"Don't sign away our future. Don't send our children begging." Those were the words of Mrs. Grace Kwabena, a farmer in Ghana at a forum organized by a trade union coalition to put pressure on African leaders to stop the Economic Partnership Agreement (EPA) negotiations with EU.
The Ghana Trade and Livelihood Coalition (GTLC) say the EPA trade deal is aimed at perpetuating Africa, Caribbean and Pacific (ACP) countries as dumping zones for foreign agricultural producers. It has called for mass mobilization of people in ACP countries to prevail on their governments to halt the EPA negotiations while urging various parliaments not to ratify the agreement if it is signed.
An executive member of the coalition, Mr. Sylvester Bagooro, presented the group's stand at the first international workshop for alliance - building in the West African sub-region, held in Ghana. According to Bagooro, free trade agreements are not the best options for developing countries like Ghana and Burkina Faso, where 95 per cent of workers are small scale farmers.
He maintained that the agreements would deprive such farmers of their livelihoods and worsen the poverty situation in Africa. The EPA accord requires ACP countries to open their economies to competition from highly subsidized imports from the EU. Over 200 Ghanaian farmers had earlier staged a peaceful demonstration in Accra during Ghana's Farmers Day demanding that current African Union chairman, Ghanaian president John Kufuor, prevail on the AU to stop the wholesome dumping of cheap agricultural products from Europe which EPA seeks to promote.
The farmers marched to the Ghana Ministry of Finance and Economic Planning where they explained how the EU trade deal means the death of agriculture in ACP countries and their death as farmers. Singing a dirge, the farmers-mainly rice, cotton, tomato and poultry producers, decried the reluctance of African leaders to reject the agreement.
Black Britian
March 30, 2007
Diamonds : the mob moves into Namibia
Senior members of the Italian Mafia have obtained an interest in Namibia’s nascent diamond-cutting industry, using front companies to buy an existing but unused diamond-cutting and polishing licence, an 18-month-long investigation has revealed.
Company documents show that the Italian criminal syndicate appears to have been aided and abetted in obtaining their licences by former intelligence operator and self-described “business consultant” Zackey Nefungo Nujoma, former president Sam Nujoma’s youngest son. Two shelf companies, Avilla and Marbilla, nominally controlled by local lawyer CJ Gouws and Nujoma, are among the eight diamond buyers and 18 diamond cutters currently licensed by the ministry in terms of the Diamond Act. Nujoma has denied any know-ledge of any organised crime links to either Avila or Marbella. Gouws said his firm had sold the off-the-shelf companies to Nujoma, who is listed as a geologist in the company records, and who wanted to use them to apply for unspecified mining concessions. Full ownership of these two companies was subsequently transferred to a blind, off-shore company, Diamond Ocean Enterprises Limited, which is registered in the British Virgin Islands.
Pietro Palazzolo, also known as Peter von Palace-Kolbatschenko, the brother of wanted crime boss Vito Palazzolo, was one of Avila’s directors. Vito Palazzolo, often referred to as the Mafia’s banker, has been involved in massive money-laundering schemes, as well as drug smuggling and immigration fraud. He is currently being tried in absentia in Italy for money laundering and racketeering.
It is not known who ultimately controls Diamond Ocean Enterprises, as the BVI’s banking secrecy laws prevent disclosure in this regard. Several sources spoken to were of the firm opinion that the licence belonged to the alleged Mafia kingpin. “It’s not Pietro, it is Vito Palazzolo himself,” one well-placed source said. Nujoma denies knowing who Von Palace-Kolbatschenko really is and also declined to discuss who the real owners of Diamond Ocean Enterprises were.
The Diamond Act forbid the transfer of any diamond licence or controlling interests in companies or close corporations holding such licences without written permission from the minister. Transgressions of the law are met with a R250,000 ($34,000 ) fine and/or five years imprisonment. Furthermore, the Act states that the minister shall refuse to issue any diamond licence to an individual or entity which, “in the opinion of the Minister is or has been involved in activities relating to the unlawful dealing in or possession of diamonds.”
Extracts of company share registers showed that Pietro Palazzolo, listed as a South African with Namibian residency, served as Avila’s director from November 29 2005 to June 2 2006. Records show that Palazzolo resigned as director after 100% ownerships of Avila and Marbella were moved off-shore. Nujoma is currently listed as the only Namibian director in both Avila and Marbella Investments.
While Pietro Palazzolo appears to have a clean record, various public and confidential documents indicate that South African, Italian and American law-enforcement agencies consider him to be part of his brother’s operations. Both Palazzolo brothers are known to be regular visitors to Namibia. They and Israeli diamantaire Gershon Ben-Tovim were at one stage partners in an ostrich venture. In 2002, workers at the ostritch farm said that various high-ranking government officials, including a top law-enforcement official, had over the years been regular visitors, raising the question to what extent organised crime had penetrated the Namibian state.
Any legitimate entry into the diamond industry would afford the “Mob” a huge money-laundering opportunity, as the Kimberley Process of certification only covers rough diamonds, anti-corruption campaigning NGO Global Witness’s Alex Yearsley said. Once rough diamonds have been cut, they would be virtually untraceable among the millions of carats of cut diamonds being traded internationally, he said.
Angola remains the major source of illicit rough diamonds in the region, followed by the Democratic Republic of Congo. But because the Mafia would likely be looking to launder money through the purchase of diamonds, it would be willing to pay up to 30% more than the market price, making them very attractive as customers. The Angolan diamond industry is dominated by President Eduardo dos Santos’s daughter Isabella dos Santos, and international anti-corruption NGOs such as Global Witness and Fatal Attractions believe that Palazzolo has direct links to her.
Mail and Guardian
Company documents show that the Italian criminal syndicate appears to have been aided and abetted in obtaining their licences by former intelligence operator and self-described “business consultant” Zackey Nefungo Nujoma, former president Sam Nujoma’s youngest son. Two shelf companies, Avilla and Marbilla, nominally controlled by local lawyer CJ Gouws and Nujoma, are among the eight diamond buyers and 18 diamond cutters currently licensed by the ministry in terms of the Diamond Act. Nujoma has denied any know-ledge of any organised crime links to either Avila or Marbella. Gouws said his firm had sold the off-the-shelf companies to Nujoma, who is listed as a geologist in the company records, and who wanted to use them to apply for unspecified mining concessions. Full ownership of these two companies was subsequently transferred to a blind, off-shore company, Diamond Ocean Enterprises Limited, which is registered in the British Virgin Islands.
Pietro Palazzolo, also known as Peter von Palace-Kolbatschenko, the brother of wanted crime boss Vito Palazzolo, was one of Avila’s directors. Vito Palazzolo, often referred to as the Mafia’s banker, has been involved in massive money-laundering schemes, as well as drug smuggling and immigration fraud. He is currently being tried in absentia in Italy for money laundering and racketeering.
It is not known who ultimately controls Diamond Ocean Enterprises, as the BVI’s banking secrecy laws prevent disclosure in this regard. Several sources spoken to were of the firm opinion that the licence belonged to the alleged Mafia kingpin. “It’s not Pietro, it is Vito Palazzolo himself,” one well-placed source said. Nujoma denies knowing who Von Palace-Kolbatschenko really is and also declined to discuss who the real owners of Diamond Ocean Enterprises were.
The Diamond Act forbid the transfer of any diamond licence or controlling interests in companies or close corporations holding such licences without written permission from the minister. Transgressions of the law are met with a R250,000 ($34,000 ) fine and/or five years imprisonment. Furthermore, the Act states that the minister shall refuse to issue any diamond licence to an individual or entity which, “in the opinion of the Minister is or has been involved in activities relating to the unlawful dealing in or possession of diamonds.”
Extracts of company share registers showed that Pietro Palazzolo, listed as a South African with Namibian residency, served as Avila’s director from November 29 2005 to June 2 2006. Records show that Palazzolo resigned as director after 100% ownerships of Avila and Marbella were moved off-shore. Nujoma is currently listed as the only Namibian director in both Avila and Marbella Investments.
While Pietro Palazzolo appears to have a clean record, various public and confidential documents indicate that South African, Italian and American law-enforcement agencies consider him to be part of his brother’s operations. Both Palazzolo brothers are known to be regular visitors to Namibia. They and Israeli diamantaire Gershon Ben-Tovim were at one stage partners in an ostrich venture. In 2002, workers at the ostritch farm said that various high-ranking government officials, including a top law-enforcement official, had over the years been regular visitors, raising the question to what extent organised crime had penetrated the Namibian state.
Any legitimate entry into the diamond industry would afford the “Mob” a huge money-laundering opportunity, as the Kimberley Process of certification only covers rough diamonds, anti-corruption campaigning NGO Global Witness’s Alex Yearsley said. Once rough diamonds have been cut, they would be virtually untraceable among the millions of carats of cut diamonds being traded internationally, he said.
Angola remains the major source of illicit rough diamonds in the region, followed by the Democratic Republic of Congo. But because the Mafia would likely be looking to launder money through the purchase of diamonds, it would be willing to pay up to 30% more than the market price, making them very attractive as customers. The Angolan diamond industry is dominated by President Eduardo dos Santos’s daughter Isabella dos Santos, and international anti-corruption NGOs such as Global Witness and Fatal Attractions believe that Palazzolo has direct links to her.
Mail and Guardian
March 29, 2007
Reverse foreign aid, it benefits rich over poor
by Tina Rosenberg*
For the last 10 years, people in China have been sending me money. I also get money from countries in Latin America and sub-Saharan Africa, really, from every poor country. I'm not the only one who's so lucky. Everyone in a wealthy nation has become the beneficiary of the generous subsidies that poorer countries bestow upon rich ones. Here in the US, this welfare program in reverse allows our government to spend wildly without runaway inflation, keeps many American businesses afloat and even provides medical care in parts of the country where doctors are scarce.
Economic theory holds that money should flow downhill. The North should want to sink its capital into the South, the developing world, which some define as all countries but the 29 wealthiest. According to this model, money both does well and does good : investors get a higher return than they could get in their own mature economies, and poor countries get the capital they need to get richer. Increasing the transfer of capital from rich nations to poorer ones is often listed as one justification for economic globalization.
Historically, the global balance sheet has favored poor countries. But with the advent of globalized markets, capital began to move in the other direction, and the South now exports capital to the North, at a skyrocketing rate. According to the United Nations, in 2006 the net transfer of capital from poorer countries to rich ones was $784 billion, up from $229 billion in 2002. (In 1997, the balance was even.) Even the poorest countries, like those in sub-Saharan Africa, are now money exporters.
How did this great reversal take place? Why did globalization begin to redistribute wealth upward? The answer, in large part, has to do with global finance. All countries hold hard-currency reserves to cover their foreign debts or to use in case of a natural or a financial disaster. For the past 50 years, rich countries have steadily held reserves equivalent to about three months' worth of their total imports. As money circulates more and more quickly in a globalized economy, however, many countries have felt the need to add to their reserves, mainly to head off investor panic, which can strike even well-managed economies. Since 1990, the world's non-rich nations have increased their reserves, on average, from around three months' worth of imports to more than eight months' worth, or the equivalent of about 30 percent of their G.D.P. China and other countries maintain those reserves mainly in the form of super-secure U.S. Treasury bills; whenever they buy T-bills, they are in effect lending the United States money. This allows the U.S. to keep interest rates low and Washington to run up huge deficits with no apparent penalty.
But the cost to poorer countries is very high. The benefit of T-bills, of course, is that they are virtually risk-free and thus help assure investors and achieve stability. But the problem is that T-bills earn low returns. All the money spent on T-bills, a very substantial sum, could be earning far better returns invested elsewhere, or could be used to pay teachers and build highways at home, activities that bring returns of a different type. Dani Rodrik, an economist a Harvard's Kennedy School of Government, estimates conservatively that maintaining reserves in excess of the three-month standard costs poor countries one percent of their economies annually, some $110 billion every year. Joseph Stiglitz, the Columbia University economist, says he thinks the real cost could be double that.
In his recent book, "Making Globalization Work," Stiglitz proposes a solution. Adapting an old idea of John Maynard Keynes, he proposes a sort of insurance pool that would provide hard currency to countries going through times of crisis. Money actually changes hands only if a country needs the reserve, and the recipient must repay what it has used.
No one planned the rapid swelling of reserves. Other South-to-North subsidies, by contrast, have been built into the rules of globalization by international agreements. Consider the World Trade Organization's requirements that all member countries respect patents and copyrights, patents on medicines and industrial and other products; copyrights on, say, music and movies. As poorer countries enter the W.T.O., they must agree to pay royalties on such goods, and a result is a net obligation of more than $40 billion annually that poorer countries owe to American and European corporations.
There are good reasons for countries to respect intellectual property, but doing so is also an overwhelming burden on the poorest people in poorer countries. After all, the single largest beneficiary of the intellectual-property system is the pharmaceutical industry. But consumers in poorer nations do not get much in return, as they do not form a lucrative enough market to inspire research on cures for many of their illnesses. Moreover, the intellectual-property rules make it difficult for poorer countries to manufacture less-expensive generic drugs that poor people rely on. The largest cost to poor countries is not money but health, as many people simply will not be able to find or afford brand-name medicine.
The hyper-competition for global investment has produced another important reverse subsidy : the tax holidays poor countries offer foreign investors. A company that announces it wants to make cars, televisions or pharmaceuticals in, say, east Asia, will then send its representatives to negotiate with government officials in China, Malaysia, the Philippines and elsewhere, holding an auction for the best deal. The savviest corporations get not only 10-year tax holidays but also discounts on land, cheap government loans, below-market rates for electricity and water and government help in paying their workers.
Rich countries know better. The EU, for example, regulates the incentives members can offer to attract investment. That car plant will most likely be built in one of the competing countries anyway; the incentives serve only to reduce the host country's benefits. Since deals between corporations and governments are usually secret, it is hard to know how much investment incentives cost poorer countries, certainly tens of billions of dollars. Whatever the cost, it is growing, as country after country has passed laws enabling the offer of such incentives.
Human nature, not smart lobbying, is responsible for another poor-to-rich subsidy : the brain drain. The migration of highly educated people from poor nations is increasing. A small brain drain can benefit the South, as emigrants send money home and may return with new skills and capital. But in places where educated people are few and emigrants don't go home again, the brain drain devastates. In many African countries, more than 40 percent of college-educated people emigrate to rich countries. Malawian nurses have moved to Britain and other English-speaking nations en masse, and now two-thirds of nursing posts in Malawi's public health system are vacant. Zambia has lost three-quarters of its new physicians in recent years. Even in South Africa, 21 percent of graduating doctors migrate.
The financial consequences for the poorer nations can be severe. A doctor who moves from Johannesburg to North Dakota costs the South African government as much as $100,000, the price of training him there. As with patent enforcement, a larger cost may be in health. A lack of
trained people, a gap that widens daily, is now the main barrier to fighting AIDS, malaria and other diseases in Africa.
Sometimes reverse subsidies are disguised. Rich-country governments spent $283 billion in 2005 to support and subsidize their own agriculture, mainly agribusiness. Artificially cheap food exported to poor countries might seem like a gift, but it is often a Trojan horse. Corn, rice or cotton exported by rich countries is so cheap that small farmers in poor countries cannot compete, so they stop farming. Three-quarters of the world's poor people are rural. The African peasant with an acre and a hoe is losing her livelihood, and the benefits go mainly to companies like Archer Daniels Midland and Cargill.
Most costly to poor countries, they have been drafted into paying for rich nations' energy use. On a per capita basis, Americans emit more greenhouse gases into the atmosphere, and thus create more global warming than anyone else. What we pay to drive a car or keep an industrial plant running is not the true cost of oil or coal. The real price would include the cost of the environmental damage that comes from burning these fuels. But even as we do not pay that price, other countries do. American energy use is being subsidized by tropical coastal nations, who appear to be global warming's first victims. Some scientists argue that Bangladesh already has more powerful monsoon downpours and Honduras fiercer cyclones because of global warming, likely indicators of worse things ahead. The islands of the Maldives may someday be completely underwater. The costs these nations will pay do not appear on the global balance sheets. But they are the ultimate subsidy.
*Tina Rosenberg is a contributing writer for the NYTimes magazine
New York Times
------------------------------------------------------------------------
For the last 10 years, people in China have been sending me money. I also get money from countries in Latin America and sub-Saharan Africa, really, from every poor country. I'm not the only one who's so lucky. Everyone in a wealthy nation has become the beneficiary of the generous subsidies that poorer countries bestow upon rich ones. Here in the US, this welfare program in reverse allows our government to spend wildly without runaway inflation, keeps many American businesses afloat and even provides medical care in parts of the country where doctors are scarce.
Economic theory holds that money should flow downhill. The North should want to sink its capital into the South, the developing world, which some define as all countries but the 29 wealthiest. According to this model, money both does well and does good : investors get a higher return than they could get in their own mature economies, and poor countries get the capital they need to get richer. Increasing the transfer of capital from rich nations to poorer ones is often listed as one justification for economic globalization.
Historically, the global balance sheet has favored poor countries. But with the advent of globalized markets, capital began to move in the other direction, and the South now exports capital to the North, at a skyrocketing rate. According to the United Nations, in 2006 the net transfer of capital from poorer countries to rich ones was $784 billion, up from $229 billion in 2002. (In 1997, the balance was even.) Even the poorest countries, like those in sub-Saharan Africa, are now money exporters.
How did this great reversal take place? Why did globalization begin to redistribute wealth upward? The answer, in large part, has to do with global finance. All countries hold hard-currency reserves to cover their foreign debts or to use in case of a natural or a financial disaster. For the past 50 years, rich countries have steadily held reserves equivalent to about three months' worth of their total imports. As money circulates more and more quickly in a globalized economy, however, many countries have felt the need to add to their reserves, mainly to head off investor panic, which can strike even well-managed economies. Since 1990, the world's non-rich nations have increased their reserves, on average, from around three months' worth of imports to more than eight months' worth, or the equivalent of about 30 percent of their G.D.P. China and other countries maintain those reserves mainly in the form of super-secure U.S. Treasury bills; whenever they buy T-bills, they are in effect lending the United States money. This allows the U.S. to keep interest rates low and Washington to run up huge deficits with no apparent penalty.
But the cost to poorer countries is very high. The benefit of T-bills, of course, is that they are virtually risk-free and thus help assure investors and achieve stability. But the problem is that T-bills earn low returns. All the money spent on T-bills, a very substantial sum, could be earning far better returns invested elsewhere, or could be used to pay teachers and build highways at home, activities that bring returns of a different type. Dani Rodrik, an economist a Harvard's Kennedy School of Government, estimates conservatively that maintaining reserves in excess of the three-month standard costs poor countries one percent of their economies annually, some $110 billion every year. Joseph Stiglitz, the Columbia University economist, says he thinks the real cost could be double that.
In his recent book, "Making Globalization Work," Stiglitz proposes a solution. Adapting an old idea of John Maynard Keynes, he proposes a sort of insurance pool that would provide hard currency to countries going through times of crisis. Money actually changes hands only if a country needs the reserve, and the recipient must repay what it has used.
No one planned the rapid swelling of reserves. Other South-to-North subsidies, by contrast, have been built into the rules of globalization by international agreements. Consider the World Trade Organization's requirements that all member countries respect patents and copyrights, patents on medicines and industrial and other products; copyrights on, say, music and movies. As poorer countries enter the W.T.O., they must agree to pay royalties on such goods, and a result is a net obligation of more than $40 billion annually that poorer countries owe to American and European corporations.
There are good reasons for countries to respect intellectual property, but doing so is also an overwhelming burden on the poorest people in poorer countries. After all, the single largest beneficiary of the intellectual-property system is the pharmaceutical industry. But consumers in poorer nations do not get much in return, as they do not form a lucrative enough market to inspire research on cures for many of their illnesses. Moreover, the intellectual-property rules make it difficult for poorer countries to manufacture less-expensive generic drugs that poor people rely on. The largest cost to poor countries is not money but health, as many people simply will not be able to find or afford brand-name medicine.
The hyper-competition for global investment has produced another important reverse subsidy : the tax holidays poor countries offer foreign investors. A company that announces it wants to make cars, televisions or pharmaceuticals in, say, east Asia, will then send its representatives to negotiate with government officials in China, Malaysia, the Philippines and elsewhere, holding an auction for the best deal. The savviest corporations get not only 10-year tax holidays but also discounts on land, cheap government loans, below-market rates for electricity and water and government help in paying their workers.
Rich countries know better. The EU, for example, regulates the incentives members can offer to attract investment. That car plant will most likely be built in one of the competing countries anyway; the incentives serve only to reduce the host country's benefits. Since deals between corporations and governments are usually secret, it is hard to know how much investment incentives cost poorer countries, certainly tens of billions of dollars. Whatever the cost, it is growing, as country after country has passed laws enabling the offer of such incentives.
Human nature, not smart lobbying, is responsible for another poor-to-rich subsidy : the brain drain. The migration of highly educated people from poor nations is increasing. A small brain drain can benefit the South, as emigrants send money home and may return with new skills and capital. But in places where educated people are few and emigrants don't go home again, the brain drain devastates. In many African countries, more than 40 percent of college-educated people emigrate to rich countries. Malawian nurses have moved to Britain and other English-speaking nations en masse, and now two-thirds of nursing posts in Malawi's public health system are vacant. Zambia has lost three-quarters of its new physicians in recent years. Even in South Africa, 21 percent of graduating doctors migrate.
The financial consequences for the poorer nations can be severe. A doctor who moves from Johannesburg to North Dakota costs the South African government as much as $100,000, the price of training him there. As with patent enforcement, a larger cost may be in health. A lack of
trained people, a gap that widens daily, is now the main barrier to fighting AIDS, malaria and other diseases in Africa.
Sometimes reverse subsidies are disguised. Rich-country governments spent $283 billion in 2005 to support and subsidize their own agriculture, mainly agribusiness. Artificially cheap food exported to poor countries might seem like a gift, but it is often a Trojan horse. Corn, rice or cotton exported by rich countries is so cheap that small farmers in poor countries cannot compete, so they stop farming. Three-quarters of the world's poor people are rural. The African peasant with an acre and a hoe is losing her livelihood, and the benefits go mainly to companies like Archer Daniels Midland and Cargill.
Most costly to poor countries, they have been drafted into paying for rich nations' energy use. On a per capita basis, Americans emit more greenhouse gases into the atmosphere, and thus create more global warming than anyone else. What we pay to drive a car or keep an industrial plant running is not the true cost of oil or coal. The real price would include the cost of the environmental damage that comes from burning these fuels. But even as we do not pay that price, other countries do. American energy use is being subsidized by tropical coastal nations, who appear to be global warming's first victims. Some scientists argue that Bangladesh already has more powerful monsoon downpours and Honduras fiercer cyclones because of global warming, likely indicators of worse things ahead. The islands of the Maldives may someday be completely underwater. The costs these nations will pay do not appear on the global balance sheets. But they are the ultimate subsidy.
*Tina Rosenberg is a contributing writer for the NYTimes magazine
New York Times
------------------------------------------------------------------------
Rwanda's prospects impress US investors
by Marc Gunther*
It's not every day that an African head of state delivers a corporate endorsement at an annual shareholder meeting. But Paul Kagame, the president of Rwanda, did just that recently at Starbucks' meeting in Seattle. Starbucks' chief executive, Jim Donald, introduced Kagame, who praised the $8-billion-a-year company. "Starbucks and Rwanda are extended family, very closely linked by the business we do together," Kagame said. His comments delivered welcome relief from the criticism aimed at Starbucks over a recent trademark dispute with Ethiopian coffee growers.
Best known today for the 1994 genocide that killed 800,000 of its people, Rwanda is, thanks to Kagame, quietly building a new reputation in corporate America - as a business-friendly nation that wants to become a model of private sector development in Africa. The 49-year-old Kagame,who has led Rwanda since 2000, lately has become an unlikely favorite of American CEOs. in March he had lunch senior Google executives including CEO Eric Schmidt; the Internet firm just announced plans to make its free Web-based software available in Rwanda.
Kagame had dinner with Jim Sinegal, the CEO of Costco; the big retailer buys coffee from Rwanda and wants to do more business there. Last week, too, Terracom, Rwanda's leading phone company, hired an American-born CEO as it builds out what it says will be the fastest communications backbone in Africa. Senior executives at the wireless firm Alltel the huge engineering and construction company Bechtel and clothing maker Columbia Sportswear also have consulted with Rwandan officials.
Why the attention to Rwanda, a small country of about 9 million people? It's no accident. Many of the corporate ties between the U.S. and Rwanda can be traced back to two Chicago-area businessmen: Joe Ritchie, the founder of an investment firm, and his partner Dan Cooper.
Rwanda is known as the "Land of a Thousand Hills" but it was not the lush landscape that appealed to Ritchie. He and Cooper toured the country and met government and business leaders. They decided that Kagame was open, honest, business-savvy and, unlike some African leaders, serious about fighting corruption. "We came away saying, this is the most undervalued 'stock' on the continent and maybe in the world," Cooper says. "Here's an African nation that's reaching out to corporate America. They want U.S. business to bring innovation to their country."
Coffee was the obvious place to start. A U.S.-backed program called PEARL (Partnership for Enhancing Agriculture in Rwanda Through Linkages) had been helping Rwanda's coffee growers to organize themselves, invest in new washing stations and dramatically improve the quality of their coffee. PEARL introduced Rwandan coffee growers to U.S. and European buyers of specialty coffee.
The specialty coffee business is growing fast. In 2006, about a thousand tonnes of fully washed Rwandan coffee was sold into U.S. specialty and gourmet markets at prices averaging $2.00 per pound. Commodity coffee, the kind that Rwanda used to produce, sells for just 60 to 75 cents a pound. "The companies that are buying these top quality coffees are investing a lot in the communities and cooperative," Dan Clay, director of Michigan State University's Institute of International Agriculture, who has worked in Rwanda since 1979Clay says. "They put a lot of their own time in, and they do some training."
Starbucks is encouraging Rwanda growers to ramp up their production: "We're very bullish on Rwanda. They've still got a long way to go, but they're getting there more quickly than any other African country."
The Google deal came via a different route. in late 2006 Francoise Brougher, the global director of strategy at Google, led a group of company employees on a three week trip to Africa, stopping in Rwanda, Ghana, Senegal and Nigeria. She had been asked by top Google executives to seek out business opportunities in Africa. The Rwanda deal will make Google Apps - Web-based applications for e-mail, a calendar, the creation of documents and spreadsheets, messaging and Web page authoring - available to government ministries and three colleges. (The company announced a similar initiative in Kenya.) Each university and ministry will get its own domain names, and all the applications will be available without advertising. This will save the Rwandans the considerable expense of developing their own e-mail systems, maintaining servers, training staff and buying PC-based software.
To use Google Apps, Rwandans will need computers and broadband connections - but Brougher said that Google picked Rwanda for its rollout in part because the government is "extremely progressive" when it comes to promoting information technology: "The country has invested in IT infrastructure, the same way governments invest in roads," she says.
There's lots more in the works. Tom Ritchey, a master designer and welder of mountain bicycles, as well as an accomplished bike racer, has several projects underway in Rwanda. He is developing a racing team and creating an efficient cargo-hauling bike to help coffee growers to market. Other U.S. firms are talking about rebuilding railroads and highways.
There's no doubt that Rwanda has plenty of work to do. Gross domestic product in 2005 was less than $2 billion, and per capita income, adjusted to take the living costs into account, is about $1,500 a year, according to the U.S. State Department. Amnesty International says human rights groups are prevented from working freely in the country and that activists and journalists face harassment and intimidation.
But the country, visitors say, is democratic, peaceful and working hard to heal the terrible wounds caused by the genocide. Google's Brougher said, "For us, it's very inspiring, knowing the history." Says Dan Cooper: "We think this is an extraordinary place that that deserves our support and we feel lucky to be a part of it."
*Gunther is senior writer at CNNMoney Fortune
CNN Money
It's not every day that an African head of state delivers a corporate endorsement at an annual shareholder meeting. But Paul Kagame, the president of Rwanda, did just that recently at Starbucks' meeting in Seattle. Starbucks' chief executive, Jim Donald, introduced Kagame, who praised the $8-billion-a-year company. "Starbucks and Rwanda are extended family, very closely linked by the business we do together," Kagame said. His comments delivered welcome relief from the criticism aimed at Starbucks over a recent trademark dispute with Ethiopian coffee growers.
Best known today for the 1994 genocide that killed 800,000 of its people, Rwanda is, thanks to Kagame, quietly building a new reputation in corporate America - as a business-friendly nation that wants to become a model of private sector development in Africa. The 49-year-old Kagame,who has led Rwanda since 2000, lately has become an unlikely favorite of American CEOs. in March he had lunch senior Google executives including CEO Eric Schmidt; the Internet firm just announced plans to make its free Web-based software available in Rwanda.
Kagame had dinner with Jim Sinegal, the CEO of Costco; the big retailer buys coffee from Rwanda and wants to do more business there. Last week, too, Terracom, Rwanda's leading phone company, hired an American-born CEO as it builds out what it says will be the fastest communications backbone in Africa. Senior executives at the wireless firm Alltel the huge engineering and construction company Bechtel and clothing maker Columbia Sportswear also have consulted with Rwandan officials.
Why the attention to Rwanda, a small country of about 9 million people? It's no accident. Many of the corporate ties between the U.S. and Rwanda can be traced back to two Chicago-area businessmen: Joe Ritchie, the founder of an investment firm, and his partner Dan Cooper.
Rwanda is known as the "Land of a Thousand Hills" but it was not the lush landscape that appealed to Ritchie. He and Cooper toured the country and met government and business leaders. They decided that Kagame was open, honest, business-savvy and, unlike some African leaders, serious about fighting corruption. "We came away saying, this is the most undervalued 'stock' on the continent and maybe in the world," Cooper says. "Here's an African nation that's reaching out to corporate America. They want U.S. business to bring innovation to their country."
Coffee was the obvious place to start. A U.S.-backed program called PEARL (Partnership for Enhancing Agriculture in Rwanda Through Linkages) had been helping Rwanda's coffee growers to organize themselves, invest in new washing stations and dramatically improve the quality of their coffee. PEARL introduced Rwandan coffee growers to U.S. and European buyers of specialty coffee.
The specialty coffee business is growing fast. In 2006, about a thousand tonnes of fully washed Rwandan coffee was sold into U.S. specialty and gourmet markets at prices averaging $2.00 per pound. Commodity coffee, the kind that Rwanda used to produce, sells for just 60 to 75 cents a pound. "The companies that are buying these top quality coffees are investing a lot in the communities and cooperative," Dan Clay, director of Michigan State University's Institute of International Agriculture, who has worked in Rwanda since 1979Clay says. "They put a lot of their own time in, and they do some training."
Starbucks is encouraging Rwanda growers to ramp up their production: "We're very bullish on Rwanda. They've still got a long way to go, but they're getting there more quickly than any other African country."
The Google deal came via a different route. in late 2006 Francoise Brougher, the global director of strategy at Google, led a group of company employees on a three week trip to Africa, stopping in Rwanda, Ghana, Senegal and Nigeria. She had been asked by top Google executives to seek out business opportunities in Africa. The Rwanda deal will make Google Apps - Web-based applications for e-mail, a calendar, the creation of documents and spreadsheets, messaging and Web page authoring - available to government ministries and three colleges. (The company announced a similar initiative in Kenya.) Each university and ministry will get its own domain names, and all the applications will be available without advertising. This will save the Rwandans the considerable expense of developing their own e-mail systems, maintaining servers, training staff and buying PC-based software.
To use Google Apps, Rwandans will need computers and broadband connections - but Brougher said that Google picked Rwanda for its rollout in part because the government is "extremely progressive" when it comes to promoting information technology: "The country has invested in IT infrastructure, the same way governments invest in roads," she says.
There's lots more in the works. Tom Ritchey, a master designer and welder of mountain bicycles, as well as an accomplished bike racer, has several projects underway in Rwanda. He is developing a racing team and creating an efficient cargo-hauling bike to help coffee growers to market. Other U.S. firms are talking about rebuilding railroads and highways.
There's no doubt that Rwanda has plenty of work to do. Gross domestic product in 2005 was less than $2 billion, and per capita income, adjusted to take the living costs into account, is about $1,500 a year, according to the U.S. State Department. Amnesty International says human rights groups are prevented from working freely in the country and that activists and journalists face harassment and intimidation.
But the country, visitors say, is democratic, peaceful and working hard to heal the terrible wounds caused by the genocide. Google's Brougher said, "For us, it's very inspiring, knowing the history." Says Dan Cooper: "We think this is an extraordinary place that that deserves our support and we feel lucky to be a part of it."
*Gunther is senior writer at CNNMoney Fortune
CNN Money
SA protectionist textile import quotas backfire on intended beneficiaries
South African Trade and Industry Minister Mandisi Mpahlwa has been forced to ease quota restrictions imposed by government on textile imports recently. They were put in place to prop up the local clothing and textile sectors and protect them from cheaper Chinese imports. The quotas have in some cases hurt the very manufacturers whom they were intended to benefit because they prevented the import of fabric not available locally. This has had a dire effect on factories and threatened jobs. Government announced the plan in 2006 in an effort to cushion clothing manufacturers.
A notice published by the International Trade Administration Commission said the commission would consider written requests from importers to increase their quotas under special circumstances, notably where specific products were manufactured only in China or not manufactured locally. This includes firemen's gear and specialised sporting gear. ITAC is an administrative body responsible for creating an enabling environment for fair trade through customs tariffs.
According to ITAC acting commissioner Itumeleng Masege, the concession was recommended by the monitoring committee that was appointed to track the import restrictions and identify unintended negative consequences. The decision to adjust the quotas was reached after extensive consultations with industry and labour.
The allowance to increase quotas, however, comes with a strict requirement that importers will get the allowance only if they commit to measures that help develop the local industry, including a "significant and demonstrable enhancement of, or contribution to, technology development, skills development, new markets, empowerment, local procurement and building of competitiveness of the local industry". If they obtain an additional quota for one product line, they may have to forego it for another. The controversial plan was met with resistance from big business, which said it would hurt consumers, and some retailers even planned to take government to the Constitutional Court over the matter. It is understood that the introduction of the quotas is partially responsible for stalling a government - conceived sector strategy intended to underpin the recovery plan for the beleaguered manufacturing sector.
Ironically, government's reason for introducing the Chinese quotas over two years was precisely to provide a window in which the clothing manufacturers could recover. The ambitious strategic plan is now effectively in limbo, as retailers, alienated by the Chinese quota plan, voted with their feet, unnamed sources said.
Business Day
A notice published by the International Trade Administration Commission said the commission would consider written requests from importers to increase their quotas under special circumstances, notably where specific products were manufactured only in China or not manufactured locally. This includes firemen's gear and specialised sporting gear. ITAC is an administrative body responsible for creating an enabling environment for fair trade through customs tariffs.
According to ITAC acting commissioner Itumeleng Masege, the concession was recommended by the monitoring committee that was appointed to track the import restrictions and identify unintended negative consequences. The decision to adjust the quotas was reached after extensive consultations with industry and labour.
The allowance to increase quotas, however, comes with a strict requirement that importers will get the allowance only if they commit to measures that help develop the local industry, including a "significant and demonstrable enhancement of, or contribution to, technology development, skills development, new markets, empowerment, local procurement and building of competitiveness of the local industry". If they obtain an additional quota for one product line, they may have to forego it for another. The controversial plan was met with resistance from big business, which said it would hurt consumers, and some retailers even planned to take government to the Constitutional Court over the matter. It is understood that the introduction of the quotas is partially responsible for stalling a government - conceived sector strategy intended to underpin the recovery plan for the beleaguered manufacturing sector.
Ironically, government's reason for introducing the Chinese quotas over two years was precisely to provide a window in which the clothing manufacturers could recover. The ambitious strategic plan is now effectively in limbo, as retailers, alienated by the Chinese quota plan, voted with their feet, unnamed sources said.
Business Day
Kenya MPs : Extend protection against COMESA sugar competition
http://www.eastandard.net/hm_news/news.php?articleid=1143966653
The Kenya Sugar Parliamentary Association wants the government to lobby for the extension of the four-year industrial protection against cheap sugar imports from COMESA countries. The chairman of the Association, MP Wycliffe Osundwa, led the call. COMESA is the Common Market for Eastern and Southern Africa, a grouping of _______ countries.
Osundwa said that farmers in Kenya were going to suffer if the COMESA duty-free sugar is allowed onto the local market from the end of February 2008. He said government failed to privatize the parastatal sugar mills to allow private capital to flow in for the industry to be ready for competition. Osundwa said that all MPs from the sugar cane growing areas in Western, Nyanza and part of Rift-Valley province want the government to push for another four-year extension of the reprieve to protect farmers and the industry.
Mumias Sugar Company raised a red flag over the expiry of the four-year industrial reprieve ,and the unpreparedness of Kenya to face the cheap COMESA imports. The sugar company, which is the only one ready for the competition, has advertised for a study to establish the preparedness of the local sugar industry for duty-free COMESA imports.
The reprieve expires on February 28 2008, opening the way for unlimited duty-free sugar imports.
The Kenya Sugar Parliamentary Association wants the government to lobby for the extension of the four-year industrial protection against cheap sugar imports from COMESA countries. The chairman of the Association, MP Wycliffe Osundwa, led the call. COMESA is the Common Market for Eastern and Southern Africa, a grouping of _______ countries.
Osundwa said that farmers in Kenya were going to suffer if the COMESA duty-free sugar is allowed onto the local market from the end of February 2008. He said government failed to privatize the parastatal sugar mills to allow private capital to flow in for the industry to be ready for competition. Osundwa said that all MPs from the sugar cane growing areas in Western, Nyanza and part of Rift-Valley province want the government to push for another four-year extension of the reprieve to protect farmers and the industry.
Mumias Sugar Company raised a red flag over the expiry of the four-year industrial reprieve ,and the unpreparedness of Kenya to face the cheap COMESA imports. The sugar company, which is the only one ready for the competition, has advertised for a study to establish the preparedness of the local sugar industry for duty-free COMESA imports.
The reprieve expires on February 28 2008, opening the way for unlimited duty-free sugar imports.
Doha talks prospects fading, says Brazilian
The chances of success in the World Trade Organization's Doha round of free-trade talks are fading, Marcos Jank, president of the Brazilian Institute for International Trade Negotiations, said on March 28.
"We have a big risk of failure," he said. "There is a window of opportunity in 2007. I think that is closing. If we lose this year, because of the U.S. election next year we will probably lose 2008 too," Jank said. Jank said talks could resume in 2009 but after losing two years the prospects of success would be "very bad."
The WTO launched its Doha round in 2001 to cut barriers to trade around the world as a way to lift millions of people out of poverty and boost the global economy. Trading powers have been locked in behind-the-scenes efforts in recent weeks to galvanize the negotiations, which were relaunched in January after a six-month suspension.
Jank said there was a risk that the failure of trade talks could lead to a world of bilateral agreements, adding these would just focus on market access and could not deal with domestic subsidies and anti-dumping rules. He noted there were already many new instruments of protection not covered by WTO talks, including an explosion of barriers on sanitary grounds.
WTO chief Pascal Lamy said last week that the United States needed to make a new offer on reducing trade-distorting agriculture subsidies if the Doha talks were to progress. Jank backed the call for U.S. concessions and also said India, which could be one of the big winners if talks succeeded, needed to give ground. "India are asking too much in this round," he said.
The U.S. has agreed to cut subsidies but wants market access for its products in return, which developing countries such as India have been reluctant to concede.
Engineering News
"We have a big risk of failure," he said. "There is a window of opportunity in 2007. I think that is closing. If we lose this year, because of the U.S. election next year we will probably lose 2008 too," Jank said. Jank said talks could resume in 2009 but after losing two years the prospects of success would be "very bad."
The WTO launched its Doha round in 2001 to cut barriers to trade around the world as a way to lift millions of people out of poverty and boost the global economy. Trading powers have been locked in behind-the-scenes efforts in recent weeks to galvanize the negotiations, which were relaunched in January after a six-month suspension.
Jank said there was a risk that the failure of trade talks could lead to a world of bilateral agreements, adding these would just focus on market access and could not deal with domestic subsidies and anti-dumping rules. He noted there were already many new instruments of protection not covered by WTO talks, including an explosion of barriers on sanitary grounds.
WTO chief Pascal Lamy said last week that the United States needed to make a new offer on reducing trade-distorting agriculture subsidies if the Doha talks were to progress. Jank backed the call for U.S. concessions and also said India, which could be one of the big winners if talks succeeded, needed to give ground. "India are asking too much in this round," he said.
The U.S. has agreed to cut subsidies but wants market access for its products in return, which developing countries such as India have been reluctant to concede.
Engineering News
March 28, 2007
SADC border posts slow down trade
The Southern African Development Community’s goal of lifting trade barriers between member states will remain a mirage if intra-regional road transport inefficiencies continue unchecked. One of the biggest problems is congestion at regional border posts, particularly the Beit Bridge crossing between South Africa and Zimbabwe, the SADC’s busiest, and SA’s key gateway to the north. The border crossing links the SADC’s economic powerhouse with Botswana, Zimbabwe, Zambia, Malawi, the Democratic Republic of Congo and Mozambique. About 250 commercial vehicles pass through the border post each day.
While the hold-up is most acute at Beit Bridge, delays also occur at Chirundu border post between Zimbabwe and Zambia, and at Tunduma between Zambia and Tanzania. Federation of East and Southern African Road Transporters’ Association (Fesarta) chairman Mike Scott says inefficiencies at regional border posts add to the costs of goods transported in the SADC region. “While the region’s infrastructure is being upgraded with 12 new and planned corridors across southern and eastern African states, traffic jams characteristic of certain border post crossings have become an impediment as they effectively slow down the passage of goods.”
Scott contends that the key to growing intra-regional trade is to free up the movement of goods between member countries. “We need to harmonise and free up the road passage of goods between member states, the final objective being an SADC trade operation similar to that of the European Economic Community.”
While the movement of trade goods through the Beit Bridge border crossing has improved in recent months owing to a number of initiatives by regional governments and private-sector players, much work still remains before the border operates at peak efficiency. “Although the border is operating 24 hours a day, the main cause of congestion is bureaucracy, a shortage of staff and budgetary constraints. The bottlenecks also put pressure on inadequate facilities for hosting drivers, who are sometimes laid over for up to three hours waiting for final clearances,” Scott says.
SADC member states have agreed to develop simplified measures at border posts, including clearance and pre-clearance procedures, simplified and harmonised documentation, and modern data-processing procedures. Private-sector border-post authorities, a one-stop-shop border-post concept, harmonised operational working hours and standardised documentation are also in the offing. The SADC has also agreed to develop a harmonised road-traffic policy in respect of vehicle dimensions and combinations, safety standards of vehicles and maximum vehicle loads.
Scott concurs that these measures will help reduce delays. “The one-stop border concept means that north-bound and south-bound commercial traffic would be able to cross the border after only a single clearance, not a clearance on both sides of the border as is the current practice,” he says.
Overloading on corridor roads and regulating of weighing procedures, and weight restrictions on roads across the SADC region are some of the other issues that Fesarta would like to see addressed to smooth the flow of goods.
Business Day
While the hold-up is most acute at Beit Bridge, delays also occur at Chirundu border post between Zimbabwe and Zambia, and at Tunduma between Zambia and Tanzania. Federation of East and Southern African Road Transporters’ Association (Fesarta) chairman Mike Scott says inefficiencies at regional border posts add to the costs of goods transported in the SADC region. “While the region’s infrastructure is being upgraded with 12 new and planned corridors across southern and eastern African states, traffic jams characteristic of certain border post crossings have become an impediment as they effectively slow down the passage of goods.”
Scott contends that the key to growing intra-regional trade is to free up the movement of goods between member countries. “We need to harmonise and free up the road passage of goods between member states, the final objective being an SADC trade operation similar to that of the European Economic Community.”
While the movement of trade goods through the Beit Bridge border crossing has improved in recent months owing to a number of initiatives by regional governments and private-sector players, much work still remains before the border operates at peak efficiency. “Although the border is operating 24 hours a day, the main cause of congestion is bureaucracy, a shortage of staff and budgetary constraints. The bottlenecks also put pressure on inadequate facilities for hosting drivers, who are sometimes laid over for up to three hours waiting for final clearances,” Scott says.
SADC member states have agreed to develop simplified measures at border posts, including clearance and pre-clearance procedures, simplified and harmonised documentation, and modern data-processing procedures. Private-sector border-post authorities, a one-stop-shop border-post concept, harmonised operational working hours and standardised documentation are also in the offing. The SADC has also agreed to develop a harmonised road-traffic policy in respect of vehicle dimensions and combinations, safety standards of vehicles and maximum vehicle loads.
Scott concurs that these measures will help reduce delays. “The one-stop border concept means that north-bound and south-bound commercial traffic would be able to cross the border after only a single clearance, not a clearance on both sides of the border as is the current practice,” he says.
Overloading on corridor roads and regulating of weighing procedures, and weight restrictions on roads across the SADC region are some of the other issues that Fesarta would like to see addressed to smooth the flow of goods.
Business Day
March 27, 2007
Africa must form economic blocks to survive globalization : EU envoy
African countries will only survive globalisation if they find the political drive to forge larger economic blocks, the European Union has warned. They should create larger entities made up of constituents who keep their national identities, like the EU, the German ambassador to Uganda, Alexander Muehlen, advised.
"Without having gone through two world wars on their territory, but having been subject to colonialism, African countries now face the challenge of coping with a modern globalised world," Muehlen said. "The challenge can only be shouldered if countries overcome small-scale thinking and find the political drive to cooperate closely with each other. This should lead to larger regional groupings, associations and eventually unions."
Muehlen, whose country holds the presidency of the 27-member European block, was addressing an occasion marking 50 years of the EU. He said for Germany, which had been defeated, humiliated and divided after the second World War, there was need for reconciliation and cooperation with its neighbours. He advised that cooperation does not necessarily mean giving up national identities and cultures, saying EU member states preserve theirs but cooperate and jointly take decisions on common issues.
The Head of the European Commission delegation to Uganda, Ambassador Vincent De Visscher, said the EU had enhanced peace and stability in Europe. He noted that it had also opened opportunities for their citizens. He said with its single market, trade policy and currency, the EU is the world's largest trading block.
New Vision
"Without having gone through two world wars on their territory, but having been subject to colonialism, African countries now face the challenge of coping with a modern globalised world," Muehlen said. "The challenge can only be shouldered if countries overcome small-scale thinking and find the political drive to cooperate closely with each other. This should lead to larger regional groupings, associations and eventually unions."
Muehlen, whose country holds the presidency of the 27-member European block, was addressing an occasion marking 50 years of the EU. He said for Germany, which had been defeated, humiliated and divided after the second World War, there was need for reconciliation and cooperation with its neighbours. He advised that cooperation does not necessarily mean giving up national identities and cultures, saying EU member states preserve theirs but cooperate and jointly take decisions on common issues.
The Head of the European Commission delegation to Uganda, Ambassador Vincent De Visscher, said the EU had enhanced peace and stability in Europe. He noted that it had also opened opportunities for their citizens. He said with its single market, trade policy and currency, the EU is the world's largest trading block.
New Vision
March 26, 2007
World Bank appoints Nigerian as VP for Africa Region
World Bank President Paul Wolfowitz on March 23 announced the appointment of Obiageli “Oby” Ezekwesili as Vice President for the Africa Region. Ms. Ezekwesili, a Nigerian, will join the World Bank from her most recent position as Minister of Education within the Government of Nigeria. Beginning May 1, she will lead the World Bank's Africa operations, which lend about $4.7 billion a year to the continent.
Ezekwesili began her career as an auditor and management consultant. She was one of the founding members of Transparency International, and also served as Special Assistant to the President of Nigeria on Budget Monitoring. She subsequently served as Minister of Solid Minerals Development. She has served as the Chairperson for the Nigeria Extractive Industries Transparency Initiative since 2004. She also pioneered the first ever audit of the oil and gas sector.
Ezekwesili has been the Minister of Education since June 2006. She holds a Masters in International Law and Diplomacy from the University of Lagos, as well as a Masters of Public Administration from the Kennedy School of Government, Harvard. She is also a chartered accountant. She was selected for this position through a competitive international search.
Ezekwesili began her career as an auditor and management consultant. She was one of the founding members of Transparency International, and also served as Special Assistant to the President of Nigeria on Budget Monitoring. She subsequently served as Minister of Solid Minerals Development. She has served as the Chairperson for the Nigeria Extractive Industries Transparency Initiative since 2004. She also pioneered the first ever audit of the oil and gas sector.
Ezekwesili has been the Minister of Education since June 2006. She holds a Masters in International Law and Diplomacy from the University of Lagos, as well as a Masters of Public Administration from the Kennedy School of Government, Harvard. She is also a chartered accountant. She was selected for this position through a competitive international search.
How nations abuse free trade rhetoric
book review by V.Krishna Ananth
The birth of the World Trade Organisation (WTO) was held by some as an event that marked the end to all the bad things about the GATT regime. A view was peddled that the unfair practice of non-trade barriers would no longer hinder commerce between nations and that the signing of the treaty at Marakesh in March 1993 marked the beginning, in the true sense, of a global free trade regime. But then, it did not take too long to realise that non-trade barriers did not vanish. And that the WTO regime too could be derailed.
The fiasco at the Doha round of talks and the increasing resort, by nations, to the anti-dumping laws simply confirm this fact. In addition to the concerted attempts by the developed nations to impose labour standards and thus erect barriers against imports from the developing nations, the business of anti-dumping provisions is emerging into a means to curb free trade. Non-trade barriers continue to emerge, less than a decade after the WTO came into existence.
In the book "Anti-Dumping: Global Abuse of a Trade Policy Instrument," Bibek Debroy and Debashis Chakraborty have put together studies by specialists from across the world, to show that the provisions in the WTO agreement relating to anti-dumping are now a means that the governments in various countries, developed and developing, are beginning to use to the detriment of free trade. The collection of eight essays focuses on various instances of nations
abusing the provisions of the WTO's Anti-Dumping Agreement (ADA) and conveys the need for substantive changes in the Agreement.
The abuse, as the essays establish, is most common in the manner in which nations seek investigations even where there is no case. The book's essays clearly establish that back-to-back investigations against dumping are ordered by nations to protect domestic industry. While the US used this path to protect its industry from being gobbled up by imports from developing nations (cases with regard to India, Turkey and South Africa are illustrated in the book), the essays also deal with the recent trend of developing nations also resorting to back-to-back investigations against dumping.
Nations are content with ordering back-to-back investigations and rarely take the cases to the Disputes Settlement Body (DSB) of the WTO. The essays establish that the investigations, in most instances, are meant only to frustrate free trade, thus defeating the very rationale of the WTO.
The collection is a good read for those deluded by the belief that free-trade is a possibility and that nations will resist, over time, the temptation to protect domestic industry. But then, economic history is replete with instances that show that free-trade is mere rhetoric; an illusion.
Tribune India
The birth of the World Trade Organisation (WTO) was held by some as an event that marked the end to all the bad things about the GATT regime. A view was peddled that the unfair practice of non-trade barriers would no longer hinder commerce between nations and that the signing of the treaty at Marakesh in March 1993 marked the beginning, in the true sense, of a global free trade regime. But then, it did not take too long to realise that non-trade barriers did not vanish. And that the WTO regime too could be derailed.
The fiasco at the Doha round of talks and the increasing resort, by nations, to the anti-dumping laws simply confirm this fact. In addition to the concerted attempts by the developed nations to impose labour standards and thus erect barriers against imports from the developing nations, the business of anti-dumping provisions is emerging into a means to curb free trade. Non-trade barriers continue to emerge, less than a decade after the WTO came into existence.
In the book "Anti-Dumping: Global Abuse of a Trade Policy Instrument," Bibek Debroy and Debashis Chakraborty have put together studies by specialists from across the world, to show that the provisions in the WTO agreement relating to anti-dumping are now a means that the governments in various countries, developed and developing, are beginning to use to the detriment of free trade. The collection of eight essays focuses on various instances of nations
abusing the provisions of the WTO's Anti-Dumping Agreement (ADA) and conveys the need for substantive changes in the Agreement.
The abuse, as the essays establish, is most common in the manner in which nations seek investigations even where there is no case. The book's essays clearly establish that back-to-back investigations against dumping are ordered by nations to protect domestic industry. While the US used this path to protect its industry from being gobbled up by imports from developing nations (cases with regard to India, Turkey and South Africa are illustrated in the book), the essays also deal with the recent trend of developing nations also resorting to back-to-back investigations against dumping.
Nations are content with ordering back-to-back investigations and rarely take the cases to the Disputes Settlement Body (DSB) of the WTO. The essays establish that the investigations, in most instances, are meant only to frustrate free trade, thus defeating the very rationale of the WTO.
The collection is a good read for those deluded by the belief that free-trade is a possibility and that nations will resist, over time, the temptation to protect domestic industry. But then, economic history is replete with instances that show that free-trade is mere rhetoric; an illusion.
Tribune India
From sex workers to restaurant workers, the global slave trade is growing
Twenty-seven million slaves exist in our world today. Girls and boys, women and men of all ages are forced to toil in the rug loom sheds of Nepal, sell their bodies in the brothels of Rome, break rocks in the quarries of Pakistan, and fight wars in Africa.
Go behind the façade in any major town or city in the world today and you are likely to find a thriving commerce in human beings. You may even find slavery in your own backyard. For several years my wife and I dined regularly at an Indian restaurant located near our home in the San Francisco Bay area. Unbeknownst to us, the staff were slaves. The restaurant's owner had used fake visas and false identities to traffic perhaps hundreds of adults and children into the US. He forced the laborers to work long hours for minimal wages, money they returned to him as rent to live in one of his apartments. He threatened to turn them into the authorities as illegal aliens if they tried to escape.
As many as 800,000 are trafficked across international borders annually, and up to 17,500 new victims are trafficked across US borders each year, according to the U.S. Department of Justice. More than 30,000 additional slaves are trans-ported through the U.S. on their way to other international destinations. Attorneys from the U.S. Department of Justice have prosecuted 91 slave-trade cases in cities across the United States and in nearly every state of the nation.
“Ten Million Children Exploited for Domestic Labor” — this title for a 2004 U.N. study hardly needs explaining. The U.N.’s surveys found 700,000 children forced into domestic labor in Indonesia alone, with staggering numbers as well in Brazil (559,000), Pakistan (264,000), Haiti (250,000), and Kenya (200,000). The U.N. report indicates that children remain in servitude for long stretches of time because no one identifies their enslavement: “These youngsters are usually ‘invisible’ to their communities, toiling for long hours with little or no pay and regularly deprived of the chance to play or go to school.” UNICEF estimates that one million children are forced today to sell their bodies to sexual exploiters. In a single country, Uganda, nearly 40,000 children have been kidnapped and violently turned into child soldiers or sex slaves.
Kevin Bales, a pioneer in the fight against modern slavery, say, "Slaves in Pakistan may have made the shoes you are wearing and the carpet you stand on. Slaves in the Caribbean may have put sugar in your kitchen and toys in the hands of your children. In India they may have sewn the shirt on your back and polished the ring on your finger.”
Widespread poverty and social inequality ensure a pool of recruits as deep as the ocean. Parents in desperate straits may sell their children. Young women in vulnerable communities are more likely to take a risk on a job offer in a faraway location. The poor are apt to accept a loan that the slave trader can later manipulate to steal their freedom. All of these paths carry unsuspecting recruits into the supply chains of slavery.
There are times to read history, and there are times to make history. We live right now at one of those epic moments in the fight for human freedom. We no longer have to wonder how we might respond to our moment of truth. Future generations will look back and judge our choices, and be inspired or disappointed.
This article is adapted from David Batsone’s new book Not For Sale : The Return of the Global Slave Trade — and How We Can Fight It (HarperSanFrancisco, © 2007).
Canadian Dimension
Go behind the façade in any major town or city in the world today and you are likely to find a thriving commerce in human beings. You may even find slavery in your own backyard. For several years my wife and I dined regularly at an Indian restaurant located near our home in the San Francisco Bay area. Unbeknownst to us, the staff were slaves. The restaurant's owner had used fake visas and false identities to traffic perhaps hundreds of adults and children into the US. He forced the laborers to work long hours for minimal wages, money they returned to him as rent to live in one of his apartments. He threatened to turn them into the authorities as illegal aliens if they tried to escape.
As many as 800,000 are trafficked across international borders annually, and up to 17,500 new victims are trafficked across US borders each year, according to the U.S. Department of Justice. More than 30,000 additional slaves are trans-ported through the U.S. on their way to other international destinations. Attorneys from the U.S. Department of Justice have prosecuted 91 slave-trade cases in cities across the United States and in nearly every state of the nation.
“Ten Million Children Exploited for Domestic Labor” — this title for a 2004 U.N. study hardly needs explaining. The U.N.’s surveys found 700,000 children forced into domestic labor in Indonesia alone, with staggering numbers as well in Brazil (559,000), Pakistan (264,000), Haiti (250,000), and Kenya (200,000). The U.N. report indicates that children remain in servitude for long stretches of time because no one identifies their enslavement: “These youngsters are usually ‘invisible’ to their communities, toiling for long hours with little or no pay and regularly deprived of the chance to play or go to school.” UNICEF estimates that one million children are forced today to sell their bodies to sexual exploiters. In a single country, Uganda, nearly 40,000 children have been kidnapped and violently turned into child soldiers or sex slaves.
Kevin Bales, a pioneer in the fight against modern slavery, say, "Slaves in Pakistan may have made the shoes you are wearing and the carpet you stand on. Slaves in the Caribbean may have put sugar in your kitchen and toys in the hands of your children. In India they may have sewn the shirt on your back and polished the ring on your finger.”
Widespread poverty and social inequality ensure a pool of recruits as deep as the ocean. Parents in desperate straits may sell their children. Young women in vulnerable communities are more likely to take a risk on a job offer in a faraway location. The poor are apt to accept a loan that the slave trader can later manipulate to steal their freedom. All of these paths carry unsuspecting recruits into the supply chains of slavery.
There are times to read history, and there are times to make history. We live right now at one of those epic moments in the fight for human freedom. We no longer have to wonder how we might respond to our moment of truth. Future generations will look back and judge our choices, and be inspired or disappointed.
This article is adapted from David Batsone’s new book Not For Sale : The Return of the Global Slave Trade — and How We Can Fight It (HarperSanFrancisco, © 2007).
Canadian Dimension
East Africa moves to promote exports to EU
Regional counterparts Kenya, Tanzania Uganda have embarked on a campaign to develop and promote the export sector in the East African Community. Training of experts who will later transfer the knowledge to the stakeholders in the sector is in full gear and is expected to end in
June, officials said.
The training, dubbed Trainers of Trainers, is supported by the Netherlands government through the Centre for the Promotion of Imports from Developing Countries (CBI) in collaboration with the Uganda Export Promotion Board. Its aim is to increase the production and improve the quality of exports to the EU. CBI consultant Dorothy Tuma said that each of the three countries sent 10 representatives for the training, currently taking place in Kampala. They will then go back home and train others on how to penetrate the EU market.
Since 2005, at least 90 consultants from the three countries have attained skills in the training sessions, which were conducted in Uganda, Kenya Tanzania and the Netherlands.Tuma said the current trainees were the last batch under the programme.
The participants said the training has helped them find answers to questions people have been asking about the EU markets, particularly on issues pertaining to quality standards, sustaining supplies and finding and keeping markets.
The Monitor
June, officials said.
The training, dubbed Trainers of Trainers, is supported by the Netherlands government through the Centre for the Promotion of Imports from Developing Countries (CBI) in collaboration with the Uganda Export Promotion Board. Its aim is to increase the production and improve the quality of exports to the EU. CBI consultant Dorothy Tuma said that each of the three countries sent 10 representatives for the training, currently taking place in Kampala. They will then go back home and train others on how to penetrate the EU market.
Since 2005, at least 90 consultants from the three countries have attained skills in the training sessions, which were conducted in Uganda, Kenya Tanzania and the Netherlands.Tuma said the current trainees were the last batch under the programme.
The participants said the training has helped them find answers to questions people have been asking about the EU markets, particularly on issues pertaining to quality standards, sustaining supplies and finding and keeping markets.
The Monitor
Uganda tea export earnings increase, but sector needs investment
Ugandan tea exporters earned $53.9 million in 2006, a 23 per cent increase over the previous year, despite a drop in volumes due to drought, as well as higher costs of diesel and electricity. Figures released by the Uganda Tea Association (UTA) showed that export volumes dropped by 15.3 per cent to 32.7 million kg during 2006, but gained from a 42 per cent increase in prices on the world market. Uganda's tea production and exports hit its highest level in 2004 when 36,840 tonnes was exported, earning $37.3 million. Since then, the volumes have been declining.
The tea industry has also been affected by the erratic electricity cuts caused by the drop in water levels of Lake Victoria and the River Nile. UTA executive Ignatius Munabi said that although the government had offered a subsidy to bulk diesel users, the cost of diesel was already high on the world market. He said the industry expected its exports to recover in 2007 to the levels registered during 2005 if the weather remained stable. Some 36,500 tonnes was exported in 2005. He said the area under tea production has remained almost the same for the past 30, years at about 20,000 hectares.
Under the present acreage, Uganda is capable of producing and exporting about 40,000 tonnes of tea. "The problem we face is that there are also small-scale tea processing factories whose data we do not capture in our figures. If they can get better machinery, they are capable of adding another one million to two million tonnes to our exports," Munabi said. The small-scale growers produce mostly for the local market.
Under the poverty alleviation programme, the government committed itself to expand the area under tea cultivation by providing free seedlings. However, this scheme has not received any fresh funding over the past four years.
Munabi said the tea industry in Uganda had been unable to attract new investors. "People who would be investing in tea production are already buying tea at the Mombasa tea auction in Kenya, where the majority of Uganda's tea exports are routed through. They prefer to be engaged in buying and marketing, not production. The tea industry needs more incentives in order to attract fresh investment," he said. He also said that small-scale producers were cashing in on the rising demand for tea in Southern Sudan, Congo, Burundi and Rwanda. These teas are bought in local currency and therefore are not reflected as exports. About 10 per cent of made tea is consumed locally.
The East African
The tea industry has also been affected by the erratic electricity cuts caused by the drop in water levels of Lake Victoria and the River Nile. UTA executive Ignatius Munabi said that although the government had offered a subsidy to bulk diesel users, the cost of diesel was already high on the world market. He said the industry expected its exports to recover in 2007 to the levels registered during 2005 if the weather remained stable. Some 36,500 tonnes was exported in 2005. He said the area under tea production has remained almost the same for the past 30, years at about 20,000 hectares.
Under the present acreage, Uganda is capable of producing and exporting about 40,000 tonnes of tea. "The problem we face is that there are also small-scale tea processing factories whose data we do not capture in our figures. If they can get better machinery, they are capable of adding another one million to two million tonnes to our exports," Munabi said. The small-scale growers produce mostly for the local market.
Under the poverty alleviation programme, the government committed itself to expand the area under tea cultivation by providing free seedlings. However, this scheme has not received any fresh funding over the past four years.
Munabi said the tea industry in Uganda had been unable to attract new investors. "People who would be investing in tea production are already buying tea at the Mombasa tea auction in Kenya, where the majority of Uganda's tea exports are routed through. They prefer to be engaged in buying and marketing, not production. The tea industry needs more incentives in order to attract fresh investment," he said. He also said that small-scale producers were cashing in on the rising demand for tea in Southern Sudan, Congo, Burundi and Rwanda. These teas are bought in local currency and therefore are not reflected as exports. About 10 per cent of made tea is consumed locally.
The East African
EPAs serve EU interests, will not guarantee market access
by Eric Mgendi*
It has been argued that African Caribbean and Pacific (ACP) countries should sign Economic Partnership Agreements to safeguard revenue and jobs and promote growth and development. But the implications are shallowly discussed without sufficient engagement with citizens. Trade regimes must benefit maize, tea, coffee, horticulture, dairy and sugar cane farmers and pastoralists. For example, the Common Agriculture Policy (CAP) applied by European Union member states has protected farmers through tight regulation of agriculture trade regimes and direct support.
Similarly, the United States supports farmers through subsidies even when they promise discussions about them, and despite the existence of the WTO. Joseph Stiglitz, a former World Bank economist and Nobel Economics laureate, has said, "Developing countries should do as the developed nations did and not as they say."
The EU protected and subsidised its farmers to develop agriculture. It may be comfortable revising CAP now because most of its citizens are no longer farmers. But Africa is different. Have we done enough to create a conducive, productive and rewarding environment for farmers? Citizens' needs and interests should take priority in bilateral and international agreements. Under what conditions do we give oil exploration ventures to China, for example? Under what conditions do we get aid from the US and EU? We must guard against aid that is dangled, but helps push outsiders' agenda at the expense of the majority. Under the Cotonou Agreement, 77 ACP countries enjoy duty-free quotas in the EU market without requiring that they provide duty free access to products from the union, a principle referred to as non-reciprocal.
EPA is the new trade arrangement expected to replace the Cotonou partnership when it expires in December 2007. It is meant to be reciprocal- countries will eliminate tariffs on goods and services as a result of trade deals with the EU. ACP countries have only been given two choices : to sign EPAs or lose all benefits they get under Cotonou.
Analysts say in Kenya horticulture will be a key beneficiary. The sector directly and indirectly employs more than two million people and has been used as the basis for wholesomely entering into EPAs to guard against revenue and job losses. Of its produce, nine per cent (400,000 tonnes) was sold as raw materials to the agro-industrial processing sector and 88 per cent (3.82 million tonnes) in the local fresh market. Only three per cent (133,000 tonnes) was exported. Large-scale farmers dominate the export market, comprising mainly cut flowers (51 per cent) and vegetables (38 per cent). Many local suppliers are small-scale farmers who account for 70 per cent of horticulture production.
More than 50 per cent of vegetables and fruits were consumed locally. Kenya's biggest market for flowers is for export, accounting for 98 per cent of production. Three to five companies dominate floriculture. In 1997, small-scale growers supplied 70 per cent of export earnings from high value agriculture. By 2000, this had fallen to 30 per cent. Kenya's fish industry is another important sector, employing more than one million people. While the EU has granted Kenya duty-free market access for fish exports, stringent safety and hygiene standards act as non-tariff barriers. Rules of trade should be predictable and not ad hoc.
Tourism is also a sensitive sector. The EU accounts for 60 per cent of tourists who visit Kenya annually. Removing tariffs would deny us revenue, and local companies would not compete effectively with their EU counterparts. It is unlikely that the principle of reciprocity will apply if we waive visa fees for EU visitors. Will the EU also provide unrestricted access to their countries? Signing EPAs will not guarantee access to the EU market. Recently, UK's largest supermarket, Tesco, raised the issue of 'food miles' and environmental concerns arising from products transported over long distances. Independent studies have, however, shown that the effect of emissions on food produced in Africa is lower than in the EU.
The point is this : in the absence of government commitment to support farmers, any deal on agriculture export will not have any impact on poverty. Kenya could benefit more from tea and coffee, but high tariffs and lack of value addition are the drawbacks. Similarly, Kenya cannot exploit the EU cotton market because of capacity issues. It cannot even fully exploit the US market through the Africa Growth and Opportunity Act (AGOA).
EPAs serve EU interests. It is a major exporter and processor of subsidised sugar, wheat, rice and dairy products. We risk destroying sub-sectors that support 12 million Kenyans.
*The writer is the Africa communications coordinator for ActionAid International.
The East African
It has been argued that African Caribbean and Pacific (ACP) countries should sign Economic Partnership Agreements to safeguard revenue and jobs and promote growth and development. But the implications are shallowly discussed without sufficient engagement with citizens. Trade regimes must benefit maize, tea, coffee, horticulture, dairy and sugar cane farmers and pastoralists. For example, the Common Agriculture Policy (CAP) applied by European Union member states has protected farmers through tight regulation of agriculture trade regimes and direct support.
Similarly, the United States supports farmers through subsidies even when they promise discussions about them, and despite the existence of the WTO. Joseph Stiglitz, a former World Bank economist and Nobel Economics laureate, has said, "Developing countries should do as the developed nations did and not as they say."
The EU protected and subsidised its farmers to develop agriculture. It may be comfortable revising CAP now because most of its citizens are no longer farmers. But Africa is different. Have we done enough to create a conducive, productive and rewarding environment for farmers? Citizens' needs and interests should take priority in bilateral and international agreements. Under what conditions do we give oil exploration ventures to China, for example? Under what conditions do we get aid from the US and EU? We must guard against aid that is dangled, but helps push outsiders' agenda at the expense of the majority. Under the Cotonou Agreement, 77 ACP countries enjoy duty-free quotas in the EU market without requiring that they provide duty free access to products from the union, a principle referred to as non-reciprocal.
EPA is the new trade arrangement expected to replace the Cotonou partnership when it expires in December 2007. It is meant to be reciprocal- countries will eliminate tariffs on goods and services as a result of trade deals with the EU. ACP countries have only been given two choices : to sign EPAs or lose all benefits they get under Cotonou.
Analysts say in Kenya horticulture will be a key beneficiary. The sector directly and indirectly employs more than two million people and has been used as the basis for wholesomely entering into EPAs to guard against revenue and job losses. Of its produce, nine per cent (400,000 tonnes) was sold as raw materials to the agro-industrial processing sector and 88 per cent (3.82 million tonnes) in the local fresh market. Only three per cent (133,000 tonnes) was exported. Large-scale farmers dominate the export market, comprising mainly cut flowers (51 per cent) and vegetables (38 per cent). Many local suppliers are small-scale farmers who account for 70 per cent of horticulture production.
More than 50 per cent of vegetables and fruits were consumed locally. Kenya's biggest market for flowers is for export, accounting for 98 per cent of production. Three to five companies dominate floriculture. In 1997, small-scale growers supplied 70 per cent of export earnings from high value agriculture. By 2000, this had fallen to 30 per cent. Kenya's fish industry is another important sector, employing more than one million people. While the EU has granted Kenya duty-free market access for fish exports, stringent safety and hygiene standards act as non-tariff barriers. Rules of trade should be predictable and not ad hoc.
Tourism is also a sensitive sector. The EU accounts for 60 per cent of tourists who visit Kenya annually. Removing tariffs would deny us revenue, and local companies would not compete effectively with their EU counterparts. It is unlikely that the principle of reciprocity will apply if we waive visa fees for EU visitors. Will the EU also provide unrestricted access to their countries? Signing EPAs will not guarantee access to the EU market. Recently, UK's largest supermarket, Tesco, raised the issue of 'food miles' and environmental concerns arising from products transported over long distances. Independent studies have, however, shown that the effect of emissions on food produced in Africa is lower than in the EU.
The point is this : in the absence of government commitment to support farmers, any deal on agriculture export will not have any impact on poverty. Kenya could benefit more from tea and coffee, but high tariffs and lack of value addition are the drawbacks. Similarly, Kenya cannot exploit the EU cotton market because of capacity issues. It cannot even fully exploit the US market through the Africa Growth and Opportunity Act (AGOA).
EPAs serve EU interests. It is a major exporter and processor of subsidised sugar, wheat, rice and dairy products. We risk destroying sub-sectors that support 12 million Kenyans.
*The writer is the Africa communications coordinator for ActionAid International.
The East African
Liberalisation may boost growth but not create jobs
Even if trade openness boosts economic growth, such growth may not create jobs or alleviate poverty. Therefore the much-vaunted Aid for Trade concept should be redesigned so that "the major focus is shifted from simply creating more trade to the more important objective of poverty reduction''.
This is according to Mohammed Ali Rashid, economics professor at the School of Arts and Social Sciences at the North South University in Bangladesh. He argued at a (March 2007) Nairobi conference entitled "Linkages between Trade, Development and Poverty Reduction'' that there are many reasons to be sceptical about the existence of a "general, unambiguous relationship between trade openness and growth. The conference was organised by the India-based non-governmental research organisation Consumer Unity and Trust Society (CUTS.)
"Very few countries have grown over long periods of time without experiencing an increase in foreign trade. But trade liberalisation should not be seen in isolation, Rashid contended. If it boosts the demand for domestic labour-intensive products, the demand for labour will increase and either wages or employment or both will increase. "However, if the poor are mostly unskilled and the demand for semi-skilled labour is increased, poverty will be unaffected or may be worsened,'' said Rashid. An example in this regard would be South Africa. He insisted that governments have to develop national policies which ensure that the benefits of export-led growth reach the poor.
Rashid was also critical of Aid for Trade, an instrument with which richer countries propose to help poorer countries to access world markets. Rich states promise to help poor countries to diversify and expand their goods and services, and to overcome internal constraints that frequently prevent them from fully engaging with market opportunities. This includes assistance to enhance competitiveness and to their capacity to participate in international trade negotiations. "Developed country trade partners need to be convinced about the urgent need to redesign the Aid for Trade package so that it can become an effective instrument for poverty reduction,'' he said.
The liberalisation of markets and the scrapping of import and export tariffs will lead to revenue losses for governments of poor countries, Christine Menca, CUTS official for international trade told the conference. "Many developing countries get up to 50 percent of their revenue from international trade taxes. If the markets are liberalised, they will lose this income. Some analysts say that these losses have to be compensated for with alternative revenue systems like value added tax,'' Menca said.
But value added tax has been criticised as an anti-poor measure because of its indiscriminate and catch-all application. Another way to make up for the revenue loss is for governments to hike food, fuel and other commodities' prices, a step which is also detrimental to the poor, Rashid pointed out.
According to Brendan Vickers, senior researcher at a South African think tank, the Institute for Global Dialogue, "no country has ever become industrialised by initiating free trade before it first ensured that its own interests were protected. Countries with strong economies like the UK and the US only started opening their markets when their economies were rock solid. However, the WTO does not condone these protective measures. It is what the Cambridge-based economist Ha-Joon Chang calls 'kicking away the ladder'. Developed countries became successful by climbing the ladder. But the ladder is no longer accessible to developing countries.''
Civil society organisations (CSOs) are concerned about Aid for Trade, according to Vickers, raising questions about rich countries' willingness to compete with poor countries in world markets. Many fear that Aid for Trade may not involve new resources but the repackaging of existing social development aid initiatives. They have also criticised Aid for Trade's exclusive focus on technical assistance and capacity building.
IPS
This is according to Mohammed Ali Rashid, economics professor at the School of Arts and Social Sciences at the North South University in Bangladesh. He argued at a (March 2007) Nairobi conference entitled "Linkages between Trade, Development and Poverty Reduction'' that there are many reasons to be sceptical about the existence of a "general, unambiguous relationship between trade openness and growth. The conference was organised by the India-based non-governmental research organisation Consumer Unity and Trust Society (CUTS.)
"Very few countries have grown over long periods of time without experiencing an increase in foreign trade. But trade liberalisation should not be seen in isolation, Rashid contended. If it boosts the demand for domestic labour-intensive products, the demand for labour will increase and either wages or employment or both will increase. "However, if the poor are mostly unskilled and the demand for semi-skilled labour is increased, poverty will be unaffected or may be worsened,'' said Rashid. An example in this regard would be South Africa. He insisted that governments have to develop national policies which ensure that the benefits of export-led growth reach the poor.
Rashid was also critical of Aid for Trade, an instrument with which richer countries propose to help poorer countries to access world markets. Rich states promise to help poor countries to diversify and expand their goods and services, and to overcome internal constraints that frequently prevent them from fully engaging with market opportunities. This includes assistance to enhance competitiveness and to their capacity to participate in international trade negotiations. "Developed country trade partners need to be convinced about the urgent need to redesign the Aid for Trade package so that it can become an effective instrument for poverty reduction,'' he said.
The liberalisation of markets and the scrapping of import and export tariffs will lead to revenue losses for governments of poor countries, Christine Menca, CUTS official for international trade told the conference. "Many developing countries get up to 50 percent of their revenue from international trade taxes. If the markets are liberalised, they will lose this income. Some analysts say that these losses have to be compensated for with alternative revenue systems like value added tax,'' Menca said.
But value added tax has been criticised as an anti-poor measure because of its indiscriminate and catch-all application. Another way to make up for the revenue loss is for governments to hike food, fuel and other commodities' prices, a step which is also detrimental to the poor, Rashid pointed out.
According to Brendan Vickers, senior researcher at a South African think tank, the Institute for Global Dialogue, "no country has ever become industrialised by initiating free trade before it first ensured that its own interests were protected. Countries with strong economies like the UK and the US only started opening their markets when their economies were rock solid. However, the WTO does not condone these protective measures. It is what the Cambridge-based economist Ha-Joon Chang calls 'kicking away the ladder'. Developed countries became successful by climbing the ladder. But the ladder is no longer accessible to developing countries.''
Civil society organisations (CSOs) are concerned about Aid for Trade, according to Vickers, raising questions about rich countries' willingness to compete with poor countries in world markets. Many fear that Aid for Trade may not involve new resources but the repackaging of existing social development aid initiatives. They have also criticised Aid for Trade's exclusive focus on technical assistance and capacity building.
IPS
March 23, 2007
Africa ill-prepared for trade negotiations
Trade experts have realized the need for training in order to effectively engage the international community on trade issues, with a view to enhancing economic productivity. Africa is plagued with a limited capacity to address emerging trade issues and has a poor understanding of global markets and inadequate institutional linkages, consequently hurting its trade relations.
Some African countries have sent lean and ill-prepared teams to high profile international negotiations such as the World Trade Organization. Consequently, the continent has been tossed from one issue to the other without significant gains by government officials from developed countries, who are keen to protect their own industries while persuading others to lift their barriers.
Bracing to engage the international community through trade negotiation is a noble undertaking. However, the fact that African businesses are ill prepared to fit into the global economy should be addressed. In addition, a sound business environment devoid of trade barriers within Africa would be good. More intra-Africa businesses should be seen booming before reaching out to the international community.
The African Executive
Some African countries have sent lean and ill-prepared teams to high profile international negotiations such as the World Trade Organization. Consequently, the continent has been tossed from one issue to the other without significant gains by government officials from developed countries, who are keen to protect their own industries while persuading others to lift their barriers.
Bracing to engage the international community through trade negotiation is a noble undertaking. However, the fact that African businesses are ill prepared to fit into the global economy should be addressed. In addition, a sound business environment devoid of trade barriers within Africa would be good. More intra-Africa businesses should be seen booming before reaching out to the international community.
The African Executive
Mixed feelings on outcome of mid-March WTO cotton meeting
Participants at a 15-16 March WTO conference on cotton said the meeting had been constructive and that a positive atmosphere had prevailed. Many of the cotton-producing countries had low expectations,not anticipating that it would produce any significant new developments on the crucial issue of US subsidies.
In 2003, low prices linked to the extensive subsidies provided to US cotton producers prompted four African countries - Benin, Burkina Faso, Chad and Mali - to introduce a "sectoral initiative on cotton" in the Doha Round negotiations. They sought the ultimate elimination of cotton subsidies along with compensation to be paid in the interim. In the July 2004 Framework, members agreed to address cotton "ambitiously, expeditiously, and specifically" but since then, however, the 'cotton four' group's proposals for deeper-than-standard subsidy cuts have languished alongside the overall negotiations.
The recent meeting aimed "to take stock of initiatives and action on the development assistance and trade policy aspects of the cotton issue." This included the July Framework's instruction to the WTO Director-General to consult with relevant international organisations "to direct effectively existing programmes and any additional resources towards development of the economies where cotton has vital importance."
Sources indicated that the US was initially reluctant even to place the cotton issue on the agenda. During the meeting, participants pointed to the need for the US to implement a March 2005 WTO dispute ruling against several of its cotton subsidy and export credit payments. In that case, Brazil successfully argued that certain payments that Washington had notified as 'green box' measures were in fact distorting trade and production, violating the US' own WTO commitments in addition to being prejudicial to Brazil's trade interests. The two countries now disagree over whether the US has brought its cotton support programmes into accordance with the ruling. A separate panel is currently determining whether the US is indeed in compliance.
WTO Director-General Pascal Lamy told the meeting that cotton remained one of the "litmus tests" of the development content of the Doha Round, and that there would be "no round without cotton being on board." Ambassador Crawford Falconer (New Zealand) said that "if we do not have an outcome on cotton, there'll be no outcome for the Doha Round."
Cotton-producing African countries indicated that this recognition of the centrality of cotton to the overall negotiations was one of the main achievements of the conference, along with the reiteration of the cotton-specific mandate. Developing countries in general were united in support of the mandate and the need for rapid action, trade sources said.
Sources noted that the World Bank claimed at the meeting that, even if cotton subsidies were in fact eliminated, many African countries would have difficulty competing with more competitive producers in countries like Brazil. However, African cotton producers rejected this assessment. In total, 36 African countries produce and trade cotton, along with other developing countries, such as Brazil and India.
Development campaigners voiced disappointment at the lack of results from the conference. Celine Charveriat of Oxfam said "the high level session on cotton at the WTO failed to produce concrete results. Donors did not commit to support a safety net for African producers, and US subsidies were hardly discussed.There is still a long way to go before African producers benefit from international trade negotiations and in the meantime, the burden of low cotton prices will continue to be borne by them."
The next meeting of the agriculture negotiating committee has been scheduled for 23 March.
In 2003, low prices linked to the extensive subsidies provided to US cotton producers prompted four African countries - Benin, Burkina Faso, Chad and Mali - to introduce a "sectoral initiative on cotton" in the Doha Round negotiations. They sought the ultimate elimination of cotton subsidies along with compensation to be paid in the interim. In the July 2004 Framework, members agreed to address cotton "ambitiously, expeditiously, and specifically" but since then, however, the 'cotton four' group's proposals for deeper-than-standard subsidy cuts have languished alongside the overall negotiations.
The recent meeting aimed "to take stock of initiatives and action on the development assistance and trade policy aspects of the cotton issue." This included the July Framework's instruction to the WTO Director-General to consult with relevant international organisations "to direct effectively existing programmes and any additional resources towards development of the economies where cotton has vital importance."
Sources indicated that the US was initially reluctant even to place the cotton issue on the agenda. During the meeting, participants pointed to the need for the US to implement a March 2005 WTO dispute ruling against several of its cotton subsidy and export credit payments. In that case, Brazil successfully argued that certain payments that Washington had notified as 'green box' measures were in fact distorting trade and production, violating the US' own WTO commitments in addition to being prejudicial to Brazil's trade interests. The two countries now disagree over whether the US has brought its cotton support programmes into accordance with the ruling. A separate panel is currently determining whether the US is indeed in compliance.
WTO Director-General Pascal Lamy told the meeting that cotton remained one of the "litmus tests" of the development content of the Doha Round, and that there would be "no round without cotton being on board." Ambassador Crawford Falconer (New Zealand) said that "if we do not have an outcome on cotton, there'll be no outcome for the Doha Round."
Cotton-producing African countries indicated that this recognition of the centrality of cotton to the overall negotiations was one of the main achievements of the conference, along with the reiteration of the cotton-specific mandate. Developing countries in general were united in support of the mandate and the need for rapid action, trade sources said.
Sources noted that the World Bank claimed at the meeting that, even if cotton subsidies were in fact eliminated, many African countries would have difficulty competing with more competitive producers in countries like Brazil. However, African cotton producers rejected this assessment. In total, 36 African countries produce and trade cotton, along with other developing countries, such as Brazil and India.
Development campaigners voiced disappointment at the lack of results from the conference. Celine Charveriat of Oxfam said "the high level session on cotton at the WTO failed to produce concrete results. Donors did not commit to support a safety net for African producers, and US subsidies were hardly discussed.There is still a long way to go before African producers benefit from international trade negotiations and in the meantime, the burden of low cotton prices will continue to be borne by them."
The next meeting of the agriculture negotiating committee has been scheduled for 23 March.
March 20, 2007
Mali cotton farmers priced out of business by World Bank reforms : report
In a new report entitled "Pricing Farmers out of Cotton: The Costs of World Bank Reforms in Mali," Oxfam analyzed how efforts to privatize the Malian cotton sector, including the adoption of a new price-setting mechanism, could leave struggling farmers worse off. The situation in Mali is an example of how the burden of low cotton prices is borne by farmers in Africa while farmers in rich countries are insulated, according to Oxfam.
"Mali's three million cotton farmers have been squeezed by American cotton subsidies and now they have to worry about World Bank. "Instead of improving the livelihoods of cotton farmers, a new price-setting mechanism could destabilize cotton as a source of income for millions of farmers and increase poverty rates by five percent."
Mali is one of the world's poorest countries, with over two-thirds of the population, mostly in rural areas. Mali is also the second largest cotton producer in sub-Saharan Africa after Burkina Faso. Whereas the impacts of low and volatile prices are now shared to some degree by many stakeholders in the Malian cotton sector, the new pricing mechanism will actually push the burden of price risk on to the farmers, according to the agency.
"Transferring the risks of a highly volatile world market down to the bottom of the chain exacerbates poverty," continued Charveriat. "A new mechanism, like a price stabilization fund could help farmers and other stakeholders manage the price risks inherent in producing raw commodities for the export market, positively affecting food security, rural development, health and education."
Oxfam called on the wider donor community, especially the World Bank and IMF, to kick-start a support fund to insulate farmers better and ensure that the risk is shared amongst the various stakeholders. A support fund which functions as a price stabilization mechanism can be very successful in helping farmers to manage risk as long as it is well designed and producer-managed, as evidenced in Burkina Faso. In the event of several years of low prices, the producer price and the fund will adjust accordingly, compelling cotton farmers to plant their crop based on signals from the market.
Cotton farmers in Africa have yet to benefit from international trade negotiations at the WTO and are still bearing the brunt of American subsidies and dumping. New analysis by University of California economist Daniel Sumner highlighted in the Brazilian submission to the WTO Compliance Panel shows the link between American commodity subsidies and overproduction of cotton. Between 2000 and 2005, according to Sumner, American cotton producers would have lost $663 per planted acre, or almost $10 billion in aggregate, if they would not have had payments from marketing, loan and counter-cyclical payments. Instead of losses, subsidies provided American cotton farmers with profits of $127 per acre on average, or $1.44 billion in aggregate.
"If US cotton farmers had to farm for the market, they would have reduced cotton production rather than racking up collective losses of more than $12 billion over market revenue," continued Charveriat. "Reforming the US Farm Bill offers the possibility of reducing export dumping which is so damaging to farmers in developing countries, but it is up to the US Congress to deliver."
Against this backdrop, it is also crucial that core development issues, such as cotton, are not sidelined in the current WTO negotiations. A deal that will rush into rules that do not allow for development, and that instead consolidate and exacerbate inequalities both between and within countries would be a missed opportunity, considering the grand promises made 5 years ago.
Kansas City Infozine
"Mali's three million cotton farmers have been squeezed by American cotton subsidies and now they have to worry about World Bank. "Instead of improving the livelihoods of cotton farmers, a new price-setting mechanism could destabilize cotton as a source of income for millions of farmers and increase poverty rates by five percent."
Mali is one of the world's poorest countries, with over two-thirds of the population, mostly in rural areas. Mali is also the second largest cotton producer in sub-Saharan Africa after Burkina Faso. Whereas the impacts of low and volatile prices are now shared to some degree by many stakeholders in the Malian cotton sector, the new pricing mechanism will actually push the burden of price risk on to the farmers, according to the agency.
"Transferring the risks of a highly volatile world market down to the bottom of the chain exacerbates poverty," continued Charveriat. "A new mechanism, like a price stabilization fund could help farmers and other stakeholders manage the price risks inherent in producing raw commodities for the export market, positively affecting food security, rural development, health and education."
Oxfam called on the wider donor community, especially the World Bank and IMF, to kick-start a support fund to insulate farmers better and ensure that the risk is shared amongst the various stakeholders. A support fund which functions as a price stabilization mechanism can be very successful in helping farmers to manage risk as long as it is well designed and producer-managed, as evidenced in Burkina Faso. In the event of several years of low prices, the producer price and the fund will adjust accordingly, compelling cotton farmers to plant their crop based on signals from the market.
Cotton farmers in Africa have yet to benefit from international trade negotiations at the WTO and are still bearing the brunt of American subsidies and dumping. New analysis by University of California economist Daniel Sumner highlighted in the Brazilian submission to the WTO Compliance Panel shows the link between American commodity subsidies and overproduction of cotton. Between 2000 and 2005, according to Sumner, American cotton producers would have lost $663 per planted acre, or almost $10 billion in aggregate, if they would not have had payments from marketing, loan and counter-cyclical payments. Instead of losses, subsidies provided American cotton farmers with profits of $127 per acre on average, or $1.44 billion in aggregate.
"If US cotton farmers had to farm for the market, they would have reduced cotton production rather than racking up collective losses of more than $12 billion over market revenue," continued Charveriat. "Reforming the US Farm Bill offers the possibility of reducing export dumping which is so damaging to farmers in developing countries, but it is up to the US Congress to deliver."
Against this backdrop, it is also crucial that core development issues, such as cotton, are not sidelined in the current WTO negotiations. A deal that will rush into rules that do not allow for development, and that instead consolidate and exacerbate inequalities both between and within countries would be a missed opportunity, considering the grand promises made 5 years ago.
Kansas City Infozine
Canadian asks : Why are WTO talks taking place at all?
by Larry Brown*After a few weeks of hiatus the negotiations at the World Trade Organization (WTO) are officially back on. Unfortunately, rather than use the weeks of interruption as a chance for sober second thought, the WTO and government leaders have revived the talks without ever considering any of the substantive reasons for doubting the wisdom of this path. It all seems to be driven by a single article of faith : free trade is good therefore more free trade is better. Never have so many people laboured so mightily for such an unproven and discredited holy grail.
Canada's representatives are operating on ideological autopilot on this subject, advocating for a position that has lost its credibility. The concerns (and the hard research) of the large number of Canadians who oppose an extension of the current free trade agenda are consistently ignored. Our government, quite openly, is exclusively working for and advocating for the leaders of large businesses. Organizations across the country and around the world, have repeatedly asked for any empirical evidence that freer trade has benefited our countries or our citizens. The General Agreement on Trade in Services (GATS), a subset of the WTO itself, has a clause that calls explicitly for an empirical review. That has never happened. What we get instead is rhetorical statements about how great free trade is and will be.
But the evidence is compelling that this is a blind alley for Canadians. Under the existing free trade regimes, Canada has lost well over 224,000 manufacturing jobs since the end of 2002. One definition of insanity is to keep doing the same thing over and over while expecting a different result. If under free trade rules Canada has lost over 224,000 good manufacturing jobs, does it make sense to think more free trade will suddenly reverse that trend? Some companies are doing quite well, of course. We're always told that when companies make big profits, we all do well because they re-invest those profits in new plants and equipment. Except under free trade regimes, they don't reinvest in new plants or new jobs. In the third quarter of 2006, profitable companies in Canada spent a record $90.3 billion dollars on mergers and acquisitions, on buying one another instead of investing in new manufacturing jobs in Canada. That's in just four short months.
Since the world embarked on this corporate-style free trade experiment, inequality has deepened and sharpened. The richest 2% of the world's population now own more than half of the world's assets. Corporate leaders in Canada only take 2 days to "earn" what their workforce takes the rest of the year to earn.
It's not that serious doubt about the benefits of free trade is some kind of secret. The World Bank is very pro-free trade, of course. But even they issued an analysis that shows the benefits from freer trade are marginal at best. According to their study, most of the benefits go to developed countries, not the poorer nations of the world. The total benefit, even for developed nations, is economically insignificant, according to the World Bank's calculations. The United Nations Food and Agriculture Organization concluded the last 40 years of international trade in agriculture has not benefited the developing countries and, least of all, the least developed countries.
To make the point more telling, we only need to look at the recent Davos session, which involves meetings of the ultra-rich and ultra-powerful from around the world. Something interesting took place at the Davos session this year. Discussions focused on the fact that globalization isn't working for everyone, that the free trade regime underpinning corporate-style globalization has meant stagnating wages and rising job insecurity in developed countries. The business elite at the Davos session worried that "popular fears" could turn into a political backlash that could lead to protectionism, or at least make broad free-trade agreements harder to achieve in the future.
Morgan Stanley research shows that the winners in this process are the owners of capital rather than labour. Their analysis demonstrates, for example, that real labour incomes in the U.S. have only grown at roughly half the rate of labour productivity.
Of course many of the powerful business people at the Davos session believe the problem is one of perceptions, and that fears about trade undermining living standards in developed countries are misplaced. Perception, Or cold hard fact? Under free trade regimes, in the European Union, United Kingdom, United States, Canada and Japan, the share of national incomes that goes to corporate profits has shown a steady increase from the year 2000, up from 11% to about 16%, while the percentage that goes to worker's wages has dropped from nearly 15% to under 13%.
More poverty internationally, measurably more hunger, less equality within and between countries, jobs lost in Canada and the U.S. and Mexico as manufacturers pursue the endless quest for the lowest common denominator. It's not a very edifying picture.
So, as our government charges pell-mell into the renewed negotiations on the WTO, let us once more pose the question. If the corporate sector and their government allies get what they want, more and better free trade, what will be the result for people? We know what the result will be for large companies, and we know that from hard experience. But what do we get out of the deal? We've had enough of the empty ideological claims. Give us the facts. And, if our government doesn't have the facts, can't show in any plausible way that their agenda is good for this country, or for anyone other than corporate leaders, they simply have no mandate or business pursuing that agenda.
*Larry Brown is the National Secretary-Treasurer of the National Union of Public andGeneral Employees (NUPGE), Canada
NUPGE
Ugandan goods pile up in Kenya, port privatization questioned
The pile-up of Uganda-bound rail cargo at the Kenyan port of Mombasa has reached crisis levels, threatening to paralyse the operations of several manufacturing companies in Uganda.
Rift Valley Railways (RVR), the company that was in 2006 given the rights to run the Kenya-Uganda railways is apparently taking time to settle down, raising doubts as to whether the privatisation of the service was justified in the first place. "Right now, we have 150 containers that have spent 60 days at Mombasa," said Busingye Rwabwogo, deputy operations manager at Mukwano Industries, a plastics and soap-making firm in Kampala. "We are told the pile-up is due to lack of wagons."
Importers of heavy raw materials say they cannot fall back on the shorter and easier route through Lake Victoria, as this has been rendered dysfunctional by the removal from service of two ferries that were involved in a mid-lake collision, sinking one of them. This route is now serviced by just one ship delivering only 22 containers per week.
While it takes up to a month for goods to get to Kampala by rail, the ferry route took just three days. Road transport is not a very encouraging option either. "Nobody would refuse to use trucks," Rwabwogo said, "but we need to transport industrial inputs that are heavy for our soap factory. And of course, using trucks is very expensive." The leading freight companies charge $3,500 to transport a 20-feet container from Mombasa to Kampala by road, which is almost twice what the railways option would cost.
RVR Uganda chief executive officer Robert Mortensen said could not discuss the cargo pile-up until he had obtained sufficient information from his Nairobi counterpart, Roy Puffet. RVR took over the Kenya-Uganda Railways concession in November 2006 but has since come under criticism over delays in improving the service on the railway line. There is also a dispute among the company's sponsors that is pending in the Commercial Court in Kampala.
The company inherited a crumbling marine section now operating at 75 per cent below capacity with only one ship plying various routes on Lake Victoria. The section, a loss-making division of the former Uganda Railways Corporation, was running three ships that plied the Lake Victoria routes of Port Bell-Mwanza-Kisumu, taking considerable weight off the main Mombasa-Kampala railway line.
However, following the sinking one ferry boat in 2005, the other two were grounded, rendering the marine section dysfunctional. In addition, the section feeds off Tanzania Railways, which is in a worse state than RVR, compounding the problems on the route. Over the past decade, TRC has been grappling with problems of its own, ranging from a shortage of wagons to worn-out rails.
These problems have been worsened by the growth in demand for quick transportation of goods to the emerging markets in the Great Lakes region, particularly in eastern Democratic Republic of Congo, Rwanda, Burundi, and southern Sudan. An official at the Kenya Ports Authority offices in Kampala said that on the evidence of their performance in the first three months, RVR has rendered worse service than the former Kenya and Uganda Railways.
During the takeover, Puffet did not guarantee a miracle, saying that his company could turn around the line overnight, but promised a better service with faster delivery of cargo. He said it was unacceptable that cargo took an average of three to four weeks before it arrived in Kampala. The company faces an uphill task to fulfil those promises.
The pile-up has already begun to hit Ugandan consumers, with oil industry executives blaming the increase in the pump price of petroleum products, by as much as Ush150 ($0.08) per litre in the last two weeks, on delays in the delivery of oil products from Kenya.
Various oil companies have wagons awaiting collection at the port, and are facing an even more serious concern,as Total Uganda managing director Jacques Christopher said the Kenya Ports Authority forbids trucks from picking up oil products from the Mombasa port, leaving oil companies to wait for the wagons to be delivered to various Kenyan towns, from where the trucks take over.
While the railway serves a chunk of the Ugandan business community, manufacturers of steel and iron building materials are still reluctant to sacrifice the speed of road transport for the lower costs of the railway. An official of one said his company was planning to revert to rail transport to cut the high road freight costs, but the delays and delivery period remain a hindrance to doing this.
The East African
Rift Valley Railways (RVR), the company that was in 2006 given the rights to run the Kenya-Uganda railways is apparently taking time to settle down, raising doubts as to whether the privatisation of the service was justified in the first place. "Right now, we have 150 containers that have spent 60 days at Mombasa," said Busingye Rwabwogo, deputy operations manager at Mukwano Industries, a plastics and soap-making firm in Kampala. "We are told the pile-up is due to lack of wagons."
Importers of heavy raw materials say they cannot fall back on the shorter and easier route through Lake Victoria, as this has been rendered dysfunctional by the removal from service of two ferries that were involved in a mid-lake collision, sinking one of them. This route is now serviced by just one ship delivering only 22 containers per week.
While it takes up to a month for goods to get to Kampala by rail, the ferry route took just three days. Road transport is not a very encouraging option either. "Nobody would refuse to use trucks," Rwabwogo said, "but we need to transport industrial inputs that are heavy for our soap factory. And of course, using trucks is very expensive." The leading freight companies charge $3,500 to transport a 20-feet container from Mombasa to Kampala by road, which is almost twice what the railways option would cost.
RVR Uganda chief executive officer Robert Mortensen said could not discuss the cargo pile-up until he had obtained sufficient information from his Nairobi counterpart, Roy Puffet. RVR took over the Kenya-Uganda Railways concession in November 2006 but has since come under criticism over delays in improving the service on the railway line. There is also a dispute among the company's sponsors that is pending in the Commercial Court in Kampala.
The company inherited a crumbling marine section now operating at 75 per cent below capacity with only one ship plying various routes on Lake Victoria. The section, a loss-making division of the former Uganda Railways Corporation, was running three ships that plied the Lake Victoria routes of Port Bell-Mwanza-Kisumu, taking considerable weight off the main Mombasa-Kampala railway line.
However, following the sinking one ferry boat in 2005, the other two were grounded, rendering the marine section dysfunctional. In addition, the section feeds off Tanzania Railways, which is in a worse state than RVR, compounding the problems on the route. Over the past decade, TRC has been grappling with problems of its own, ranging from a shortage of wagons to worn-out rails.
These problems have been worsened by the growth in demand for quick transportation of goods to the emerging markets in the Great Lakes region, particularly in eastern Democratic Republic of Congo, Rwanda, Burundi, and southern Sudan. An official at the Kenya Ports Authority offices in Kampala said that on the evidence of their performance in the first three months, RVR has rendered worse service than the former Kenya and Uganda Railways.
During the takeover, Puffet did not guarantee a miracle, saying that his company could turn around the line overnight, but promised a better service with faster delivery of cargo. He said it was unacceptable that cargo took an average of three to four weeks before it arrived in Kampala. The company faces an uphill task to fulfil those promises.
The pile-up has already begun to hit Ugandan consumers, with oil industry executives blaming the increase in the pump price of petroleum products, by as much as Ush150 ($0.08) per litre in the last two weeks, on delays in the delivery of oil products from Kenya.
Various oil companies have wagons awaiting collection at the port, and are facing an even more serious concern,as Total Uganda managing director Jacques Christopher said the Kenya Ports Authority forbids trucks from picking up oil products from the Mombasa port, leaving oil companies to wait for the wagons to be delivered to various Kenyan towns, from where the trucks take over.
While the railway serves a chunk of the Ugandan business community, manufacturers of steel and iron building materials are still reluctant to sacrifice the speed of road transport for the lower costs of the railway. An official of one said his company was planning to revert to rail transport to cut the high road freight costs, but the delays and delivery period remain a hindrance to doing this.
The East African
African grain trade summit slated for April in Kenya
The second African Grain Trade Summit will be held in Nairobi in April 2007, a follow-up to the inaugural summit of 2005.
The director of Eastern Africa Grain Council, Anne Mbaabu, says the summit will seek to address and resolve constraints that negatively affect the agricultural industry. She said the summit would raise questions touching on the sector's competitiveness and seek ways of tackling subjects such as the need for trade finance, the cost of doing business and the progress made towards effective regional trade policies.
The summit comes at a time when the regional grain sector is grappling with issues of food security, and high cost of doing business. The meeting will also present a case for structured grain trading systems and their integration with food aid systems at a time when the region is continuously receiving food aid.
KBC
The director of Eastern Africa Grain Council, Anne Mbaabu, says the summit will seek to address and resolve constraints that negatively affect the agricultural industry. She said the summit would raise questions touching on the sector's competitiveness and seek ways of tackling subjects such as the need for trade finance, the cost of doing business and the progress made towards effective regional trade policies.
The summit comes at a time when the regional grain sector is grappling with issues of food security, and high cost of doing business. The meeting will also present a case for structured grain trading systems and their integration with food aid systems at a time when the region is continuously receiving food aid.
KBC
Diamonds not everybody's best friend in West Africa
The illegal diamond trade has spurred wars and conflicts in Africa with devastating consequences. Angola and Sierra Leone, for instance, are still reeling from the effects of war. The recent movie Blood Diamond is a powerful portrayal of the brutality of the illegal trade of diamonds, where rebel groups are funded to sustain conflict and where innocent people are enslaved to gouge the earth in search of the precious stones.
In a study conducted in 2000 by two journalists, Ian Smillie and Lansana Gaberie, they found that the war in Sierra Leone was not about winning but "to engage in profitable crime under the cover of warfare. Diamonds have fuelled Sierra Leone's conflict destabilizing the country for the better part of three decades, stealing its patrimony and robbing an entire generation of children." The war in Sierra Leone had lasted a decade and had claimed more than 75,000 lives. Many of those who were "fortunate" to survive had their limbs hacked off.
According to some reports, countries such as Ivory Coast and Liberia are still witnessing conflict due to the global trade of diamonds. Liberia suffered eight years of civil war and the loss of more than 200,000 people due to the diamond trade. Efforts to blacklist stones from war-plagued regions remain largely unsuccessful.
In 2003 there was a huge campaign to highlight the consequences of the illegal diamond trade. This led to an agreement known as the "Kimberly Process " whereby a certificate that ensures that the stones are conflict-free must accompany all shipments of rough diamonds to and from participating countries."
While things have improved since the Kimberly Process was instituted, there is still much to be done. Illegal diamonds find their way into countries that process legal diamonds, which makes it difficult to combat the illegal trade.
Turkish Weekly
In a study conducted in 2000 by two journalists, Ian Smillie and Lansana Gaberie, they found that the war in Sierra Leone was not about winning but "to engage in profitable crime under the cover of warfare. Diamonds have fuelled Sierra Leone's conflict destabilizing the country for the better part of three decades, stealing its patrimony and robbing an entire generation of children." The war in Sierra Leone had lasted a decade and had claimed more than 75,000 lives. Many of those who were "fortunate" to survive had their limbs hacked off.
According to some reports, countries such as Ivory Coast and Liberia are still witnessing conflict due to the global trade of diamonds. Liberia suffered eight years of civil war and the loss of more than 200,000 people due to the diamond trade. Efforts to blacklist stones from war-plagued regions remain largely unsuccessful.
In 2003 there was a huge campaign to highlight the consequences of the illegal diamond trade. This led to an agreement known as the "Kimberly Process " whereby a certificate that ensures that the stones are conflict-free must accompany all shipments of rough diamonds to and from participating countries."
While things have improved since the Kimberly Process was instituted, there is still much to be done. Illegal diamonds find their way into countries that process legal diamonds, which makes it difficult to combat the illegal trade.
Turkish Weekly
US, EU talks necessary for Doha round to succeed : South African official
South Africa's trade minister, Mandisi Mpahlwa, believes the US and the EU must negotiate if the current Doha round of trade talks is to succeed. He believes the two dominant world economic actors have expectations of each other in the current Doha talks that require them to meet to iron them out.
"It's quite clear that in the area of agriculture, in particular the area of subsidies, as well as the area of market access in agriculture - they're the key for results," a Reuters report quotes him as saying.
The 5-year-old Doha round was relaunched in January after a six-month suspension that was triggered by differences among major trading partners, especially the United States and the European Union, over farm subsidies. A breakthrough depends mostly on the United States and the EU accepting deeper cuts in farm subsidies and tariffs, while developing countries must further open markets to manufactured goods. These issues have been major sticking points, with each side worried about the economic and political consequences of making the required concessions.
German finance minister Peer Steinbrueck, after a mid-March meeting with members of the US Congress, was reported to be pessimistic about the prospect of success of the trade talks.
"It's quite clear that in the area of agriculture, in particular the area of subsidies, as well as the area of market access in agriculture - they're the key for results," a Reuters report quotes him as saying.
The 5-year-old Doha round was relaunched in January after a six-month suspension that was triggered by differences among major trading partners, especially the United States and the European Union, over farm subsidies. A breakthrough depends mostly on the United States and the EU accepting deeper cuts in farm subsidies and tariffs, while developing countries must further open markets to manufactured goods. These issues have been major sticking points, with each side worried about the economic and political consequences of making the required concessions.
German finance minister Peer Steinbrueck, after a mid-March meeting with members of the US Congress, was reported to be pessimistic about the prospect of success of the trade talks.
March 19, 2007
Mauritius joins other sugar producers to form trade coalition
Mauritius has joined several ACP Africa, Caribbean and Pacific (ACP) countries to form a pressure group which will lobby for maintaining the US Sugar Programme (USSP). The official in charge of the sugar industry at the ministry of agro-industry, Rama Deerpal, said many sugar producing countries have joined together to form the International Sugar Trade Coalition (ISTC).
The organisation, set up at the end of January 2007, aims to press the U.S. government to maintain the USSP in its present form in the new agricultural legislation which the U.S. Congress will be adopting this year. Mauritius has banded itself with Zimbabwe, Swaziland, Jamaica, the Dominican Republic, Barbados, Trinidad and Tobago, Belize and Ecuador to form the coalition.
There has been a lot of criticism of the USSP, provisions of which have been to maintain high prices on imports into the U.S. of sugar and sugar-based products. But members of the ISTC argue that they will suffer should the programme be reformed, and that thousands of jobs will be in jeopardy in their countries.
The coalition will start its lobbying with members of the new U.S. Congress and the committees on agricultural products and finance. A small group of legislators are asking for reform of the U.S. regime, arguing that many enterprises associated with sugar-based products have relocated their companies out of the U.S. to other countries.
Mauritius produces more than 500 000 tons of sugar yearly. With the reduction of 36% of the price of sugar paid to the country by the European Union, and in the eventuality that the U.S. Congress changes that country's sugar protocol, the island will be in desperate financial straits.
APA
The organisation, set up at the end of January 2007, aims to press the U.S. government to maintain the USSP in its present form in the new agricultural legislation which the U.S. Congress will be adopting this year. Mauritius has banded itself with Zimbabwe, Swaziland, Jamaica, the Dominican Republic, Barbados, Trinidad and Tobago, Belize and Ecuador to form the coalition.
There has been a lot of criticism of the USSP, provisions of which have been to maintain high prices on imports into the U.S. of sugar and sugar-based products. But members of the ISTC argue that they will suffer should the programme be reformed, and that thousands of jobs will be in jeopardy in their countries.
The coalition will start its lobbying with members of the new U.S. Congress and the committees on agricultural products and finance. A small group of legislators are asking for reform of the U.S. regime, arguing that many enterprises associated with sugar-based products have relocated their companies out of the U.S. to other countries.
Mauritius produces more than 500 000 tons of sugar yearly. With the reduction of 36% of the price of sugar paid to the country by the European Union, and in the eventuality that the U.S. Congress changes that country's sugar protocol, the island will be in desperate financial straits.
APA
Ghana : the irony of jubilee independence celebration cloth made in China
by Amos Safo
Garment and textiles workers have accused the government of paying lip service to promoting made-in-Ghana goods. The workers say their accusation is based on government's decision to outsource a mass printing of the Ghana at 50 jubilee cloth to Chinese textile companies.
Minister of presidential affairs, Kwadwo Mpiani, confessed that the Ghana@50 Planning Committee of which he is chairman imported most of the special cloth from China. He blamed the government decision on the inability of local textile companies to produce the anniversary cloth in enough quantities to meet demand for the 50th independence anniversary celebrations scheduled to start in March.
But the garment and textile workers claim the government actually ordered the clothes from China before submitting the designs to local textile companies in February. When reached for comment, the managements of textile manufacturers were tight-lipped for fear of victimization.
"You cannot believe it, for all these years we have been preaching against dumping of cheap textile from China; so the government's decision to import the jubilee cloth from China is an endorsement of cheap imports", Abraham Coomson , General Secretary of the Ghana Textile, Garment and Leather Workers Union.
Coomson emphasized that Ghana's four major printers (GTP, GTMC, PRINTEX and AT) together could have produced any quantity of cloth needed. He rejected Mpiani's explanation that local industries lacked the capacity to produce the required quantities. "The simple reason is that some people want to make money by awarding the contracts to Chinese companies, even if it means local companies folding up", Coomson lamented.
The few contracts the local companies had were awarded by some private textile distributors. All GTP had from government was a contract to print 3,000 yards of the brand that bears the image of founding president Kwame Nkrumah, while Printex only had a contract to print 10,000 pieces.
According to Coomson, the immediate consequences of the marginalization of local textile firms would be job losses. "If we are celebrating 50 years of independence, we must be able to print our anniversary clothes, otherwise what are we celebrating?", he asked, blaming the hitch on poor planning.
Ghana's clothing industry has fallen victim to a flood of cheap Asian textiles, mostly from China. A sector that employed around 25,000 workers in the 1970s and 80s now employs a mere 3000 workers. The Ghana Textile Manufacturing Company, for instance, which used to employ 3,000 workers, now has a mere 150 on its payroll. The main casualties of the unbridled trade liberalization that has hit the textile sector are Freedom Textiles, Tema Textile and lately Juapong Textile. The latest government decision only sounds the death knell for a sector that used to hold its own against foreign competition.
Textile industry watchers argue that if trade policies had been favourable to local industries, the alarming loss of jobs and livelihoods would have been minimal. Stakeholders say the onus is on the government to act quickly to save the textile industry which has the potential to create new jobs. But the decision to import even Ghana's anniversary cloth from China is ample demonstration of how unresponsive government is to the plight of the manufacturing sector. Ghana's loss is China's gain.
According to the Economist magazine, although Europe remains Africa's biggest trading partner, its share has dropped from 44 percent to 32 in the last ten years, with China catching up gradually. China now takes over 70 percent of Sudan's exports, compared with 10 percent in 1995. Burkina Faso also sends a third of its exports, almost all of its cotton to China, compared with virtually nothing in the 1990s. Equally important is the fact that Africa has now found in China more than a new buyer for its commodities. Besides, China is also emerging as a new source of aid and investment. China invested $900 million in Africa in 2004, out of $15 billion investment the continent received. It has also canceled several billion dollars of African debts.
Speaking in Uganda, a senior Chinese official, the third to visit Africa in the last six months - said concerns about a so-called "Chinese threat" in Africa were inaccurate and irresponsible. China argues forcefully that the gains it is making in the textile sector worldwide is the result of years of investments in that sector to sharpen its competitive urge and gain the comparative advantage it now enjoys. Textile and clothing products made in China have been gradually accepted by consumers from both developing and developed countries for their affordability and fine quality. This underlies the increasing market share of Chinese textile and clothing products", says a Chinese embassy statement from South Africa.
The Chinese insist that the success of their textile industry can be attributed to the country's positive response and timely readjustment in the face of difficulties, instead of flinching and resorting to self protection. The Chinese say the country's market expansion in textile and clothing market is nothing for the rest of the world to worry about because it is the integration of world trade which brought China this right. "Any restriction aiming at China will be a distortion to the WTO's free trade principle which will definitely hurt Chinese people's confidence in WTO and their enthusiasm for the new round of negotiations. These unfair and discriminatory doings will never be accepted by China", warned the statement.
In China's bid to protect its right of surviving as a developing country, its booming economy is now beginning to hurt the economies of other poor and developing countries, since no country can make any strides in economic development without strong local industries. Certainly, the new scrambler (China) for Africa has its good and bad sides, just as the previous scramblers (Europe) milked Africa dry and continue to do so. It is left with Africa to bargain properly, in fact protest against China's unfair trade practices that are killing local industries. Both China and Africa should be winners.
AllAfrica.com
Garment and textiles workers have accused the government of paying lip service to promoting made-in-Ghana goods. The workers say their accusation is based on government's decision to outsource a mass printing of the Ghana at 50 jubilee cloth to Chinese textile companies.
Minister of presidential affairs, Kwadwo Mpiani, confessed that the Ghana@50 Planning Committee of which he is chairman imported most of the special cloth from China. He blamed the government decision on the inability of local textile companies to produce the anniversary cloth in enough quantities to meet demand for the 50th independence anniversary celebrations scheduled to start in March.
But the garment and textile workers claim the government actually ordered the clothes from China before submitting the designs to local textile companies in February. When reached for comment, the managements of textile manufacturers were tight-lipped for fear of victimization.
"You cannot believe it, for all these years we have been preaching against dumping of cheap textile from China; so the government's decision to import the jubilee cloth from China is an endorsement of cheap imports", Abraham Coomson , General Secretary of the Ghana Textile, Garment and Leather Workers Union.
Coomson emphasized that Ghana's four major printers (GTP, GTMC, PRINTEX and AT) together could have produced any quantity of cloth needed. He rejected Mpiani's explanation that local industries lacked the capacity to produce the required quantities. "The simple reason is that some people want to make money by awarding the contracts to Chinese companies, even if it means local companies folding up", Coomson lamented.
The few contracts the local companies had were awarded by some private textile distributors. All GTP had from government was a contract to print 3,000 yards of the brand that bears the image of founding president Kwame Nkrumah, while Printex only had a contract to print 10,000 pieces.
According to Coomson, the immediate consequences of the marginalization of local textile firms would be job losses. "If we are celebrating 50 years of independence, we must be able to print our anniversary clothes, otherwise what are we celebrating?", he asked, blaming the hitch on poor planning.
Ghana's clothing industry has fallen victim to a flood of cheap Asian textiles, mostly from China. A sector that employed around 25,000 workers in the 1970s and 80s now employs a mere 3000 workers. The Ghana Textile Manufacturing Company, for instance, which used to employ 3,000 workers, now has a mere 150 on its payroll. The main casualties of the unbridled trade liberalization that has hit the textile sector are Freedom Textiles, Tema Textile and lately Juapong Textile. The latest government decision only sounds the death knell for a sector that used to hold its own against foreign competition.
Textile industry watchers argue that if trade policies had been favourable to local industries, the alarming loss of jobs and livelihoods would have been minimal. Stakeholders say the onus is on the government to act quickly to save the textile industry which has the potential to create new jobs. But the decision to import even Ghana's anniversary cloth from China is ample demonstration of how unresponsive government is to the plight of the manufacturing sector. Ghana's loss is China's gain.
According to the Economist magazine, although Europe remains Africa's biggest trading partner, its share has dropped from 44 percent to 32 in the last ten years, with China catching up gradually. China now takes over 70 percent of Sudan's exports, compared with 10 percent in 1995. Burkina Faso also sends a third of its exports, almost all of its cotton to China, compared with virtually nothing in the 1990s. Equally important is the fact that Africa has now found in China more than a new buyer for its commodities. Besides, China is also emerging as a new source of aid and investment. China invested $900 million in Africa in 2004, out of $15 billion investment the continent received. It has also canceled several billion dollars of African debts.
Speaking in Uganda, a senior Chinese official, the third to visit Africa in the last six months - said concerns about a so-called "Chinese threat" in Africa were inaccurate and irresponsible. China argues forcefully that the gains it is making in the textile sector worldwide is the result of years of investments in that sector to sharpen its competitive urge and gain the comparative advantage it now enjoys. Textile and clothing products made in China have been gradually accepted by consumers from both developing and developed countries for their affordability and fine quality. This underlies the increasing market share of Chinese textile and clothing products", says a Chinese embassy statement from South Africa.
The Chinese insist that the success of their textile industry can be attributed to the country's positive response and timely readjustment in the face of difficulties, instead of flinching and resorting to self protection. The Chinese say the country's market expansion in textile and clothing market is nothing for the rest of the world to worry about because it is the integration of world trade which brought China this right. "Any restriction aiming at China will be a distortion to the WTO's free trade principle which will definitely hurt Chinese people's confidence in WTO and their enthusiasm for the new round of negotiations. These unfair and discriminatory doings will never be accepted by China", warned the statement.
In China's bid to protect its right of surviving as a developing country, its booming economy is now beginning to hurt the economies of other poor and developing countries, since no country can make any strides in economic development without strong local industries. Certainly, the new scrambler (China) for Africa has its good and bad sides, just as the previous scramblers (Europe) milked Africa dry and continue to do so. It is left with Africa to bargain properly, in fact protest against China's unfair trade practices that are killing local industries. Both China and Africa should be winners.
AllAfrica.com
Tanzania private sector divided over reviving COMESA membership
The anti-Comesa lobby argues that Tanzania will not benefit from rejoining the trade bloc. A source said, "Some of our members are strongly opposed to the idea of rejoining Comesa because their products are not competitive in the market due to what they see as the unfair advantage enjoyed by other member countries whose production costs are low because of government subsidies."
Of particular discomfort to the lobby is Egypt, where electricity is heavily subsidised for industry. Egypt has previously collided with Kenya, also a Comesa member, over its subsidised goods, especially cement. In retaliation for Nairobi's reluctance to allow in its goods, Cairo had threatened to lock out Kenya's tea.
A member of the pro-Comesa lobby, Louis Accaro, director of the Tanzania Private Sector Foundation, said the fears of subsidised goods undercutting Tanzanian products are unfounded. He said Comesa trade protocols provide members with in-built mechanisms to deal with issues of trade imbalances and subsidies. He said that industries that do not favour returning to Comesa should realise that all regional trade blocs follow rules set by the World Trade Organisation (WTO). He said those rules safeguard the interests of disadvantaged countries to ensure a balanced approach to trading between partners. He, however, conceded that concerns raised by those opposed to rejoining Comesa should be examined and addressed.
The government has said that it will only consider rejoining the trade bloc if the business sector comes up with concrete evidence showing the losses the country has suffered as a result of being outside Comesa. Tanzania pulled out of Comesa in 2000 to avoid duplication of efforts among several trade blocs that led to high membership costs. It is also a member of the Southern Africa Development Community (SADC) and the East African Community (EAC).
Juma Ngasongwa, minister for planning, said it was up to the business community to convert the government to its cause. He was minister for industry and trade when the country pulled out of Comesa. He said he had advised the business community against pulling Tanzania out of Comesa, but gave in to the intense pressure to do so.
The push for Tanzania to rejoin Comesa comes close to a deadline set by the East African Community requiring Kenya, Uganda and Tanzania to reconsider their membership in other regional trade blocs ahead of the establishment of a political federation in 2010.
The raging debate on Comesa started in 2006, when the Tanzanian private sector presented the government with a case study on "The Effects of Tanzania's Withdrawal from Comesa," showing how much trade had been lost by the country's decision to stay out of the economic grouping. The report said aluminium, glass, cement, cigarette and beer firms lost million of dollars in forgone exports to Comesa markets between 2000 and 2005.
The report showed Tanzania was losing million of dollars to Kenya and Uganda by staying out Comesa market, in the process paralysing five of the country's major manufacturing industries. Business penetration into new markets such as Sudan, Madagascar and Democratic Republic of Congo, countries that have joined the Comesa grouping, would also suffer.
Elvis Musiba, president of the Tanzania Chamber of Commerce, Industries and Agriculture (TCCIA), said at the time of the release of the report ,"It establishes that getting out of Comesa was not a wise thing to do. We lost huge markets for our exports, and now it recommends that Tanzania rejoins the bloc." He said that, for example, Tanzania lost a potential Egyptian tea market soon after it pulled out because of the differences in tariff that made Egypt turn to Kenyan suppliers. He further noted that experience had shown that it was not a viable idea for the country to go back to Comesa member states seeking bilateral agreements after it had just pulled out of the trading bloc.
At a convened to debate on the report, however, it emerged that some industries strongly opposed the idea of asking the government to rejoin the club. Cement companies, for instance, see the influx of cheap imported cement as a threat to their survival, as they are saddled with extremely high production costs such as of fuel, compounded by poor electricity supply.
The report says pulling out of the bloc greatly frustrated the expansion programmes of several Tanzanian industries, which had sought to increase exports to member countries of the bloc. Just prior to the Comesa pullout, for example, glass manufacturer Kioo Ltd had brought in investment capital of over $27 million to modernise and increase production to cater for both the Comesa and SADC markets, while Tanzania Breweries had also increased production and diversified its products in readiness to penetrate the Comesa market.
Tanzania has been doing more business with Comesa states than with SADC. Data shows that Tanzania exported goods worth $144,044,767 and $148,348,686 to Comesa in 2003 and 2004 respectively, while it exported goods worth $39,653,544 and $118,403,868 to the SADC market over the same period.
Analysts have said that the circumstances that prompted Tanzania to pull out of Comesa have now changed, and the country should take advantage of political developments in DR Congo, Sudan, Somalia to explore new markets for its exports. Geography also puts Tanzania in the Comesa region, with infrastructure linkages with seven neighbouring countries, some of which are members of both SADC and Comesa, making it a major transit facilitator by rail, road and water.
Comesa is Africa's largest economic grouping, with a combined population of 400 million people. Its member states are Burundi, Comoros, DR Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.
In the year 2000, Comesa launched the first African Free Trade Area and in 2008, it is scheduled to launch a Customs Union.
The East African
South Africa to lure call centers
The South African government has earmarked one billion rands in investment incentives over the next five years to lure international business services in an effort to boost job creation and increase foreign direct investment.
The department of trade estimates the plan will translate into 100000 new jobs by 2009 and draw about $175m in foreign direct investment, which could push the sector's contribution to GDP up to 1,36% by 2009, from the current 0,92%.
SA has had success with call centres, with the sub sector growing 8% a year over the past four years. It now employs 54000 call centre agents and government hopes to emulate that success through interventions in the rest of the sector.
Apart from investment incentives and training support grants, a range of other ambitious interventions are also on the cards to boost the sector's competitiveness. These could see investors having access to cheaper telecommunication services and virtually rent-free office space in some areas.
The department was also in talks with local governments in more remote areas to identify office space that could be refurbished and provided with inter-connectivity, free of charge, in a bid to attract investors to cities outside main hubs, where unemployment was high.
The investment incentives, the first sweetener, are on a par with a global benchmark in providing grants equal to half of the salary of each job created and a skill-training grant. Depending on the size of the investment and the number of jobs created, companies can claim grants of up to R60000 per "seat", where a seat would provide jobs for one to three people, depending on whether the firm operates shifts.
A firm employing 200 to 499 people, with an investment expenditure of at least R74000 a seat, would qualify for a grant of R37000 to R44600, while a company employing more than 500 people with qualifying investment of R89200 a seat, could receive up to R52000.
Funding is provided by the departments of trade and industry.The Business Trust has also contributed R100m to the plan.
Business Day
The department of trade estimates the plan will translate into 100000 new jobs by 2009 and draw about $175m in foreign direct investment, which could push the sector's contribution to GDP up to 1,36% by 2009, from the current 0,92%.
SA has had success with call centres, with the sub sector growing 8% a year over the past four years. It now employs 54000 call centre agents and government hopes to emulate that success through interventions in the rest of the sector.
Apart from investment incentives and training support grants, a range of other ambitious interventions are also on the cards to boost the sector's competitiveness. These could see investors having access to cheaper telecommunication services and virtually rent-free office space in some areas.
The department was also in talks with local governments in more remote areas to identify office space that could be refurbished and provided with inter-connectivity, free of charge, in a bid to attract investors to cities outside main hubs, where unemployment was high.
The investment incentives, the first sweetener, are on a par with a global benchmark in providing grants equal to half of the salary of each job created and a skill-training grant. Depending on the size of the investment and the number of jobs created, companies can claim grants of up to R60000 per "seat", where a seat would provide jobs for one to three people, depending on whether the firm operates shifts.
A firm employing 200 to 499 people, with an investment expenditure of at least R74000 a seat, would qualify for a grant of R37000 to R44600, while a company employing more than 500 people with qualifying investment of R89200 a seat, could receive up to R52000.
Funding is provided by the departments of trade and industry.The Business Trust has also contributed R100m to the plan.
Business Day
Uganda launches organic cotton garment exports
Ugandan president Yoweri Museveni flagged off the first exports of garments made from local organic cotton in February. Phoenix Logistics located in Kampala is taking advantage of the favourable export terms of the U.S. government's Africa Growth and Opportunity Act (AGOA) and shipped the first consignment of 50,000 units worth $125,000 to Edun Live, a high end brand owned by rock star Bono.
The company will invest US$5.5 million to modernise is operations and is expected to earn another $4 million by the end of 2007 from garment exports to the US under AGOA.
Raw cotton earns $1 per kilogram while the finished product fetches $5-8. Global demand for organic cotton products is growing at 35% annually.
Museveni has in the past referred to AGOA as "one of the greatest acts of solidarity between the West and Africa for the last 500 years."
East African Business Week
The company will invest US$5.5 million to modernise is operations and is expected to earn another $4 million by the end of 2007 from garment exports to the US under AGOA.
Raw cotton earns $1 per kilogram while the finished product fetches $5-8. Global demand for organic cotton products is growing at 35% annually.
Museveni has in the past referred to AGOA as "one of the greatest acts of solidarity between the West and Africa for the last 500 years."
East African Business Week
Internal audit questions IMF's role in Africa
The report, issued in March 2007, is aimed at helping the IMF improve its management of the programme under which it gives obligatory policy advice in return for loans. It was conducted by the Independent Evaluation Office (IEO), the IMF's own monitor.
The 130-page report examines the IMF's role and performance in the determination and use of aid to 29 low-income countries in Sub-Saharan Africa (SSA) that have been under the Poverty Reduction and Growth Facility (PRGF), the IMF's low-interest lending programme for poor countries, between 1999-2005. The report notes that while this period saw improved macroeconomic performance in a number of SSA countries, with higher growth rates and falling inflation, there was almost no change in the share of the population living in poverty.
It comes two weeks after an external review committee that examined cooperation between the IMF and its sister institution, the World Bank, also said that the Fund needs to clarify its role in low-income countries.
Monday's findings are likely to fuel concerns about the IMF's role in poor nations and the Fund's relevance on the global economic scene. "The work in low-income countries, in the face of the growing irrelevance of the Fund for middle-income countries -- because these are withdrawing from financial programmes -- was another hope for the Fund, and it wanted to position itself as playing a role there," Aldo Caliari of Centre of Concern, a Catholic group based in Washington said.
The two reports suggest that the Fund has strayed, at least in part, from its mandate by imposing overly strict economic policies that actually hindered the use of available aid, despite rhetoric that the Washington-based lender was committed to do more on aid mobilisation and poverty-reduction.
"The resulting disconnect has reinforced cynicism about, and distrust of, Fund activities in SSA and other low-income countries," said the IEO report. "It was especially large in the early years of the evaluation period, when management communications stressed the two-way linkages between growth and poverty reduction, but it remains a concern even today.
In three out of the five case study countries -- Burkina Faso, Ghana, Mozambique, Rwanda and Tanzania -- the IMF did not permit domestic financing of aid shortfalls, although the report noted that the Fund showed "greater flexibility in more recent programmes".
In general, the report found that the IMF has failed to consult with a broad audience in poor nations, including civil society and local partners. On the issue of aid, it found that PRGFs have neither set ambitious aid targets nor identified additional aid opportunities where countries' need was greater than aid inflows. "IMF staff have done little to analyse additional policy and aid scenarios and to share the findings with the authorities and donors. They have not been proactive in mobilising aid resources, a topic where the Board remains divided and Fund policy - and operational guidance to staff - are unclear," said the report.
The report said that because of those problems, social development targets were often given short shrift. "Lacking clarity on what they should do on the mobilisation of aid, alternative scenarios, and the application of poverty and social impact analysis, IMF staff focused on macroeconomic stability, in line with the institution's core mandate and their deeply ingrained professional culture," said the report.
There have been numerous calls in recent years, spearheaded by some U.S. think tanks, for the Fund to be more selective and focused in its engagement with low-income members, and particularly not to add to their debts. Critics of the IMF have urged it to cooperate more with development-focused institutions and groups, and some have suggested that the Fund's PRGF programme should be largely transferred to the World Bank.
In contrast, the U.S. Treasury Department had in the past sought to redefine the IMF's role in PRGF programmes to make it more geared towards balance of payments support. However, debt activists say that the Fund's policy prescriptions have led borrowers deeper into debt and made them more vulnerable to shifts in global trade and investment. Some of the IMF's core recommendations for borrowing nations include tight fiscal management, tax reforms, financial sector reform, governance reforms, economic liberalisation and privatisation of state-owned enterprises.
In its latest report, the IEO, which was created in August 2001, recommended that IMF management establish transparent mechanisms for monitoring and evaluating the implementation of its policy guidance and that the IMF take several other corrective steps, such as periodically assessing the implications for Fund policies and strategies in borrowing nations.
The IMF says that it will study the issues raised by the report. "The report's candid assessments and useful recommendations will help management and the Board clarify further the institution's mandate and policies to help SSA achieve growth and reduce poverty," said IMF Managing Director Rodrigo de Rato in a statement posted on the IMF's website.
IPS
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