June 21, 2007
At the recent Technology, Entertainment, Design (TED) conference in Arusha, Tanzania, delegates witnessed a curious tantrum. Whilst Andrew Mwenda, a conference delegate, was making his argument against foreign aid as a panacea for Africa’s ills, Irish rock star Bono heckled him with expletive laden interruptions that raised more than a couple of eyebrows.
Bono’s heckling not only exhibited an intolerance to a particular line of argument, but it also revealed a sensitivity to being upstaged on a matter where he sees himself as a champion. This is unfortunate because the Bonos of this world need to listen more and display greater humility to African perspectives on African problems. Or is he not quite sure that Africans can come up with solutions to their own problems?
The ‘moral outrage’ argument has lost its currency. The G8 countries are increasingly immune to the sights and sounds of Africa’s misery - starving babies, dying mothers and children, and victims of conflict. Why else do they need the same very vocal celebrity campaigning at every annual summit? Bono and Bob Geldof know this but they insist on playing along, blinded by the false hope that the G8 industrialised nations will listen to them because of their celebrity power. Geldof recently said that whilst he is inclined not to take Chancellor Merkel’s promises on more aid to Africa seriously, he is nevertheless willing to give her the benefit of the doubt. What astonishing ignorance. Or is it?
The G8 countries are not driven by the pleas or haranguing of rock stars. They are defined by hard-nosed economic and political interests borne of a history rooted in economic and political domination, virulent self interest, and the reality that they got their societies to where they are now not through handouts, rooted in kindness, but by home grown solutions to their developmental challenges.
Why the blindness to this reality by celebrities? Has any nation ever developed by way of handouts? The British industrial revolution for example, was fuelled by home grown technological breakthroughs that defined Britain as a truly modern society. Average incomes over a 100-year period (1870-1970) trebled and prosperity caused by industrial activity was mainly attributed to Britain’s trading links with the rest of the world. Britain became the manufacturing centre of the world with cities like Liverpool and Manchester representing the best of that era. In my reading of British economic history, I have never encountered the words aid or sympathy in the lexicon of the economic literature of that time.
Pro-aid campaigners argue that providing aid to accountable governments is a means of stimulating their economies. This is nonsense. Giving aid to poor countries and working exclusively through their government agencies makes accountability worse rather than better. It makes the governments more accountable to foreign donors than to their own people.
Also, the notion that the donor-recipient relationship is a collaborative partnership is false. It is false because power and resources determine negotiating edge, especially when one party is giving the money and the other receiving. The notion that governments give aid out of moral compunction as opposed to self interest is a vapid argument and far from reality.
There is also a paternalistic attitude that invariably informs and determines the broader policy considerations in favour of the donors and the outlook of their bureaucrats. Most key and sensitive government departments in many donor funded countries, like the Treasury, Ministry of Finance and the Central Bank, have large numbers of donor expatriates as advisors or overseers.
Africa’s only viable and sustainable strategy for economic growth is one based on trade and not aid. For this to happen, African countries need to aggressively support their private sectors to create environments for enterprise, wealth creation and elimination of poverty. This will require African governments to overcome the disarticulation of their political economies by adopting policies that have its poor citizens at the heart of their political agenda. This agenda can only be effectively promoted by an enlightened and patriotic leadership whose commitment should surmount the temptations of power and the trap of misrule.
There is one area, though, where Messrs Bono and Geldof could have significant impact - campaigning to the retails sector in G8 countries. Let’s do the maths. For example, If African products could obtain 4% market share of all products sold in the UK per year, this would represent over £10 billion, which is equal to the total direct investment Africa received in 2005. If, on the other hand, Africa’s trade with the rest of the world increased by 4% this would translate into £160 billion per annum, equal to six times the current aid flows per annum. I suspect, though, that this less glamorous and quiet route would prove less attractive to media hungry celebrities.
For the G8 countries, the continued refusal to open your markets and trade fairly with Africa is not sustainable. There is an increasing and critical link between poverty and conflict. Global insecurity, refugees, human rights and the issue of MDGs have their roots in poverty, political and economic injustice and the competition for scarce resources. G8 nations cannot continue to delude themselves that they can continue to benefit from a globally unjust trade regime and not suffer the consequences of increased global insecurity that impacts their own prosperity and way of life. Reform is in their interest as much as Africa’s.
*Rugasira is chairman of of Rwanda-based Good African Coffee
China has poured investment and aid into Africa as it seeks crude oil and other commodities for its rapidly expanding economy. At the same time it has increased its exports of consumer goods to Africa.
"Let us now identify some market issues and opportunities in China and take advantage of it, because they are taking advantage of our market," Trade Minister Alan Kyerematen said. He said cheap Chinese imports were not necessarily a bad thing and could help reduce inflation and bring more affordable consumer goods to the inhabitants of poor countries.
"The negative thing that we should be wary of is the planned or unplanned, attempt by China to suck all the natural resources from Africa to feed their industries," he said. "If we are going to get the benefits that I am talking about only at the expense of becoming another colonial state to Asia, then it doesn't help us, because the rate at which China is absorbing raw materials from Africa is a bit frightening."
Kyerematen said African countries should take advantage of development assistance on offer from China and said Beijing sometimes delivered aid faster than other donors.
Some critics say Beijing's policy of non-interference has undermined the development agenda of Western donors by giving aid money with no strings attached to African countries accused of human rights abuses. They point to Sudan, an important source of oil for China, where conflict in the western Darfur region has killed more than 200,000 people since 2003 in what Washington calls "genocide".
Ghana's main exports are gold and cocoa, but it may start producing oil after London-based oil company Tullow said this week it had found up to 600 million barrels of high quality crude in a field off the West African country's shores.
But Kyerematen said African countries would not get the best deal from Beijing and other trading partners until they began negotiating as a bloc. "Unless we have an African trading organisation ... then I don't think we are strong enough to be able to maximise our negotiating benefits with China," Kyerematen said.
Ghana is due to host an African Union summit next month where the continent's leaders will discuss proposals for a joint forum to able to speak with one voice in trade negotiations.
Itsede said that the scheme was expected to be private sector driven and that it would not involve the central banks of the ECOWAS member countries.
According to Itsede, the scheme is a result of the Banjul Declaration of 2005, aimed at improving macro-economic management, liberalising markets and widening economic space for private-sector activities in the sub-region. He said the declaration laid out a road map that must be met before the date set out for the operation of the common currency.
The WAIFEM chief said that other elements of the declaration included the harmonisation of the currencies and payment system of member states, development of a regional processing standard and the building of a West African Monetary Zone (WAMZ) secretariat.
He lamented the "care-free attitude'' that trailed the deceleration, noting that instead of the WAMZ countries working to withdraw their individual currencies, they were strengthening them.
Itsede said that latest progress report on WAMZ indicated that the Gambia and Nigeria had met all the four primary convergence criteria required for the take of the scheme, while Ghana, Guinea and Seirra Leone had met only three.
eBay's marketplace for African "pity products" : Special rules for the unruly, untrustworthy African
There was the widely publicised “aid vs trade” debate at TEDGlobal last week. The general feeling around the session I was in though, was that people would only buy African products if they were sold with a story of “helping Africa’s poor and needy.”
The basic idea is that eBay is working with Fair Trade organizations to certify NGOs, aid organizations and a few for-profit companies to source and manage products coming from places like Africa, and some places in Asia and South America. Organizations that are certified as “Trust Providers” will be allowed to do business.
eBay, in coordination with World of Good is setting up a specific marketplace for these third-world artisans to sell their inventory. The artisans don’t have direct access to this marketplace, instead they need to work through sellers in the US and UK to make the final sale. This new marketplace is being marketed towards the LOHAS demographic (Lifestyle of Health and Sustainability), who are willing to pay 20%+ premium on products.
There seems to be a great many supplier artisans around the world. What eBay is trying to do is increase the demand - an area where they see a gap in the chain - by providing a special place to “tell a story” about the goods.
This is all well and good. Noble even. However, I think they’re missing something - or at least only looking at the problem from one angle. From what I have experienced talking to Africans, they want to sell their goods on equal footing with everyone else. They will use another charity platform, if that’s all they’re given to work with, but it’s not what they really want.
What if eBay were to set up a micro-enterprise investment fund for companies to use and invest in building out eBay enterprises in Africa? What if they were to invest in for-profit companies as a real business move into the continent? There are more options than just those though…
That’s what I would like to see happen. Provide all of the tools that other international eBay regions get - like India. Treat Africa the same, instead of having special rules with watchdog “trust providers” to control the unruly and untrustworthy African.
I’m torn, because I like that eBay is paying attention and trying to do something, but I’m a little put out by the attitude that Africa needs special rules. I don’t think that’s the case, I believe that Africans can, and will, perform on the world stage with everyone else.
However, what the eBay team is trying to do is probably the right decision for them. In the end, they see Africa as a risk - and certain countries are hotbeds for fraud and eCommerce corruption. Maybe a more balanced approach would be to work in some type of direct investment play into Africans at the local level as well as these development groups.
June 19, 2007
The European Union (EU) has been pushing African, Caribbean and Pacific (ACP) countries to conclude Economic Partnership Agreements (EPAs) by the end of the year, claiming that preferences which they now enjoy will not be approved by the World Trade Organisation (WTO) come next year.
Now, at last, some government representatives in Africa and the Caribbean are refusing to be pushed, recognising that the terms of the proposed EPAs could make their countries worse off than if they relinquished the preferences.
In any event, preferential access to the EU market for two important exports, sugar and bananas, has already suffered from significant changes to the terms of entry. Preferences, therefore, while still important to small and vulnerable economies, do not have the same worth as they did before.
If, on top of this reality, the EU insists on the further opening up of the markets of ACP countries to give European companies the right to competition and government procurement, local companies could be squeezed out of their own domestic markets.
The EU also wants trade in goods and services opened up on a reciprocal basis. This means that the African, Caribbean and Pacific regions would be treated as if they were the equals of Europe in trade and investment terms despite the huge differences in the level of their development and their financial capacity.
In short, the ACP countries could be swamped by Europe. For despite the talk about “reciprocity”, it simply is not possible for ACP companies to compete within their own countries (let alone in Europe) with much larger and well resourced European companies.
Indeed, in as much as the EU countries may not want to hear it, and they would strenuously deny it, these EPAs could well be the start of a new era of colonialism in which the economies of ACP countries are held in thrall to European companies.
The EU has to recall that it is busy fortifying barriers to migration from ACP countries. It should not at the same time be contributing to conditions of dislocation and displacement in which more and more people have to try to get into Europe to eke out a livelihood.
Lest it be said that I am unmindful of the circumstances of poor governance in many ACP countries, and that I am ignoring the need and importance for adjustment in the economies in all of them, I acknowledge these circumstances fully. But, even with the best will in the world to address these issues, ACP countries will be hard-pressed to do so if they are not given the breathing space and helped with the capacity to effect the changes that are necessary.
The Trade Minister of Barbados, Dame Billie Miller, made a telling observation recently. She declared that regional negotiators remained firmly convinced that preferential treatment must be given to small vulnerable economies and developing countries, as there is a need to protect sensitive sectors and industries from rapid liberalisation.
She went on to say : "Europe and the other OECD countries gave themselves since the Second World War - virtually the better part of 60 years - to arrive at where they would like us to be. And they expect us to do this in 10 to 15 years. It is just a human and physical impossibility.”
Then, a Namibian trade analyst, Wallie Roux, lost his job because he suggested that the EU was trying to browbeat southern African governments into signing an EPA before they had a chance to analyse its consequences. Roux had urged the SADC governments not to capitulate to demands that they sign an EPA swiftly. He wrote: "If you are unwise enough to rush for a deadline without looking at the content of the agreement, then you are signing away your life".
Both Miller's and Roux’s observations point to the growing unease of ACP countries with the hurried pace at which the EU wants to complete the EPAs. There is clearly a need to pause and to reflect more deeply on the implications of the proposed agreements. If they are concluded in haste, there may be a long and troubled period of repentance.
It is not sufficient for the EU to dangle the threat of the WTO not extending preferences over the heads of the ACP group. The WTO is a creature of its member-states, and surely if the four regions of Europe, Africa, the Caribbean and the Pacific were to make a case for the extension of current conditions to allow them more time to conclude agreements, other countries in the WTO would listen.
And, if they don’t, then perhaps Russian President Vladimir Putin may be right that today's international economic organizations "look archaic, undemocratic and awkward" and a new system is necessary – one that is more sensitive to development and less obsessed with globalisation.
* Ronald Sanders is a business executive and former Caribbean diplomat who publishes widely on small states in the global community.
The Zambia News and Information Services (ZANIS) said Mwanawasa had invited the mine managers to his official residence to discuss the tax increments, but did not indicate when this meeting would take place. "Mr. Mwanawasa said so far, the mining firms had in principle agreed with the government's intention to increase mineral royalties," Zanis said.
The mining firms already pay value added tax, personal income tax for workers and land tax to municipal councils.
Finance Minister Ng'andu Magande in a separate statement said the mining firms had declared an aggregate profit of $397.3 million in 2005/06 financial year, after making losses of $43.2 million in 2002/03. He said the mining companies contributed 35.7 billion kwacha (approximately $9 million) in mineral royalties, up from 3,633,795 Zambian kwacha in 2002/03 financial year.
Analysts attribute the jumps to rising international metals prices and a more than doubling in Zambia's output of copper, the country's main export, over the period.
Magande said the government would audit earnings of the mining firms to determine the tax requirements. "It is important to note that there is a process in place that is diligently observed to ensure that tax audits are conducted to verify the profits declared by mining companies," he said.
Tax increases have been a controversial issue in Zambia since last September's presidential and legislative elections, after chief opposition leader Michael Sata swept to a major victory in parliamentary polls following his pledge to raise taxes paid by the mines. Sata lost the presidential vote to Mwanawasa, who was re-elected for a second and final five-year term in office allowed by the law.
Some of the key foreign investors in Zambia's mining sector include Canada's First Quantum Minerals, Australia's Equinox Minerals, London-listed Vedanta Resources and Swiss firm Glencore International AG.
Copper mining earns Zambia the bulk of foreign exchange, but analysts say the country does not reap enough benefits because the mines are owned by foreigners.
The person or people who came up with the slogan "Uganda, gifted by nature" could not have come up with a better phrase. How else could you describe a country that has oil deposits, is home to a variety of animals and plants - some so rare that they can only be viewed from Uganda? Then there natural gifts like Uganda being the source of the River Nile, the wonderful climate that spans most of the country, the fertile soils and many other attributes.
Despite the incredible gifts that nature has bestowed upon the country, many Ugandans continue in an existence of deprivation characterised by illiteracy, hunger, sickness and insecurity. The renowned author and speaker, Brian Tracy says that humans are by nature lazy, greedy, ambitious, selfish, ignorant and vain.
Abundance of natural resources or sound macroeconomic policies and stable political and legal institutions are not sufficient for a nation to become prosperous. A nation's prosperity depends on its competitiveness, which is based on the productivity with which it produces goods and services. Competitiveness is rooted in a nation's micro economic fundamentals-the sophistication of company operations and strategies and the quality of the micro economic business environment in which companies compete.
Take the case of electricity power supply. Before the country had one monopoly; the Uganda Electricity Board that was responsible for power generation, distribution and billing. The people in authority had the wisdom of breaking UEB into three different monopolies handling the different roles of generation, distribution and billing. The result is that Uganda now produces less power which is poorly distributed and attracts a very high tariff.
Because electricity supply has become erratic and expensive, many cottage industries have been forced to either close down or move to other countries. Those that have opted to stay within the country have to live with the reality of diminished production at a high cost.
Internet access is an area where Ugandan consumers are literally being robbed. Two or so years ago, some prospective investor from the USA asked me to advice him on effective but affordable Internet connectivity. Given the requirements, the best price I could come up with would set them back by $2,000 per month. The man did his own research which basically confirmed that a service that he was paying $50 per month for in the USA would cost 40 times more in Uganda.
The other area that ought to make our blood boil is the level of filth; I mean physical filth in the society. One day I observed a man and a woman eating yoghurt in a taxi. When the man was done he casually tossed the empty polythene sachet into the street. Minutes later the woman also tossed her cup through the window of the now moving taxi. Ben Kiwanuka Street in Kampala, which is near the biggest taxi park in Uganda, is half buried under a pile of rubbish.
The filth I witnessed on that city road or the yoghurt containers that were tossed out of the taxi are the work of adults with no sense of right behaviour and who are being "silently" watched by other adults. Instead of hiring people to clean the city, it would be more cost effective if the city council and other municipal councils passed and implemented by-laws that forced people like the two taxi passengers to work for a half day clearing the garbage that their ilk so thoughtlessly continue to throw around. We can not successfully promote Uganda as a destination for tourists or business meetings when the major roads in the capital city are buried in garbage.
The other area of concern is the manner in which our school system is teaching early learners. Instead of equipping learners to know how and where to find answers our school system is drilling children to cram the right answers.
Many of our current graduates already cannot command management positions; take any 10 leading businesses in the country and you will be shocked to learn that the number of Ugandans in top management is about two out of 10 or even less! If we continue with the present rote learning system in education then in 20 years time Ugandans will not even hold operational jobs.
As a man known to me likes to say, "Let us stop committing silence." It is about time citizens began breaking the culture of silence and started to speak openly and positively about the micro economic conditions that are hampering Uganda from becoming competitive.
*James Abola is a business/finance consultant in Kampala. Blog: http://jhabola.blogspot.com
The three member states of the East African Community not so many days ago tabled their budget proposals in their respective Parliaments for approval. Despite differences in the budget proposals, one common feature always manages to find its way in the budgets. And that is donor support from development partners.
Here in Tanzania not so many people have been amused. The budget proposal seems to have had one too many increments of taxes and levies.
In Kenya general elections are on the horizon. Pundits have already started hinting that this year's budget would be geared towards pleasing the electorate. So far so true!
Reports from Uganda say that the government has cut the trade, tourism and industry sector budget by 18 per cent. The cut has been attributed to donor support decline in the sector by about 18.6 per cent. And there you have it, the pang of over-dependency.
I don't see our beloved MPs objecting when it would come to voting time. A fierce debate is almost guaranteed but an outright rejection is almost out of the question.
After a long day beseeching, you wouldn't expect a famished person to snub a meal that may well serve as offering a lifeline, be it leftovers. Famished persons are smart enough to know that such a course of action may be detrimental. The needy have little or no choices at all, but they still have brains!
The point is you wouldn't expect to see a budget that has been supported by donors by over 40 per cent to be rejected by the supposed benefactors. Even the donors would be shocked! And what if they choose to withdraw their support?
And so here we are. The budget proposal has already been tabled and the stage is set for approval. Even the most critical voices would approve and we will all go to bed happy, yet still suffering from the same illness.
The illness has become permanent. In fact, in its own dysfunctional way somehow reaffirms the relationship between the North and South. It is called the dependency syndrome!
The OSBP Project Manager, Kingsley Chanda, said the committee under the guidance of COMESA was expected to approve the project road map and a bilateral agreement developed by stakeholders. He hoped that once achieved by all key players, the OSBP would make the region more competitive and attractive for trade and investment.
Chanda said intra-regional trade had grown consistently by 20 per cent per annum in value terms since the launch of the COMESA free trade area in October 2000. He said the increase in intra-regional trade had led to a rise in trade issues affecting both large and small enterprises, as well as the movement of people in the region. He noted that improved border procedures and immigration formalities at all levels were necessary for the benefit of both national and regional economies.
Chanda also revealed that the implementation of the OSBP in the region would start with the one at Chirundu, on the Zambia-Zimbabwe border, as a pilot project, as decided by the COMESA Council of Ministers in 2005. He said Chirundu is strategically positioned with a volume of traffic standing at 270 for commercial vehicles and 240 Customs declarations per day.
The OSBP aims to reduce the number of stops made at border posts by combining activities of border control agencies for both countries at a single location in each particular direction.
The 20 member COMESA region, has an estimated combined population of 400 million people and covers an area of over 12 million square kilometres, compared to Southern African Development Community's estimated 9.8 million square kilometre area and 233 million people.
The two organisations have overlapping memberships.
COMESA member countries are Angola, Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.
SADC's 14 member countries are Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.
“As Africans, we must be aware of the potential threats that can emanate from relying on extractive industries for our growth,” he stated, addressing the South Africa – Democratic Republic of Congo business forum, in Cape Town. “But we must also not lose the opportunity of using the current interest to diversify our product base to higher value adding products.”
“In other words, why must someone make razor blades from our iron-ore and sell it back to us at 100 times the price of the raw materials?” Mpahlwa questioned.
“In developing high-value-added industrial activities, I think we will need each other as partners, which will allow us the benefit of a stronger position to ensure that even as we are trading our non-renewable energy resources, that in the long term, our economies will be strong and diverse enough to secure a bright future for all,” he concluded.
IFC announced in a statement on June 18 that it will issue guarantees against KCB's underlying trade transactions, covering payment risk and helping increase Kenya's share of the global trade finance market. The facility is part of IFC's 1 billion U.S. dollars Global Trade Finance Program, which was launched in 2005 to support trade with the emerging markets worldwide and promote flows of goods and services between developing countries.
"IFC's Global Trade Finance Program will increase our capacity, enabling us to take up more transactions," Martin Oduor-Otieno, Kenya Commercial Bank's chief executive. The new program, Otieno said, will also help the bank develop pre-export financing products at a very competitive price. "We see this as a first step in building a long-term partnership with IFC," he added.
Edward Nassim, IFC Vice President for Africa said increased trade in Africa is important to supporting economic growth and development. "This transaction will help increase KCB's capacity to provide trade solutions to its clients and broaden its network of international trade banks," he said.
The Global Trade Finance Program has provided over $300 million worth of guarantees to facilitate trade in Africa in just over a year.
IFC provides guarantee coverage of bank risk in emerging markets, allowing recipients to expand their trade finance transactions within an extensive network of countries and banks and to enhance their trade finance coverage.
Muchenje tells us that most customers “get it” with two transactions and become regulars, trading the system for carrying piles of cash to transact business with suppliers. He said that the system processes $10 million USD per month, which he says represents 2% of Zambia’s economy. That’s a pretty amazing achievement for a very young company. The next frontier for Celpay is cross-border transactions - Zambia to South Africa and Zambia to DRC.
Susie Lonie of Vodaphone represents M-PESA an amazing mobile money transfer solution from Vodaphone and Safaricom. Like Celpay, M-PESA isn’t authorized to operate as a bank - all the money lives in a single account, and a transaction simply changes computer records of how much money belongs to which user.
Over 450 merchants now sell mobile money cards that support M-PESA - you can purchase a card, enter the code from the scratch off card into your phone, then transfer all or some of the money to another mobile user. That user can come to a M-PESA merchant and transfer her codes to the shop operator and receive cash in return. The cost of transferring money is split between the sender and recipient, and costs less than a dollar in total for subscribers. Most users are transferring money from big cities to rural areas - that’s actually a good thing for the merchants, as urban merchants (receiving cash) have good access to banks while rural merchants (issuing cash) often have poor access to banks, and this reduces the cash they have on hand.
Lonie says that M-PESA doesn’t compete with other banking services - it competes with giving money to a trusted friend, or hiding it in a package on a bus going to your village. The users of the system are usually unbanked and often illiterate - they learn the system from trainers, and from the merchants who sell the product - organizers have trained 50 trainers to train vendors, and they plan to train ten times as many in the near future.
The exciting news from M-PESA is that they’re expanding into the remittance market. Many development professionals believe there’s more money sent to Africa via remittances than via all foreign aid - it’s a many billion dollar market, one that many banks are anxious to tap into.
In late June/early July, Vodacom will be launching a test service enabling remittance from the UK to Kenya. Users in the UK will be required to register and provide identification, minimizing the possibility of using the service for money laundering or terror financing. They’ll make payments via the web, including the name of the recipient - recipients will need to show ID to claim the payments.
Inexpensive, convenient remittance is a big deal - it provides critical fiscal support for millions of families around the world, and allows thousands of new microbusinesses to be funded by families abroad.
"The commodities market in Africa is badly organised. The exchange has promised its assistance to organise the market and it will bring a great transparency to the Africa market," Adendorff said.
A boom in commodities prices, driven by China's emergence as the top consumer of many metals and other products, has increased interest in Africa's rich resources. London is still the trading centre for most metals, in a legacy of the colonial era, but Africa's exports are increasingly shipped to China.
Grains futures are already traded in South Africa, and Egypt's stock exchanges have proposed a bourse to trade wheat, rice and possibly cotton. The Dubai Gold and Commodities Exchange is gaining greater prominence in the region.
Pan-Africa Commodities plans to set up four trading platforms in Egypt, Uganda, Ghana and Botswana as its first step, and proposes ultimately to extend the number of platforms to 41, covering 45 African countries, Adendorff said.
Metals contracts could include non-ferrous metals and minor metals, Adendorff said, but declined to identify which. A cotton contract would be established in Egypt.
"We see most of the trade volume coming from intra-Africa traders, with some international participation," he said.
Following a visit by three top Gabonese officials to Beijing, the Libreville government last week unveiled a long-awaited timetable for essential infrastructure work as well as a list of Chinese companies that will do the job. Production at the facility, located in Belinga, north-eastern Gabon, is expected to start in 2011.
"We have agreed on the legal framework for the operation, the Chinese have designated the constituent companies and its financial organisation," said Gabon's minister for mines, Richard Auguste Onouviet. "Contrary to what one has heard up to now the project is on the rails. It was difficult to get going but the teething problems common to an operation of such a size are now behind us."
Iron ore was discovered in 1955 at Belinga, which lies in remote forest hills 500 kilometres east of Libreville, the capital and port on Gabon's Atlantic coast. Believed to be one of the last major untapped iron ore reserves on the planet, the Belinga site has never been developed because of the prohibitive cost of the necessary infrastructure. Costly rail links are needed to reach the reserves in the tropical forest, along with a deep-water port and a hydroelectric dam.
Last year Gabon gave China sole rights to exploit untapped iron ore reserves, saying it would create "thousands of jobs" for the Gabonese. Chinese interests will control 85 percent of Comibel, the company named to oversee the project, and Gabon 15 percent, Onouviet said.
The Chinese import-export bank Eximbank has agreed to lend the Chinese companies the three billion dollars necessary to carry out the infrastructure work, with the loan reimbursed through sales of the iron mineral. Infrastructure work had been expected to get underway in 2006 but had been put off several times, raising doubts over whether the project would ever get off the ground.
The delays have caused impatience in Gabon, where the government sees the project creating 20,000 jobs in an economy plagued by high unemployment.
Business in Africa
Guinea-Bissau's ruling classes and its coup-prone army reportedly are benefiting handsomely from the cocaine trade. Da Silva's snooping threatened the big snort. He had worked doggedly, often without a car - until he bagged one in a drug raid - and had made several large cocaine seizures. But, instead of plaudits, he lost his job.
Two Colombians were caught red-handed last September with a car full of cocaine, estimated to have a street value of about $40million. The rare success - Guinea-Bissau's biggest drug haul - fell apart when the two suspects were released within days and the drugs vanished. Judges cited interference and the justice minister at the time called their release "regrettable".
Impoverished Guinea-Bissau is trying to fight against an influx of hundreds of millions of dollars worth of Latin American cocaine, but experts say the battle is being undermined by state complicity, a weak police force and a justice system that cannot deal with criminals, even if they are caught.
Guinea-Bissau's Minister of Justice, Carmelita Barbosa Pires, is under no illusions about how drastic the situation is. "This is a crisis. We know there are serious problems with justice and things that must be done quickly," she said.
The former Portuguese colony's problems are as basic as not having a single prison. "We just need a building to put people in. If there is no prison it is indicative of impunity," said Pires.
And Da Silva's sacking is likely to exacerbate the cheek-turning, which appears to be the official response to the booming cocaine trade.
Policemen often find themselves up against colleagues who are involved in the trade. "There are people in the police and the security services who are giving protection to the drug trade," said a drug control official, who did not want to be named.
Drug control experts believe that the army can demand up to $500,000 to secure a landing strip while cocaine is flown into the country. The navy turns a blind eye or even helps ship the drug out on to the high seas.
Local journalists have followed the boom in the trade from the initial drops of cocaine on remote islands off the coast to the highly developed network that is now in place. But reporting on it is dangerous. "The pressure is clear. There have been threats made against us for speaking about it," said Agnelo Regalo, the director of Radio Bombolom, an independent radio station in Bissau.
The sight of soldiers changing money, obviously the fruits of corruption, is a symbol of obvious impunity. Why is it allowed to continue? Guinea-Bissau is highly unstable and coup-prone; analysts say the price of allowing the armed forces a few indiscretions is worth the relative stability.
In fact, this impunity might threaten greater instability. The amounts coming into the country indicate that it is being used as a regional stockpile, say experts. During a recent seizure, acetone, a product used to process cocaine, was found, suggesting labs are being set up in the country as well.
"My concern is that the drug trade might change the set-up of the economy," said a diplomat. "The country's annual GDP is $290million. If you compare that to the billions that are coming through in drugs, it can't compete."
Mail and Guardian
June 16, 2007
June 14, 2007
Is foreign aid doing Africa more harm than good? That question surfaced very quickly in the opening session of TEDGlobal in Arusha, Tanzania, sparking a lively point-counterpoint between Ugandan journalist Andrew Mwenda and unannounced guest Bono.
The conference, never before held in Africa, attracts a famously eclectic group, largely from the worlds of Technology, Entertainment and Design (hence the intials TED.)
I have made several trips to Africa before, most recently visiting Zambia with a group called Friends Of Zambia, dedicated to attracting more foreign aid and trade to that southern African country. There are moments when the challenges seem so complex that you don't know where to begin, then you see that a village just needs a well to get clean water or a girl just needs a uniform to go to school and you know where you can start.
One of the opening speakers at TEDGlobal was Andrew Mwenda, a Uganda journalist and fellow at Stanford. He voiced a point of view that I have been hearing more of lately : that the foreign aid provided by developed nations is doing more harm than good by propping up corrupt governments and turning the citizens into passive recipients of charity instead of active parts in the building of their countrys' economy. It's direct foreign investment that will begin to change the economic dynamic, not charity.
Based on the reaction from audience members from 40 different countries with a large African concentration, Mwenda's position was widely held. To make his point, Mwenda took a few swipes at the Marshall Plan that rebuilt Europe after the Second World War, claiming "it was not as great as it was cracked up to be." Then he challenged the audience to "give me a single example of one country that was developed with aid. Just give me one example."
That's when some gentle heckling began from a familiar Irish voice in the audience. Most people in the hall did not even realize Bono was there. After a short break he took the stage with a short video from German Chancellor and G8 chair Angela Merkel and this opening line : "try telling Angela Merkel that the Marshall Plan was a load of crap." He said Germany was a "brilliant example" of how aid can work. "It was a bulwark against sovietism and also an act of mercy." He went on to say that "the Cold War was fought in Africa, too. We were complicit in supporting murderous regimes like Mobutu's. I don't think it is charity to pay back those countries several generations later. It is justice."
Addressing the growing feeling that debt relief will not get African nations nearly as far as western direct investment, Bono said "20 million children in Africa are going to school today as a direct result of debt relief, 3 million right here in Tanzania alone. Combine a well educated population with the kinds of tax relief that was offered to companies coming in and you have economic growth. Only the state can offer that package."
To Mwenda's charge that every minister in every bloated department has a fleet of cars, yet few dispensaries have even a single ambulance, Bono conceded that "this can't be about redecorating presidential palaces," but reminded the audience that "3000 African kids will die today of malaria so you have to work on the micro as well as the macro economic issues."
No doubt, this is just the beginning of many debates that will play out this week at TEDGlobal. It's too simple to decide that either aid or trade is the solution, though I was surprised to hear from journalist Carol Pineau, the producer of the documentary Africa : Open for Business that "no one in Africa really believes any more that aid does any good at all." Really? That shocks me. I believe ultimately that it is jobs and business and sustainable industries will be the most powerful tools for lifting up these countries, but can free market forces save the people dying of AIDS right now? I don't see how.
I have worried in the past that because so many of the resources that come to Africa come in the form of aid, that Africa's best and brightest are working for NGO's and charities, instead of starting their own small businesses. Two years ago I met a fantastic young man in Lusaka, Zambia running an orphanage. His managerial skills were so impressive that I couldn't help thinking to myself whether the country would be better served if this young man were given the money to start a business instead of an orphanage.
Does aid create a brain drain away from agriculture and industry and towards relief work? It clearly can.
The Huffington Post
The CEO of the MTN group, Phutuma Nhleko, said MTN is contributing towards NEPAD's objectives through targeted social and infrastructure investments in many African countries including Ghana, Cameroon, Nigeria, Rwanda, South Africa and Uganda. It was due to those commitments that the MTN group offered to sponsor the fifth edition of the influential African Business Leaders Forum slated for October 17 and 19 in Accra, Ghana.
The event which would bring Africa and business leaders, and investors together would create a platform for assessing the post independence 1994 gains of Africa and opportunities to define a future of prosperity for all Africans.
The MTN group of companies, a multinational telecommunications group was launched in 1994. It currently operates in 21 countries in Africa, Asia, and the Middle East.
Battery manufacturers in East Africa want their governments to protect them and consumers from what they are calling a Chinese onslaught.
This follows the recent collapse of the region's biggest battery maker, Kenya-based Associated Battery Manufacturers (ABM), attributed by industry players to cheap imports from China. The manufacturers, Associated Battery Manufacturers, Uganda Battery Manufacturers, Tanzania's Yuasa Ltd, AIBM and AP Batteries, claim imports from China do not meet the required local standards, and have been known to last as briefly as a month.
ABM has further warned that the stock of lead, the raw material used in battery manufacturing, in Kenya will only last until August, after which there will be no locally-made batteries. Consumers will be forced to buy the low quality imports and jobs will be lost as more factories close down. ABM has sent home 100 of its employees as the lead shortage starts to bite.
Although Uganda and Tanzania are not as hard hit, if lead exports are not stopped immediately, the two countries could find themselves in a similar crisis such as that facing Kenya. The manufacturers have stepped up a campaign to persuade regional governments to ban the exports. Industry players say Nigeria and Morocco are already in a situation where all batteries are imported from China after the latter bought out all lead battery scrap from them.
The manufacturers are being supported in their campaign by their respective revenue authorities, national environmental bodies, trade ministries and, notably, the East African Community.
Six months ago, ABM sounded the alarm that the sector was running out of its core raw material. Managing director John Kinyanjui says that investigations showed that China had positioned and funded buyers across the country to buy out lead at a higher price than what was offered by local battery manufacturers. He said this was tantamount to sabotaging the operations of local manufacturers.
According to Kinyanjui, when China first introduced its batteries into the African market in 2003, the industry was not concerned because though cheaper, they were of low quality. However when after six months the Chinese realised they could not compete with locally made batteries in Nigeria, they resorted to buying all scrap lead to deny local manufacturers the scarce raw material. ABM officials travelled to China hoping to buy the raw material from there, but were denied on the premise of the Basel Convention, which restricts trade in hazardous materials like lead.
Local manufacturers realised the seriousness of the problem and wrote to the Kenya Association of Manufacturers, the Ministry of Trade, Finance and the East African Community. Trade Permanent Secretary David Nalo promised to take action to save the industry from imminent collapse, while Trade Minister Mukhisa Kituyi took the matter to the EAC headquarters in Arusha.
The manufacturers, following the Chinese example, sought assistance from the Department of Mines and Geology whose commissioner, in turn, wrote to the Kenya Revenue Authority citing that lead exports, being metal were illegal and contravened the Basel Convention.
Lead is available from recycling old batteries. Only three countries; China, Russia and Australia have lead mines. Due to its scarcity and high demand, the countries do not sell the raw material, but instead market finished products.
China circumvented this problem through the mass importation of old batteries, especially from the developing world, notably Africa.
The East African
«We are aware that toothpaste is something that's been counterfeited in the past,» he said. «We don't want to alarm people unnecessarily.
MS USA Trading, Inc. of North Bergen, New Jersey, said the toothpaste may contain diethylene glycol, a chemical found in antifreeze. The same chemical has led to the recall of several brands of toothpaste imported from China in recent weeks. The company said the toothpaste, imported from South Africa, was sold in discount stores in New Jersey, New York, Pennsylvania and Maryland.
"Made in South Africa" is printed on the box and includes Regular, Gel, Triple and Herbal versions.
The company said the problem was discovered in routine testing by the Food and Drug Administration. It said no illnesses have been reported to date.
Consumers who have purchased 5-ounce (142-gram) toothpaste under the Colgate label can return them to the place of purchase for a refund, MS USA Trading said.
June 13, 2007
The announcement was made by Baroness Amos, leader of the House of Lords, at a press conference at the World Economic Forum on Africa in Cape Town.
The AECF will provide match-funding for business innovations and support businesses to help people in Africa become economically active.
Amos said, "Business development is essential in the fight against poverty. Last week the G8 reaffirmed the importance of this in stimulating economic growth in developing countries and encourage businesses to improve the level of sustainable investment in those countries."
"The Africa Enterprise Challenge Fund will help to deliver this. It encourages innovation in trade and commerce to help those who are most excluded enter the world of business. The fund will become operation in 2008," she added.
Britain became one of the first donors to get behind the new fund. Other donors include the African Development Bank, the Consultative Group to Assist the Poor and the International Fund for Agricultural Development.
The AECF will become operational in early 2008. It will offer grants of up to 1.5 million dollars to businesses that provide innovative proposals for improving people's chances to take part in economic activity, particularly in the areas of finance and agriculture.
The World Economic Forum (WEF) on Africa is expected to open in Cape Town on June 13 with a focus on addressing the capacity constraints and skills gaps that frustrate growth on the continent. This year's forum has attracted more than 700 participants from 42 countries, including five heads of state and a cross-section of CEOs, according to the organizers.
Copper prices on the London Metal Exchange have shot to record highs of about $8,000 per metric tonne -- from the average of $1 200 six years ago -- in what is considered the biggest base-metal bull market in 50 years, fuelled by strong demand from China and India.
But the Zambian government has continued to charge paltry mineral royalties of 0,6% - the world average is 3% - and offers lengthy tax holidays to foreign investors, resulting in poor earnings from the booming prices of its main export, copper.
Mining companies doing business in Zambia are also exempt from customs duties on imports of capital machinery and there are no restrictions on the amount of profits, dividends or royalties that can be externalised. The incentives were introduced and enshrined in the mining firms’ legally binding development agreements in 2002, to attract investment at a time when copper prices were depressed and South Africa’s mining conglomerate, Anglo American, had just pulled out of Zambia’s mining sector. And now, with the current boom in copper-market prices, there are increasing calls from Zambian business, opposition political parties and the labour movement for the government to renegotiate the development agreements and raise the mineral tax to levels that would benefit the country.
On a recent visit to Zambia World Bank economic adviser Paul Collier, said “government has made a tactical error in imposing a tax-free-regime on the copper industry and should quickly impose a windfall tax, so that the people of Zambia can benefit from their resources before the boom in copper prices subsides.”
A proposal for the introduction of the windfall tax was also lauded by a senior Zambian business leader and former owner of the defunct Meridian BIAO Bank, Andrew Sardanis, who said renegotiating the agreements would be a time-consuming exercise for the development-hungry country. “Businesses have a way of delaying things. By the time talks are concluded, copper prices could have fallen from the current highs. Windfall taxes are the country’s practical solution to benefiting from stronger copper prices. It (the windfall tax) won’t be against the agreements, all governments do it. Even Britain did it. With the high price of copper, the mines want to produce; they will accept it, we must not be behaving as if we are walking on eggs,” Sardanis told local media.
With reasonable mineral royalties, analysts say the country could raise enough revenue required for national development as has been the case with the world’s largest copper producer, Chile, which last year netted a record budget surplus of $8-billion from its 3% royalties.
Early this year Zambian Finance Minister Ng’andu Magande announced in his budget speech that government had eliminated tax holidays and increased mineral royalty taxes to 3% for all mining firms “to ensure more collection of revenue from the mining sector.” But a few days later Magande disclosed that the new tax revisions would not apply to existing mining companies.
The government is now trying to target mining companies on the basis of their poor corporate social responsibility. Mining firms in Zambia, many of them from China and India, have been accused of adopting a “step-brotherly” attitude towards the communities in which they operate,
coupled with paying poor perks and not sending Zambian employees for specialised training.
“I will soon be meeting the mining companies to explain to them that the development agreements were about more than tax breaks; they are also obliged by the mining firms to train local contractors if they lacked the necessary skills. Now, when we go into these negotiations, we want to know whether the mines have been able to do that. If they haven’t, what is the problem and how can we work together to create this capacity?” asked Magande, who is also chair of the government committee to revise mineral royalty taxes.
But mining analyst Frederick Bantubonse, general manager of the Zambia Chamber of Mines, cautioned the state not to tamper with the existing development agreements, saying mining companies still need more breathing space. “The government should honour the development agreements despite calls from stakeholders to review the contracts … mining is a long-term business and government efforts should be directed towards growing the economy,” Bantubonse said. “The investment that has been coming into the mining sector since 2000 has gone into plant rehabilitations, expansions and acquiring new production facilities, and therefore, mining companies should be given a bit of time to realise some profits from their investment.”
Mail and Guardian
June 11, 2007
Question : Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa...
Answer i: ... for God's sake, please just stop.
Q : Stop? The industrialized nations of the West want to eliminate hunger and poverty.
A : Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.
Q : Do you have an explanation for this paradox?
A : Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound : Development aid is one of the reasons for Africa's problems. If the West were to cancel these payments, normal Africans wouldn't even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.
Q : Even in a country like Kenya, people are starving to death each year. Someone has got to help them.
A : But it has to be the Kenyans themselves who help these people. When there's a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program -- which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It's only natural that they willingly accept the plea for more help. And it's not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa ...
Q : ... corn that predominantly comes from highly-subsidized European and American farmers ...
A : ... and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN's World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It's a simple but fatal cycle.
Q : If the World Food Program didn't do anything, the people would starve.
A : I don't think so. In such a case, the Kenyans, for a change, would be forced to initiate trade relations with Uganda or Tanzania, and buy their food there. This type of trade is vital for Africa. It would force us to improve our own infrastructure, while making national borders -- drawn by the Europeans by the way -- more permeable. It would also force us to establish laws favoring market economy.
Q : Would Africa actually be able to solve these problems on its own?
A : Of course. Hunger should not be a problem in most of the countries south of the Sahara. In addition, there are vast natural resources : oil, gold, diamonds. Africa is always only portrayed as a continent of suffering, but most figures are vastly exaggerated. In the industrial nations, there's a sense that Africa would go under without development aid. But believe me, Africa existed before you Europeans came along. And we didn't do all that poorly either.
Q : But AIDS didn't exist at that time.
A : If one were to believe all the horrifying reports, then all Kenyans should actually be dead by now. But now, tests are being carried out everywhere, and it turns out that the figures were vastly exaggerated. It's not three million Kenyans that are infected. All of the sudden, it's only about one million. Malaria is just as much of a problem, but people rarely talk about that.
Q : And why's that?
A : AIDS is big business, maybe Africa's biggest business. There's nothing else that can generate as much aid money as shocking figures on AIDS. AIDS is a political disease, and we should be very skeptical.
Q : The Americans and Europeans have frozen funds previously pledged to Kenya. The country is too corrupt, they say.
A : I am afraid, though, that the money will still be transferred before long. After all, it has to go somewhere. Unfortunately, the Europeans' devastating urge to do good can no longer be countered with reason. It makes no sense whatsoever that directly after the new Kenyan government was elected -- a leadership change that ended the dictatorship of Daniel arap Moi -- the faucets were suddenly opened and streams of money poured into the country.
Q : Such aid is usually earmarked for a specific objective, though.
A : That doesn't change anything. Millions of dollars earmarked for the fight against AIDS are still stashed away in Kenyan bank accounts and have not been spent. Our politicians were overwhelmed with money, and they try to siphon off as much as possible. The late tyrant of the Central African Republic, Jean Bedel Bokassa, cynically summed it up by saying : "The French government pays for everything in our country. We ask the French for money. We get it, and then we waste it."
Q : In the West, there are many compassionate citizens wanting to help Africa. Each year, they donate money and pack their old clothes into collection bags ...
A : ... and they flood our markets with that stuff. We can buy these donated clothes cheaply at our so-called Mitumba markets. There are Germans who spend a few dollars to get used Bayern Munich or Werder Bremen jerseys, in other words, clothes that that some German kids sent to Africa for a good cause. After buying these jerseys, they auction them off at Ebay and send them back to Germany -- for three times the price. That's insanity ...
Q : ... and hopefully an exception.
A : Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livelihoods. They're in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria's textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.
Q : Following World War II, Germany only managed to get back on its feet because the Americans poured money into the country through the Marshall Plan. Wouldn't that qualify as successful development aid?
A : In Germany's case, only the destroyed infrastructure had to be repaired. Despite the economic crisis of the Weimar Republic, Germany was a highly- industrialized country before the war. The damages created by the tsunami in Thailand can also be fixed with a little money and some reconstruction aid. Africa, however, must take the first steps into modernity on its own. There must be a change in mentality. We have to stop perceiving ourselves as beggars. These days, Africans only perceive themselves as victims. On the other hand, no one can really picture an African as a businessman. In order to change the current situation, it would be helpful if the aid organizations were to pull out.
Q : If they did that, many jobs would be immediately lost ...
A : ... jobs that were created artificially in the first place and that distort reality. Jobs with foreign aid organizations are, of course, quite popular, and they can be very selective in choosing the best people. When an aid organization needs a driver, dozens apply for the job. And because it's unacceptable that the aid worker's chauffeur only speaks his own tribal language, an applicant is needed who also speaks English fluently -- and, ideally, one who is also well mannered. So you end up with some African biochemist driving an aid worker around, distributing European food, and forcing local farmers out of their jobs. That's just crazy!
Q : The German government takes pride in precisely monitoring the recipients of its funds.
A : And what's the result? A disaster. The German government threw money right at Rwanda's president Paul Kagame. This is a man who has the deaths of a million people on his conscience -- people that his army killed in the neighboring country of Congo.
Q : What are the Germans supposed to do?
A : If they really want to fight poverty, they should completely halt development aid and give Africa the opportunity to ensure its own survival. Currently, Africa is like a child that immediately cries for its babysitter when something goes wrong. Africa should stand on its own two feet.
Bono, the musician and social activist who has pushed for more help for Africa, said that the old promises have become harder to keep. "They say US$60 billion for AIDS, TB and malaria and it sounds great, but that's not earmarked for Africa, it's a global figure and there's no timeline," he said.
Bob Geldof, the Boomtown Rats co-founder who nurtured the historic Live Aid concert in 1985 and the series of Live 8 concerts in 2005, seethed, calling the initiative — indeed, the whole summit — a "grotesque pantomime." "Do me a favor, get serious guys, get serious," he said of the leaders of Britain, Italy, Canada, the United States, France, Russia, Germany and Japan. "This wasn't serious. This was a farce. A total farce."
Chancellor Angela Merkel said the G-8 agreed on a program worth more than US$60 billion in aid but in its final communique, the amount pledged had no timeframe and did not specifically single out Africa as the beneficiary.
"The key words to look for here are 'Africa' and 'global' and how, within one paragraph, they switch from what looks like a promise to near universal access for Africa suddenly into a global promise," Bono said. "Obviously, I understand if they think that rock stars might not be able to add and subtract or spell and read, but there's some people around here who can," he said.
An array of independent aid groups and African academics said the declaration fell short of the goals first unveiled two years ago in Gleneagles, Scotland, amid a wave of concern that saw social activists and outgoing British Prime Minister Tony Blair urging immediate help for Africa. "The promise of poverty reduction in Africa : It's a recurring declaration made each year by the heads of the G-8," said Issa Keita, a professor of international economics at the University of Bamako, Mali. "Yet this mechanism of debt just makes more and more African nations become poor." He argued that G-8 countries often prioritize issues such as immigration and environmental damage over economic development in Africa. "The G-8 will never come in and create development for us in our stead," he said.
The declaration on aid came on the last day of the summit in Heiligendamm. "We stress our firm resolve to implement the commitments on development made, in particular, in Gleneagles," it said. "These include the historic multilateral debt relief of up to US$60 billion, the implementation of which is now well under way."
Proponents of debt relief in Africa and other social activists criticized the world's leading industrial nations for failing to live up to their 2005 promises. Max Lawson, a senior policy adviser with Oxfam International, said the US$60 billion works out to just US$3 billion (€2.23 billion) extra in aid by 2010. "This means the G-8 will still fall far short of their Gleneagles pledges." He called the declaration "a small step when we need giant leaps."
But Blair, who leaves office June 27 and has made Africa a personal project, said the declaration was a blanket call for reaffirmation of promises made at Gleneagles in 2005, when leaders called for increasing aid to US$50 billion (€37 billion) a year through 2010, with half of that going to Africa itself. "The important thing about what we have agreed today is that we have recommitted ourselves to all the commitments we made a couple of years ago at Gleneagles," Blair said. "But the important thing is we have set out how we are going to do them."
But whether the army is called on is irrelevant. The threat has ratcheted up the tension and the stakes in the present confrontation. Union leaders admit there is a great deal more anger now because the threat came at a time when the government negotiators were aware that the combined public service unions had agreed to table a lower pay demand.The position was that the government had increased its offer from 6 percent to 6.5 percent and the unions had lowered their demand from 12 percent to 10 percent.
But the stakes are now much higher than just pay and working conditions for the civil service : they go to the core of economic policy and to the long-term survival of the ANC in the government. There may be a temporary truce if agreement is reached to end the present strike, but the war will continue. This war is about macroeconomic policy and the type of government the unions and their allies may feel is necessary in future. A leading unionist called for a total national stoppage to bring about a change in macroeconomic policy, which he and other unionists blamed for the growing wage and welfare gap in the country.
The unions and their allies are pushing for a demand-led, social democratic economic model that would mean a high degree of state intervention in every aspect of the economy. This could include prescriptive investment and elements of nationalisation. In simple terms, it would mean putting redistribution before growth rather than, as at present, laying stress on economic growth.
This demand for a switch in policy received something of a boost in a recent speech by ANC presidential hopeful and businessman Tokyo Sexwale. He condemned economic growth for its own sake. Although he gave no specifics, he admitted that current policies had not worked and talked of "wealth creation for all" and "engaging in strategies" to achieve this. But the government has given no indication that it intends to deviate from its present liberal economic orientation.
This has boiled over into the political arena and poses a potential threat to the ANC in the government. ANC leaders are acutely aware that southern Africa is the last region on the continent where nationalist liberation movements still largely hold power. The only exception is Zambia, where a trade union-led civil society coalition toppled President Kenneth Kaunda and his United National Independence Party in 1991.
Says the SA Institute of International Affairs deputy chairman, Moeletsi Mbeki : "Throughout West Africa, not a single one of the former nationalist anti-colonial movements still holds power. From a political viewpoint, it is trade unions that pose the greatest threat to nationalist parties, which invariably claim to be the sole representatives of the majority."
The lesson of Zambia has not been lost on other sub-Saharan governments. Attempts to incorporate or, failing that, to crush trade union organisation has been particularly obvious in Zimbabwe. Now there are allegations that it is happening here. Says Madisha : "I am very upset but it does seem that our government is taking actions which are aimed at crushing us."
The possibility of a fairly imminent rupture in the governing tripartite alliance has also seen elements of the SA Communist Party (SACP) trying to position the party as the potential leader of any trade union-led breakaway to challenge the ANC or to pressure it into a dramatic change of economic policy.
The gauntlet has been flung. Either the ANC adopts a heavily interventionist, social democratic economic model or it may find itself challenged by the very constituency that brought it to power.
My family lived in Kenya for three years due to my father's diplomatic posting there. His official duties included representing the World Health Organisation, the United Nations Environment Program and the UN Commission on Human Settlements. One of the reasons that I get stuck into the UN for its corruption and fecklessness as much as I do is because of the greater understanding I gained of the organisation due to my father's interactions with it.
The corruption we saw in Kenya (and in trips to other African nations) was not only endemic but also, in a sense, tribal in that in Africa it's understood that the chief owns all of the tribe's assets to do with as he sees fit. Paying off one's supporters is a key part of propping up any corrupt official's ongoing tenure and that's what we saw in spades. In one glaring instance of corruption, a certain aid organisation made a one million dollar donation to Kenya, which went straight into the President's pocket. No questions asked.
There is a general naivety in rich nations regarding corruption in Africa. People see leaders such as Zimbabwe's lunatic Robert Mugabe wrecking their countries and respond by not only ignoring the cause of people's plight, but also turning a blind eye to massive corruption at the highest levels. To understand how massive it actually is, it's estimated that 80% of Zimbabwe's budget is now spent on paying off Mugabe's supporters including the military, police, government officials and business associates.
As an aside, the reason that World Bank chief, Paul Wolfowitz, was forced to resign is that he brought an attitude of cleaning up the bank's lending practices, tying loans to improved governance. The Europeans, with their vested interests in maintaining the gravy train status quo, didn't like that too much and took action as soon as they had an opportunity.
The naivety that allows people to ignore Africa's corruption is based on a misunderstanding of the depth of corruption that actually exists there. They see corruption as being something like that which brought down Enron and Worldcom or the corrupt activities of someone like Congressman William Jefferson (Democrat, Louisiana). What these people miss is that corruption occurs at every level in the system. Get pulled up by the police for any offence - slip them some money. Go to the department of motor vehicles to get your licensed renewed and, if you want it done at all then - slip them some money. The amount of money paid determines the speed of response. Corruption is endemic, and expected, throughout nearly all of Africa.
What is the rich nations' response to this ongoing bad behaviour? To reward it - in the name of compassion. As any judge or lawyer will tell you, what gets rewarded gets repeated.
Why, then, do rich nations continue to provide massive amounts of aid to Africa if it's untied to any actual outcome? Basically, it's to buy the votes of these countries in international organisations such as the UN and to smooth the way for business interests to be able to operate to their advantage. Reality? Yes. Cynical? Absolutely.
The relevance of the bank has recently come under scrutiny, with African leaders calling for its restructuring.
Zoellick is on a tour of Africa, Europe and Latin America ahead of his appointment to the top position at the international development finance institution. He is set to take over from disgraced Paul Wolfowitz, who steps down at the end of this month.
Zoellick said he was struck by a new generation of African leaders taking responsibility for their countries. The focus was still firmly on poverty, but these leaders were looking increasingly at growth, wealth creation and the creation of sustainable jobs.
No one-size-fits-all approach could be adopted for African countries, said Zoellick, emphasising the vast potential of the continent. “There are some strong opportunities here,” he said. “You want to catch the wave and move forward with some of the high-quality economic leaders in Africa. I hope the World Bank can develop stronger partnerships with African countries to assist them in achieving stronger growth.”
The former US trade representative is a vocal advocate of free trade and open markets, and his remarks signal a shift in approach to Africa’s problems, with a growing emphasis on helping the continent overcome systemic handicaps to incorporate it in the global trading system in a sustainable manner. This entails addressing capacity constraints and infrastructural inadequacies.
But the focus is also on encouraging greater regional integration, which would create larger markets for trade, and south-south trade. “There is a need to look at supply-side constraints, which is the ability to move goods and people. It is about roads, ports and telecommunications. A key focus is to secure this, not just in the context of countries but especially in the context of regions ... With many of the countries being small markets, there is a need to look at borders,” Zoellick said, pointing out a need to deepen discussions on regional integration between members of the Southern African Development Community (SADC) and the Economic Community of West African States (Ecowas).
Zoellick’s stance is in harmony with a desire by many African leaders to wean themselves from their reliance on the west and cement their independence. During his stint as US trade representative, Zoellick was closely involved in launching the Doha development agenda, and he was a staunch proponent of lowering agricultural subsidies by rich countries and increased access to agricultural markets for the poor.
Images of clashes between G8 protesters and riot police in the German port city of Rostock in which 1000 people were injured sent different signals to different people of the world.
For Africans living under pseudo democratic regimes, it reminded them that there is no difference between the so-called developed world and their own, in real terms. Police will always crackdown, uncompromisingly and hard, on protesters. To police in Africa, it was an inspiration. Beating up protesters was not, after all, very uncivilised. To the African protesters who often stir up trouble to provoke the security forces to their advantage, it was apparent that theirs was a global tactic, not unique to them alone. "Even the Europeans do it".
Police blamed the violence on some 2,000 militants known as the "black block." The protesters say that security forces infiltrated their otherwise peaceful demonstration to make the demonstrators look bad, and to present them to the world as irresponsible hecklers, thus diverting the world from the real issues at the core of the dissent
But why are people demonstrating against the G8 anyway? What is this anti-globalisation coalition that has sought to be heard since 1999? It is considered by many to be a social movement, while others consider it to be an umbrella term that encompasses a number of separate social movements.
In either case, participants are united in opposition to the political power of large corporations, as exercised in trade agreements and elsewhere, which they say undermines democracy, the environment, labour rights, national sovereignty, the third world, and other concerns. The groups and individuals that would come to be known as the "anti-globalisation movement" developed in the late twentieth century to combat the globalisation of corporate economic activity and the free trade with developing nations that might result from such activity.
Members of the anti-globalisation movement generally advocate alternatives to liberal economics, and seek to protect the world's population and ecosystem from what they believe to be the damaging effects of globalisation. Support for human rights NGOs is another cornerstone of the anti-globalisation movement's platform. They advocate for labour rights, environmentalism, feminism, freedom of migration, preservation of the cultures of indigenous peoples, biodiversity, cultural diversity, food safety, and ending or reforming capitalism.
By contrast, certain paleo-conservative American opponents of globalisation, such as Patrick Buchanan, argue against globalisation from a point of view of economic nationalism. Against outsourcing, such paleo-conservative opponents of globalisation phrase their opposition in xenophobic terms. "The industrialised world must protect itself against the Global South," Buchanan argues, because what he calls the "Third World" is racked with disease and the peoples there lack a Western culture. Economic globalisation, therefore, will result in the "Death of the West".
Although adherents of the movement often work together, the movement itself is heterogeneous. It includes diverse and sometimes opposing understandings of the globalisation process, and incorporates alternative visions, strategies and tactics. Generally speaking, protesters believe that the global financial institutions and agreements undermine local decision-making methods. Many governments and free trade institutions are seen as acting for the good of multinational corporations. These corporations are seen as having privileges that most humans do not have : moving freely across borders, extracting desired natural resources, and utilising a diversity of human resources. They are perceived to be able to move on after doing permanent damage to the natural capital and biodiversity of a nation, in a manner impossible for that nation's citizens.
Some of the movements' common goals are; an end to the legal status of so-called "corporate personhood" and the dissolution or dramatic reform of the World Bank, IMF, and WTO.
*Rwanda based writer