Africa becoming safer for investment, trade

by Paul J Davies

Sub-Saharan Africa is becoming a safer place for investment and trade as political risk around the world falls in spite of the economic turmoil unleashed by the financial crisis, according to an insurance industry analysis.

Kenya, Mozambique, Rwanda, Uganda and Zambia counted for five of 11 countries where the risks associated with doing business have fallen this year, according to the annual study by Aon, one of the world’s biggest insurance brokers, and Oxford Analytica, an academic consultancy.

It also highlights how each country fares for particular risks such as sovereign default, exchange transfer – or getting payments out of a country – war, civil unrest, legal risk and political interference.

(FT.com is publishing an interactive version of the annual political risk map in partnership with Aon for the first time.

The map shows how the overall risk of investment loss and non-payment of bills or debts due to political or civil disruption in individual countries has changed over the past seven years.)

Financial Times

Africa, continent of new consumers beckons

by Peter Wonacott

There's a new gold rush under way for the African consumer, a campaign that spans the continent and aims to reach an emerging middle class. These are the people who have begun to embrace cellphone messages, restaurant meals and trips down supermarket aisles.

In Kenya, a battle between units of Britain's Vodafone Group PLC, and India's Bharti Airtel Ltd. has driven down the consumer's cost of a text message to a penny. Yum Brands Inc. of the U.S. recently said it wants to double its KFC outlets in the next few years to 1,200.

And Wal-Mart Stores Inc. has agreed to pay nearly $2.5 billion to buy 51% of South Africa's Massmart Holdings Ltd., with plans to use the discount retailer as a foothold for continental expansion. Andy Bond, Wal-Mart's regional executive vice-president, describes the potential as a "10- to 20-year play."

Some analysts believe a billion-person continental market already has arrived. Consultancy McKinsey & Co. says the number of middle-income consumers—those who can spend for more than just the necessities—in Africa has exceeded the figure for India. The firm predicts consumer spending will reach $1.4 trillion in 2020, from about $860 billion in 2008.

While Africa's resource wealth continues to lure the bulk of foreign investment, the rise of that new consumer class is beginning to shift the balance. From 2000 to 2009, foreign direct investment to Africa increased sixfold to $58.56 billion, according to the United Nations Conference on Trade and Development. And that includes a sharp drop during the global financial crisis, from $72.18 billion in 2008.

A growing percentage of foreign direct investment has been going to sectors such as manufacturing and services, with the value of mergers and acquisitions in the manufacturing sector hitting a record $16 billion in 2008.

While overall investment in Africa slowed in 2009 amid the global economic downturn, investment in the services sector picked up, boosted by Vodafone's $2.4 billion increase in its stake in South Africa's largest mobile-phone operator by subscribers.

High commodity prices have helped sustain robust expansion in Africa's resource-rich economies. And with that, better infrastructure, improved governance and the creation of jobs through private investment have helped drive the growth of the middle class.

The International Monetary Fund estimates that gross domestic product in the 47 countries of sub-Saharan Africa rose 5% last year and forecasts 5.5% growth for this year.

But there's still a long way to go before Africa becomes the next Asia. Zimbabwe's economy contracted by half from 2000 to 2008, a period of sustained political turmoil for a country that once was the breadbasket of southern Africa. And cocoa producer Ivory Coast is embroiled in the continent's latest election dispute, with two candidates claiming to be president.

Poverty remains rampant. And Africa ranks at the bottom of the World Bank's Ease of Doing Business survey, which takes into account such things as taxes, enforcing contracts and protecting investors.

Many African governments are under pressure to create jobs, even if it requires giving foreign companies a greater role in domestic economies.

That's a major hurdle for African governments still grappling with a colonial past. From the 16th to the early 20th centuries, Africa was the source of an estimated 11 million slaves in Europe and the Americas.

Trevor Manuel, the head of South Africa's planning commission, says the sometimes-arbitrary boundaries set by former European colonial powers have disrupted efforts to knit together economies even in places, like West Africa, where people share a common language. "Rationally, we should be one market," says the former finance minister.

A study last year on West African transportation by the U.S. Agency for International Development found that Togo had 5.7 checkpoints per 100 kilometers, at which a total of $25.62 in bribes were demanded resulting in more than two hours of delays. In neighboring Benin, the checkpoint waits weren't as long but truck drivers had to pay about $95.03 in bribes per 100 kilometers.

As a result, some veteran Africa watchers are skeptical about how quickly a bet on the continent's consumer will pay off.

"Where is the money tree? Where is this consumer fruit?" asks Duncan Clarke, chairman of Global Pacific & Partners, an investment advisory firm specializing in oil and gas.

In the near term, Mr. Clarke and others believe Africa's most promising opportunities won't be found in its new shopping malls but beneath its soil and sea beds, where big oil and global miners have long toiled.

Many consumer giants are more sanguine. Drinks company Diageo PLC sells Guinness stout, Smirnoff vodka, Baileys liqueur and Johnnie Walker whiskey in more than 40 countries across Africa. Chocolate makerNestlé SA, which built its first plant in Africa in 1927, has more than two dozen factories on the continent.

Growth is changing the complexion of countries where these companies operate. In Ethiopia, which still receives about a billion dollars a year in U.S. aid, there's an expanding niche of young urban professionals. The country's economy has been growing at a double-digit clip powered by services, agriculture and infrastructure building for the past half-decade.

The growth has drawn back the Ethiopian diaspora, who had fled the famine-prone country. They are returning now with expertise and capital.

"I do believe we are on the cusp of a major transformation," says Eleni Gabre-Madhin, a former World Bank official who now heads Ethiopia's first commodities exchange.

Wall Street Journal

Emerging Africa expected to see rise in investment

by Shawn Ladd

Having demonstrated resilience during the global financial crisis, Africa’s emerging market countries have good prospects for 2011.

Foreign direct investment, particularly from Africa’s new trading partners in Asia, is expected to strengthen and demand for African bonds is set to increase.

Such diversification of financing sources for much-needed public investment would be welcome, but would also require a coherent macroeconomic policy and foreign exchange regime to cope with capital flow surges, especially if they have historically been prone to debt problems.

Advanced-industrial-country policy measures, albeit needed to shore up their own growth prospects, have led to historically low yields and, in some cases, significant increases in public debt. These trends, coupled with strong growth prospects in many emerging markets, have led investors to look further afield.

Economic analysts, investors, and the media are increasingly able to single out countries in sub-Saharan Africa with good track records and prospects that inspire investor confidence, such as those globalization researcher Steven Radelet has dubbed “emerging Africa” (see Box 1).

Box 1
Radelet’s 17 emerging African economies


Countries that posted per capita economic growth of more than 2 percent for the period 1996–2008:

Botswana
Burkina Faso
Cape Verde
Ethiopia
Ghana
Lesotho
Mali
Mauritius
Mozambique
Namibia

Rwanda
Sao Tome and Principe
Seychelles
South Africa

Tanzania
Uganda
Zambia

In turn, half a dozen African countries that had plans to tap international capital markets before the crisis hit in 2008 are dusting these plans off and seeking private financing, notably for ambitious infrastructure investment programs. This development will contribute directly to building critically needed African infrastructure. Establishing a benchmark bond yield will also help speed the development of capital markets and financial services for the African private sector.

But while such financing is welcome, it also comes with at least two requirements. First, countries will need to manage new debt carefully, limiting market financing to high-return projects, to avoid the risk of future debt crises. Second, these emerging African countries, as many emerging market economies have done before, will confront the task of making their economies robust to capital flow surges in the face of historical volatility.

As discussed in the IMF’s Regional Economic Outlook for sub-Saharan Africa in October 2010, African trade is already shifting toward the dynamic emerging markets, notably China. Trade between China and Africa has been expanding rapidly, growing by an average of 30 percent a year over the past decade, and likely exceeded $100 billion in 2010.

These new partners will continue to show strong demand for goods that Africa can supply, and will be alert for opportunities to invest directly. For Africa, the key priorities will be negotiating fair and durable deals with big multinational firms and making the best use of the revenue windfalls, especially when the resources are nonrenewable

Revenue authorities and finance officials of 18 African countries gathered in Kampala, Uganda in mid-2010 for an in-depth, two-day conference on oil revenue management, cosponsored by Norway’s Oil for Development program. At the conference, the IMF Fiscal Affairs Department (FAD) launched The Taxation of Petroleum and Minerals: Principles, Problems and Practice, a handbook that provides analysts and decision-makers the essential foundations of resource taxation.

FAD’s Fiscal Analysis of Resource Industries (FARI) Initiative has a unique collection of natural resource laws and agreements from around the world, covering a wide variety of commodities. FARI experts use this knowledge to construct output/price/cost scenarios, alternative tax or financial arrangements, and revenue outcomes, so that African authorities can negotiate fair, durable and competitive agreements.

In recognition of the growing number of new natural resource projects in Africa, the IMF Institute, in cooperation with the Bank of Algeria, organized a High Level Seminar on Natural Resources that brought together academics, civil society representatives, and veteran officials from natural resource producers for a frank discussion of experience, good and bad, of natural resource revenue management. The IMF Institute will distill this into a book and has already launched a new course on the Macroeconomics of Natural Resource Management for member country officials.

With support from development partners, the IMF will this year substantially step up its technical assistance in tax policy and administration and in managing natural resource wealth by launching two new trust funds.

With new financial resources—from windfall natural resources revenues, new-found access to private capital, increased tax effort, or additional official development assistance—African countries can fund transformative investments. Solid investment projects, especially in transportation and power, could radically improve growth prospects and the ability to efficiently deliver public services that contribute to attaining the United Nations’ antipoverty Millennium Development Goals.


The needs are massive: the World Bank has estimated that in sub-Saharan Africa alone the total financing needed is $93 billion a year, of which a third remains unfunded.

Besides more financing, tackling the infrastructure gap will take a concentrated effort to improve how public investment projects are selected and managed. Many African countries have only recently emerged from comprehensive debt relief and will need to be mindful of the debt-sustainability ramifications of new financing. However, the IMF’s new debt limits policy offers additional flexibility to countries with IMF-supported programs, tailored to their debt management capacity.

If growth in advanced industrial and dynamic emerging economies falls short of expectations, the effects will be felt in Africa. This is potentially worrisome because most African countries have yet to rebuild the policy buffers that helped to mitigate the adverse effects of the last crisis. Rebuilding these buffers is therefore urgent.

Although the overall inflation outlook remains moderate, there are notable upside risks in food, fuel, and other commodities, suggestive of a rerun of the 2008 food and fuel price crisis that was only extinguished by the global financial crisis. These risks call for continued effort on agricultural policies on the supply side, and efficient social safety nets on the demand side.

Notwithstanding the rapid gains of the last decade, poverty, often extreme, remains pervasive in sub-Saharan Africa. In far too many places, more rapid growth has not yet translated into local employment opportunities, a better social safety net, or a higher quality of life. In addition, weak governance, limited administrative capacity, or political instability (and even outright conflict) have suppressed or reversed per-capita-GDP gains.

In 2011, the IMF will continue to assist its African members to make their macro and foreign exchange policies robust to capital flows, to manage the burden of new debt, and to seize new natural resource and infrastructure investment opportunities.

IMF

Africa-India trade to be at $ 57 billion in 2012

India's Assocham Gujarat Council has projected bilateral trade between India and Africa to be around $ 57 billion in the year 2012 from current levels of close to $ 50.62 billion.

Releasing the Assocham study on “Indo-Africa Business Trade” here today, Bhagyesh Soneji, Chairperson, Assocham Gujarat Council, said the study has pointed out that quality wheat and rice and some varieties of fruits would occupy a larger space in Indian export consignments to Africa in the coming years.

The study shall be debated at the Assocham summit on “Business Opportunities with the African Countries” in Ahemdabad and would be participated by diplomatic representations from African countries.

The two-way trade between India and Africa jumped to current levels of $50.62 billion from $ 45 billion in 2009-10, rising rapidly from around $ 40 billion in 2008-09.

Soneji further said that out of the projected two-way trade between India and Africa, share of agri commodities can be around $ 15-16 billion by 2012.

Africa needs massive investment in supplemental agricultural activities like irrigation, storage, transport infrastructure and better access to other markets for inputs like fertilizers, seeds, planting materials and credit.

According to Assocham, as many as 450 Indian investors in Ethiopia alone, with investment capital of about $4 billion, have invested in areas of mining, floriculture, horticulture, construction, manufacturing, textiles, leather etc. indicating the huge potential that Africa harbours.

Commodityonline

New biz expansion: Hello Africa, India's calling

by Tom Maliti and Bashir Adigun

Millions of mobile phone subscribers in Africa saw the icon on their phone screens change from Kuwaiti company Zain to Indian company Airtel last fall. The change means little to the average customer, but for the continent, it's another sign that India is moving in.

The expansion by Bharti Airtel into 16 African countries underscores the rise of India in Africa, at a time when much of the focus on foreign investment here has been on China.

The Indian government is raising its diplomatic profile in Africa, with Prime Minister Manmohan Singh and his Cabinet leading several business delegations in recent years. And Indian companies are striving to keep up with China's business profile in Africa, taking advantage of historical ties with the continent.

"I think one of the things that India doesn't want to allow to happen is to get behind in this kind of engagement," said Sanusha Naidu, research director at the Britain-based Fahamu organization, an advocacy group tracking African issues.

Naidu said India's renewed interest in Africa has not received as much attention as China's because India is not seen as a threat.

"It is seen as a democratic state," Naidu, a South African, said. "It doesn't have a communist regime. All that plays in favor of India."

India and China are vying for Africa because of the bottom line: Africa represents new growth.

"This is the last growth continent in the world. Europe is a done industry. The U.S. is a done industry. Southeast Asia is old," said Sunil Mittal, founder and chairman of Bharti Airtel. "Our model is not suitable for a matured market. We need growth and Africa is the right place to grow."

The International Monetary Fund said in October that sub-Saharan Africa will register the second-highest growth rates in the world in 2011, behind only Asia. The IMF said sub-Saharan Africa's economic growth rate will be 5 percent in 2010, compared with 2.5 percent in 2009. This year, the IMF projects Africa's rate will be 5.5 percent.

The relations between India and Africa are centuries old. In the 1960s and 1970s, India helped newly independent African states by training them at Indian universities and other institutions. Indian conglomerates such as the Tata Group have had a presence in Africa for decades.

But India is now changing its relationship with Africa from the political, such as advocating an end to colonialism, to the economic. In recent years, some Indian companies have expanded their business in Africa, propelling what were once small operations into major players. New companies have also moved in. Among them are:

-- In October 2008, Indian conglomerate Essar Group launched a mobile telephone company in Kenya, in its first investment in Africa. Since then, it has acquired mobile telephone companies in Uganda and the Republic of Congo.

Essar Oil, India's second-biggest private oil firm, entered an agreement in 2009 to acquire 50 percent of Kenya Petroleum Refineries, which serves three countries in east and central Africa. Last year Essar won the bid to acquire a 60 percent share in the state-owned Zimbabwe Iron and Steel Co.

-- In 2005, Karuturi Global, an Indian agriculture company, bought 15 hectares in Ethiopia to grow roses for export, an investment of about $1.9 million. Karuturi has since grown that investment to have 75 hectares of roses. In 2007, it bought one of the largest flower farms in Kenya, in a deal valued at about $65.5 million. In the past two years, Karuturi has acquired another 311,700 hectares in Ethiopia for an undisclosed amount of money.

-- Indian drug companies Cipla and Ranbaxy have been a lifeline for years for millions of Africans who are HIV-positive, because they produce far cheaper generic anti-retroviral drugs than the branded drugs from European and American companies.

Ranbaxy, which moved into South Africa in 1996, now has 10 full-fledged subsidiaries or offices across Africa. This year, it is opening its second manufacturing facility in South Africa. Cipla also opened a new manufacturing facility in South Africa in September.

Along with business, India is playing a philanthropic role in Africa, while at the same time raising its profile. During a summit with African leaders in April 2008, India pledged more than $500 million in grants for development projects. It also pledged to increase by more than $2 billion its lines of credit to African countries and regional economic groups.

The summit was India's first with African leaders. However, China has held three such summits since 2003, where it has pledged loans and infrastructure projects much bigger than what India has promised. In its most recent summit in November 2009, China pledged $10 billion in loans over a three-year period.

In October, India's Commerce and Industry Minister Anand Sharma led a trade mission to East Africa. He said India is exploring whether African farmers can be encouraged to grow legumes and export them to India, the world's largest market for legumes.

"I think at this time India is taking off in terms of industrialization, so definitely they are looking for a market," said Jacob Mignouna, the technical director at the Nairobi-based research organization the African Agricultural Technology Foundation. "Of course there may be some philanthropic aspect of it, but the bottom line is, they are looking for trade, for opportunities also for the Indian industries."

The close relationship between India and Africa is reflected in trade. Between April and July 2010, India exported $4.8 billion worth of goods to Africa -- a 51 percent increase from the same period in 2009. India imported about $7.8 billion worth of goods from Africa between April and July 2010, a 40.7 percent increase from the previous year.

The Bharti Airtel investment in Africa is so far one of the biggest from corporate India. Last year, Bharti Airtel, India's largest mobile phone company, tried and failed to acquire South Africa's MTN, one of the continent's largest communication companies.

This year Bharti Airtel bought the Africa operations of Kuwait operator Zain for $10.7 billion, and immediately began slashing prices. Call prices dropped 50 percent or more in 11 countries to attract more customers.

Founder Mittal said he wants to more than double the company's Africa business in the next 2 1/2 years to 100 million subscribers. At the end of September, Bharti Airtel said it had about 40 million subscribers in Africa.

Africa for its part needs to look more critically at its developing relationship with India, Naidu warned.

"Is it (Africa) gaining technical experience? Is it gaining development experience? We need to interrogate the relationship much more clearly," said Naidu. "I think we need to ask those questions where if Africa is not gaining out of this relationship, then what needs to be done?"

Boston.com

Trade between South Africa and India set to reach target of $10 billion

Loyiso Langeni

South Africa and India  are set to reach the ambitious target of $10bn in annual two-way trade by next month — 23 months ahead of schedule — India Trade and Commerce Minister Anand Sharma has said.

Mr Sharma was in the country to officiate at the opening of the first branch in Africa of Indian state-owned commodity trading enterprise MMTC.

"I have taken a look at the figures (and) I’m sure that within the current financial year, which concludes in March … in fact, I have been conservative it may happen as early as next month … we would cross $10bn mark in two-way trade," Mr Sharma said.

He said a new, annual two-way trade target — of $15bn by 2014 — would be discussed with his South African counterpart, Trade and Industry Minister Rob Davies .

Mr Davies said there had been hard work and a lot achieved in intensifying trade relations between SA and India.

"This investment (the opening of the MMTC office ) speaks to the maturing of our trade relationship and is taking place at a time as SA has been accepted to become a member of the Brazil, Russia, India and China bloc (known as Bric)," he said.

Mr Davies will form part of President Jacob Zuma ’s delegation to the first Bric meeting — in China in April — to which SA has been invited .

International Relations and Co-operation Minister Maite Nkoana-Mashabane previously said SA would use the Bric platform to further the country’s foreign policy agenda on the global stage.

Mr Sharma said gold consumption in the Indian market last year, at the height of the global financial crisis, increased 50% . The country is now the world’s largest consumer market for gold products.

India’s economy is projected to grow 12% next year from a base of 8,5% last year.

India is one of the largest emerging market economies, with an insatiable appetite for commodity goods. The country is also one of one of the largest importers of South African coal, importing 12-million tons last year.

Rock phosphates, precious stones, minerals, fertilisers and steel are other commodities that are high on the list of products India wants from SA. The MMTC will source them from the South African market .

The company, which had a n annual turnover of $10bn in the past financial year, wants access to 200 tons of gold a year and up to 600 tons of silver to feed a joint- venture precious metals refinery that will come on stream in May.

It said it would like at least 25 tons of the gold it purchases to come from SA .

Businessday

Africa's economic growth picking up, says expert

by Zain Verjee

"In 2011 there is a chance that we will get that much closer to those pre-crisis trend growth rates," said Razia Khan, head of African research for Standard Chartered Bank.

"We were looking at 6% to 7% growth rate in a number of frontier market economies -- that is the key expectation," she said.

Issuing a positive outlook, Khan, whose job is to investigate everything that contributes to Africa's economic standing, said the continent has emerged from the grips of the global financial crisis much better than many had anticipated.

"Part of it has to do with the amount of leverage in the system -- a lot of it has to do with China and the strength of China and of course the support that has given to commodity prices," Khan explained.

And while she acknowledged that factors such as political instability, food prices and inflation could hamper economic recovery, she noted: "Assuming all goes well, we are seeing good, sound growth prospects in a number of economies."

Khan sat down with CNN's Zain Verjee and gave her analysis of Africa's prospects for the coming year.

CNN: How do you see the outlook for Africa in 2011? What are some of the key things you look for?
Africa has come out of the crisis a lot better than many had expected.
--Razia Khan, Standard Chartered Bank

Razia Khan: Generally it is positive -- our belief at Standard Chartered is that trend growth in Africa will continue to recover. Of course, after the global economic crisis in 2009 we saw better rates of growth in 2010, but not yet back to trend.

In 2011 there is a chance that we will get that much closer to those pre-crisis trend growth rates. We were looking at 6% to 7% growth rate in a number of frontier market economies -- that is the key expectation.

Of course there are risks to this scenario -- there has been a lot of press about the rise in food prices; we are looking with a special concern in East Africa and potentially adverse weather conditions that may prove to be a setback to growth.

Of course, political risks have featured very strongly at the start of the year as well -- but assuming all goes well, we are seeing good, sound growth prospects in a number of economies.

CNN: What are you basing that kind of optimism on?

RK: Part of it is that Africa's growth momentum was doing pretty well even before the crisis. Yes, we saw an interruption with the global economic crisis, no question about that, but Africa has come out of the crisis a lot better than many had expected.

Part of it has to do with the amount of leverage in the system -- a lot of it has to do with China and the strength of China and of course the support that has given to commodity prices.

CNN: How have China and Asia helped in the recovery in Africa?

RK: We have seen very imbalanced growth in the wake of the crisis. We've continued to see a recovery in Asia, most Asian emerging markets not only making good in the losses associated with the crisis, but seeing real growth, real value addition beyond that.

That, of course, has been a key support for Africa, although Europe, mostly the core of the Euro area, remains the key trading partner for Africa. We've seen great trade gains with the rest of the world -- especially developing Asia, especially China, and that has been a big source to African economies' performance.

CNN: 2011 is a big year for elections in Africa -- to what extent do you think politics is going to be a real key factor this year?

RK: Just in case anyone thought the environment was more benign for whatever reason, the events in Cote d'Ivoire have certainly acted as some sort of wake-up call.

Of course, we have the big events happening early on in the new year -- the referendum in Southern Sudan, this is going to be watched very closely. Political risks haven't gone away -- we could see a reshaping of the East African landscape. It's how the political players react to whatever emerges from that referendum that is going to be key to economic prospects.

And then, of course, in West Africa, in Nigeria, in April, another very important election, the passage of which could be a key driver of investor confidence -- local investor confidence initially, foreign investor confidence in time. There are these big political events that are going to be closely watched.

CNN: For the average person who wants to invest in Africa, what kind of advice would you give them?

RK: There are still very good growth prospects in Africa. One of the successes, of course, is that we hadn't seen negative growth across the region as a result of the crisis. Yes, a contraction in one or two economies -- South Africa being more exposed to the global economy, a few of the mining economies -- but in general, most African countries managed to sustain some kind of positive growth and those growth rates are picking up.

CNN

East Africa poised to tap a reborn south Sudan

by Helen Nyambura-Mwaura and Elias Biryabarema

East African nations could reap trade and investment opportunities worth billions of dollars to help develop south Sudan if it splits from the north, but they will have to compete with bigger rivals like China to do so.

Southerners are expected to vote overwhelmingly in favour of separation in a referendum this month, a vote that follows decades of civil war with the north and, the south says, economic and political marginalisation.

Companies in neighbouring Kenya and Uganda, from taxi firms to Kenya's largest lender by assets, Kenya Commercial Bank (KCB), are already tapping the boundless opportunities in Juba, the south's capital.

"We have an advantage but that does not mean we cannot be outcompeted," said James Shikwati, executive director of the Inter Region Economic Network think-tank.

"Powers such as China, Japan, India are also ready. Whatever we manufacture, they can land here at almost zero cost."

Kenya's exports to south Sudan almost doubled between 2005 and 2009, rising to 12.8 billion shillings ($157.7 million) from 6.8 billion after south Sudan rebels signed a peace agreement with Khartoum's administration that paved the way for this month's vote.

South Sudan is neighbouring Uganda's main export market, importing goods worth $184.6 million from east Africa's second largest economy in 2009, according to the Uganda Exports Promotions Board.

"For the last couple of years south Sudan has been the largest driving force for our manufacturing sector because its demand for our products has been remarkable," said Maggie Kigozi, executive director of the Uganda Investment Authority.

Uganda is establishing a 3.0 billion shillings ($1.29 million) industrial park in Gulu for manufacturers targetting the south Sudan market, she said. Once a marginalised town at the heart of northern Uganda's own civil war, Gulu has boomed as a trading post linking Kampala and Juba.

Toyota Uganda plans an engineering and repair workshop in Gulu to tap the neighbouring market, where Toyota's 4x4 Landcruiser rules the dirt tracks.

The risk for East African nations is what happens if the vote ignites a new conflict that might draw in regional economies, in which case neighbours could expect a sharp downturn in demand for their products as well as a torrent of refugees.

A return to war might cost neighbouring countries 34 percent of their total annual GDP over a 10-year period and set back Kenya and Ethiopia $1 billion annually, according to a report by Frontier Economics.

"If the referendum is conducted well and Khartoum receives the outcome peacefully and south Sudan is born as a new state, we're almost certain our annual exports to this new country will double, our trade with south Sudan will grow tremendously," said Florence Katta, head of the Uganda Exports Promotion Board. "If the vote favours secession and Khartoum starts a war, our exports will plummet."

Kenya's KCB has plans to double its branches in South Sudan to 30 by 2015 and stands to lose its investment if war erupts.

"It's virgin territory ... It has got the potential to be the biggest economy in the region in the next 10-20 years," KCB chief Martin Oduor-Otieno said in an interview.

"Everybody is holding their breath. The last thing anyone wants is another Somalia flaring in the region. If that happens it will be extremely difficult to stabilise the south," said James Shikwati. "It's about regional security and stability."

Kenya is positioned to pitch itself as a logistics hub and transport conduit for an independent but landlocked south Sudan.

The region is rich in oil, the main bone of contention over the demarcation of borders, which it pipes north to Port Sudan.

Analysts believe the new state would seek to export its oil to the Indian Ocean coast via a yet-to-be-built corridor through Kenya to sidestep Khartoum.

Hungry for the south's resources, countries such as China and Japan will happily finance such an alternative exit route, analysts say.

Kenya is seeking investors to fund its $22 billion share of a planned corridor connecting Ethiopia and Sudan to the Kenyan coast with railways, roads, telecommunications cables and a 1,400 km pipeline.

Toyota Tsusho, the investment wing of the carmaker, is one of the companies interested in the $1.5 billion pipeline, according to an International Crisis Group (ICG) report.

There is some resentment towards Kenyan and Ugandan business players investing in south Sudan, however, with some southerners perceiving them as hawkish and exploitative.

They say neighbouring countries benefitted from the aid funding that flowed through their economies when they sheltered refugees, and should leave the country to its owners.

"They got money from the U.N. and many NGOs. They mistreated us and followed us home to take away what we are supposed to get. They just want to gain double," read an online comment posted by Ajejo Kak Kokora. "We must rethink again after January the 9th. Many of us think liberation is only to be free from North. No, liberation means free even from our neighbour."

Reuters

Zambia-China trade projected to reach US$2.4 billion in 2011

by Nkole Chitala

The government of Zambia  has projected a substantial increase in trade volumes reaching US$2.4 billion between Zambia and China this year.

And government is targeting to take 300 entrepreneurs to participate at the 109th session of the China Import and Export Fair, also known as the Canton Fair, this year following an invitation from China.

Minister of Commerce, Trade and Industry Felix Mutati said trade between the two countries is expected to rise to over US$2.4 billion this year compared to US$2 billion recorded in 2010.

He urged firms to take advantage of China’s declaration of duty free on imports from Least Developed Countries. This means that Zambian entrepreneurs can export to China duty-free.

He was speaking at a promotional seminar on the Canton Fair at Intercontinental Hotel on the night of January 20. The seminar was organised by Zambia Development Agency in conjunction with the economic and commercial counsellor’s office of the Embassy of China in Zambia.

The Canton Fair is held twice a year in spring and autumn.

Mr Mutati said Government has decided to take over Zambia China Business Association (ZCBA) international participation at the fair.

“This time, as Government, we became so envious and decided to take this to another level from the 150 firms that the association has taken to the fair. Our target is to double the number of firms we are taking to the fair this year,” he said.

The Ministry of Commerce, Trade and Industry will lead the Zambian delegation to China this year.

“We think as Zambia we need to work with you from being a consumer market to a market with the ability of absorbing whatever Zambia is capable of producing,” he told the Chinese officials attending the seminar.

Mr Mutati, however, urged Zambian firms intending to participate at the Canton Fair to focus on diversity in terms of exports to China. He urged firms to begin exporting products to China in large quantities if they are to realise huge benefits.

“We want firms to take products not in suitcases but increase volumes and start exporting in containers,” he said.

The government wants to work with China and make Canton Fair a win -win situation so that when Zambia holds the International Trade Fair, more Chinese entrepreneurs can also attend it.

He thanked the ZCBA for exposing Zambian entrepreneurs to international markets.

And visiting Chinese vice Minister of Commerce, Trade and Industry Zhong Shan extended an invitation to entrepreneurs to attend the 109th Canton Fair this year. Mr Zhong said his country is willing to expand bilateral trade in exports particularly to increase the number of firms participating in the import and export fair this year. He said China has an enormous market for Zambian entrepreneurs.

Mr Zhong said his visit came shortly after a visit by Chinese vice prime minister Hui Liangyu, saying this showed China’s commitment to bilateral trade relations with Zambia.

Meanwhile, ZCBA chairperson Sebastian Kopulande said the association has exposed 600 firms to international markets in the last six years it has been in existence.

Chinese Ambassador to Zambia Li Quiangmin said Zambia is likely to become the third largest trade partner for China in southern Africa.

The fair is held in Guangzhou and is the largest exhibition in China with gross exhibition space of over 1.12 million square metres and 56,000 stands.

UK Zambians

Developing nations may attract U.S.$1.5 trillion investment in 2011

by Kingsley Ighomwenghian

Latest data from the United Nations Conference on Trade and Development (UNCTAD) indicates that the growth in Foreign Direct Investment (FDI) stagnated last year, compared to 2005 and 2007.

According to UNCTAD's latest global investment trends monitor, total FDI for the year stood at about $1.12 trillion in 2010, dropping slightly from previous year's $1.14 billion, 25 percent below the 2005-2007.

The report forecast global FDI of between $1.3 and 1.5 trillion this year, a level that would have been more robust, but for the uneven economic recovery across the world, investment protectionism, currency volatility and sovereign debt worries.

The report also revealed that multi-nationals in developed countries are currently holding between $4 and $5 trillion in cash, which remains a source of investment that would be repatriated to their home countries, mainly in the developed economies.

According to the study released on Monday, developing economies and those in transition attracted more FDIs than the developing countries in 2010, in what may be evidence that economic recovery is more significant in developing nations.

Reuters quoted James Zhan, director of UNCTAD's investment and enterprise division, as saying that developing countries would not attract most FDI over the long term, once flows to developed countries recovered.

"The absorptive capacity of developing countries of FDI is still limited," he said.

The report noted that in flows into Africa fell 14.4 per cent, affected significantly by South Africa and Nigeria, two of the continent's largest economies. No reasons have however been adduced for the drops by UNCTAD, according to Zhan.

It was a mixed picture for economies in the Euro zone, going by data for 2010 that showed that such economies attracted 19.9 per cent less FDI than the previous year.

The European Union was however outpaced by Japan, whose FDIs slumped by 83.4 per cent to $2 billion, due mainly to divestments by foreign companies. For example, auto giant- Ford cut its stake in Mazda, while Liberty Global sold its stake in cable TV provider Jupiter Telecommunications.

In contrast however, FDIs to the US jumped 43.3 per cent to $186 billion, following a significant revival of reinvested earnings of foreign affiliates, which was however not much more than half the 2008 level.

Reuters, quoting the UNCTAD report noted that developing countries in Latin America, Southeast and East Asia attracted strong flows, with China topping $100 billion for the first time. Hong Kong, which UNCTAD data treats separately from China, jumped into third place with $62.6 billion.

But India was not as lucky as her fellow Asians, as FDI flows crashed 31.5 per cent in 2010.

FDI forms also diverged, with cross-border mergers and acquisitions rising 37 per cent to $341 billion in 2010, owing to the growing stock market value of assets and increased financial capacity of buyers. International greenfield investments, by far the biggest form, fell in both value and number.

Looking at the types of investment, economic recovery in many countries and improved performance by foreign affiliates lifted reinvested earnings to double the 2009 figure, while equity capital flows edged down and other capital flows such as intra-company loans saw a significant drop.

UNCTAD does not yet have a breakdown of the sources of investment, but Zhan said it was clear that developing countries were playing an increasing role as investors, as multinationals - known in UNCTAD as trans-national corporations or TNCs -- in those countries become more financially potent.

allafrica.com

Central African Republic, land of diamonds and poverty, goes to vote

The Central African Republic holds presidential and parliamentary elections on January 23.

The polls have been delayed three times because of problems over funding and rebel disarmament, leaving incumbent President Francois Bozize in power beyond his initial mandate, which ended in June.

There are five candidates including former president Ange Felix Patasse and Martin Ziguele.

Here are some key facts about the country:

ECONOMY:

* One of the world's poorest countries despite its potential wealth from natural resources, it is situated in the centre of Africa, stretching from rainforest in the southwest to savannah in the north.

-- Longstanding uncertainty due to internal rebellions as well as regional instability has discouraged investment in its gold, uranium and diamond deposits.

-- Some 55 percent of the country's GDP came from agriculture (including timber) in 2009.

* GDP (2009): $2.006 billion.

Annual real GDP growth rate (2009): 2.4 percent.

Per capita income (2009, PPP): $750.

* CAR was 154 (out of 178) in Transparency International's corruption index along with Kenya, Comoros, Congo-Brazzaville and Guinea-Bissau.

TRADE (2009):

* Exports: $290 million; including timber and diamonds, with some exports of coffee, cotton, and tobacco.

-- Main exporters: Belgium, Indonesia, China, Morocco, and Democratic Republic of the Congo.

* Imports: $449 million; including petroleum products, items to support public sector investment programme.

-- Main countries: France, United States, Cameroon, Netherlands.

COUNTRY DETAILS:

* The former French colony has had several attempted coups or mutinies. President Bozize, a former army general, seized power in a coup in March 2003 before seeking to legitimise his presidency through the ballot box in 2005.

POPULATION: 4.5 million

RELIGION: Protestant 25 percent, Roman Catholic 25 percent, traditional African religions 24 percent, Muslim 15 percent. GEOGRAPHY: Sandwiched between Sudan and Congo, the landlocked country is roughly the size of France. Area is 622,984 sq km (242,000 sq miles).

Reuters

Chinese trade facility for Zimbabwe

China has extended an 80 million yuan (approximately US$12 million) facility to Zimbabwe to boost trade and economic cooperation between the struggling southern African economy and the world’s second largest economy.

Zimbabwean Industry Minister Welshman Ncube told journalists that the facility would be extended under three broad based economic agreements that representatives of the two countries signed.

Visiting Chinese commerce deputy minister Zhong Shan signed on behalf of his government while Finance Minister Tendai Biti signed for Zimbabwe.

“We had a  meeting with the Chinese deputy minister of commerce in the morning,” Ncube said. “We signed three broad based agreements through the Minister of Finance, we received an 80 million yen grant and China has agreed to second agricultural experts to the country.”

Ncube told journalists that the three areas of interest covered by the agreements included increasing trade volumes between Beijing and Zimbabwe, deepening economic and technical cooperation and agricultural exchange programmes.

Last year, cumulative trade volumes between Zimbabwe and China stood at US$520 million.

He added that the two countries also resolved to increase trade volumes. “Our trade with China last year amounted to US$520 million. Our objective is to push trade to a billion dollars.”

Ncube said the Chinese delegation also expressed keen interest towards investing in the local diamond sector.

It is estimated that Zimbabwe has potential to satisfy about 25 percent of the world diamond demand.

“We also discussed the possibility of Chinese investment in our diamond sector,” Ncube said, noting that investment would be centred on value addition and new mining projects.

China has emerged as one of Zimbabwe’s most important political allies and trading partners since 2000 when President Robert Mugabe adopted his ‘Look East’ policy.

The policy is premised on the need to find new trading partners and markets after traditional investors from Western nations turned against Harare in protest over Mugabe’s human rights abuses, repression against political opponents and violent land-grab programme.

The “Look East” policy specifically targets investors from Muslim and Asian nations and in exchange Zimbabwe has promised minerals – including diamonds and gold – and prime land to the investors, resulting in Harare penning several agreements mainly with China, Russia and Iran.

But critics say there have been few results because the policy failed to attract serious and meaningful investments to shore up Zimbabwe’s struggling economy chiefly because the crisis-hit nation had failed to meet its side of the deal.

ZimOnline 

Ghana wants duty free access to Indian market

The west African nation of Ghana is concerned about the imbalance in its trade with India and is hoping to gain duty-free access to the Indian market to improve the situation, say trade officials here.

'We are aware that the two countries have similar climatic conditions and apart from cocoa, almost all we produce here in Ghana do well in India and this means finding ways to improve our trade,' Ghana's Minister of Trade Hannah Tetteh said.

The ministry said Ghana wants to enjoy access to Indian markets under the African initiative that would grant a duty- and quota-free market to Ghanaian goods in order to balance the huge trade imbalance between the two countries.

Officials of the ministry said they are aware that India has launched an African initiative which grants duty- and quota-free market access to Africa's least developed countries and expects Ghana to benefit from the facility.

Imports from India to Ghana increased to $314,491,460 at the end of 2009 from $307,534,508 in 2008.

Ghana's exports to India have fluctuated between the lowest figure of $6.85 million in 2001 and the highest figure of $204.4 million in 2008, according to the ministry's figures. Half of the 2008 figure is accounted for by cocoyam exports with a value of $105 million.

India recorded the highest trade with Ghana in 2007 with $373,584,347 while Ghana on the other hand recorded $75,502,691.

In addition, the ministry said, it is also considering the use of the Ghana-India Permanent Joint Commission as a vehicle to promote more trade from Ghana to India.

SIFY

Nigeria-India trade dropped to $8.7billion in 2010’

With Indian outreach to Africa steadily growing, a major Indian products and services show is being mounted later this month amid high hopes that trade between India and Nigeria will pick up this year after a lull in the past two years.

“As a result of global recession, trade dropped for a while but there are signs that things would improve this year,” S.K. Makhijani, counsellor at the Indian High Commission in Abuja, said.

As part of efforts to boost trade, a four-day Indian Products and Services Exhibition (IPASE) is being organised in Lagos from January 29 to February1.

A statement issued by the high commission read in part: “IPASE is being organised in cooperation with the Nigeria-India Chambers of Commerce and Industry (NICCI) and is intended to afford a unique opportunity to the providers of Indian goods and services in Nigeria to showcase their wares and projects at a central venue in Victoria Islands, Lagos.”

IPASE is open to all stakeholders engaged in providing Indian goods and services to the Nigerian market. Both outdoor and indoor space is available.

According to the high commission, India-Nigeria trade reached the milestone of $10.2 billion during 2008-2009, but fell to $8.7 billion in 2009-10 due to global recession. Indian exports to Nigeria were dominated by manufactured items such as machinery and instruments, pharmaceuticals, electronics and transport equipment.

The balance of trade has been in Nigeria’s favour due to large Indian imports of crude.

There are over 100 Indian companies estimated to have footprints in Nigeria. Prominent among them being Bharti AirTel, Tata, Bajaj Auto, Birla Group, Kirloskar, Mahindra, Ashok Leyland, NIIT, ApTech New India Assurance, Bhushan Steel, KEC and Skipper Electricals.

India has pole positions in Nigeria’s pharmaceuticals, steel and power transmission sectors. In addition, Nigeria- based ethnic Indians are also economically very active in consumer manufacturing and retailing, construction and air services.

Nigerian Compass

Africa doesn't need favors, asserts Sudanese telecom mogul

Mo Ibrahim is the Sudanese-born telecom billionaire and founder of the Mo Ibrahim Foundation. Some excerpts from his interview with The Africa Report:

So where to invest now in Africa, and how?


"[My businesses] are in real estate, we are in financial institutions, in agriculture ... Africa is hungry for services and products. Three-quarters of our people are young people. People need everything. We are pushing for the rule of law, we are fighting against corruption. We don’t pay bribes. Africa is rich, but we have mismanagement of our resources. We need good governance, and that’s what we are fighting for. The right policies and transparency are essential. It’s not about asking the US for more money or China for more money. We have everything we need right here. 
"

There is a consensus that Africa needs roads and power, but how do you attract investment into infrastructure when it is harder to get returns in those sectors?

Only by example. I built infrastructure in Africa. We got 850% return on our investment. Of course, building a power plant is not the same as telecoms, but you will still get a return. And actually it is better because you sign a contract before you even start. If I am building power stations here, I sign a contract with the government saying they will buy all my power at this price. I have already got my money back, guaranteed. This is a low-risk, lower-return operation. People will still invest at a 3-4% return.


How can trade between African countries be boosted and what is holding it back?

 "We need to trade with each other more. Look at Europeans, how much inter-European trade is happening compared to how much trade is taking place between African countries. It is time to start to build this infrastructure linking us together. Otherwise we will be tiny, weeny, sub-scale countries, not viable and unable to compete in this world.

"

The Africa Report

Tanzania orders Chinese traders out of Dar es Salaam market

Chinese traders in Tanzania's main city of Dar es Salaam were earlier this month given 30 days to stop trading in a busy market.

The deputy industry minister said Chinese businessmen were allowed into the country as investors, but not as "vendors or shoe-shiners." Lazaro Nyalandu said these jobs could "be carried out by locals", Tanzania's Citizen paper quotes him as saying.

A BBC reporter says there are many foreigners trading illegally in Tanzania, especially from China. They have opened up many small retail and wholesale shops, the BBC's Hassan Mhelela in Dar es Salaam says.

But the Chinese traders are sometimes resented for their business acumen, he says.

Mr Nyalandu made the comments at Kariakoo market, which the government wants to become an export centre for the East African nation.

He also said that Tanzania was about to do a deal with the Chinese government to ensure that goods imported from China meet international standards, Tanzania's Guardian newspaper reports.

BBC

SADC trade deal with Europe expected by mid-2011

The Southern African Development Community (SADC) was presenting a more unified front at the Economic Partnership Agreement (EPA) negotiations with the European Union (EU), said South African Trade and Industry Minister Rob Davies, adding that a final agreement could possibly be reached by mid-2011.

This came after negotiations dragged on beyond the previously hoped for deadline of December 2010.

“We are now working in much more of a united way as the SADC group, and that is important and good for the potential outcome,” Davies said.

He also emphasised that the parties were not negotiating interim-EPAs, but rather, as agreed last year, were working towards ratification of a final EPA. This included negotiation on more difficult issues, which were excluded from the interim-EPA negotiations.

The interim-EPA negotiations previously caused friction among SADC member States, as some of them, namely Botswana, Lesotho, Mozambique and Swaziland signed the interim-EPA, while South Africa, Namibia and Angola did not. South Africa was engaging in the negotiations on two levels, Davies stated.

Firstly, South Africa has to ensure that the trade arrangements were compatible with what has been agreed to in the Southern African Customs Union, thus the EPAs should not impose complicating obligations and should not destabilise regional integration.

The second level of engagement was to ensure that a new trading arrangement, which would replace the existing Trade Development and Cooperation Agreement (TDCA) with the EU, would deliver additional benefits for the country.

Specifically, fisheries and agricultural products were areas where Davies felt that there was room for South Africa to leverage additional benefits.

Davies noted that the EPA negotiations were progressing, although the most difficult issues, such as export taxes and the most favoured nation clause, had been left until last, and had yet to be dealt with. These were considered “make or break” issues, “so there is still plenty of work to be done”. The next technical negotiating meeting was scheduled for February. Davies stated that the EU was showing “some flexibility.”

Engineering News

Nigeria leads Africa in illicit financial outflow with $130billion

by Emeka Umejei

Nigeria is said to take the lead in Africa among 10 developing countries most involved in illicit financial outflows between 2000 and 2008.

The annual report of Global Financial Integrity (GFI) based in the United States disclosed that $6.5 trillion was removed from the developing world within the period.

Nigeria alone accounting for $130 billion.

The report analysed the cost of crime, corruption, and trade mispricing.

Released on January 18, it ranks countries according to the magnitude of outflows with China leading other nine countries with $2.18 trillion, Russia ($427 billion), Mexico ($416 billion), Saudi Arabia ($302 billion), Malaysia ($291 billion), United Arab Emirates ($276 billion), Kuwait ($242 billion), Venezuela ($157 billion), Qatar ($138 billion), and Nigeria ($130 billion).

It also shows the annual outflows for each country and breaks outflows down into two categories of drivers: trade mispricing and “other,” which includes kickbacks, bribes, embezzlement, and other forms of official corruption.

GFI Director Raymond Baker said in the report that every year developing countries are losing 10 times the amount of Official Development Assistance (ODA) remitted for poverty alleviation and economic development.

“This report measures the quantity and pattern of these harmful outflows and provides stark proof of the impact of these illicit financial practices,” he added.

According to the report, illicit outflows increased from $1.06 trillion in 2006 to approximately $1.26 trillion in 2008, with annual outflows from developing countries averaging between $725 billion and $810 billion, per year over the 2000-2008 time period.

Illicit flows increased in current Dollar terms by 18.0 per cent per annum from $369.3 billion at the start of the decade to $1.26 trillion in 2008.

When adjusted for inflation, the real growth of such outflows was 12.7 per cent.

The report disclosed real growth of illicit flows by region as follows:

Middle East and North Africa (MENA) (24.3 per cent), developing Europe (23.1 per cent), Africa (21.9 per cent), Asia (7.85 per cent), and Western hemisphere (5.18 per cent),

Asia accounted for 44.4 percent of total illicit flows from the developing world, followed by Middle East and North Africa (17.9 per cent), developing Europe (17.8 per cent), Western hemisphere (15.4 per cent), and Africa (4.5 per cent).

Trade mispricing accounted for an average of 54.7 per cent of cumulative illicit flows from developing countries between 2000 and 2008 and is the major channel for the transfer of illicit capital from China.

The report said bribery, theft, kickbacks, and tax evasion were the greatest conduit for the illicit financial flows from the major exporters of oil such as Kuwait, Nigeria, Qatar, Russia, Saudi Arabia, the United Arab Emirates, and Venezuela.

It noted that oil exporting countries, like Russia, the United Arab Emirates, Kuwait, and Nigeria, are becoming more important as sources of illicit capital.

Illicit outflows through trade mispricing grew faster Africa (28.8 per cent per annum) than anywhere else, possibly due to weaker customs monitoring and enforcement regimes.

“Apart from differences in the extent to which major exporters of illicit capital drive such flows from developing countries, the conduit for the transfer of these funds also varies.

“For instance, while trade mispricing is the major channel for the transfer of illicit capital from China, the balance of payments (captured by the World Bank Residual or CED – change in external debt – model) is the major conduit for the unrecorded transfer of capital from the major exporters of oil such as Kuwait, Nigeria, Qatar, Russia, Saudi Arabia, the United Arab Emirates, and Venezuela.”

It said Mexico is the only oil exporter where trade mispricing is the preferred method of transferring illicit capital abroad while Malaysia is the only country where the corrupt use roughly comparable portions of both channels (CED and GER) to transfer such capital.

Nevertheless, GFI projected a slowdown in illicit financial outflows due to what it describes as decline in trade mispricing resulting from a slack in world trade in the wake of global financial crisis.

Nigerians “just in one year” in 2007 stashed over $8 billion (N1.16 trillion) in foreign banks, with the money idling away still when it could be productively channelled into the economy, Jude Amaefule, an economic and oil expert, had lamented on August 9, 2009.

He reiterated in Abuja that the savings, also known as ‘Diasporic Direct Inflow (DDI),’ which leapfrog the financial systems of beneficiary countries, could be used to rescue Nigeria’s power and oil sectors.

Amaefule, the Chairman of Emerald Energy Resources (EER), an international oil company based in Lagos, noted that the Diaspora Investment Fund (DIF) is Nigeria’s money abroad, an untapped source of funding for projects that could upgrade living standards.

He noted that “Despite the fast pace of growth and strong resource endowment, Nigeria has not increased its Gross Domestic Product (GDP)/capita beyond that of its smaller and resource-poor neighbours. Recent trends have even shown Ghana (a country with a minuscule fraction of Nigeria’s resource endowment) overtaking it.

Daily Independent

'Liberia imports its eggs from India'

by Shubha Singh

If you order a couple of fried eggs for breakfast in any restaurant in Monrovia, the capital of Liberia, the eggs are almost certain to be from India. Almost 90 percent of pharmaceuticals sold in the West African country are also from India.

According to India's Honorary Consul General in Liberia Upjit Singh Sachdeva, 'There are no poultry and dairy farms in Liberia, and all the eggs are imported from India while chicken and meat are imported from South America and other countries.'

In fact, trade is just one of the ways in which the once war-torn country is trying to rebuild its economy. There are over 150 Indian companies operating in Liberia, ranging from small trading firms to manufacturing companies. Steel conglomerate ArcelorMittal has a major iron ore mine in Liberia.

'India-Liberia bilateral relations are at their peak,' Sachdeva told IANS in an interview during a visit to attend the Pravasi Bharatiya Divas, the annual convention of the Indian diaspora.

There has been an exchange of visits by political leaders in the past couple of years. Trade relations have increased with a widening trade basket.

Indian exports to Liberia include engineering goods, pharmaceuticals, two wheelers, transportation equipments, steel and plastic products. Liberian exports are gold, diamonds, timber and metal scrap. Indian investments have increased from $450 million in 2005 to more than $2 billion in 2009.

India is now one of the significant trade partners of Liberia, says Sachdeva, who was this month awarded the prestigious Pravasi Bharatiya Samman by President Pratibha Patil for his tireless work in improving relations with Liberia.

Brought up in Jalandhar, Punjab, Sachdeva has lived in Liberia for the past 24 years, ever since he joined his cousin's timber business. A few years later, Sachdeva set out on his own and is now one of the prominent Indian businessmen in Liberia. He has worked to promote connections between India and Liberia and in 1996, the Indian government appointed him to look after Indian interests in Liberia as its consul general.

'Liberian students have started taking admission in colleges in Delhi University as well as other institutes. There are even a few students pursuing a journalism programme. Liberians have begun to travel to India for medical tourism...they find it is much cheaper to get surgical procedures performed in India than in South Africa.

'Regular air connections have made it easier to travel to India. Kenya Airways and Ethiopian Airlines have connecting flights from Monrovia to Nairobi to Mumbai or Monrovia, Addis Ababa to Delhi and Mumbai,' Sachdeva explained.

Political exchanges have put bilateral relations on a fast track.

Then minister of State for external affairs Shashi Tharoor visited Monrovia in 2008. It was the first visit by an Indian foreign minister since Sardar Swaran Singh visited the country 38 years ago. It was followed by a visit by then Minister for Overseas Indian Affairs Vyalar Ravi in February 2009.

From the Liberian side, Minister of Mines and Energy Eugene Shannon visited India with a high-level delegation to participate in the Confederation of Indian Industry-Africa Conclave.

An agreement for implementation of an E-network project for tele-education and tele-medicine has been signed and also two 'Hole-in-the-Wall' computer projects for making children computer-literate.

There is a small Indian community in Liberia. It numbered 10,000 at its peak in the early 1990s. Some Indians left during the civil war, but there were others who remained in Monrovia. There are now 3,000 Indians living and working in Liberia.

'Indians have a good image in Liberia, they are not just involved in business but they participate in all social activities,' Sachdeva says. 'During the war, we had made shelter places at three locations in Monrovia - at the Indian community school and at the site of the proposed Mahatma Gandhi memorial hospital. We also set up a medical centre at the Indian school.'

Sachdeva's own business enterprise has built two schools in the country as part of its corporate social responsibility programme. He has also donated an ambulance and built the moot court for the Law School of Liberia. Sachdeva was the first Indian to be appointed to the board of trustees of the University of Liberia.

With the good image Indians have in Liberia, Sachdeva believes that there are tremendous opportunities for Indian investment as 'Liberia is exceedingly investor-friendly.'

Sify

Zimbabwe to trade grains, cereals on new exchange

Zimbabwe set up a commodities exchange on Friday, ending a government monopoly on trade in grains and cereals to try to bring higher prices for farmers and encourage them to increase production.

Industry and Commerce Minister Welshman Ncube said the new Commodities Exchange in Zimbabwe (COMEZ), a partnership between the government and private investors, would initially trade grains and cereals and later expand to cover other commodities outside the agriculture sector.

"We want a situation where the smallest farmer of grains and cereals wherever located should be able to take advantage of the commodities exchange," Ncube said at the COMEZ launch.

The southern African country has grappled since 2001 with food shortages that are often attributed to agricultural disruption caused by President Robert Mugabe's seizure of white-owned commercial farms for black resettlement.

The government abolished the only agriculture commodities exchange in 2001, decreeing the state Grain Marketing Board be the sole buyer and seller of grain and cereals. Farmers complained of poor prices and payment delays.

The Zimbabwe Agriculture Commodities Exchange traded commodities worth $677 million in 2001 before it was abolished.

Since a political settlement between Mugabe and arch-rival Morgan Tsvangirai in 2009, Zimbabwe's farming has started to recover, with output of tobacco, a key export crop, doubling last year.

Maize production has also risen on the back of more support for farmers and the adoption of hard currencies.

Reuters

Zimbabwe to start commodity exchange

by Nelson Gore Banya

Zimbabwe opened a commodities exchange to end the state monopoly on grain trading, Industry and Commerce Minister Welshman Ncube said.

The Commodities Exchange of Zimbabwe, known as Comez, will be managed by the state, banks and farmers’ unions, Ncube told reporters in Harare.

The southern African nation effectively closed its Agricultural Commodities Exchange in 2001 when President Robert Mugabe gave the state-owned Grain Marketing Board a monopoly on the trade of corn and wheat.

“We should create a transparent, open and accessible commodities market where both buyers and sellers can participate knowing the prevailing prices,” Ncube said at the opening of the exchange today.

Wilson Nyabonda, chairman of the newly established exchange, said private investors would be invited to take up shares in COMEZ. He did not say when the exchange would begin trading.

Zimbabwe reaped 1.35 million metric tons of corn in its last harvest in April last year, short of the 2.09 million metric tons it needs to feed its people and livestock, the United Nations World Food Programme and Food and Agriculture Organization said Aug. 10. Corn is the country’s staple food. About 1.68 million Zimbabweans depend on emergency food aid, it said. Two years of poor rains reduced harvests in 2008 and 2009.

Zimbabwe produced 10,000 metric tons of winter wheat last year, leaving the country shy of its 410,000 to 450,000-ton requirement, the Commercial Farmers’ Union said last year.

Zimbabwe’s new commodities exchange will initially trade only grains, cereals and oil seeds, Ncube said.

Businessweek