November 22, 2009
November 21, 2009
The World Trade Organization authorized Brazil November 19 to impose trade sanctions on the United States over its support for cotton, as Brazil ratcheted up pressure on Washington over the illegal subsidies. But Brazil is not yet ready to levy the sanctions, as it considers which U.S. products to target and analyses U.S. data on subsidies which will determine the size of retaliation.
The formal move at the WTO's dispute settlement body (DSB) brought Brazil one step closer to retaliating against the United States, the world's biggest cotton exporter, in the highly sensitive 9-year-old row.
The reduction of rich countries' cotton subsidies is seen by developing countries as the litmus test of efforts to reform the world trading system in the WTO's Doha round, with African producers in particular demanding radical change. Brazil's request to go ahead and impose sanctions, following an award by WTO arbitrators on August 31, responds to the U.S. failure to comply with earlier WTO rulings condemning the subsidies, which distort the world market for cotton, hurting farmers in poor countries.
But U.S. WTO diplomat Juan Millan told the dispute body that Washington did intend to comply with the rulings and so Brazil would not need to levy the sanctions. "While the United States understands that the DSB will today be authorizing the suspension of concessions or other obligations, we do not believe that it will be necessary for Brazil to exercise that authorization," he said in a statement. He said imposing sanctions could hurt the economies of both the United States and Brazil.
The arbitrators allowed Brazil, the second biggest cotton exporter, in some circumstances to "cross-retaliate" against goods other than cotton, or even in services or intellectual property such as patents on drugs.
One source at Brazil's WTO mission said that any retaliation would not take effect until after that consultation concluded.
Meanwhile, Brazilian officials are calculating the scale of any retaliation on the basis of a formula set by arbitrators. The arbitrators allowed Brazil to impose sanctions worth $147.3 million a year for subsidies such as marketing loans and counter-cyclical payments that the WTO had previously found hurt Brazil's own industry. In addition they allowed it to impose a variable amount to compensate for prohibited export credit guarantees known as GSM 102 payments, depending on the size of those payments. For the fiscal year ended September 2006, that compensation would be $147.4 million, making total retaliation of around $300 million, but at the time of the arbitration award Brazil said it would be entitled to about $800 million in sanctions this year.
The Brazil mission source said that the United States had just provided data on the prohibited export subsidies for the fiscal year ended September 2008, but this now needed to be analyzed.
The presidents of Kenya, Tanzania, Rwanda, Uganda and Burundi have agreed to the free movement of people and goods across the region. It is hoped that the deal will lead to greater economic clout for the region. The common market is due to come into effect by July 2010.
The East African Community was launched 10 years ago and has a population of 120 million.
There had been fears that Kenya, as the economic heavyweight, would dominate. So until recently Kenya had still been subject to taxes as a way of helping the other countries' industries catch up. Some analysts suggest that when the agreement becomes operational, Tanzania could be swamped by the better trained workers from neighbouring Kenya.
Our correspondent says businesses in the region are frustrated with the amount of bureaucracy and are pushing for governments to do more to promote trade.
The signing of this common market agreement coincides with the tenth anniversary of the East Africa Community.BBC
November 18, 2009
"Nigeria has not signed the EPA," Commerce and Industry Minister Achike Udenwa said, adding that "there are still negotiations going on."
Economic Partnership Agreements (EPAs) are pacts that would require African and Caribbean nations to gradually open their markets to European goods in exchange for open access to European markets. They are meant to replace trade deals that have previously given European countries preferential market access to former colonies.
"The EPA is all about market access and we are saying that market access should be linked with the development issue," Udenwa said in an interview. "We have to make sure our own industrial infrastructure is up to date, that it can support competition so that our products can compete with those of the developing world. We cannot open up our markets when our own industries are disadvantaged," he said.
Nigeria's manufacturing sector is buckling under the stress of severe shortages of power and other poor infrastructure. Because of a lack of electricity, diesel generator-powered plants have become so expensive that many companies opt to import finished goods rather than produce themselves if they are to make decent profits. Government is battling to boost power output, aiming at 6,000 megawatts by next month from around 3,000 megawatts. But the amount is still inadequate given the size of the population.
Nigeria, with 140 million people, is the most populous country on the continent, making it a hugely attractive market.
"Particularly why Nigeria is bothered is because we are the largest market in west Africa and once the EPA is signed, products coming into other west African countries will also find their way into Nigeria and that will mess up our industries completely," said Udenwa.
In the 15-member west African regional bloc, the Economic Community for West African States (ECOWAS), Ghana and Ivory Coast have so far initialled interim agreements with the EU.
November 16, 2009
Driven out of Zimbabwe's eastern diamond fields by police, illegal diamond dealers now operate in this town ten minutes from Machipanda frontier You know you are in diamond country when you reach the border. "You want diamonds?" asks the official checking the serial numbers on our car engine. "I can get you one: 16 carats," he promises.
Vila de Manica is not rich. Tea-bag-size sachets of washing powder are on sale in a dusty market. However, diamond money has changed the landscape here – literally. Dotted among the drab concrete buildings are houses freshly painted in yellow and purple. Coils of razor wire top the walls. There are satellite dishes, armed security guards.
Outside the Flamingo Restaurant four dealers order rounds of Manica beer. They speak bitterly of the brutality of Zimbabwean police.
The Marange fields were the scene of a frenzied diamond rush from 2006 to last year. Schoolchildren threw their books into the bush and dug alongside their teachers. Dealers booked into the Holiday Inn in the nearby city of Mutare.
President Robert Mugabe's security forces ended the free-for-all last November, moving into the fields with dogs and guns. Rights groups say 200 people were killed. The brutality nearly got Zimbabwe suspended from the Kimberley Process Certification Scheme (KPCS), the global diamond trade body. Earlier this month, the KPCS gave Zimbabwe until June 2010 to implement a plan to bring it up to international standards. But military abuses reportedly continue.
"Zimbabwe is very bad," says a Somali dealer. He has a front tooth missing after a beating in Marange last year, he says. Police stole £4,800 he was carrying. "Our friend had both his legs broken two weeks ago. He lost £21,000," claims a dealer from Mali.
The dealers say it's easier operating in Mozambique. The police leave them alone if their passports and visas are in order. They travel to and from northern Nampula province. The Zimbabwean diamonds they deal in go to Dubai and then Asia. They say the stones are mostly industrial grade, used for machines.
In a clothes store, a Lebanese man in an Emporio Armani T-shirt says he's from Essex, where his three children go to school. His brother has bought property in Vila de Manica. "Now I sell stones," he says. He looks at my cheap flip-flops and moves away. I am obviously not a serious buyer.
It's getting harder to smuggle Zimbabwe's diamonds. The authorities have awarded contracts for Marange to two companies: Mbada Mining, a little-known local firm, and Canadile Miners, which has South African investors. They are investing heavily.
There's just one problem: according to a court ruling, the claim belongs to African Consolidated Resources, a company listed on the London stock exchange. Desperate for money – mines minister Obert Mpofu believes diamonds can bring Zimbabwe £360,000 a day – the government has gone ahead with mining, pending an appeal.
A pharmacy in Mutare is sparsely stocked but can sell you an electric diamond scale for £20.
November 15, 2009
2.'Some African countries not economically viable'
3.Ethiopia earns $343 million from foreign trade in three months
4.South Africa insists trade imbalance favours Nigeria
5.Nigeria complains about trade ties with South Africa
6.Iran to build tractor factory in Senegal
7.Mozambique, Brazil trade rises threefold
8.Zimbabwe agrees not to export disputed diamonds, U.S. says
In September businessman Xu Tonggou was murdered trying to resist a robbery. On the same day six armed men robbed the offices of a construction company, beating workers with batons and threatening them with AK-47s.
"These are just the tip of the iceberg," says Xu Ning of the CBC. "Things have got worse in the last few months. Just last night someone I was due to have dinner with did not turn up because he had been robbed. Chinese people here are afraid, they are afraid. They don't know who's a criminal. What used to be something that happened perhaps once a month has become a daily occurrence. This is bad for business between Angola and China," he said.
Eddie Zhang, head of Shanghai Urban Construction Group, the company building the new 50,000-capacity football stadium in Luanda, said that he was hearing of a growing number of attacks and that they weren't just normal robberies but planned "mafia-style."
Superintendent Jorge Bengue of Luanda's Police Command police, however, disputed there was a campaign of violence specifically targeting Chinese nationals in the city. He said crime was a reality in any city in the world and he was not aware of any rise in incidents involving Chinese people.
There are tens of thousands of Chinese workers in Angola, involved in reconstruction projects after the country's 27-year-long civil war. Chinese workers are also building stadiums for the 2010 African Cup of Nations. China has given Angola more than $5bn in oil-backed loans to build infrastructure.
African states must integrate immediately or some will not survive, Mo Ibrahim, who funds the world's biggest prize in support of leadership on the continent, said late on Saturday.
Ibrahim was speaking at the opening of a two-day event promoting good governance in Africa, which appears to have slipped following a spate of coups in the past two years.
"Some of our countries, and I'm really sorry to say this, are just not viable," the Sudanese mobile phone tycoon said. "We need scale and we need that now -- not tomorrow, the next year or the year after."
Several overlapping regional groupings throughout the continent are trying to knit their economies closer together, but the pace and extent of integration is slower than hoped.
"Intra-African trade is 4-5 percent of our international trade. Why? This is unacceptable, unviable, and people need to stand up and say this," Ibrahim said.
"Who are we to think that we can have 53 tiny little countries and be ready to compete with China, India, Europe, the Americans? It is a fallacy."
The $5 million Ibrahim Prize, which has previously been awarded to outgoing presidents Joaquim Chissano of Mozambique and Festus Mogae of Botswana, was not awarded this year. Judges led by former U.N. Secretary-General Kofi Annan said although there were some credible candidates, they would not make an award. They did not explain why.
John Kufuor of Ghana, Olusegun Obasanjo of Nigeria and Thabo Mbeki of South Africa were among the eligible candidates, all of whom stepped down of their own accord -- a key condition.
"We are poor, we are hungry, we are going without," said Ibrahim. "Something is drastically wrong. I think we have the right to ask our leaders: are they really serious?" he told an audience including Tanzanian President Jakaya Kikwete.
Celebrities including Senegalese singer Youssou N'dour and Beninois poverty activist Angelique Kidjo performed during the evening, saying leaders needed to do more.
Former Sudanese child soldier and hip hop artist Emmanuel Jal called for greater vision and compassion. "So many people died that we don't even cry any more," he said in a performance that spoke of his experiences with Kalashnikovs and brought many in the audience to tears.
"To be a president in Africa, it's like you're going to be a big man, because they take all the money. You need a leader that's going to say no to corruption," he said after leaving the stage. "When there's no vision, people perish."
Discussion panels on Sunday with several African leaders will address climate change, food security and economic integration, which the Mo Ibrahim Foundation says require Africa's urgent attention.
Head of information and public relations office with the ministry, Amakel Yimam said that the income was secured from products exported to over 100 European, Asian and African countries and the USA. The products include, among others, coffee, cereals, flowers, oil seeds, Khat, meat and livestock.
Amakel said nearly three billion USD is expected to be earned at the end of the budget year. The head said prime attention given to foreign trade sector and activities being carried out by investors contributed to growth in the income. Foreign trade has significant role in the efforts to extricate the country from poverty, he said.
Jonathan said concerns are that bilateral relations have yielded enormous benefits for South African entrepreneurs with investment in Nigeria while there were little or no opportunities for Nigerians to do real business in the southern African country.
"Some Nigerians have questioned the very rationale for the BNC if our relations and the benefits they confer are so skewed and if South African authorities are engaged in alleged acts of discrimination against Nigerian visitors, residents and businesses in South Africa," he said.
Business people from the two countries opened talks on November 13 to seek ways to level the playing field.
"I strongly suspect that in the course of your deliberations, there will be strong complaints from Nigerians who want something done about the balance of business opportunities," Jonathan said.
South African Vice President Kgalema Motlanthe is expected to address the forum on November 14.
South Africa, one of the continent's largest oil consumers, gets most of its crude requirements from the Middle East, yet Nigeria is one of Africa's two top oil producers.
South Africa's deputy trade and industry minister Bongi Maria Ntuli said that Nigeria, Africa's most populous country, is her country's second largest trading partner on the continent. "As an open economy, we welcome new investment and collaborative partnerships in key areas of opportunity - all uniquely poised to deliver real competitive advantage," Ntuli said.
The suspected involvement of Nigerians in crimes in South Africa -- from internet scams to the production of fake South African identity cards, passports, immigration and marriage documents -- is one of the sore points in relations between the two countries.
"We know the balance of trade is skewed in favour of Nigeria because of the amount of oil South Africa imports from Nigeria," Motlanthe told a gathering of businessmen from the two countries."We will like to bring parity in this area by improving the trade flows between our two countries," Motlanthe said.
They were gathered to mark a decade of bilateral ties under the auspices of the Nigeria/South Africa Bi-National Commission (BNC). On Bovember 13, Nigerian Vice President Goodluck Jonathan told the same gathering that trade with South Africa was unfairly titled in favour of the latter. He said bilateral relations have yielded enormous benefits for South African entrepreneurs with investment in Nigeria while there were little or no opportunities for Nigerians to do real business in South Africa.
"Some Nigerians have questioned the very rational for the BNC if our relations and the benefits they confer are so skewed and if South African authorities are engaged in alleged acts of discrimination against Nigerian visitors, residents and businesses in South Africa," he said.
Official sources in South Africa say more than 100 South African companies operate in Nigeria, a jump from only four before 1999. The largest of them are in banking, telecommunications, retail and entertainment business. No figures of Nigerian outfits that have set up shop in South African were readily available. South Africa, one of the continent's largest oil consumers, gets most of its crude requirements from the Middle East. Nigeria is one of Africa's two top oil producers.
The two countries were scheduled to sign an agreement that is expected to ease immigration problems between their nationals but Motlanthe said the deal would have to be deferred to allow for the completion of an on-going review of South African immigration laws. "However, in keeping with our commitment to ease immigration between Nigeria and South Africa, our government has, in the interim, made provision for three years multiple visas for holders of diplomatic and official passports from Nigeria," Motlanthe said. He said the decision "will be implemented with immediate effect while given time for the completion of the review process which is expected to last for a few months."
Prospective Nigerian visitors often complain of difficulty in obtaining South African visas. Motlanthe admitted that the challenges were not limited to visas alone.Suspected criminal conducts of some Nigerians resident in South Africa have been creating friction between the two countries but Motlanthe said they (Nigerian nationals) were "in no way associated with criminal activities again."
November 14, 2009
Ali-Akbar Mehrabian says Iran is ready to 'develop the agriculture industry' in this western African country. He made the remarks in a meeting with Senegalese Foreign Minister Madicke' Niang in Tehran. He also announced that the second phase of an automobile manufacturing plant would go into operation in Senegal to manufacture Iranian cars.
Iran's giant automobile manufacturer, Iran Khodro, built the first phase of its factory in Senegal last year to export its cars to a number of western African countries.
Niang also noted that if the car manufacturing plant is expanded, its output could meet the demands of the Senegalese market as well as those of other African countries.
Based on agreements reached between the two Muslim states, Iran will provide Senegal with locomotives, boxcars, a subway, agricultural machines, cement factories, a refinery and electronic components.
Iran also has agreed to conduct geological and mineral prospecting surveys as well as offer training in various fields in the African state.
Iran Press TV
November 11, 2009
Trade between Brazil and Mozambique has risen more than threefold to $102.5 million so far this year compared with a year earlier, Brazilian Trade Minister Miguel Jorge said.
Between January and October this year, Brazilian exports to Mozambique totaled $100.4 million, up from $28.4 million a year earlier, Jorge said at a briefing in the southeast African country’s capital, Maputo. Mozambican exports to Brazil increased from $2,000 in the first 10 months of 2007 to $2.1 million during the same period this year, said Jorge.
Brazil is the world’s biggest producer of sugar, coffee and orange juice, the second-largest producer of soybeans and the third-biggest producer of corn. It’s also home to Vale SA, the world’s biggest iron-ore producer, which has won a concession to mine coal in Mozambique’s Tete province. Jorge is leading a 100-member delegation of businesspeople seeking investment and cooperation ventures in Angola, Mozambique and South Africa.
Zimbabwe’s government won’t export diamonds from its disputed Marange diamond fields until it has put in measures to better monitor trading in the gems.
“Zimbabwe agreed not to export Marange diamonds until the monitoring mechanism is established,” Ian Kelly, a spokesman for the U.S. State Department, said in an e-mailed statement.
The Kimberley Process, a global body created to curb trade in gems mined to fund conflict, on Nov. 5 decided not suspend Zimbabwe’s membership, saying it supports the nation’s attempts to work toward compliance with the group’s requirements.
Marange was seized by the Zimbabwe government from Maidstone, England-based African Consolidated Resources Plc in 2006 after gems were found. As many as 20,000 illegal miners besieged the area, also known as Chiadzwa, and were later cleared off by the army and police. New York-based Human Rights Watch says more than 200 were killed last year. Zimbabwe’s police say they have had no reports of atrocities.
November 07, 2009
2. China offers Africa more trade, investment
3. Niger says Nigeria imposes un-announced cross-border trade blockade
4. Egypt offers India exclusive industrial zone
5. Costs, delays scupper Airbus A400M sale to South Africa
6. China's trade brings Africa more growth than risk
7. East Africa Customs Union is on course
8. Mozambique serves as conduit for controversial Zimbabwean diamonds
9. Senegal inaugurates assembly plant for Chinese buses
10. Scramble for Africa: Brazil gaining on China
11. Egyptian minister to probe South African meat ban
12. Why Africa welcomes the Chinese
13. The facts of China's relations with Africa
14. Africa export revenue to fall
15. China's Africa goals more than just natural resources
Rights groups alleged soldiers killed about 200 people at a diamond field last year, which the government denies. The decision came as talks to save the unity government started in Mozambique. The coalition administration - formed in February - has been in crisis since Prime Minister Morgan Tsvangirai began boycotting cabinet meetings last month. Mr Tsvangirai is protesting at the way President Robert Mugabe is implementing the power-sharing deal.
Correspondent Karen Allen says the compromise diamond deal agreed in Namibia is likely to anger human rights groups. Although its own investigators found killings and forced evictions from the Marange diamond fields in the east of the country close to the border with Mozambique, the Kimberley Process panel stopped short of kicking Zimbabwe out, she says. Instead it has adopted a plan - proposed by Zimbabwe itself - which includes calls for an independent inspector to monitor diamonds leaving the controversial fields. Human rights groups claim the diamonds have been an important source of revenue for the military and for President Mugabe's Zanu-PF party.
The proposals outlined by Chinese Commerce Minister Chen Deming come ahead of a summit November 8 and 9 between Chinese and African leaders in the Red Sea resort of Sharm el-Sheikh. The meeting follows a landmark 2006 summit in Beijing that catapulted China's hunt for oil, minerals and other raw materials in Africa and brought Africa Chinese investment in infrastructure and other projects.
Chinese investments in Africa totaled $7.8 billion as of last year while trade has rocketed 30 percent annually this decade, exceeding $100 billion last year, Chen said in an essay published in the state-run China Daily newspaper.
Among the new measures Chen proposed are exempting unspecified types of commodities from customs duties, setting up logistics centers in Africa and creating an inspection system to weed out trade in substandard consumer goods. China would also continue to build schools and hospitals, support malaria-prevention programs and improve farming methods in Africa, Chen said. The proposals seem intended in part to blunt criticisms that rapidly growing economic ties were chiefly benefiting the Chinese side, with China reaping natural resources and cornering consumer markets while creating too few jobs for Africans. International aid watchdogs and good governance groups have likewise criticized Beijing for its loan policies in which few conditions are attached, thereby encouraging corruption.
"China has closely followed the development of Africa and sincerely wishes to make its contributions to the African people in developing their nations and creating a better life," Chen said.
Nigeria’s government has denied that it ordered the border to be closed and has not commented on the border hold-ups. People travelling south from Niger into Nigeria along the 1,500km (940 mile) border are not affected.
Reporter Chima Ila at the Nigerian border point in Maradi State said truck owners were angry. Many travellers from Niger were also unhappy at the situation, as many along the border are reliant on food from Nigeria, she said.
Niger was suspended from West Africa’s trade bloc Ecowas last month after President Mamadou Tandja went ahead with a controversial parliamentary election. But its neighbours stopped short of measures such as trade embargoes. Earlier this year, Mr Tandja dissolved parliament and had the constitution changed to let him seek a third term. The land-locked, arid and drought-prone country depends on its giant neighbour for many of its imports.
November 06, 2009
India is the first country to which Egypt made this rare offer, Indian Commerce and Industry Minister Anand Sharma said after meeting with Egyptian Prime Minister Ahmed Nazif.
“Nazif offered us to establish an India Industrial zone in the Suez Canal Development Zone. This is a significant ... as India is the first country to be offered such a big industrial initiative,” Sharma said.
The Suez Canal Development Area (SIDC) is of strategic importance as the Suez Canal, connecting the Red Sea in the Indian Ocean and the Mediterranean Sea in Europe, is a transit route for almost one-third of the global trade.
As per the offer, the Indian companies can set up joint ventures with the local firms and these could be located in the SIDC. Such an industrial zone would help find Indian companies easy market access to Europe and Africa, he said.
In his meeting with Nazif, Sharma discussed ways to enhance bilateral trade which was $3.75 billion in 2008-09.
Sharma, who also met his Egyptian counterpart Rachid Mohamed Rachid said, “We looked at areas where we can expand.”
India has a total investment of about $750 million in about 40 projects in the north western African country. The groups present in Egypt include Tatas, Dabur, GAIL, Mahindra Satyam (formerly Satyam Computer) and Wipro.
Sharma also had a meeting with WTO Director General Pascal Lamy. “We reviewed what progress has been made in Doha Development Round,” Sharma said.
Later, while speaking at the ‘Informal African WTO Trade Ministerial Meeting’, Sharma said India enjoys close ties with Africa and has common concerns and interests with many African member nations including agriculture.
“It is essential for developing countries from diverse groups in the WTO negotiations to stand together. Only through this unity can it be ensured that disciplines worked out are fair and do not place an undue burden on developing countries,” Sharma said.
November 05, 2009
South Africa cancelled a $5.2 billion contract to buy eight Airbus A400M military transport aircraft due to rising costs and delivery delays, cabinet spokesman Themba Maseko said on November 5. The move is a setback for the European planemaker, which appeared caught off guard by the decision, and could hand business to U.S. rivals eager to pounce on delays and uncertainty surrounding Europe's largest defence project.
"We have terminated the contract with Airbus but we've not terminated our quest to ensure we have the necessary capabilities. That is very clear," South African Defence Minister Lindiwe Sisulu said. "We have as one of our priorities the acquisition of strategic military air transport capability."
Shares in Airbus parent EADS initially fell 1 percent but recovered ground to trade almost flat on the day at 13.23 euros.
"We cannot comment at this point of time. We have just learned this from the media," Airbus spokesman Stefan Schaffrath said. The cancellation comes at a time when EADS is in the final stages of negotiating a rescue package for the rest of the 20 billion euro A400M project with a core group of European buyers, some of whom have also threatened to trim or cancel orders.
Lockheed Martin (LMT.N), producer of the veteran C-130 airlifter, has predicted extra sales due to A400M delays, which have mainly been blamed on engine software problems.
Launched after almost two decades of debate over European requirements in 2003, the A400M is designed to drop troops and heavy equipment in combat zones or disaster areas. Britain, France, Germany, Belgium, Luxembourg and Turkey ordered 180 planes in Europe's largest single arms procurement deal.
Export sales to South Africa and Malaysia brought the total order tally to 192 but Chile cancelled an order. South Africa's decision does not affect the main 20 billion euro European contract which looms large over EADS finances, but the company is already relying on exports to make the airplane break even after taking 2.3 billion euros in provisions.
"The termination of the contract is due to extensive cost escalation and the supplier's failure to deliver the aircraft within the stipulated timeframe," Maseko said.
South Africa has vowed to slash borrowing for three years to bring down a record deficit of 7.6 percent of GDP this year. "They are clearly worried about the need for extra borrowing and so a few big ticket items are easy wins," said Peter Attard Montalto, emerging markets economist at Nomura International.
South Africa's arms procurement agency Armscor told parliament last month the cost had jumped to 47 billion rand ($6.1 billion) from 6.4 billion, or 837 million euros at the time the order was placed. The value of the deal had already risen to 17 billion rand by the time the transaction was signed.
"The escalation would have placed an unaffordable burden to the taxpayer at a time when the national fiscus is under pressure due to the economic downturn," Maseko said.
South Africa's main opposition party, the Democratic Alliance, has called for a parliamentary investigation into the deal, which took place under former President Thabo Mbeki, who was forced from office last year.
Maseko said the cost of the South African order would have been $5.22 billion. He said no penalty fee was expected as the contract made provision for cancellation. Airbus plans to carry out the maiden flight of the A400M by year end, two years behind schedule.
China's ties with Africa have been a magnet for critics worried about corruption and human rights on a continent struggling with both, but its investments are bringing more growth than risk for countries starved of trade. Two-way trade flows have ballooned tenfold since 2000, to $107 billion last year, as China builds infrastructure, sells cheap goods and buys much-needed energy and mineral resources.
These deals have drawn criticism from activists and politicians, often Western, who say China is stripping Africa of raw materials while shoring up corrupt and oppressive regimes. But African and Chinese businessmen and academics say Beijing is filling a yawning need for key infrastructure, and Chinese firms are also shaking up moribund markets where Western companies were doing little to develop local economies.
"We always talk about trade being more important than aid," said Adrian Davis, the China head of Britain's Department for International Development (DFID), which works with Beijing to support development in Africa. "This is money going into Africa ... We are investing in health and education, but Africa also needs physical infrastructure which we in the West haven't been doing."
China's critics also say they are concerned about what it is funding, and how, as roads, stadia and government buildings built with Chinese cash spring up around the continent -- some of them aid, some of them trade, but many something in between. Beijing entwines business and assistance more closely than Western governments, using infrastructure to pay for resources and often disbursing donated funds through the Commerce Ministry. This makes it hard to put a figure on handouts, and the only official number for Africa covers all spending from 1949 to 2006.
"We put everything into a very big basket called economic cooperation; investment, humanitarian assistance, contracts. So it is difficult to figure out what belongs purely to aid," said He Wenping, an Africa expert at an official Beijing think-tank.
But Beijing is aware of the risk to its reputation and market access if projects are derailed by sleaze and its bankers have used their trade-aid model to curb dangers, experts say. Bypassing host governments and paying Chinese firms directly to build a road or hospital, which is handed over when completed, cuts opportunities for the most predatory graft that often left other aid projects unfinished.
"The Chinese say: 'We will take your gold and put in so many schools, we will take your copper and put in a railway line'," said Kwaku Atuahene-Gima, a Ghanian citizen who is Professor at the China Europe International Business School. "If that happens, that is a more effective way of developing the system than giving loans and aid money that go into the pockets of politicians and other people who squander it."
One Chinese firm has been caught up in a large African graft probe this year. Activists say they are more concerned about the secrecy that surrounds China's investments than the actual deals. "There is no inherent problem with offering access to oil or other resources in return for infrastructure, but complex, opaque deals bring a huge risk of corruption," said Diarmid O'Sullivan, corruption expert at resource activist group Global Witness.
China, which has pulled hundreds of millions out of poverty under a one-party central regime, is sceptical of the Western emphasis on democracy and transparency as key to prosperity. The money it gives in aid or in return for resources usually comes with no strings attaching it to human rights or governance standards, in line with Beijing's long-standing pledge of "non-interference" in the affairs of other nations. Critics say this undermines efforts to force bad governments to clean up. But those efforts have met with limited success.
"Major Western governments and institutions haven't been able to contribute to a quantum leap in controlling corruption," said Fredrik Galtung, chief executive of Tiri, an NGO that seeks practical ways to improve integrity. "The continent is littered with international projects...that didn't deliver anything. Look at the billions Nigeria borrowed -- and look at its electricity supply," he added, referring to the West African state's notoriously patchy flow of power.
Many in China and Africa see greed, double standards and fear about losing influence and market share in their former colonial strongholds behind Western criticisms. They point out that Chinese firms invest far more in other parts of the world, with the same labour and environmental standards, but those operations are far less scrutinised.
"It is only around Africa because the vested political interests are so much larger. I think that's the realpolitik view of why this hostile stance has developed," said Martyn Davis, head of Stellenbosch Univerity's Centre for Chinese Studies.
Major western firms today -- like Chinese counterparts -- still do business in countries with oppressive governments and have been caught up in multi-million dollar bribery scandals. U.S. oil companies including Exxon Mobil have invested in Equatorial Guinea, a tiny West African state where petrodollars help prop up a regime recently criticised by campaign group Human Rights Watch for "corruption, mismanagement, and callousness toward its own people."
This year KBR Inc, the former engineering subsidiary of Halliburton Co.pleaded guilty to charges that it paid $180 million in bribes to Nigerian officials in a decade-long scheme to secure $6 billion in contracts. "Just because another competitor has arrived doesn't warrant this spectre of the Chinese resource monster stomping all over Africa you see in the media," said one Western banker in Africa.
QUESTION: Is there a special arrangement for Burundi and Rwanda who just joined the customs union in July this year yet the fully fledged union comes into force on January 2010?
ANSWER: There is no breathing space for Rwanda and Burundi. As far as the customs union is concerned, it was one of the conditions for them to accede to the East African Community. The breathing space they had enjoyed was only for two years from July 2007 to July 2009. One would like to believe that there has been a lot of good work to prepare for the onslaught (of the Customs Union) from them.
The remarkable thing is that they have fully participated in the negotiations of the East African common market protocol. We have also not heard anything from them that they will not be ready.
QUESTION: Do you think the two countries, Tanzania and Uganda, are ready since the transitional phase for zero tariffs in intra- region trade ends in December?
ANSWER: It is not a question of the two being ready. They have had four years breathing space. During this time, there has been emergence of business confidence in Tanzania and Uganda which probably did not exist before. The negotiations on the customs union took about three and half years because of apprehensions about Kenya being superior. This anxiety has evaporated over the last four years because the two have their own industrial capacity on the one hand.
They have also come to realise that trade with Kenya does not hinge exclusively on manufacturing, that Uganda and Tanzania have got their own advantages particularly in agriculture, on which they can leverage their trading particularly with Kenya.
One of the litmus tests about this confidence is the record time within which the common market negotiations have proceeded, a record time of 18 months.
QUESTION: There is still a big problem with awareness of the inherent opportunities the community presents as the recent study commissioned by the EAC Customs Directorate shows especially among the wananchi, what are you doing about it?
ANSWER: Generally, the question of outreach has been a challenge. My reaction to this deficit is, maybe we are pointing too much blame on the EAC Secretariat.
It is not an executing body but a think tank. The key role for outreach is really the partner states. No other regional bloc has the structures that the EAC has. Our members of the East African Legislative Assemblies sit in national parliaments and cabinets.
For Rwanda and Burundi, the ministers do not sit in parliament, but Uganda, Kenya and Tanzania have the platform of national parliaments. Maybe we have not fully exploited the benefits of this unique system that we have.
This is one of the most important challenges that we must confront because how then do we create a critical mass of people who understand the EAC coming together.
QUESTION: Are we on course for the monetary union and the political federation?
ANSWER: As far as the monetary union is concerned, we made serious advances in taking a study in what is involved. The five governors of our central banks have been greatly involved and a validation process has been ongoing. The goal of 2012 maybe rather ambitious because the monetary union is a complex level of integration and requires a very intricate level of convergence.
For instance, Burundi is just coming out of war and they do not have structures. They do not even have a revenue authority. Our leaders would not want to see variable geometry where some people are left behind. They would like to see five countries move together. For the federation, we are developing best practices that we can use as a template which can inform a federation of East Africa.
QUESTION: We have elections in all the five countries starting next year up to 2012. What role will the EAC secretariat play?
ANSWER: Between June to November 2010, the EAC will face a major challenge as far as its operations are concerned. This is something we are discussing. If we do not harmonise our election periods, we will continue to face gaps. For instance, in Kenya after the violence for about four months, the ministers could not meet.
QUESTION: But will the EAC have a say in the smooth running of these elections?
ANSWER: Ultimately, the EAC will have to move in the direction that the European Union Commission has. That is, to give more power to the secretariat.
This is one of our recommendations in the common market protocol, to move the EAC to a commission. Currently the secretariat cannot take any decisions but a Commission would have a more defined role.
As a secretariat, the EAC is not an executing agency. We use the partner states and the ministers for EAC affairs are our key links with the partner states. We can call them on short notice if there is a matter regarding a partner state.
QUESTION: The recent role of some EAC partner states like Uganda and Burundi in Somalia peacekeeping has ignited terrorist threats. Any concerted plans to tackle this as an EAC problem?
ANSWER: Our chiefs of defence forces will be meeting from November 9-13.
The subject they will be looking at is the idea hatched at the Kigali heads of state summit which is the need for EAC to have its own standby force.
They are looking at issues to do with terrorism. Our defence forces have also been doing military excises together. So we are building a base and rapport for a single unit of command. This will be a prelude to what president Kikwete of Tanzania said at the summit, the need for an East Africa Defence Pact, meaning if one partner state is attacked, the others respond.
QUESTION: A cross-cutting issue noted by the World Bank “Doing Business Report-2010” points out corruption and the challenge of accessing credit as the top two obstacles to doing business in East Africa. Why are we not having an EAC voice on this issue?
ANSWER: Over the last 18 months, the EAC has been working with the anti-corruption bureaus in East Africa to come up with a protocol that will be considered by the ministers. This will identify the root causes of corruption. It is not just a question of arresting people and jailing them. The issue should be on uprooting the evil.
We see a lot of distortions on doing business firstly in the mindsets of our public officials. About 60% of the distorted cost of doing business is in the mindset, corruption, and short operational times of our border posts. The other 40% of the issues have to do with infrastructure like roads, rail and energy and the collapse of our maritime.
Development aid to Africa can boost domestic demand on the continent and help wean the global economy from over-reliance on personal consumption in the United States, a senior World Bank official said on November 5.
The world economy's over-reliance on U.S. consumption has been cited as one side of an imbalance in trade and investment flows, seen as among the key topics of debate when Group of 20 financial leaders meet in Scotland this week.
"We need to look at a multi-polar world, because the dependence on U.S. consumption will have to shift," Ngozi Okonjo-Iweala, managing director at the international lender, told a news conference. "There are other countries that can provide consumption. When you look at Africa, it has around a billion consumers. When you invest in Africa you provide trade and services to these people."
The Group of 20 industrialized and emerging nations will meet to discuss ways to avoid the imbalances in trade and investment flows that played a part in the global financial crisis. Part of a U.S. proposal is reducing trade surpluses in major exporters like China and increasing savings in debt-laden countries, including the United States.
Okonjo-Iweala, a former Nigerian finance minister, said it was important to return African countries and other emerging economies to the growth rates they enjoyed before the global crisis to reduce poverty and contribute to rebalancing growth. Okonjo-Iweala, who met with Japanese Finance Minister Hirohisa Fujii and other government officials, also reiterated the Bank's plan to increase its capital base so it can lend more.
The Bank will provide member nations with an assessment of its capital needs by spring 2010. France, Britain and Italy have said they were not convinced the increase was necessary, although the United States, Nordic countries, the Netherlands and Australia have voiced general support.
This dusty border town (Manica) in southern Africa has become a major hub for trading rough diamonds, but there is a problem: Mozambique doesn't produce any of the sparkling stones. The diamonds come from neighboring Zimbabwe, smuggled illegally along a pipeline that Mozambican officials say they are powerless to stop.
The Kimberley Process, an international regulatory body that polices the diamond trade, is set to decide November 5 at a meeting in Namibia whether to suspend Zimbabwe's membership, which allows it to certify that its diamonds are conflict-free. Earlier this year, its investigators documented human-rights abuses by the Zimbabwean military against diamond miners in some fields, which the military and government have denied.
If the group rules against Zimbabwe, the country will lose its Kimberley certification, an internationally recognized stamp of approval sought by middlemen, retailers and consumers as a way of avoiding so-called blood diamonds -- gems mined amid violence, sold to fund conflict, or both. The rampant smuggling through Mozambique, however, could undermine any sanctions the Kimberley Process puts on Zimbabwe.
And whether or not the group votes to sanction Zimbabwe, the smuggling route is complicating regional efforts to clean up the image of African diamonds.Other nearby Kimberley Process members -- such as Botswana, South Africa and Namibia -- have been at pains to assure consumers that their own gems are conflict-free. Smuggled Zimbabwean stones can be sold as if they came from some of these neighbors, confusing buyers who might stay away from Zimbabwean stones no matter what Kimberley officials rule this week.
Murisi Zwizwai, Zimbabwe's deputy mining minister, declined to comment on allegations made by the Kimberley Process, including complicity in the smuggling trade. He said the government would respond to the charges at this week's Kimberley meeting. "Our diamonds are not blood diamonds," he said.
Starting late last year, the Zimbabwean military and police moved into diamond fields near the Mozambican border. Zimbabwe said the operation was aimed at relocating hundreds of thousands of artisan miners who had swarmed the region. But human-rights groups said the authorities forced miners to dig for the benefit of senior government officials or military commanders under the threat of violence, allegations the government has denied.
Many of these stones are smuggled across the border, Mozambican officials say. Here, middlemen resell them to dealers, who then ship them out of Mozambique to be cut, polished and sold on the world market.
It is difficult to know how many diamonds are being smuggled through Mozambique. Kimberley Process investigators said that according to government statistics, 59% of Zimbabwe's production in 2008 wasn't exported through official channels.
Pedro Jemusse, a Mozambique district police spokesman in the provincial capital of Chimoio, about an hour away from Manica, said it is hard to crack down on the trade because foreign buyers usually have appropriate immigration papers, and it is difficult to catch smugglers in the act. Mr. Jemusse also acknowledges police and border guards can be bribed.
The first point of sale for rough Zimbabwean diamonds is Manica, according to interviews with the Mozambican government, police and border officials, as well as some diamond buyers. Diamond traders from Lebanon, Israel, Somalia and West African nations like Nigeria and Guinea have flocked to the town, dotted with traditional mud-and-stick homes. Driving shiny new cars, they rent elaborate, freshly constructed houses, painted in pastels.
Zimbabweans and Mozambicans carry rough stones across the border checkpoint near Manica. They hide them in their mouths or in bandages wrapped around their legs. One Mozambican man who lives in Zimbabwe said he walks across the border nearly every day, introducing Zimbabwean diamond sellers to mostly Lebanese buyers, who wait on the shaded terrace of the Flamingo Restaurante and Bar. Marked by a giant white flamingo signboard along one of Manica's main streets, it is one the town's best-known spots for meeting black-market diamond dealers.
On a recent afternoon, several men gathered around a plastic lawn table at another fixture of the smuggling route, the Manica Lodge, holding up stones to the light. Deals range from a paltry $1 a carat to $3,000 or $4,000 a carat for a good stone. One buyer said that they can make as much as $100,000 a month in the trade here. Around midnight on a recent Friday at Coquiero, a popular nightclub outside town, three locally well-known Lebanese diamond buyers settled into the red couches in the VIP lounge, mixing vodka tonics from a bottle of Smirnoff on the mirrored tabletop. They scrolled through their BlackBerrys as they checked out girls on the dance floor. One of the buyers told a reporter that he and his companions had been buying diamonds for the past one or two years, but said they weren't doing anything wrong. "I'm just trying to make a living," he said.
Wall Street Journal
"This inauguration is the occasion to praise the excellence of the relations between Senegal and China," Wade said at the opening of the plant in the western city of Thies. The construction was made possible by a Chinese loan of 11 billion CFA francs (16.7 million euros, 24.7 million dollars).
The plant is a partnership between the Chinese firm King Long and Senegalese Senbus. King Long is taking over from Indian Tata Motors, which was in partnership with Senbus from 2005 until 2008 for the assembly of over 500 minibuses used to renew Dakar's public transport fleet.
Wade, who has been in power since 2000 and has already announced he will run again in the 2012 presidential elections, has ushered in a host of Chinese projects in Senegal like the construction of a new national theatre in Dakar by Chinese firm Complant.
The relations between Beijing and Dakar are relatively recent as they re-established diplomatic ties only in late 2005 after a 10-year hiatus due to Senegal's recognition of Taiwan.Since 2005 China has announced a host of aid, loans and cooperation projects with the West African country.
China is leading the pack in the 21st century 'scramble for Africa' but anybody who thinks Beijing has the continent sewn up need only glance at the passport of Brazilian President Luiz Inacio Lula da Silva. By the time he first visited the European Union in 2007, four years after coming to office, Lula had racked up six trips to Africa, covering 16 countries. Then, in July, he was guest of honour at an African Union summit in Libya, a reminder to Beijing ahead of its second Forum on China-Africa Cooperation (FOCAC) in Egypt on November 8-9 that it is not alone in courting the continent and its raw materials.
Reflecting Lula's push, Brazil's annual trade with Africa has jumped from $3.1-billion (R24,5-billion) in 2000 to $26.3-billion last year, a rate of growth outpaced only by China, which has seen two-way commerce soar tenfold this decade to $107-billion.
China has now eclipsed the United States as the continent's biggest trading partner.
"The balance of commercial power has shifted entirely," said Martyn Davies of Frontier Advisory, a South Africa-based consultancy for investors in emerging African markets. "This is not something new - it's just been accelerated by the economic crisis. It's towards inter-emerging market trade, rather than the traditional north-south trade."
It is not only Brazil and China that are muscling in on Africa. The two other members of the so-called BRICs grouping - India and Russia - are also setting up stall in a region that for generations European powers regarded as their own back yard.
Indian trade with Africa has jumped from $4.9-billion to $32-billion this decade, a similar growth trajectory to Brazil. However, in terms of foreign direct investment in the last six years, India leads the way with 130 projects, compared to 86 from China and 25 from Brazil, according to research by South Africa's Standard Bank.
Both Brazil and India are also happy to use their cultural and linguistic links to advance their causes. Besides sharing a language with Mozambique and Angola through common Portuguese heritage, nearly one in two Brazilians claims some African ancestry, while South Africa is home to more people of Indian origin than anywhere outside the subcontinent.
In the last 12 months, Russia has also launched a major diplomatic and trade offensive in Africa, with Mikhail Margelov, its envoy to Sudan, declaring in January that Russia was "back in Africa" and ready to play a "more active role."
His comments were followed within six months by a high profile visit by President Dmitry Medvedev to Egypt, Nigeria, Namibia and Angola to shore up Russian energy, mining, construction and telecommunications deals.
"These forays and the commercial deals which follow them are for the first time in 50 years forcing Western countries to play catch-up on a continent in which they have always maintained unlimited commercial access," Standard Bank said last month.
The rise of competing sources of trade and investment also fulfils the ambitions of many African countries to free themselves from overdependence on commercial ties to one or two Western partners, in particular the United States.
Besides energy and minerals, which make up the lion's share of African exports to the BRICs countries, there is growing interest in its arable land - less than 25 percent of which is cultivated - as a source of food for export.
Probably typical of the deals of the future is the $1-billion China lent Angola in March to develop a farming sector devastated by a 27-year civil war that only ended in 2002.
"Africa's agricultural potential will become an increasingly potent driver of the BRICs commercial engagement with the continent," Standard Bank said in a report.
November 03, 2009
South Africa’s agriculture minister Tina Joemat-Pettersson had received a pledge from her Egyptian counterpart Amen Abaza that he would investigate the ban on South African bone-in beef and other livestock products, the paper said. It cited South African Red Meat Producers Organisation chief executive Gerhard Schutte as saying the ban was still in place despite South Africa’s status as being ‘foot and mouth disease-free’ under World Organisation for Animal Health standards.
South Africa is a net importer of beef but exports high-quality beef to other parts of the world.
There is a debate among geopolitical and economic commentators about the merits of Chinese versus western involvement with Africa. One argument is that Chinese investment is exploitative and undermines the development of democracy and human rights on the continent.
Others view the matter in terms of competition, arguing that China is encroaching on the decades-long monopoly of the west over Africa's natural resources.
Neither of these viewpoints addresses the core issues. First, major players in global investment and development are discussing Africa without engaging its people as equal partners. Second, Africans are not seen to be proactive in setting their own priorities and terms of engagement.
Development aid, fashioned on this skewed relationship, has long been a key source of income for the continent. While helpful, aid has not delivered sustainable development. It is clear that trade and investment bring greater opportunity for wealth creation.
Africa welcomes investment, from the east and west, north and south, and Rwanda is no exception. We want investment that offers skills and jobs, encourages entrepreneurship, and provides the opportunity to improve millions of lives. This call for investment and trade rather than traditional aid does not mean the latter's contribution to addressing poverty is not recognised. However, the fundamental problem with the current development aid practice is the danger countries face as they become perpetually reliant on handouts.
So what should those who give aid, and those who receive it, focus on? The primary purpose of aid should ultimately be to work itself out, leaving a positive legacy behind. Aid should also be used to create opportunities for trade, enhance self-sufficiency and assist with the development of a robust private sector to attract investment.
In many countries, for example, aid offers resources such as fertilisers for free. The intention is good but this often prevents local businesses from being able to provide these goods competitively. Given the choice, people would prefer to work and provide for themselves, rather than receive charity. Africans want self-determination and dignity.
Our continent, like others, requires investment to further its development. Efforts to pursue this need not be seen as a threat to the strengthening of democracy. Of course, African leaders should take good governance and human rights seriously – and most do. This is not – and should not be – because anybody else tells us to, or in return for investment, but because it is the right thing to do. The presence of Chinese investment in Africa does not discharge governments of their responsibilities any more than its presence in the EU or US should erode human rights there.
In Rwanda, we have worked hard to tackle the root causes of corruption and ensure there is a strong case for attracting investment. This programme of reform is yielding results and has been recognised by the World Bank's 2010 Doing Business Index, which saw Rwanda jump from 143rd to 67th position in one year, making it the world's leading reformer.
In 2008, Rwanda's GDP grew at 11.2%, and despite the global financial crisis our 2009 projections give us cause for optimism. Wages in key export sectors have grown more than 20% annually over the last eight years, and all these developments have occurred while the percentage of our national budget funded by aid has been reduced by half since 2001.
Ultimately, Africa's relationship with its international counterparts should be redefined. For too long, we have not been able to trade fairly with Europe and the US; trade barriers and subsidies, particularly in agriculture, have protected external markets from African products, hindering our ability to trade as equals.
Investment and trade with willing countries, including intra-African trade, helps the continent to build a much-needed culture of entrepreneurship and development. All would benefit if the world focused on increasing investment in Africa, and if Rwanda and the rest of the continent worked to establish more equitable international partnerships. A trade relationship built on this new approach would be more helpful in reaching what should be our common goal: sustainable development, mutual prosperity and respect.
November 02, 2009
by Ben Blanchard
Chinese Premier Wen Jiabao heads to Egypt this week to attend the second Africa-China summit. Here are some facts about ties between China and Africa:
TRADE AND INVESTMENT
Trade between China and Africa has jumped in the past decade, driven by China's resource needs and growing African demand for cheap Chinese-made products. In 2008, total trade was $106.8 billion, up 45.1 percent on 2007. In 2000, trade was only $10.5 billion. China's imports from Africa were $56 billion in 2008, and its exports to African states, including both sub-Saharan and North Africa, were $50.8 billion. China's imports from Africa are dominated by oil and mineral shipments from a handful of countries: Angola, Sudan, Nigeria, Zambia, the Democratic Republic of the Congo and its smaller neighbour, the Republic of the Congo.
Newly independent African states became important diplomatic allies of China during the 1950s and 1960s, when Mao Zedong's Communist Party supported independence movements and gave aid to new nations. African nations also formed an important bloc supporting Beijing in international forums, and were instrumental in ejecting Taiwan from China's seat at the United Nations in 1971. President Hu Jintao has made consolidating ties with Africa a feature of his foreign policy. In 2006, Beijing hosted its first summit with African leaders and announced promises to boost trade and aid. China has partially cancelled debts owed by the poorest African countries and also lifted tariffs on their goods. Critics say China's aid to Africa is too closely tied to commercial goals and does not demand sufficient accountability from governments accused of corruption and human rights abuses. However, Western nations' record on governance and clean business in Africa has also been chequered.
In past years, Beijing has competed with Taiwan, the self-governed island that China says is a breakaway province, for the diplomatic recognition of some African governments. Four African states -- Burkina Faso, Gambia, Sao Tome and Principe, and Swaziland -- still maintain diplomatic ties with Taiwan. Some countries have switched ties numerous times, hoping to squeeze more aid out of either China or Taiwan. Malawi is the most recent African country to establish ties with China, severing links with Taiwan in December 2007.
Rights groups say China, which last year imported $6.3 billion of Sudanese crude oil, has failed to do enough to stop bloodshed in Sudan's strife-torn Darfur and has violated a U.N. arms embargo on the region. China denies the charges and has appointed its own envoy to try to bring peace to Darfur. China's Foreign Ministry says critics who suggest China is only interested in Africa because of its energy resources are "erroneous and one-sided."
Similarly, oil exporting countries will take the biggest hit, with a shortfall of US$200 billion in 2009. Dr. Sibry Tapsoba, Head, African Development Institute at the African Development Bank (AFDB), announced this at the 6th Trade Policy Course in Accra last week.
The course was organised by the World Trade Organisation (WTO), the Economic Commission for Africa (ECA) and the African Development Bank.
The training course brought together over 100 participants from most of the African countries, including the host Ghana. Dr Tapsoba indicated that with exports declining faster than imports, trade balance will deteriorate in most counties.
Exports for 2009 and 2010 have been revised downwards by 40%. As a result, from a comfortable overall current account surplus of 2.7% of Gross Domestic Product (GDP) for both 2008 and 2007, the continent will record an overall deficit of 4.3% of GDP in 2009.
Tapsoba reiterated that the continent has been severely hit by the financial crisis, with its growth rate forecasted to be at 2.8% in 2009. Sub-Sahara Africa is expected to grow at 2.5% while middle income countries have been hit severely due to their relatively higher integration into the global economy. He added that the slowdown in growth is primarily due to a decline in trade-flow.
Africa has made significant and continuous progress in economic growth, as evidence by the average annual rate of 5.8% before the occurrence of the economic and financial crisis. This relatively good result has been attributed to various reforms undertaken by African governments to stabilise and liberalize their economies as well as stimulate growth.
However, despite substantial progress in reforming the overall policy environment, Tapsoba said it would appear that many African counties may not achieve the Millennium Development Goals (MDGs). The reason is partly attributable to a lack of capacity in public and private sectors in Africa, which has been acknowledged as a major impediment in the attainment of poverty reduction goals.
Dr Tapsoba has said that “it is therefore evident that, no matter the amount of Financial Resource Mobilization for Africa’s Development, such funds would yield only limited or modest results if companies do not have human organizational and institutional capacity to absolve and effectively utilize them.”
Barely a month goes by without some new energy or mineral deal being struck between China and an African nation. These deals have transfixed the West, but China gets far more from the relationship than raw resources.
Africa offers China two important things -- a chance to earn the global respect it believes it deserves in recognition of its growing economic clout, and friends who do not judge it, or who at least have little reason to directly fear China's rise.
Communist China's friendly relations with Africa go back decades, to when Beijing backed newly independent states as well as liberation movements. The continent's backing was vital in getting China into the United Nations in 1971.
"You could argue that the contemporary driver is economic, but they've always had a political interest in Africa, from the mid-1950s onward," said Chris Alden, an Africa expert at the London School of Economics. "As China becomes a more active player in multilateral affairs, it recognises it needs partners, and Africa in many ways is a very suitable partner."
In 2006, President Hu Jintao promised a leap in investment, trade and aid at Beijing's first summit with African leaders. At the G20 summit of big developed and developing economies last November, he raised Africa's needs during the global economic turmoil.
When Chinese Premier Wen Jiabao visits Egypt for the second Africa-China summit from November 8 to 9, analysts and diplomats expect him to match the $5-billion in loans and credit offered then by Hu, or even exceed it.
Africa's GDP is about $1,2-trillion, roughly one quarter the size of China's $4,4-trillion economy.
"While savouring the fruits of its own growth, China has never forgotten its obligations to the African brothers," the official Xinhua news agency said in a recent commentary.
Hu's commitment to Africa appears to reflect his belief that the continent offers a friendly stage to show the wider world that China's growth and international policies are a global good.
"They would like to demonstrate that their benign intentions are best represented in places like Africa," said Alden.
Africa also offers China important diplomatic support that it invariably does not get from the United States, Europe or even other countries in Asia, especially when it comes to contentious issues like United Nations' votes over human rights.
"We need the vote from African countries whenever we are facing voting events, like the Shanghai Expo, Olympic Games, Human Rights, et cetera," said He Wenping at China's Institute of West African and African Studies.
Of course, none of this is to say business deals and investments in mines and oil fields are not important.
Trade between China and African countries has surged by an average annual 30% for much of the past decade, driven by China's appetite for oil and minerals, and its sales of clothes, cars, telecommunications and other goods to African markets.
Yet the investments go beyond simply buying up natural resources. China's largest bank, ICBC, owns 20% of South Africa's Standard Bank.
Shenzhen-based Huawei Technologies, China's biggest telecoms equipment maker, is pushing south from its established stamping ground in North Africa. Peer ZTE is another Chinese player growing in importance in Africa.
"Not everything is driven by politics -- it's driven by business," said Martyn Davies, executive director of Stellenbosch University's Centre for Chinese Studies in South Africa. "All the companies that are investing in Africa are making a lot of money."
With developed markets either saturated or entry requirements too high, Chinese firms see Africa as a great untapped market, added Duncan Innes-Ker, Beijing-based China analyst at the Economist Intelligence Unit. "When it comes to other parts of the world, it is true that the requirements that come along with investment, like labour and environment standards, essentially negate the main advantage China has, which is a lot of cheap money and an ability to do things very well at the moderate cost end of the scale," he said.
"A lot of it comes down to where Chinese firms have their comparative advantage, and these are fast-growing markets," Innes-Ker added. "Chinese companies are well placed to exploit that, as unlike a lot of Western companies they're used to operating in a market where you have to be flexible."
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