1.The case for investing In Africa
2.Africa weathers economic crisis better than expected
3.Africa to Europe bushmeat smuggling thrives
4.African economy to grow 5.2 pct in 2011 -OECD/AfDB
5.Poverty muddies response to W. African drug trade
6.East and West Africa are worlds apart on trade
7.Standard Chartered soft commodity loan to boost Asia-Africa trade
8.'Patronizing' West risks losing trade, influence to emerging powers, warns think tank
9.Happy 10th birthday AGOA but why is there no party?
10.Africa must do more to help itself economically
11.Greater intra-EAC integration pays off in more trade
12.East Africa's monetary goal undaunted by euro woes
13.South Africa targets maize exports of 4.5 million tons
14.Global Fairtrade sales top €3billion
15.Namibia looks to uranium as diamonds lose luster
16.China triples size of African equity fund to $3 billion
17.Zimbabwe exports $1 billion of minerals up to May this year
18.Nigeria versus South Korea - development scorecard
19.Cautionary notes sounded as South-South trade booms
20.Smuggled goods dominate ancient Ethiopian trade route
21.ACP and EU nations sign revised trade deal
22.Kenya trade with BRIC countries increases
23.Southern Africa to sign scaled-down EPA before end of 2010
July 26, 2010
The case for investing In Africa
by Paul Collier
Most international businesses are still not very aware of Africa's investment opportunities. Information costs are high: Africa is fragmented into many different countries, and even in aggregate the continent is a fairly small economy.
For several decades, investor ignorance did not matter: With few exceptions Africa's economies were too badly run for there to be many opportunities for firms of integrity. But there has been a sea change--Africa is on the move. There will be ups and downs, but investors from the countries of the Organisation for Economic Co-operation and Development (OECD) who remain set in their ways may be missing a giant business opportunity if they fail to pay attention to the changes afoot.
The situation in Africa quietly began to change during the period 1995-2005. Profound macroeconomic reforms tamed inflation and opened economies to international trade. More patchily, the regulatory environment facing international business also improved. Public ratings, such as the World Bank's Doing Business surveys, enabled African governments to benchmark their performance and began to put pressure on those that were recalcitrant. As the global commodity boom built to its 2008 crescendo, many African countries were well positioned to harness the spike in their export revenues for growth beyond the resource extraction sector itself.
That upturn in national growth rates was mirrored in the increased profitability of companies operating in Africa. Indeed, three distinct sources of data indicate that returns on investment are higher there than in other regions. One was a comprehensive study of the publicly traded companies operating in Africa for the period 2002-07, mostly in the manufacturing and services sectors. It found that these companies' average return on capital was around two-thirds higher than that of comparable companies in China, India, Indonesia and Vietnam.
Another source, on the foreign direct investment of U.S. companies, showed that they were getting a higher return on their African investments than on those in other regions. Finally, analysis of a series of surveys of several thousand manufacturing firms around the developing world found that, at the margin, capital investment had a higher return in Africa.
This was the scene in the years leading up to the global crisis. Although its origins had nothing to do with the continent, the crisis did not bypass Africa. Its effect was to collapse commodity prices--for example, the price of oil initially tumbled by more than $100 a barrel. More subtly, the international appetite for risk collapsed, and since Africa is still generally viewed as the riskiest region, investors got scared; for example, international banks curtailed letters of credit to African exporters far more drastically than to those in other regions.
These effects were severe. However, with a few exceptions--inevitable in a region with so many countries--Africa weathered the economic storms well. Led by its two largest economies, South Africa and Nigeria, most countries had built prudent fiscal positions: In a remarkable break with its past, Nigeria had freed itself from debt and built up over $70 billion of foreign exchange reserves. Further, the adverse impact of the crisis through commodity prices lasted less than a year for Africa. Globally, commodity prices rapidly bounced back and seem to have stabilized around levels markedly higher than those in the decades before the boom, underwritten by growing Asian economies and their corresponding need for commodities.
Forbes
Most international businesses are still not very aware of Africa's investment opportunities. Information costs are high: Africa is fragmented into many different countries, and even in aggregate the continent is a fairly small economy.
For several decades, investor ignorance did not matter: With few exceptions Africa's economies were too badly run for there to be many opportunities for firms of integrity. But there has been a sea change--Africa is on the move. There will be ups and downs, but investors from the countries of the Organisation for Economic Co-operation and Development (OECD) who remain set in their ways may be missing a giant business opportunity if they fail to pay attention to the changes afoot.
The situation in Africa quietly began to change during the period 1995-2005. Profound macroeconomic reforms tamed inflation and opened economies to international trade. More patchily, the regulatory environment facing international business also improved. Public ratings, such as the World Bank's Doing Business surveys, enabled African governments to benchmark their performance and began to put pressure on those that were recalcitrant. As the global commodity boom built to its 2008 crescendo, many African countries were well positioned to harness the spike in their export revenues for growth beyond the resource extraction sector itself.
That upturn in national growth rates was mirrored in the increased profitability of companies operating in Africa. Indeed, three distinct sources of data indicate that returns on investment are higher there than in other regions. One was a comprehensive study of the publicly traded companies operating in Africa for the period 2002-07, mostly in the manufacturing and services sectors. It found that these companies' average return on capital was around two-thirds higher than that of comparable companies in China, India, Indonesia and Vietnam.
Another source, on the foreign direct investment of U.S. companies, showed that they were getting a higher return on their African investments than on those in other regions. Finally, analysis of a series of surveys of several thousand manufacturing firms around the developing world found that, at the margin, capital investment had a higher return in Africa.
This was the scene in the years leading up to the global crisis. Although its origins had nothing to do with the continent, the crisis did not bypass Africa. Its effect was to collapse commodity prices--for example, the price of oil initially tumbled by more than $100 a barrel. More subtly, the international appetite for risk collapsed, and since Africa is still generally viewed as the riskiest region, investors got scared; for example, international banks curtailed letters of credit to African exporters far more drastically than to those in other regions.
These effects were severe. However, with a few exceptions--inevitable in a region with so many countries--Africa weathered the economic storms well. Led by its two largest economies, South Africa and Nigeria, most countries had built prudent fiscal positions: In a remarkable break with its past, Nigeria had freed itself from debt and built up over $70 billion of foreign exchange reserves. Further, the adverse impact of the crisis through commodity prices lasted less than a year for Africa. Globally, commodity prices rapidly bounced back and seem to have stabilized around levels markedly higher than those in the decades before the boom, underwritten by growing Asian economies and their corresponding need for commodities.
Forbes
Africa weathers economic crisis better than expected
by William Wallis
Africa has weathered the global financial crisis better than expected.
Thanks largely to rising export volumes, and recovering commodity prices, the continent is emerging this year with projected GDP growth of 4 percent, up from 2.3 per cent in 2009 according to the annual outlook for the continent published today by the African Development Bank(AfDB).
“It appears that the African economy has been more resilient to the global crisis than other emerging economies, with the exception of those in Asia, notably China and India,” the reports says.
A year ago every indicator looked bad. Foreign investment flows were drying up, trade volumes were dropping, remittances were declining and the prices for the commodities which drive most African economies had in many cases collapsed. On top of that there was a strong risk that as the rich world focussed on clearing up its own mess, foreign aid flows would also fall.
It has been bad. But not as bad as the initial fears, according to the AfDB. Preliminary estimates for 2009 indicate a sharp fall in FDI to Africa of 35 percent.Export values declined by almost as much and the drop in remittances according to rough calculations was 6.6 percent on average. Countries reliant on revenues from tourism were hard hit, and oil producers saw incomes dive.
Overall the continent moved from a fiscal surplus of 2.2 percent to a deficit of 4.4 percent with trade and current account balances also deteriorating across the board. The biggest setback was to poverty reduction - with economic expansion dropping to the roughly the same level as population growth - and unemployment rising sharply.
But foreign aid flows continued broadly at their same pace, agriculture benefited from favourable weather, and growth in services held up. Many countries were able to continue public spending programmes thanks to debt relief and “generally better macroeconomic fundamentals,” in the years prior to the global crisis. With a few exceptions, governments avoided panic re-introduction of subsidies and controls.
Now things are slowly picking up. the report says:
Eastern Africa, which had best weathered the global crisis, is likely to achieve again the highest average growth in 2010- 11, exceeding 6%. Real output is expected to grow at around 5% in North Africa and West Africa, and at 4% in Central Africa during the forecasting period.
But a reminder of how fragile the recovery in Africa is came only last week when prices for base metal, a key driver of teh continent’s commodity-driven expansion, fell sharply on concerns about the financial health of the eurozone and a tightening of credit in China. Nor are fears of political instability ever very far away.
Financial Times
Africa has weathered the global financial crisis better than expected.
Thanks largely to rising export volumes, and recovering commodity prices, the continent is emerging this year with projected GDP growth of 4 percent, up from 2.3 per cent in 2009 according to the annual outlook for the continent published today by the African Development Bank(AfDB).
“It appears that the African economy has been more resilient to the global crisis than other emerging economies, with the exception of those in Asia, notably China and India,” the reports says.
A year ago every indicator looked bad. Foreign investment flows were drying up, trade volumes were dropping, remittances were declining and the prices for the commodities which drive most African economies had in many cases collapsed. On top of that there was a strong risk that as the rich world focussed on clearing up its own mess, foreign aid flows would also fall.
It has been bad. But not as bad as the initial fears, according to the AfDB. Preliminary estimates for 2009 indicate a sharp fall in FDI to Africa of 35 percent.Export values declined by almost as much and the drop in remittances according to rough calculations was 6.6 percent on average. Countries reliant on revenues from tourism were hard hit, and oil producers saw incomes dive.
Overall the continent moved from a fiscal surplus of 2.2 percent to a deficit of 4.4 percent with trade and current account balances also deteriorating across the board. The biggest setback was to poverty reduction - with economic expansion dropping to the roughly the same level as population growth - and unemployment rising sharply.
But foreign aid flows continued broadly at their same pace, agriculture benefited from favourable weather, and growth in services held up. Many countries were able to continue public spending programmes thanks to debt relief and “generally better macroeconomic fundamentals,” in the years prior to the global crisis. With a few exceptions, governments avoided panic re-introduction of subsidies and controls.
Now things are slowly picking up. the report says:
Eastern Africa, which had best weathered the global crisis, is likely to achieve again the highest average growth in 2010- 11, exceeding 6%. Real output is expected to grow at around 5% in North Africa and West Africa, and at 4% in Central Africa during the forecasting period.
But a reminder of how fragile the recovery in Africa is came only last week when prices for base metal, a key driver of teh continent’s commodity-driven expansion, fell sharply on concerns about the financial health of the eurozone and a tightening of credit in China. Nor are fears of political instability ever very far away.
Financial Times
Africa to Europe bushmeat smuggling thrives
A.L. Chaber / Zoological Society, London-APA pangolin, or scaly anteater, smoked prior to transport from Africa to France.
by Sharon Begley
Scientists estimate nearly 12,000 pounds of illegal bushmeat are smuggled into France from Africa every week, and the threat to endangered species is only getting worse.
An undeclared bottle of whiskey, a string of pearls bought on vacation and hidden inside a bra in the suitcase—sure, customs inspectors see that every day. But a nice haunch of crested porcupine? Some fresh cane rat or long-tailed pangolin? Red-river hog or Nile crocodile? Not so much.
But maybe customs agents at international airports should start looking more often. When Anne-Lise Chaber of the Zoological Society of London spent two and a half weeks with customs inspectors assigned to flights originating in sub-Saharan Africa and landing at Paris’s Roissy-Charles de Gaulle airport in June 2008, she found that bushmeat—the meat of wild animals—was being illegally brought in at an astonishing rate. Inspecting just 134 passengers arriving on 29 Air France flights (out of about 180 flights in all during the 18 days of the study, with a capacity of about 17,000 passengers per week), agents found 414 pounds of bushmeat and 288 pounds of livestock—including a nicely wrapped whole sheep and calves nestled in carryalls.
Conservation biologists have previously sounded the alarm about illegal sales of bushmeat by and to Africans living in Europe and the United States—Africans living abroad apparently want a taste of home just as Americans living overseas need their pizza fix—but the scope of the problem on a daily basis had never before been documented.
Chaber and her ZSL colleagues therefore decided to watch over the shoulders of the customs agents as they performed random inspections on passengers arriving from Africa. (To be precise, the inspections were random except in the case of passengers carrying ice chests, who were all chosen for scrutiny.)
It was a grisly picture, and not only because among the contraband were the aforementioned sheep and calves. Based on this sample, the scientists estimate that 5 metric tons (11,550 pounds) of bushmeat is being smuggled into Paris from Africa every week, with Cameroon (8,000 pounds), the Central African Republic (2,100 pounds), and the Republic of Congo (1,300 pounds) the chief offenders.
“We were surprised by the estimated volumes—5 tonnes” [11,000 pounds] per week, Marcus Rowcliffe of the ZSL told me by e-mail. And with one passenger “carrying 51 kg [112 pounds] of bushmeat and no other luggage, strongly suggesting a link with trade rather than personal use,” it is clear that supplying bushmeat to the African diaspora is a thriving concern.
It also poses a serious threat to endangered species. After years in which conservationists focused on the loss of habitat as a chief reason for the disappearance of species, it has become clear that illegal hunting is taking a horrific toll on tropical wildlife populations. (NEWSWEEK described this growing threat in a 2007 cover story on the poaching of mountain gorillas in Congo, and in a 2008 story on “the extinction trade.” “While there is anecdotal evidence of international trade in bushmeat, including seizures of African bushmeat at airports, and the occasional prosecution of traders in European cities, it is a neglected aspect of the issue,” Rowcliffe and his collaborators write in the current issue of the journal Conservation Letters.
It is also against the law. The European Union prohibits passengers arriving in Europe from carrying any meat or meat products, partly because they may harbor pathogens but also because of the threat it poses to endangered wildlife. Yet despite this ban, the ZSL scientists could have opened their own butcher shop with what the customs agents found. (As it was, much of the bushmeat carried for sale rather than personal use was apparently destined for the market near Château Rouge station on Rue des Poissonniers in Paris, where middle-aged bushmeat is sold in the open. Prices: €20 and €30 per kilogram—or $11 to $13.50 per pound—for primate, crocodile, cane rat, and porcupine.)
The bushmeat arrived dressed and often smoked, which made identification a challenge. Although the pangolins, porcupines, and cane rats were obvious, the monkeys had to be identified by skeletal analysis. “But even then we were only able to identify the monkeys to genus level,” says Rowcliffe: guenons (Cercopithecus sp.) or mangabeys (Cercocebus sp.). All species in these genera are listed as endangered or threatened by the Convention on International Trade in Endangered Species (CITES), which means that international trade in these creatures is banned or highly restricted—and in any case, illegal for individual airline passengers. Trade in the Nile croc and slender-snouted croc is also banned, while trade in the blue duiker and pangolins is restricted, yet there they all were. All told, 39 percent of the bushmeat carcasses passengers were carrying represent species whose continued existence is sufficiently threatened as to make it illegal to bring them into Europe.
Although the estimated amount of bushmeat imported from Africa to France is a tiny proportion of the total estimated kill (upward of 2.2 million tons per year in the Congo basin, say the ZSL scientists), “the volume and nature of import and trade suggests the emergence of a luxury market for African bushmeat in Europe,” they write in their paper. “Imports are supplying an organized system of trade and are not solely being brought for personal consumption. . . . The development of a luxury market, linked to increasing affluence of the consumer population, is of particular concern because of the potential for demand to remain high even as supply dwindles and prices rise, potentially driving the extinction of even relatively resilient species.”
And don’t look for it to stop any time soon. Detecting and seizing bushmeat, or other forms of vanishing species, is not a priority for customs officials, who find it time-consuming, unpleasant, and potentially dangerous. Unlike seizures of illegal drugs, intercepting the bodies of animals whose species is on the brink of extinction does not qualify for bonuses. To make matters worse, “most of the passengers carrying illegal meat were angry and outraged while the meat got confiscated,” Chaber (who is now the animal care supervisor at Al Ain Wildlife Park in theUnited Arab Emirates) told me by e-mail. “These bad reactions made customs uneasy about implementing fines as they felt confiscation was already a strong punishment for the guilty passengers.”
But even if European governments don’t care enough about vanishing species to change their airport policies, there might be one easy fix. One third of the passengers carrying bushmeat were flying on discounted Air France tickets, which go to family members of employees. If the airline imposed penalties, including the threat of dismissal, on the staff members through whom the tickets were obtained, that nice Nile croc might not seem like such a tempting carry-on in the future.
Newsweek
African economy to grow 5.2 pct in 2011 -OECD/AfDB
by Tim Cocks
Africa is slowly emerging from the global recession and should grow 4.5 percent this year and just over five percent in 2011, a report by the African Development Bank and the OECD forecast on May 24.
The rate of growth is an improvement on the average 2.5 percent experienced by the continent's 53 states in 2009 but still short of the six percent annual rise achieved between the global financial crisis exploded in 2008.
Poverty remains rife but most African states have benefitted from a more stable political environment in recent years to begin the catch up with the developed world.
"If the world economy and world trade continue to recover, and commodity prices remain close to current levels, the continent's outlook in 2010 and 2011 is promising," said the joint annual report by the Bank and the Paris-based Organisation of Economic Co-operation and Development (OECD).
The forecasts were broadly in line with April forecasts by the International Monetary Fund (IMF), which is predicting 4.75 percent growth in sub-Saharan Africa this year and six percent in 2011.
Africa's share of global trade is still tiny -- three percent of the value of total world exports -- and the report said it was still unlikely to meet United Nations' Millennium Development Goals of halving poverty by 2015, especially with a mushrooming population.
The AfDB estimated the continent would need around $50 billion a year in extra financing to attain that goal.
Besides the global economic recovery and strong commodity prices, the report cited better terms of trade and development finance as reasons why the continent has managed to weather the worst global recession since World War Two.
"This trend is expected to continue and could even be reinforced if structural bottlenecks are addressed and the business environment further improved. Foreign investment is also set to play a critical role in boosting the continent's recovery," it said.
The report noted that growth rates are likely to be uneven, with the economies of East Africa -- including fast-growing Uganda and Tanzania -- faring best with an average six percent growth this year and next.
By contrast, North and West Africa were expected to post GDP gains of five percent, Central Africa four percent and Southern Africa, which was worst hit by the global downturn, four percent for this year and next.
Forexyard
Africa is slowly emerging from the global recession and should grow 4.5 percent this year and just over five percent in 2011, a report by the African Development Bank and the OECD forecast on May 24.
The rate of growth is an improvement on the average 2.5 percent experienced by the continent's 53 states in 2009 but still short of the six percent annual rise achieved between the global financial crisis exploded in 2008.
Poverty remains rife but most African states have benefitted from a more stable political environment in recent years to begin the catch up with the developed world.
"If the world economy and world trade continue to recover, and commodity prices remain close to current levels, the continent's outlook in 2010 and 2011 is promising," said the joint annual report by the Bank and the Paris-based Organisation of Economic Co-operation and Development (OECD).
The forecasts were broadly in line with April forecasts by the International Monetary Fund (IMF), which is predicting 4.75 percent growth in sub-Saharan Africa this year and six percent in 2011.
Africa's share of global trade is still tiny -- three percent of the value of total world exports -- and the report said it was still unlikely to meet United Nations' Millennium Development Goals of halving poverty by 2015, especially with a mushrooming population.
The AfDB estimated the continent would need around $50 billion a year in extra financing to attain that goal.
Besides the global economic recovery and strong commodity prices, the report cited better terms of trade and development finance as reasons why the continent has managed to weather the worst global recession since World War Two.
"This trend is expected to continue and could even be reinforced if structural bottlenecks are addressed and the business environment further improved. Foreign investment is also set to play a critical role in boosting the continent's recovery," it said.
The report noted that growth rates are likely to be uneven, with the economies of East Africa -- including fast-growing Uganda and Tanzania -- faring best with an average six percent growth this year and next.
By contrast, North and West Africa were expected to post GDP gains of five percent, Central Africa four percent and Southern Africa, which was worst hit by the global downturn, four percent for this year and next.
Forexyard
Poverty muddies response to W. African drug trade
West African drug trafficking is having a “very significant” impact on the regions economies but local responses have been contradictory as the flow of money is seen as “better than nothing” by some, the United Nations said.
The trade has spooked European nations trying to stem drugs flowing onto their markets.
The world body estimates that 1 billion worth of cocaine, destined to Europe from Latin America, passed through West Africa in 2008. The figure is higher than or comparable to the gross domestic product of a handful of nations in the region.
“There is a contradictory message coming from these countries,” Antonio Maria Costa, executive director of the U.N.s Office for Drugs and Crime (UNODC), said late on June 21.
But concerns are also rising over the impact a drugs trade of this value is having in West Africa as analysts say it is leading to a spike in money laundering, crime and corruption in a region in need of stability and investment.
Costa was speaking on the sidelines of a meeting of seven nations seeking to map out a response to the drug trade, which is increasingly seen as having a direct impact on, rather than just passing through, a patchwork of poor and unstable nations.
“On the one hand you cannot build the societies using illegal money. On the other hand, these are countries not greatly appreciated by foreign investors, with mass unemployment, mass poverty. Therefore these resources coming in are better than nothing,” he added.
Few figures are available, though a boom in construction in Senegal and a sudden jump in the number of banks in Gambia are cited as evidence.
Real estate, tourism and casinos in the region are being used to launder vast sums of money, experts say.
Instability in Guinea-Bissau and Guinea over the last year has also been linked, in parts, to the trade.
Experts warned that West Africans are consuming more of the drugs flowing through their countries, raising the specter of rising crime and health problems in already unstable states.
Regional body ECOWAS warned that money from the drugs trade was undermining efforts to improve governance in the region.
The nations signed off on the “Dakar Initiative”, the latest in a string of agreements to tackle a trade that the U.N. said was ignored for two years, between 2004 and 2006, before several hundred kilo cocaine seizures grabbed world headlines.
“The economic and financial systems of our region, which was so badly hit by the economic crisis, are now threatened by money laundering and the impact of the drug economy,” Prime Minister Souleymane Ndene Ndiaye said, without making any reference to his own country.
European donors also promised 15 million euros in aid.
The Dakar Initiatives plans to tackle trafficking include strengthening judicial systems, boosting the security forces, reducing demand and improving international cooperation.
And Costa warned that any approach to cut them out in West Africa must, like in drug-producing Colombia or Afghanistan, offer viable economic alternatives in order to succeed.
The trade is still primarily run by Latin American cartels but the U.N. fears an increase in the numbers of “unwilling but vulnerable soldiers of cartels” in the region.
“When people start earning an income, being part of a criminal activity that income has to be removed but hopefully it has to be replaced by legal opportunities otherwise this is not sustainable. When the illicit money has macro-economic dimensions, we risk macro-economic consequences,” Costa said.
Reuters
The trade has spooked European nations trying to stem drugs flowing onto their markets.
The world body estimates that 1 billion worth of cocaine, destined to Europe from Latin America, passed through West Africa in 2008. The figure is higher than or comparable to the gross domestic product of a handful of nations in the region.
“There is a contradictory message coming from these countries,” Antonio Maria Costa, executive director of the U.N.s Office for Drugs and Crime (UNODC), said late on June 21.
But concerns are also rising over the impact a drugs trade of this value is having in West Africa as analysts say it is leading to a spike in money laundering, crime and corruption in a region in need of stability and investment.
Costa was speaking on the sidelines of a meeting of seven nations seeking to map out a response to the drug trade, which is increasingly seen as having a direct impact on, rather than just passing through, a patchwork of poor and unstable nations.
“On the one hand you cannot build the societies using illegal money. On the other hand, these are countries not greatly appreciated by foreign investors, with mass unemployment, mass poverty. Therefore these resources coming in are better than nothing,” he added.
Few figures are available, though a boom in construction in Senegal and a sudden jump in the number of banks in Gambia are cited as evidence.
Real estate, tourism and casinos in the region are being used to launder vast sums of money, experts say.
Instability in Guinea-Bissau and Guinea over the last year has also been linked, in parts, to the trade.
Experts warned that West Africans are consuming more of the drugs flowing through their countries, raising the specter of rising crime and health problems in already unstable states.
Regional body ECOWAS warned that money from the drugs trade was undermining efforts to improve governance in the region.
The nations signed off on the “Dakar Initiative”, the latest in a string of agreements to tackle a trade that the U.N. said was ignored for two years, between 2004 and 2006, before several hundred kilo cocaine seizures grabbed world headlines.
“The economic and financial systems of our region, which was so badly hit by the economic crisis, are now threatened by money laundering and the impact of the drug economy,” Prime Minister Souleymane Ndene Ndiaye said, without making any reference to his own country.
European donors also promised 15 million euros in aid.
The Dakar Initiatives plans to tackle trafficking include strengthening judicial systems, boosting the security forces, reducing demand and improving international cooperation.
And Costa warned that any approach to cut them out in West Africa must, like in drug-producing Colombia or Afghanistan, offer viable economic alternatives in order to succeed.
The trade is still primarily run by Latin American cartels but the U.N. fears an increase in the numbers of “unwilling but vulnerable soldiers of cartels” in the region.
“When people start earning an income, being part of a criminal activity that income has to be removed but hopefully it has to be replaced by legal opportunities otherwise this is not sustainable. When the illicit money has macro-economic dimensions, we risk macro-economic consequences,” Costa said.
Reuters
East and West Africa are worlds apart on trade
by Jenny Luesby
East and West Africa may be on the same continent, just five hours flight from each other, and with complementary economies that would make it natural enough for a high level of interaction.
But, in reality, they are virtually cut off from one another.
With a combined population of two-fifths of a billion, and well-matched resources, East and West Africa have some of the lowest trade between them of any regions in the world, according to a UN report, with just one carrier running costly and often half-empty flights between the regions, no road route, and negligible traffic between the two continental hubs.
To fly to West Africa from East Africa costs twice or thrice as much as flying from Africa to Europe, including to London, which is eight and half hours away.
As an example, flying to Dakar on economy and business costs $1,281 and $4,076 on Kenya Airways and is possible on three flights a week. Yet a return ticket to London, with many departures a day, costs from $668 on Virgin Atlantic. Yet Kenya Airways, which operates around five flights a week to West Africa, remains the only carrier covering the route with direct flights, and often the flights, which together could transport only around 1,000 to 2,000 people a week, are not full.
Communication is not better. Telephone charges between African countries can be 50 to 100 times higher than within Northern America, according to a World Bank report, acting as a hindrance to even basic conversation.
Moreover, the weak air links are compounded by the absence of any direct links by road, rail or sea.
The road network is anyway a big challenge inside the two regions, let alone between them.
A recent study by West Africa Trade Hub (WATH), an Accra-based institution, showed that the cost of transporting a container by road from Accra to Lagos, costs three times as much as transporting the same container from the United Kingdom to Lagos.
Added to that, Dr Joshua Kivuva, a lecturer in the department of political science, University of Nairobi, says relations between East and West Africa have been historically limited. “Different languages could also be attributed to the minimum contact between the two regions,” he adds.
A 2006 UN Economic Commission report showed trade among African countries accounts for about 10 per cent of their total external trade, the lowest in any world region, while trade with Europe accounts for approximately 40 per cent of exports.
Regional economic communities have facilitated trade and investment between African countries by reducing trade barriers, bringing tangible benefits in employment and incomes.
And the low trade levels between East and West Africa is replicated across other African regions.
Because of hindrances to trade within Africa, exports from Tunisia and Cameroon often find their way to French warehouses before being redirected to each other’s market.
Yet while both East and West Africa’s economic drivers are agriculture, oil and mineral resources, these are more scarce in East Africa than in West and could be a source of vibrant trade between the two territories.
Likewise, East Africa is moving at a different pace than the West as knowledge economies.
Figures from the Export Promotion Council show low levels of trade between East Africa and West Africa, compared to East Africa and other parts of the continent.
In 2009, Kenya imported goods worth Sh9.6 billion from Egypt, while it exported Sh12 billion worth of goods to the North African nation.
In comparison, Kenya bought products worth Sh109 million from Nigeria, and exported Sh1.2 billion of mainly agricultural products to the country.
The fact that Kenya and Egypt belong to the Comesa trading block has significantly contributed to the high volume of trade between the two countries.
With 19 member states and a combined population of 430 million people, Comesa’s annual export bill of US$ 157 billion makes it one of the giant regional trade bodies in the continent.
Meanwhile, 26 countries in northern, east, and southern Africa, are on course to forming one free trading block as was agreed in the first summit held in Uganda in 2007.
The member countries of the three regional trading blocs — EAC, Comesa and SADC — are currently harmonising rules of engagement, ahead of the 2012 deadline when the trade area is to start operating.
“This is aimed at deepening trade between these countries. Formation of the free trade area is also in line with AU’s (Africa Union) vision of having an African economic community,” says Richard Sindiga, head of Comesa desk in the Ministry of Trade.
With West Africa effectively outside this new bloc, and hard to reach from the rest of Africa by road, rail, air and phone, East and West additionally remain largely offline on the world wide web.
In Sub Saharan Africa, Internet penetration is below seven per cent, while in Northern Africa its 32 percent as per AEO figures. This continues to present a real obstacle in information sharing and referencing between African countries, meaning that, for instance, when epidemics occur, tolls are higher than in Western countries.
And there remains a huge disparity between those in the population that can access information and those that can’t.
On the East/West axis, the number of Nigerian Internet users is now over eight million, compared with Kenya’s three million users. Yet the West African numbers are low per population, as Nigeria has nearly 150 million people, while Kenya has some 40 million people.
For now, the world may be a global village, but East and West Africa are barely even talking to each other.
Business Daily Africa
East and West Africa may be on the same continent, just five hours flight from each other, and with complementary economies that would make it natural enough for a high level of interaction.
But, in reality, they are virtually cut off from one another.
With a combined population of two-fifths of a billion, and well-matched resources, East and West Africa have some of the lowest trade between them of any regions in the world, according to a UN report, with just one carrier running costly and often half-empty flights between the regions, no road route, and negligible traffic between the two continental hubs.
To fly to West Africa from East Africa costs twice or thrice as much as flying from Africa to Europe, including to London, which is eight and half hours away.
As an example, flying to Dakar on economy and business costs $1,281 and $4,076 on Kenya Airways and is possible on three flights a week. Yet a return ticket to London, with many departures a day, costs from $668 on Virgin Atlantic. Yet Kenya Airways, which operates around five flights a week to West Africa, remains the only carrier covering the route with direct flights, and often the flights, which together could transport only around 1,000 to 2,000 people a week, are not full.
Communication is not better. Telephone charges between African countries can be 50 to 100 times higher than within Northern America, according to a World Bank report, acting as a hindrance to even basic conversation.
Moreover, the weak air links are compounded by the absence of any direct links by road, rail or sea.
The road network is anyway a big challenge inside the two regions, let alone between them.
A recent study by West Africa Trade Hub (WATH), an Accra-based institution, showed that the cost of transporting a container by road from Accra to Lagos, costs three times as much as transporting the same container from the United Kingdom to Lagos.
Added to that, Dr Joshua Kivuva, a lecturer in the department of political science, University of Nairobi, says relations between East and West Africa have been historically limited. “Different languages could also be attributed to the minimum contact between the two regions,” he adds.
A 2006 UN Economic Commission report showed trade among African countries accounts for about 10 per cent of their total external trade, the lowest in any world region, while trade with Europe accounts for approximately 40 per cent of exports.
Regional economic communities have facilitated trade and investment between African countries by reducing trade barriers, bringing tangible benefits in employment and incomes.
And the low trade levels between East and West Africa is replicated across other African regions.
Because of hindrances to trade within Africa, exports from Tunisia and Cameroon often find their way to French warehouses before being redirected to each other’s market.
Yet while both East and West Africa’s economic drivers are agriculture, oil and mineral resources, these are more scarce in East Africa than in West and could be a source of vibrant trade between the two territories.
Likewise, East Africa is moving at a different pace than the West as knowledge economies.
Figures from the Export Promotion Council show low levels of trade between East Africa and West Africa, compared to East Africa and other parts of the continent.
In 2009, Kenya imported goods worth Sh9.6 billion from Egypt, while it exported Sh12 billion worth of goods to the North African nation.
In comparison, Kenya bought products worth Sh109 million from Nigeria, and exported Sh1.2 billion of mainly agricultural products to the country.
The fact that Kenya and Egypt belong to the Comesa trading block has significantly contributed to the high volume of trade between the two countries.
With 19 member states and a combined population of 430 million people, Comesa’s annual export bill of US$ 157 billion makes it one of the giant regional trade bodies in the continent.
Meanwhile, 26 countries in northern, east, and southern Africa, are on course to forming one free trading block as was agreed in the first summit held in Uganda in 2007.
The member countries of the three regional trading blocs — EAC, Comesa and SADC — are currently harmonising rules of engagement, ahead of the 2012 deadline when the trade area is to start operating.
“This is aimed at deepening trade between these countries. Formation of the free trade area is also in line with AU’s (Africa Union) vision of having an African economic community,” says Richard Sindiga, head of Comesa desk in the Ministry of Trade.
With West Africa effectively outside this new bloc, and hard to reach from the rest of Africa by road, rail, air and phone, East and West additionally remain largely offline on the world wide web.
In Sub Saharan Africa, Internet penetration is below seven per cent, while in Northern Africa its 32 percent as per AEO figures. This continues to present a real obstacle in information sharing and referencing between African countries, meaning that, for instance, when epidemics occur, tolls are higher than in Western countries.
And there remains a huge disparity between those in the population that can access information and those that can’t.
On the East/West axis, the number of Nigerian Internet users is now over eight million, compared with Kenya’s three million users. Yet the West African numbers are low per population, as Nigeria has nearly 150 million people, while Kenya has some 40 million people.
For now, the world may be a global village, but East and West Africa are barely even talking to each other.
Business Daily Africa
Standard Chartered soft commodity loan to boost Asia-Africa trade
by Edward Russell
Rising Asia-Africa trade flows have received their latest boost with a $120 million structured syndicated trading loan to agricultural commodity dealer Export Trading Group by Standard Chartered Bank and partially guaranteed by the International Finance Corporation (IFC).
Tanzania-based Export Trading, one of the largest agricultural supply chain companies in Africa, will use the funds to finance trade in soft commodities, including maize and soybeans. 80% will be used for flows within Africa and 20% for trade with China and India. Jean Craven, head of corporate finance at the company, said the percentage of funds used for trade with Asia will increase over time.
Standard Chartered is the mandated lead arranger of the structured loan and the IFC will guarantee 50% of the deal. The World Bank Group company originally approved it in December 2009, but Standard Chartered's participation was not confirmed until last week. The loan is a revolving facility and will be available to Export Trading for 12 months.
"This deal demonstrates Standard Chartered Bank's commitment to the development of the agricultural sector across Africa," said Anil Dua, head of origination and client coverage for Africa at the bank. This is in line with the IFC's goal to send the market positive signals about the state of African agribusiness, according to its website.
The agency also said the loan guarantee would support small African farmers' access to markets and create new jobs.
Structured trade deals between Asia and Africa are on the rise. Ong Tee Chong, head of structured trade finance for Asia at South Africa's Standard Bank, said that the products were increasingly popular with traders on both sides of the Indian Ocean because of a lack of "mutual understanding" in an interview last year. Last October, the institution signed a $150 million loan agreement with the Japan Bank of International Cooperation to boost access to trade finance in Africa.
Standard Chartered has structured a number of trade finance facilities between Africa and Asia during the past 12 months. Deals include a $250 million import facility for telecom equipment from China to East Africa, a €143 million cement export facility for cement from Nigeria to China and a $40 million import facility for rice from India to West Africa.
Craven said Export Trading mainly imports fertiliser from China and maize and rice from India. In terms of exports, he said pulses, edible beans and sesame are sent to Asia on a "large scale".
Trade between China and Africa rose 58% year-on-year during the period from January to September 2008 (the most recently available data), totalling $92.7 billion. Between India and Africa, it totalled $13.8 billion from April to September 2009; which was 45.4% of the total for the 2008 fiscal year.
Finance Asia
Rising Asia-Africa trade flows have received their latest boost with a $120 million structured syndicated trading loan to agricultural commodity dealer Export Trading Group by Standard Chartered Bank and partially guaranteed by the International Finance Corporation (IFC).
Tanzania-based Export Trading, one of the largest agricultural supply chain companies in Africa, will use the funds to finance trade in soft commodities, including maize and soybeans. 80% will be used for flows within Africa and 20% for trade with China and India. Jean Craven, head of corporate finance at the company, said the percentage of funds used for trade with Asia will increase over time.
Standard Chartered is the mandated lead arranger of the structured loan and the IFC will guarantee 50% of the deal. The World Bank Group company originally approved it in December 2009, but Standard Chartered's participation was not confirmed until last week. The loan is a revolving facility and will be available to Export Trading for 12 months.
"This deal demonstrates Standard Chartered Bank's commitment to the development of the agricultural sector across Africa," said Anil Dua, head of origination and client coverage for Africa at the bank. This is in line with the IFC's goal to send the market positive signals about the state of African agribusiness, according to its website.
The agency also said the loan guarantee would support small African farmers' access to markets and create new jobs.
Structured trade deals between Asia and Africa are on the rise. Ong Tee Chong, head of structured trade finance for Asia at South Africa's Standard Bank, said that the products were increasingly popular with traders on both sides of the Indian Ocean because of a lack of "mutual understanding" in an interview last year. Last October, the institution signed a $150 million loan agreement with the Japan Bank of International Cooperation to boost access to trade finance in Africa.
Standard Chartered has structured a number of trade finance facilities between Africa and Asia during the past 12 months. Deals include a $250 million import facility for telecom equipment from China to East Africa, a €143 million cement export facility for cement from Nigeria to China and a $40 million import facility for rice from India to West Africa.
Craven said Export Trading mainly imports fertiliser from China and maize and rice from India. In terms of exports, he said pulses, edible beans and sesame are sent to Asia on a "large scale".
Trade between China and Africa rose 58% year-on-year during the period from January to September 2008 (the most recently available data), totalling $92.7 billion. Between India and Africa, it totalled $13.8 billion from April to September 2009; which was 45.4% of the total for the 2008 fiscal year.
Finance Asia
'Patronizing' West risks losing trade, influence to emerging powers, warns think tank
The executive summary of the report issued by the British think tank, Chatham House, entitled "Our Common Strategic Interests: Africa's Role in the Post-G8 World":
African countries are playing a more strategic role in international affairs. Global players that understand this and develop greater diplomatic and trade relations with African states will be greatly advantaged.
For many countries, particularly those that have framed their relations with Africa largely in humanitarian terms, this will require an uncomfortable shift in public and policy perceptions. Without this shift, many of Africa's traditional partners, especially in Europe and North America, will lose global influence and trade advantages to the emerging powers in Asia, Africa and South America.
A strong diplomatic and trade engagement with Africa matters. Africa is the foundation of the global supply chain – a strategic source of almost 40% of the raw materials, agriculture, fresh water and energy essential for global growth. Its rainforests play a central role in the planet's climate. Its population of one billion are increasingly important consumers. Africa is strategically placed between time zones, continents and hemispheres.
However, the overwhelmingly humanitarian interest of many Western countries and traditional partners has led to stereotyped perceptions of Africa in terms only of problems. These views are increasingly patronizing, recursive, out of touch, and a deterrent to serious business interest. Meanwhile the emerging economic powers of the G20 see Africa in terms of opportunities – as a place in which to invest, gain market share and win access to resources.
The re-emergence of China as a principal partner of many African states has renewed interest in engagement with Africa among many business people and politicians in the West. Sometimes this interest has been expressed via a sense of amorphous threat to Western interests. Yet China's re-engagement is for the most part welcome, as is that of the increasing numbers of emerging powers such as Turkey, South Korea and Brazil that have forced Africa's traditional partners to think again about the mutual value of investing in the continent's growing consumer and skills base.
Crucially, however, this approach needs to be balanced with respect and support for a regulatory and governance framework that ensures such investments deliver long-term benefits to all. Too often Africa's emerging partners pay lip service to the rhetoric of 'win-win' and 'South-South cooperation' while reproducing the worst excesses of colonial and neocolonial exploitation.
T
Development assistance has played, and will continue to play, an important role for many African countries, but economic fortunes across the continent are now diverging. This makes it less meaningful to treat Africa as a single entity in international economic negotiations.
So on the one hand, the G8 has played a role in supporting engagement with Africa based on enlightened mutual self-interest and agreement on shared rules and principles. On the other hand, the emerging economies of the G20 have brought entrepreneurialism, energy and recognition of mutual benefits that are increasingly attractive. A key task for the G20 will be to fuse the best of the approaches of both the traditional and emerging partners of Africa to the benefit of all.
Those best placed to effect this change are the continent's own leaders. Africa has never been in such a strong bargaining position in international affairs, with increasing numbers of suitors. However, African leadership is at present insufficient and the activism and vision that characterized the first few years of the twenty-first century are less in evidence now. This is dangerous because without strong, effective leadership the competition for Africa's resources may degenerate into the kind of colonial exploitative scramble from which much of the continent has only recently begun to recover.
Governance institutions in general – from national governments to regional bodies and the African Union itself – are stronger than they were, but they need to be far stronger still. It is in the interest of all Africa's international partners to support their further consolidation. African states must further merge their economies with those of their neighbours if the advantages of scale are to be sufficient to satisfy the largest investors. All this requires leadership from within Africa, reinforced by strong diplomatic support from outside. To this end it is in the global interest that the African Union should be granted a permanent place at the G20.
The citizens of Western countries are understandably weary of continued calls for more aid to Africa, particularly in the aftermath of the recent global financial crisis. They must be reassured that aid works and that delivering growth for Africa will deliver real economic benefits to them. Aid is a very necessary safety net, but it is not a springboard. It will ultimately deliver the development Africa needs only if it is used in support of private-sector-led growth and stability. Emerging economies are capitalizing on this. Western countries ought to benefit too; indeed it should be a strategic imperative for them. Yet thus far there is insufficient evidence that they recognize this.
Most Western countries still enjoy a comparative, if diminishing, advantage over emerging powers in policy and academic understanding of Africa. Yet resources and expertise on Africa have been allowed to wither in Western governments, academia and the news media. The advantages many former colonial powers enjoyed in terms of expertise, trade links and cultural affinity are now far fewer than many policy-makers assume.
Beneath the rhetoric of the importance of Africa, diplomatic and trade resources devoted to it are still being cut in many Western capitals, leading to a downward spiral of ignorance and thus marginalization in strategic awareness. Reversing this trend will require time and investment, but the rewards should be considerable. The financial crisis challenged Western claims about the superiority of the democratic and free market model. Western countries should welcome the opportunity to demonstrate the advantages, dynamism and resilience of their economies and governance systems, and export them to Africa for common benefit, in an increasingly competitive multipolar world.
Chatham House
African countries are playing a more strategic role in international affairs. Global players that understand this and develop greater diplomatic and trade relations with African states will be greatly advantaged.
For many countries, particularly those that have framed their relations with Africa largely in humanitarian terms, this will require an uncomfortable shift in public and policy perceptions. Without this shift, many of Africa's traditional partners, especially in Europe and North America, will lose global influence and trade advantages to the emerging powers in Asia, Africa and South America.
A strong diplomatic and trade engagement with Africa matters. Africa is the foundation of the global supply chain – a strategic source of almost 40% of the raw materials, agriculture, fresh water and energy essential for global growth. Its rainforests play a central role in the planet's climate. Its population of one billion are increasingly important consumers. Africa is strategically placed between time zones, continents and hemispheres.
However, the overwhelmingly humanitarian interest of many Western countries and traditional partners has led to stereotyped perceptions of Africa in terms only of problems. These views are increasingly patronizing, recursive, out of touch, and a deterrent to serious business interest. Meanwhile the emerging economic powers of the G20 see Africa in terms of opportunities – as a place in which to invest, gain market share and win access to resources.
The re-emergence of China as a principal partner of many African states has renewed interest in engagement with Africa among many business people and politicians in the West. Sometimes this interest has been expressed via a sense of amorphous threat to Western interests. Yet China's re-engagement is for the most part welcome, as is that of the increasing numbers of emerging powers such as Turkey, South Korea and Brazil that have forced Africa's traditional partners to think again about the mutual value of investing in the continent's growing consumer and skills base.
Crucially, however, this approach needs to be balanced with respect and support for a regulatory and governance framework that ensures such investments deliver long-term benefits to all. Too often Africa's emerging partners pay lip service to the rhetoric of 'win-win' and 'South-South cooperation' while reproducing the worst excesses of colonial and neocolonial exploitation.
T
Development assistance has played, and will continue to play, an important role for many African countries, but economic fortunes across the continent are now diverging. This makes it less meaningful to treat Africa as a single entity in international economic negotiations.
So on the one hand, the G8 has played a role in supporting engagement with Africa based on enlightened mutual self-interest and agreement on shared rules and principles. On the other hand, the emerging economies of the G20 have brought entrepreneurialism, energy and recognition of mutual benefits that are increasingly attractive. A key task for the G20 will be to fuse the best of the approaches of both the traditional and emerging partners of Africa to the benefit of all.
Those best placed to effect this change are the continent's own leaders. Africa has never been in such a strong bargaining position in international affairs, with increasing numbers of suitors. However, African leadership is at present insufficient and the activism and vision that characterized the first few years of the twenty-first century are less in evidence now. This is dangerous because without strong, effective leadership the competition for Africa's resources may degenerate into the kind of colonial exploitative scramble from which much of the continent has only recently begun to recover.
Governance institutions in general – from national governments to regional bodies and the African Union itself – are stronger than they were, but they need to be far stronger still. It is in the interest of all Africa's international partners to support their further consolidation. African states must further merge their economies with those of their neighbours if the advantages of scale are to be sufficient to satisfy the largest investors. All this requires leadership from within Africa, reinforced by strong diplomatic support from outside. To this end it is in the global interest that the African Union should be granted a permanent place at the G20.
The citizens of Western countries are understandably weary of continued calls for more aid to Africa, particularly in the aftermath of the recent global financial crisis. They must be reassured that aid works and that delivering growth for Africa will deliver real economic benefits to them. Aid is a very necessary safety net, but it is not a springboard. It will ultimately deliver the development Africa needs only if it is used in support of private-sector-led growth and stability. Emerging economies are capitalizing on this. Western countries ought to benefit too; indeed it should be a strategic imperative for them. Yet thus far there is insufficient evidence that they recognize this.
Most Western countries still enjoy a comparative, if diminishing, advantage over emerging powers in policy and academic understanding of Africa. Yet resources and expertise on Africa have been allowed to wither in Western governments, academia and the news media. The advantages many former colonial powers enjoyed in terms of expertise, trade links and cultural affinity are now far fewer than many policy-makers assume.
Beneath the rhetoric of the importance of Africa, diplomatic and trade resources devoted to it are still being cut in many Western capitals, leading to a downward spiral of ignorance and thus marginalization in strategic awareness. Reversing this trend will require time and investment, but the rewards should be considerable. The financial crisis challenged Western claims about the superiority of the democratic and free market model. Western countries should welcome the opportunity to demonstrate the advantages, dynamism and resilience of their economies and governance systems, and export them to Africa for common benefit, in an increasingly competitive multipolar world.
Chatham House
Happy 10th birthday AGOA but why is there no party?
by Kevin Kelly
Congratulations abounded on Capitol Hill in Washington in May at a 10th birthday celebration for the Africa Growth and Opportunity Act.
“By opening the American market to almost all goods from beneficiary sub-Saharan African countries, Agoa has helped Africans use trade to fight poverty and grow their economies,” US Trade Representative Ron Kirk declared.
Mr Kirk acknowledged, however, that “more can be done to help African countries make the most of the opportunities Agoa provides.”
Analysts outside the US government agree that Agoa did produce significant gains for Africa in the first five years after the preferential trade programme was signed into law by President Bill Clinton on May 18, 2000.
Agoa was mainly intended to boost African textile and apparel sales to the United States by providing duty-free access for those products for countries that met US political and economic criteria. The theory was that development of a textile manufacturing sector could power an overall economic takeoff in Africa just as had occurred decades earlier than in East Asia.
And there were signs that Agoa might indeed succeed in that regard.
Kenya’s clothing exports to the United States, valued at $30 million in 2000, had soared to $258 million in 2005. Similar gains were enjoyed by a few other African countries that had at least a rudimentary textile manufacturing infrastructure in place at the time of Agoa’s inception.
The trend has turned sharply downward in the past few years, however.
Agoa itself should not be blamed for this reversal, the independent analysts say.
“It was a case of being in the wrong place at the wrong time,” observes Paul Ryberg, head of the Washington-based African Coalition for Trade.
He and other experts point to the end in 2005 of an international textile quota system that had limited exports to the United States by major manufacturing countries such as China and India. With the lifting of that lid, the Asian dynamos were able to grab even larger shares of the US market — to the detriment of countries such as Kenya that lacked economies of scale and that were hobbled by weak infrastructure.
Mr Ryberg notes that while Bangladesh is about as distant from US West Coast ports as Kenya is from US East Coast ports, it typically takes four times longer for a Kenyan shipment of clothing to reach the United States than for a boatload of clothing from Bangladesh.
In addition, production costs are much higher in African countries than for their Asian competitors. Electricity is more expensive and less reliable, for example, owing to an underdeveloped grid.
The global recession has compounded the losses sustained by African exporters. Last year, Kenya shipped $195 million worth of apparel to the US, according to Mr Kirk’s office – about $60 million less than in 2005.
Kenya has experienced a corresponding loss of apparel-sector jobs during the same period — from 32,000 to 12,000 employees, according to an Agoa information website maintained by the Trade Law Centre for Southern Africa.
As severe as those losses have been, Kenya’s apparel exporting sector would probably have disappeared entirely following the end of the quota system had Agoa not been in place, Mr Ryberg speculates.
Today, Agoa functions mainly as an oil-importing programme. Petroleum products now account for more than 90 per cent of all Agoa-covered trade, with three oil-producing countries — Nigeria, Angola and Congo-Brazzaville – reaping about 70 per cent of Agoa’s benefits.
Competitive threats to Agoa’s textile-exporting countries could meanwhile prove overwhelming if the US Congress approves a proposal to extend duty-free access to Bangladesh and Cambodia.
Paul Collier, head of Oxford University’s Centre for the Study of African Economies, warned recently that such a move “would destroy Africa’s much smaller apparel manufacturing sector.”
He notes that Bangladesh and Cambodia already enjoy annual apparel sales to the United States of $3.5 billion and $2 billion, respectively, compared to about $1 billion for all of Africa.
Mr Ryberg suggests there is a good chance that the proposal favouring Bangladesh and Cambodia could be approved next year.
He and other lobbyists focused on Africa trade are working to block the legislation while simultaneously urging Congress to help improve Africa’s infrastructure. Mr Ryberg concedes, however, that prospects for such an initiative are not promising, given the size of US budget deficits.
The East African
Congratulations abounded on Capitol Hill in Washington in May at a 10th birthday celebration for the Africa Growth and Opportunity Act.
“By opening the American market to almost all goods from beneficiary sub-Saharan African countries, Agoa has helped Africans use trade to fight poverty and grow their economies,” US Trade Representative Ron Kirk declared.
Mr Kirk acknowledged, however, that “more can be done to help African countries make the most of the opportunities Agoa provides.”
Analysts outside the US government agree that Agoa did produce significant gains for Africa in the first five years after the preferential trade programme was signed into law by President Bill Clinton on May 18, 2000.
Agoa was mainly intended to boost African textile and apparel sales to the United States by providing duty-free access for those products for countries that met US political and economic criteria. The theory was that development of a textile manufacturing sector could power an overall economic takeoff in Africa just as had occurred decades earlier than in East Asia.
And there were signs that Agoa might indeed succeed in that regard.
Kenya’s clothing exports to the United States, valued at $30 million in 2000, had soared to $258 million in 2005. Similar gains were enjoyed by a few other African countries that had at least a rudimentary textile manufacturing infrastructure in place at the time of Agoa’s inception.
The trend has turned sharply downward in the past few years, however.
Agoa itself should not be blamed for this reversal, the independent analysts say.
“It was a case of being in the wrong place at the wrong time,” observes Paul Ryberg, head of the Washington-based African Coalition for Trade.
He and other experts point to the end in 2005 of an international textile quota system that had limited exports to the United States by major manufacturing countries such as China and India. With the lifting of that lid, the Asian dynamos were able to grab even larger shares of the US market — to the detriment of countries such as Kenya that lacked economies of scale and that were hobbled by weak infrastructure.
Mr Ryberg notes that while Bangladesh is about as distant from US West Coast ports as Kenya is from US East Coast ports, it typically takes four times longer for a Kenyan shipment of clothing to reach the United States than for a boatload of clothing from Bangladesh.
In addition, production costs are much higher in African countries than for their Asian competitors. Electricity is more expensive and less reliable, for example, owing to an underdeveloped grid.
The global recession has compounded the losses sustained by African exporters. Last year, Kenya shipped $195 million worth of apparel to the US, according to Mr Kirk’s office – about $60 million less than in 2005.
Kenya has experienced a corresponding loss of apparel-sector jobs during the same period — from 32,000 to 12,000 employees, according to an Agoa information website maintained by the Trade Law Centre for Southern Africa.
As severe as those losses have been, Kenya’s apparel exporting sector would probably have disappeared entirely following the end of the quota system had Agoa not been in place, Mr Ryberg speculates.
Today, Agoa functions mainly as an oil-importing programme. Petroleum products now account for more than 90 per cent of all Agoa-covered trade, with three oil-producing countries — Nigeria, Angola and Congo-Brazzaville – reaping about 70 per cent of Agoa’s benefits.
Competitive threats to Agoa’s textile-exporting countries could meanwhile prove overwhelming if the US Congress approves a proposal to extend duty-free access to Bangladesh and Cambodia.
Paul Collier, head of Oxford University’s Centre for the Study of African Economies, warned recently that such a move “would destroy Africa’s much smaller apparel manufacturing sector.”
He notes that Bangladesh and Cambodia already enjoy annual apparel sales to the United States of $3.5 billion and $2 billion, respectively, compared to about $1 billion for all of Africa.
Mr Ryberg suggests there is a good chance that the proposal favouring Bangladesh and Cambodia could be approved next year.
He and other lobbyists focused on Africa trade are working to block the legislation while simultaneously urging Congress to help improve Africa’s infrastructure. Mr Ryberg concedes, however, that prospects for such an initiative are not promising, given the size of US budget deficits.
The East African
Africa must do more to help itself economically
African nations must stop seeking handouts and begin tough structural reforms, especially on trade, if they truly want to improve their economies, U.S. Secretary of State Hillary Clinton on June 14.
"Most of the work that needs to be done needs to be done in Africa," Clinton told a forum about U.S. diplomacy on the continent.
"If you look at at trade between African countries, it is abysmally minimalistic," Clinton said. "African countries don't trade with themselves. They have barriers and tariffs and customs problems that stand in the way of developing their own economies."
Clinton's sharp comments were in response to a question about broadening the African Growth and Opportunity Act (AGOA), a measure passed by Congress in 2000 which gives favorable access to U.S. markets to dozens of African countries.
While many African governments hope the benefits can be made permanent, Clinton signaled Washington was going to look for signs that African countries are serious about improving their own domestic economic policies.
"The United States will do our part, but African countries have to start doing their part and making the changes that will grow the economies in the sub-Saharan region," she said. "It means doing things that are going to run afoul of special interests and government bureaucrats and businesses that already have a lock on a market," Clinton said.
"They'd rather have the biggest piece of a small pie than a smaller piece of a big pie. So if you are going to have that mentality, it is really hard to utilize the incredible tool that AGOA is," she said.
Both Clinton and U.S. President Barack Obama have used trips to Africa to stress good governance, saying local leadership is as important as foreign help in the drive to stamp out war, corruption and disease on the continent.
Despite big improvements under AGOA, overall U.S. trade with sub-Saharan African countries remains small, accounting for just slightly more than 1 percent of total U.S. exports and about 3 percent of total U.S. imports in 2008.
U.S. imports from sub-Saharan Africa grew about 28 percent in 2008 to $86 billion, but higher oil prices accounted for a large chunk of that increase.
Sounding almost exasperated, Clinton indicated that Africa's arguments for the redress of economic imbalances left by colonialism were beginning to wear a little thin -- at least in Washington.
"For goodness sakes, this is the 21st century. We've got to get over what happened 50, 100, 200 years ago and let's make money for everybody. That's the best way to try to create some new energy and some new growth in Africa," she said.
Reuters
"Most of the work that needs to be done needs to be done in Africa," Clinton told a forum about U.S. diplomacy on the continent.
"If you look at at trade between African countries, it is abysmally minimalistic," Clinton said. "African countries don't trade with themselves. They have barriers and tariffs and customs problems that stand in the way of developing their own economies."
Clinton's sharp comments were in response to a question about broadening the African Growth and Opportunity Act (AGOA), a measure passed by Congress in 2000 which gives favorable access to U.S. markets to dozens of African countries.
While many African governments hope the benefits can be made permanent, Clinton signaled Washington was going to look for signs that African countries are serious about improving their own domestic economic policies.
"The United States will do our part, but African countries have to start doing their part and making the changes that will grow the economies in the sub-Saharan region," she said. "It means doing things that are going to run afoul of special interests and government bureaucrats and businesses that already have a lock on a market," Clinton said.
"They'd rather have the biggest piece of a small pie than a smaller piece of a big pie. So if you are going to have that mentality, it is really hard to utilize the incredible tool that AGOA is," she said.
Both Clinton and U.S. President Barack Obama have used trips to Africa to stress good governance, saying local leadership is as important as foreign help in the drive to stamp out war, corruption and disease on the continent.
Despite big improvements under AGOA, overall U.S. trade with sub-Saharan African countries remains small, accounting for just slightly more than 1 percent of total U.S. exports and about 3 percent of total U.S. imports in 2008.
U.S. imports from sub-Saharan Africa grew about 28 percent in 2008 to $86 billion, but higher oil prices accounted for a large chunk of that increase.
Sounding almost exasperated, Clinton indicated that Africa's arguments for the redress of economic imbalances left by colonialism were beginning to wear a little thin -- at least in Washington.
"For goodness sakes, this is the 21st century. We've got to get over what happened 50, 100, 200 years ago and let's make money for everybody. That's the best way to try to create some new energy and some new growth in Africa," she said.
Reuters
Greater intra-EAC integration pays off in more trade
Efforts towards economic integration by member countries of the East African Community (EAC) have paid off with increased intra-regional trade and higher government revenues, according to Tanzanian President Jakaya Mrisho Kikwete, the bloc's current chairman.
Between 2005 and 2008, intra-EAC trade increased from US$1,847.3 million to US$2,715.4 million, allaying fears that the creation of a customs union would spark a negative impact on the economies of the partner states, Kikwete said late Tuesday.
''Trade has increased tremendously and all nations have benefited,'' the president told the East African Legislative Assembly meeting in Nairobi, Kenya.
The president mentioned three tasks that need to be given special attention, starting with how to fully integrate Rwanda and Burundi as late comers into the East African Customs Union.
The two are relatively smaller economies compared to the three original EAC partners -- Kenya, Tanzania and Uganda – and Kikwete said they ''need to be assisted accordingly.''
He mentioned the second task as making the EAC region a single customs territory whereby duties on imported goods should be paid at the port of entry in order to stop tax evasion by unscrupulous importers.
With elaborate systems put in place, the revenues accrued from import duties would be duly remitted to the nation where goods are destined.
Thirdly, Kikwete mentioned the removal of infrastructure related barriers -- both physical and non-physical -- as a critical step that should be taken in order to ensure smooth flow of trade and movement of people in the region.
''Good physical infrastructure such as roads, railways, ports, inland waterways, airports, energy and telecommunications are essential for a well functioning customs union and common market. Our people are the main actors and objects of the integration project,'' he said.
Last year, EAC leaders signed the Common Market Protocol which they view as a major milestone in the region's integration process. The Common Market is due to take off 1 July 2010 and it will be followed by the establishment of a Monetary Union.
Afriquejet
Between 2005 and 2008, intra-EAC trade increased from US$1,847.3 million to US$2,715.4 million, allaying fears that the creation of a customs union would spark a negative impact on the economies of the partner states, Kikwete said late Tuesday.
''Trade has increased tremendously and all nations have benefited,'' the president told the East African Legislative Assembly meeting in Nairobi, Kenya.
The president mentioned three tasks that need to be given special attention, starting with how to fully integrate Rwanda and Burundi as late comers into the East African Customs Union.
The two are relatively smaller economies compared to the three original EAC partners -- Kenya, Tanzania and Uganda – and Kikwete said they ''need to be assisted accordingly.''
He mentioned the second task as making the EAC region a single customs territory whereby duties on imported goods should be paid at the port of entry in order to stop tax evasion by unscrupulous importers.
With elaborate systems put in place, the revenues accrued from import duties would be duly remitted to the nation where goods are destined.
Thirdly, Kikwete mentioned the removal of infrastructure related barriers -- both physical and non-physical -- as a critical step that should be taken in order to ensure smooth flow of trade and movement of people in the region.
''Good physical infrastructure such as roads, railways, ports, inland waterways, airports, energy and telecommunications are essential for a well functioning customs union and common market. Our people are the main actors and objects of the integration project,'' he said.
Last year, EAC leaders signed the Common Market Protocol which they view as a major milestone in the region's integration process. The Common Market is due to take off 1 July 2010 and it will be followed by the establishment of a Monetary Union.
Afriquejet
South Africa targets maize exports of 4.5 million tons
by Antony Sguazzin and Carli Lourens
South Africa aims to export 4.5 million metric tons of corn in the current marketing year, almost triple the prior period, as the biggest harvest in 28 years threatens to flood the local market.
The target was increased from a previous estimate, Agriculture Minister Tina Joemat-Pettersson told reporters in Cape Town in May.
“We were exporting 4 million tons of excess corn to the continent,” she said. “It has now reached a figure of 4.5 million tons.”
The national Crop Estimates Committee on May 20 raised its estimate for this season’s harvest of the grain by 1.6 percent to 13.32 million tons. Exports were 1.65 million tons in the season ended April 30.
“There is almost no way we will be able to export all of that,” Sarel Snyman, a trader at Pretoria-based Thebe Securities Ltd., said by phone today of the new estimate. “It’s not looking good for the farmers,” he said, adding that current prices show little likelihood of improvement and probably will leave some producers bankrupt.
The most actively traded white corn contract rose 1.9 percent to 1,143.80 rand ($146) a ton on the South African Futures Exchange today, narrowing this year’s decline to 30 percent. Yellow corn has slid 23 percent in 2010. Meal made from white corn is the country’s staple food, and yellow corn is used mainly for animal feed in South Africa.
“It’s going to be difficult to export that amount of corn, logistically and physically,” Rory Bezuidenhout, a commodity trader at Pretoria-based Degro Futures Ltd., said in an interview.
Farmers’ group Grain SA has asked South Africa’s Competition Commission for an advisory opinion on a proposal to pool some corn exports because it may raise antitrust concerns, said Neels Ferreira, Grain SA’s chairman.
Favorable weather has boosted crops elsewhere in southern Africa. Zambia’s corn harvest climbed 42 percent to 2.7 million tons this season.
Business Week
South Africa aims to export 4.5 million metric tons of corn in the current marketing year, almost triple the prior period, as the biggest harvest in 28 years threatens to flood the local market.
The target was increased from a previous estimate, Agriculture Minister Tina Joemat-Pettersson told reporters in Cape Town in May.
“We were exporting 4 million tons of excess corn to the continent,” she said. “It has now reached a figure of 4.5 million tons.”
The national Crop Estimates Committee on May 20 raised its estimate for this season’s harvest of the grain by 1.6 percent to 13.32 million tons. Exports were 1.65 million tons in the season ended April 30.
“There is almost no way we will be able to export all of that,” Sarel Snyman, a trader at Pretoria-based Thebe Securities Ltd., said by phone today of the new estimate. “It’s not looking good for the farmers,” he said, adding that current prices show little likelihood of improvement and probably will leave some producers bankrupt.
The most actively traded white corn contract rose 1.9 percent to 1,143.80 rand ($146) a ton on the South African Futures Exchange today, narrowing this year’s decline to 30 percent. Yellow corn has slid 23 percent in 2010. Meal made from white corn is the country’s staple food, and yellow corn is used mainly for animal feed in South Africa.
“It’s going to be difficult to export that amount of corn, logistically and physically,” Rory Bezuidenhout, a commodity trader at Pretoria-based Degro Futures Ltd., said in an interview.
Farmers’ group Grain SA has asked South Africa’s Competition Commission for an advisory opinion on a proposal to pool some corn exports because it may raise antitrust concerns, said Neels Ferreira, Grain SA’s chairman.
Favorable weather has boosted crops elsewhere in southern Africa. Zambia’s corn harvest climbed 42 percent to 2.7 million tons this season.
Business Week
Global Fairtrade sales top €3billion
by Carl Collen
Consumer spending on Fairtrade products climbs 15 per cent in 2009, despite the onset of the economic downturn.
Consumers across the world spent some €3.4bn on Fairtrade products last year, a 15 per cent increase on 2008, defying the global economic crisis that gripped many key Fairtrade markets through the year.
Strong growth was recorded in established Fairtrade nations such as the UK, where growth hit 14 per cent and estimated Faitrade retail sales jumped 12 per cent to £800m (€935m).
The US reported on sales growth of 7 per cent for the year, while some countries saw sales grow by over 50 per cent, including Australia/New Zealand (up 58 per cent) and Canada (up 66 per cent).
Fairtrade gained new customers outside many of these traditional markets, with exponential sales growth in Eastern Europe, South Africa and countries in the global south, the Fairtrade Foundation revealed.
"As 2009 began in the midst of the worst recession in 70 years, we worried that Fairtrade producers could lose sales," said Rob Cameron, CEO of Fairtrade Labelling Organisations International. "Instead, consumers across the globe bucked the trend and proved their deep commitment to giving producers a fair deal. Fairtrade sales grew in all countries."
Sales have a large impact on the 1.2m farmers and workers selling through the label, who benefited from stable, higher-than-market income including Fairtrade premium funds for development projects. Banana producers invested more than €12m into community and business development last year.
Fruitnet
Consumer spending on Fairtrade products climbs 15 per cent in 2009, despite the onset of the economic downturn.
Consumers across the world spent some €3.4bn on Fairtrade products last year, a 15 per cent increase on 2008, defying the global economic crisis that gripped many key Fairtrade markets through the year.
Strong growth was recorded in established Fairtrade nations such as the UK, where growth hit 14 per cent and estimated Faitrade retail sales jumped 12 per cent to £800m (€935m).
The US reported on sales growth of 7 per cent for the year, while some countries saw sales grow by over 50 per cent, including Australia/New Zealand (up 58 per cent) and Canada (up 66 per cent).
Fairtrade gained new customers outside many of these traditional markets, with exponential sales growth in Eastern Europe, South Africa and countries in the global south, the Fairtrade Foundation revealed.
"As 2009 began in the midst of the worst recession in 70 years, we worried that Fairtrade producers could lose sales," said Rob Cameron, CEO of Fairtrade Labelling Organisations International. "Instead, consumers across the globe bucked the trend and proved their deep commitment to giving producers a fair deal. Fairtrade sales grew in all countries."
Sales have a large impact on the 1.2m farmers and workers selling through the label, who benefited from stable, higher-than-market income including Fairtrade premium funds for development projects. Banana producers invested more than €12m into community and business development last year.
Fruitnet
Namibia looks to uranium as diamonds lose luster
by Carli Lourens
Namibia, stung by the collapse of the diamond industry two years ago, is trying to diversify its $8.2 billion economy by exploiting uranium deposits that are the second-biggest in Africa.
Namibia’s economy contracted 0.8 percent last year, after expanding 4.3 percent a year earlier, as mining output halved. Diamond production plunged to 929,006 carats from 2.22 million carats a year earlier, according to the central bank. Demand for the gems plunged as the worst recession since World War II deterred buyers of luxury items like necklaces and earrings.
“The uranium sector is on the verge of surpassing the diamond industry as Namibia’s biggest,” Luise Nakatana, a mining analyst at Investment House Namibia, a Windhoek-based brokerage, said in an interview on May 18. “If all the proposed projects come on stream, the uranium sector will play a significant role in the country’s economic growth.”
Namibian output may quadruple by 2015 as new mines are opened by companies including Extract Resources Ltd., more than doubling uranium’s contribution to the economy, according to IHN. The industry accounted for 5.6 percent of Namibia’s gross domestic product last year.
The southern African country is the world’s largest producer of offshore diamonds, most of which are mined by Namdeb, a joint venture between the government and De Beers, the world’s No. 1 diamond company. Last year, uranium sales totaled 4 billion Namibian dollars ($530 million), beating diamond sales of 3.8 billion Namibian dollars for the first time, according to Old Mutual Plc’s Namibian unit.
“Diamonds have taken a big knock from the global financial crisis and we’re still reeling from that,” Veston Malango, general manager of the Chamber of Mines of Namibia, said by phone from Windhoek. “Uranium has taken center stage.”
Projects coming on stream may boost uranium production fourfold to 40 million pounds (18,144 metric tons) within five years, Robin Sherbourne, group economist at Old Mutual Namibia, said in an interview. IHN estimates it may increase to 50 million pounds over the same period.
“We might end up producing a fifth of all mined uranium,” Sherbourne said.
Uranium companies are planning to spend more than $3 billion starting operations in Namibia, he said. In 2008, the country became the world’s fourth-biggest producer, from sixth before. The Moscow-based State Atomic Energy Corp., known as Rosatom Corp., said last week Russia is prepared to invest about $1 billion developing uranium deposits in Namibia.
Namibia has “significant” reserves and isn’t plagued by political instability like some rival producers, Marino G. Pieterse, a uranium analyst and editor of Uraniumletter International, said by phone from Amsterdam.
It does have a water supply problem, which is a “major concern” for companies planning to start production in Namibia, said Heike Smith, head of research at Windhoek-based IJG Securities Ltd. The country is mostly desert or semi-desert.
Insufficient or expensive water supplies together with current uranium price levels may hinder development, said Leon Pretorius, managing director of Deep Yellow Ltd., the Australian company exploring for uranium in Namibia. Existing operations, generally, are “only just” profitable at current price levels, he said.
RBC Capital Markets cut its 2010 uranium forecast by 11 percent to $44.50 a pound from $50 last month as supplies increase, and said the metal may trade at $55 a pound next year and $75 a pound in 2012, when the market will move into deficit.
Among projects set to come on stream in Namibia is Rio Tinto’s extension of the world’s third-largest uranium mine, Rossing. The London-based company also has a 15 percent stake in Extract Resources, which plans to build the world’s second- largest uranium mine nearby. Areva, based in Paris, is constructing the $750 million Trekkopje mine. Bannerman Resources Ltd., based in Leaderville, Australia, is studying a $555 million mine east of the coastal town of Swakopmund.
The Namibian government is also likely to become a direct participant in the industry, after forming exploration and mining company Epangelo late last year. Epangelo may form joint ventures with foreign investors, Energy Minister Erkki Nghimtina said in December.
Business Week
Namibia, stung by the collapse of the diamond industry two years ago, is trying to diversify its $8.2 billion economy by exploiting uranium deposits that are the second-biggest in Africa.
Namibia’s economy contracted 0.8 percent last year, after expanding 4.3 percent a year earlier, as mining output halved. Diamond production plunged to 929,006 carats from 2.22 million carats a year earlier, according to the central bank. Demand for the gems plunged as the worst recession since World War II deterred buyers of luxury items like necklaces and earrings.
“The uranium sector is on the verge of surpassing the diamond industry as Namibia’s biggest,” Luise Nakatana, a mining analyst at Investment House Namibia, a Windhoek-based brokerage, said in an interview on May 18. “If all the proposed projects come on stream, the uranium sector will play a significant role in the country’s economic growth.”
Namibian output may quadruple by 2015 as new mines are opened by companies including Extract Resources Ltd., more than doubling uranium’s contribution to the economy, according to IHN. The industry accounted for 5.6 percent of Namibia’s gross domestic product last year.
The southern African country is the world’s largest producer of offshore diamonds, most of which are mined by Namdeb, a joint venture between the government and De Beers, the world’s No. 1 diamond company. Last year, uranium sales totaled 4 billion Namibian dollars ($530 million), beating diamond sales of 3.8 billion Namibian dollars for the first time, according to Old Mutual Plc’s Namibian unit.
“Diamonds have taken a big knock from the global financial crisis and we’re still reeling from that,” Veston Malango, general manager of the Chamber of Mines of Namibia, said by phone from Windhoek. “Uranium has taken center stage.”
Projects coming on stream may boost uranium production fourfold to 40 million pounds (18,144 metric tons) within five years, Robin Sherbourne, group economist at Old Mutual Namibia, said in an interview. IHN estimates it may increase to 50 million pounds over the same period.
“We might end up producing a fifth of all mined uranium,” Sherbourne said.
Uranium companies are planning to spend more than $3 billion starting operations in Namibia, he said. In 2008, the country became the world’s fourth-biggest producer, from sixth before. The Moscow-based State Atomic Energy Corp., known as Rosatom Corp., said last week Russia is prepared to invest about $1 billion developing uranium deposits in Namibia.
Namibia has “significant” reserves and isn’t plagued by political instability like some rival producers, Marino G. Pieterse, a uranium analyst and editor of Uraniumletter International, said by phone from Amsterdam.
It does have a water supply problem, which is a “major concern” for companies planning to start production in Namibia, said Heike Smith, head of research at Windhoek-based IJG Securities Ltd. The country is mostly desert or semi-desert.
Insufficient or expensive water supplies together with current uranium price levels may hinder development, said Leon Pretorius, managing director of Deep Yellow Ltd., the Australian company exploring for uranium in Namibia. Existing operations, generally, are “only just” profitable at current price levels, he said.
RBC Capital Markets cut its 2010 uranium forecast by 11 percent to $44.50 a pound from $50 last month as supplies increase, and said the metal may trade at $55 a pound next year and $75 a pound in 2012, when the market will move into deficit.
Among projects set to come on stream in Namibia is Rio Tinto’s extension of the world’s third-largest uranium mine, Rossing. The London-based company also has a 15 percent stake in Extract Resources, which plans to build the world’s second- largest uranium mine nearby. Areva, based in Paris, is constructing the $750 million Trekkopje mine. Bannerman Resources Ltd., based in Leaderville, Australia, is studying a $555 million mine east of the coastal town of Swakopmund.
The Namibian government is also likely to become a direct participant in the industry, after forming exploration and mining company Epangelo late last year. Epangelo may form joint ventures with foreign investors, Energy Minister Erkki Nghimtina said in December.
Business Week
China triples size of African equity fund to $3 billion
by Gregory White
China's Africa development fund is set to triple in size to $3 billion, according to China Daily.
The China-Africa Development Fund (CAD) targets investment projects on the African continent, including both industrial and infrastructure enterprises.
Specifically, the fund has been involved in the creation of a glass factory in Ethiopia and a power plant in Ghana. The fund has also been involved in the creation of "trade zones" in Egypt and Nigeria.
Eventually, CAD is to top out at a total of $5 billion.
Business Insider
China's Africa development fund is set to triple in size to $3 billion, according to China Daily.
The China-Africa Development Fund (CAD) targets investment projects on the African continent, including both industrial and infrastructure enterprises.
Specifically, the fund has been involved in the creation of a glass factory in Ethiopia and a power plant in Ghana. The fund has also been involved in the creation of "trade zones" in Egypt and Nigeria.
Eventually, CAD is to top out at a total of $5 billion.
Business Insider
Zimbabwe exports $1 billion of minerals up to May this year
by Brian Latham
Zimbabwe exported minerals valued at almost $1 billion in the five months through May, the Herald newspaper reported, citing Mines Minister Obert Mpofu.
The exports show that projections of 40 percent growth in the mining industry this year are possible, the Harare-based newspaper reported. Platinum group metals and gold accounted for most of the increase in value, according to the Herald.
Mining contributes 16 percent to Zimbabwe’s gross domestic product, the newspaper said.
Bloomberg
Zimbabwe exported minerals valued at almost $1 billion in the five months through May, the Herald newspaper reported, citing Mines Minister Obert Mpofu.
The exports show that projections of 40 percent growth in the mining industry this year are possible, the Harare-based newspaper reported. Platinum group metals and gold accounted for most of the increase in value, according to the Herald.
Mining contributes 16 percent to Zimbabwe’s gross domestic product, the newspaper said.
Bloomberg
Nigeria versus South Korea - development scorecard
by Dan Levy
Investment: Since 1980, Nigeria and South Korea have fostered close collaborative ties, especially through South Korean investments in the areas of resource development and construction. A bilateral investment treaty was signed in 1997. South Korean businesses are building liquefied natural gas plants and crude oil transportation and storage facilities. in construction, the orders received by South Korean companies in 2008 reached $6.3 billion accounting for over 65% of total orders from African countries. (Source: Government of South Korea)
Trade: Trade between Nigeria and South Korea has been on a steady rise, totaling $2.65 billion in 2008. As a result, Nigeria has emerged as South Korea’s third largest trading partner in Africa. South Korea is Nigeria’s fourth largest trading partner. (Source: The Embassy of the Republic of Korea in Nigeria)
Development Assistance: South Korea has successfully transformed itself from an aid-recipient to a donor country. An estimated 13% of South Korea’s odA is going to Africa, and it has provided a total of $28 million to Nigeria, supporting projects related to agricultural processing and vocational training. South Korea has also begun to share some of its remarkable development experience with Nigeria, including lessons on food security, low-carbon growth, and government efficiency. (Source: Foreign Ministry of South Korea)
Green growth: In February 2010, South Korea announced that it will spend $84.5 billion or 2% of its annual GDP over the next five years on environment-related industries. (Source: Government of South Korea)
Investment: Although Nigeria is keen to attract further foreign direct investment from South Korea, particularly in the area of information and communication technology, security concerns, high levels of corruption, unreliable energy sources and lack of transparent governance impair prospects.
Development: Despite enormous resource wealth and some improvements, Nigeria remains off target to meet the Millennium development goals on eradicating extreme poverty and hunger and improving health and education services. (Source: MDG Monitor)
Maternal Mortality: Nigeria suffers from one of the highest rates of maternal mortality in the world. A woman in nigeria is almost 70 times more likely to die as a result from child birth than her South Korean counterpart. (Source: WHO World Health Statistics 2010)
Corruption: Corruption is a problem for both countries, albeit to very different degrees. While corruption is endemic in Nigeria, it is much more localized in South Korea. Nonetheless, there have been a series of high-profile fraud and corruption cases in the latter, most notably against the founder of Daewoo as well as the Chairman of Samsung.
Africa Report
Investment: Since 1980, Nigeria and South Korea have fostered close collaborative ties, especially through South Korean investments in the areas of resource development and construction. A bilateral investment treaty was signed in 1997. South Korean businesses are building liquefied natural gas plants and crude oil transportation and storage facilities. in construction, the orders received by South Korean companies in 2008 reached $6.3 billion accounting for over 65% of total orders from African countries. (Source: Government of South Korea)
Trade: Trade between Nigeria and South Korea has been on a steady rise, totaling $2.65 billion in 2008. As a result, Nigeria has emerged as South Korea’s third largest trading partner in Africa. South Korea is Nigeria’s fourth largest trading partner. (Source: The Embassy of the Republic of Korea in Nigeria)
Development Assistance: South Korea has successfully transformed itself from an aid-recipient to a donor country. An estimated 13% of South Korea’s odA is going to Africa, and it has provided a total of $28 million to Nigeria, supporting projects related to agricultural processing and vocational training. South Korea has also begun to share some of its remarkable development experience with Nigeria, including lessons on food security, low-carbon growth, and government efficiency. (Source: Foreign Ministry of South Korea)
Green growth: In February 2010, South Korea announced that it will spend $84.5 billion or 2% of its annual GDP over the next five years on environment-related industries. (Source: Government of South Korea)
Investment: Although Nigeria is keen to attract further foreign direct investment from South Korea, particularly in the area of information and communication technology, security concerns, high levels of corruption, unreliable energy sources and lack of transparent governance impair prospects.
Development: Despite enormous resource wealth and some improvements, Nigeria remains off target to meet the Millennium development goals on eradicating extreme poverty and hunger and improving health and education services. (Source: MDG Monitor)
Maternal Mortality: Nigeria suffers from one of the highest rates of maternal mortality in the world. A woman in nigeria is almost 70 times more likely to die as a result from child birth than her South Korean counterpart. (Source: WHO World Health Statistics 2010)
Corruption: Corruption is a problem for both countries, albeit to very different degrees. While corruption is endemic in Nigeria, it is much more localized in South Korea. Nonetheless, there have been a series of high-profile fraud and corruption cases in the latter, most notably against the founder of Daewoo as well as the Chairman of Samsung.
Africa Report
Cautionary notes sounded as South-South trade booms
by Ravi Kanth Deverakonda
An Indian textile engineer and entrepreneur called Raj Rajendran visited Rwanda in 1999. He was tasked to close down an unviable textile factory following the civil war. But he discovered propitious agro-climatic conditions, particularly volcanic soil -- ideal for the rearing of silk worms to produce raw silk.
"Rajendran converted an old refrigerator into an incubator to hatch silk worm eggs, imported second-hand machinery from India, and started reeling Rwanda’s first silk yarn," said Charles Gore, a senior official of the Africa division in the United Nations Conference on Trade and Development (UNCTAD).
Sustained efforts by Rajendran over the last 10 years resulted in him creating a new brand called "Silk Hills" which bears the label "Made in Rwanda". Rajendran’s company now exports silk and cotton products to the U.S., Canada and elsewhere and is the largest private employer in the tiny east African country.
"In short, the Indian entrepreneur demonstrated that it is possible to bring about ‘transformational’ changes in an African country through economic interactions and knowledge-sharing skills with big developing countries like China, India and Brazil," Gore argued.
He is the lead author of UNCTAD’s annual report on Africa, titled "South-South Cooperation: Africa and the New Forms of Development Partnership," published on Jun 18.
The report confirms China and India’s status as the main drivers of trade and investment with African countries.
It is true that "increasing trade and investment between developing countries by reducing trade barriers could bring real benefits in terms of employment and incomes," said Isabel M. Mazzei, senior policy advisor for Oxfam in Geneva. It could also promote improved political relationships between countries and enable countries to reduce their dependence on markets in the industrialised countries."
But Mazzei warned that, "due to large differences in the size and level of development of Third World economies, full liberalisation of South-South trade is not desirable."
"Getting the balance right between further liberalisation and the appropriate protection of vulnerable farm sectors and infant industries will be a major challenge for economic policy makers," she added.
At the launch of the report Dr Supachai Panitchpakdi, UNCTAD’s secretary general, pointed out that there exists a growing recognition that South-South cooperation -- which is accelerating investment and trade between large developing countries, such as China, India and Brazil, and African countries -- could pave the way for transfer of technology and knowledge skills.
Panitchpakdi urged the rising economic giants of the South to go well beyond trade and investment to create a new economic and social climate to reverse the historical trend which has seen Africa supplying agricultural goods and raw materials while importing manufactured goods.
"I am confident that with the rising trend of developmental aid flowing from the leading countries of the South to Africa, estimated at around 2.8 billion dollars in 2006, there will be a paradigmatic shift in the coming years," he told IPS, adding that China also increased its assistance to Africa last year.
The 116-page report on Africa captures undercurrents that are gradually changing the landscape of South-South trade. For example, the total merchandise trade between African countries and non-African developing countries such as China, India, and Brazil, among others, jumped to 283 billion dollars in 2008 -- from 34 billion dollars in 1995.
In contrast, Africa’s trade with developed countries increased from 138 billion dollars to 588 billion dollars over the same period. "The growing share of developing countries in Africa’s trade has led to a reduction in the proportion of the region’s trade going to its traditional partners in Europe and North America," according to the report.
But the reports’ authors noted that, "although there has been an increase in Africa’s trade with developing countries, the composition is skewed more towards imports rather than exports".
Non-African developing countries are now the major "greenfield" investors on the African continent. This kind of investment refers to creating new economic assets that could include manufacturing facilities, along with other infrastructural facilities.
Foreign direct investment in greenfield projects has shot to 184 in 2008, up from 52 in 2004. Chinese infrastructure and financial commitments increased to 4.5 billion dollars in 2007, compared to 470 million dollars in 2001.
But the report’s authors cautioned that China’s growing economic interaction with Africa should not be seen as a "China-Africa story" but part of a broader trend towards intensifying Africa-South economic relationships, particularly with large and dynamic emerging countries.
The report urged African countries to adopt a "pro-active" approach by planning long-term economic projects and asserting their domestic concerns when negotiating cooperation with other developing countries.
In effect, African nations should strive towards building their "productive capacities" to produce a greater variety of goods that are more sophisticated products, the report emphasised
IPS
An Indian textile engineer and entrepreneur called Raj Rajendran visited Rwanda in 1999. He was tasked to close down an unviable textile factory following the civil war. But he discovered propitious agro-climatic conditions, particularly volcanic soil -- ideal for the rearing of silk worms to produce raw silk.
"Rajendran converted an old refrigerator into an incubator to hatch silk worm eggs, imported second-hand machinery from India, and started reeling Rwanda’s first silk yarn," said Charles Gore, a senior official of the Africa division in the United Nations Conference on Trade and Development (UNCTAD).
Sustained efforts by Rajendran over the last 10 years resulted in him creating a new brand called "Silk Hills" which bears the label "Made in Rwanda". Rajendran’s company now exports silk and cotton products to the U.S., Canada and elsewhere and is the largest private employer in the tiny east African country.
"In short, the Indian entrepreneur demonstrated that it is possible to bring about ‘transformational’ changes in an African country through economic interactions and knowledge-sharing skills with big developing countries like China, India and Brazil," Gore argued.
He is the lead author of UNCTAD’s annual report on Africa, titled "South-South Cooperation: Africa and the New Forms of Development Partnership," published on Jun 18.
The report confirms China and India’s status as the main drivers of trade and investment with African countries.
It is true that "increasing trade and investment between developing countries by reducing trade barriers could bring real benefits in terms of employment and incomes," said Isabel M. Mazzei, senior policy advisor for Oxfam in Geneva. It could also promote improved political relationships between countries and enable countries to reduce their dependence on markets in the industrialised countries."
But Mazzei warned that, "due to large differences in the size and level of development of Third World economies, full liberalisation of South-South trade is not desirable."
"Getting the balance right between further liberalisation and the appropriate protection of vulnerable farm sectors and infant industries will be a major challenge for economic policy makers," she added.
At the launch of the report Dr Supachai Panitchpakdi, UNCTAD’s secretary general, pointed out that there exists a growing recognition that South-South cooperation -- which is accelerating investment and trade between large developing countries, such as China, India and Brazil, and African countries -- could pave the way for transfer of technology and knowledge skills.
Panitchpakdi urged the rising economic giants of the South to go well beyond trade and investment to create a new economic and social climate to reverse the historical trend which has seen Africa supplying agricultural goods and raw materials while importing manufactured goods.
"I am confident that with the rising trend of developmental aid flowing from the leading countries of the South to Africa, estimated at around 2.8 billion dollars in 2006, there will be a paradigmatic shift in the coming years," he told IPS, adding that China also increased its assistance to Africa last year.
The 116-page report on Africa captures undercurrents that are gradually changing the landscape of South-South trade. For example, the total merchandise trade between African countries and non-African developing countries such as China, India, and Brazil, among others, jumped to 283 billion dollars in 2008 -- from 34 billion dollars in 1995.
In contrast, Africa’s trade with developed countries increased from 138 billion dollars to 588 billion dollars over the same period. "The growing share of developing countries in Africa’s trade has led to a reduction in the proportion of the region’s trade going to its traditional partners in Europe and North America," according to the report.
But the reports’ authors noted that, "although there has been an increase in Africa’s trade with developing countries, the composition is skewed more towards imports rather than exports".
Non-African developing countries are now the major "greenfield" investors on the African continent. This kind of investment refers to creating new economic assets that could include manufacturing facilities, along with other infrastructural facilities.
Foreign direct investment in greenfield projects has shot to 184 in 2008, up from 52 in 2004. Chinese infrastructure and financial commitments increased to 4.5 billion dollars in 2007, compared to 470 million dollars in 2001.
But the report’s authors cautioned that China’s growing economic interaction with Africa should not be seen as a "China-Africa story" but part of a broader trend towards intensifying Africa-South economic relationships, particularly with large and dynamic emerging countries.
The report urged African countries to adopt a "pro-active" approach by planning long-term economic projects and asserting their domestic concerns when negotiating cooperation with other developing countries.
In effect, African nations should strive towards building their "productive capacities" to produce a greater variety of goods that are more sophisticated products, the report emphasised
IPS
Smuggled goods dominate ancient Ethiopian trade route
by Heather Murdock
Store owners say smuggled goods cost about 40 percent less than taxed goods from Ethiopia’s capital. Legally purchased goods, they say, would drive them out of business.
Only 200 miles from the border of Somalia is the Ethiopian city of Harar, an ancient center of commerce linking Africa to the Arab world. Nowadays, the old merchant route is still tread regularly. Smugglers carry everything from cell phones to satellite dishes into Ethiopia daily, unhindered by taxes and law, dominating local markets.
It works like this: ordinary people – old people, young people, men and women – take the bus from the eastern Ethiopian city of Harar, to Hargeisa, the capital of Somaliland.
The bus ride to Somaliland costs about nine dollars and takes the better part of the day. Once in Hargeisa, the passengers hit the markets and buy cell phones, DVD players, T-shirts, cosmetics and just about everything else. They stash the goods in cloth bags, or under heavy sweaters. They pay the bus driver about $20 to go back.
VOA Photo – H. MurdockEverything from cloth to DVD players are smuggled in from Somaliand and to Ethiopia daily, and dominate many local markets. Often the materials arrive on camels or donkeys.
Outside her small stone home in Harar's thousand-year-old walled city, 20-year-old Naima, a smuggler, grinds coffee beans by hand, pounding them in a centuries-old tradition.
Naima says she makes the trip to Somaliland about once a week with more than 20 other smugglers. The trip back to Harar cost more than twice as much because the bus driver knows they are carrying smuggled goods. If they are caught, she says, the smugglers usually only have their goods confiscated. The bus drivers, however, face fines or imprisonment.
Before military checkpoints, Naima says, the smugglers exit the bus and haul their goods on foot for hours through remote villages before they meet their bus again.
Small-scale smugglers make between $15 to $40 a trip. Their earnings average about $3.50 per day, in a country where about 80 percent of the people live on less than $2 a day. Naima says it is a good living for a single girl with no children. And with jobs scarce in the impoverished country, she says she has few other choices while she is in school. After she graduates from college, Naima wants to teach the Harari language to local children.
Smugglers say crossing the border into what is technically Somali territory is not as dangerous as you might think. They are quick to point out that Hargeisa is in Somaliland, which is separate from the war-ravaged territories of southern Somalia, a country deemed by the international community a "failed state."
VOA Photo – H. MurdockShopkeepers in the bustling markets of Harar are not shy to admit that they buy their goods from smugglers who import consumer goods from Somaliland.
Somaliland is a self-declared independent republic that covers most of northern Somalia along the Gulf of Aden. Unlike its southern neighbor, Somaliland is mostly peaceful, and it says it is open for business.
Ethiopian officials say that the road from Hargeisa to Harar has long been alive with illegal trafficking of consumer goods.
In January, a coalition of Ethiopian authorities and phone companies said that 95 percent of cell phones in Ethiopia were smuggled in, costing the government about $50 million a year in lost tax revenue.
But government authorities say the flow of smuggled goods into Ethiopia has slowed considerably in the past two years after an overhaul of customs laws in 2008. This year, the Ethiopian customs authority doubled its budget for informants to about $1.3 million. If caught, smugglers and anyone who purchases smuggled goods can go to jail for as many as 15 years.
But in the bustling markets of Harar, shopkeepers say the only way to do business in this town is to buy from smugglers.
Mutagas, a 16-year-old shopkeeper leans out of his electronics stall in a crowded indoor market. The narrow paths are packed with tiny shops selling shoes, clothes, cosmetics and just about every kind of electronic gadget. Like the other shopkeepers, he is not shy about admitting that his goods were purchased illegally.
He says modern store owners in Harar buy goods illegally because they cost about 40 percent less than taxed goods. And as often as not, he says the sellers, like the merchants of old, carry their goods to market on the backs of donkeys and camels.
VOA
Store owners say smuggled goods cost about 40 percent less than taxed goods from Ethiopia’s capital. Legally purchased goods, they say, would drive them out of business.
Only 200 miles from the border of Somalia is the Ethiopian city of Harar, an ancient center of commerce linking Africa to the Arab world. Nowadays, the old merchant route is still tread regularly. Smugglers carry everything from cell phones to satellite dishes into Ethiopia daily, unhindered by taxes and law, dominating local markets.
It works like this: ordinary people – old people, young people, men and women – take the bus from the eastern Ethiopian city of Harar, to Hargeisa, the capital of Somaliland.
The bus ride to Somaliland costs about nine dollars and takes the better part of the day. Once in Hargeisa, the passengers hit the markets and buy cell phones, DVD players, T-shirts, cosmetics and just about everything else. They stash the goods in cloth bags, or under heavy sweaters. They pay the bus driver about $20 to go back.
VOA Photo – H. MurdockEverything from cloth to DVD players are smuggled in from Somaliand and to Ethiopia daily, and dominate many local markets. Often the materials arrive on camels or donkeys.
Outside her small stone home in Harar's thousand-year-old walled city, 20-year-old Naima, a smuggler, grinds coffee beans by hand, pounding them in a centuries-old tradition.
Naima says she makes the trip to Somaliland about once a week with more than 20 other smugglers. The trip back to Harar cost more than twice as much because the bus driver knows they are carrying smuggled goods. If they are caught, she says, the smugglers usually only have their goods confiscated. The bus drivers, however, face fines or imprisonment.
Before military checkpoints, Naima says, the smugglers exit the bus and haul their goods on foot for hours through remote villages before they meet their bus again.
Small-scale smugglers make between $15 to $40 a trip. Their earnings average about $3.50 per day, in a country where about 80 percent of the people live on less than $2 a day. Naima says it is a good living for a single girl with no children. And with jobs scarce in the impoverished country, she says she has few other choices while she is in school. After she graduates from college, Naima wants to teach the Harari language to local children.
Smugglers say crossing the border into what is technically Somali territory is not as dangerous as you might think. They are quick to point out that Hargeisa is in Somaliland, which is separate from the war-ravaged territories of southern Somalia, a country deemed by the international community a "failed state."
VOA Photo – H. MurdockShopkeepers in the bustling markets of Harar are not shy to admit that they buy their goods from smugglers who import consumer goods from Somaliland.
Somaliland is a self-declared independent republic that covers most of northern Somalia along the Gulf of Aden. Unlike its southern neighbor, Somaliland is mostly peaceful, and it says it is open for business.
Ethiopian officials say that the road from Hargeisa to Harar has long been alive with illegal trafficking of consumer goods.
In January, a coalition of Ethiopian authorities and phone companies said that 95 percent of cell phones in Ethiopia were smuggled in, costing the government about $50 million a year in lost tax revenue.
But government authorities say the flow of smuggled goods into Ethiopia has slowed considerably in the past two years after an overhaul of customs laws in 2008. This year, the Ethiopian customs authority doubled its budget for informants to about $1.3 million. If caught, smugglers and anyone who purchases smuggled goods can go to jail for as many as 15 years.
But in the bustling markets of Harar, shopkeepers say the only way to do business in this town is to buy from smugglers.
Mutagas, a 16-year-old shopkeeper leans out of his electronics stall in a crowded indoor market. The narrow paths are packed with tiny shops selling shoes, clothes, cosmetics and just about every kind of electronic gadget. Like the other shopkeepers, he is not shy about admitting that his goods were purchased illegally.
He says modern store owners in Harar buy goods illegally because they cost about 40 percent less than taxed goods. And as often as not, he says the sellers, like the merchants of old, carry their goods to market on the backs of donkeys and camels.
VOA
ACP and EU nations sign revised trade deal
African, Caribbean and Pacific (ACP) nations signed on June 22 a revised trade and development agreement with the European Union.
"The revised Cotonou agreement reflects our common goals of battling poverty, promoting sustainable development and promoting the ACP economies in the global economy, notable through trade relations," said EU Development Commissioner Andris Piebalgs.
The ACP and EU reached agreement in March on revising the 2000 Cotonou Agreement to make improvements in the distribution of development aid and tweak trade components to lessen barriers to the 79 ACP countries.
The revised agreement also aims to reduce poverty in the ACP countries, help them reach their Millennium Development Goals, tackle the proliferation of small arms and the threats posed by organised crime.
First signed in 2000, the Cotonou Agreement is revised every five years.
EU Business
"The revised Cotonou agreement reflects our common goals of battling poverty, promoting sustainable development and promoting the ACP economies in the global economy, notable through trade relations," said EU Development Commissioner Andris Piebalgs.
The ACP and EU reached agreement in March on revising the 2000 Cotonou Agreement to make improvements in the distribution of development aid and tweak trade components to lessen barriers to the 79 ACP countries.
The revised agreement also aims to reduce poverty in the ACP countries, help them reach their Millennium Development Goals, tackle the proliferation of small arms and the threats posed by organised crime.
First signed in 2000, the Cotonou Agreement is revised every five years.
EU Business
Kenya trade with BRIC countries increases
by Allan Odhiambo
President Luiz Da Silva’s early July visit to Nairobi has added fresh impetus to the ongoing shift in Kenya’s choice of economic partners in favour of the world’s emerging powerhouses such as Brazil, China and India, economists said.
The shift has seen Kenya turn East – to China and India – for financial, technical and commercial ties for the headroom it needs to reduce its dependence on Europe and North America.
Brazil, Russia, India and China belong to the group of the world’s emerging economic powerhouses commonly known as BRICs that, save for Russia, have recently emerged as top players in Africa’s trade and investment scene.
A deepening of ties between Africa and the BRICs has seen the proportion of Africa’s trade with the emerging economies rise from 4.6 per cent in 1993 to more than 19 per cent in 2008.
Kenya is expected to use its growing ties with Brazil to seek affordable technology and loans to build the infrastructure it needs to push economic growth to the double digit levels target required to realise the Vision 2030 development goal.
Brazil has emerged as the world’s leader in biofuels production technology which it has been using to shield its economy from the turbulence of the petroleum market.
Like India and China, the South American nation has also emerged as a global powerhouse in the production of cheap goods that require advanced technology such as generic drugs.
Kenya’s bilateral engagement with Brazil has remained low mainly due to obstacles such as lack of direct flights between the two nations.
“What is absolutely striking is how much change there has been between the BRICs and Africa,” said Mr Jacko Maree, the CEO of South Africa’s Standard Bank.
President Kibaki’s hand in the ongoing shift is being seen in the fact that he has not visited or hosted any major European leader since coming to power eight years ago but has made several trips to China and India.
Brazil’s arrival in Africa is being seen as promising the continent a fresh opportunity to diversify policy advice, trading partners and sources of investment to South America.
“While Sino-Africa trade has grown particularly rapidly, Brazil’s has remained relatively flat at around 18 per cent of Africa’s total trade with the BRICs in the past two decades,” Simon Freemantle and Jeremy Stevens of Standard Bank said in a recent analysis of the BRICs activities in Africa.
Brazil has, however, stepped up the race for Africa that has seen President Da Silva follow in the footsteps of China and India with to visit to a number of African capitals for the signing of multi-billion commercial deals.
“What brings them together is that they are at the frontier of capitalism,” said Christian Lohbauer, an international relations expert at the University of Sao Paulo in an interview with BBC.
“These efforts and initiatives have manifested themselves in the mushrooming of high-level official visits to Africa driven by, and in tandem with, the economic and political expansion of the BRICs on the global stage,” the Stanbic economists say.
More recently, Brazil has made its National Development Bank (BNDES) the driver of its business partnerships in Africa that finances its exporters and major projects that its firms are carrying out abroad.
By deepening its ties with Brazil, Kenya is likely to benefit from bio-diesel technology that is now becoming an option for energy-deficit economies around the world.
Brazil’s most significant commercial venture in Africa remains state-run Petrobas, a petroleum company with a big presence in Angola and Nigeria.
Mr Da Silva has over the years advocated the expansion of Brazil’s ethanol production activities to other markets, financing exports and transfer of technology to the target markets.
Kenya is expected to enter the ethanol fuel market in September following the release of a formula that will see petroleum blended with ethanol at the ratio of 85:15.
Mumias, Kenya’s largest sugar miller is already lining up for the bio-fuel business with the establishment of a plant to produce 25 million litres of ethanol per annum from 100,000 tonnes of molasses that will earn it Sh1 billion in additional revenue annually.
Besides energy, Kenya’s new found partnership with Brazil could also bring major fortunes in the aviation industry where President Kibaki said the government was looking forward to concluding Bilateral Service Agreements to facilitate faster movement of persons between the two countries through direct flights.
Brazil is also a major maker of aeroplanes and its Embraer brand is part of national carrier, Kenya Airways’ latest fleet modernisation programme.
So far KQ has grown its fleet of the 70-seater Embraer 170 aircraft to six using them on regional routes such as Nairobi-Kigali and Nairobi-Juba.
Last year, Brazil deepened its foray in Africa with the launch of an international TV channel aimed at acting as a channel for cultural cooperation.
President Da Silva said the aim of the Portuguese-language channel is to present Brazil to the world even though analysts said the move only symbolized the South American nation’s growing interest in Africa. TV Brasil Internacional, based in Brasilia, broadcasts to 49 African nations via Maputo. So far it has won audiences in the Portuguese-speaking African nations such as Mozambique, Angola, Cape Verde, Guinea-Bissau, and Sao Tome and Principe.
Business Daily Africa
President Luiz Da Silva’s early July visit to Nairobi has added fresh impetus to the ongoing shift in Kenya’s choice of economic partners in favour of the world’s emerging powerhouses such as Brazil, China and India, economists said.
The shift has seen Kenya turn East – to China and India – for financial, technical and commercial ties for the headroom it needs to reduce its dependence on Europe and North America.
Brazil, Russia, India and China belong to the group of the world’s emerging economic powerhouses commonly known as BRICs that, save for Russia, have recently emerged as top players in Africa’s trade and investment scene.
A deepening of ties between Africa and the BRICs has seen the proportion of Africa’s trade with the emerging economies rise from 4.6 per cent in 1993 to more than 19 per cent in 2008.
Kenya is expected to use its growing ties with Brazil to seek affordable technology and loans to build the infrastructure it needs to push economic growth to the double digit levels target required to realise the Vision 2030 development goal.
Brazil has emerged as the world’s leader in biofuels production technology which it has been using to shield its economy from the turbulence of the petroleum market.
Like India and China, the South American nation has also emerged as a global powerhouse in the production of cheap goods that require advanced technology such as generic drugs.
Kenya’s bilateral engagement with Brazil has remained low mainly due to obstacles such as lack of direct flights between the two nations.
“What is absolutely striking is how much change there has been between the BRICs and Africa,” said Mr Jacko Maree, the CEO of South Africa’s Standard Bank.
President Kibaki’s hand in the ongoing shift is being seen in the fact that he has not visited or hosted any major European leader since coming to power eight years ago but has made several trips to China and India.
Brazil’s arrival in Africa is being seen as promising the continent a fresh opportunity to diversify policy advice, trading partners and sources of investment to South America.
“While Sino-Africa trade has grown particularly rapidly, Brazil’s has remained relatively flat at around 18 per cent of Africa’s total trade with the BRICs in the past two decades,” Simon Freemantle and Jeremy Stevens of Standard Bank said in a recent analysis of the BRICs activities in Africa.
Brazil has, however, stepped up the race for Africa that has seen President Da Silva follow in the footsteps of China and India with to visit to a number of African capitals for the signing of multi-billion commercial deals.
“What brings them together is that they are at the frontier of capitalism,” said Christian Lohbauer, an international relations expert at the University of Sao Paulo in an interview with BBC.
“These efforts and initiatives have manifested themselves in the mushrooming of high-level official visits to Africa driven by, and in tandem with, the economic and political expansion of the BRICs on the global stage,” the Stanbic economists say.
More recently, Brazil has made its National Development Bank (BNDES) the driver of its business partnerships in Africa that finances its exporters and major projects that its firms are carrying out abroad.
By deepening its ties with Brazil, Kenya is likely to benefit from bio-diesel technology that is now becoming an option for energy-deficit economies around the world.
Brazil’s most significant commercial venture in Africa remains state-run Petrobas, a petroleum company with a big presence in Angola and Nigeria.
Mr Da Silva has over the years advocated the expansion of Brazil’s ethanol production activities to other markets, financing exports and transfer of technology to the target markets.
Kenya is expected to enter the ethanol fuel market in September following the release of a formula that will see petroleum blended with ethanol at the ratio of 85:15.
Mumias, Kenya’s largest sugar miller is already lining up for the bio-fuel business with the establishment of a plant to produce 25 million litres of ethanol per annum from 100,000 tonnes of molasses that will earn it Sh1 billion in additional revenue annually.
Besides energy, Kenya’s new found partnership with Brazil could also bring major fortunes in the aviation industry where President Kibaki said the government was looking forward to concluding Bilateral Service Agreements to facilitate faster movement of persons between the two countries through direct flights.
Brazil is also a major maker of aeroplanes and its Embraer brand is part of national carrier, Kenya Airways’ latest fleet modernisation programme.
So far KQ has grown its fleet of the 70-seater Embraer 170 aircraft to six using them on regional routes such as Nairobi-Kigali and Nairobi-Juba.
Last year, Brazil deepened its foray in Africa with the launch of an international TV channel aimed at acting as a channel for cultural cooperation.
President Da Silva said the aim of the Portuguese-language channel is to present Brazil to the world even though analysts said the move only symbolized the South American nation’s growing interest in Africa. TV Brasil Internacional, based in Brasilia, broadcasts to 49 African nations via Maputo. So far it has won audiences in the Portuguese-speaking African nations such as Mozambique, Angola, Cape Verde, Guinea-Bissau, and Sao Tome and Principe.
Business Daily Africa
Southern Africa to sign scaled-down EPA before end of 2010
Southern African trade ministers have pledged to sign a significantly scaled down economic partnership agreement (EPA) with the European Union (EU) before the end of 2010. Could this be the conclusion to years of divisive negotiations?
It was a mere sentence in the draft minutes of the meeting of Southern African Development Community (SADC) ministers in Gaborone on Jun 17: "Ministers noted the strategy proposed by senior officials aimed at concluding an inclusive EPA by the end of 2010." A timeline in the document then outlines the signing of "an inclusive EPA" and its notification to the World Trade Organisation (WTO) by the end of the year.
After the skirmishes around the controversial trade pact - that spells out a reciprocal tariff regime on goods between the countries and the EU - the decision may seem sudden. As recent as May 2010, Namibian trade minister Hage Geingob defended the country’s opposition to the EPA in parliament, accusing the EU of "bullying" its much smaller southern African counterparts.
While significant progress was made during a high level technical negotiating session in Brussels in early May, there are still some significant issues outstanding that could see signing pushed into next year. Independent trade policy analyst Wallie Roux, based in Windhoek, told IPS he assumes that the December 2010 deadline will be missed.
IPS News
It was a mere sentence in the draft minutes of the meeting of Southern African Development Community (SADC) ministers in Gaborone on Jun 17: "Ministers noted the strategy proposed by senior officials aimed at concluding an inclusive EPA by the end of 2010." A timeline in the document then outlines the signing of "an inclusive EPA" and its notification to the World Trade Organisation (WTO) by the end of the year.
After the skirmishes around the controversial trade pact - that spells out a reciprocal tariff regime on goods between the countries and the EU - the decision may seem sudden. As recent as May 2010, Namibian trade minister Hage Geingob defended the country’s opposition to the EPA in parliament, accusing the EU of "bullying" its much smaller southern African counterparts.
While significant progress was made during a high level technical negotiating session in Brussels in early May, there are still some significant issues outstanding that could see signing pushed into next year. Independent trade policy analyst Wallie Roux, based in Windhoek, told IPS he assumes that the December 2010 deadline will be missed.
IPS News
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