August 31, 2008
2. AFREXIMBANK faces soaring demand for oil trade finance
3. African textile industry falters despite AGOA
4. New pan-African investment fund raises $130 million
5. Trade with China both an opportunity and a threat for Africa
6. West sees difficulty in Africa, China sees opportunity
7. Japan sends trade and investment missions to Africa
8. Taiwan-Africa Business Association visits four African countries
9. The age of food colonialism
Trade between China and Africa surpassed $10 billion in 2000 and has been increasing by over 30 percent annually for seven consecutive years. In 2007, bilateral trade went up by 32.2 percent from the previous year to $73.3 billion. During the first half of 2008, bilateral trade amounted to $53.1 billion, up 66 percent year-on-year. China exported $23 billion to Africa, up 40 percent, and bought $30 billion from Africa, up 93 percent.
"Bilateral trade has been developing fast, and is generally balanced, but we have noticed that some African countries still run a deficit in trade with China," said an official with the department of western Asian and African affairs of the Ministry of Commerce.
China traditionally mainly sells textile and light industry products to Africa, and exports in these sectors have been increasing at a stable rate. In recent years, exports of automotives, mechanics and hi-tech products from China have also been increasing quickly. Meanwhile, consumer products from Africa, including diamonds across the continent and coffee from Uganda, are becoming more popular among Chinese consumers as well.
The official said although deficit or surplus is normal in a trade relation, China understands African countries' concerns and maintains that the two sides need to work together on the current trade imbalance. "China has adopted many measures to increase imports from African countries and the measures have been quite effective," said the official.
Under the framework of the Forum on China-Africa Cooperation, the Chinese government does not charge tariffs on products from some of the less developed African countries. By the first half of 2008, China imported a total of $620 million worth of products from Africa without charging any tariffs.
Feng Hongzhang, director of the trade development bureau under the Ministry of Commerce, said African governments and related organizations have been active in participating in the exposition. According to Feng, currently nearly 200 enterprises from 22 African countries have decided to come to the event. It will feature traditional products from Africa including crafts, food and diamonds.
To enhance the mutual understanding among businessmen from China and Africa, and help African enterprises to develop their market in China and expand their exports here, several seminars including introductions on markets in Nigeria and Zambia will also be going on during the exposition.
“There is a dilemma when we look at oil,” says Afreximbank President Jean-Louis Ekra. “A large number of countries in Africa are non-oil producers and these need oil to generate and move exports. At the same time those countries which are net oil exporters also need financing to be able to produce at levels that meet rising global oil demand. So both importers and exporters need financing.”
Crude prices, which opened the year below US$100 per barrel, galloped to a record high of US$136 a barrel by mid-June, and analysts say further increases appear likely as rising demand puts further pressure on tight global supplies.
Sources with the Bank say that demand for pre-shipment credit, both for imports and exports,
is at a 22-year high. Between 2005 and 2006 the Bank disbursed US$2.1 billion in funds mostly to finance imports and exports of oil in various countries on the continent. This financing is being
provided under a special arrangement known as a ‘syndicated finance facility’ or ‘club deals’, where Afreximbank arranges financing together with partner banks and provides the guarantees.
One of the companies that recently benefited from Afreximbank’s export credit facility is Nigeria’s Lonestar Drilling Limited, which received a US$70 million pre-payment credit to finance its export costs. Afreximbank provided 36 percent of the credit, while the rest was met by a pool of partner banks.
Headquartered in Cairo, Egypt, Afreximbank was set up in 1993 by African governments, private and institutional investors and non-African fi nanciers, to provide trade finance facilities and promote intra- and extra-African trade. The Bank provides short-term credit and
medium-term loans to African exporters and importers and finances imports needed for trade development, such as equipment, spare parts and raw materials.
Between 1996 and 2003, Afreximbank approved and disbursed over US$6.7 billion in loans to countries on the continent through various commercial and merchant banks.
Ekra said that financing oil trade will be the focus of Afreximbank over the next couple of years but he added that electricity and telecommunications will remain among the Bank’s top priorities. Although Afreximbank has assured African nations that it has raised enough capital to finance African trade for the next ten years, many analysts are raising questions about whether the Bank will be forced to divert resources away from infrastructure development to finance
oil trade, especially imports.
Only nine of the 53 African nations are net oil exporters. The rest depend heavily on a narrow range of primary agricultural and mineral exports which have been historically subject to wide price fluctuations. The IMF estimates that oil imports account for 25-40 percent of annual total import payment of many net oil importers in Africa.
Many countries in Africa are concerned about facing a debt crisis akin to that of the 1980s. The oil shocks of the 1970s were one of the main causes of the developing-country debt crisis in the 1980s. Some economists have warned that rising oil import bills will put considerable pressure
on fragile economies in Africa, making the repeat of a debt crisis likely.
Southern African Trade Hub
At a seminar on the textile industry, it was pointed out that the market share of Africa in the global textile-related business, as estimated in June 2008, stands at a mere $200 million..
Obia Ofemtold the stakeholders that while a large number of African countries are taking endeavors to make the most of the opportunity thrown open by African Growth and Opportunity Act (AGOA) and other preferential trade concessions by EU, the Nigerian industry is still grappling to find a space in the international market.
The country has practically taken no initiatives towards taking this opportunity for expanding its textile industry. Even the availability of massive resources and cheap manpower could not help the country secure a place on the export charts.
If the situation continues in the present way and if measures are not taken to improve the market conditions, experts believe that by 2009, the entire chain of textile factories in the country would meet a disastrous fate.
On the global front, textile production is expected to grow by 25 percent by 2020 in which the Asian region is likely to be a major contributor. Abolition of the US quota regime since the start of 2005 has made the continent a hub for textile trade.
This is also because most of the Asian countries, instead of resorting to imports for their raw material supplies, opted for investing heavily in backward integration projects, just like their counterparts in developed countries. This gradually strengthened the textile base in countries like China, India and Bangladesh.
As a result, most of the textile trade is concentrated in Asia and is being monopolized by countries like China, India, Bangladesh, Vietnam and even Cambodia, who are rapidly capturing the value added textile market deserted by the developed nations due to high costs of production.
Fibre to Fashion
There's a good reason why they don't serve customers themselves. Two years ago supporters of Michael Sata, an opposition leader who had unsuccessfully run for president with a campaign criticising China's growing push into Zambia, targeted Chinese-owned businesses in Kamwala during post-election rioting. Chinese traders at the market have been harassed and abused in recent years. Nowadays, most of the Chinese names above shop doors have been painted over or replaced and Zambians man the tills until their Chinese bosses come to shut up shop.
Sitting behind the counter at one Chinese-owned business, Nelson gestures at the piles of blankets, sports shoes, T-shirts and nylon bags for sale. "Everything here comes from China," he says. "That's why it's so cheap." Nelson has no shortage of customers eager for bargains to stretch their limited budgets.
Around the corner, Susan Kalal is not so lucky. She sells clothing produced in South Africa and says the Chinese have lured away her customers with their cut-price goods. "Business has been very slow since they moved in. The Chinese sell everything so cheaply, it's impossible for me to compete."
A few stalls away, another Zambian trader selling jeans made in South Africa sniffs that Chinese imports are of inferior quality. "People buy them and then they fall apart after one wear," he says. "That's hardly value for money."
In Zimbabwe, disgruntled consumers coined a derisive phrase - zhing zhong - to describe such products and the expression appears to have spread to several other African countries where markets are piled high with cheap electronics, clothes, toys and other goods imported from China.
But the issue goes deeper than complaints of shoddy workmanship. When it comes to Africa's tilt towards Beijing, several of the continent's commentators have argued that while the winners are the countries that export the raw materials China so desperately needs to fire its economy, the losers are those who face competition from the cheap manufactured goods that result.
"Chinese investors are extremely interested in Africa as a market," says Lucy Corkin, projects director at the Centre for Chinese Studies at South Africa's Stellenbosch University, the only African institute devoted entirely to researching China's engagement with the continent. "They realise the potential of Africa as a consumer market to a far greater degree than the West has."
In Malawi, the most recent African country to sever ties with Taiwan in order to secure a multi-million dollar investment deal with Beijing, some fear that fledgling industries may suffer if China floods local markets with imports. The landlocked nation has few natural resources but over 10 million potential consumers.
"The Chinese talk of a win-win situation, but how can it be when one party is a major economic and geopolitical player and the other is a tiny country like Malawi? Malawian products can never compete against the might of China," says Ephraim Munthali, a journalist in the capital, Lilongwe.
"When it comes to production, it is difficult for Africa to compete with China," notes a report entitled China's Economic Takeoff: Implications for Africa, published by the Brenthurst Foundation, a South African think-tank. Despite low wages, the report argues, "the continent's disadvantages, such as poor infrastructure and high transport costs" make African products prohibitively expensive.
Ironically, in Zambia, a textile factory built with Chinese cash as a sign of Sino-Zambian solidarity has been hit by competition from subsidised Chinese imports. The Zambia-China Mulungushi Textiles firm was once the biggest such mill in Zambia, employing over 1,000 people. Last year, the factory ceased production after suffering repeated losses. "Just like some sectors will win, you are obviously going to have some sectors that are hurt. There is absolutely no way you are going to protect all sectors in this globalised world," says Zambia's minister for trade and commerce Felix Mutati.
Concern has been raised about the impact of cheap Chinese imports on clothing and footwear industries following job losses in countries including South Africa, Kenya, Botswana, Lesotho and Swaziland. Tanzania's only flip-flop factory is struggling to break even in the face of increasing competition from China. In South Africa, the government imposed a quota on Chinese imports to protect local industry after trade unions cried foul.
Moeletsi Mbeki, deputy chairman of the South African Institute of International Affairs, says China represents both "a tantalising opportunity and a terrifying threat." The story is all too familiar, he notes. "We sell them raw materials and they sell us manufactured goods with a predictable result - an unfavourable trade balance."
Writing in Nigeria's Daily Trust newspaper, columnist Charles Onunaiju observed that unless efforts are made to alter the current pattern of trade, the Sino-African relationship will "come to resemble the Europe/America and Africa relations, that is, lopsided, dependent and even detrimental to Africa."
Such criticism has not gone unnoticed in Beijing. During an eight-nation tour of the continent last year, Chinese president Hu Jintao promised to increase imports from Africa. "China takes seriously the concerns about the imbalance in the structure in China-Africa trade," Hu told an audience in Pretoria, going on to pledge "effective steps" to address concerns. That July, China removed import tariffs on 454 goods from the 26 least-developed countries in Africa. Since then some $450 million (€306 million) worth of duty-free imports, including sesame, coffee beans, animal hides, cocoa and other products have flowed into the Chinese market from Africa. "The favourable tariffs are expected to cover more categories according to market demand," Wei Jianguo, China's deputy minister of commerce has stated.
But many say this is not enough, arguing that the durability of the relationship between the world's most populous country and its poorest continent will depend on whether China encourages African efforts to progress from being mere producers of raw materials to becoming authors of their own development through economic diversification.
The first close investors in the fund included African Development Bank, CDC, FMO, Shell Foundation, International Finance Corporation and GroFin. The GAF was still open to additional investors, it stated.
The fund was looking to make risk capital investments of between R750 000 and R7,5-million in seven countries, including namely Nigeria, Ghana, Kenya, Tanzania, Rwanda, Uganda and South Africa.
The new pan-African fund would be targeting growth finance opportunities in all sectors such as consumer goods, services, logistics/transportation, private education, tourism, manufacturing and agri-business. Mauritius based GroFin Managers has GroFin teams based in offices in Lagos, Accra, Nairobi, Dar es Salaam, Kigali, Kampala, Pretoria and Durban.
“We are very excited about the opportunities this fund creates. The economic, political and social reforms coupled with several years of high growth that have taken place across many African economies make it a very attractive growth finance environment,” said GroFin Managers MD Jurie Willemse.
The GroFin Africa Fund was building on the risk capital and business development platform established by GroFin in Africa through the GroFin East Africa Fund, a R195-million fund invested in growth finance enterprises throughout East Africa, the Aspire Nigeria Fund, a R230-million fund investing in Nigeria and the Empowerment through Energy Fund, a R50-million pilot fund fully invested in South Africa. GroFin also manages R140-million of bank co-investment commitments in East Africa.
Chou is also general manager of QQQ Industrial Corp., an auto-parts trading company established in 1980. He has been cultivating Taiwan-Africa interaction long before TABA`s establishment and is convinced that Africa will be a major trade partner for Taiwan.
"Long ago, most companies in Taiwan ignored the importance of Africa as a business partner due mainly to insufficient knowledge, as well as worrying about personal and business safety. Many years ago for the rest of the world Africa seemed a minor market despite possessing rich natural resources, which could not be transported easily due to lacking infrastructure and political factors. But with surging fuel and commodity prices, businesspeople can find more opportunities the earlier they enter Africa, which has become an increasingly important location. The same reason drives us to invest in China," said Chou.
"Taiwan companies, however, without official backing like counterparts in China, have to adopt another strategy to tap the African market," Chou says. "Last year TABA successfully led three Taiwan trade delegations to different African nations, achieving initial success to build business ties. But, I have been telling Taiwan firms eagerly interested in Africa that the most effective way for Taiwan players is to find suitable partners there, and then educate them in business concepts. In short, we should look at Africa with the view to cultivate the potential market, seeking to achieve mutual-success rather than only selling products for short-term business relationship."
According to the TABA chairman, setting up TABA is to help Taiwan companies interested in Africa to take full advantage of the association`s platform to exchange information and share experiences gained from business activities in Africa. "TABA looks forward to integrating resources available from related government agencies and private sectors to more effectively explore business opportunities in Africa," Chou says.
Also TABA`s other function is to promote and improve trade and investment relations between Taiwan and African nations, as well as educate the Taiwan business community that Africa is an emerging, attractive business destination.
So far over 80 members from various industries have joined TABA.
TABA just successfully led a Taiwan delegation to four African nations from August 23 to September 8, including Cote d`Ivoire, Ghana, Nigeria and Tanzania, with the group consisting of 20 major companies in Taiwan that visited the capitals of the four nations.
The delegation included Aten International Co, Ltd. (major products as KVM switches, VGA splitter/switch etc.), Beverly and Victor Co., Ltd. (chemicals, appliances etc.) Candeo Corp. (computers peripherals etc.), Carrot Industrial Co., Ltd. (blinds, roller shades etc.), Formosa 21 Inc. (CCTV products, computer peripherals), Froch Enterprise Co., Ltd. (stainless steel welded pipe and tube), Giantlock Co., Ltd. (cable ties and wire accessories), Glacialtech Inc. (CPU cooler, chassis fan etc.), QQQ Industrial Corp. (auto spare parts and accessories) etc.
Of the three delegations, the first is scheduled to leave August 30 for Botswana, Mozambique, Madagascar and South Africa, while the second will depart on Sept. 9 for Kenya, Uganda, Ethiopia and Tanzania. The third mission is set off on Sept. 13 for Nigeria, Ghana, Senegal, Ivory Coast and Cameroon.
The missions, consisting of government officials and business representatives, will meet with African political and business leaders and visit relevant facilities in various African countries.
The plan for the missions was announced by Prime Minister Yasuo Fukuda during the Tokyo International Conference on African Development in May.
On a recent morning, at least two-thirds of the passengers on the fully booked Airbus A340-600 were Chinese. Slick-suited Chinese businessmen with briefcases sat next to Chinese engineers in jeans busily tapping on their laptops. Taking up most of economy class were scores of what appeared to be Chinese labourers, with weathered faces and calloused hands. The cabin crew made their announcements in Portuguese, English and Mandarin. Among the in-flight entertainment offerings was Crouching Tiger, Hidden Dragon. Everything else came with Mandarin subtitles.
In the current phase of China's engagement with Africa, there is no more important country for Beijing than Angola. Not only is the oil-rich former Portuguese colony now China's main supplier of crude, having surpassed Saudi Arabia some time ago, it is also China's largest trading partner in Africa.
But in a country where state finances are notoriously opaque, it is difficult to pin down the exact nature of a relationship that many say encapsulates the notion that, when it comes to Africa, where the West sees difficulty, China sees opportunity.
In 2002, with Angola facing the mammoth task of picking itself up after almost three decades of civil war, plans to organise an international donors conference were abandoned. Western countries cited a lack of transparency and reports that billions of dollars in oil revenues had vanished from the country's coffers.
That slight clearly still rankles with Aguinaldo Jaime, Angola's deputy prime minister. "The donor community was not ready to come to our rescue so we had to look for alternatives," he says crisply, sitting in his office at the presidential palace high above Luanda's Atlantic coastline. And so the government turned to Beijing.
"We had just come out of a long war, our economy had been devastated and the country had massive social needs," explains Jaime. "China was willing to understand this reality and put a huge financial package on the table. This is the main reason Angola decided to enter into a relationship with China."
Beijing secured a major stake in Angola's future oil production in exchange for a multibillion dollar package of loans and aid that included funds for Chinese firms to rebuild the country's rutted roads and ruined railways, and replace long-destroyed schools, hospitals and offices. Since then tens of thousands of Chinese have arrived in Angola. The blue-overalled Chinese construction worker breaking rocks or pouring concrete has become a common sight both in Luanda and some of the more remote towns of the country's interior.
One of the recent arrivals is Qui Shou Ying from Beijing. He is commercial director for Sino-Hydro Corp, a Chinese state-owned company contracted to build two roads, two water supply systems, 18 schools and four irrigation projects by next year. Qui lists the challenges that slow his projects down - erratic water and electricity supply is a particular annoyance, plus everything, apart from the local labourers he employs, needs to be imported from China.
What is striking though is Qui's zealous sense of mission. "Angola desperately needs help in reconstructing their country after the war," he says. "It is very important for our company to do a good job in helping Angola develop." Qui and his wife, an accountant at Sino-Hydro, live in the company compound on the outskirts of Luanda, a sprawling site that houses 300 Chinese workers as well as acting as a storage and logistics base.
Most Chinese in Angola, and indeed in other parts of Africa, live in similar compounds, many of which are high-walled and completely sealed off from the surrounding community. As elsewhere, this isolation encourages sometimes fantastical speculation about the new arrivals and the way they live. One frequently heard rumour in Angola is that China has sent some of its prisoners over to work on the roads.
The Chinese are to be found in the most unexpected places. I came across a small Chinese-run clinic in one of the many shanty towns known as musseques that ring Luanda. Xiong Kaihong, a 25-year-old nurse from Beijing, said the staff's use of traditional Chinese medicine such as acupuncture had become very popular with local patients.
Despite grumbling from some critics that Chinese labourers are doing jobs Angola's legions of unemployed could do - Beijing's deal stipulates that 70 per cent of the reconstruction tenders must go to Chinese firms and these companies tend to bring their own workers from China - there are few signs that the popular resentment which has bubbled up in other parts of Africa is gaining significant ground here.
There is no mention of China in any opposition party manifesto ahead of next month's elections, the first since 1992. "I think so far people generally see it as a positive thing," says Carlos Figueiredo, who works for the UN's development programme. "We see infrastructure being repaired and that's happening quite fast. As far as I know there is not much tension. It will be interesting to follow this and see how it will evolve. It's a real mixing of people and cultures on many different levels."
Allan Cain, a Canadian who runs a development agency and who has lived in Angola for almost 30 years, says the Chinese engagement, particularly its loan package, is an opportunity the country must be careful not to waste. "The concern is that there is little national capacity and planning for the effective use of this credit line . . . Some of the projects are simply wasteful prestige projects such as sports stadiums that will burn a lot of that credit line for results that won't produce economic returns in the long term for Angola."
Others raise concerns that "no-strings-attached" Chinese credit creates a situation where the Angolan government has little incentive to implement political reform, tackle endemic corruption and make its economy more transparent. Already there are signs of the problems that can arise when hard-headed Chinese business comes up against the realities of a country like Angola, which, despite its vast oil wealth, languishes on the bottom rungs of most development indices.
Rumours abound of suspended or cancelled contracts and billions of dollars worth of funds unanswered for on both sides. Observers have speculated that relations have cooled considerably since the heady days of the first credit lines. Deputy prime minister Jaime plays down that suggestion, pointing out that Angolan president Jose Eduardo dos Santos signed off on a number of new contracts while in Beijing to attend the Olympics. "In any negotiation there are sometimes setbacks," Jaime says. "Just because parties sometimes cannot agree on a particular business point does not imply the relationship is not good. "As we like to say," he adds with a smile, "business is business, friendship is friendship."
In his book Late Victorian Holocausts, Mike Davis tells the story of the famines that sucked theguts out of India in the 1870s. The hunger began when a drought killed the crops. As starvation bit, the viceroy, Lord Lytton, oversaw the export to England of a record 6.4m hundredweight of wheat. While Lytton lived in imperial splendour and commissioned, among other extravagances, "the most colossal and expensive meal in world history", between 12 million and 29 million people died. Only Stalin manufactured a comparable hunger.
Now a new Lord Lytton is seeking to engineer another brutal food grab. As Tony Blair's favoured courtier, Peter Mandelson often created the impression that he would do anything to please his master. Today he is the European trade commissioner. From his sumptuous offices in Brussels and Strasbourg, he hopes to impose a treaty that will permit Europe to snatch food from the mouths of some of the world's poorest people.
Seventy per cent of the protein eaten by the people of Senegal comes from fish. Traditionally cheaper than other animal products, it sustains a population that ranks close to the bottom of the human development index. One in six of the working population is employed in the fishing industry; about two-thirds of these workers are women. Over the past three decades, their means of subsistence has started to collapse as other nations have plundered Senegal's stocks.
The EU has two big fish problems. One is that, partly as a result of its failure to manage them properly, its own fisheries can no longer meet European demand. The other is that its governments won't confront their fishing lobbies and decommission all the surplus boats.
The EU has tried to solve both problems by sending its fishermen to west Africa. Since 1979 it has struck agreements with the government of Senegal, granting our fleets access to its waters. As a result, Senegal's marine ecosystem has started to go the same way as ours.
Between 1994 and 2005, the weight of fish taken from the country's waters fell from 95,000 tonnes to 45,000 tonnes. Muscled out by European trawlers, the indigenous fishery is crumpling: the number of boats run by local people has fallen by 48% since 1997. In a recent report on this pillage, ActionAid shows that fishing families that once ate three times a day are now eating only once or twice. As the price of fish rises, their customers also go hungry.
The same thing has happened in all the west African countries with which the EU has maintained fisheries agreements. In return for wretched amounts of foreign exchange, their primary source of protein has been looted. The government of Senegal knows this, and in 2006 it refused to renew its fishing agreement with the EU. But European fishermen - mostly from Spain and France - have found ways round the ban. They have been registering their boats as Senegalese, buying up quotas from local fishermen and transferring catches at sea from local boats.
These practices mean that they can continue to take the country's fish, and have no obligation to land them in Senegal. Their profits are kept on ice until the catch arrives in Europe. Mandelson's office is trying to negotiate economic partnership agreements with African countries. They were supposed to have been concluded by the end of last year, but many countries, including Senegal, have refused to sign. The agreements insist that European companies have the right both to establish themselves freely on African soil, and to receive national treatment. This means that the host country is not allowed to discriminate between its own businesses and European companies.
Senegal would be forbidden to ensure that its fish are used to sustain its own industry and to feed its own people. The dodges used by European trawlers would be legalised. The UN's Economic Commission for Africa has described the EU's negotiations as "not sufficiently inclusive." They suffer from a "lack of transparency" and from the African countries' lack of capacity to handle the legal complexities. ActionAid shows that Mandelson's office has ignored these problems, raised the pressure on reluctant countries and "moved ahead in the negotiations at a pace much faster than the [African nations] could handle."
If these agreements are forced on west Africa, Lord Mandelson will be responsible for another imperial famine.This is one instance of the food colonialism that is again coming to govern the relations between rich and poor counties. As global food supplies tighten, rich consumers are pushed into competition with the hungry.
Last week the environmental group WWF published a report on the UK's indirect consumption of water, purchased in the form of food. We buy much of our rice and cotton, for example, from the Indus valley, which contains most of Pakistan's best farmland. To meet the demand for exports, the valley's aquifers are being pumped out faster than they can be recharged. At the same time, rain and snow in the Himalayan headwaters have decreased, probably as a result of climate change.
In some places, salt and other crop poisons are being drawn through the diminishing water table, knocking out farmland for good. The crops we buy are, for the most part, freely traded, but the unaccounted costs all accrue to Pakistan. Now we learn that Middle Eastern countries, led by Saudi Arabia, are securing their future food supplies by trying to buy land in poorer nations. The Financial Times reports that Saudi Arabia wants to set up a series of farms abroad, each of which could exceed 100,000 hectares. Their produce would not be traded: it would be shipped directly to the owners. The FT, which usually agitates for the sale of everything, frets over "the nightmare scenario of crops being transported out of fortified farms as hungry locals look on."
Through "secretive bilateral agreements", the paper reports, "the investors hope to be able to bypass any potential trade restriction that the host country might impose during a crisis." Both Ethiopia and Sudan have offered the oil states hundreds of thousands of hectares. This is easy for the corrupt governments of these countries: in Ethiopia the state claims to own most of the land; in Sudan an envelope passed across the right desk magically transforms other people's property into foreign exchange. But 5.6 million Sudanese and 10 million Ethiopians are currently in need of food aid. The deals their governments propose can only exacerbate such famines.
August 25, 2008
2. Sporting prowess is a potential export for Africa
3. Third World Network urges Ghanaian rejection of EPA
4. DRC poachers decimating elephants as China drives up ivory demand
5. Equatorial Guinea to host African oil and gas conference
6. Ugandan traders decry 'unfair' trade deals within East Africa
7. As SADC Free Trade Area takes effect, fear of South African dominance emerges
8. Large companies to benefit more from SADC Free Trade Area
9. Ecobank sells shares
"The unprecedented importation of old computers into Africa from developed countries to satisfy information technology needs has resulted in electronic waste that adds to environmental pollution," Environment Minister Kwadwo Adjei-Darko said. "I appeal to developed countries not to use Africa as a dumping site for computers," he told representatives from 150 countries attending a week-long United Nations conference on climate change.
Children scavenging rubbish dumps for old computer parts are a common sight in Africa. The activity exposes them to dangerous minerals such as lead, cadmium and toxic fumes emitted from dump sites, experts say. "This is the situation in most African cities where 'computer villages' for selling old imported computers, especially laptops, are springing up," said Christian Teriete of the international NGO World Wide Fund for Nature (WWF).
The dumping of used equipment does not end with computers only, but extends to cars, refrigerators, televisions and other electronic devices which African governments should also oppose, activists say. "A lot of used cars imported mostly from Europe ply the streets of Accra, emitting high levels of smoke," WWF's Teriete added.
But Ben Abedi, an Accra taxi driver expressed misgivings on the workability of any plans to effect a ban."The (Ghanaian) government banned the importation of used cars of more than 10 years and placed high import duties on them, but such cars are all over the country. Nothing has changed," Abedi said.
The answer has been showcased on your TV screen throughout the Beijing Olympics, says Cristian Worthington, a Vancouver software developer and entrepreneur. It’s runners — men, and a few women, who can out-pace everybody else in the world.
Worthington, who confesses to being an Olympic junkie and is a serious runner himself, developed this theory as he watched the distance-running events, which were dominated by eastern Africans from Kenya and Ethiopia. (Short-distance events were totally dominated by runners of West African descent, although — thanks to the slave trade that dispersed their ancestors — virtually all of them ran on Western Hemisphere teams.)
“For Kenyans, running is a ‘service’ they can produce without special tools and they can export without restriction,” he said in an email. “Since most major contests around the world offer appearance bonuses for elite athletes, the cost of getting to meets is actually not as high as you might imagine. So the market for the ‘service’ has a very low export cost.”
In many international meets the top runners can earn sizeable purses of five or even six figures. And in East Africa, the norm is for elite athletes not to squander their winnings on luxury and bling, but to pump the money into their communities — supporting young runners, building schools, and that sort of thing.
That’s an important if running is to be a worthwhile export, Worthington noted. “None of this would work if the athletes just screwed off and took the money elsewhere. But their success drives home a point that African leaders have been trying to get across to the WTO — namely that many of these countries would not need aid if they could trade on a level playing field.”
At a press conference in Accra on August 21 ahead of the 11th Annual Review and Strategic Meeting of the Africa Trade Network (ATN), a coalition of non-governmental organizations across Africa, the Programmes Officer; Environment Unit of TWN, Mr Gyekye Tanoh, said "it is still necessary that as civil society, we intervene to ensure that Ghana gets the best deal in the process.”
The Accra meeting, hosted by TWN Africa, will focus on responding to the new challenges emerging for the ATN's ongoing flagship campaign against the Economic Partnership Agreements (EPAs).
Since Ghana and Cote d'Ivoire signed an Interim Partnership Agreement in December last year, neither of their Parliaments has been able to ratify the agreement when the deadline elapsed two months ago.
“The interim EPA is fraudulent because it goes beyond what it claims to do. Instead of focusing on trade in goods, the agreement actually captures the Singapore issues such as procurement, trade-related issues and intellectual property rights," Tanoh stated.
"More importantly, from the point of view of genuine development, the lEPAs are also a framework for expansion into full and comprehensive EPAs, which include commitments that have been rejected and thrown out of the WTO, such as universal liberalization and deregulation of services and investment rules," Tanoh added.
Although the EU claimed that it was illegal to trade within the old trading system under which it offered non-reciprocal market access to countries in Africa, the Caribbean and the Pacific (ACP), it has since December last year not notified World Trade Organisation (WTO) about the interim agreement. This means that the two parties still trade based on the old system, which is premised on the Cotonou Partnership Agreement signed in Benin in 2000.
The Programme Officer of the TWN said the so-called interim EPA conflicted with most of Ghana's local laws, policies and programmes such as the Ghana Investment Promotion Council (GPIP) and defeated the pro-industry Domestic Content Bill.
The four-day annual review and strategy meeting of the ATN would, therefore, explore some of these issues and examine options by locating the current conjuncture of the EPAs in a more comprehensive context of the global economy and form a perspective of shared analysis of the real development options for Africa today.
“Equally, such clarification will facilitate linkages and mobilization of strategic constituencies and help sustain the upscaling of the Stop EPA campaign and its broad range of advocacy and campaign intervention outside and inside the official negotiations," Mr Tanoh said.
Some specific issues to be discussed from Monday, August 25 to Thursday, August 28, this year, will include Global and African economic context today; Global Crises, the rise of China and other emerging powers and the commodity boom, as well as examining the interim EPAs on trade in goods) and EPAs
Rwandan rebels have killed seven Savannah elephants in the past 10 days alone in the Virunga National Park, along DRC's eastern border with Rwanda and Uganda, Emmanuel de Merode said.
"We've definitely lost 20% of the population this year and probably more," he said. "We have rangers with them, and we're trying to reinforce them. But the rangers are outnumbered 20 to one."
The 790 000ha reserve was home to one of Central Africa's largest Savannah elephant herds in the 1970s, numbering about 5 000. But a brutal 1998 to 2003 war, heavy poaching, corruption and mismanagement of the park have taken a heavy toll. Today conservationists believe no more than 300 elephants remain.
China, among the world's main destinations for illegal ivory, was granted permission last month to buy 108 tonnes of ivory stocks from Botswana, Namibia, South Africa and Zimbabwe by the Convention on International Trade in Endangered Species.
De Merode singled out China's growing appetite for ivory as one of the root causes of this year's increase in elephant killings, as poachers attempt to launder their illegal ivory for legitimate sale.
"It's very difficult to distinguish between legal and illegal stocks," he said.
Despite the official end of the conflict in DRC, the eastern borderlands remain a volatile patchwork of rebel strongholds and militia-controlled zones. Armed clashes between rival armed groups are a regular occurrence, limiting the rangers' ability to patrol, and providing cover for poaching.
The Savannah elephant is a sub-species of the African elephant, which is classified as a vulnerable species by the International Union for Conservation of Nature and Natural Resources.
Mail and Guardian
Traders are angry over what they called unfair trade agreements Uganda has signed with other East Africa Community (EAC) partners.
They said the pacts were negatively affecting their businesses and also complained to Parliament that the officials who negotiated for the country in Arusha, the community headquarters, endorsed deals that only favoured Kenyans.
The concerns are contained in a report of the committee on tourism, trade and industry on the budget estimates for the 2008/2009 financial year.
The traders, who said they supported the regional integration, however, noted that it was moving too fast and to their disadvantage.
"The EAC was supposed to be private sector-driven but the reality on the ground is that the business community is being left behind. Trade issues agreed by the member states are not practiced by some states," they said.
The committee head, Kiiza Rwebembera, pointed out that polythene bags below 30 microns had been banned in Uganda but were being exported from Kenya. "These bags find their way to Uganda yet our manufacturers stopped producing them. This is not fair to us," read the petition.
The businessmen also observed that many non-tax barriers remained existed between the member states despite the Customs Union protocol.
The launch of a free trade area (FTA) within the Southern Africa Development Community (SADC) has brought the region one step closer to a regional customs union by 2010. But the launch of the FTA at the recent SADC heads of state summit was met with mixed reaction.
According to Taku Fundira, an analyst at the Trade Law Centre of Southern Africa (TRALAC), the FTA is ‘‘intended to act as a catalyst for increased regional integration and to facilitate trade and investment flows within the region.’’ TRALAC is a think tank based in Stellenbosch near Cape Town.
‘‘Some of the countries in the SADC are being prevented from fully benefiting from the gains of trade because of the size and nature of their economies. By integrating, countries are able to exploit scale economies while at the same time restructuring the regional economy in ways that benefit the production base of the region.’’
However, one of the critics, trade specialist Dot Keet, said trade in the region is skewed in favour of South Africa -- the strongest economy. ‘‘The trade deficits in the region are in South Africa's favour. Mostly South African companies are moving into and benefiting – in all sectors including communication, tourism, retail, trade, mining, airlines, banking, et cetera.’’
Keet is with the Alternative Information Development Centre (AIDC), a Cape Town-based non-governmental organisation focussing on development research from a critical standpoint. She warned that many SADC countries are negotiating economic partnership agreements (EPAs) with European Union (EU) countries. ‘‘If there is a free trade area in the SADC region and the EPAs with its most favoured nation clauses are signed, it will open the doors to European imports,’’ Keet told IPS.
The ‘‘most favoured nation’’ clause in the EPAs requires African signatories to give the EU the same treatment as in future agreements with other countries signed subsequent to the EPAs.
‘‘It will be extremely difficult to monitor trade across porous borders – whether it is goods from SADC or Europe. Many of the SADC countries are willing to sign agreements which will undermine their own economic advancement. The EU is insisting on the liberalisation of finances, health and a number of services,’’ Keet explained.
‘‘Most of the limited export sector of SADC countries is heavily biased towards the European markets. EU countries threaten African countries with tariff raises on imported goods if the EPAs are not signed.’’
She added that, although South Africa is in a better position than the rest of the region as it has diversified its exports to South America, China and India, it is also reliant on Europe. According to her, SADC countries are further compromised as they are heavily reliant on foreign aid. They fear that the millions of dollars that are annually poured into these countries will be withdrawn if they do not sign EPAs.
Nkululeko Khumalo, a researcher at the South African Institute of International Affairs (SAIIA) attached to the University of the Witwatersrand in Johannesburg, differed from Keet: ‘‘It is simply not true that the FTA will lead to European goods flooding the SADC markets. The FTA is about intra-SADC trade and outsiders are precluded from benefiting from it through rules of origin.’’
These rules translate into tariff duties for goods produced outside the region.
He added: ‘‘Since 2000, SADC countries have been implementing the provisions of the SADC Trade Protocol. They achieved the goal of liberalising 85 percent of goods within eight years. The establishment of the FTA is one of the targets set by the SADC countries before the establishment of the Customs Union by 2010. ‘Whether the Customs Union will become a reality within the next 18 months remains to be seen. There is too little time left."
According to Fundira of TRALAC, the FTA will aid increased intra-regional trade along with inflows of foreign capital -- mainly from South Africa. ‘‘This will help to boost industrial development and the diversification of the export base. The FTA may also help to reduce uncertainty and improve the financial credibility of countries in the region. In turn this could boost private sector investment.’’
Before the SADC summit, South African finance minister Trevor Manuel in a speech to the National Assembly in Cape Town warned that the fact that several SADC members were members of other regional groups could become problematic, as each group had its own way of negotiating with EU members.
Manuel advised the different member states to decide on which regional grouping they wanted to be members of.
Khumalo also believes that membership of different bodies pose some challenges. Tanzania, for example, belongs to more than one grouping. He has suggested as a way forward that SADC and the Common Market for Eastern and Southern Africa (COMESA) create a mutual free trade agreement. This will assist countries that do not want to pick one membership and leave behind another.
In the end, it could help with trade integration across the African continent, Khumalo argued.
This is according to civil society organisations belonging to the Southern African People's Solidarity Network (SAPSN).
SAPSN contends that the signing of the FTA in the current regional environment will not lead to fair trade. The network adopted a resolution to this effect at its summit which ran parallel to the SADC summit of heads of state Aug 16-17). SAPSN represents several non-governmental organisations from across the region.
‘‘We must recognize that such a SADC free trade area will serve the expansionist aims and interests of South African companies, not the equitable and more balanced trade development that enables cross-border trade, especially by small women traders,’’ read a draft of the resolution.
A delegate from Zimbabwe asked, ‘‘where is the fair trade when cross-border female traders are forced to spend hours waiting at the border?’’
Jubilee South Africa’s message was more strident, urging civil society groupings to rally populations in their home countries against the SADC FTA. Jubilee is a non-governmental organisation calling for the cancellation of poor countries’ debt. The organisation's chairperson, Mallet Pumelele Giyose, said the FTAs will only benefit corporations from South Africa and, in some cases, their parent companies based in the North.
The SADC FTA ‘‘is a deal for South African businesses. There is nothing in it for SADC. All it will do is to choke the life out of small businesses in the region,’’ Giyose said. He cited examples of how South African big business is spreading its influence across the continent, muscling small businesses out of trade in their home countries.
Giyose lamented the case of Zambia where shopping malls have been taken over by South Africa-based corporations, leading to loss of livelihoods for local producers whose products can't compete with imported products. He added that FTAs are bankrolled by corporate interests that put profit before people.
Thomas Deve, United Nations' Millennium Campaign policy analyst for Africa based in Nairobi, Kenya, gave a slightly different interpretation: ‘‘The SADC FTA is a welcome development but in the region's current state, it is just an elite deal which does not take small business and ordinary people into account. We will not stop campaigning against the FTA, whether it is signed or not.’’
The Millennium Campaign promotes the participation of people in the achievement of the United Nations’ Millennium Development Goals.
A delegate from Zambia at the SAPSN meeting deplored SADC for ‘‘killing’’ markets for small farmers in Zambia. He called on SADC to represent the people's interests and not to parrot the ‘‘gentlemen's club'' of the North which has nothing to do with concern over average people’s lives. ‘‘Cabbages and vegetables are now cheaper in the supermarkets as all farmers are forced to sell their products in the supermarkets,’’ said the delegate.
SAPSN contends that the FTA will not benefit SADC states until the region is fully integrated. This integration process is being undermined by the economic partnership agreements (EPAs) with the European Union (EU) which have been entered into on a bilateral basis, fragmenting the region.
‘‘SADC must reunite as a region and, together, firmly resist the EU's re-colonisation through the EPAs, instead of manoeuvring separately to get EU trade and aid support which is splitting SADC,’’ SAPSN resolved at its meeting.
These views echoed to some extent SADC Executive Secretary General Augusto Tomaz Salamao's remarks that the region will not fully achieve its aspirations if it is not united.
SAPSN also argued that the SADC FTA will further serve to create an open integrated market for EU importers, investors and service corporations.
Ecobank is offering new investors 5.12 billion ordinary shares at $0.29 a share. It is also selling 3.76 billion shares to existing shareholders at $0.27 each, according to the offer document. The offering is an ``investment in the future of Africa,'' Chief Executive Officer Arnold Ekpe said in an interview from London on Aug 22. The proceeds will fund expansion into new countries in Africa, inject extra capital into existing units and upgrade computer systems, he said.
Ecobank has operations in 25 African countries, including Nigeria, Chad and Malawi. The lender is expanding on the continent as more consumers use banks amid rising wealth spurred by faster economic growth. It also wants to tap into increased trade and investment banking transactions from London, Dubai and Beijing as demand for commodities surges.
The bank plans to focus on countries in sub-Saharan Africa excluding South Africa, Ekpe said. It will begin operating in Uganda and Gabon later this year after securing licenses from the two countries. ``Our geographical focus is what we call Middle Africa,'' Ekpe said. ``We still have a few more countries to do.''
Ecobank's expansion strategy brings it into direct competition with Johannesburg-based Standard Bank Group Ltd., Africa's biggest lender by assets, which has a presence in 18 countries.
The outlook for Ecobank ``looks solid'' provided its management doesn't take on too many responsibilities as the bank expands, Roelof Horne, who manages the Guernsey-based Investec Pan-Africa fund, said in an interview on Aug. 21.
The share sale will take place on the Nigerian Stock Exchange, the Ghana Stock Exchange and the Bourse Regionale des Valeurs Mobilieres in Abidjan, which serves as the regional stock market for Francophone west African countries.
Ecobank has held more than 70 meetings with investors from Asia, Europe and the U.S. and expects a ``good' response to the offering, Ekpe said in a statement on Aug. 20. The sale will close on Oct. 3 and trading in the new shares will commence on Dec. 12, according to the offer timetable.
August 22, 2008
It currently attracts only about $9 billion, according to Goldman Sachs. This means that the country must on the average pull in $50 billion on a yearly basis to hit its target. It also means doing an extra $41 billion better than current levels; which economic observers say may be a Herculean task.
The task is not an easy one, as research shows that Nigeria is not even in the top ten of FDI destination where the least country, Thailand received $9.6 billion in 2007, according to World Bank research contained in Global Development Finance 2008. Unsurprisingly, according to Goldman Sachs, the bulk of FDI inflows (55 percent in 2006) went to the oil and gas sector. But other sectors have also benefited, particularly the banking and infrastructure sectors.
The Nigerian economy is in dire need of diversification, having had oil and gas as mainstays for nearly half a century. Oil and gas represents 98 percent of Nigeria’s total export revenue and amounted to $58 billion in 2006, tripling the country’s trade surplus since 2002.
The research by Goldman Sachs notes that the FDI growth is on the back of Nigeria’s improving economic climate, with GDP accelerating an average seven percent in the last five years. Imports have also risen rapidly and much of this in the form of investment goods for the oil sector. Trade surplus has risen to $40bn (up from $28bn in 2006 and only $5bn in 2002). The outlook interestingly also looks favourable as official figures put targets for 2008 at 10 percent. It is expected that exports would grow to $92bn in 2008, assuming oil production of 2mn bpd. It is also believed that the current account would run a surplus of 9 percent of GDP in 2008, up from a deficit of 3 percent in 2003. The favourable outlook suggests that FDI would continue to pour in, but at what rate?
Goldman Sachs three years ago predicted that the country would figure in the top twenty economies by 2020. Soon after, it appeared on the radar of Fitch, then Standard and Poor’s, two rating agency, which gave the country high marks. Since then international investors have been looking in and even taking positions in some of the most attractive sectors of the economy. One such investor, a private equity firm even re-wrote the BRIC (Brazil, Russia, India and China) acronym as BRINC with the ‘N’ standing for Nigeria.
Why FDI may slow
But there are situations on the ground that may slow the massive inflow envisaged by government. Chief of these impediments is government’s penchant for policy reversals. Reversals should be relics of the country’s stint with despotism and military junta. Reversals send a wrong signal about a country’s intention to be a part of the international flow of investment capital with all the benefits that come with it.
The tottering stage of the rule of law and property rights law, for example the land use laws, is yet another snag in government’s plans. In this regard, there are lessons to learn from Singapore, a country of just six million people that have made their economy a hub for FDI on account of entrenching the Rule of Law.
The ease of doing business in Nigeria needs to be given extra attention as these impacts directly on companies’ bottom line. Government is urged to stream line registration processes and double up efforts in rebuilding broken infrastructure particularly, power and road infrastructure. On this, the lesson is from Ghana, a neigbouring country now hot on investors’ destination points.
Other reasons why FDI may stall
The main factors motivating FDI into Nigeria and some other African countries, OECD observes, is the availability of natural resources in the host countries and, to a lesser extent, the size of the domestic economy. Studies have attributed this to the fact that, while gross returns on investment can be very high in Africa, the effect is more than counterbalanced by high taxes and a significant risk of capital losses.
As for the risk factors, analysts now agree that three of them may be particularly pertinent: macroeconomic instability; loss of assets due to non-enforceability of contracts; and physical destruction caused by armed conflicts.The second of these may be particularly discouraging to investors domiciled abroad, since they are generally excluded from the informal networks of agreements and enforcement that develop in the absence of a transparent judicial system.
Several other factors holding back FDI have been proposed in recent studies. Notably, the perceived sustainability of national economic policies, poor quality of public services and closed trade regimes. Even where the obstacles to FDI do not seem insurmountable, investors may have powerful incentives to adopt a wait-and- see attitude.
FDI (and especially greenfield investment) contains an important irreversible element, so where investors’ risk perception is heightened the inducement would have to be massive to make them undertake FDI as opposed to deferring their decision. This problem is compounded where a deficit of democracy, or of other kinds of political legitimacy, makes the system of government prone to sudden changes.
Finally, a lack of effective regional trade integration efforts has been singled out as a factor. Due to this, national markets remained small and grew at a modest pace (and, in some cases, they even contracted).
Quality of FDI
In terms of quality of capital flows, Goldman Sachs are confident that much of the money that will continue to flow into Nigeria will be in a form that promotes efficient allocation. For example, they expect continued investment in Greenfield FDI into industries such as consumer goods and agriculture, rather than into the banking sector. Based on recent trends, they expect much of this investment to be supported by private international inflows, mainly from China, Russia and the Middle East. They also expect a continued steady influx of capital from the official donor sector, which will likely be targeted towards longer-term large-scale infrastructure investments, as well as Nigeria’s budget.
FDI pros and cons
A 2002 study by the OECD notes that FDI triggers technology spillovers, assists human capital formation, contributes to international trade integration, helps create a more competitive business environment and enhances enterprise development. All of these contribute to higher economic growth, which is the most potent tool for alleviating poverty in developing countries.
Moreover, beyond the strictly economic benefits, FDI may help improve environmental and social conditions in the host country by, for example, transferring "cleaner" technologies and leading to more socially responsible corporate policies.
The flipside, however, according to the report, could be a deterioration of the balance of payments as profits are repatriated (albeit often offset by incoming FDI), a lack of positive linkages with local communities, the potentially harmful environmental impact of FDI, especially in the extractive and heavy industries, social disruptions of accelerated commercialisation in less developed countries, and the effects on competition in national markets.
Moreover, some host country authorities perceive an increasing dependence on internationally operating enterprises as representing a loss of political sovereignty. Even some expected benefits may prove elusive if, for example, the host economy, in its current state of economic development, is not able to take advantage of the technologies or know-how transferred through FDI.
The workshop was held in Accra, Ghana from 21-23 July under the theme “Protecting the consumer against counterfeit products through interagency and sub-regional collaboration.” It was organised by the Food and Drugs Board in collaboration with the Ghanaian Institute of Packaging.
“Aside from being a threat to human life, counterfeit goods deny genuine products of their rightful market share, cost government significant amounts in lost tax revenue, threaten jobs and create lack of consumer confidence in products,” Ghanaian President John Agyekum Kufuor said at the opening session of the workshop. But nations are struggling with how to address the problem while also developing locally advantageous solutions.
Although the magnitude of counterfeiting is difficult to calculate, some experts have estimated that 10 percent of the global pharmaceutical supply may be counterfeit, rising as high as 25 percent in developing countries. A survey conducted by WHO between January 1999 and October 2000 found 60 percent of counterfeiting incidents occurred in developing countries and 40 percent in industrialised nations.
To protect the local medical industries, a task force will prepare a mechanism for reporting counterfeit issues, including harmful effects on the local economy. To promote international investment, the task force will help West African countries to comply with international standards set by the WHO, World Intellectual Property Organization (WIPO), and the International Trademark Association (INTA), a US-based industry group.
This is intended to increase investment by foreign research-based reputable multinational pharmaceutical manufacturers which are typically reluctant to manufacture their products in countries where counterfeiting is rampant, as they fear an inability to protect their IP rights, according to Courage Quashigah, Ghana’s Minister of Health. It is unclear how the task force will help grow local innovation and local IP rights.
Hassan Moawad Abdel Al, former president of Alexandria’s Mubarak City for Scientific Research and Technology Applications, Egypt indicated that the task force must focus its activities on a campaign to make the public aware of indigenous knowledge. It must also promote sustainable use of traditional medicinal plants, which are the only source of medication for about 75 percent of all Africans.
Intellectual Property Watch
A lot of attention is being given to how China and India are bringing big technologies to Africa: hydroelectricity, solar technologies, computing, mobile-phone infrastructure. No question, these are important. But virtually unnoticed is how less expensive motorocycles are making personal transportation affordable to people who only recently dreamed of owning a bicycle.
Sakwa is a farmer I have been getting to know for the past few years in East Africa. He grows maize, green beans, cotton and a bit of peanuts. As farm prices have risen, he's become more interested in buying and selling crops grown by his neighbors. The motorcycle is a critical "enabling" technology, permitting him to travel over dirt roads easily and cheaply.
Sakwa this spring bought a motorcycle made by the Chinese company Dayun. Five years ago, European companies dominated the African market for motorbikes. But prices were high and repairs relatively costly.
The Chinese have transformed the motorcycle market -- in both East and West Africa -- with less expensive motorcycles and cheaper parts. True, the bikes are less powerful. But at least now Sakwa can afford one.
The influx of Chinese bikes seems likely to grow. What happened a decade ago in Asia surely will happen in Africa: motorbikes as a "ubiquitous" form of transport.
At the G8 in June Gordon Brown claimed that a deal could help to solve the global food crisis, but War on Want believes that the deal on offer would have made global food, financial and environmental crises worse.
Hilary continued: “rather than trying to revive these failed negotiations, Brown must join with other European leaders in crafting a new EU trade policy. Europe’s relations with the wider world must be based on principles of trade justice, not the self-interest of European exporters.”
The failure was due mainly to the US refusal to accept safeguards for farmers and workers in developing countries. The US and EU also refused to offer any meaningful cuts in the subsidies given to their own farmers, which lead to the dumping of agricultural produce on developing country markets and the destruction of rural economies. These disagreements have led to two previous collapses and are symptomatic of the aggressive tactics of the US and EU throughout the talks, said War on Want.
War on Want points to existing evidence that forcing open developing countries’ markets even more in the interests of Western corporations, would further increase poverty and inequality. Developing countries that were supposed to benefit from a deal have been almost totally excluded from decisions. Any future talks must be conducted on the basis of genuine transparency and democracy, said War on Want.
War on Want
The overfishing of West African coastal waters, often by large European trawlers and sometimes by ‘‘fishing pirates’’ who trawl without any authorisation, has largely depleted local fish stocks.
This has a direct impact on the rising rate of unemployment and on the ever-increasing flow of West Africans who embark on perilous journeys to Europe, in search of a better life.
‘‘The largest numbers of unemployed fishers ever are trying to emigrate to Europe, using their small fishing boats and pirogues, which leads to a number of people dying on the high seas,’’ says Moussa Demba Dembele, a Senegalese economist who coordinates the Forum for African Alternatives' research on development.
The ActionAid report is titled ‘‘Selfish Europe: How the Economic Partnership Agreements would further contribute to the decline of fish stocks and exacerbate the food crisis in Senegal.’’
It indicates that one in six of the working population is in the fishing industry and that fishing generates over 600,000 direct and indirect jobs.
Nevertheless, many West African countries have agreed to grant European fishing vessels access to their territorial waters in exchange for fees, as set out by Fishery Access Agreements initiated in 1979.
According to ActionAid, ‘‘the European Union can satisfy only 50 percent of its internal demand for fish from its own fish resources. The deficit has been filled for years through access'' to the fishing waters of the African, Caribbean and Pacific (ACP) countries.
Especially West African coastal waters, relatively close to Europe, has been plundered in recent years. Senegal’s catch volumes have fallen from 95,000 tons to 45,000 tons between 1994 and 2005, according to an estimate of the Senegalese department of maritime fishing.
‘‘European fishery operators present in Senegalese waters contribute significantly to the overexploitation of fishing stocks and provide little long term gains for the industry,’’ the ActionAid report argues.
Senegalese fishers, like most of their West-African counterparts, fish from pirogues which do not allow them to go far out at sea, where large-haul trawlers operate. As a consequence of the depletion of stocks, ‘‘from a peak of 10,707 pirogues in 1997, the fleet declined to a mere 5,615 in 2005'', the report indicates.
‘‘Many fishing companies are only operating part time due to the severe supply deficits of high value species and the average volume of fish exports has fallen by a total of 32 percent over the course of the past 15 years. This has led to companies laying off 50-60 percent of their staff,’’ it adds.
Dembele estimates that those Senegalese fisheries which have not gone bankrupt now operate at less than 50 percent of their capacity.
This has led the Senegalese government to decline renewing its fishing agreements with the European Commission in 2006 in an attempt to limit access to its fish and protect its industry.
Similarly, this was a factor in the Senegalese government's decision not to sign the economic partnership agreement (EPA) the EU proposed, as according to ActionAid, ‘‘the full economic partnership agreements proposed by the European Commission, which include services and investment provisions, are likely to lock in and worsen such practices.''
But putting the proposed EPA on hold has not stemmed the problem, as many European trawlers catch more fish than they are allowed to.
‘‘Companies which fish with a proper licence routinely exceed the quotas they are granted, as Senegal doesn't have enough resources to patrol its waters,’’ Dembele explains.
Additionally, many industrial vessels routinely fish in areas reserved for small-scale fishing, which extends to six miles (9.65 km) off the coast.
‘‘Fishing authorities also have problems controlling boats that move from one fishing zone to another while crossing borders,’’ the report adds.
‘‘Trawler owners play with different licenses and, if they can't get a license from Senegal, they have no problem obtaining one from a neighbouring country,’’ the report quotes Dame Mboup, director of Senegal's fishing protection and surveillance agency, as saying.
Many large trawlers also fish without any form of authorisation license.
According to the Environmental Justice Foundation (EJF), a London-based nongovernmental organisation that monitors illegal fishing, the scourge of ‘‘pirate fishing’’ affects the entire region.
‘‘Between 1997 and 2001, aerial surveys of Guinea's territorial waters found that 60 percent of the 2,313 vessels spotted were committing offences. Surveys of Sierra Leone and Guinea Bissau over the same period found levels of illegal fishing at 24 percent (of 947 vessels) and 24 (of 926 vessels), respectively,’’ the EJF writes.
Other European fishing companies have eluded the limits of quotas by resorting to the ‘‘Senegalisation’’ of their fleet: ‘‘A European ship owner forms a joint venture to enable his boats to fly the Senegalese flag. This allows him to avoid strict controls and access to fish in waters reserved to Senegalese boats,’’ the report explains.
Such considerations drive ActionAid to recommend ‘‘a permanent suspension of the fisheries agreements, the imposition of biological rest periods and reinforced surveillance of territorial waters.’’
But restoring this policy space for West African governments would conflict with the interim EPAs. As currently drafted, the EPAs require ACP countries to further open their economies to European competition.
Critics of the European Partnership Agreements (EPAs) recently published a pamphlet on "how the Economic Partnership Agreements would further contribute to the decline on fish stocks and exacerbate the food crisis in Senegal."
The author expands to the point of stating that EPAs' "…likely negative impacts will be: the worsening of the food crisis, the loss of work and revenues for women, with a direct impact on livelihoods, the loss of control by the government over a strategic sector, a loss for the national economy, and a strong incitement to illegal immigration."
It sounds really like EPAs will wreak havoc in Senegal and in ACP (African, Caribbean, Pacific) countries… Except that no EPA has been signed with Senegal or with the full Western African region! "Stepping stone" EPAs have been initialled with Ivory Coast and Ghana, and we are now progressing in the negotiation of a full EPA with the West African region. So the pamphlet speculates on possible effects of an agreement which does not exist, and implies that current problems in the fisheries sector in Senegal are to be blamed on some future EPA with the EU.
There is no basis for drawing these conclusions. As shown by different impact assessment studies, there are opportunities for growth and mutual benefits on both sides. Furthermore, the issues addressed by the pamphlet have yet to be negotiated with West Africa. However, the draft proposal currently being discussed with our West African partners puts a strong emphasis on sound fisheries management and control, appropriate fisheries governance and fight against IUU (Illegal, Unregulated, Unreported Fishing).
EPAs, in particular for the Pacific, Eastern and Southern Africa and Cariforum regions, contain provisions on fisheries management and control to ensure that exhaustible resources like fish is caught in a sustainable manner. Market access goes hand in hand with provisions on sustainable fisheries management and control, agreeing on best practices to develop the fishing industry in a sustainable way.
Moreover, under the European Development Fund (EDF) substantial funding is aimed at improving ACP fisheries sector and implementing the measures aimed at enforcing sustainable fishing. The EU is also providing financial assistance to help ACP countries meet EU standards (in particular, Sanitary and Phytosanitary standards – SPS).
The EU-Senegal fishing agreement was in place until 2006 and included a legal framework for fishing practice to help develop a thriving Senegalese fishing sector - Senegal decided not to renegotiate the agreement.
European fleets are already invading the local fishing market, either illegally or by making the most of loopholes in local legislation and joint-venture regulations. They push local fishermen out of the market and make them illegally emigrate to the EU.
European vessels were allowed to fish in Senegalese waters until the expiry of the last bilateral fisheries agreement in 2006, and fished only 2 to 3% of total products on the local market. On the other hand, they provided Senegalese fish factories with raw material from neighbouring fishing areas. This boosted Senegalese companies' business and created jobs for the Senegalese.
Bilateral Fisheries Partnership Agreements should not be confused with EPAs. Whereas the former concern access to fishery resources, EPAs are about trade and development and do not go into the details of access quotas to fish stocks or licences for fishermen.
It must be recalled that any new bilateral Fisheries Partnership Agreement to be negotiated with Senegalese authorities would give access to European vessels only to surplus fishing stocks – only fishing capacity which local fleets are unable to exploit themselves. Moreover, access to the local fishing sector goes in parallel with direct creation of jobs, marketing of produce in African countries, strengthening of control and surveillance (all European vessels are equipped with satellite tracking devices) and rules (on nets, fishing areas, rest periods to let fishes reproduce etc) to avoid depletion of local fish stocks.
As of today, as clearly indicated by Senegalese Minister Mr Djibo Ka, there are very few European shipping vessels operating in Senegalese waters, and they have virtually no impact on local fishing resources, reduced fishing production and immigration of local fishermen. In fact, as far as migration is concerned, most
Senegalese migrants are not fishermen but rather jobless urbanised youth.
Joint ventures between European and Senegalese fishing fleets are signed under Senegalese law and, if European vessels abuse of those agreements, they should be held accountable under Senegalese law and by local authorities.
European negotiators are forcing ACP ones to include provisions on investments in EPA texts, so as to open local markets to foreign direct investment and eventually letting Europeans take over local industry, including the fishing sector.
Sub-Saharan Africa is the region with the lowest level of investment in the world, and even Africans invest abroad. The EU's objective is to reverse this trend. Shouldn't West Africans try to further explore opportunities for subregional trade in fish products rather than turning to the EU?
First of all, as already under the "Everything but Arms" initiative most West African countries have duty-free quota-free access to European markets, meaning that they can already export fish and fishery products to the EU at zero tariff. But EPAs go beyond simple market access: they also encourage trade in the region, between West African countries themselves, in the framework of a broader regional integration drive which is at the heart of all EPAs.
Currently only 12% of the trade exchange in West Africa is intraregional. West African countries should therefore be able to boost intra-region trade in, for instance, fish and fish products. EPAs are all about boosting regional integration.
With regards to management, there are already organisations in the region, such as the "Commission sous-régionale de pêche" (CSRP), which could play a more active role - it is up to African governments to kick-start their functioning and make them be more active. The EU is already providing assistance to the CSRP.
But management of resources and selling rights to those resources are not the same thing. The first is a matter of cooperation and politics, the latter a legal issue and question of allocation of benefits. The EU thinks EPAs could be a place to negotiate better resource management.
Beyond the Senegalese case, all EPAs are bad for developing countries and will ultimately lead to the mpoverishment of local fish stocks. Look at EPA provisions in the Caribbean and East Africa - they are about
improving fisheries management and creating a sustainable industry, including the right to domestic regulation of industry and increasing measures aimed at the protection and sustainable management of fish stocks. The key focus here is on sustainable development and ensuring no lowering of standards to encourage investment, and the enforcement of local standards.
As the dust settles over the failed WTO talks in Geneva of the last fortnight, a fact that has been under-highlighted has become more clear. That is the important and even crucial role that the African and other smaller economies played in the mini-Ministerial process.
The African countries, led on this issue by the Burkina Faso Trade Minister, Mr. Mamadou Sanou, were furious with the turn of events. "We have been patient but we now feel betrayed, cotton was never even discussed," he told the formal Trade Negotiations Committee meeting on 30 July, after the talks had collapsed.