South Africa posts biggest trade surplus in almost a decade

by Nasreen Seria

South Africa posted its biggest trade surplus in almost a decade in November as exports of raw materials surged and iron ore shipments were recorded a month later than they occurred.

The surplus of 8.4 billion rand ($1.3 billion) followed a deficit of 3.2 billion rand in October, theSouth African Revenue Service said. The median estimate of three economists surveyed by Bloomberg was for a deficit of 3.5 billion rand.

Excluding the 3.2 billion rand of iron ore exports, which took place in October and were only captured by the revenue service in November, the trade surplus was 5.2 billion rand, according to the statement. South African trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.

Exports rebounded this year, helping to narrow the trade deficit in the first 11 months to 5 billion rand, down from 29.5 billion rand in the same period of 2009, the revenue service said. That helped to underpin the rand, which has strengthened more than 15 percent against the dollar in the past six months.


Shipments of precious metals, such as gold and platinum, surged by 2.2 billion rand, or 16 percent, in November from the previous month, while base metal exports increased by 1.2 billion rand, or 15 percent, the agency said.

Imports fell 2.4 percent to 51.8 billion rand last month from October, mainly due to an 11 percent slump in purchases of equipment parts, the revenue service said. Exports surged 21 percent to 60.2 billion rand.

Bloomberg

South Africa's entry into BRIC to reshape world economy

After a year of hard work, South Africa has formally joined with the four major emerging powers that form the BRIC cooperation mechanism. South African media said it is an important milestone, signifying South Africa is becoming a major emerging economy in the world.

The prime motivation for South Africa's entry into BRIC — short for Brazil, Russia, India and China — is to create conditions for the country's economic development. Before the outbreak of the international financial crisis, South Africa had experienced the fastest economic growth since 1994, with the economy growing at a rate of more than 5 percent for three consecutive years. But the financial crisis drastically slowed economic growth and pushed unemployment higher.

The role of South Africa's traditional trading partners — Western countries — has been lessened significantly and the emerging economies are becoming increasingly prominent. China is South Africa's largest trading partner, and South Africa is the largest destination in Africa for China's direct investment.

South Africa's trade with India increased to 7.5 billion U.S. dollars last year. Its trade and investment with Brazil and Russia also increased rapidly. The emerging economies are bringing more opportunities for South Africa's development. The accession into the BRIC has become inevitable as the South African government stresses diplomacy should serve the interest of economy.

By joining the BRIC countries, South Africa also hopes to become the gateway for the BRIC countries' entry into Africa. From 2000 to 2008, BRIC trade with Africa increased more than seven times. In 2008, the BRIC trade with Africa accounted for nearly 20 percent of Africa's total foreign trade volume.

Some economists believe that the BRIC is taking Africa from the edge to the center of the global economy. As Africa's largest economy, South Africa has companies operating in more than half of the African continent. South Africa is looking forward to expanding cooperation with the BRIC counties in Africa, which will ultimately promote national economic development.

The rapid development of Africa contributed to South Africa's accession into the BRIC. Over the past decade, efforts to pursue peace, stability and economic reform have brought rapid economic growth to the African continent. Africa's role in the international arena has been increasingly important.

Although some think South Africa's small population, the size of its economy and the relatively slow growth rate do not meet the BRIC standard, South Africa has the ability to promote agendas related to Africa on the international arena and promote South-South cooperation. This is an important factor that makes South Africa valuable as a BRIC country.

From South Africa's efforts to join the BRIC, people can see the expanding influence of the emerging countries. It has not been 10 years since the term BRIC was coined. An official dialogue mechanism between the leaders of the BRIC countries was not established until 2009.

However, the economic vitality of the cooperation among the four countries has had a great effect on the international community. Data shows that the BRIC contribution to global economic growth reached 50 percent. The International Monetary Fund predicted that by 2014, the proportion BRIC economies contribute will reach 61 percent.

What is more, the four countries are playing an increasingly important role in issues including international financial system reform, climate change and other matters related to major issues of global governance in promoting the international order to move in a more balanced direction.

Aware of these changes and trends and holding the same position on many global issues, South Africa wishes to become a member of BRIC in order to achieve mutual benefits.

The expansion of BRIC not only reflects the adjustment of the global economic landscape, but also will further promote changes in the world order. In 2011, all the BRICS countries will serve as members of the U.N. Security Council, permanent or non-permanent. Their active roles deserve people’s attention in the year to come.

People's Daily Online

Booming Ethiopia is the new face of Africa

by Rick Ackerman

This is a growth story. A few years ago, I spent some time living in Ethiopia. I was in the suburbs of Addis Ababa, getting to know one terrific family in particular: the mother, who was the real head of the household; the father, Abba, a shoemaker; and his four single daughters, all in their thirties. What could possibly go wrong?

OK, I am already getting off track. This is supposed to be an article about Ethiopia’s boom and the inflation that has come in its wake. I call the daughters “my gals” when I talk about them with friends, and we keep in touch almost daily via e-mail. One is a student, and the other three work: as a translator, a seamstress and a secretary. They all have good educations, speak English and are in every way typical of women you might meet anywhere in the world: the same hopes and dreams, the same troubles with men and the same daily worries about meeting the bills, making ends meet and trying to save.

Well almost the same. You see, these women earn a grand total of 2900 Ethiopian birr in monthly income between them. That’s roughly $175 dollars for six people to share — a fairly typical income in Ethiopia. However, I never thought of the family as poor during the time I knew them. They own a home, are well educated, eat well, and the girls were always “dressed to kill,” so on the surface it all looked pretty normal to me. Expenses are regional and relative, and so daily costs there are generally incredibly low. But come on! A buck a day per person is just not enough money! Nevertheless.

16.5% Devaluation OvernightSo the cost of living is low. At least it was. Until the Central Bank, in a surprise announcement last month, devalued the currency by 16.5% in a single day, making it the fourth devaluation in less than two years. Monetary policy was being used as a means for the country to retain a competitive export advantage, and to manage its currency’s float against the U.S. dollar. A falling dollar in effect precipitated the action by the Ethiopian Central Bank. So, this was no stealth devaluation — it was all in-your-face.

Compounding worries for my girls is the recent commodity boom and an attendant, sharp price increase in cotton, coffee, cocoa, wheat, canola, and of course cooking fuel (kerosene). The problem they are facing is that commodities, while locally sourced, are not locally priced, as they are subject to global competition and speculative forces. Prices are set in the futures markets. So despite being an agricultural country and net food exporter, Ethiopia and its people face the same market dynamics and price hikes that we are about to experience in the West. (This story is indirectly about us, as you will see). And because Ethiopia is primarily an agricultural exporter, the new prices hit the streets almost as fast as they changed on the boards in New York and London. It is no joke that Ethiopians are now unable to afford buying some of the produce of their own country. Following this last price spike, coffee is almost out of the question.

Since the summer, the cost of a kilo of coffee has climbed from about$ 2.20 U.S. to more than $4 –a price spike of almost 100%. Buying coffee on a daily budget of a dollar is not just prohibitive, it is a sacrifice and a luxury. This irony is not lost on the people living right in the midst of the country where coffee was originally discovered, and where it is still a primary exports.

The gals have been pretty worried lately. They are stoic, though, and rarely complain, even though the price of flour is also up over 70%, cooking oil by 50%, and onions (of all things) by an incredible 250%. And you thought we had inflation worries in the U.S.! Ethiopia’s Central Statistical Agency (CSA), meanwhile, reports for 2010 that tobacco has risen 34%, clothing 25% and rent, fuel and power have collectively risen by over 16%. Yikes!

All of this is an outgrowth of a shifting, global investment dynamic that has made paper investments risky; where bonds pay nothing; and where holding cash is a surefire way to go broke over the long run. There has been a shift, particularly amongst hedge funds, from certain equities and debt instruments and into hard assets, gold and resources.

Exacerbating this trend is the widespread belief that quantitative easing is leading to dollar devaluation. This makes resource investments very appealing as a long-term hedge against inflation. Stimulus leakage itself, as well as the outcomes of investment changes that flow from quantitative easing, are now driving the African growth story even as they exert tremendous inflationary pressures. These are the sources behind some of the stresses the people there are now facing.

An unfortunate outcome of the new dynamic is big price increases that negatively impact not only Ethiopians, but people who live in the poorest countries in the world. Keep in mind that in many countries across Africa and parts of Asia, food and transportation are the largest components of household budgets. Double-digit inflation therefore inflicts hardship in a way that very few North Americans can fully comprehend.

Today, Ethiopia is one of the largest coffee exporters in the world, and not so surprisingly, government revenues have surged on the back of commodity price increases and export growth. Increased incomes from both private and corporate sources including the VAT tax have reportedly shot up a staggering 150% in just the last three months, and the government is on track to fully exceed its wildest estimates.

To look at it one way, the price increases for food are coming out of the pockets of the average person on the street and then miraculously reappearing on government ledgers. While it is not quite simple, the differences between export revenues and increased consumption costs could hardly balance equitably. But this is not a bad-news story, and while Ethiopians are paying the price at the till, the country is experiencing powerful growth on the other.

Why? Because the country possesses abundant natural resources. Ethiopia is a veritable cornucopia, and China (amongst others) wants in on the action. So they have shown up with what the country badly needs: hard cash, engineering expertise and generous assistance with infrastructure improvements. They even send in their own people and equipment to get the jobs done. No hurry of course. Pay the bill later.

The happy surprise is that the commodities boom is beneficial to Ethiopia in many ways. The country’s natural resources are only now being explored, even as known quantities of gold, potash and natural gas are being exploited beneficially. Diamond exploration is under way in Welega Province by an Australia miner, Nyota. From what I know, they are almost certain to find some there. As a result, employment numbers are up across the country and there has been a significant infusion of foreign investment over the last few years. Capital is flowing from India, Malaysia, Singapore, China, Australia and many other sources. Not so surprisingly, there has also been inflation to match the rapid growth, and this has made life difficult for the working man or woman.

The most recent inflation data show that the annual rate is above 11% even without considering commodities. This is on top of last year’s 9%, and an astounding rate of 45% in 2008. If you can believe this, people there hold U.S. dollars as an inflation hedge! This actually makes perfect sense, since inflation is relative. And when both Gold and Silver lie beyond the financial means of virtually everyone, then a store of greenbacks seems as good as gold itself. Especially when the value of your own currency is shrinking by the day.

According to the CIA fact-book, Ethiopian GDP growth was running at 8.7% for 2009 while industrial growth exceeded 10%, making Ethiopia the world’s fifth fastest-growing economy. Exports were worth a paltry $1.6 billion U.S. versus $7 billion in imports. Obviously, there is much progress needing to be made. However, as U.S. contributions to programs and aid have added to remittances from the Ethiopian diaspora, IMF forgiveness of some indebtedness and Chinese direct investment have made up the difference, bringing the country’s budget nearly into balance.

As noted above, the Chinese, among others, are taking a very serious interest in the region, which is enjoying a construction boom. According to The Economist, Ethiopia and Eritrea will be among the three fastest-growing economies in the world in 2011. Wow! Growth there is anticipated to exceed 10% annually. Surprise! And you thought it would be China, didn’t you? Nazret.com, the Ethiopian news portal, just reported Chinese investments exceeding $800 million in a wide variety of projects and activities, including cement factories that are creating thousands of new jobs. This might sound like chump change, but it is in fact very significant relative to Ethiopian export incomes.

Imagine for a moment that a single country invested in the U.S. a sum equal to half of America’s exports trade, and you can see what is happening to Ethiopia.

In the background, up to 16 new universities are being constructed or are near completion, courtesy of the German government and related agencies.

According to Wiki, nearly half of Ethiopia’s population is below the age of 14, and 60% of it is below 30. Quite a contrast to the burgeoning retiree population of Western nations.

Furthermore, health initiatives from a multitude of sources including the U.S. Government, the Gates Foundation, Canadian International Development Agency (CIDA) and a host of others are making the country stronger and healthier than ever. At 2%, AIDS rates are among the lowest in Africa and dropping due to education and health initiatives.

Relatively low wages have also enticed some of Asia’s overheated economies into outsourcing to Ethiopia. This might seem surprising, since many people think of Asia itself as one monstrous factory. Rarely do we consider that production costs, particularly in China, have spiked due to the ongoing real estate bubble, and that the Chinese themselves are eager to hold down production costs by outsourcing. Much of Africa beyond Ethiopia has been benefiting from this development.

As a result, Ethiopia has been ramping up its textile business at a feverish pace, and factories have been springing up across the country. The government of Meles Zenawi has openly welcomed new investments, and resource rights are being sold to interested parties as exploration for minerals ramps up. The government is stable and has been for many years, and the country is more or less at peace. It would be hard to find a friendlier, warmer place to visit.

But there is so much more to this story. China’s growing demand for construction materials has seen them investing in no fewer than three cement facilities recently to supply voracious demand in Asia’s big cities, but also to build dams in Ethiopia.

Dams? Yes. Few of you reading this will know that the Nile River’s main source of water – as much as 85% of it, according to one recent estimate — lies in the Ethiopian highlands. This has raised concerns that Egypt may someday receive less than what it currently believes is equitable. Ethiopia is by no means the parched wasteland that many imagine it to be. To the contrary, although almost devoid of trees, much of the country is wet and green, particularly in the highlands, and this is why hydroelectricity is such an obvious solution to the country’s growing power needs.

The rains unfortunately are not always predictable, and this has been at the root of some past disasters and famines, as irrigation has not been sufficiently developed to ensure steady agricultural productivity. But growth has been phenomenal, due in large part to the needs of a burgeoning Asia. The Chinese in particular have moved into the country in a big way and are busy building roads, dams, irrigation systems and bridges across the country.

Things are changing for the better, and quickly. Thus, in a surprise twist, what is arguably the poorest country on Earth is actually one of the world’s biggest investment and growth stories of the year.

Don’t believe me? Go and see it for yourself. Ethiopian Airlines is well known as the best carrier on the continent, sporting the newest fleet of Boeing 737’s and 777-200’s, as well as one of the safest flight records anywhere.

This year alone, Ethiopian Airlines have acquired or placed on order 38 new aircraft including ten state-of-the-art 787’s. An expansion of the Bole International Airport, which is considered Africa’s primary air hub and which hosts almost four million passengers annually, is ongoing to accommodate growing air traffic and congestion. The on-board food, incidentally, is terrific.

Back in Addis, meanwhile, my gals are feeling very stressed. Their wages are on the rise but are not keeping pace with the loss of buying power caused by the recent birr devaluations, nor with the fast pace of rising costs for nearly all of the things they need. I can send cash to help out, of course (and I do), but the girls represent only one small family in a country of more than 80 million people. What about everyone else? I worry, too, for my friends over there, and I can only hope that the recent developments eventually lead to a higher standard of living, and that Ethiopia can escape the grip of poverty that has been its hallmark for most of the past century. Industrialization and resources are clearly the keys to Ethiopia’s future, the fuel behind its recent growth story. It is still early in the game for capitalists to get involved. The country is open to investment, and even a relatively small sum can yield potentially explosive results.

If that sounds like advertising, consider that fewer than 1.5 people in 100 have cell phones, according to a recent report. That is the lowest concentration in all of Africa, and among the lowest in the world. There is huge pent-up demand for technology of all kinds, a youthful population and a growing (although still tiny) middle class.

Like much of Africa, Ethiopia has energy to burn and a desire to break from the bonds of the past. Demographics tell us there is tremendous potential there and a lot of future customers. Asian direct investment tells us that development is being fast-tracked. This is a country you will want to follow if you are an investor who is interested in emerging markets. And last, Ethiopians themselves are telling us they want to be an integral part of the global community. This is truly a growth story.

It is about the New Africa, the world’s last big frontier, and a Wild West of investment opportunities. The potential is tremendous. All of those people look hungry, all right — but in a way you probably never expected. So forget the sad, sad imagery of the past. These people are hungry to join the party!

Goldseek

Kenyan companies plan joint ventures into West Africa

by George Omondi

Kenyan businesses are looking for joint investment opportunities in West Africa to overcome tariff and logistic barriers that have locked their products out of the region’s populous states.

Under the renewed investment drive, manufacturers and raw material suppliers are seeking to set up joint production units or lease out their patents to facilitate the production of their goods in West Africa.

They said joint ventures in West Africa would ensure their goods sell in targeted markets at competitive prices, significantly raising their sales volumes.

Goods exported directly from Kenya currently face high freight charges and prohibitive tariffs of between 30 and 50 per cent that make them less competitive in western African markets.

“It has been difficult to make direct forays from this side of the world because of high freight charges and unlike the more open eastern and southern African markets, the West African market is quite closed for outside businesses,” said Mr Vimal Shah, one of the business executives eying the region for expansion.

Kenya enjoys preferential trade relations with most countries in the East and southern Africa under East African Community (EAC) and Common Market for Eastern and Southern Africa (Comesa).

But the country’s exports face higher tariff walls in western Africa where countries have organised themselves into Economic Community of West African States (Ecowas) trading bloc.

“All these market access challenges to us mean extra transport cost that end up making our goods and products less competitive in Western African countries,” said Mr Shah.

The Exports Promotion Council (EPC) —the government agency charged with developing export markets —says its past efforts to promote West Africa as an export destination has elicited slow response due to tariff, freight and logistical difficulties

“For goods from Kenya to get to West Africa, the shipment either has to go through Cape Town or Mediterranean Sea which are considered too long routes for perishable goods,” said EPC spokesperson, Mr Ernest Chitechi.

The council said it has since organised several buyer-seller meetings, and signed MOUs with the Ghana Export Promotion Council to facilitate trade development between the two countries.

Out of the 15 countries that trade under ECOWAS, only Ghana and Nigeria beep on Kenya’s export radar screen.

Exports to Nigeria dropped by 41 per cent to Sh1.9 billion last year, the same period that exports to Ghana recorded a modest growth of three per cent from the previous year to close at Sh591 million.

Last year, Kenya’s exported goods worth Sh3 billion to West Africa.

But these figures pale in comparison with Kenya’s trade with EAC partners where exports to Uganda alone —Kenya’s largest destination for exports —recorded Sh46.2 billion last year.

Over the same period, Kenya’s exports to Tanzania totalled Sh30 billion; Rwanda Sh9 billion and Burundi Sh4 billion.

“Most of the time, it is difficult to get a shipping line to move the goods, and if it is available, it takes too long for the goods to reach their destination,” said Mr Chitechi Kenya Airways has hinted at plans of putting more cargo planes on the West African route, raising hope for fresh produce exporters.

In his June investor briefing, the CEO Titus Naikuni invited exporters to take advantage of the plan.

Under the mission dubbed “Go West”, top Kenyan business executives toured Ghana and Nigeria last month, exploring joint venture deals that will allow industrial raw material suppliers and manufacturers to set up businesses in West Africa with ease.

Kenyan firms that participated in last month’s tour include Mabati Rolling Mills, Bedi Investments, Bidco Oil Refineries, Interlabels, and Pwani Oil Products.

“We went, we saw and we will definitely go back to West Africa”, said Pwani Oil Products Ltd’s Export Manager, Paul Thairu.

Business Daily Africa

Question and Answer: Troubled trade ties between Africa and the EU

The European Union and Africa (held) a summit in the Libyan capital late November with regional security, energy policy, immigration and development on the agenda. Europe's troubled trade talks with Africa ... has been raised, with the two blocs unable to agree free-trade agreements after years of negotiations.

Following are some questions and answers looking at the state of EU-Africa trade relations.

WHY IS TRADE SUCH A CONTENTIOUS ISSUE?

The European Union, the world's largest trading zone, wants its former colonies in Africa, the Caribbean and the Pacific to open their doors to European goods and services in return for duty-free access to European consumer and commodities markets. Negotiations on so-called Economic Partnership Agreements started in 2002 and were due to conclude in 2007. So far none of Africa's five regional groupings, or either of the Pacific or Caribbean groupings, has fully implemented an EPA with the European Union.

WHY DOES EUROPE CARE?

China, Brazil, Russia and India are striking ever more far-reaching deals with countries such as Angola, Sudan, Nigeria and Kenya for trade in minerals and energy. With GDP growth of as much as 10 percent in some African countries and the World Bank predicting an unprecedented economic takeoff for the continent, the prospect of a growing consumer base among Africa's billion-strong population is of keen interest to EU exporters and investors. The value of trade in goods between the EU and Africa stood at 278 billion euros in 2008, according to the European Union's statistics agency Eurostat.

WHAT DO AFRICAN LEADERS WANT?

African leaders say EPAs will swamp their states with European goods and services, destroying nascent local industry. African leaders have united against Europe, calling for the continuation of duty-free access to EU markets -- which the EU granted to poor African states on a temporary basis in 2007 -- while EPA negotiations continue. They also want an extension of EU duty-free status for more prosperous African nations such as South Africa and Nigeria, and equal tariff cuts for poor and rich African states. Failing agreement, African leaders have warned that "African countries may have to discontinue the EPA negotiations" -- a threat repeated by Libyan leader Muammar Gaddafi at the summit.

WHAT DOES EUROPE WANT?

So far the European Union has demanded that African states open 80 percent of their markets to European goods and services. The 27-country EU also wants its tour operators, banks and telecommunications firms to set up shop in Africa, and for African nations to adopt European standards on governance, the environment and competition law. Increasingly, Europe also wants access to African agriculture, commodities and energy markets. The EU says EPAs will benefit African nations by allowing them to develop their exports to Europe and its 500 million people.

EUROPE'S NEXT MOVE?

Exasperated with the stalled talks and China's growing hold on the continent, the EU may back down on its demands -- though how dramatic such a climbdown will be remains to be seen. EU trade chief Karel De Gucht has said the EU may scale back its demands on Africa's banking, telecom and other services sectors, and back down on some legislative demands.

Yet in a confidential letter to EU foreign and trade ministers De Gucht suggested more radical moves: "The issues we need to address are ... to decide either to discontinue negotiations or to accept agreements with a lower level of ambition," De Gucht wrote in September.

Reuters

China-Africa trade hits record high

Trade volume between China and Africa hit a record this year, sending out positive signals about economic and trade cooperation, experts said.

Bilateral trade to the end of November increased 43.5 percent year-on-year to $114.8 billion, surpassing the pre-crisis level of $106.8 billion for all of 2008, according to a white paper on China-Africa economic and trade cooperation released by the Chinese government.

“China’s robust economic activities, and enhanced cooperation between the two regions, have dragged bilateral trade out of the shadows of the global economic crisis,” said He Wenping, director of the African studies department of the Institute of West-Asian and African Studies under the Chinese Academy of Social Sciences.

China emerged as Africa’s largest trading partner in 2009, outpacing the European Union and the United States.

Trade structures have improved in recent years and markets have opened for each other’s products, said the white paper.

According to the white paper, China’s exports of machinery and electronic products account for more than half of the overall export volume, while the country’s imports of agricultural commodities have increased dramatically over the years.

To boost exports from Africa to China, some products from the least-developed countries in Africa with diplomatic relations with China have been exempt from tariffs since 2005.

By July 2010, the number of tariff-free products had increased to 4,700 taxable items, and is expected to grow to cover 95 percent of China’s total taxable items.

In the meantime, China’s total direct investment in Africa surged to $9.3 billion by the end of 2009, and the scope of investment has been widened from the mining sector to finance, manufacturing, tourism and agriculture, said the white paper.

“At the same time, modes of investment have become more diversified to include merger and acquisition, equity participation and others,” He said. According to He, trade and investment structures will be further optimized.

“Both China and African countries are in the process of industrialization and urbanization, which dictate cooperation will be deepened in sectors such as infrastructure, agriculture, manufacturing and technology, to continue enhancing Africa’s economic development and improving its people’s livelihood,” she said.

By the end of 2009, China had provided assistance for the construction of more than 500 infrastructure projects in Africa.

From 2007 to 2009, the country offered $5 billion in preferential loans and preferential export buyers’ credit, and promised another $10 billion of preferential loans from 2010 to 2012.

In education and training, more than 30,000 people in Africa had attended training programs provided by the Chinese government by June, covering more than 20 fields such as economics, agriculture and public administration.

In the meantime, China has been conducting activities to improve people’s livelihood in African countries, including improving medical and health conditions, carrying out agricultural cooperation and reducing Africa’s debts.

From 2000 to 2009, 312 debts of 35 African countries were cancelled by China, exceeding 18.9 billion yuan ($2.85 billion), according to the white paper.

Peoples Daily

Kenya to open first African carbon exchange

Kenya says it is launching Africa's first carbon exchange to facilitate the trading of carbon credits and help tackle climate change.

The market will enable all African countries to sell and trade their carbon credits, the BBC reported

Carbon dioxide is one of the main gases causing climate change, scientists say, and such exchanges, where polluting industries in rich countries pay for clean development projects in poor countries, are one way to offset carbon emissions.

Experts say Africa will be badly affected by climate change even though most of the greenhouse gases that cause it are produced in the West and Asia.

Kenya officials say they hope the trade in carbon credits will open up investment in the generation of renewable energy and forestry projects.

They estimate the country's largest forest, the Mau, has the potential to earn the country close to $2 billion a year over the next 15 years.

UPI

Chart of China-Africa trade

by Valentina Romei and Barney Jopson

In the debate over strengthening ties between China and Africa, trade relations are often boiled down to China’s insatiable hunger for African oil and minerals. China’s friends say this is a gross oversimplification, but the latest chart of the week (after the break) shows it’s not unreasonable.

Exports from sub-Saharan Africa to China lack diversity: 89 per cent last year were oil, minerals and other raw materials. The value of exports has grown at a staggering rate over the past decade - from $4.2bn in 2000 to $38bn in 2009 - but the high proportion of primary goods has not changed. Two things, however, get less recognition: the high concentration of exports from just a few African countries, and the nature of the trade in the opposite direction.

Overall, commerce between China and sub-Saharan Africa last year was $69.6bn, down from $82bn in 2008 due to the effects of the global economic downturn. It is already bouncing back this year.

The value of sub-Saharan Africa’s imports from China tends to be lower than the value of its exports to China, but not always and not by much: over the past decade imports were worth between 65 per cent and 105 per cent of the value of exports.

One key part of what’s heading to Africa from China is manufactured goods. The low prices of many Chinese consumer goods mean they fit neatly with African demands and help broaden the range of products African consumers can buy: particularly footwear, furniture, lighting, textiles, electronic toys and pharmaceuticals.

The countries with the largest proportion of imports coming from China are the tiny economies of Togo, Botswana and Lesotho, which are buying mainly fabrics and clothing.

But more African money is spent on machinery and transport equipment. As the African Development Bank noted in a paper in July, that is “linked to the strong presence of Chinese firms in the infrastructure sector, specifically in telecommunications, road construction and [the] construction of numerous public buildings”. Many of those Chinese companies have won building contracts linked to concessional financing from state-owned Chinese financial institutions.

In absolute terms South Africa is the biggest importer from China, bringing in telecoms equipment, computers and other goods that accounted for 26 per cent of all sub-Saharan imports last year.

Of the biggest economies, South Africa has the most balanced trade relationship with the Asian superpower: its exports of ores and precious metals helped it to contribute 15 per cent of all sub-Saharan exports to China last year.

The largest exporter is Angola and the majority of its shipments are oil. The same is true for Sudan, the second biggest exporter, which sends over 60 per cent of its exports to China, making it one of the most reliant on the Asian country. In both Sudan and Angola, Chinese state-owned companies have played a crucial role in developing the energy sector since the 1990s.

The list of top exporters is completed by the Democratic Republic of Congo, the Republic of Congo, and Equatorial Guinea - and those six alone account for a remarkable 86 per cent of sub-Saharan exports to China. Outside that group shipments fall off sharply, demonstrating how China’s mineral grab is concentrated in just a few places and is not yet a pan-continental trend.

In spite of the high proportion of oil and minerals in the export figures, the share declined marginally as Africa’s manufactured exports rose to 8 per cent of the total last year, up from about half of that proportion at the start of the decade. But most manufacturing is still about making products derived from raw materials such as copper, iron, silver and aluminium.

Many African governments would like produce higher-value products - and to encourage that China is investing more in African industrial parks and special economic zones. However, one senior US official has described China in Africa as “a pernicious economic competitor with no morals”, according to a WikiLeaks cable. If that is accurate, the China-Africa trade balance is unlikely to shift.

Financial Times

Mozambique overtakes Zimbabwe as trade partner of South Africa

by Kudzai Chimhangwa

Mozambique has taken over a large share of trade and investment with South Africa over the past years owing to Zimbabwe’s economic crisis which suffocated exports, a cabinet minister said in November.

Officially welcoming a delegation of business executives from South Africa, Tapiwa Mashakada, Minister of Economic Planning and Investment Promotion said Zimbabwe wants to reclaim its position as South Africa’s largest regional trading partner.

The delegation was in the country to explore business opportunities. “In recent years, South Africa has been more involved in trade and investment deals with Mozambique. We intend to reclaim our position over Mozambique,” Mashakada said.

South Africa has emerged as the main trading partner for Mozambique and the main source of the latter’s foreign direct investment.

Total exports from South Africa to Mozambique consisting of manufactured goods, petroleum, motor vehicles and consumer goods were valued at R13 billion (about US$1,8 billion) in 2009 while imports from Mozambique were worth R3 billion (about US$430 million) during the same period.

Zimbabwe and South Africa signed and ratified a Bilateral Investment Promotion and Protection Agreement last year as part of efforts to boost trade and investment between the countries.

Mashakada said there was need to grow investment and trade links between Zimbabwe and South Africa although he conceded that the country still had to redress some critical trade aspects.

“Zimbabwe’s economy was operating at a paltry 10% of its capacity which meant that we could not generate sufficient exports for South Africa’s market. However, we now have adequate purchasing power and boast a modicum of economic stability,” he said.

The visiting South African delegation was made up of about 40 business executives with interests in the agro-industry, mining, electrical and information technology sectors, among others.

Mashakada told the delegation that the economy is expected to grow by 8% this year buoyed by a strong recovery in the mining and agricultural sectors while the cash budgeting system will do away with recurrent budget deficits.

However, Mashakada in a separate interview pointed out that the present economic stability would only last as long as there was goodwill by all parties concerned, including government.

“The previous violations of Bippas relate to the land reform policy and property rights issues. The compensation aspect of the land acquisition policy has been the bone of contention,” he said.

“German and Dutch Bippas among others have been violated in the past with regard to lack of compensation because the government was insolvent,” he said.

Mashakada said the Indigenisation Act was not unique to Zimbabwe and was not tantamount to assets grabbing.

“The regulations are very clear. There is no ambiguity. It is debatable whether the act is good or bad but investors must know that it is not tantamount to grabbing of private assets or nationalisation,”he said.

The Standard

Gaddafi issues warning to EU over African trade

by Christian Lowe

Libyan leader Muammar Gaddafi has warned the European Union that Africa would turn to other trade partners if the EU continued to impose terms for cooperation.

Gaddafi's warning, at an EU-Africa summit attended by senior European officials, echoed complaints from some other African leaders who say Europe is trying to make them open their borders to trade but not giving enough in return.

"Our choice now is to cooperate with our brothers in the European Union but if that cooperation fails, Africa has other choices," Gaddafi said in opening remarks at the summit in Tripoli. "Let every country and every group govern itself. Every country is free to serve its own interests. Africa can look to any other international bloc such as Latin America, China, India or Russia."

A leaked internal document from the African Union in November showed some governments on the continent felt that trade deals being offered by the EU were one-sided. It said the bloc was asking African countries to liberalise their economies to comply with World Trade Organisation (WTO) rules but was not doing enough to help them develop their own economies.

"We do not benefit from the WTO and we call for its abolition," Gaddafi said. "All its interests are in opening our borders for industrial goods and killing national industries in the Third World, so I call (on everybody) not to join it."

The Libyan leader also took a swipe at the EU's practice of linking economic assistance to African countries' respect for human rights and good governance.

"We are not interested in political power. We want economic development," he said. "What is the meaning of human rights? What is the meaning of good governance?"

In his own speech to the summit, European Council President Herman Van Rompuy defended the bloc's policy on Africa.

"In a highly interdependent world economy, there are no easy recipes. But I am convinced that we can find ways of mutually beneficial cooperation, notably via the private sector. We need to transcend the state dependent economies which have performed so poorly over decades of development cooperation," Van Rompuy said.

The EU, the world's biggest trading zone, has for years been trying to hammer out free-trade deals, known as Economic Partnership Agreements (EPAs), with African countries.

But so far none of the five African regional groupings negotiating the EPAs with the EU has fully implemented an agreement. Some of those involved are saying if there is no breakthrough soon, the talks should be scrapped.

African Union Secretary-General Jean Ping, speaking at the summit in Tripoli, said the stalled agreements were "a vital issue which must be dealt with as soon as possible."

Reuters

Africa accounts for 9% of EU27 trade

After six years of steady growth, the EU27 trade in goods with Africa dropped in 2009, with exports falling by 10% and imports by one third, compared with 2008. As a result, the EU27 deficit in trade with Africa, which reached a peak of 40 billion euro in 2008, turned into a small surplus of 1 bn in 2009.

The first nine months of 2010 showed a renewed growth in EU27 trade with Africa. Exports rose from 79 bn in the first nine months of 2009 to 90 bn in the same period of 2010, and imports from 79 bn to 96 bn. As a result, the EU27 trade balance with Africa moved from in balance in the first nine months of 2009 to a deficit of 6 bn in the same period of 2010.

In the first nine months of 2010, Africa accounted for 9% of the EU27's total trade in goods. On the occasion of the third EU-Africa Summit, which takes place on 29 and 30 November 2010 in Tripoli in Libya, Eurostat, the statistical office of the European Union, issues data on trade in goods between the 27 Member States of the EU and 53 African countries.

EU-Africa Partnership

ECOWAS targets 40 percent intra-regional trade by 2030

by Sunday Williams

The ECOWAS Commission said it is targeting an increase in intra-community trade in West Africa to 40 percent by 2030 with 50 percent share of the region's trade in manufactured goods and services.

The Commissioner for Trade,Industry,Customs and free movement, ECOWAS Commisson,Mohammed Daramy made the remarks in Abuja at the 4th meeting of the Regional and central steering committees on the implementation of the West Africa Quality Porgramme (WAQP) The target is part of a recently adopted 20 year action plan (2010-2030) known as West Africa Common Industrial Policy (WACIP) by the ECOWAS Commission.

Experts have expressed worry over the low level of trade between the West African countries which is currently very low, at about 4 percent.

The commissioner said that the commission also targets a progressive increase in the manufacturing industry's contribution to the regional GDP from current average of 6 to 7 percent to over 20 percent by 2030. The commission also targets increase in export of finished and semi-finished goods from West Africa to the global market from the current 0.1 percent to 1 percent by 2030.

Daramy said that in order to realize the above milestones, they must promote the development of quality standards for raw materials, semi-finished and finished goods.

"Without a strong quality  infrastructure at national and regional levels, it will be difficult for us to progressively increase our manufacturing industries contribution to the national as well as the regional GDP," he said. He said that the development of West Africa Quality infrastructure is a long term vision that will assist in focusing on strategic sectors for industrial development, taking into consideration challenging issues such as competiveness, sanitary and phyto-sanitary measures in West Africa.

He said that the harmonized quality control system as a regional strategy can be the stimulus to foster more trade both for commodities and manufactured products.

allafrica.com

Euro-zone troubles a ‘wake up call’ signalling delay for African monetary union

by David Marsh

 For many years, the legacy of the colonial past and their own exemplary economic performance after the Second World War gave the Europeans cult status in money matters across Africa.

Now, with the strains of the “one size fits all” monetary policy gnawing away at the entrails of economic and monetary union (EMU), could all this be about to change? Quite a turnaround here. A continent that for decades has been a byword for grandiose economic mismanagement is now starting to ask whether Europe’s governance problems make it the right model to follow.

These reflections have been prompted by a week of discussions with central bankers and economists from six southern and eastern African countries. In the past, European monetary thinkers have had a powerful reputation here -- more conservative and less obsessed by geopolitical fads than the Americans, more experienced and reliable than the Asians. So in the 1990s, in the wake of the great changes wrought by the demise of the Soviet Union and the transition to post-apartheid South Africa, it was natural that the Africans turned to Europeans for direction.

The buzzword in a number of upwardly mobile countries was regional economic integration. Small wonder that southern and east African countries sought guidance from the new dynamic EMU model led by Germany and France.

All the greater recently has therefore been the consternation of African economists and technocrats at the increasing difficulties in the euro area. In particular, the path towards EMU for the five states of the East African Economic Community, mapped out with the help of the European Central Bank, looks less straightforward than imagined.

The competitive difficulties of the peripheral EMU members are a “wake-up call” for Africa, one official told me. From central bankers across the region, I was asked many questions. How can better-off states in monetary union protect themselves from contagion risk by less well-managed members? Doesn’t a fiscal union need to be brought in at the same time as monetary union? How do African politicians not at all used to sharing power intend to handle the losses of sovereignty inevitable in EMU? Do all monetary unions lead inevitably to two-tier systems in which creditor nations take over the debts of errant states, in the way that Germany is being asked to do in Europe? More generally: are permanently fixed exchange rates really consistent with poor countries’ development objectives?

There is a positive side to all this soul-searching, though. For forward-looking African nations, now led to a far greater extent that in the past by leaders schooled in economic thought and trained in western universities, the ups-and-downs in Europe are occurring at an opportune time. Rather as in a laboratory experiment, developing countries now have a ringside seat to analyze the successes and shortcomings of the European monetary experiment and learn appropriate lessons.

Many building blocks needed in individual countries preparing for African Monetary Union -- improved fiscal performance, enhanced trade integration with neighboring countries, modernization of financial markets -- are necessary requirements for future growth. So Africa’s EMU drive can catalyze useful developments in economic policy that need to be done anyway.

My main conclusion from comparing European and African experience? African EMU needs to come only after a long period of proven economic convergence: what the Europeans used to call the “coronation theory” of monetary union. To avoid the kind of mishaps now seen in the Old Continent, European tenacity needs to be combined with African patience.

Marketwatch

Zimbabwe exports remain depressed

by Tawanda Musarurwa

Zimbabwe's exports levels have remained depressed for the year as the country recorded a decline in trade with one of its major partners, South Africa.

According to statistics from the Confederation of Zimbabwe Industries 2010 manufacturing sector survey, Zimbabwe’s external trade has failed to improve, even as the economy has shown signs of growth during the period

"Levels of exports remain depressed; in terms of export markets Zambia continues to be the leading export destination. Interesting to note is the drop in market share of South Africa, and a considerable increase in market share to Mozambique, from 5 percent in 2009 to 11 percent in 2010," said CZI.

Zambia remained the leading export destination for the year, although there was a slight decline from last year from 31 percent to 30 percent.

Botswana’s market share improved from last year’s 12 percent to 15 percent as it moved to rank second as Zimbabwe’s export destination.

Malawi was in third as exports to that country improved from 13 percent to 15 percent.

More telling, however, was the decline recorded in the South African market, which went down from 20 percent to 14 percent during the period.

South Africa has traditionally been one of Zimbabwe’s major trade partners, and earlier in the year the two countries signed a Bilateral Investment Protection and Promotion Agreement to enhance trade between them.

Despite the decline in Zimbabwe’s exports to South Africa, the former remains a key importer of South African products, a factor that is driving the anticipated trade deficit for the upcoming year.

According to preliminary figures released by the Ministry of Finance, imports will remain relatively unchanged at about US$3,5 billion while exports are expected to increase to US$2,3 billion.

The projected trade imbalance is resulting from the poor performance of industry, whose average capacity utilisation levels have improved by 10 percent, according to CZI.

CZI has said that the majority of companies are failing to export mainly due to the high costs of production, which have resulted in locally manufactured products being uncompetitive on the international market both in terms of cost and quality.

At the same time many companies have resorted to producing for the domestic market mainly due to low capacity levels.

This has been compounded by the lack of working capital to finance orders due to the unfavourable borrowing conditions on the local market and unavailability of external lines of credit.

The Government has, however, undertaken a number of initiatives to address the prevalent market illiquidity.

This includes establishment of the Zimbabwe Economic and Trade Revival Facility that is co-funded by the Government and the Africa Export and Import Bank, the Botswana line of credit and the Common Market of Southern Africa-South Africa line of credit.

There is, however, need for the country to generally enhance its overall export strategy.

CZI noted that other factors that hindered companies from exporting this year include inadequate knowledge of export markets, failure to secure orders, unavailability of raw materials and in some instances companies cited non-production.

Economists contend that a ramp up with regards to the country’s export sector can boost economic growth, not least by improving prevailing illiquidity in the market, which has a cyclical effect on other critical economic areas.

The Herald

Imports force Zimbabwean clothes-makers to abandon trade

by Tarisai Tahungai and Victoria Mtomba

Evelyn Mbariro operated a small sewing business in Mbare, Harare’s oldest township, making various types of clothes for the city’s low and middle-income earners.

The backyard factory, set up by converting three of the rooms in her five-roomed house into workshops and a showroom, produced everything: from ladies’ formal costumes and school uniforms to “designer” clothes, some of which found their way to downtown retail shops in the city.

But that was then.

Around March last year, the business went the way of Cone Textiles and David Whitehead, folding operations and offloading employees; her 19-year old child, an auntie’s son and herself. Mbariro said the clothing-manufacturing project was no longer viable.

Firstly, the influx of second-hand clothes from China and other south-east Asian countries smuggled in containers has virtually wrested the market that had traditionally secured a livelihood for her and other downstream players.

Secondly, the type of clothes she makes is now “out of taste”, imported low-cost second-hand clothes have a trendy touch in terms of design and style.

“It’s difficult for us to compete with the second-hand clothes because they are cheap,” Mbariro said. “The local garments are very expensive. It’s not difficult to produce the same clothes, but it’s pointless because it costs twice or thrice more to produce the same apparel sold by local boutiques.”

Mbariro said the import pressure started five years ago and eventually squeezed local traders out of the market in March last year, a month after the multiple currency regime came into force.

Established in 2000, the owner-managed firm is one of the few businesses that had survived Operation Murambatsvina, a government-led clean-up campaign that razed buildings, cottages and industries not approved by the local council in 2005.

Although the market proved more destructive than the legal crackdown, there is something that they couldn’t destroy, the spirit of entrepreneurship.

But recovering from the setback and diversifying away from clothing was not a stroll in the park from that low capital base, tight margins and depressed demand, the early offshoots of dollarisation. It took her five months to learn a new game and to regain satisfaction and confidence that the business was taking her somewhere.

She has now opened a petty-commodity stall at Mupedzanhamo, Harare’s largest open-space market for second-hand household wares and clothing.

The “table” as it is called, mostly deals in beauty accessories such as face creams. It also sells old newspapers and wallets. Her neighbour and competitor, Chipo Mahukwe, also trades in the same commodities.

In this market, newspapers have many lives after print. Old newspapers are used as packaging material for a number of items.

An old copy of NewsDay, which has a face value of $0,50, sells at $0,01 or R0,5.
Mahukwe says her daily turnover from the sales averages $3-$5.

“I have been in this business since 2002, but have realised that there is no money in the market and business is difficult,” said Mahukwe.

NewsDay

Rwanda's coffee, tea and mineral exports rise

by Berna Namata

A large increase in Rwanda's exports is expected to narrow the country's widening trade gap this season.

The gap between exports and imports is expected to end with a moderate deficit of $9.4 million this year from a surplus of $144.8 million in 2009.

Official figures from the Central Bank show that in the first nine months of this year, Rwanda exports increased by 30.5 per cent, while the volume rose by only 3.6 per cent.

Last year the country's trade deficit worsened mainly due to lower exports and higher imports.

The country's external current account deficit increased from negative $230 million, approximately five per cent of GDP in 2008 to negative $381.5 million, approximately seven per cent of GDP in 2009.

While export earnings at $193 million were $74 million lower than 2008 total earnings as a result of weaker global demand and low domestic production, the country's import bill grew by nine per cent to $963 million.

The increase in the import bill was attributed to the country's joining of the EAC Customs Union in 2009.

Finance Minister John Rwangombwa said export value has been largely boosted by overall improvement in commodity prices on international markets.

"We had good investments in coffee. We are seeing the results now. We have also seen an increase in tea," he said.

Coffee, tea and minerals remain dominant in the country's exports accounting for 67.9 per cent of the total export earnings in the first nine months this year.


Tea exports performed well in both value and volume increasing by 20.9 per cent and 18 per cent respectively mainly due to high international prices, from an average of $2.50 per kilogramme to $2.56 per kg.

Coffee exports registered a sharp rise between January and November largely due to a positive trend of prices for the crop which gained between 35 per cent and 40 per cent on the international market.

According to Ocir Café, the Rwandan coffee authority, coffee exports in the 11 months of 2010 rose by 27.45 per cent from Rwf22.1 billion ($37 million) to Rwf30.4 billion ($51 million) in 2009.

In volume terms, shipments from Rwanda reached 20,000 metric tonnes compared with 16,000 metric tonnes.

Mr Rwangombwa said the country is in the advanced stages of unveiling a national export diversification strategy to boost the sector.

The strategy would focus on increasing the value of existing export sectors and developing new sectors such as horticulture and services.

"This is one area where we expect to see increased exports and tourism where we are making big investments." he added.


Exports have also been boosted by growth in minerals, which currently account for 30 per cent.

Last year receipts from minerals dropped by about 40 per cent as volumes dropped by 13 per cent while prices dropped by 13 per cent compared with 2008.

This year mineral exports are expected to fetch about $60 million in revenue compared with $54.6 million last year.

First quarter statistics from the Central bank indicate that the mining sector grew by 23.4 per cent this year with a consolidated turnover of Rwf9.29 billion from Rwf7.53 billion in the first quarter of 2009 as a result of increase in international prices of minerals.

"Prices have been improving and with relatively less volume, we may not get a drop in the money we get," Rwanda Geology and Mines Authority director-general Dr Michael Biryabarema, said recently.

In the first half of this year, the mining sector grew by 37 per cent compared with only 2.9 per cent recorded last year.

While the value has seen a modest increase, Dr Biryabarema said the sector has seen a drop in volumes mainly due to the decline in demand and international prices experienced last year.


This led to a slowdown in local production. Volumes of minerals fell by 16.5 per cent on average in the first 10 months of this year.

In 2008, the sector grew by 35.4 percent before dropping to 13.8 percent last year.

However, with relatively good prices experienced this year, Dr Biryabarema said production is expected to increase.

According to Dr Biryabarema, the recently enacted American legislation on "conflict minerals" poses big challenges for the sector.

The legislation defines conflict minerals as coltan, cassiterite, wolframite, gold and their derivatives, which are financing conflict in DRC or "an adjoining country".

The key minerals produced in Rwanda (cassiterite, wolframite, coltan and gold) all fall under the above category.

"It does affect (Rwanda) because it says within nine months from July of this year companies buying metals from Rwanda or countries surrounding Congo should be able to verify up to the mine level; the challenge is that most of our producers are not yet to get to that level," he explained.

While the government had put in place measures to ensure that all the minerals originating from the country are accounted for and mined with international good practice, Dr Biryabarema said the timeframe given under the legislation is not sufficient.

"We had earlier started a system of certification of bringing our mining industry up to date with the modern way of production but we were still at pilot level." he observed.

The legislation requires that consumers and manufacturers including companies like IBM, Intel, Motorola, Apple ,HP and others to determine the mine and location of origin in an effort to ensure that minerals are conflict free.

Rwanda produces about 5 percent of the world's tantalum, used in electronics, and about 4 percent of global tungsten production, according to the latest available information on the website of the U.S. Geological Survey.

allafrica.com

DR Congo decries loss of favored US trade status

The Democratic Republic of Congo is criticizing the loss of its status as a favored U.S. trading partner.

An order from President Barack Obama stripped the DRC of its status as a beneficiary of the African Growth and Opportunity Act.

The designation gave Congo specific trade advantages to encourage economic development and reforms.

U.S. officials say the move stemmed from large-scale human rights abuses by the Congolese armed forces, especially rapes.

DRC government spokesman Lambert Mende said in Kinshasa that the U.S. move was totally unjustified. Mende says his government does not believe Congolese forces are accomplices in atrocities against civilians.

The U.S. and United Nations have accused Congolese forces of mistreating civilians in Congo's volatile northeast.

Numerous rebel and militia groups are active in the region. Repeated efforts by U.N. and Congolese forces to shut down the groups or integrate them into the military have largely failed.

The African Growth and Opportunity Act is designed to promote democracy and prosperity in Africa's poorest countries. The act gives the countries greater access to the U.S. market as long as they make democratic advances.

VOA

Illegal human trade increasing in Kenya

by Carol Tomno

Globally the human trafficking trade is on the rise. Despite being an underground trade it is raking in billions of dollars annually. Kenya which is famous for its tourist attractions and world beating athletes is slowly having its image tainted by booming human traffic trade. This year the country has seen the human traffic trade increasing.

The East African country is turning into a destination and transit point for victims of human trafficking and smuggling. Human trafficking has become one of the most lucrative illegal businesses in the country.

The victims of the trafficking syndicate are men in their early thirties and teens mainly from neighbouring Ethiopia .They are being lured by prospects of better jobs in south Africa, and are turning easy prey for human traffickers who are out to make quick money .The illegal trade is part of a lucrative human trafficking and smuggling business that has taken root along the Kenya-Ethiopia border. It involves desperate Ethiopians out to join their relatives who are refugees in the western world or those looking for greener pastures in South Africa.

Victims of human trafficking believe those helping them flee from their countries will not cause them any harm; they instead see the possibility of better lives ahead. But most of them have gone through harrowing experiences or ended up in jail. Many who have been arrested while waiting to go to the countries of their dreams have been found living in deplorable human conditions.

But many are willing to persevere if only to achieve the dreams of better life elsewhere. ‘I wanted to travel to South Africa to secure a better job and better life like my other friends and relative said Abebe. Speaking in his native language, he said through an interpreter that he was introduced to the human traffickers by a friend. But his life was turned upside down after he was arrested and handed a three month sentence. All his dreams and the 50,000 shillings he spent to get smuggled into the country has gone up in smoke. He had seen the possibility of travelling to Nairobi and thereafter to South Africa but police raided a house where he was hiding with others and arrested them. He will be repatriated back to Ethiopia after serving his jail term

Other victims interviewed said they had given all their money to the Human smugglers. Those who have had their dreams cut short by police complained that the traffickers had failed to protect them from the police arrest. International Organization for Migration (IOM), an anti-human trafficking organization says Kenya's porous borders and war in the neighbouring countries is fuelling the trade.

This year alone, police in Nairobi have rescued hundreds of people being trafficked through Kenya. IOM's says most people who are trafficked come from Tanzania, Rwanda, Ethiopia, Somalia, Uganda, Congo and Kenya itself.

Victims are trafficked from these countries after with the promise of a better life but they end up working as slaves with little or no pay wherever they are taken. It is complicated by the fact that most of them can only communicate in their native languages. Kenya is now in the process of enacting laws to protect victims and counter human trafficking.

Another trade that seems to be thriving in Kenya is the illegal trade in body parts. Recently Police in the country unearthed a syndicate in which human body organs are reportedly sold across borders in Eastern Africa. Authorities said the illegal trade involved mortuary attendants and workers of funeral homes mainly in the capital city Nairobi.

This year several people were arrested by the police for transporting male genitals to a neighbouring country, after they laid an ambush following a tip-off. The suspects included an employee of a local funeral home.

But perhaps the biggest shock was from a 28 year old Kenyan Nathan Mutei who attempted to sell his 20 year old albino friend Robinson in neighbouring Tanzania for $250,000. Police said investigation had shown body parts have a booming market in neighbouring Tanzania, where more than 50 albinos have been killed in the last three years. Remains of albinos are sold to buyers who believe the body parts will cure them or make them rich.

Globally, it is estimated that human trafficking trade, a new form of modern slavery rakes in up to about $2.9 billion in profits. Bizarre as it may seem, the sale of Human organs equally rakes in Billions of Dollars.

Africa News

Zambia lifts ban on Kenya milk

by Judith Akolo,

Zambia has finally lifted a six year ban on Kenya milk.

Speaking on the sidelines of the 29th Common Markets of Eastern and Southern Africa - Comesa Council of Ministers meeting in Lusaka, Trade Permanent Secretary Eng. Abdulrazaq Adan Ali said the two countries have now reached an understanding after concerted efforts to see an end to the ban on milk exports to Zambia.

"The long running misunderstanding between us and Zambia on standards for milk that we export to the country has finally ended and I am excited about this new development that will see Kenyan milk processors access the lucrative Zambian market," said Ali.

Zambia set up standards for milk grading rating from one to three and maintained that Kenya could only export milk of the first grade.

Legislation to this effect was passed that saw Kenya lose a foothold in the Zambian milk market.

Zambian Vice President George Kunda said owing to the fact that the private sector in the region is strong, it was crucial that countries in the Comesa sub-region continued to forge ahead with the regional integration plans and remove the trade restrictions.

Comesa Secretary General Sindiso Ngwenya attributed the decrease in intra-Comesa trade to a fall in the demand for commodities including tea and copper by the importing countries.

While calling for structural transformation of economies in the Comesa bloc, Ngwenya said this will help in cushioning the economies from external shocks hence the need for market integration.

Ngwenya noted for integration to succeed there would be need to invest in cross boarder infrastructure networks.

"This requires that member states vigorously mobilize domestic and external resources to invest in among others in cross border infrastructure networks," he said. The Secretary General maintained that even as

Comesa moves into a customs union there was still need for a regional policy that supports micro, medium and small enterprises noting that it is the SMEs that ensured the economies in the region remain resilient in the face of external shocks as it happened in 2009 economic meltdown.

The outgoing head of delegation of the European Union Dr Derek Fee said the EU has a £4 million for the Global Climate Change Program that will be used in helping the East and Southern Africa region put in place programs to address impacts of climate change in the region, through adaptation and mitigation measures.

Kenya Broadcasting Corporation