African trade blocs agree on free trade zone

Three African trading blocs agreed on October 22 to create a free trade zone spanning 26 countries and to establish joint infrastructure and energy projects.

The zone would help streamline access to markets within African regional bodies with an estimated gross domestic product (GDP) of $624-billion. Many African nations belong to conflicting and overlapping groups.

"The greatest enemy of Africa, the greatest source of weakness has been disunity and a low level of political and economic integration," Ugandan President Yoweri Museveni said.

"Bigger markets are a strategic instrument of liberating people from poverty," he said at a meeting of heads of state who chair the Common Market for Eastern and Southern Africa (Comesa), the East African Community (EAC) and the South African Development Community (SADC).

The EAC already has a functioning union and Comesa plans to launch its own by December this year. The 15-member SADC plans a customs union in 2010 and 12 of its members launched a free trade zone in August.

Analysts say that the continent has yet to fully exploit intra-regional trade as a way to boost growth.

The final communique from the meeting said the ultimate goal would be the establishment of a single customs union.

The final document said the timeframe for integration would be decided in one year. The groups will also move to harmonise transport, technology and energy plans.

Rwandan President Paul Kagame said the blocs should take steps to ease the impact of integration on smaller economies.

Delegates at the meeting said unifying would also help defend their interests when negotiating Economic Partnership Agreements (EPAs) with the European Union to replace preferential trade deals, which expire at the year's end.

"The negotiations on economic partnership agreements ... risk weakening Africa and may further balkanise the continent," said Erastus Mwencha, deputy chairperson of the African Union Commission.

A senior South African official said the proposed free trade area (FTA) would strengthen its members' negotiating position in international trade talks.

"When we've got a pan-regional FTA we've then have a legitimate basis to negotiate as a block so that some of these internal contradictions that arise as we negotiate as separate regions begin to be taken away," Ayanda Ntsaluba, director general in the Department of Foreign Affairs, told Reuters in Cape Town.

"We don't think its going to be an easy process... (but it's) the only viable path the continent can take if it wants to play in this global environment," Ntsaluba said.

The EAC has agreed to a temporary trade deal with the EU, effectively securing a one-year reprieve. Kenyan President Mwai Kibaki said COMESA had reached a similar pact.

The trade zone would include Angola, Botswana, Burundi, Comoros, Djibouti, the Democratic Republic of Congo, Egypt, Eritrea, Ethiopia, Kenya, Lesotho, Libya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Swaziland, South Africa, Sudan, Tanzania, Uganda, Zambia and Zimbabwe.

Reuters

The intricacies of the Doha Round for ACP countries

The Doha Round was launched in 2001 in Doha, Qatar, to provide a developmental dimension to global trade by enabling developing and least developed countries to secure enhanced access for their products in rich country markets.

However, there has been a pronounced shift in the negotiations over the last seven years — from developmental issues to the purely market-driven concerns of the dominant players.The coordinators for the African, Caribbean and Pacific (ACP) group, the least developed countries (LDC) group and the Africa group are all concerned about sustained attempts to undermine the developmental components in agriculture and cotton subsidies.

The US, the EU, Canada and other industrialised countries are demanding a hefty payment from their developing country counterparts for the reforms they have to undertake in their agriculture. That shift led to the collapse of Doha trade talks time and again, several analysts said.

For example, the US is not prepared to address its trade-distorting subsidies on cotton and other commodities until it secures enhanced market access for its farm products in developing countries. This condition puts paid to the flexibilities being envisaged for developing countries to protect their precarious farm production.

Along with Japan, Canada, Norway and Switzerland, the US and the EU have repeatedly maintained that they must secure a high level of access for their industrial products in developing countries as ‘‘payment’’ for their commitment to reduce the distortions they are causing in the global farm trade.

The ACP, the Africa group and the LDC group are pushing hard for simple and flexible rules for special products and a special safeguard mechanism (SSM) to protect their resource-poor subsistence farmers.

These three groups have joined ranks with the G-33 coalition led by Indonesia which is demanding easy conditions to use the SSM mechanism to face unforeseen surges in imports of major food items.

The ACP wants a ‘‘special safeguard mechanism (SSM) to protect our farmers from unforeseen import surges; the reduction of cotton subsidies; and a proper mechanism to address the erosion of preferences’’, explained Servansing. But the US, Australia and Uruguay ‘’are demanding tough and burdensome conditionalities that would make these provisions redundant.

Tough rules

The US, along with Australia, Canada and other farming exporting countries, want a set of tough rules for the SSM to ensure that it does not affect the normal trade in farm products. In July this year, the talks broke down on SSM, among other issues, when India and China refused to accept the stringent conditions demanded by the US.

Subsequently, there were attempts to renew these talks but there has been no progress as the leading farming exporters are not budging from their tough conditions.

Apart from the SSM, there is complete silence on how cotton — one of the boiling issues on the Doha agenda and the most important demand for the four West African cotton producers (Benin, Burkina Faso, Mali and Chad) -- is going to be addressed in coming days. This is due to the US’s decision not to come up with an alternative.

The chair indicated in his last draft text issued in the month of July that cotton subsidies should be reduced over 80 per cent, a suggestion that was rejected by the US. In a nutshell, the African countries are eager to conclude the Doha modalities agreement by the end of this year but they continue to face several hurdles to their developmental demands.

Oxfam, the developmental pressure group, cautioned the African countries about rushing into an agreement without addressing their concerns on special farm products and the special safeguard mechanism.

ips

1. African states adamant Doha must focus on development

2. Francophonie's poorest fear fallout of financial crisis

3. Africa must integrate its economies

4. Turkey turns trade focus to Africa

5. Senegal, China sign zero-tariff trade deal

6. French logistics company bullish on Africa's trade prospects

7. Mandelson wasn't so great as EU trade commissioner

8. PTA Bank gets $50 million credit line from China Development Bank

9. Legal ivory trade resumes for first time in a decade

10. Triodos Bank defies global credit crunch

African states adamant Doha must focus on development

by Ravi Kanth Devarakonda

Faced with the global financial crisis and high food prices, African countries want to conclude the much-delayed modalities agreement in the Doha Round of talks on agriculture and market-opening for industrial goods by the end of this year.

But they are not going to tolerate the ongoing attempts to lower the ‘‘developmental dimension’’ in the modalities agreement by some key members of the World Trade Organisation (WTO), several African trade envoys told IPS.

The modalities (parameters) agreement comprises a maze of rules that stipulate how WTO members must reduce their farm subsidies and import tariffs, as well as import duties on industrial goods.

For African countries, the important developmental issues in these parameters include a steep reduction in the global cotton subsidies; special flexibilities to safeguard important farm products on which tens of millions of poor farmers survive; the mitigation of the erosion of trade preferences provided by their erstwhile colonisers; the duty-free and quota-free access for least developed countries with simple and easy rules; and so on.

‘‘We are worried about the financial crisis, as well as the rising food prices, because most of our countries are dependent on external trade and we also import many agriculture products,’’ said the coordinator for the Africa, Caribbean and Pacific (ACP) group Ambassador Shree Baboo Chekitan Servansing.

‘‘Trade is part of the solution in the current global financial and food crisis and a strong agreement to reduce farm subsidies and rebalancing of trade rules will augur well for the world economy,’’ he told IPS in an interview. ‘‘Any delay to conclude this agreement will further compound the worsening crises,’’ Servansing argued.

Besides, the financial crisis in the leading industrialised countries is bound to cause a hole in official development assistance budgets. It will crowd out aid for trade. ‘‘Therefore, it is important that the DDA (Doha Development Round) is wrapped up without much delay,’’ he emphasised.

‘‘The Africa group has decided to commit to concluding the Doha modalities negotiations by the end of 2008,’’ said Ambassador Guy Alain Emmanuel Gauze, the Africa group coordinator at the WTO. ‘‘We are still working hard to ensure that the work on the modalities agreement in agriculture and NAMA (non-agricultural market access) is proceeding smoothly,’’ he told IPS.

An early agreement in the Doha Round ‘‘may unlock’’ the current stalemate in addressing various global problems and ‘‘will boost global trade at a time when fears of protectionism are on the rise,’’ said Dr Anthony Mothae Maruping, Lesotho's trade envoy and the coordinator for the least developed countries (LDCs) group at the WTO.

However, the three coordinators expressed sharp concern over sustained attempts to undermine the developmental components in industrial goods and duty-free and quota-free market access for products exported by the LDCs.

As regards negotiations on industrial goods, the African countries are opposed to sectoral tariff elimination as it would adversely impinge on their trade preferences. Sectoral tariff elimination involves bringing tariffs on agreed products to zero. For the U.S., it is a vital demand to satisfy its domestic industrial lobbies and secure support for the modalities agreement.

‘‘Sectoral tariff elimination is not obligatory for African countries. It is only voluntary,’’ said Gauze, suggesting that they will not join the negotiations on this issue. ‘‘We are opposed to all the elements in the sectoral tariff elimination,’’ said Servansing, arguing that this issue would further undermine trade preferences.

Also, the duty-free and quota-free access for African countries cannot be burdened with what are complex rules of origin, said Maruping. There is still no clarity on various aspects relating to duty-free and quota-free access, according to him.

IPS

Francophonie's poorest fear fallout of financial crisis

The poorest countries in the French-speaking world Sunday welcomed a drop in energy costs amid global financial woes, but also expressed concern about a drop in demand for their natural resources.A summit 56 French-speaking nations which opened Sunday is the first north-south forum since the global financial meltdown and the issue has seized the group's agenda.

"This will hit natural resources, the industry, trade, and in the midst of a food crisis, it's clear it will damage developing nations," said Denis Sassou Nguesso, president of the Republic of the Congo.

The republic, and others reliant on commodities exports, are "very concerned" about the sudden drop in metals and other natural resources prices and the subsequent fall in exports that is likely to follow, he said.

But most of them, being energy-importing countries such as Senegal, welcomed a drop in oil prices, after paying hundreds of millions of dollars in energy surcharges in the past year due to a spike in prices as high as 147.27 dollars a barrel in July.

"For the moment, I believe it is primarily a crisis that affects developed nations, nations that set up a financial system that has slipped from their control," commented Blaise Compaore, president of Burkina Faso.

Poorer countries do not have access to the financial markets, and so the meltdown has had no direct effect, he stressed.

"But since these (developed) countries are our economic partners, of course we're concerned about its impact on our economies," Compaore said.

Francophonie Secretary General Abdou Diouf and host Prime Minister Stephen Harper of Canada urged world leaders at the start of the three-day summit on Friday to be conscious of the impact of the crisis on pinched nations.

"It's strongly paradoxal that the developing world has not yet been truly touched by the crisis. But they are also clearly, extremely worried," said a senior Harper aide.

Compaore said: "We're still asking ourselves if this will affect development aid (for poorer countries), will it affect our trade with northern nations, will it exacerbate current trade distortions."

"If the global economic slowdown persists, we'll certainly face difficulties selling our natural resources at a good price and northern nations are sure to become more protectionist, particularly in the agricultural sector," he said.

"We're heading into a period of uncertainty," he said.

Some leaders criticized the United States and European governments' two trillion dollar bank bailout for ignoring the needs of Africa, and were cynical of the speed the package was put together while decades of negotiations have failed to lift Africa out of poverty.

"Some might say it's immoral, but morality is not worth much in economics and politics, unfortunately," said Senegal President Abdoulaye Wade.

"This crisis originated in northern countries, but the solution will not be found in the north," he said, supporting tougher financial regulations and a revamp of the system touted by French President Nicolas Sarkozy.

On Saturday, the Francophonie's 56 member countries "unanimously" backed Sarkozy's call for crisis talks to cipher global financial woes, and overhaul the banking system.

"They are calling for a global and monumental response because it's a global and monumental crisis," France's Prime Minister Francois Fillon said in a speech in Quebec City.

Sarkozy had pressed for a meeting of the Group of Eight (G8) industrialized nations, and others, by year's end to mull a revamp of the global financial system.

UN chief Ban Ki-Moon meanwhile proposed holding talks at the UN secretariat in New York to "lend universal legitimacy to this endeavor and demonstrate a collective will to face this serious global challenge."

Saturday, Sarkozy, US President George W. Bush, and European Commission chief Jose Manuel Barroso agreed at Bush's Maryland retreat on a series of summits beginning after the November 4 presidential election.

But there were already signs of different visions for the summits, with European leaders pushing for a radical overhaul of the whole financial architecture while Bush said the foundations must be preserved.

AFP

Africa must integrate its economies

Even as the world’s attention remains fixed on America and Europe’s financial crisis that is now expected to slow down the global economy, Africa is rightly pushing ahead with a planned merger of its many blocs in what is billed as the initial steps to the building of a continent-wide economic community. A meeting, which opened in Kampala last Friday, is expected to come up with a framework for the merger of the Common Market for Eastern and Southern Africa (Comesa), the East African Community (EAC) and the Southern Africa Development Community (SADC). Merger of the three trading blocs is seen a key to resolving the many challenges to economic prosperity for 800 million inhabitants of the continent. Top among these challenges has been the protectionism which has over the years prevented the free flow of goods and services across national borders — even among communities that have traditionally belonged to single markets. Then there is the challenge of infrastructure that has, for example, ensured that many African capitals are more accessible to the outside world from Europe than from neighbouring states. Lately, as competition on the global platform shifted from political ideology to trade, Africa has found itself between a rock and a hard place. On the one hand, the continent has had to deal with a global environment in which its partners are demanding more and more openness yet this very openness has become the biggest threat to industries and livelihoods. This dilemma only became more apparent last year as Africa negotiated with Europe for a new economic partnership agreement (EPA). These are trade agreements under which Africa gets special access to the European markets and are crafted in accordance with the global framework laid down by the World Trade Organisation (WTO). Key in the framework has been the requirement that every country entering into such negotiations must belong to a single trading bloc. Yet in Africa, the phenomenon of countries belonging to multiple economic communities is common and continues to unfold. East Africa was particularly disadvantaged by this because member states belonged to three different trading blocs. As things stand, establishing a single economic community offers the continent the best opportunity to marshal the clout it needs to engage with the world for favourable economic terms. Yet the unity project has remained captive of small minded leaders looking to preserve themselves in power regardless of the poor plight of those they claim to lead. This is a challenge Africa must overcome.

Business Daily Africa

Turkey turns trade focus to Africa

by David Neylan

Turkish businessmen try to establish trade links with their African counterparts in a trade bridge summit organized this year by the Turkish Confederation of Businessmen and Industrialists. There have been a quite a few prominent meetings between Turkey and African nations in recent months. These meetings have taken place both at the ministerial and private sector levels and have become so common that one commentator remarked, “Turkey has fallen in love with Africa.”

However, behind much of the lofty political rhetoric about humanitarian aid and economic development lie “hard” political and economic strategies, which include the pressing and long-term need to reduce Turkish dependence on traditional European and Russian trading partners as well as short-term goals such as obtaining African support for the recently successful bid for a seat on the UN Security Council.

In the past six months alone, significant meetings have included the Turkey-Africa Foreign Trade Bridge, hosted by the Turkish Confederation of Businessmen and Industrialists (TUSKON), which brought together upwards of a 1,000 businessmen from 45 countries; the first ever Turkey-Africa Cooperation Summit, sponsored by the Foreign Economic Relations Board (DEİK), featuring many African heads of state and their Turkish counterparts. This is all in addition to the recent announcement of the Turkish Union of Chambers and Commodity Exchanges (TOBB) and the Union of African Chambers of Commerce, Industry, Agriculture & Professions (UACCIAP) that they will work together to establish the Turkish-African Chamber (TAC).

If politicians’ speeches are any reflection of reality and are to be taken as anything more than bully-pulpit rhetoric, then President Gül, at least in part, shed some light on the topic when he stated before a delegation of businessmen that Turkey is well posed to snap up a number of contracting tenders in such sectors as “health, education, agriculture, environment, infrastructure and capacity building.” “We realize the potential in a continent which is fast developing,” said one government official who has intimate knowledge of the government’s policy of fostering Turkish-African trade relations

“War-torn countries are essentially building everything from ground zero. Many don’t have roads or infrastructure,” the official said, adding that others “have fertile land but don’t have the technology” to exploit this potential. But finding new markets in Africa goes beyond a simple desire for economic gain. The official revealed that Ankara is urgently trying to diversify its trade relations.

Several events seem to have underlined to Turkey the importance of diversifying its partners. The first is what an increasing number of observers are calling an “economic meltdown” in Europe, whose market absorbs more than 50 percent of Turkish exports.

The second is the diplomatic row between Ankara and Moscow over Ankara granting passage to US warships carrying aid for Georgia through the Bosporus. The conflict spilled over into the trade arena, resulting in Turkish trucks being stopped at the Russian border and costing the Turkish economy between an estimated $1-1.5 billion in lost trade revenue.

At a recent dinner hosted by TUSKON, the need to diversify exports was confirmed in part by Timur Tığdemir, the department head for the Africa division of the organization, who said that there was increasing importance being placed by Turkey on diversifying its trade with such regions as Africa. He elaborated on Turkish trade relations and showed that this growth plan indeed held water; in the first eight months of 2008, exports were up 64.6 percent over the previous year and had climbed to $6.25 billion.

More interestingly, exports to the Sub-Saharan region were up by more than 85 percent, with total trade to the continent amounting to over $15 billion. The number and diversity of products was also rapidly growing. Although these figures represent only a small fraction of Turkey’s total foreign trade, which is around $300 billion, Turkey is keenly aware that this figure must increase in line with its goal of reducing its dependency on European markets. And Tığdemir was confident that this number would continue growing in the coming months as more and more Turkish businessmen were entering African markets.

TUSKON President Rızanur Meral recently confirmed these sentiments and announced that developing trade with Africa was at the top of the organization’s agenda. Indeed, Tığdemir said that TUSKON would bring a number of delegations to such Sub-Saharan countries as Burkina Faso and Senegal in the coming months.

With respect to commodity purchases from Africa, another official who did not want to go on record revealed that Turkey was desperately trying to divert its oil and gas imports away from Russia and Central Asia and was looking at Africa as an ever-promising source, adding, “Russian actions against Turkey, in combination with the Russian row with Ukraine in the cold winter of 2006 taught Turkey a lesson” -- that Russia is perfectly capable of moving diplomatic disagreements into the energy sector. Turkey’s recent agreements with Algeria to buy liquefied gas are another step in the right direction. Recent Turkish drives to access the relatively cheap natural gas markets in Kenya are yet another example of furthering this drive.

The same government officials noted that there is increasing Chinese and Indian competition for access to African tenders and resources. The strategy is being expanded in many ways.

Reminiscent of Turgut Özal’s trade strategy in the 1980s, which relied heavily on Turkish Airlines (THY) to expand virtually nonexistent trade relations with Central Asian and Far Eastern markets, THY has recently announced a number of new direct African routes (which include such cities as Khartoum, Addis Ababa and Lagos) and the Turkish government is planning to open 15 new embassies in African capitals, more than doubling the current number of 12. While there is no doubt a strong realpolitik dimension to relations with Africa, at the end of the day, all stand to gain from increasing interdependence.


Zaman

Senegal, China sign zero-tariff trade deal

China has signed a trade deal with Senegal to offer zero-tariff treatment to more than 400 categories of goods imported from Senegal.

The agreement was inked by Chinese Ambassador to Senegal Lu Shaye and Senegalese Minister for Commerce Mamadou Diop in Dakar, Senegal’s capital.

The trade deal will elevate their bilateral trade and economic ties to a new stage and will also foster people-to-people exchanges between the two sides, said Lu.

The two peoples will benefit from the agreement which raised the number of tariff-free Senegalese export products to China from about 190 in 2005 to more than 600, the Chinese ambassador added.

Diop said that the agreement was of great significance for the two countries to strengthen their economic and trade cooperation.

Friendly bilateral cooperation in various fields, particularly in trade and economy, has been booming since China and Senegal resumed diplomatic ties in October 2005, the minister said.

More Senegalese are now running businesses or have started their own enterprises in China, he said, adding that he welcomed more Chinese businessmen to make investment in Senegal.

At the Beijing Summit of the China-Africa Cooperation Forum in 2006, the Chinese government pledged to further open China’s market to exports from Africa’s least developed countries by raising the number of products enjoying zero-tariff treatment from190 to 440.

XINHUA

French logistics company bullish on Africa's trade prospects

Aside from a few niche industries such as cut flowers, which are air-freighted from Kenya and Ethiopia to auctions in the Netherlands, African trade has not changed much since the end of the colonial era. Unprocessed raw materials go out; finished goods come in. The trade imbalance is vividly illustrated by the ships sent from Asia to pick up empty containers left at African ports.

Within Africa, moreover, it is difficult and costly to move goods. The continent has only a few broken-down railways. It has nothing resembling a transcontinental motorway. Even the British colonial dream of a road connecting Cape Town with Cairo failed. Today, getting a container to the heart of Africa—from Douala in Cameroon to Bangassou in the Central African Republic, say—still means a wait of up to three weeks at the port on arrival; roadblocks, bribes, pot-holes and mud-drifts on the road along the way; malarial fevers, prostitutes and monkey-meat stews in the lorry cabin; hyenas and soldiers on the road at night.

The costs of fuel and repairs make even the few arterial routes (beyond southern Africa) uneconomic. A study by America’s trade department found that it cost more to ship a ton of wheat from Mombasa in Kenya to Kampala in Uganda than it did to ship it from Chicago to ...e the best of Africa’s creaking infrastructure to construct transcontinental logistics networks. Among them are DHL, Maersk, Dubai World and Chinese companies supplying oil and mining projects in Angola and the Democratic Republic of Congo (DRC).

The clear leader so far is Bolloré Africa Logistics, a division of Bolloré, a French industrial conglomerate. Bolloré’s African adventure started in the 1980s when Vincent Bolloré, the omnivorous billionaire who heads the family firm, began to buy up ancient transport infrastructure in west Africa. Growth since has been rapid and mostly profitable. As a port operator, stevedore, warehouser and freight forwarder, Bolloré handles 80% of west Africa’s exports (excluding oil) and 25% of east Africa’s—in short, nearly all of Africa’s cotton and cocoa, as well as much of its coffee, rubber, and timber.

With offices in 42 African countries and 20,000 of his 31,000 employees based in Africa, Mr Bolloré is bullish on the continent’s prospects. Bolloré Africa Logistics accounts for $2 billion of the group’s $10 billion annual revenues. Its head, Dominique Lafont, predicts 12-17% annual growth for the division for the next five years. He believes better logistics are vital to reduce poverty in Africa. A new warehouse for perishable goods, or a new garage for repairing overland lorries, he reckons, create more lasting benefits to Africans than most aid projects do.

Bolloré’s aim is to exploit the massive unrealised potential for trade between African countries by being the first to link the economies of the Francophone and English-speaking parts of Africa. It wants to do this by establishing a 26,000km (16,000 mile) pan-African network of “vital corridors”, making use of whatever infrastructure is available, with long sections of transit by barge down the Niger, Congo, and Nile rivers deep into the interior.

Ports and “dry ports” (depots with customs-bonded warehouses) are probably the easiest part of Africa’s logistics network to fix. Bolloré was among 100 firms, “15 of them serious”, says Mr Lafont, to tender for the right to operate a new port outside Lagos in Nigeria. It already runs several other west African ports, hopes to be reconsidered for the Dar es Salaam port in Tanzania, and wants to compete with Dubai World’s Djibouti port, which has a monopoly in the Horn of Africa, by developing the port of Berbera in former British Somaliland.

Bolloré’s biggest bet was on Abidjan port in Côte d’Ivoire, where it invested heavily despite a prolonged civil war, reducing the handling time of containers in the port from eight days to two. Ivorian officials say Bolloré’s investment, which allowed cocoa exports to continue during the fighting, helped keep the country from collapse.

For its part, Bolloré brazenly uses Abidjan as part of its sales pitch of Afro-optimism and to illustrate its policy of never pulling out of any country. The firm claims to have continued operations through the Rwanda genocide, wars in Sudan and Congo, and during this year’s election crisis in Kenya.

As African economies grow and demand for consumer goods increases, Bolloré expects to make more of its money from supply-chain contracts. In Kenya, for example, it has a contract with British American Tobacco to transport tobacco from farm to factory and then as finished cigarettes to smokers across east Africa. Bolloré expects to lose money on serving the remote ends of its “vital corridors”, but believes maintaining the network will put it in a better position to bid for supplying lucrative projects such as iron ore mines in DRC, oil fields in Sudan, gold fields in Tanzania and gas pipelines in Nigeria.

The biggest impact of improved logistics in Africa may be on good governance. Prompt payment of customs dues by logistics companies on behalf of their clients and paperless transit have increased tax revenues and reduced government corruption. It is harder for a customs official to hold out for a bribe when the system is computerised and tracked by a logistics company’s bar code—although not impossible: in grubbier ports, officials sometimes hold cargo to ransom by refusing to press the return key on the keyboard.

But if the logisticians are to make headway, African governments must also do their part. They need to reduce banditry, keep roads and bridges in better shape and regulate Africa’s informal trucking business, run by cowboy operators who overload old lorries and pay bribes instead of taxes. Above all, Africa needs to smooth passage along its roads. Landlocked Rwanda recently identified 47 checkpoints and weighbridges between Mombasa and Kigali. Getting rid of roadblocks would cut the cost of shipments by 20%—and clear the way for broader economic growth.

The Economist

Mandelson wasn't so great as EU trade commissioner

The most galling thing about Peter Mandelson's return to British politics earlier this month was how Gordon Brown summarised his stint in Brussels. "Everyone has said right round the world that he has done a brilliant job", the prime minister proclaimed, a line repeated by several BBC correspondents as if it was an undisputed truth.

A ceremony taking place in Barbados this week indicates that Mandelson has little to show for his four years as the EU's trade commissioner. Governments in the Caribbean are signing an economic partnership agreement (pdf) with the union, one of the few free trade deals that this "brilliant" negotiator actually clinched.

The term agreement is a misnomer in this case. For the most part, its provisions were not the product of a frank dialogue on how the Caribbean could put commerce at the service of its people. Rather, they were drawn up by Brussels officials and presented in a take-it-or-leave-it manner.

Enormous pressure was put on representatives of Caribbean nations to cross what they considered red lines. This was especially so with the inclusion of a "most favoured nation" clause, under which any trade concession that these islands offer to major economies such as Brazil, India or China would automatically have to be offered to the EU as well.

Junior Lodge, the chief negotiator for the Caribbean, had stated he was "violently opposed" to the EU's demands for this clause – which others have described as an affront to the national sovereignty of the countries concerned – as he felt it was being driven by an aggressive mercantilist agenda. Yet because of Mandelson's bullying, his region eventually had to capitulate.

The bullying lacked even a modicum of subtlety. The Caribbean was told that if it did not accept an EPA by the end of last year, higher tariffs would be imposed on its exports to Europe. Shortly before he left Brussels, Mandelson reiterated that threat to Guyana, which initialled an agreement in December last but – following the election of a new government – has been reluctant to sign it. Imposing increased trade taxes on Guyana would deprive it of some €70m per year, a huge sum for a small economy where the national income per capita is only about €7,000.

The EPA also boasts chapters on competition, investment and public procurement. Known as the Singapore issues, these topics proved so contentious during the Doha round of world trade talks that developing countries insisted that they be taken off the agenda. Unable to get its way in a quasi-global forum, the EU is now reintroducing these measures – aimed at giving multinationals unimpeded access to wherever they wish to do business – through the backdoor.

Just as troubling, the Caribbean is being pushed to adopt European standards of intellectual property. This is not a question of preventing fake Gucci handbags being sold in Jamaica or the Bahamas. Instead, the stringent rules relating to pharmaceutical patents in the accord are likely to mean that people with life-threatening diseases will no longer be able to afford cheap generic versions of medicines. And, according to one of the most probing assessments (pdf) yet conducted on the EPA, public libraries and schools could be prevented from allowing students to have access to materials that are under copyright.

None of this affects the Caribbean in isolation. EU officials have made clear that they want this agreement to serve as a model for similarly comprehensive ones they are hoping to reach with over 60 countries in Africa and the Pacific. Diplomats from these countries do not share Brown's view that Mandelson did a "brilliant job"; some have described the EPA talks as the most painful experience of their careers.

A new report by ActionAid warns that foisting trade liberalisation on Africa will exacerbate the crisis over soaring food prices that drew some attention from western journalists before we all became fixated with Wall Street's woes. Requiring Africa to open up to European agricultural produce will further increase its dependency on imported food, rather than stimulating the development of the continent's own farming sector.

Catherine Ashton, Mandelson's replacement as trade commissioner, steps into an atmosphere of acrimony and distrust between the EU and some of the world's poorest countries as a direct result of her predecessor's sledgehammer tactics. It would be comforting to end on an upbeat note by quoting that inane pop song he was seen bopping to over a decade ago: things can only get better. But it could take a long time to repair the damage he has done.

The Guardian

PTA Bank gets $50 million credit line from China Development Bank

The Eastern and Southern Africa Trade and Development Bank (PTA Bank) has signed a $50 million credit line from China Development Bank for telecom infrastructure and other projects in Africa.

PTA Bank is placing special emphasis on supporting the rapid growth of telecommunication in the region, according to bank president Michael Gondwe.

The line of credit is among the largest that the bank has received from a single institution, Gondwe said. The funding will support the bank's regional business strategy, especially in sectors that require a large amount of funding, such as telecom and infrastructure, he explained.

With shared ownership by 19 African countries, PTA Bank funds development projects in member states, including Egypt, Eritrea, Malawi, Mauritius and Sudan.

"Our emphasis is on supporting the telecom sector because of its rapid growth, and its impact cannot be underestimated," Gondwe said. "As a development bank, it is our intention to continue being active in the sector."

So far, PTA bank has supported telecom projects in Kenya, Malawi, Tanzania, Uganda and Zambia amounting to $90 million.

The IDG News Service

Legal ivory trade resumes for first time in a decade

For the first time in nearly 10 years, international trade in elephant ivory has been sanctioned by the UN-backed Convention on International Trade in Endangered Species (CITES). Approximately 119 tons (108 tonnes) of stockpiled ivory, the remnants of 10,000+ elephants, will be auctioned from four southern African nations beginning in two weeks.

The 57th session of the Standing Committee for the Convention on International Trade in Endangered Species (CITES) ruled just months ago that China was fit to become a trading partner for the ivory, while Japan was previously approved. Both nations are known to be among the world's largest illegal ivory markets. Several multiple ton seizures which have been made at Asian ports in recent years were destined for China and Japan. The lack of enforcement for the registration systems in both countries also provides a convenient loophole for illegal traders.

The total amounts being auctioned are: Botswana ~44K kg; Namibia ~9K kg; South Africa ~51K kg; and Zimbabwe ~4K kg. Significant amounts of ivory in these stocks have been collected through culling which is itself a controversial means to control elephant populations.

"We have no doubt that flooding the market with over 100 tons of ivory will put this endangered species in even further jeopardy," continued Wamithi. Throughout west and central Africa, isolated populations have actually been wiped out completely due to illegal hunting. If we do not take this trade seriously, we will surely continue see the demise of these majestic creatures - and sooner rather than later."

Jason Bell-Leask, Regional Director for IFAW's southern Africa office also expressed his disdain. "The international trade in ivory simply cannot be justified by a perceived short-term gain such as profits from these sales. Not only are elephants a keystone species, but African tourism relies on their existence. To toy with that is to toy with the livelihoods of the citizens within these poor African nations."

In 1989, CITES Parties listed the African elephant on Appendix I, effectively prohibiting all international trade in elephants and their derivatives, including ivory, but in 1997 this was resanctioned and certain populations were down-listed to Appendix II, allowing trade with special permissions from CITES. These sales will be the second time in nearly two decades that the international sale in ivory has been authorized since the initial ban.

One year ago, a suspension of at least nine years on international elephant ivory trade was approved at the 14th meeting of the CITES Conference of the Parties. This trade ban is set to come into affect after the stockpiles sales are completed.

International Fund for Animal Welfare

Triodos Bank defies global credit crunch

Some of the world's largest financial institutions have either expired or been put into intensive care in recent weeks, but one bank in particular is bucking the trend. Europe's biggest social bank, Triodos, whose mission is to "make money work for positive social, environmental and cultural change", is thriving. Its most recent half-year results show a healthy growth in balance sheet and profits. "Credit crunch bypasses Triodos" was the bank's simple top line message to shareholders.

In global terms, it is a minnow - at least, compared to the financial leviathans that are now looking so sickly. The group's total balance sheet was €2bn in June 2008. Its UK balance sheet stands at around £317m. But when credit is scarce, and voluntary sector finances are taking a pummelling, Triodos is preparing to step up its investment in charities and businesses with socially and environmentally sustainable goals.

Charles Middleton, Triodos UK managing director, puts its success down to a "sound" model of banking: operating in the "real" economy (and avoiding complex financial instruments like derivatives); eschewing high levels of debt; taking a long-term view and resisting pressure for short-term profit maximisation. Until recently all this might have been regarded as unfashionable and staid. But as Middleton says, without a whiff of triumphalism, "sustainable investment has worked" for Triodos.

The alternative economy

The list of Triodos UK's investments - and it prides itself on its transparency in who it lends money to - reads like a who's who of the alternative economy: wind energy companies, organic farms, housing co-ops, arts projects, fair trade shops, social care charities, social businesses, even Buddhist centres. It financed the first containers of Cafédirect coffee to arrive in the UK in 1990, and 14 years later raised £5m for the company through Britain's biggest ethical public share issue.

Not so long ago its mission would have been dismissed as hippy idealism, or derided as a conscience-salving luxury affordable only for middle-class customers who did not need to chase the higher rates of financial return available on the high street. But its double bottom line approach - using depositors money to make a profit by investing in businesses which create a positive and sustainable social and environmental impact - is now looking like a model of how mainstream banking might adapt.

There is no outward sign of the hippy or the radical in Middleton. Grey-suited, discreet and undemonstratively groomed, his background is firmly establishment. At 18, when he went off to train as an army officer, he was apolitical. His understanding of social justice came gradually, through his life experiences - on the streets of Belfast during the Troubles in Northern Ireland, and subsequently, as a banker with Barclays in India and Africa, volunteer work with homeless children in Mumbai, and with HIV-positive people in Botswana.

Those experiences "challenged me to think about how the world works and how we as individuals can influence it," he says. "I have always been completely in awe of what individual people have been able to achieve. Moving to Triodos gave me the opportunity to take some of that experience and use it to work with inspirational people and businesses in the UK. They've shown me that there really is a different way to do business that is sustainable and fun."

A "different way to do business" is a theme that emerges again and again through the interview. Triodos's strict approach to investment - its promotional literature declares that it "only lends to organisations that actively do good" - may seem pious, but it is also a shrewd, as well as enlightened, approach to risk. There's a rigour to the way it sizes up business loan applicants - "If it was just an opportunity to make a lot of money out of something vaguely environmental, we would not be interested," says Middleton - that these days seems eminently sensible.

Middleton says he is as surprised as most people at the scale of the crisis in the banking industry, but not shocked that the Triodos model has so far weathered the storm. Its sustainable approach to lending is matched by a governance structure that guards its mission and independence, and prevents volatile speculation in its shares. Middleton won't say how much he is paid - though it is almost certainly less than Triodos Group chief executive, Peter Blom, who earned €209,000 in 2007. Wage differentials are miniscule by banking standards: the salary of the highest remunerated Triodos UK employee is no more than seven times the salary of the lowest-paid employee. The collective reward scheme in the UK typically pays out a flat rate bonus of "hundreds of pounds" to each employee.

Unsurprisingly, there has been a recent upsurge of interest in Triodos from customers, bankers and policy makers, which Middleton welcomes, though he is anxious to emphasise it is not the only model: "There should be a greater focus on different banking models, including our own, when the immediate concerns about many of our banks have been addressed."

Social responsibility

Changing the culture of an industry will not happen overnight, accepts Middleton. But the trauma suffered by the banking system will see a reassessment of banking fundamentals, he believes. Why shouldn't pressure from customers, shareholders and regulators - not to mention younger, more environmentally aware employees - force a recalibration of what the big banks mean by corporate social responsibility (CSR) and how they might integrate it into their core business?

Not all banks may feel comfortable copying the Triodos mission statement (one part of which is to "help create a society that promotes people's quality of life and that has human dignity at its core") but in future it will make business sense, suggests Middleton, for banks to, say, make it a condition of a loan that the recipient reduces their carbon footprint. He is frustrated by the conventional CSR practice in which a bank gives 1% of profits to good causes: the social impact of this is paltry, he argues, compared to what could be achieved through a bank's loan book.

Triodos has not been entirely unaffected by the downturn: the recession will mean tough times for many of its customers, says Middleton. But they tend to be less profit-driven, more resilient, less loaded with debt and not so exposed to the volatility of the markets. A tightening of consumer belts may affect the market for organic and fair trade produce.

But amid the gloom, there are opportunities for growth, says Middleton, in sustainable social care, housing and renewable energy businesses. "These are the core social and environmental issues," he says, "that in the long-term affect all of us."

Guardian

1. Is export-led growth now outmoded?

2. Weak supply capacity hinders Africa's export performance

3. What is so fair about fair trade?

4. Large scale efforts to connect Africa to the Web pick up

5. Conflicting views on effect of financial crisis on Africa

6. Africa makes good progress on business regulation reform

7. Uganda exports fetch $3.4 billion in 2007

8. China could usher in a new era of banking in Africa

9. Why trade liberalisation is not working for Africa and how to remedy this

10. Kampala summit to decide the future of African trade blocs

11. East African parliamentarians call for scrapping of EPAs

Is export-led growth now outmoded?

by Dani Rodrik*

For five decades, developing countries that managed to develop competitive export industries have been rewarded with astonishing growth rates: Taiwan and South Korea in the 1960s, Southeast Asian countries like Malaysia, Thailand, and Singapore in the 1970s, China in the 1980s, and India in the 1990s.

In all these cases, and a few others — also mostly in Asia — domestic reforms surely would have produced growth regardless of international trade. But it is difficult to see how the resulting growth could have been as high — reaching an unprecedented 10% or more annually in per-capita terms — without a global economy able to absorb these countries' exports.

Many countries are trying to emulate this growth model, but rarely as successfully because the domestic preconditions often remain unfulfilled. Turn to world markets without proactive policies to ensure competence in some modern manufacturing or service industry, and you are likely to remain an impoverished exporter of natural resources and labor-intensive products such as garments.

Nevertheless, developing countries have been falling over each other to establish export zones and subsidize assembly operations of multinational enterprises. The lesson is clear: export-led growth is the way to go.

But for how long? While reading the economic tea leaves is always risky, there are signs that we are at the cusp of a transition to a new regime in which the rules of the game will not be nearly as accommodating for export-led strategies.

The most immediate threat is the slowdown in the advanced economies. Europe and America are both entering recession, and fears are mounting that the financial meltdown accompanying the subprime mortgage debacle has not worked itself out.

All this is happening at a time when inflationary pressures hamper the usual monetary and fiscal remedies. The European Central Bank, tightly focused on price stability, has been raising interest rates, and the U.S. Federal Reserve may soon follow suit. So the advanced economies will suffer for a while, with obvious implications for the demand for exports from emerging markets.

On top of this is the almost certain unwinding of global current-account imbalances. Emerging markets and developing countries ran a surplus of $631 billion in 2007, split roughly equally between Asian countries and the oil-exporting states. This amounts to 4.2% of their collective gross domestic product. America alone ran a current-account deficit of $739 billion — 5.3% of its GDP. Neither the economics nor the politics of this pattern of current-account balances is sustainable, especially in a recessionary environment.

The politics are clear to see. Nothing works as potently to inflame protectionist sentiment as large trade deficits. According to a December 2007 NBC/Wall Street Journal poll, almost 60% of Americans think globalization is bad because it has subjected American firms and employees to unfair competition.

If globalization has acquired a lousy reputation in America, the external deficit deserves much of the blame. American trade policy has been remarkably resistant to protectionist pressure in recent years. But, regardless of who wins America's presidency, the world should expect closer scrutiny of imports from China and other low-cost countries as well as of outsourcing of services to places like India.

As America and other advanced economies become less hospitable to developing-country exports, rapidly growing emerging markets, help as they may, are unlikely to take up the slack and thus provide ample fuel for export-led growth. Import tariffs tend to be higher in developing countries, making it more difficult to gain access to them.

Moreover, developing countries compete in similar products — consumer goods of varying levels of sophistication — so that the politics of expanded South-South trade looks even worse than the politics of North-South trade. Anti-dumping action against imports from China, Vietnam, and other Asian exporters is already commonplace in developing countries.

So exporting will become an even tougher business. Countries like China that have large surpluses will have to rely much more on domestic demand to fuel their economies. This is not all bad, because China can certainly use more public investment in social sectors such as health and education.

But the impact will extend beyond the surplus countries. If exporters from Brazil, Turkey, South Africa, and Mexico — all deficit economies — were already struggling to compete with China in third markets when those markets were wide open and expanding rapidly, imagine how they will fare under less hospitable conditions.

The impact on growth will almost certainly be negative, even if domestic demand compensates fully for the decline in external demand. The reason is microeconomic, not macroeconomic: you can sell only so much steel or auto parts at home, and labor productivity in service industries does not match that of export-oriented activities. So shrinking export markets will slow down growth-promoting structural change at home.

None of this implies a disaster for developing countries. Long-term success still depends on what happens at home rather than abroad. What is moderately bad news at the moment will become terrible news only if economic distress in the advanced countries — especially America — is allowed to morph into xenophobia and all-out protectionism; if large emerging markets such as China, India, and Brazil fail to realize that they have become too important to free ride on global economic governance; and if, as a consequence, others overreact by turning their back on the world economy and pursue autarkic policies. Absent these missteps, expect a tougher ride on the global economy, but not a calamity.

*Mr. Rodrik, a professor of political economy at Harvard University's John F. Kennedy School of Government, is the first recipient of the Social Science Research Council's Albert O. Hirschman Prize. His latest book is "One Economics, Many Recipes: Globalization, Institutions, and Economic Growth."

New York Sun

Weak supply capacity hinders Africa's export performance

A weak supply capacity was hindering Africa’s export performance, and this explained why the continent had lost market share from 6% of the world’s export in 1980, to only 3% in 2007.

The recently released United Nation’s (UN's) Economic Development in Africa 2008 report, stated that although two decades of trade liberalisation had removed many of the barriers that limited trade, Africa’s trade progress had been less than expected, and that it was below the increases achieved by other developing regions.

UN Conference on Trade and Development s (Unctad) senior economic affairs officer for a special unit on commodities, Dr Sam Gayi, said that Africa’s ratio of export to the gross domestic product (GDP) only delivered 11%, whereas non-African developing countries experienced a 50% growth.

Relative to other developing regions, the increase in Africa’s export value was driven primarily by external factors, such as commodity prices, rather than an increase in volume. Between 1995 and 2006, Africa’s export volumes and prices grew at about 6% a year. However, Gayi said that this growth was not sustainable, as the rise in value was created by global demand for commodities, and once prices fell the value of export items would fall as well.

The report stated that an analysis of Africa’s export composition showed that most African countries had not diversified their export products, and over 60% registered higher export concentration indexes. This increased the countries’ vulnerability to price fluctuations.

The African countries that increased their export revenue owed it mainly to the unexpected price hikes in fuel, and commodities such as gold and copper. African countries that did not have these commodities to trade, with remained stagnant, with exports accounting only for 5% of their GDP.

The report investigated the importance of manufactured exports, and found that in sub-Saharan Africa, exports from the manufacturing sector amounted for only 26% of total exports. This was the lowest proportion of all regions. Gayi said that only eight African countries had manufacturing exports that made up 10% of their GDP, and these included Botswana, South Africa, and Namibia.

The report noted that if Africa wished to increase its industrial output and exports, governments had to take steps to deal with several key issues. These included poor infrastructure, high entry costs for businesses, low investor protection, and cumbersome tax systems. The report also stated that many African manufacturers were too small to benefit from the efficiencies achieved by larger firms, and governments would have to enact measures to help expand these firms to international standards.

Gayi noted that only a few African countries had taken the initiative to produce value-added products, but even their share was very low, with Africa’s share of total manufactured exports only accounting for 0,82% of global manufactured exports.

Despite its importance, the agriculture sector in several African countries deteriorated over the years, and in the space of a generation Africa went from a net producer of food, to the region most dependent on external food aid. The report stated that the main explanation rested with the negligence in development policies pursued during the last 25 years, which abandoned emphasis on research, infrastructure, and credit provision for farmers.

Countries that have maintained strong agricultural export sectors were those that pursued sustained and coherent sectoral policies to increase and diversify their agricultural exports, the report stated. These included countries such as Ghana, and the Cote d’Ivoire.

The report concluded that increased production and competitiveness would require increased productivity and the development of reliable infrastructure, including improvements in electricity generation, water supply, and telecommunications.

Engineering News

What is so fair about fair trade?

by Hilaire Avril

Fair trade is held up as promoting fair prices for producers and guaranteeing social and environmental standards. These ideas are neither new nor controversial. But the recent boom in fair trade has drawn attention as standards and models multiply while authentication mechanisms lag behind.

Artisans du Monde (''Artisans of the World''), a federation of 170 French fair trade outlets, estimates that Europe accounts for 60 percent of the fair trade market. In 2000, it reckons, one in 10 French consumers had heard of fair or equitable trade. In 2007 the figure jumped to eight out of 10. In 2006, 42 percent of French consumers in fact purchased a fair trade product.

According to the French Platform for Fair Trade (Plate-Forme pour le Commerce Équitable, or PFCE), a collective of 39 organisations, the sector's European turnover amounted to 1.25 billion euros in 2006, and fair trade sales have jumped by 20 percent every year since 2000.

At the other end of the chain, Artisans du Monde estimates that fair trade benefits 1.5 million small producers, the vast majority of whom are from developing countries. But what makes fair trade so fair to them?

Most fair trade organisations, whether buyers, importers, distributors or certifiers, operate under a self-imposed charter. Respecting a number of criteria will earn producers the right to use a network's label and grant their product access to a fair trade distributor's shelves.

But charters are as diverse as operators. Umbrella organisations such as the International Fair Trade Association, which claims 300 members, have a hard time unifying operational standards.

For Julie Maisonhaute, coordinator of the PFCE, trade is fair when it abides by three principles: paying a fair price for the product, assisting producers' communities and advocating a more equitable form of international trade. ''A fair price is a price which allows artisans and farmers to make a decent living from their work,'' she says. Fair trade buyers and importers thus commit to paying a fixed price, regardless of the product's current price on often volatile world markets.

According to the PFCE, producers who sell to fair trade operators earn 20 to 30 percent more than their product would normally fetch on the market.

Some critics argue that guaranteeing a minimum price is useless if buyers do not ensure the purchase of a certain volume every year.

Although PFCE buyers do not guarantee volumes to be purchased, they commit to buying over a period of time from the same producers. ''It doesn't work if it's a one-shot thing, if we place a single order and reconsider everything next year,'' Maisonhaute believes.

Part of the price is paid in advance: ''Importers commit to pre-paying a part of their order, so that small producers have something to live on during the year of production,'' she adds.

This also helps covering the costs of adjusting production to the importers' standards of quality. The process is sometimes long and costly but necessary for importers to be able to sell their products in the West.

The PFCE's second principle is to assist producers by helping them organise their community. ''Fair trade seeks to work in priority with producers who are organised into farmers' cooperatives, artisans' unions and even private companies, as long as their employees have a say in governance,'' Maisonhaute explains. ''We also help them getting organised by bringing lone producers into such structures.''

Finally, the PFCE insists on a more political aspect: ''Our members pledge to advocate this different conception of international trade to consumers, institutions and elected officials. Otherwise this is only a business,'' she argues.

Minga, the other major fair trade network in France, also insists on the political side of fair trade. ''Transparency is of the essence. If you can't prove to the public and the media that it's fair, then it's not,'' says Michel Besson, Minga's president.

Minga differs from PFCE by insisting on ''North to North'' trade within developed countries. It promotes ''local solidarity partnerships between producers and consumers'' which bypass major distribution chains and supermarkets. It also advocates fairness of the entire supply chain and does not apply its charter exclusively to the production phase. ''There is no such thing as fair trade yet because it's a constant struggle to make the entire chain fair,'' Besson admits.

''For instance, most goods are shipped and we insist on transporters guaranteeing their sailors decent social conditions in line with the International Labour Organisation's guidelines,'' Besson explains. ''We also pay attention to the environmental impact of transporting goods. What is the benefit of buying a fair trade tomato in France, if it comes from, say, Poland and burns a litre of diesel for each unit?'' he asks.

But, whatever the definitions, the charters and the organisations' role in the chain, both the PFCE and Minga admit that certification is the weakest link in ensuring that trade is indeed fair.
Both networks rely on self-evaluation. There is no independent verification that producers do in fact abide by a network's charter and principles.

In order to join Minga and have its products sold by the association's outlets, a producer must fill in a questionnaire with about 400 questions.

''We also encourage a participatory system of verification where a member organisation visits another and evaluates economic, social and environmental practices,'' says Besson.

For Maisonhaute, it is unthinkable to systematically verify production standards on the ground in developing countries: ''Given the number of producers and the distances to cover, the cost of travelling to each location would be unbearable.''

This allows the Adam Smith Institute, a British think tank that promotes free trade and is one of fair trade's harshest critics, to denounce what it sees as a marketing initiative rather than a new model for economic justice.

''Just 10 percent of the premium consumers pay for fair trade actually goes to the producer. Retailers pocket the rest,'' the Institute claims in a report titled ''Unfair Trade''.

Trying to cut the debate short, fair trade operators in France called on public authorities to lay down a set of standards acceptable to all in 2005.

But the proposed norms never made it into law as the different networks have not, so far, agreed on a definition of ''fair trade''.

IPS

Large scale efforts to connect Africa to the Web pick up

If you're reading this in Africa, you're one of a few who can. With just 50 million Web users across the continent, as few as 5% of Africans access the Internet, a percentage far lower than in Asia, Europe or the Americas.

In only a handful of African countries do more than 1% of the population use broadband services. (Among OECD countries, broadband penetration averages 18%.) And the services that exist don't come cheap. Broadband costs more in sub-Saharan Africa than anywhere else in the world: consumers in the region spent an average of $366 each month for speedier Internet access in 2006, according to the World Bank. Users in India, meanwhile, paid just $44.

But large-scale efforts to connect the continent are picking up speed. On Sept. 9, O3b Networks — a Channel Islands–based telco backed by Google, HSBC and U.S. cable-TV operator Liberty Global — unveiled plans to offer cheap, high-speed Internet access via satellite to developing regions like Africa by the end of 2010. It's not the only ambitious scheme to bring the continent online. In recent months, work has begun on initiatives to connect countries in eastern and southern Africa — the only major populated regions not hooked up to the global broadband network of fiber-optic cables — to each other and the rest of the world through high-speed lines.

Efforts like these to connect Africa will do more than add friends on Facebook. Boosting connectivity should do the same to countries' social and economic health, stoking trade and granting citizens access to crucial online health, education and government services, economists say. Stymieing the Web's expansion in Africa until now: the fixed-line telephone networks used to transmit Internet services in much of the rest of the world are almost nonexistent across the continent. On average, there are only four lines for every 100 people — the lowest rate anywhere in the world. That has left much of Africa reliant on satellites for its Web access. But they are costly to use and offer limited capacity. O3b — short for the "other 3 billion" around the world who are unable to tap into the Web — plans to deploy spacecraft more cheaply by orbiting them at lower altitudes than traditional satellites. That should also speed up connections.

The $700 million project is only part of a flurry of telecom activity on the continent. Amid a push by Africa's leaders and telcos to modernize its networks over the next few years, a string of firms have partnered to build the East African Submarine Cable System, some 10,000 km of fiber-optic lines linking 21 countries from South Africa to Sudan. With work on the line started last year, the project is due for completion in 2009. The World Bank's $424 million Africa Regional Communications Infrastructure Program — a complementary scheme approved at roughly the same time — aims to have all major cities in eastern and southern Africa hooked up to the high-speed lines over the next decade.

Time

Conflicting views on effect of financial crisis on Africa

The crisis in world financial and stock markets has not dramatically affected most African nations. But African economists say the continent could experience considerable repercussions as lending and investment abilities tighten in the industrialized world.

The head of Pan-African Capital Holdings in Johannesburg, Wiseman Nkuhlu, says this is because African banks have not engaged in high-risk lending as seen in the United States and Europe. "The markets of African countries are not as sophisticated as the markets in the U.S. and Europe, especially when it comes to the securitization of mortgage bonds which is behind this crisis," said Nkuhlu.

The failure of mortgage bonds, or housing loans, due to rising interest rates in Western nations sparked the crisis. Mortgage bonds are not common in most African nations. But Nkuhlu says the disruption they have caused may affect Africa's economic growth rate of five percent or more in many countries.

"This crisis is of great concern because it may result in increased risk averseness on the part of banks and reduced [investment] flows to the region. The flows that have been responsible for the high levels of growth may actually decline if the crisis continues," he said.

The director of Ghana's Development Policy Institute, Nii Moi Thompson, agrees, saying the effects of the global crisis on Africa are likely to be indirect.

"One of the more likely indirect effects is the decline in remittances to African countries as unemployment rises in North America, Europe and other places. Those Africans who live there and regularly send monies home are less likely to be in a position to send home these monies," he said. In addition, he says as Western governments try to pay for their billion-dollar rescue packages they might reduce foreign aid programs. Private humanitarian groups, facing a drop in donations, might have to do the same.

Some experts worry that the crisis could delay large-scale agriculture and infrastructure projects and could even threaten social programs to improve health, education and sanitation.

Nevertheless, the experts say there could be some positive effects. Thompson says interest rates will probably decline. "As part of the effort to survive the crisis, these Western governments will have to keep interest rates down. So if that leads to lower debt servicing then that will be better for us," he said.

Another benefit could be lower prices for petroleum, food and other basic goods due to a decline in demand.

South African economist Nkuhlu says he is optimistic that developed nations will remain committed to improving the quality of life in Africa. "The commitments and the relationship between the developed world and Africa in particular has matured, reached a point where the commitments are likely to be sustained even while under these difficult circumstances, possibly at slightly reduced levels," he said,

Thompson says other benefits from the crisis are the lessons to be learned, especially from the structural adjustment programs that sought to reduce government's role in the economy and encourage free market reforms. "The lessons are clear, that market forces can in fact be evil forces and it takes effective, responsive and competent institutions to contain them," he said.

But he cautions against excessive moves to reassert government involvement in the economy.

"We have been there before. But the problem was that we moved from one extreme to the other," he said. "There needs to be some sense of balance, some sense of moderation as to how far the markets should be allowed to go and how far the government can maintain some degree of oversight over the markets to ensure that they are productive without necessarily being destructive."

Senegalese President Abdoulaye WadeBut the president of Senegal, Abdoulaye Wade, concluded that the crisis means little to the average African.

"Who cares if the bourgeois can no longer travel or live in comfort. The greatest menace to most Africans is hunger," he said. "The amount of investment needed to feed people and create jobs in Africa is a fraction of the money being spent on the global financial crisis."

VOA

Africa makes good progress on business regulation reform

Africa had a record year for regulatory reforms that made it easier to do business on the continent, with 28 African countries completing 58 reforms. The figures were made available in the ‘Doing Business 2009’ study, published jointly by the World Bank and the International Finance Corporation (IFC).

Speaking at a function in Johannesburg in late Septmeber, IFC lead investment promotion officer David Bridgman said that three of the world’s top ten reformers were also from Africa, namely Senegal, Burkina Faso, and Botswana.

Mauritius was Africa’s overall best performer, moving up to twenty-fourth in the global rankings. South Africa was the African runner-up, at number 32, and Botswana followed close behind, at number 38.

South Africa rose two places from its previous ranking at 34, on the back of two new reforms in the period under review. Bridgman said that start-up businesses in South Africa no longer had to obtain legal assistance, or have their incorporation documents notarised, thanks to amendments to the Corporate Act.

The amendments also allowed for electronic submission of documents and publications, which helped to improve the process of business start-up.

The South African government also reduced the tax burden by eliminating the regional establishment levy and the regional service levy.

Postconflict countries Liberia, Sierra Leone and Rwanda were among the region’s most active reformers, Bridgman said.

Liberia simplified its business registration process and licensing reforms, and reduced the time required to obtain a construction permit by 77 days. The country also halved building permit fees and eased access to credit by establishing a database with credit information on borrowers at the Central Bank of Liberia.

Sierra Leone drastically cut the cost, and speeded up the process, of starting a business by abolishing some registration formalities, including the requirement to pay taxes upfront and to obtain permission for registration from exchange control authorities.

Rwanda streamlined its construction permitting process for the second year in a row by combining the applications for location clearances and building permits in a single form. The country also introduced a single application form for water, sewerage and electricity connections. The time and cost attached to registering a property also dropped.

However, Bridgman added that there were also ten African countries that had implemented no reforms over the last three years, and had subsequently lost their rankings. Africa also played host to the worstperforming countries in the list, which included Burundi, the Central African Republic, and the Democratic Republic of Congo.

The ‘Doing Business 2009’ report was compiled based on reviews of the legislative and regulatory environments in 181 countries around the world. Countries were then ranked based on ten business-regulation indicators that track the time and cost to meet government requirements in starting and operating a business.

Bridgman said it was simpler to look at the government processes alone, rather than combining the criteria with elements such as security and infrastructure, since the governments of the respective participants could take direct responsibility for the official processes.

However, he added that investors were sure to look at these elements before investing in a prospective country, and that the regulations would never be the sole consideration.

Out of the 181 participating countries, 47 African countries took part in the survey. Bridgman said Somalia was discounted because it currently had no ruling government.

Among the global regions, Eastern Europe and Central Asia led the reforms of business regulation for a fifth consecutive year, with more than 90% of the countries making improvements.

The top ten performing coun- tries include Azerbaijan, Albania, the Kyrgyz Republic, Belarus, Senegal, Burkina Faso, Botswana, Colombia, the Dominican Republic and Egypt.

Singapore led the global rankings on the overall regulatory ease of doing business, for the third consecutive year, and New Zealand was runner-up, with the US taking third place. Bahrain and Mauritius joined the ranks of the top 25 performing countries this year. For he first time ever, Bahrain, Qatar and the Bahamas were also included in the report.

Engineering News

Uganda exports fetch $3.4 billion in 2007

by David Muwanga

Uganda's exports for the year 2007 fetched $3.4 billion from $2.1 billion the previous year, the executive director of the Uganda Export Promotion Board (UEPB) has said.

"The growth in the export earnings by 39% is due to the board's focus on supporting the exporting companies to be more competitive. UEPB also focused on export development plans," Florence Kata explained.

The top 10 exports were coffee, fish, tea, cotton, tobacco, flowers, fruits, hides and skins, maize and beans. She said merchandise exports grew by 39% to $1.34b from $962m. Service exports like tourism and education fetched $520.83m, while labour remittances fetched $785.88m.
Kata said informal border trade between Uganda and her five neighbours fetched $776m from $231m in 2006, an increase of 236%.

The Common Market for Eastern and Southern Africa (COMESA) remained Uganda's largest market, accounting for 39% of the exports followed by the European Union at 28%.

The Middle and Far East have proved to be the fastest growing export destinations in volume and value, accounting for 21%, while the remaining 9% was spread among the rest of Africa, Europe and the US.

"The continued growth is partly explained by recovery in the prices of commodities internationally, especially coffee and increasing food prices globally, " Kata said.

Other factors that led to the increase in export earnings were the heightened export development and promotion efforts driven by coherent relationships between the public and the private sector. Political stability in the region and the consistent government drive for an export-led economy also played a part.

New Vision

Why trade liberalisation is not working for Africa and how to remedy this

Publisher: United Nations [UN] Conference on Trade and Development , 2008

Authors: S. Gayi; J. Nkurunziza; M. Halle

This report from UNCTAD examines Africa’s export performance after trade liberalisation to draw lessons for use in the design of future development strategies. Liberalisation over the last 25 years has removed policy barriers that were seen to inhibit export performance. Despite this the level and composition of exports has not changed. Exports have not diversified and as a whole market share is down from 6 per cent of world exports to 3 per cent.

This report identifies Africa’s weak supply response as the most important impediment to the continents export performance. Future policies should more on ways to increase production for export. Policies need to help Africa re-focus its development priorities on structural transformation in order to increase supply capacity and export response.

Analysis of the performance of agricultural exports in Africa suggests that positives from liberalisation are limited. Complementary policies are required to address structural and institutional constraints. To improve the situation the report recommends:

• increasing volumes of new market-dynamic products
• developing private sector to gain access to global value chains and working in private-public partnerships
• strengthening the capacities of the State to improve Africa’s position in global value chains
• targeting policy to specific socio-economic issues and institutions that have been identified as preventing Africa from reaching it try potential
• implementing policies to improve agricultural productivity and efficiency in agricultural trade

Africa has failed to increase manufacturing exports. This paper suggests the reason for this is weak supply capacity and poor trading infrastructures. To increase manufacturing exports Africa needs to address structural constraints so they can be more responsive to export opportunities. Comparative advantage can be created by addressing specific problems hampering the competitive production of products. These problems include:

• low levels of productive investment
• the small size of manufacturing firms
• limited access to production factors, particularly credit
  
  Full text of document :
  
  http://www.unctad.org/en/docs/aldcafrica2008_en.pdf
• Eldis
  

China could usher in a new era of banking in Africa

by Riaan Meyer*

THE dramatic events of the past few weeks, starting with one of the world’s most powerful investment banks — Lehman Brothers — going to the wall and insurer AIG teetering on the brink, has left a wounded western financial world licking its wounds and looking anew at its model of global finance.

Western finance is bound to change dramatically in the next few years. With depleted balance sheets and heightened credit adversity, the void will probably be filled by new players, notably from China and Japan. This could have important implications for Africa, where the resource boom could lead to attractive opportunities for Chinese banks.

While China has already bought into a number of international financial institutions (including Barclays, Morgan Stanley, JC Flowers), Japanese banks moved quickly to take advantage of the carnage on Wall Street to beef up their presence in investment banking. Mitsubishi UFJ has agreed to take a 10%-20% stake in Morgan Stanley, and Nomura says it will buy the Asia Pacific operations of Lehman Brothers for $225m. And with cash not a problem and subprime exposure a relatively alien concept, Asian banks are poised to expand their global presence further.

For China, expansion into the developed world is fraught with political danger, especially in the US, where suspicion of foreign (and particularly Chinese) investment in big US corporations runs deep. So the alternative is to follow patterns of trade, and this points in one direction: emerging markets, particularly Africa.

The case for China’s rapid expansion of trade relations with Africa ($72bn at the end of last year) is premised on the need for resources security to ensure continued rapid economic growth. Hence, its biggest trading partners are commodity rich countries of Africa: Sudan, Angola, Nigeria and SA.

The format of getting to the commodities has been innovative, but based mostly on the Chinese extracting resources alone or forming joint ventures with governments, such as the Chambishi copper mine in Zambia, or taking stakes in existing projects, such as a 45% stake in an offshore Nigerian oil field by China National Offshore Oil Corporation.

Deals financed in Africa have been mostly through the China Exim Bank in trade finance and project finance. While details of the financing terms are not readily available, it appears from a World Bank study that a great many, if not most, were priced on favourable terms for the recipient countries, and function essentially as an extension of Chinese aid.

But in some cases China has started co-operating with western banks to do project finance deals, including Sinopec (China Petrochemical Corporation) financing for its joint venture with Angola’s Sonangol for offshore block 18. After initial western banking reticence, the deal attracted a range of western and Chinese bank participation and the political risk of Angola was seen to have been mitigated by the size of Chinese participation.

The China Development Bank assumes an even more important role, in concert with the China Exim Bank, through investment in the $5bn China-Africa Development Fund. It will be used mainly to support African countries’ agricultural, manufacturing and energy sectors, and the development of Chinese enterprises in Africa. The fund signed its first deals with four Chinese companies in Beijing in January to invest in infrastructure and housing projects in Africa.

Traditionally, the presence of banks in emerging markets can be traced to colonial ties. Proximity is an important factor, and this refers not only to geographic proximity but also to proximity in terms of cultural, linguistic and economic ties. These factors seem to rule out a Chinese banking foray into Africa. At the same time, China has no colonial baggage to render — at least until recently — its economic decisions subject to political controversy in Africa, and it could well be in a good position to exploit growing opportunities.

But the banking market in Africa remains underdeveloped, and poses challenges for institutions hoping to land increasing market share. Banks will need to develop payment and processing systems to handle international transfers and data-capturing and management information systems to process such data. Crucially, operational and credit risk systems will need to be enhanced.

One of the main aims of the Chinese government in opening the banking system to foreign investment has been to gain the necessary expertise to become highly competitive. But in local markets, and especially emerging markets, local banks may well have an advantage in market information given superior access to corporations, superior relationships and a better understanding of local market conditions.

This implies that a foreign bank with little experience in entering foreign markets will need to take a cautious approach. It is likely to start with a fundamental understanding of the key players in the local market, and to approach such institutions with an understanding to co-operate, start joint ventures and eventually to make equity investments. This has been the approach of foreign banks in entering the Chinese banking market.

It came as a surprise, then, when one of the first meaningful investments of a Chinese bank was the 20% stake in SA’s Standard Bank, for $5,5 billion. This was a significant outlay, even for ICBC, as the finance equates to 8% of its capital. The reasoning seems sound from a strategic point of view; ostensibly, Standard Bank will help ICBC serve its corporate customers in Africa, while Standard Bank will gain a foothold in China. The funds that Standard Bank obtained will be used in its further expansion in Africa — Angola and Nigeria in particular — and a private equity fund will be set up.

It is apparent from this that Standard Bank will target growth outside its home market, and will be well placed to target Chinese corporate customers operating in Africa. This presents it with a significant opportunity to consolidate its operations in Africa, and take a large share of business from Chinese clients who will increasingly be important in this area. This puts it at a significant advantage to many other competitors. The timing of the deal also appears to be fortuitous; for many of the potential competitors, risk appetite will decline as liquidity remains under strain.

In China, however, liquidity remains abundant. It seems the Standard Bank deal will be the benchmark investment approach for Chinese banks in emerging markets; target the bigger, better developed institutions with multi-country presence first. For Chinese banks, continuing to acquire stakes in well managed and bigger African banks will seem the most likely strategy to exploit trade ties and project investment.

Merger and acquisition activity involving the major Chinese banks is likely to lead to a new era in African banking, and cement the Chinese banks’ position as the new kids on block.

*Meyer is a London-based financial analyst and a research associate for the China in Africa Project at the South African Institute of International Affairs.

Business Day

Kampala summit to decide the future of African trade blocs

The first ever tripartite summit of the East African Community, the Common Market for East and Southern Africa and the Southern Africa Development Community takes place in Kampala this week.The summit will bring together 23 states from the three regional trade blocs under the mandate of the African Union as the first step towards taking integration beyond the existing regional economic communities.

The background to this summit is that the African Union accords regional economic communities a significant role as building blocks for the eventual integration of Africa," said Julius Onen, EAC's Deputy Secretary General in charge of projects and Programmes.

Besides the host Uganda, EAC member countries Kenya, Tanzania, Rwanda and Burundi will be in attendance as well as Comesa states Egypt, Libya, Ethiopia, Eritrea, Djibouti, the Comoros, Zambia, Zimbabwe, Angola, Madagascar, Seychelles, Mauritius, Malawi, Sudan, and Swaziland. SADC members South Africa, Mozambique, Lesotho, Namibia and Botswana are also expected.

This is the first time that the three blocs meet following last month's approval in Nairobi by Comesa of a proposed merger with the SADC. The proposed merger comes at a time when the region is making efforts to do away with multiple memberships, considering for instance that EAC member countries also have overlapping memberships in both Comesa and SADC -- with Kenya, Uganda, Rwanda and Burundi in the former, while Tanzania subscribes to the latter, having quit Comesa a few years ago.

The move could well spell the beginning of an integration process across the Eastern and Southern African market of more than 500 million people. Trade within the 400 million strong Comesa market alone last year stood at $7.8 billion driven mainly by the bloc's Free Trade Area, which now covers over 13 countries. A merger between Comesa and SADC could see the biggest economies -- South Africa, Kenya, Egypt and Libya -- take up and benefit from even bigger chunks of the market.

Mr Onen said that the first areas of collaboration were for the participating countries to establish a Free Trade Area and allow free movement of labour. Officials within Comesa, EAC and SADC are agreed that the continued existence of the three trade blocs is an irrelevance, considering that the memberships of these blocs overlap, an issue that last year complicated trade negotiations between the EAC and the European Union as the two attempted to reach an Economic Partnership Agreement.

The rules require that the East African Community -- which is a Customs Union -- can only sign a trade agreement with another partner as a Customs Union. Considering that the EAC has been implementing its Customs Union for three years now and with the Comesa Customs Union set to take off in December this year, it is expected that harmonisation of trade rules, manufacturing standards and investment rules with SADC Customs Union--proposed for 2010 -- will take centrestage when senior officials meet on Tuesday (October 14) and Wednesday this week to prepare the tripartite accord, to be approved by Thursday.The document will explore harmonisation of the different Customs Unions and other trade related issues to be approved by the summit on October 22.

The diplomats, meeting ahead of the summit, agreed that among other things, a proposal on Free Trade Area and free movement of people across national borders be adopted.