Under Muammar Gaddafi, Libya has invested hundreds of millions of dollars in a large number of sub-Saharan African countries in sectors as different as hotels, telecommunications, banking, agriculture and fuel distribution.
This is a non-exhaustive list of its main investments via the Libya Africa Portfolio (LAP) which is an umbrella for several groups, among them the Libya Arab African Investment Company (LAICO).
CHAD
- Construction of the Banque commerciale et du Chari, and the Banque sahelo-saharienne.
- Construction in N'Djamena of a five-star hotel (Kempinski) and 10 villas for heads of state.
- Construction of a major school, university and sports complex.
- Purchase of SOTEL, Chadian telephone company (Societe tchadienne de telephone).
GABON
- LAICO manages one of Libreville's two big hotels. OilLibya is involved in oil exploitation.
- Since 2008 it has held a 52 percent holding in the Panafrican radio Africa N°1 which has 20 million listeners in 20 countries.
GUINEA-BISSAU
- A five-star hotel, four cashew nut processing plants, development of farmland.
- A large proportion of the arms and vehicles of the Guinea Bissau armed forces was financed by Libya.
KENYA
- LAP Green, through Tamoil, controls one of the country's main petrol distributors Mobil Kenya, under the name OilLibya.
MALI
- $185-million to buy land from the Office du Niger, through the Malibya company.
- $125-million to build a government administration complex in Bamako.
- $40-millions in the hotel sector to buy two hotels.
- Two banks.
NIGER
- Construction of a hotel at Agadez in the north of the country and the country's biggest mosque in Niamey.
- Shares in the formerly public telecommunications business SONITEL. Tamoil is also present in Niger where it awards scholarships.
RWANDA
- Acquisition in 2007 by LAP Green of 80 percent of the capital of telecoms operator Rwandatel.
- Acquisition by LAICO of the ex-Novotel in Kigali.
SOUTH AFRICA
- LAICO owns 100 percent of the Ensemble Hotel Holdings group, proprietor of the high-prestige Michelangelo Hotel in Johannesburg. Also has a minority holding in the Legacy Hotel Holdings group which manages 19 luxury establishments.
UGANDA
- The Tropical Bank Limited is 99.69 percent controlled by the Libyan Foreign Bank.
- Tamoil signed an agreement in 2007 with a view to building a $300-million oil pipeline between Uganda, where reserves are put at 2.5 billion barrels, and Kenya from where the oil will be exported. The implementation of the deal has been held up by a contract dispute between Tamoil and the Ugandan authorities.
- LAICO owns the Lake Victoria hotel at Entebbe.
ZIMBABWE
- The Libya Foreign Bank, subsidiary of the Libyan Central Bank, owns 14 percent of the Commercial Bank of Zimbabwe (CBZ), one of the biggest private banks in the country, in which the state has a holding.
Through LAICO and OilLibya Libya also manages several hotels and service stations in Gambia, Senegal, Tanzania.
iafrica.com
March 27, 2011
Libya has $70 billion to invest—and no takers
by Jason Kelly and Jesse Westbrook
Several years ago, Libya was primed to dole out some of the billions the oil state held in cash during its time as an international pariah. When the country made its way back into the West's good graces, private equity managers shined their wingtips, straightened their ties, and headed for Tripoli, eager for a slice of the estimated $70 billion controlled by the Libyan Investment Authority.
"It was the spot that everyone was soliciting as both investor and investee, thinking this was the foothold for Northern Africa and the closest oil producer to Italy and France," says Thomas J. Barrack Jr., chairman of Santa Monica (Calif.) private equity firm Colony Capital. "They were rising from decades of isolation and economic sanctions and needed everything."
One of Libyan leader Muammar Qaddafi's sons, Saif Al-Islam, came to the U.S. in 2008, attending a lunch hosted by Blackstone Group Chairman Stephen A. Schwarzman at the billionaire's Park Avenue apartment. Donald Marron, who once ran Paine Webber and is now chairman of private equity firm Lightyear Capital, also had the younger Qaddafi for lunch. It was all aboveboard, complete with U.S. diplomatic security. Neither Blackstone nor Lightyear would comment.
Those managers and others who didn't land a Libyan account likely are breathing sighs of relief that nothing came of those meetings. Barrack tried to pull off a deal with the Libyan Investment Authority in 2007, when ownership of Libya's oil refiner, Tamoil, was transferred to the fund. Colony sought to buy Tamoil's refineries outside of Libya in Germany, Italy, Switzerland, and elsewhere, as well as more than 3,000 of its Tamoil filling stations across Europe. Colony dropped its $6.1 billion bid in March 2008, citing lack of information about the assets and other financial data. Colony has no Libyan ambitions now. "Libya is too confusing, and it's too dangerous," says Barrack. "There is no transparency, no leadership, no infrastructure, and no clear signal from the West as to what is the strategy or end game." Calls to the Libyan Investment Authority were not picked up.
Other financial industry veterans forged links with the Libyans before the recent fighting started. Former Bear Stearns executive Frederic Marino started an $800 million hedge fund with seed capital from Qaddafi's government. Three calls to Marino were unreturned.
London-based FM Capital Partners, founded in 2009 with financing from a smaller Libyan sovereign wealth fund, was preparing to raise money from other outside investors this year for the first time, according to two people briefed on the plans who declined to be identified because the firm is private. Those plans may have to be postponed because other governments have frozen Qaddafi's assets.
Libyan money is a "huge hindrance" to soliciting new investors, says Don Steinbrugge, managing partner of Agecroft Partners, a Virginia consultant to hedge funds and investors. "Once there is a transition to a more stable government, their asset base should be a positive in helping them build the business," he adds.
The bottom line: Hedge funds and private equity firms will have to wait for the war's end before they resume their pursuit of Libya's billions.
Businessweek
Several years ago, Libya was primed to dole out some of the billions the oil state held in cash during its time as an international pariah. When the country made its way back into the West's good graces, private equity managers shined their wingtips, straightened their ties, and headed for Tripoli, eager for a slice of the estimated $70 billion controlled by the Libyan Investment Authority.
"It was the spot that everyone was soliciting as both investor and investee, thinking this was the foothold for Northern Africa and the closest oil producer to Italy and France," says Thomas J. Barrack Jr., chairman of Santa Monica (Calif.) private equity firm Colony Capital. "They were rising from decades of isolation and economic sanctions and needed everything."
One of Libyan leader Muammar Qaddafi's sons, Saif Al-Islam, came to the U.S. in 2008, attending a lunch hosted by Blackstone Group Chairman Stephen A. Schwarzman at the billionaire's Park Avenue apartment. Donald Marron, who once ran Paine Webber and is now chairman of private equity firm Lightyear Capital, also had the younger Qaddafi for lunch. It was all aboveboard, complete with U.S. diplomatic security. Neither Blackstone nor Lightyear would comment.
Those managers and others who didn't land a Libyan account likely are breathing sighs of relief that nothing came of those meetings. Barrack tried to pull off a deal with the Libyan Investment Authority in 2007, when ownership of Libya's oil refiner, Tamoil, was transferred to the fund. Colony sought to buy Tamoil's refineries outside of Libya in Germany, Italy, Switzerland, and elsewhere, as well as more than 3,000 of its Tamoil filling stations across Europe. Colony dropped its $6.1 billion bid in March 2008, citing lack of information about the assets and other financial data. Colony has no Libyan ambitions now. "Libya is too confusing, and it's too dangerous," says Barrack. "There is no transparency, no leadership, no infrastructure, and no clear signal from the West as to what is the strategy or end game." Calls to the Libyan Investment Authority were not picked up.
Other financial industry veterans forged links with the Libyans before the recent fighting started. Former Bear Stearns executive Frederic Marino started an $800 million hedge fund with seed capital from Qaddafi's government. Three calls to Marino were unreturned.
London-based FM Capital Partners, founded in 2009 with financing from a smaller Libyan sovereign wealth fund, was preparing to raise money from other outside investors this year for the first time, according to two people briefed on the plans who declined to be identified because the firm is private. Those plans may have to be postponed because other governments have frozen Qaddafi's assets.
Libyan money is a "huge hindrance" to soliciting new investors, says Don Steinbrugge, managing partner of Agecroft Partners, a Virginia consultant to hedge funds and investors. "Once there is a transition to a more stable government, their asset base should be a positive in helping them build the business," he adds.
The bottom line: Hedge funds and private equity firms will have to wait for the war's end before they resume their pursuit of Libya's billions.
Businessweek
US$15 billion in intra-trade among COMESA member states in 2010
by Darlington Mwendabai
The Common Market for Eastern and Southern Africa (COMESA) says it has recorded over US$15 billion in intra-trade among member states in 2010.
COMESA acting general secretary Nagla El-Hussainy said the intra-trade will give regional manufacturers opportunities for exploiting the regional market in all sectors especially in energy.
Ambassador El-Hussainy said since the launch of COMESA Free Trade Area (FTA) in 2000, the intra-trade has increased from US$3 billion to US$15 billion which has resulted in jobs and wealth.
“This substantial growth in intra-COMESA trade has thus availed regional manufacturers opportunities for exploiting the COMESA market. As a result, we are generating employment, wealth and also meeting our policy objectives concerning poverty alleviation,” she said.
Ambassador El-Hussainy said this during the official opening of the two-day second annual general meeting of the Regional Association of Energy Regulators for Eastern and Southern Africa (RAERESA) in Lusaka on March 24.
She said despite the region recording some achievement in intra-trade, the energy sector is still faced with challenges where access to electricity need attention adding that high cost and scarcity of energy is a huge hindrance to enhance the competiveness of COMESA within and outside markets.
The role of RAERESA in promoting energy investments in generating, transmitting and distribution as well as improving regulatory transparency is not only timely but critical.
“It is further envisaged that RAERESA could be committed to work towards the harmonisation of the rules as they pertain to energy and promote good governance in order to brand energy sector in the COMESA region as an investors’ friendly sector,” she said.
Ambassador El-Hussainy said time has come to connect the energy infrastructure from ‘Cape to Cairo’ and Tripoli- Mombasa – Dakar, not only by road and rail but through electricity transmission, distribution networks and petroleum and gas pipelines.
And RAERESA acting plenary chairperson Buge Wasiiya said the meeting will address strategies to bridge the energy infrastructure gap among others.
Mr Wasiiya said there is need to create conducive environment to increase direct investment both at national and regional levels in the sector.
“However, the region still faces major challenges in the development of the physical energy infrastructure…This meeting should discuss how to finance the agreed priority infrastructure,” he said.
UK Zambians
The Common Market for Eastern and Southern Africa (COMESA) says it has recorded over US$15 billion in intra-trade among member states in 2010.
COMESA acting general secretary Nagla El-Hussainy said the intra-trade will give regional manufacturers opportunities for exploiting the regional market in all sectors especially in energy.
Ambassador El-Hussainy said since the launch of COMESA Free Trade Area (FTA) in 2000, the intra-trade has increased from US$3 billion to US$15 billion which has resulted in jobs and wealth.
“This substantial growth in intra-COMESA trade has thus availed regional manufacturers opportunities for exploiting the COMESA market. As a result, we are generating employment, wealth and also meeting our policy objectives concerning poverty alleviation,” she said.
Ambassador El-Hussainy said this during the official opening of the two-day second annual general meeting of the Regional Association of Energy Regulators for Eastern and Southern Africa (RAERESA) in Lusaka on March 24.
She said despite the region recording some achievement in intra-trade, the energy sector is still faced with challenges where access to electricity need attention adding that high cost and scarcity of energy is a huge hindrance to enhance the competiveness of COMESA within and outside markets.
The role of RAERESA in promoting energy investments in generating, transmitting and distribution as well as improving regulatory transparency is not only timely but critical.
“It is further envisaged that RAERESA could be committed to work towards the harmonisation of the rules as they pertain to energy and promote good governance in order to brand energy sector in the COMESA region as an investors’ friendly sector,” she said.
Ambassador El-Hussainy said time has come to connect the energy infrastructure from ‘Cape to Cairo’ and Tripoli- Mombasa – Dakar, not only by road and rail but through electricity transmission, distribution networks and petroleum and gas pipelines.
And RAERESA acting plenary chairperson Buge Wasiiya said the meeting will address strategies to bridge the energy infrastructure gap among others.
Mr Wasiiya said there is need to create conducive environment to increase direct investment both at national and regional levels in the sector.
“However, the region still faces major challenges in the development of the physical energy infrastructure…This meeting should discuss how to finance the agreed priority infrastructure,” he said.
UK Zambians
Libyan investments in Uganda face uncertainty
by Othman Semakula
As the Muammar Gaddafi regime soldiers on, Libya is threatening to become a shadow of its former self simmering with a possibility of a civil war.
The events in Tripoli borne out of a desire for political reform will definitely have a knock on effect on the country’s global businesses established under the Libyan Arab Africa Investment Company (LAAICo), now a target of an asset freeze by the Swiss government.
The investment arm with headquarters in Switzerland was established in the early 80s to supervise Libya’s global interests with a desire to plug inflationary pressures that would result from huge monetary reserves accumulated from the oil dollars.
The wealth fund with an estimated capitalisation of over $80 billion is according to analysts closely controlled by the Gaddafi family, with a carefully woven ensemble of close associates.
It runs a tight chain of business operations in different sectors including telecommunications, manufacturing, mining, energy, hotel and real estate, tourism and textile.
The fund also runs investments under a group of subsidiaries including Libya Oil Holdings, Libya African Investment Portfolio (LAP) and Libyan Foreign Investment Company (LAFICo).
A simple analysis of LAFICo’s subsidiary, Libyan Investment Portfolio (LAP) establishments on the African continent tells of what lies ahead for those businesses.
In Uganda LAP has an investment portfolio of more than $375 million covering different sectors including real estate, hotels, telecommunications, oil and manufacturing among others.
Investments under LAP Green Networks, the fund’s telecommunications arm tells of businesses that are struggling to have a mark on markets where they are established.
For example Uganda Telecom formally owned by the government of Uganda is struggling to shake off a law suit demanding for the payment of a combined sum of about Shs30 billion ($13 million) accumulated from alleged none payment of interconnection charges for a period of about three years.
However, the dispute now in court is taking on a new twist as last week MTN announced it would starting 14 March (yesterday) severe its interconnection agreement with Utl for its failure to clear a Shs20 billion debt accumulated through none payment of interconnection charges since 2007.
However, the disputes is likely to take on a face as on Thursday last week Utl issued a statement disputing the Shs20 billion that MTN had claimed in debt. The telecom said it was only aware of a Shs3.8 billion debt that it owes MTN. adding that it would only pay the money after disposing off a case that MTN filed in Court.
Other players including Airtel Uganda and Warid Telecom have according to the Uganda Communications Commission also threatened take serious action against Utl if it doesn’t clear a combined debt of about Shs12 billion that the two telecoms demand accumulated through nonpayment of interconnection charges. LAP Green networks has a 69 per cent stake in Utl.
According to analysts, the firms under LAP Green Networks will hardly survive without Gaddafi’s handsome bailouts and it will get even harder as their direct source of funding-LAFICo, face a serious case of none transaction.
Libya has also made inroads into East Africa’s oil sector premised on the recent oil pipeline deal amounting to about Shs714 billion.
The Libyan government under Tamoil, a state owned firm inked a deal to construct an oil pipeline linking Uganda to Kenya from Eldolet in the Kenyan Rift Valley Province. The project, however, has stalled over the years due to compensation failures, diversion expenses and technical obstacles, which has forced it to rise from a previous low of about Shs212 billion to the current high of Shs714 billion.
The recent acquisition of Apparel Tri-Star shoved Libya into Uganda’s textile industry that for years has struggled to get a footing. The sector has wriggled through the old days of Nytil to the recently drafted scheme under the African Growth and Opportunities Act (Agoa). However, the acquisition of the Apparels in 2008 by a Libyan consortium was hugely criticized by the public on claims that the deal lacked transparency.
The firm previously under private ownership by a group of Malaysian investors had during its operations under the Agoa initiative been heavily criticised for lack of transparency, corruption, incompetence and a general lack of any committed development plan. During its operation it received about Shs49 billion to boost its operations from the government of Uganda. However, it is alleged that much of this dime was lost through corruption and poor planning on the side of government and the firm’s management.
Other investments under or closely supervised by LAP in Uganda, include House of Dawda, a food processing firm, National Housing and Construction Company, Tropical Bank and the Lake Victoria Libyan Hotel.
A coffee processing plant proposed mid last year is yet to take off.
However, experts familiar with the running of companies under LAP say if the conflict persists, there will be serious financial consequences on some of these companies. They say that whereas a few of these companies are sound enough to run on their own some will not survive the current storm in Tripoli.
Recently Bank of Uganda moved to allay fears of a possible Tropical Bank insolvency that the public had linked to the current events in Libya. Established in 1973, Tropical Bank with an estimated equity and assets valuation of Shs247 billions, is owned by the Libyan government (99.7 percent stake), with strong financing from the Libyan Foreign Bank. The government of Uganda holds a tiny 0.3 per cent stake in Tropical Bank through the Ministry of Finance. The bank was recently feared to have been the first offshore casualty in Uganda of the conflict in Tripoli.
However, while some companies will swim through the storm, analysts warn, it will be very unlikely for others especially in the telecom sector to stand on their own.
It is believed that Tamoil will be one firm that could heavily feel the brunt of the conflict in the long run.
For example if the rebels fighting the Gaddafi regime continue to frustrate global petroleum supplies, it would be obvious that the regime won’t have enough liquidity to run the firm’s investments controlled under the Libyan Oil Holdings.
It is important to note that oil related investments are hugely expensive which as it is happening now will be a big blow if the rebels further nick Gaddafi’s main source of revenue.
However, it is still too early to forecast any firm’s fate but it’s only a peaceful end to the conflict that will save investments under Libya Arab Africa Investment Company.
Monitor
As the Muammar Gaddafi regime soldiers on, Libya is threatening to become a shadow of its former self simmering with a possibility of a civil war.
The events in Tripoli borne out of a desire for political reform will definitely have a knock on effect on the country’s global businesses established under the Libyan Arab Africa Investment Company (LAAICo), now a target of an asset freeze by the Swiss government.
The investment arm with headquarters in Switzerland was established in the early 80s to supervise Libya’s global interests with a desire to plug inflationary pressures that would result from huge monetary reserves accumulated from the oil dollars.
The wealth fund with an estimated capitalisation of over $80 billion is according to analysts closely controlled by the Gaddafi family, with a carefully woven ensemble of close associates.
It runs a tight chain of business operations in different sectors including telecommunications, manufacturing, mining, energy, hotel and real estate, tourism and textile.
The fund also runs investments under a group of subsidiaries including Libya Oil Holdings, Libya African Investment Portfolio (LAP) and Libyan Foreign Investment Company (LAFICo).
A simple analysis of LAFICo’s subsidiary, Libyan Investment Portfolio (LAP) establishments on the African continent tells of what lies ahead for those businesses.
In Uganda LAP has an investment portfolio of more than $375 million covering different sectors including real estate, hotels, telecommunications, oil and manufacturing among others.
Investments under LAP Green Networks, the fund’s telecommunications arm tells of businesses that are struggling to have a mark on markets where they are established.
For example Uganda Telecom formally owned by the government of Uganda is struggling to shake off a law suit demanding for the payment of a combined sum of about Shs30 billion ($13 million) accumulated from alleged none payment of interconnection charges for a period of about three years.
However, the dispute now in court is taking on a new twist as last week MTN announced it would starting 14 March (yesterday) severe its interconnection agreement with Utl for its failure to clear a Shs20 billion debt accumulated through none payment of interconnection charges since 2007.
However, the disputes is likely to take on a face as on Thursday last week Utl issued a statement disputing the Shs20 billion that MTN had claimed in debt. The telecom said it was only aware of a Shs3.8 billion debt that it owes MTN. adding that it would only pay the money after disposing off a case that MTN filed in Court.
Other players including Airtel Uganda and Warid Telecom have according to the Uganda Communications Commission also threatened take serious action against Utl if it doesn’t clear a combined debt of about Shs12 billion that the two telecoms demand accumulated through nonpayment of interconnection charges. LAP Green networks has a 69 per cent stake in Utl.
According to analysts, the firms under LAP Green Networks will hardly survive without Gaddafi’s handsome bailouts and it will get even harder as their direct source of funding-LAFICo, face a serious case of none transaction.
Libya has also made inroads into East Africa’s oil sector premised on the recent oil pipeline deal amounting to about Shs714 billion.
The Libyan government under Tamoil, a state owned firm inked a deal to construct an oil pipeline linking Uganda to Kenya from Eldolet in the Kenyan Rift Valley Province. The project, however, has stalled over the years due to compensation failures, diversion expenses and technical obstacles, which has forced it to rise from a previous low of about Shs212 billion to the current high of Shs714 billion.
The recent acquisition of Apparel Tri-Star shoved Libya into Uganda’s textile industry that for years has struggled to get a footing. The sector has wriggled through the old days of Nytil to the recently drafted scheme under the African Growth and Opportunities Act (Agoa). However, the acquisition of the Apparels in 2008 by a Libyan consortium was hugely criticized by the public on claims that the deal lacked transparency.
The firm previously under private ownership by a group of Malaysian investors had during its operations under the Agoa initiative been heavily criticised for lack of transparency, corruption, incompetence and a general lack of any committed development plan. During its operation it received about Shs49 billion to boost its operations from the government of Uganda. However, it is alleged that much of this dime was lost through corruption and poor planning on the side of government and the firm’s management.
Other investments under or closely supervised by LAP in Uganda, include House of Dawda, a food processing firm, National Housing and Construction Company, Tropical Bank and the Lake Victoria Libyan Hotel.
A coffee processing plant proposed mid last year is yet to take off.
However, experts familiar with the running of companies under LAP say if the conflict persists, there will be serious financial consequences on some of these companies. They say that whereas a few of these companies are sound enough to run on their own some will not survive the current storm in Tripoli.
Recently Bank of Uganda moved to allay fears of a possible Tropical Bank insolvency that the public had linked to the current events in Libya. Established in 1973, Tropical Bank with an estimated equity and assets valuation of Shs247 billions, is owned by the Libyan government (99.7 percent stake), with strong financing from the Libyan Foreign Bank. The government of Uganda holds a tiny 0.3 per cent stake in Tropical Bank through the Ministry of Finance. The bank was recently feared to have been the first offshore casualty in Uganda of the conflict in Tripoli.
However, while some companies will swim through the storm, analysts warn, it will be very unlikely for others especially in the telecom sector to stand on their own.
It is believed that Tamoil will be one firm that could heavily feel the brunt of the conflict in the long run.
For example if the rebels fighting the Gaddafi regime continue to frustrate global petroleum supplies, it would be obvious that the regime won’t have enough liquidity to run the firm’s investments controlled under the Libyan Oil Holdings.
It is important to note that oil related investments are hugely expensive which as it is happening now will be a big blow if the rebels further nick Gaddafi’s main source of revenue.
However, it is still too early to forecast any firm’s fate but it’s only a peaceful end to the conflict that will save investments under Libya Arab Africa Investment Company.
Monitor
SABMiller upbeat about African prospects
by Jacqueline Mackenzie
Global brewing giant SABMiller is increasingly optimistic about its businesses and prospects in Africa, to the extent that it has upped its medium-term guidance for its Africa division.
At its quarterly Africa divisional update in London on March 22, SABMiller said expectations for revenue per hectolitre growth had increased from a range of 1% to 3%, to a range of 3% to 5%, subject to currency fluctuations. In addition, previous guidance for flat margins had been revised to include a 0.8% to 1% increase on average per year over the next three to four years. Anticipated medium-term compound annual volume growth in the high single digits remained unchanged.
Mark Bowman, SABMiller Africa's managing director, said that over the past three to four years the group had invested more than $1.5 billion in capital expenditure, increasing capacity and market penetration, in addition to taking the group into several new markets through acquisitions.
"This investment is paying off and we are expecting to further cement our position as the leading brewer on the African continent," he said.
Bowman added that the group had taken the view three to four years ago to invest in unfulfilled demand, and changed its focus from what he termed the "block and tackle business" in Africa to applying the SABMiller models that were used around the world, with special emphasis on its marketing competence.
SABMiller is a major investor in Africa, with a presence in 36 of the 52 countries on the continent. It also has successful partnerships with Castel and the Coca Cola Company.
The group's strategy on the continent has three main themes - to halve the price of beer in Africa, where beer remains a luxury purchase; to double the price of beer in Africa through the premiumisation and differentiation to better serve the needs and demand of the aspirational consumer; and to "Go Farming" - aimed at protecting its "licence to trade" through sustainable local sourcing.
While the first two appear at first to be contradictory, Bowman explained that the group would like to bring down the relative price of beer in Africa, while at the same time there was a significant group of consumers that were highly differentiated and the premium beer segment was symbolic of their success in life.
The rise in urbanisation in Africa - from 28% in 1980 to about 40% currently - has led to a rise in the middle-class consumer. Currently 52 African cities have a population in excess of one million people. African consumer spending is forecast to rise from $860 billion to $1.4 trillion by 2020 and there are expected to be about 1.1 billion working-age Africans by 2040.
SABMiller hopes to benefit from the middle-class tendency to seek accessible symbols of branding.
In addition, about 200 million Africans are expected to enter the market for consumer goods in the next five years. This increasingly formally employed group is expected to enter the commercial beverage space, is looking for products that resemble the mainstream and is evolving to more modern alcohol consumption and socialising patterns.
Bowman said both the premium and affordable categories presented a volume and value opportunity.
He noted that Castle Lager's growth as a premium brand in Africa had been phenomenal and the group had struggled to keep up with demand, noting that Castle Lager had become a powerful brand in the African context.
It also launched premium brand Laurentina Preta in Mozambique, marketing it alongside Laurentina Clara, and it had become the biggest brand in Mozambique.
Bowman said the group had been working hard on strengthening its mainstream brands, which were expected to show about 6% growth this year. He said all of the group's brands had been developed with a very distinctive position.
The group also planned to make clear beer more affordable and expand its traditional beer footprint. Soft drinks are also an important part of SABMiller's business, which gives it scale and back-office synergies. It has soft drinks businesses in 15 countries on the continent.
Robin Goetzsche, operations director for East Africa and managing director for Tanzania, outlined the group's operations in Tanzania, noting that Tanzania Breweries, in which SABMiller acquired a 50% stake in 1993, upping it to 75% in 1998, aimed to have the number one brand in each category and segment.
Its success stories have been Kilimanjaro Premium lager (Killi), Safari Lager and Ndovu Special Malt.
Goetzsche noted that one of the group's "little gems" is Tanzania Distilleries, which is 65%-owned by Tanzania Breweries and 35% by Distell, which is showing double-digit year-on-year growth and has 95% of the spirits market share in Tanzania. It exports to Southern Sudan, Uganda, Burundi, Rwanda and Kenya and a capacity expansion project is on the cards for 2012.
Another success highlighted by Goetzsche was the capacity expansion at the Mbeya Brewery, 11 months in the making, and where, he said, the logistics were very challenging. He said what was especially pleasing was that the operational readiness had been backed by performance.
Turning to the farming successes, Goetsche said the group had beefed up its support services in this area and had increased local raw material content in its beers.
It has over 500 small-scale farmers growing barley - divided into 10 co-ops - with contracts for 19,000 tonnes of barley and 11,000 tonness of sorghum for 2011.
Goetsche added that Tanzania Breweries believed that the alcohol beverage market had the potential to continue to grow at 6% per annum and it was well positioned to capitalise on this, with its balanced brand portfolio and strong commercial team.
Bowman added that SABMiller's new markets in Africa were growing well, with increased capacity.
He said the group was pleased with the outcome of the referendum in Southern Sudan, but he expected it would be challenging for a few years to come as there was little infrastructure there, but sufficient global goodwill to ensure success of the country as a stand-alone state. This year SABMiller is planning a US$15 million investment in Southern Sudan.
In Ethiopia, Ambo Water - a partnership with government - has new capacity in place and is performing well.
The group has also started accounting for Zimbabwe again. While Zimbabwe was not out of the woods yet, Bowman said the group was relatively more optimistic and Zimbabwe, after SA, was one of the group's biggest markets and profitability was improving.
In Nigeria - where the group is a recent entry and is a "bit player" - the group is expanding capacity and Bowman is optimistic that it will get a reasonable return on its investment in Nigeria.
It has also recently commissioned breweries in Angola, Mozambique and Tanzania.
In conclusion, Bowman said that Africa's fundamentals were good and its long-term growth prospects remained positive and the group had strong and defendable market positions. He said the group planned to put in more capacity in markets where it had seen strong growth in the next financial year.
Businesslive
Global brewing giant SABMiller is increasingly optimistic about its businesses and prospects in Africa, to the extent that it has upped its medium-term guidance for its Africa division.
At its quarterly Africa divisional update in London on March 22, SABMiller said expectations for revenue per hectolitre growth had increased from a range of 1% to 3%, to a range of 3% to 5%, subject to currency fluctuations. In addition, previous guidance for flat margins had been revised to include a 0.8% to 1% increase on average per year over the next three to four years. Anticipated medium-term compound annual volume growth in the high single digits remained unchanged.
Mark Bowman, SABMiller Africa's managing director, said that over the past three to four years the group had invested more than $1.5 billion in capital expenditure, increasing capacity and market penetration, in addition to taking the group into several new markets through acquisitions.
"This investment is paying off and we are expecting to further cement our position as the leading brewer on the African continent," he said.
Bowman added that the group had taken the view three to four years ago to invest in unfulfilled demand, and changed its focus from what he termed the "block and tackle business" in Africa to applying the SABMiller models that were used around the world, with special emphasis on its marketing competence.
SABMiller is a major investor in Africa, with a presence in 36 of the 52 countries on the continent. It also has successful partnerships with Castel and the Coca Cola Company.
The group's strategy on the continent has three main themes - to halve the price of beer in Africa, where beer remains a luxury purchase; to double the price of beer in Africa through the premiumisation and differentiation to better serve the needs and demand of the aspirational consumer; and to "Go Farming" - aimed at protecting its "licence to trade" through sustainable local sourcing.
While the first two appear at first to be contradictory, Bowman explained that the group would like to bring down the relative price of beer in Africa, while at the same time there was a significant group of consumers that were highly differentiated and the premium beer segment was symbolic of their success in life.
The rise in urbanisation in Africa - from 28% in 1980 to about 40% currently - has led to a rise in the middle-class consumer. Currently 52 African cities have a population in excess of one million people. African consumer spending is forecast to rise from $860 billion to $1.4 trillion by 2020 and there are expected to be about 1.1 billion working-age Africans by 2040.
SABMiller hopes to benefit from the middle-class tendency to seek accessible symbols of branding.
In addition, about 200 million Africans are expected to enter the market for consumer goods in the next five years. This increasingly formally employed group is expected to enter the commercial beverage space, is looking for products that resemble the mainstream and is evolving to more modern alcohol consumption and socialising patterns.
Bowman said both the premium and affordable categories presented a volume and value opportunity.
He noted that Castle Lager's growth as a premium brand in Africa had been phenomenal and the group had struggled to keep up with demand, noting that Castle Lager had become a powerful brand in the African context.
It also launched premium brand Laurentina Preta in Mozambique, marketing it alongside Laurentina Clara, and it had become the biggest brand in Mozambique.
Bowman said the group had been working hard on strengthening its mainstream brands, which were expected to show about 6% growth this year. He said all of the group's brands had been developed with a very distinctive position.
The group also planned to make clear beer more affordable and expand its traditional beer footprint. Soft drinks are also an important part of SABMiller's business, which gives it scale and back-office synergies. It has soft drinks businesses in 15 countries on the continent.
Robin Goetzsche, operations director for East Africa and managing director for Tanzania, outlined the group's operations in Tanzania, noting that Tanzania Breweries, in which SABMiller acquired a 50% stake in 1993, upping it to 75% in 1998, aimed to have the number one brand in each category and segment.
Its success stories have been Kilimanjaro Premium lager (Killi), Safari Lager and Ndovu Special Malt.
Goetzsche noted that one of the group's "little gems" is Tanzania Distilleries, which is 65%-owned by Tanzania Breweries and 35% by Distell, which is showing double-digit year-on-year growth and has 95% of the spirits market share in Tanzania. It exports to Southern Sudan, Uganda, Burundi, Rwanda and Kenya and a capacity expansion project is on the cards for 2012.
Another success highlighted by Goetzsche was the capacity expansion at the Mbeya Brewery, 11 months in the making, and where, he said, the logistics were very challenging. He said what was especially pleasing was that the operational readiness had been backed by performance.
Turning to the farming successes, Goetsche said the group had beefed up its support services in this area and had increased local raw material content in its beers.
It has over 500 small-scale farmers growing barley - divided into 10 co-ops - with contracts for 19,000 tonnes of barley and 11,000 tonness of sorghum for 2011.
Goetsche added that Tanzania Breweries believed that the alcohol beverage market had the potential to continue to grow at 6% per annum and it was well positioned to capitalise on this, with its balanced brand portfolio and strong commercial team.
Bowman added that SABMiller's new markets in Africa were growing well, with increased capacity.
He said the group was pleased with the outcome of the referendum in Southern Sudan, but he expected it would be challenging for a few years to come as there was little infrastructure there, but sufficient global goodwill to ensure success of the country as a stand-alone state. This year SABMiller is planning a US$15 million investment in Southern Sudan.
In Ethiopia, Ambo Water - a partnership with government - has new capacity in place and is performing well.
The group has also started accounting for Zimbabwe again. While Zimbabwe was not out of the woods yet, Bowman said the group was relatively more optimistic and Zimbabwe, after SA, was one of the group's biggest markets and profitability was improving.
In Nigeria - where the group is a recent entry and is a "bit player" - the group is expanding capacity and Bowman is optimistic that it will get a reasonable return on its investment in Nigeria.
It has also recently commissioned breweries in Angola, Mozambique and Tanzania.
In conclusion, Bowman said that Africa's fundamentals were good and its long-term growth prospects remained positive and the group had strong and defendable market positions. He said the group planned to put in more capacity in markets where it had seen strong growth in the next financial year.
Businesslive
$14 billion needed to revive Zimbabwe's dilapidated infrastructure
by Barnabas Thondhlana
Zimbabwe requires a staggering $14-billion to fund the rehabilitation of is ailing infrastructure, which has suffered from a decade of neglect, says the African Development Bank (AfDB).
“The very huge funding requirment of $14,2-billion for the proposed programmes exceeds the financial capacities of any one group of stakeholders involved in infrastructure services in Zimbabwe,” the bank says in its 53-page report, titled ‘Infrastructure and Growth in Zimbabwe – An Action Plan for Sustained Strong Economic Growth.’
“Successful implementation of the proposed programme will require a partnership that involves national government, State enterprises and local governments with responsibilities for infrastructure services, the donor community and private-sector investors.”
Speaking at the recent Zimbabwe Investment Conference, organised in conjunction with Euromoney, AfDB president Donald Kaberuka said: “Over the past decade, there has been minimal investment and maintenance . . . in transport, power, water and telecommunications.”
The AfDB report says that the proportion of the country’s roads – totalling almost 90 000 km – in the fair to good condition category declined from 73% in 1995 to about 60% during much of the last decade.
“The additional 12 800 km of the road network that was reclassified ‘in poor condition’ requires complete rehabilitation, the cost of which is about $1,1-billion.
“Electricity consumption per capita in Zimbabwe was 738 kWh in 1995, when the average for low-income countries around the world was 414 kWh per capita and the average for sub-Saharan Africa was 437 kWh.”
The reports notes that rehabilitating or building new water supply infrastructure would involve expenditure of $3,7-billion, while $4,3-billion would be required for power infrastructure.
The transport and communications sectors would require $5,6-billion and $116-million respectively.
http://www.engineeringnews.co.za/article/14bn-would-be-needed-to-revive-zimbabwes-dilapidated-infrastructure-2011-03-25
Zimbabwe requires a staggering $14-billion to fund the rehabilitation of is ailing infrastructure, which has suffered from a decade of neglect, says the African Development Bank (AfDB).
“The very huge funding requirment of $14,2-billion for the proposed programmes exceeds the financial capacities of any one group of stakeholders involved in infrastructure services in Zimbabwe,” the bank says in its 53-page report, titled ‘Infrastructure and Growth in Zimbabwe – An Action Plan for Sustained Strong Economic Growth.’
“Successful implementation of the proposed programme will require a partnership that involves national government, State enterprises and local governments with responsibilities for infrastructure services, the donor community and private-sector investors.”
Speaking at the recent Zimbabwe Investment Conference, organised in conjunction with Euromoney, AfDB president Donald Kaberuka said: “Over the past decade, there has been minimal investment and maintenance . . . in transport, power, water and telecommunications.”
The AfDB report says that the proportion of the country’s roads – totalling almost 90 000 km – in the fair to good condition category declined from 73% in 1995 to about 60% during much of the last decade.
“The additional 12 800 km of the road network that was reclassified ‘in poor condition’ requires complete rehabilitation, the cost of which is about $1,1-billion.
“Electricity consumption per capita in Zimbabwe was 738 kWh in 1995, when the average for low-income countries around the world was 414 kWh per capita and the average for sub-Saharan Africa was 437 kWh.”
The reports notes that rehabilitating or building new water supply infrastructure would involve expenditure of $3,7-billion, while $4,3-billion would be required for power infrastructure.
The transport and communications sectors would require $5,6-billion and $116-million respectively.
http://www.engineeringnews.co.za/article/14bn-would-be-needed-to-revive-zimbabwes-dilapidated-infrastructure-2011-03-25
India seeks natural resources in Africa but recognises continent’s development needs
by Keith Campbell
India, today, in purchasing power parity terms, is the fourth-largest economy in the world, with a gross domestic product (GDP) of just over $4-trillion. (In terms of the official exchange rate, India’s GDP is $1,43- trillion.) This is the result of two decades of rapid and sustained economic growth. From 1991 to 2002, this averaged 6% a year, jumping to almost 9% annually for the period 2003 to 2007. The Great Recession slowed this to about 5% in 2008 and some 7,4% in 2009, but it recovered to about 9% last year.
This growth stems from a process of economic reform which started in 1991 and which, in turn, was a response to a fiscal and balance of payments crisis. Despite several changes in administration, this reform process has been sustained. Consequencly, the Indian economy is generally expected to grow by 8% or more this year and by between 7% and 9% annually for the next three to five years. Like the Chinese dragon, the Indian tiger has developed a hunger for raw materials from foreign shores.
Africa, of course, is both rich in resources and relatively close to India. As the Indian economy has boomed, so has trade between the two regions. In 1991, total bilateral Indian-African trade was $965-million; in 2008, it amounted to $35-billion.
Modern economic relations between the two regions date back to the nineteenth century and nearly all Indian foreign investment in the 1960s went to Africa. Between 2000 and 2007, Indian investment in Africa jumped by 837% and, in 2009, Africa hosted about 33% of total Indian foreign investment.
These figures cover total investment in all economic sectors, not just in mining and metals. But there is little doubt that India, as a country, and Indian companies are interested in Africa as a source of raw materials to help feed its growing economy. Already in 2007, Africa supplied some 20% of India’s oil imports.
Earlier this year, speaking in Johannesburg and referring only to South Africa, Indian Commerce and Industry Minister Anand Sharma highlighted that this country has “gold, and we have an insatiable appetite for gold”. “Even during the economic recession, the imports of gold into India increased by 50%. You produce diamonds – five out of every six diamonds which are produced in the world come into Indian hands. We have the world’s largest diamond cutting and polishing industry. We are one of the largest importers of coal from South Africa. India imported 12-million tons of coal from South Africa last year. It is not only gold and diamonds. It is coal, it is manganese ore. You have large deposits of chrome ore. We want . . . to take chrome to the western coast of India for the manu- facture of high-quality steel. You also have the Rustenburg brand of nickel, which is very popular. All that will go [to India].”
Africa’s desire for development is well understood by India and Indians. “India’s approach is very different to China’s,” says South African Institute for International Affairs research associate Frank van Rooyen. “India looks towards Africa as a partner in securing energy and industrial resources. But India seeks – genuinely – to add value. It seeks long-term, mutually beneficial relationships. India sees itself as helping to uplift the peoples of Africa.”
“We took a conscious decision, as part of our partnership with the continent of Africa, [aimed at] the empowerment of people and capacity building, [and at] value addition, to set up, in many places, diamond cutting and polishing centres, so there is local value addition and job creation,” cited Sharma. Thus, an Indian Africa Diamond Institute is to be set up in Botswana by the Indian Diamond Institute Surat, and an Apex Planning Organisation for the Southern African Development Community coal industry is to be established in Mozambique by Coal India and India’s Central Mine Planning and Design Institute. But Indian investment in Africa, across all sectors, has been led by the private sector, not by the major State-owned companies.
Vedanta bought 51% of Zambia’s Konkola Copper Mines (KCM) for $48,2-million, in 2004, later increasing its stake to 79,4%. KCM is Zambia’s largest mining and metals com- pany and has an annual production capacity of 200 000 t of copper. It also produces cobalt, pyrite and sulphuric acid. It has been reported that Vedanta has invested more than $750-million in KCM, including the original purchase price.
Last year, Vedanta bought Skorpion Zinc, in Namibia, off Anglo American for $707-million, as well as Anglo’s 74% share in Black Mountain Mining for $348-million. Black Mountain Mining encompasses the Black Mountain zinc mine and the Gamsberg zinc project, both in South Africa.
India’s Tata megaconglomerate is involved in mining projects in the Côte d’Ivoire and Mozambique. In the Côte d’Ivoire, Tata Steel has a 75% share in Tata Steel Côte d’Ivoire which is developing the Mount Nimba iron-ore project. A detailed feasibility study is under way. Iron-ore from Nimba would be used to feed Tata’s steel operations, particularly in the Netherlands and the UK.
In Mozambique, Tata Steel has a 35% share in Australian company Riversdale Mining’s Benga and Tete coal exploration licences, which, together, cover an area of 24 960 ha. Benga alone has the potential to yield 720-million tons of coking coal. Tata’s share of the coking coal will be used to feed its steel plants around the world, and not just in India.
Further, Tata Steel owns 27,1% of Riversdale itself, and Riversdale also has the Zambeze coal project, in Mozambique, the Riversdale Anthracite Colliery project, in South Africa (in KwaZulu-Natal), and the operating Zululand Anthracite Colliery, also in KwaZulu-Natal. Currently, Riversdale is the subject of a takeover offer from major global miner Rio Tinto, but Tata Steel, which is the single biggest shareholder in the Australian miner, does not seem eager to sell. (Riversdale’s second-biggest shareholder is another steel group – Brazil’s Companhia Siderúrgica Nacional – which has a 17,58% stake but, oddly, no offtake agreement with the coal miner.)
The Essar group’s mining business, Essar Minerals, is undertaking exploration and development of iron-ore, coal and manganese in India, Africa and North and South America. Its African activities are focused on the exploration and geological mapping of five coal blocks in the provinces of Niassa and Tete, in Mozambique.
Two subsidiaries of the OP Jindal group are active in the mining sector in Africa. Last June, Jindal South West Energy announced that it had agreed to buy 70% of South African company Indian Ocean Mining (subject to due diligence). The South African company holds coal prospecting rights in the north-west region of the country. In February, it was reported that Jindal Steel & Power had been awarded a 25-year licence to explore for and mine coal in Mozambique’s Tete province in return for a $180-million investment. The licence covers 21 540 ha.
Much smaller Indian companies are also active. For example, there is Dharni Sampda (previously Taurian Resources – the new name means ‘earth wealth’ in Sanskrit), which has somewhat more than 500 employees – more than 200 in India and more than 300 in Africa.
The company mines manganese in Côte d’Ivoire and has exploration permits for the metal and for bauxite, also in Côte d’Ivoire, and an exploration permit for tantalite in Sierra Leone. Dharni Sampda also has exploration permits for uranium in Niger
It can safely be assumed that other Indian private-sector companies are active or interested in mining opportunities in Africa. And, belatedly, India’s giant State-owned companies are beginning to emulate their private-sector compatriots and Chinese counterparts and seek opportunities in Africa.
In January, Coal India asked the Mozambican government for another five coal exploration blocks in addition to the two already granted. The company revealed that it was ready to invest $400-million in develop- ing mines on its first two blocks, aiming at producing ten-million tons of coal in five years and employing 3 000 Mozambicans. In addition to Mozambique, South Africa and Zimbabwe are on its priority target list, along with Australia, Canada and the US.
Also in January, India’s Ministry of Steel revealed that it was in talks with South Africa to permit State-owned Manganese Ore India to buy manganese assets in this country. NMDC last year signed a 50:50 joint venture agreement with South Africa’s Kopano ke Matla Investments to enter the coal and iron-ore mining sectors in South Africa. The Indian group may also be interested in rock phosphates in Zimbabwe. Nalco is known to be interested in coal, copper and uranium opportunities in Africa and elsewhere to diversify away from aluminium.
Full article at...
Mining Weekly
India, today, in purchasing power parity terms, is the fourth-largest economy in the world, with a gross domestic product (GDP) of just over $4-trillion. (In terms of the official exchange rate, India’s GDP is $1,43- trillion.) This is the result of two decades of rapid and sustained economic growth. From 1991 to 2002, this averaged 6% a year, jumping to almost 9% annually for the period 2003 to 2007. The Great Recession slowed this to about 5% in 2008 and some 7,4% in 2009, but it recovered to about 9% last year.
This growth stems from a process of economic reform which started in 1991 and which, in turn, was a response to a fiscal and balance of payments crisis. Despite several changes in administration, this reform process has been sustained. Consequencly, the Indian economy is generally expected to grow by 8% or more this year and by between 7% and 9% annually for the next three to five years. Like the Chinese dragon, the Indian tiger has developed a hunger for raw materials from foreign shores.
Africa, of course, is both rich in resources and relatively close to India. As the Indian economy has boomed, so has trade between the two regions. In 1991, total bilateral Indian-African trade was $965-million; in 2008, it amounted to $35-billion.
Modern economic relations between the two regions date back to the nineteenth century and nearly all Indian foreign investment in the 1960s went to Africa. Between 2000 and 2007, Indian investment in Africa jumped by 837% and, in 2009, Africa hosted about 33% of total Indian foreign investment.
These figures cover total investment in all economic sectors, not just in mining and metals. But there is little doubt that India, as a country, and Indian companies are interested in Africa as a source of raw materials to help feed its growing economy. Already in 2007, Africa supplied some 20% of India’s oil imports.
Earlier this year, speaking in Johannesburg and referring only to South Africa, Indian Commerce and Industry Minister Anand Sharma highlighted that this country has “gold, and we have an insatiable appetite for gold”. “Even during the economic recession, the imports of gold into India increased by 50%. You produce diamonds – five out of every six diamonds which are produced in the world come into Indian hands. We have the world’s largest diamond cutting and polishing industry. We are one of the largest importers of coal from South Africa. India imported 12-million tons of coal from South Africa last year. It is not only gold and diamonds. It is coal, it is manganese ore. You have large deposits of chrome ore. We want . . . to take chrome to the western coast of India for the manu- facture of high-quality steel. You also have the Rustenburg brand of nickel, which is very popular. All that will go [to India].”
Africa’s desire for development is well understood by India and Indians. “India’s approach is very different to China’s,” says South African Institute for International Affairs research associate Frank van Rooyen. “India looks towards Africa as a partner in securing energy and industrial resources. But India seeks – genuinely – to add value. It seeks long-term, mutually beneficial relationships. India sees itself as helping to uplift the peoples of Africa.”
“We took a conscious decision, as part of our partnership with the continent of Africa, [aimed at] the empowerment of people and capacity building, [and at] value addition, to set up, in many places, diamond cutting and polishing centres, so there is local value addition and job creation,” cited Sharma. Thus, an Indian Africa Diamond Institute is to be set up in Botswana by the Indian Diamond Institute Surat, and an Apex Planning Organisation for the Southern African Development Community coal industry is to be established in Mozambique by Coal India and India’s Central Mine Planning and Design Institute. But Indian investment in Africa, across all sectors, has been led by the private sector, not by the major State-owned companies.
Vedanta bought 51% of Zambia’s Konkola Copper Mines (KCM) for $48,2-million, in 2004, later increasing its stake to 79,4%. KCM is Zambia’s largest mining and metals com- pany and has an annual production capacity of 200 000 t of copper. It also produces cobalt, pyrite and sulphuric acid. It has been reported that Vedanta has invested more than $750-million in KCM, including the original purchase price.
Last year, Vedanta bought Skorpion Zinc, in Namibia, off Anglo American for $707-million, as well as Anglo’s 74% share in Black Mountain Mining for $348-million. Black Mountain Mining encompasses the Black Mountain zinc mine and the Gamsberg zinc project, both in South Africa.
India’s Tata megaconglomerate is involved in mining projects in the Côte d’Ivoire and Mozambique. In the Côte d’Ivoire, Tata Steel has a 75% share in Tata Steel Côte d’Ivoire which is developing the Mount Nimba iron-ore project. A detailed feasibility study is under way. Iron-ore from Nimba would be used to feed Tata’s steel operations, particularly in the Netherlands and the UK.
In Mozambique, Tata Steel has a 35% share in Australian company Riversdale Mining’s Benga and Tete coal exploration licences, which, together, cover an area of 24 960 ha. Benga alone has the potential to yield 720-million tons of coking coal. Tata’s share of the coking coal will be used to feed its steel plants around the world, and not just in India.
Further, Tata Steel owns 27,1% of Riversdale itself, and Riversdale also has the Zambeze coal project, in Mozambique, the Riversdale Anthracite Colliery project, in South Africa (in KwaZulu-Natal), and the operating Zululand Anthracite Colliery, also in KwaZulu-Natal. Currently, Riversdale is the subject of a takeover offer from major global miner Rio Tinto, but Tata Steel, which is the single biggest shareholder in the Australian miner, does not seem eager to sell. (Riversdale’s second-biggest shareholder is another steel group – Brazil’s Companhia Siderúrgica Nacional – which has a 17,58% stake but, oddly, no offtake agreement with the coal miner.)
The Essar group’s mining business, Essar Minerals, is undertaking exploration and development of iron-ore, coal and manganese in India, Africa and North and South America. Its African activities are focused on the exploration and geological mapping of five coal blocks in the provinces of Niassa and Tete, in Mozambique.
Two subsidiaries of the OP Jindal group are active in the mining sector in Africa. Last June, Jindal South West Energy announced that it had agreed to buy 70% of South African company Indian Ocean Mining (subject to due diligence). The South African company holds coal prospecting rights in the north-west region of the country. In February, it was reported that Jindal Steel & Power had been awarded a 25-year licence to explore for and mine coal in Mozambique’s Tete province in return for a $180-million investment. The licence covers 21 540 ha.
Much smaller Indian companies are also active. For example, there is Dharni Sampda (previously Taurian Resources – the new name means ‘earth wealth’ in Sanskrit), which has somewhat more than 500 employees – more than 200 in India and more than 300 in Africa.
The company mines manganese in Côte d’Ivoire and has exploration permits for the metal and for bauxite, also in Côte d’Ivoire, and an exploration permit for tantalite in Sierra Leone. Dharni Sampda also has exploration permits for uranium in Niger
It can safely be assumed that other Indian private-sector companies are active or interested in mining opportunities in Africa. And, belatedly, India’s giant State-owned companies are beginning to emulate their private-sector compatriots and Chinese counterparts and seek opportunities in Africa.
In January, Coal India asked the Mozambican government for another five coal exploration blocks in addition to the two already granted. The company revealed that it was ready to invest $400-million in develop- ing mines on its first two blocks, aiming at producing ten-million tons of coal in five years and employing 3 000 Mozambicans. In addition to Mozambique, South Africa and Zimbabwe are on its priority target list, along with Australia, Canada and the US.
Also in January, India’s Ministry of Steel revealed that it was in talks with South Africa to permit State-owned Manganese Ore India to buy manganese assets in this country. NMDC last year signed a 50:50 joint venture agreement with South Africa’s Kopano ke Matla Investments to enter the coal and iron-ore mining sectors in South Africa. The Indian group may also be interested in rock phosphates in Zimbabwe. Nalco is known to be interested in coal, copper and uranium opportunities in Africa and elsewhere to diversify away from aluminium.
Full article at...
Mining Weekly
Seventh India-Africa trade, investment meet underway
With booming two-way trade, investment deals worth billions of dollars are likely to be discussed at the three-day India-Africa project partnership conclave that starts here March 27, organisers said.
Some 800 delegates from nearly 35 African countries are scheduled to participate at the the seventh such conclave, co-hosted by the Confederation of Indian Industry (CII) and Exim Bank, in cooperation with the ministries of external affairs and commerce.
India's External Affairs Minister S.M. Krishna is scheduled to kick-off the conclave with a special plenary address March 27 at the Taj Palace hotel. The theme this year: Creating Possibilities; Delivering Values.
Officials in India's foreign office said the conclave is also a build-up to the India-Africa Summit in May, scheduled at the Ethiopian capital Addis Ababa, which would be attended by Prime Minister Manmohan Singh.
'Delegates from 31 African countries have confirmed their participation at this year's business conclave so far. The participants include heads of state and government, top ministers, government officials and business leaders,' a CII official said. 'These events provide an opportunity to deepen bilateral economic engagements. They also help African nations to work together and speak in one voice on regional integration,' Nigeria's Foreign Minister H. Odein Ajumogobia said in an interview recently.
In the last six conclaves 1,084 projects worth $56.08 billion were discussed.
'Over the last six years, projects in various areas have been discussed and implemented. The conclave has been successfully able to build a bridge between Indian and African business leaders and officials,' according to a concept note released by the CII.
'The conclave has developed into a platform that has enhanced the presence of 'Brand India' in the African countries. Africa with its look east policy has also found the conclaves a credible access point for appropriate technologies and partners.'
India's trade with African countries has soared by over 400 percent since 2005, when the first conclave was held.
In the last edition, some 500 delegates from 33 African nations, including 29 ministers, had participated. Some 157 projects worth $10.02 billion were discussed in over 1,200 one-to-one business meetings during the last year's conference, the organisers said.
Political leaders at the conclave include African Union Commission Chair Jean Ping, Mozambique Prime Minister Aires Bonifacio Ali, Central African Republic Prime Minister Faustin Archange Touadera, Togo Prime Minister Gilbert Fossoun Houngbo and Somalia Deputy Prime Minister Abdiweli Mohamed Ali.
SIFY
Some 800 delegates from nearly 35 African countries are scheduled to participate at the the seventh such conclave, co-hosted by the Confederation of Indian Industry (CII) and Exim Bank, in cooperation with the ministries of external affairs and commerce.
India's External Affairs Minister S.M. Krishna is scheduled to kick-off the conclave with a special plenary address March 27 at the Taj Palace hotel. The theme this year: Creating Possibilities; Delivering Values.
Officials in India's foreign office said the conclave is also a build-up to the India-Africa Summit in May, scheduled at the Ethiopian capital Addis Ababa, which would be attended by Prime Minister Manmohan Singh.
'Delegates from 31 African countries have confirmed their participation at this year's business conclave so far. The participants include heads of state and government, top ministers, government officials and business leaders,' a CII official said. 'These events provide an opportunity to deepen bilateral economic engagements. They also help African nations to work together and speak in one voice on regional integration,' Nigeria's Foreign Minister H. Odein Ajumogobia said in an interview recently.
In the last six conclaves 1,084 projects worth $56.08 billion were discussed.
'Over the last six years, projects in various areas have been discussed and implemented. The conclave has been successfully able to build a bridge between Indian and African business leaders and officials,' according to a concept note released by the CII.
'The conclave has developed into a platform that has enhanced the presence of 'Brand India' in the African countries. Africa with its look east policy has also found the conclaves a credible access point for appropriate technologies and partners.'
India's trade with African countries has soared by over 400 percent since 2005, when the first conclave was held.
In the last edition, some 500 delegates from 33 African nations, including 29 ministers, had participated. Some 157 projects worth $10.02 billion were discussed in over 1,200 one-to-one business meetings during the last year's conference, the organisers said.
Political leaders at the conclave include African Union Commission Chair Jean Ping, Mozambique Prime Minister Aires Bonifacio Ali, Central African Republic Prime Minister Faustin Archange Touadera, Togo Prime Minister Gilbert Fossoun Houngbo and Somalia Deputy Prime Minister Abdiweli Mohamed Ali.
SIFY
Poor nations struggle to get affordable trade finance
by Jennifer M. Freedman
Traders in poor nations in Africa, Latin America and parts of Asia have “considerable difficulty” obtaining affordable trade finance even as commerce has picked up in the past year, the International Chamber of Commerce said.
Global trade flows rebounded in many locations in 2010, with the recovery driven by increases in North America, Europe and Asia as well as between Asia and the rest of the world, the ICC said in its Trade and Finance Global Survey 2011. The World Trade Organization forecast in September that global commerce would climb 13.5 percent in 2010.
Still, high pricing meant that traders in developing countries found it difficult to access affordable finance, especially import finance, according to the study released today in Zurich. One positive development highlighted in the report, based on the responses of representatives from 210 banks in 94 countries, is that the average price for letters of credit in large emerging economies fell to 70-150 basis points last year from 150-250 basis points in 2009.
“What is needed now is a more targeted use of resources, focusing on the poorer countries and small and medium-sized enterprises around the world,” WTO Director-General Pascal Lamy said in the report. “They should not be paying the high price for the repair and re-regulation of the global finance industry.”
The Geneva-based WTO’s Expert Group on Trade Finance commissioned the survey to track developments in the industry. Respondents said trading conditions in several advanced economies are returning to normal, in terms of liquidity and the availability of trade finance, and the acceptance of risk and pricing has become more favorable.
Africa enjoyed the fastest trade growth between 2009 and 2010, at more than 21 percent, followed by the Asia-Pacific at 10 percent and Central and Latin America at 9.7 percent, according to the report. The large volume of transactions in Asia drove the upswing in trade, rather than Africa, where volumes were small.
Bloomberg
Traders in poor nations in Africa, Latin America and parts of Asia have “considerable difficulty” obtaining affordable trade finance even as commerce has picked up in the past year, the International Chamber of Commerce said.
Global trade flows rebounded in many locations in 2010, with the recovery driven by increases in North America, Europe and Asia as well as between Asia and the rest of the world, the ICC said in its Trade and Finance Global Survey 2011. The World Trade Organization forecast in September that global commerce would climb 13.5 percent in 2010.
Still, high pricing meant that traders in developing countries found it difficult to access affordable finance, especially import finance, according to the study released today in Zurich. One positive development highlighted in the report, based on the responses of representatives from 210 banks in 94 countries, is that the average price for letters of credit in large emerging economies fell to 70-150 basis points last year from 150-250 basis points in 2009.
“What is needed now is a more targeted use of resources, focusing on the poorer countries and small and medium-sized enterprises around the world,” WTO Director-General Pascal Lamy said in the report. “They should not be paying the high price for the repair and re-regulation of the global finance industry.”
The Geneva-based WTO’s Expert Group on Trade Finance commissioned the survey to track developments in the industry. Respondents said trading conditions in several advanced economies are returning to normal, in terms of liquidity and the availability of trade finance, and the acceptance of risk and pricing has become more favorable.
Africa enjoyed the fastest trade growth between 2009 and 2010, at more than 21 percent, followed by the Asia-Pacific at 10 percent and Central and Latin America at 9.7 percent, according to the report. The large volume of transactions in Asia drove the upswing in trade, rather than Africa, where volumes were small.
Bloomberg
Free trade partly responsible for reducing world poverty
by Mark Perry
Ian Fletcher claims here that “Free Trade Isn’t Helping World Poverty,” and Don Boudreaux responds here. Here’s some related research:
From a new NBER working paper “Parametric Estimations of the World Distribution of Income,” by Maxim Pinkovskiy and Xavier Sala-i-Martin (Columbia University):
Abstract: We use a parametric method to estimate the income distribution for 191 countries between 1970 and 2006. We estimate the World Distribution of Income and estimate poverty rates, poverty counts and various measures of income inequality and welfare. Using the official $1/day line, we estimate that world poverty rates have fallen by 80% from 0.268 in 1970 to 0.054 in 2006 (see chart above). The corresponding total number of poor has fallen from 403 million in 1970 to 152 million in 2006. Our estimates of the global poverty count in 2006 are much smaller than found by other researchers. We also find similar reductions in poverty if we use other poverty lines. We find that various measures of global inequality have declined substantially and measures of global welfare increased by somewhere between 128% and 145%. We analyze poverty in various regions.
MP: The bottom chart above shows poverty rates for the five regions analyzed in the paper, with some pretty amazing results for East Asia (includes mainland China, Taiwan and S. Korea), which in 1960 had the highest regional poverty rate in the world by far, at 58.8%, compared to 39.9% for Africa, 11.6% for Latin America, 8.4% for MENA (Middle East, N. Africa) and South Asia (20.1%). In the 36-year period between 1970 and 2006, the poverty rate in East Asia fell to only 1.7% by 2006, which was below any of the other four regions: Africa (31.8%), Latin America (3.1%), MENA (5.2%) and South Asia (2.6%).
Both graphs are based on a poverty measure of $1/day, but the authors obtain similar results using four other measures of poverty from $2 to $10 per day, both for the overall reduction in world poverty (top graph) and the regional differences (bottom graph).
Bottom Line: Assuming these estimates are accurate, the 80% reduction in poverty between 1970 and 2006 has to be the greatest reduction in world poverty in such a short time span in the history of the world, and the 97% reduction in East Asia has to be the most significant improvement in regional standard of living in history as well. The authors don’t explore the reasons for the record reduction in world poverty, but some likely candidates might be: globalization, market-based reforms, liberalization, Information Age technology, productivity gains in agriculture, the collapse of central planning in China and India, etc.
Daily Markets
Ian Fletcher claims here that “Free Trade Isn’t Helping World Poverty,” and Don Boudreaux responds here. Here’s some related research:
From a new NBER working paper “Parametric Estimations of the World Distribution of Income,” by Maxim Pinkovskiy and Xavier Sala-i-Martin (Columbia University):
Abstract: We use a parametric method to estimate the income distribution for 191 countries between 1970 and 2006. We estimate the World Distribution of Income and estimate poverty rates, poverty counts and various measures of income inequality and welfare. Using the official $1/day line, we estimate that world poverty rates have fallen by 80% from 0.268 in 1970 to 0.054 in 2006 (see chart above). The corresponding total number of poor has fallen from 403 million in 1970 to 152 million in 2006. Our estimates of the global poverty count in 2006 are much smaller than found by other researchers. We also find similar reductions in poverty if we use other poverty lines. We find that various measures of global inequality have declined substantially and measures of global welfare increased by somewhere between 128% and 145%. We analyze poverty in various regions.
MP: The bottom chart above shows poverty rates for the five regions analyzed in the paper, with some pretty amazing results for East Asia (includes mainland China, Taiwan and S. Korea), which in 1960 had the highest regional poverty rate in the world by far, at 58.8%, compared to 39.9% for Africa, 11.6% for Latin America, 8.4% for MENA (Middle East, N. Africa) and South Asia (20.1%). In the 36-year period between 1970 and 2006, the poverty rate in East Asia fell to only 1.7% by 2006, which was below any of the other four regions: Africa (31.8%), Latin America (3.1%), MENA (5.2%) and South Asia (2.6%).
Both graphs are based on a poverty measure of $1/day, but the authors obtain similar results using four other measures of poverty from $2 to $10 per day, both for the overall reduction in world poverty (top graph) and the regional differences (bottom graph).
Bottom Line: Assuming these estimates are accurate, the 80% reduction in poverty between 1970 and 2006 has to be the greatest reduction in world poverty in such a short time span in the history of the world, and the 97% reduction in East Asia has to be the most significant improvement in regional standard of living in history as well. The authors don’t explore the reasons for the record reduction in world poverty, but some likely candidates might be: globalization, market-based reforms, liberalization, Information Age technology, productivity gains in agriculture, the collapse of central planning in China and India, etc.
Daily Markets
Zimbabwe, China sign $585 million in trade pacts
Zimbabwe and China on March 21 signed a raft of agreements worth $585 million (413 million euros) aimed at reviving the southern African country's health, mining and agriculture sectors.
"We acknowledge the efforts by the China Development Bank to engage government in supporting Zimbabwe's most critical areas of energy, mining, transport, agriculture, manufacturing and tourism," said Zimbabwean Vice President Joice Mujuru.
The signing ceremony was also attended by Chinese Vice Premier Wang Qishan, who is in Zimbabwe on an official visit.
Wang pledged support for Zimbabwe's fledgling economic recovery since the launch of the power-sharing deal. And he promised to lobby for the lifting of Western sanctions on Mugabe and his inner circle.
He also said China supported Zimbabwe's equity law, which seeks to give locals a majority stake in foreign-owned companies, but asked for protection for Chinese firms.
"We understand and appreciate the indigenisation policy, but we ask you to protect the legitimate rights of Chinese businesses," he said.
The agreements included $342 million for an agricultural machinery scheme, $99.5 million for medicine and $144 million for the rehabilitation of sewers in the capital, Harare. The two countries were also discussing a $102-million loan from China's Export-Import Bank.
Zimbabwe and China have political ties dating back to before Zimbabwe's independence in 1980, when Beijing provided arms and training to guerrillas fighting British colonial rule.
China has also been pivotal in protecting Zimbabwe at the United Nations. In 2008, China vetoed a UN Security Council resolution seeking sanctions against Harare
AFP
"We acknowledge the efforts by the China Development Bank to engage government in supporting Zimbabwe's most critical areas of energy, mining, transport, agriculture, manufacturing and tourism," said Zimbabwean Vice President Joice Mujuru.
The signing ceremony was also attended by Chinese Vice Premier Wang Qishan, who is in Zimbabwe on an official visit.
Wang pledged support for Zimbabwe's fledgling economic recovery since the launch of the power-sharing deal. And he promised to lobby for the lifting of Western sanctions on Mugabe and his inner circle.
He also said China supported Zimbabwe's equity law, which seeks to give locals a majority stake in foreign-owned companies, but asked for protection for Chinese firms.
"We understand and appreciate the indigenisation policy, but we ask you to protect the legitimate rights of Chinese businesses," he said.
The agreements included $342 million for an agricultural machinery scheme, $99.5 million for medicine and $144 million for the rehabilitation of sewers in the capital, Harare. The two countries were also discussing a $102-million loan from China's Export-Import Bank.
Zimbabwe and China have political ties dating back to before Zimbabwe's independence in 1980, when Beijing provided arms and training to guerrillas fighting British colonial rule.
China has also been pivotal in protecting Zimbabwe at the United Nations. In 2008, China vetoed a UN Security Council resolution seeking sanctions against Harare
AFP
Emirates expect more trade with COMESA
by Abdul Basit
COMESA plays a key role in the productive trade and economic alliance between the UAE and Africa, UAE Minister of Foreign Trade Shaikha Lubna Al Qasimi said.
Al Qasimi predicted that the trade between the UAE and COMESA is expected to jump significantly as first ten months figures are already exceeded the total trade of 2009.
The UAE’s trade with COMESA is equivalent to 52 per cent of its total trade with Africa during the first 10 months of 2010. For the period UAE trade with COMESA bloc jumped by 6.3 per cent.
“Relations between the UAE and COMESA have witnessed substantial growth over the past 10 years. Our trade has increased 8-fold during this period and has gone up from $636 million in 1999 to $5.675 billion 2009,” Al Qasimi said during a panel session at COMESA Forum.
Other panelists include Chirau Ali Mwakwere, Minister for Trade, Kenya; Ahmed bin Ali, Group Senior Vice President Corporate Communications, Etisalat Group; Peter Kiguta, Director General (Customs and Trade), East African Community and Charles Mbire, Chairman, MTN Uganda. The UAE as a whole is a gateway to a regional import market worth over $150 billion covering 1.4 billion potential consumers. With more than 170 shipping lines and over 80 airlines and an open market imposing no exchange controls, quotas or trade barriers, Dubai, the UAE’s most vibrant business hub facilitates the smooth flow of goods to the local and regional markets.
“Dubai in particular has been very active in fostering strong trade relations with COMESA and encouraging trade to and from the bloc. As the Middle East’s recognised commercial hub, our host emirate offers COMESA and international businesses with a broad range of opportunities for various activities such as trade, transport and distribution, and manufacturing and processing,” the minister said.
“COMESA and other foreign companies planning to set up operations in the UAE and Dubai, will find many attractive cost advantages, including zero corporate and income taxes, and cheap energy. Moreover, current average tariffs imposed on imports into the UAE stand at 5 per cent, which is much less than the international allowed ceiling of 14.3 per cent,” she said. At the start of the two-day event, encouraging statements from opening session speakers set the tone for healthy discussions among delegates from COMESA, Dubai, the UAE, the GCC and the rest of the world.
Kenya’s minister Ali Mwakwere said, “If Dubai does business and trade with COMESA member states then it can get advantage of COMESA member enjoys.” He said the bloc has increased trade with rest of the world and Dubai can take advantage of this window. Best entry point is East Africa, he added.
He said that food stuff is great opportunity for Dubai to promote its food processing industry. “We also have a lot of land, which is not cultivated. It is another opportunity for agriculture sector.”
Dubai can take advantage of the affordable skilled available in the bloc, he said, adding: “There are also opportunities to explore mining sector in the bloc.”
MTN Uganda’s Mbire said, “We look for partners and want one-to-one relationship. We can help them understand business plan in Africa.”
Peter Kiguta said, “We are negotiating outside the region and promoting investment in power, railways and infrastructure development.”
Khaleej Times
COMESA plays a key role in the productive trade and economic alliance between the UAE and Africa, UAE Minister of Foreign Trade Shaikha Lubna Al Qasimi said.
Al Qasimi predicted that the trade between the UAE and COMESA is expected to jump significantly as first ten months figures are already exceeded the total trade of 2009.
The UAE’s trade with COMESA is equivalent to 52 per cent of its total trade with Africa during the first 10 months of 2010. For the period UAE trade with COMESA bloc jumped by 6.3 per cent.
“Relations between the UAE and COMESA have witnessed substantial growth over the past 10 years. Our trade has increased 8-fold during this period and has gone up from $636 million in 1999 to $5.675 billion 2009,” Al Qasimi said during a panel session at COMESA Forum.
Other panelists include Chirau Ali Mwakwere, Minister for Trade, Kenya; Ahmed bin Ali, Group Senior Vice President Corporate Communications, Etisalat Group; Peter Kiguta, Director General (Customs and Trade), East African Community and Charles Mbire, Chairman, MTN Uganda. The UAE as a whole is a gateway to a regional import market worth over $150 billion covering 1.4 billion potential consumers. With more than 170 shipping lines and over 80 airlines and an open market imposing no exchange controls, quotas or trade barriers, Dubai, the UAE’s most vibrant business hub facilitates the smooth flow of goods to the local and regional markets.
“Dubai in particular has been very active in fostering strong trade relations with COMESA and encouraging trade to and from the bloc. As the Middle East’s recognised commercial hub, our host emirate offers COMESA and international businesses with a broad range of opportunities for various activities such as trade, transport and distribution, and manufacturing and processing,” the minister said.
“COMESA and other foreign companies planning to set up operations in the UAE and Dubai, will find many attractive cost advantages, including zero corporate and income taxes, and cheap energy. Moreover, current average tariffs imposed on imports into the UAE stand at 5 per cent, which is much less than the international allowed ceiling of 14.3 per cent,” she said. At the start of the two-day event, encouraging statements from opening session speakers set the tone for healthy discussions among delegates from COMESA, Dubai, the UAE, the GCC and the rest of the world.
Kenya’s minister Ali Mwakwere said, “If Dubai does business and trade with COMESA member states then it can get advantage of COMESA member enjoys.” He said the bloc has increased trade with rest of the world and Dubai can take advantage of this window. Best entry point is East Africa, he added.
He said that food stuff is great opportunity for Dubai to promote its food processing industry. “We also have a lot of land, which is not cultivated. It is another opportunity for agriculture sector.”
Dubai can take advantage of the affordable skilled available in the bloc, he said, adding: “There are also opportunities to explore mining sector in the bloc.”
MTN Uganda’s Mbire said, “We look for partners and want one-to-one relationship. We can help them understand business plan in Africa.”
Peter Kiguta said, “We are negotiating outside the region and promoting investment in power, railways and infrastructure development.”
Khaleej Times
Kenya and Brazil explore trade deals
Kenya and Brazil have taken the first step towards reducing the trade gap between them with the opening of the first Brazil East Africa trade expo.
Trade between the two countries is currently in favor of Brazil, with Kenya exporting goods worth Sh81 million while at the same time importing goods worth Sh5 billion from Brazil in 2009.
The expo was opened by Vice president Kalonzo Musyoka who said discussions are ongoing between Emblair and Kenya Airways in which the latter will use its capacity and maintenance experience to provide a base for maintenance, repair and service for the Emblair fleet operating in African skies.
Nairobi Star
Trade between the two countries is currently in favor of Brazil, with Kenya exporting goods worth Sh81 million while at the same time importing goods worth Sh5 billion from Brazil in 2009.
The expo was opened by Vice president Kalonzo Musyoka who said discussions are ongoing between Emblair and Kenya Airways in which the latter will use its capacity and maintenance experience to provide a base for maintenance, repair and service for the Emblair fleet operating in African skies.
Nairobi Star
Zimbabwe to reduce state shareholding in agricultural lender
by Kudzai Chimhangwa
The government of Zimbabwe soon offload its shares in Agribank in order to make the bank more competitive after Cabinet authorised the cash- strapped state-owned bank to seek strategic partners, Finance minister Tendai Biti said on March 19.
Biti said this at the official signing of the memorandum of understanding and commercial agreement between the Industrial Development Corporation (IDC) South Africa and Agribank for a US$30 million loan facility.
The two banks have agreed on a six-year facility for medium term use and is concessional with a capital grace repayment of one year.
"This event is the Bilateral Investment Promotion and Protection Agreement signed between Zimbabwe and South Africa in action," said Biti adding that when Agribank becomes more competitive, strategic partners can be taken on board through an initial public offering.
The funding arrangement comes at a time when Agribank is restructuring and has closed nine branches in various parts of the country as well as retrenching 160 employees.
Biti explained that Zimbabwe's economy needed capital in the form of foreign direct investment contributing between 15 to 25% of Gross Domestic Product (GDP) and internal savings constituting 30% of GDP.
Ufikile Khumalo, the IDC executive director said that the signing ceremony mark-ed the beginning of greater levels of co-operation between the institution and other Zimbabwean entities.
"IDC South Africa intends to broaden the investment footprint in the economy," said Khumalo adding that over US$80 million worth of investments have been made in various companies in Zimbabwe, among them Delta and Econet.
"We are well placed to strengthen the region's backbone in the agricultural sector, mining, manufacturing, Information and Communication Technology, retail, capacity building and any other sectors that we may agree upon from time to time," he said.
Khumalo pointed out that the professional manner in which the negotiations were conducted gave the institution confidence and re-assurance that the funds would be used for the intended purposes.
Agribank CEO Sam Malaba said the memorandum of understanding is the culmination of lengthy negotiations also buttressed by the Sadc Finance and Investment protocol recently ratified by Namibia, which promotes co-operation between regional countries in developmental financing.
Malaba said that US$20 million would be allocated to companies with interests in agro-processing, horticulture, fertilisers and food processing among others.
"The other US$10 million will be disbursed towards IDC Zimbabwe subsidiaries," he said.
The Standard
The government of Zimbabwe soon offload its shares in Agribank in order to make the bank more competitive after Cabinet authorised the cash- strapped state-owned bank to seek strategic partners, Finance minister Tendai Biti said on March 19.
Biti said this at the official signing of the memorandum of understanding and commercial agreement between the Industrial Development Corporation (IDC) South Africa and Agribank for a US$30 million loan facility.
The two banks have agreed on a six-year facility for medium term use and is concessional with a capital grace repayment of one year.
"This event is the Bilateral Investment Promotion and Protection Agreement signed between Zimbabwe and South Africa in action," said Biti adding that when Agribank becomes more competitive, strategic partners can be taken on board through an initial public offering.
The funding arrangement comes at a time when Agribank is restructuring and has closed nine branches in various parts of the country as well as retrenching 160 employees.
Biti explained that Zimbabwe's economy needed capital in the form of foreign direct investment contributing between 15 to 25% of Gross Domestic Product (GDP) and internal savings constituting 30% of GDP.
Ufikile Khumalo, the IDC executive director said that the signing ceremony mark-ed the beginning of greater levels of co-operation between the institution and other Zimbabwean entities.
"IDC South Africa intends to broaden the investment footprint in the economy," said Khumalo adding that over US$80 million worth of investments have been made in various companies in Zimbabwe, among them Delta and Econet.
"We are well placed to strengthen the region's backbone in the agricultural sector, mining, manufacturing, Information and Communication Technology, retail, capacity building and any other sectors that we may agree upon from time to time," he said.
Khumalo pointed out that the professional manner in which the negotiations were conducted gave the institution confidence and re-assurance that the funds would be used for the intended purposes.
Agribank CEO Sam Malaba said the memorandum of understanding is the culmination of lengthy negotiations also buttressed by the Sadc Finance and Investment protocol recently ratified by Namibia, which promotes co-operation between regional countries in developmental financing.
Malaba said that US$20 million would be allocated to companies with interests in agro-processing, horticulture, fertilisers and food processing among others.
"The other US$10 million will be disbursed towards IDC Zimbabwe subsidiaries," he said.
The Standard
Kenya opens Africa's first carbon exchange
by Beatrice Gachenge
Kenya opened Africa's first climate exchange platform on March 24, expected to unlock trade in carbon credits on the continent and benefit small scale projects.
Carbon markets are intended to cut the cost of fighting climate change by giving companies the flexibility either to reduce their own greenhouse gases or buy emissions permits.
The Africa Carbon Exchange in east Africa's biggest economy will provide holders of carbon credits with easier access to global markets and information, which in turn is expected to increase foreign investor interest in the region.
"The exchange will pull a lot of foreign direct investments through development of more carbon projects. We will start with a futures market in May and progress to spot once more projects are registered," said Tsuma Charo, chief executive officer at Africa Carbon Exchange (ACX).
Kenya has 17 projects awaiting registration by the executive board of the CDM, while three have already received approval, Charo said.
"In the next five years, Kenya will have attracted about $1 billion in foreign direct investments worth of business in the energy sector alone," he said.
Schemes like those under the U.N. Kyoto Protocol's Clean Development Mechanism (CDM), promote investments in emission-reducing projects in the developing world by companies and governments in rich nations.
In return for building wind farms or other projects, such investments can earn valuable carbon offsets called certified emission reductions (CERs) that can be sold for profit or used to meet mandatory targets to cut emissions.
ACX said it had received several enquiries from other African countries interested in trading their credits.
"We have received very strong interest from Uganda, Zambia, Rwanda and after the launch we expect more African interest," John Kihumba, chairman of ACX, told a news conference during the exchange's launch.
GreenNext Sustainability Ltd, a Kenyan environmental management consulting firm, has been selling credits to international buyers who have access to global markets, but had to contend with low earnings due to high transactional costs.
"They dictated prices and take off their commissions which means the prices we got for our clients are not as good," said James Mwangi, managing director at GreenNext. "With a local exchange we can probably try and influence the prices because the transactional costs are lower."
Mwangi said small scale climate projects would be the main beneficiaries of a local climate exchange platform, since they would have access to the market, previously a hard task.
Mwangi, who previously traded at most three projects in a quarter said the exchange would attract more players and was projected to at least trade one project per month.
Reuters
Kenya opened Africa's first climate exchange platform on March 24, expected to unlock trade in carbon credits on the continent and benefit small scale projects.
Carbon markets are intended to cut the cost of fighting climate change by giving companies the flexibility either to reduce their own greenhouse gases or buy emissions permits.
The Africa Carbon Exchange in east Africa's biggest economy will provide holders of carbon credits with easier access to global markets and information, which in turn is expected to increase foreign investor interest in the region.
"The exchange will pull a lot of foreign direct investments through development of more carbon projects. We will start with a futures market in May and progress to spot once more projects are registered," said Tsuma Charo, chief executive officer at Africa Carbon Exchange (ACX).
Kenya has 17 projects awaiting registration by the executive board of the CDM, while three have already received approval, Charo said.
"In the next five years, Kenya will have attracted about $1 billion in foreign direct investments worth of business in the energy sector alone," he said.
Schemes like those under the U.N. Kyoto Protocol's Clean Development Mechanism (CDM), promote investments in emission-reducing projects in the developing world by companies and governments in rich nations.
In return for building wind farms or other projects, such investments can earn valuable carbon offsets called certified emission reductions (CERs) that can be sold for profit or used to meet mandatory targets to cut emissions.
ACX said it had received several enquiries from other African countries interested in trading their credits.
"We have received very strong interest from Uganda, Zambia, Rwanda and after the launch we expect more African interest," John Kihumba, chairman of ACX, told a news conference during the exchange's launch.
GreenNext Sustainability Ltd, a Kenyan environmental management consulting firm, has been selling credits to international buyers who have access to global markets, but had to contend with low earnings due to high transactional costs.
"They dictated prices and take off their commissions which means the prices we got for our clients are not as good," said James Mwangi, managing director at GreenNext. "With a local exchange we can probably try and influence the prices because the transactional costs are lower."
Mwangi said small scale climate projects would be the main beneficiaries of a local climate exchange platform, since they would have access to the market, previously a hard task.
Mwangi, who previously traded at most three projects in a quarter said the exchange would attract more players and was projected to at least trade one project per month.
Reuters
Zambia's Chinese-owned copper plant workers strike
More than 600 workers at Zambia's Chinese-owned Chambishi Copper Smelter have downed tools demanding a pay rise, bringing production at the plant to a halt, a union official said on March 25.
Chambishi, a joint venture of China Nonferrous Metals Corporation (CNMC) and Yunnan Copper Industry about 370 km north of Lusaka, processes 150,000 tonnes of blister copper per annum.
Mundia Sikufele, president of the National Union of Mining and Allied Workers, said the strike started on March 24 after the management offered a 12 percent pay rise, which the workers rejected.
"There is no production because the workers did not enter the plant yesterday and even today they are outside demanding for a higher offer," Sikufele said. He could not say how much the workers are demanding.
"The management has indicated readiness to renegotiate on condition that the workers call off the strike immediately," Sikufele said.
First Quantum Minerals' Kansanshi mine and Chibuluma mine, owned by South Africa's Metorex, last year joined Equinox Minerals' Lumwana mine in using Chambishi for processing copper concentrates.
The Chambishi smelter is located in an economic zone where Zambian authorities are waiving taxes to attract investments and encourage value addition to raw copper.
Reuters
Chambishi, a joint venture of China Nonferrous Metals Corporation (CNMC) and Yunnan Copper Industry about 370 km north of Lusaka, processes 150,000 tonnes of blister copper per annum.
Mundia Sikufele, president of the National Union of Mining and Allied Workers, said the strike started on March 24 after the management offered a 12 percent pay rise, which the workers rejected.
"There is no production because the workers did not enter the plant yesterday and even today they are outside demanding for a higher offer," Sikufele said. He could not say how much the workers are demanding.
"The management has indicated readiness to renegotiate on condition that the workers call off the strike immediately," Sikufele said.
First Quantum Minerals' Kansanshi mine and Chibuluma mine, owned by South Africa's Metorex, last year joined Equinox Minerals' Lumwana mine in using Chambishi for processing copper concentrates.
The Chambishi smelter is located in an economic zone where Zambian authorities are waiving taxes to attract investments and encourage value addition to raw copper.
Reuters
How Japan’s earthquake will affect Africa
by Claude Harding
Africa should brace itself for a decline in aid and trade flows with Japan following the devastating earthquake last week that hit the world’s third-largest economy, according to a Standard Bank report released on March 18.
The total value of trade and investment flows between Africa and Japan in 2010 stood at US$24 billion.
The earthquake and resulting tsunami has so far left an estimated 16,000 people dead and about 400,000 more homeless. The negative economic spill-over effects are expected to further add to the already sluggish global economy.
The report, written by the bank’s research analysts, Simon Freemantle and Jeremy Stevens, warns that this will have a material impact on African markets and economies because of the considerable linkages between Japan and Africa.
“Quite clearly, African countries must prepare for an inevitable decrease in trade and aid volumes with Japan in the near and perhaps even medium-term,” note Freemantle and Stevens. “The linkages between Japan and Africa – both direct and indirect – are certainly substantial. Therefore, any renewed bout of risk aversion, dent in external demand, shelving of investment, swings in terms of trade, and fall in aid commitments will be harmful.”
Freemantle and Stevens further note that the net effect in the short term will be harmful for those economies most linked to Japan, with countries like South Africa expected to be most affected from a trade perspective.
In terms of overseas development assistance, countries such as Tanzania and Sudan may feel the pinch, while from an investment perspective, Africa’s larger economies, particularly South Africa and perhaps Nigeria, will experience “marginal compression”.
How we made it in Africa
Africa should brace itself for a decline in aid and trade flows with Japan following the devastating earthquake last week that hit the world’s third-largest economy, according to a Standard Bank report released on March 18.
The total value of trade and investment flows between Africa and Japan in 2010 stood at US$24 billion.
The earthquake and resulting tsunami has so far left an estimated 16,000 people dead and about 400,000 more homeless. The negative economic spill-over effects are expected to further add to the already sluggish global economy.
The report, written by the bank’s research analysts, Simon Freemantle and Jeremy Stevens, warns that this will have a material impact on African markets and economies because of the considerable linkages between Japan and Africa.
“Quite clearly, African countries must prepare for an inevitable decrease in trade and aid volumes with Japan in the near and perhaps even medium-term,” note Freemantle and Stevens. “The linkages between Japan and Africa – both direct and indirect – are certainly substantial. Therefore, any renewed bout of risk aversion, dent in external demand, shelving of investment, swings in terms of trade, and fall in aid commitments will be harmful.”
Freemantle and Stevens further note that the net effect in the short term will be harmful for those economies most linked to Japan, with countries like South Africa expected to be most affected from a trade perspective.
In terms of overseas development assistance, countries such as Tanzania and Sudan may feel the pinch, while from an investment perspective, Africa’s larger economies, particularly South Africa and perhaps Nigeria, will experience “marginal compression”.
How we made it in Africa
March 21, 2011
1 Investment in African economies shifting away from raw materials
2 Free trade isn't helping reduce world poverty
3 UN advises East Africa against food export ban
4 Tanzania container traffic seen up 10 percent in 2011
5 Zimbabwe cellphone operator receives Chinese bank loan
6 Ugandan importers face frustration at Kenyan ports
7 Bribes proving costly for West African truckers
8 India exempts Least Developed Countrys' exports from duty
9 Niger ups oil reserves estimate
10 Canada seeks closer economic ties with Africa
11 Rwanda completes fibre optic network
12 South Africa 2010 gold production down on 2009
2 Free trade isn't helping reduce world poverty
3 UN advises East Africa against food export ban
4 Tanzania container traffic seen up 10 percent in 2011
5 Zimbabwe cellphone operator receives Chinese bank loan
6 Ugandan importers face frustration at Kenyan ports
7 Bribes proving costly for West African truckers
8 India exempts Least Developed Countrys' exports from duty
9 Niger ups oil reserves estimate
10 Canada seeks closer economic ties with Africa
11 Rwanda completes fibre optic network
12 South Africa 2010 gold production down on 2009
Investment in African economies shifting away from raw materials
by Isolda Agazzi
Local and foreign investment on the African continent is slowly moving away from agriculture and raw materials to manufacturing, services, communication and tourism, despite poor infrastructure and low skills levels.
"Africa is the last frontier of growth. In the past, investment opportunities were mainly in oil, diamonds and property. But today resources are diversifying, with 60 percent of growth coming from non-traditional sectors, such as retail, manufacturing, financial services, telecoms, real estate and tourism", stated Nozipho January-Bardill.
She is the group executive for corporate affairs at Mobile Telephone Networks (MTN), a South African company that has invested in 21 countries, both in Africa and in the Middle East.
While most economies have contracted during the recession, African gross domestic product (GDP) has been expanding, she told the fourth Swiss- African business exchange, a gathering of businesspeople from Switzerland and African states that ended Mar 17.
"Africa is in a take-off phase, with foreign direct investment (FDI) increasing from 15 billion dollars to 80 billion dollars in eight years. And the per capita GDP of the top performing economies - Algeria, Botswana, South Africa, Libya, Mauritius, Morocco and Tunisia - exceed that of BRIC (Brazil, Russia, India and China), the traditional emerging countries," January-Bardill noted.
In 2008, the collective GDP of the continent was 1,6 trillion dollars - equal to Brazil’s or Russia. In 2020, it is expected to be 2,6 trillion dollars.
African governments are playing a larger role in foreign investment. In the World Investment Report 2010, UNCTAD noticed that developing countries are increasingly pursuing a double strategy: attracting foreign investment while, at the same time, regulating it and directing it to sectors that are conducive to development.
Maggie Kogozi, the executive director of the Uganda Investment Authority, said that, "our aim is to attract investment, both foreign and local. Since we have an educated workforce, we want it to go into value-addition: manufacturing, services, information and communication technologies, the financial sector, education and health are picking up quite well. There are also tourism opportunities, with a big need for hotel and lodges."
Uganda, like other countries, is also rich in petroleum and minerals. "But the good news is that they are still in the ground, so now we can manage them better," she said. "We have a strong standards and environmental body and a solid revenue authority, so we are ready to exploit our resources."
With six billion barrels to be exploited, Uganda is putting out bids for an oil refinery in the country. It has also huge deposits of gold and a gold refinery for processing the metal locally, thanks to Russian investment. "And we would like that model for everything: adding value before we export," Kogozi affirmed.
But there are problems too. Infrastructure remains the most obvious area to improve. Infrastructure bottlenecks, such as poor road networks, inefficient railway systems and expensive and unreliable electricity supply, are major hurdles.
"Most of Africa needs to be rebuilt or constructed from scratch," said January- Bardill. "The cost of transport is very high. Like it is often said, Africa is expensive because it is poor and it is poor because it is expensive."
Another challenge is the skills shortage. But new forms of FDI herald a new era, as foreign companies supply capital and new management methods, skills and technology. "We want to encourage all people to invest in Africa. I would like to invite you to think of the continent in a more positive light and to see opportunities the way they are," she concluded.
Ramadhan R. Madabida, CEO of the Tanzania Pharmaceutical Industry (TPI), is also looking for investors. This state enterprise was privatised in 1997. "When we took over, it had a loss of about one million dollars, but last year we made 250,000 dollars profit.
"The local production of pharmaceuticals, especially in least developed countries (LDCs), is viable and feasible. It depends on a workable public private partnership, technical know-how, market size and cost structure. But there are technical and human resources gaps in poor resource-based settings like Tanzania that need to be filled by technology transfers," Madabida added.
TPI produces and sells generic medicines for anti-malaria and AIDS-related diseases. As an LDC, Tanzania can benefit from the flexibilities of the World Trade Organisation’s Trade-Related Aspects of Intellectual Property rights (TRIPS) agreement and does not have to patent medicines till 2016.
Malaria and HIV/AIDS make up more than 75 percent of medical needs in the country. There are about 1.2 million people living with HIV and 350,000 people who need AIDS treatment immediately.
The government of Tanzania supports local pharmaceutical industries by giving exclusive tenders for all items that can be made locally. It also has abolished import duties on many inputs.
"The vision," said Madabida, "is to transform TPI to become the regional pharmaceutical technology centre of excellence. Our mission is to break the cycle of dependency."
The total investment required is 12 million dollars. Some 5,3 million dollars have already been invested and another 6,4 million dollars will be invested by December 2011.
The potential for total demand in the country is of 165 million dollars, of which anti-malaria represents 30-40 percent of all drugs needs.
"The demand-supply gap amounts to 104 million dollars, so further investment is justified. There is a huge potential market for pharmaceutical products in East, Central and Southern Africa," he concluded.
IPS
Local and foreign investment on the African continent is slowly moving away from agriculture and raw materials to manufacturing, services, communication and tourism, despite poor infrastructure and low skills levels.
"Africa is the last frontier of growth. In the past, investment opportunities were mainly in oil, diamonds and property. But today resources are diversifying, with 60 percent of growth coming from non-traditional sectors, such as retail, manufacturing, financial services, telecoms, real estate and tourism", stated Nozipho January-Bardill.
She is the group executive for corporate affairs at Mobile Telephone Networks (MTN), a South African company that has invested in 21 countries, both in Africa and in the Middle East.
While most economies have contracted during the recession, African gross domestic product (GDP) has been expanding, she told the fourth Swiss- African business exchange, a gathering of businesspeople from Switzerland and African states that ended Mar 17.
"Africa is in a take-off phase, with foreign direct investment (FDI) increasing from 15 billion dollars to 80 billion dollars in eight years. And the per capita GDP of the top performing economies - Algeria, Botswana, South Africa, Libya, Mauritius, Morocco and Tunisia - exceed that of BRIC (Brazil, Russia, India and China), the traditional emerging countries," January-Bardill noted.
In 2008, the collective GDP of the continent was 1,6 trillion dollars - equal to Brazil’s or Russia. In 2020, it is expected to be 2,6 trillion dollars.
African governments are playing a larger role in foreign investment. In the World Investment Report 2010, UNCTAD noticed that developing countries are increasingly pursuing a double strategy: attracting foreign investment while, at the same time, regulating it and directing it to sectors that are conducive to development.
Maggie Kogozi, the executive director of the Uganda Investment Authority, said that, "our aim is to attract investment, both foreign and local. Since we have an educated workforce, we want it to go into value-addition: manufacturing, services, information and communication technologies, the financial sector, education and health are picking up quite well. There are also tourism opportunities, with a big need for hotel and lodges."
Uganda, like other countries, is also rich in petroleum and minerals. "But the good news is that they are still in the ground, so now we can manage them better," she said. "We have a strong standards and environmental body and a solid revenue authority, so we are ready to exploit our resources."
With six billion barrels to be exploited, Uganda is putting out bids for an oil refinery in the country. It has also huge deposits of gold and a gold refinery for processing the metal locally, thanks to Russian investment. "And we would like that model for everything: adding value before we export," Kogozi affirmed.
But there are problems too. Infrastructure remains the most obvious area to improve. Infrastructure bottlenecks, such as poor road networks, inefficient railway systems and expensive and unreliable electricity supply, are major hurdles.
"Most of Africa needs to be rebuilt or constructed from scratch," said January- Bardill. "The cost of transport is very high. Like it is often said, Africa is expensive because it is poor and it is poor because it is expensive."
Another challenge is the skills shortage. But new forms of FDI herald a new era, as foreign companies supply capital and new management methods, skills and technology. "We want to encourage all people to invest in Africa. I would like to invite you to think of the continent in a more positive light and to see opportunities the way they are," she concluded.
Ramadhan R. Madabida, CEO of the Tanzania Pharmaceutical Industry (TPI), is also looking for investors. This state enterprise was privatised in 1997. "When we took over, it had a loss of about one million dollars, but last year we made 250,000 dollars profit.
"The local production of pharmaceuticals, especially in least developed countries (LDCs), is viable and feasible. It depends on a workable public private partnership, technical know-how, market size and cost structure. But there are technical and human resources gaps in poor resource-based settings like Tanzania that need to be filled by technology transfers," Madabida added.
TPI produces and sells generic medicines for anti-malaria and AIDS-related diseases. As an LDC, Tanzania can benefit from the flexibilities of the World Trade Organisation’s Trade-Related Aspects of Intellectual Property rights (TRIPS) agreement and does not have to patent medicines till 2016.
Malaria and HIV/AIDS make up more than 75 percent of medical needs in the country. There are about 1.2 million people living with HIV and 350,000 people who need AIDS treatment immediately.
The government of Tanzania supports local pharmaceutical industries by giving exclusive tenders for all items that can be made locally. It also has abolished import duties on many inputs.
"The vision," said Madabida, "is to transform TPI to become the regional pharmaceutical technology centre of excellence. Our mission is to break the cycle of dependency."
The total investment required is 12 million dollars. Some 5,3 million dollars have already been invested and another 6,4 million dollars will be invested by December 2011.
The potential for total demand in the country is of 165 million dollars, of which anti-malaria represents 30-40 percent of all drugs needs.
"The demand-supply gap amounts to 104 million dollars, so further investment is justified. There is a huge potential market for pharmaceutical products in East, Central and Southern Africa," he concluded.
IPS
Nigeria-India trade booming
With bilateral trade booming and Indian investments seen to double in two years, Nigeria has pushed for direct flights to facilitate business travel between the two countries, the country's foreign minister, H. Odein Ajumogobia, has said on a visit to India.
'Our bilateral trade was over $10 billion in 2010 and total Indian investment in Nigeria is around $5 billion. I would like to see that double in a short time -- two years. It is quite possible if we focus on specific areas,' Ajumogobia said in an interview.
He said power, oil and gas, financial services and agriculture were four critical areas in which Indian companies could play a significant role in capacity building in Nigeria, among the fastest-expanding economies in Africa with a 7-percent average growth.
'It took me eight hours to fly from Abuja to Dubai and another three hours from Dubai to New Delhi, not counting the stop-over. A direct flight will reduce the hassle and travel time,' said Ajumogobia. 'We are actively negotiating a bilateral air-service agreement with Indian authorities to start the direct flights as soon as possible,' he said, referring to the talks that had started in 2007 during Indian Prime Minister Manmohan Singh's visit to Abuja.
Nigeria is India's largest trading partner in Africa. Bilateral trade grew 50 percent in the first half of this fiscal with the two-way import-export for the year set to top $12 billion. Indian investments have also risen in Nigeria, estimated at $5 billion.
The minister also spoke about Nigeria's engagement with India in oil and gas sectors and said his country was supplying five percent of India's oil needs. He said oil imports, now at 60,000 barrels per day, will increase soon to 80,000 barrels.
Ajumogobia said there were over 100 Indian firms operating in Nigeria in hydrocarbons, power, telecom, textiles, chemicals, electrical equipment, pharmaceuticals, plastics, software and auto sectors.
Sify
'Our bilateral trade was over $10 billion in 2010 and total Indian investment in Nigeria is around $5 billion. I would like to see that double in a short time -- two years. It is quite possible if we focus on specific areas,' Ajumogobia said in an interview.
He said power, oil and gas, financial services and agriculture were four critical areas in which Indian companies could play a significant role in capacity building in Nigeria, among the fastest-expanding economies in Africa with a 7-percent average growth.
'It took me eight hours to fly from Abuja to Dubai and another three hours from Dubai to New Delhi, not counting the stop-over. A direct flight will reduce the hassle and travel time,' said Ajumogobia. 'We are actively negotiating a bilateral air-service agreement with Indian authorities to start the direct flights as soon as possible,' he said, referring to the talks that had started in 2007 during Indian Prime Minister Manmohan Singh's visit to Abuja.
Nigeria is India's largest trading partner in Africa. Bilateral trade grew 50 percent in the first half of this fiscal with the two-way import-export for the year set to top $12 billion. Indian investments have also risen in Nigeria, estimated at $5 billion.
The minister also spoke about Nigeria's engagement with India in oil and gas sectors and said his country was supplying five percent of India's oil needs. He said oil imports, now at 60,000 barrels per day, will increase soon to 80,000 barrels.
Ajumogobia said there were over 100 Indian firms operating in Nigeria in hydrocarbons, power, telecom, textiles, chemicals, electrical equipment, pharmaceuticals, plastics, software and auto sectors.
Sify
Free trade isn't helping reduce world poverty
by Ian Fletcher
The propaganda for free trade tells us that not only is it the master key to our own prosperity, but also the master key to lifting the world's poor out of poverty. So if we don't support free trade, we're in for a guilt trip like the one that used to make us stick quarters into UNICEF boxes.
Unfortunately, free trade just doesn't work as a global anti-poverty strategy. The spreading Third World affluence one sees in TV commercials only means that the thin upper crust of Western-style consumers is now more widespread than ever before. But having more affluent people in the Third World is not the same as the Third World as a whole nearing the living standards of the First.
This is actually not a terribly big secret, and is fairly well known to the people who promote free trade. For a start, the World Bank standard for poverty is $2 a day, so "moving people out of poverty" can merely consist in moving people from $1.99 a day to $2.01 a day. In one major study, there were only two nations in which the average beneficiary jumped from less than $1.88 to more than $2.13: Pakistan and Thailand. Every other nation was making minor jumps in between.
The developing world's gains from trade liberalization (insofar as there are any) are concentrated in a relatively small group of nations, due to the fact that only a few developing nations have economies that are actually capable of taking advantage of freer trade to any meaningful extent.
Although it depends a bit on the model, China, India, Brazil, Mexico, Argentina, Vietnam, and Turkey generally take the lion's share. This list sounds impressive, but it actually leaves out most Third World nations. Dirt-poor nations like Haiti aren't even on the radar. Even nations one notch up the scale, like Bolivia, barely figure.
So forget helping starving children in Africa this way. They're not even in the game of international trade--let alone winners of it.
Like it or not, this is perfectly logical, as increased access to the ruthlessly competitive global marketplace (which is all free trade provides) benefits only nations whose industries have something to sell which foreign trade barriers are currently keeping out. Their industries must both be strong enough to be globally competitive and have pent-up potential due to trade barriers abroad, a fairly rare combination.
As a result, the most desperately impoverished nations, which have few or no internationally competitive industries, have basically nothing to gain from freer trade.
What progress against poverty has occurred in the world in recent decades has not been due to free trade, but due to the embrace of mercantilism and industrial policy by some poor nations. (This is, of course, the same way nations like the U.S. and England became prosperous hundreds of years ago.) According to the World Bank, the entire net global decline in the number of people living in poverty since 1981 has been in mercantilist China, where free trade is spurned. Elsewhere, their numbers have grown.
The story on global economic progress for poor nations in the last 30 years is roughly as follows:
1. China (one fifth of humanity) braked its population growth, made a quantum leap from agrarian Marxism to industrial mercantilism, and thrived--largely because the U.S. was so open to being the "designated driver" of its export-centered growth strategy during this period.
2. India (another fifth) sharply increased the capitalist share of its mixture of capitalism and Gandhian-Fabian socialism after 1991. It did reasonably well, but not as well as China and not well enough to reduce the absolute number of its people living in poverty, given unbraked population growth.
3. Latin America lost its way after the oil shocks of the 1970s, experienced the 1980s as an economic "lost decade," and tried to implement the free market Washington Consensus in the 1990s. It didn't get the promised results, so some nations responded with a pragmatic retreat from free market purism, others with a lurch to the left, the former showing results in the last five years or so.
4. The collapse of Communism left some nations (Cuba, North Korea) marooned in Marxist poverty, while others (Uzbekistan, Mongolia) discovered that the only thing worse than an intact communist economy is the wreckage of one. Much of Eastern Europe and the ex-USSR got burned by an overly abrupt transition to capitalism, then recovered at various speeds.
5. Sub-Saharan Africa spent much of this period in political chaos, with predictable economic results (except for South Africa and Botswana). Washington Consensus policies in the 1990s did not deliver, and the few recent bright spots have yet to deliver increased per capita income or lower unemployment.
6. Other poor countries followed patterns one through five to varying degrees, with corresponding outcomes.
China is unquestionably the star here. But all its brutally efficient achievements in forcing up the living standards of its people from an extremely low base, it still has serious problems. Its growth miracle has been largely confined to the metropolitan areas of the country's coastal provinces. Of the 800 million peasants left behind in agriculture, perhaps 400 million have seen their incomes stagnate or even decline.
Over the last 30 years of greatly expanding free trade, most of the world's poor nations have actually seen the gap between themselves and the rest of the world increase. As economist Dani Rodrik of Harvard summarizes the data:
The income gap between these regions of the developing world and the industrial countries has been steadily rising. In 1980, 32 Sub-Saharan countries had an income per capita at purchasing power parity equal to 9.3 percent of the U.S. level, while 25 Latin American and Caribbean countries had an income equal to 26.3 percent of the U.S. average. By 2004, the numbers had dropped to 6.1 percent and 16.5 percent respectively for these two regions. This represents a drop of over 35 percent in relative per capita income.
Today, because a few formerly poor nations are succeeding economically while most have been hit with economic decline, the world is splitting into a "twin peaks" income distribution, with a hollowing out of middle-income countries.
A significant number of nations have gone backwards, and are now poorer than they were a generation ago. Most poor nations have high fertility, so population growth drags down their per capita income by a percentage point or two every year if economic growth does not outpace it.
Contrary to impressions in the media, economic success is actually becoming more concentrated in the Western world, not less. According to one summary of the data by Syed Murshed of Erasmus University in Holland:
Between 1960 and 2000 the Western share of rich countries has been increasing; to be affluent has almost become an exclusive Western prerogative--16 out of 19 non-Western nations who were rich in 1960 traversed into less affluent categories by 2000 (for example, Algeria, Angola, and Argentina). Against that, four Asian non-rich countries moved into the first group.
Most non-Western rich nations in 1960 joined the second income group by 2000, and most non-Western upper-middle-income countries in 1960 had fallen into the second and third categories by 2000. Of 22 upper-middle-income nations in 1960, 20 had declined into the third and fourth income categories, among them the Democratic Republic of the Congo, also known recently as Zaire, and Ghana. Most nations in the third group in 1960 descended into the lowest income category by 2000. Only Botswana moved to the third group from the fourth category, while Egypt remains in the third category.
We seem to inhabit a downwardly mobile world with a vanishing middle class; by 2000 most countries were either rich or poor, in contrast to 1960 when most nations were in the middle-income groups. (Emphasis added.)
This is no accident. Free trade tends to mean that the industrial sectors of developing nations either "make it to the big time" and become globally competitive, or else they get killed off entirely by imports, leaving nothing but agriculture and raw materials extraction, dead-end sectors which tend not to grow very fast.
Free trade eliminates the protected middle ground for economies, like Mongolia or Peru, which don't have globally competitive industrial sectors but were still better off having such sectors, albeit inefficient ones, than not having them at all. The productivity of modern industry is so much higher than peasant agriculture that it raises average income even if it is not globally competitive.
Nations which open up their economies to (somewhat) free trade relatively late in their development, and continue to support domestic firms with industrial policy, are far more likely to retain medium and high technology industry, the key to their futures, than nations which embrace full-blown free trade and a laissez faire absence of industrial policy too early in their development.
There are numerous documented cases in which trade liberalization simply killed off indigenous industries without supplying anything to replace them. To take some typical examples given by the International Forum on Globalization:
Senegal experienced large job losses following liberalization in the late 1980s; by the early 1990s, employment cuts had eliminated one-third of all manufacturing jobs. The chemical, textile, shoe, and automobile assembly industries virtually collapsed in the Ivory Coast after tariffs were abruptly lowered by 40 percent in 1986. Similar problems have plagued liberalization attempts in Nigeria. In Sierra Leone, Zambia, Zaire, Uganda, Tanzania, and the Sudan, liberalization in the 1980s brought a tremendous surge in consumer imports and sharp cutbacks in foreign exchange available for purchases of intermediate inputs and capital goods, with devastating effects on industrial output and employment. In Ghana, liberalization caused industrial sector employment to plunge from 78,700 in 1987 to 28,000 in 1993.
One unhappy corollary of this is the so-called Vanek-Reinert effect, in which the most advanced sectors of a primitive economy are the ones destroyed by a sudden transition to free trade. Once these sectors are gone, a nation can be locked in poverty indefinitely.
Huffington Post
The propaganda for free trade tells us that not only is it the master key to our own prosperity, but also the master key to lifting the world's poor out of poverty. So if we don't support free trade, we're in for a guilt trip like the one that used to make us stick quarters into UNICEF boxes.
Unfortunately, free trade just doesn't work as a global anti-poverty strategy. The spreading Third World affluence one sees in TV commercials only means that the thin upper crust of Western-style consumers is now more widespread than ever before. But having more affluent people in the Third World is not the same as the Third World as a whole nearing the living standards of the First.
This is actually not a terribly big secret, and is fairly well known to the people who promote free trade. For a start, the World Bank standard for poverty is $2 a day, so "moving people out of poverty" can merely consist in moving people from $1.99 a day to $2.01 a day. In one major study, there were only two nations in which the average beneficiary jumped from less than $1.88 to more than $2.13: Pakistan and Thailand. Every other nation was making minor jumps in between.
The developing world's gains from trade liberalization (insofar as there are any) are concentrated in a relatively small group of nations, due to the fact that only a few developing nations have economies that are actually capable of taking advantage of freer trade to any meaningful extent.
Although it depends a bit on the model, China, India, Brazil, Mexico, Argentina, Vietnam, and Turkey generally take the lion's share. This list sounds impressive, but it actually leaves out most Third World nations. Dirt-poor nations like Haiti aren't even on the radar. Even nations one notch up the scale, like Bolivia, barely figure.
So forget helping starving children in Africa this way. They're not even in the game of international trade--let alone winners of it.
Like it or not, this is perfectly logical, as increased access to the ruthlessly competitive global marketplace (which is all free trade provides) benefits only nations whose industries have something to sell which foreign trade barriers are currently keeping out. Their industries must both be strong enough to be globally competitive and have pent-up potential due to trade barriers abroad, a fairly rare combination.
As a result, the most desperately impoverished nations, which have few or no internationally competitive industries, have basically nothing to gain from freer trade.
What progress against poverty has occurred in the world in recent decades has not been due to free trade, but due to the embrace of mercantilism and industrial policy by some poor nations. (This is, of course, the same way nations like the U.S. and England became prosperous hundreds of years ago.) According to the World Bank, the entire net global decline in the number of people living in poverty since 1981 has been in mercantilist China, where free trade is spurned. Elsewhere, their numbers have grown.
The story on global economic progress for poor nations in the last 30 years is roughly as follows:
1. China (one fifth of humanity) braked its population growth, made a quantum leap from agrarian Marxism to industrial mercantilism, and thrived--largely because the U.S. was so open to being the "designated driver" of its export-centered growth strategy during this period.
2. India (another fifth) sharply increased the capitalist share of its mixture of capitalism and Gandhian-Fabian socialism after 1991. It did reasonably well, but not as well as China and not well enough to reduce the absolute number of its people living in poverty, given unbraked population growth.
3. Latin America lost its way after the oil shocks of the 1970s, experienced the 1980s as an economic "lost decade," and tried to implement the free market Washington Consensus in the 1990s. It didn't get the promised results, so some nations responded with a pragmatic retreat from free market purism, others with a lurch to the left, the former showing results in the last five years or so.
4. The collapse of Communism left some nations (Cuba, North Korea) marooned in Marxist poverty, while others (Uzbekistan, Mongolia) discovered that the only thing worse than an intact communist economy is the wreckage of one. Much of Eastern Europe and the ex-USSR got burned by an overly abrupt transition to capitalism, then recovered at various speeds.
5. Sub-Saharan Africa spent much of this period in political chaos, with predictable economic results (except for South Africa and Botswana). Washington Consensus policies in the 1990s did not deliver, and the few recent bright spots have yet to deliver increased per capita income or lower unemployment.
6. Other poor countries followed patterns one through five to varying degrees, with corresponding outcomes.
China is unquestionably the star here. But all its brutally efficient achievements in forcing up the living standards of its people from an extremely low base, it still has serious problems. Its growth miracle has been largely confined to the metropolitan areas of the country's coastal provinces. Of the 800 million peasants left behind in agriculture, perhaps 400 million have seen their incomes stagnate or even decline.
Over the last 30 years of greatly expanding free trade, most of the world's poor nations have actually seen the gap between themselves and the rest of the world increase. As economist Dani Rodrik of Harvard summarizes the data:
The income gap between these regions of the developing world and the industrial countries has been steadily rising. In 1980, 32 Sub-Saharan countries had an income per capita at purchasing power parity equal to 9.3 percent of the U.S. level, while 25 Latin American and Caribbean countries had an income equal to 26.3 percent of the U.S. average. By 2004, the numbers had dropped to 6.1 percent and 16.5 percent respectively for these two regions. This represents a drop of over 35 percent in relative per capita income.
Today, because a few formerly poor nations are succeeding economically while most have been hit with economic decline, the world is splitting into a "twin peaks" income distribution, with a hollowing out of middle-income countries.
A significant number of nations have gone backwards, and are now poorer than they were a generation ago. Most poor nations have high fertility, so population growth drags down their per capita income by a percentage point or two every year if economic growth does not outpace it.
Contrary to impressions in the media, economic success is actually becoming more concentrated in the Western world, not less. According to one summary of the data by Syed Murshed of Erasmus University in Holland:
Between 1960 and 2000 the Western share of rich countries has been increasing; to be affluent has almost become an exclusive Western prerogative--16 out of 19 non-Western nations who were rich in 1960 traversed into less affluent categories by 2000 (for example, Algeria, Angola, and Argentina). Against that, four Asian non-rich countries moved into the first group.
Most non-Western rich nations in 1960 joined the second income group by 2000, and most non-Western upper-middle-income countries in 1960 had fallen into the second and third categories by 2000. Of 22 upper-middle-income nations in 1960, 20 had declined into the third and fourth income categories, among them the Democratic Republic of the Congo, also known recently as Zaire, and Ghana. Most nations in the third group in 1960 descended into the lowest income category by 2000. Only Botswana moved to the third group from the fourth category, while Egypt remains in the third category.
We seem to inhabit a downwardly mobile world with a vanishing middle class; by 2000 most countries were either rich or poor, in contrast to 1960 when most nations were in the middle-income groups. (Emphasis added.)
This is no accident. Free trade tends to mean that the industrial sectors of developing nations either "make it to the big time" and become globally competitive, or else they get killed off entirely by imports, leaving nothing but agriculture and raw materials extraction, dead-end sectors which tend not to grow very fast.
Free trade eliminates the protected middle ground for economies, like Mongolia or Peru, which don't have globally competitive industrial sectors but were still better off having such sectors, albeit inefficient ones, than not having them at all. The productivity of modern industry is so much higher than peasant agriculture that it raises average income even if it is not globally competitive.
Nations which open up their economies to (somewhat) free trade relatively late in their development, and continue to support domestic firms with industrial policy, are far more likely to retain medium and high technology industry, the key to their futures, than nations which embrace full-blown free trade and a laissez faire absence of industrial policy too early in their development.
There are numerous documented cases in which trade liberalization simply killed off indigenous industries without supplying anything to replace them. To take some typical examples given by the International Forum on Globalization:
Senegal experienced large job losses following liberalization in the late 1980s; by the early 1990s, employment cuts had eliminated one-third of all manufacturing jobs. The chemical, textile, shoe, and automobile assembly industries virtually collapsed in the Ivory Coast after tariffs were abruptly lowered by 40 percent in 1986. Similar problems have plagued liberalization attempts in Nigeria. In Sierra Leone, Zambia, Zaire, Uganda, Tanzania, and the Sudan, liberalization in the 1980s brought a tremendous surge in consumer imports and sharp cutbacks in foreign exchange available for purchases of intermediate inputs and capital goods, with devastating effects on industrial output and employment. In Ghana, liberalization caused industrial sector employment to plunge from 78,700 in 1987 to 28,000 in 1993.
One unhappy corollary of this is the so-called Vanek-Reinert effect, in which the most advanced sectors of a primitive economy are the ones destroyed by a sudden transition to free trade. Once these sectors are gone, a nation can be locked in poverty indefinitely.
Huffington Post
UN advises East Africa against food export ban
by William Davison
The United Nations food agency warned East African nations against using export bans to combat record food prices and urged them instead to consider reducing import duties.
Bans on shipments implemented by African and South Asian countries in the past “may be negative in the long term” because they may reduce global trade, said Castro Camarada, the Food and Agricultural Organization’s East Africa coordinator..
As a net importer of food and dependent on food aid, the region is especially vulnerable to prices that surged to a new peak for the eighth successive month in February, according to the FAO’s Food Price Index.
Reducing import duties “could be a favorable” response as long as countries have the “budget to deal with it,” Camarada said.
Ethiopia’s temporary abolition of some taxes on food items was partly responsible for the rate of growth in food prices slowing from 44.3 percent in 2009 to a 5.5 percent decline in 2010, State Minister of Finance Abraham Tekeste said to the FAO and African Union conference.
Bloomberg
The United Nations food agency warned East African nations against using export bans to combat record food prices and urged them instead to consider reducing import duties.
Bans on shipments implemented by African and South Asian countries in the past “may be negative in the long term” because they may reduce global trade, said Castro Camarada, the Food and Agricultural Organization’s East Africa coordinator..
As a net importer of food and dependent on food aid, the region is especially vulnerable to prices that surged to a new peak for the eighth successive month in February, according to the FAO’s Food Price Index.
Reducing import duties “could be a favorable” response as long as countries have the “budget to deal with it,” Camarada said.
Ethiopia’s temporary abolition of some taxes on food items was partly responsible for the rate of growth in food prices slowing from 44.3 percent in 2009 to a 5.5 percent decline in 2010, State Minister of Finance Abraham Tekeste said to the FAO and African Union conference.
Bloomberg
Tanzania container traffic seen up 10 percent in 2011
Container volumes handled by Tanzania's Dar es Salaam port are expected to rise by 10 percent this year after the port operator invested in new cargo handling equipment.
Tanzania International Container Terminal Services (TICTS), a unit of Hutchison Port Holdings, said it plans to move 373,000 twenty-foot equivalent units (TEUs) this year, up from 337,547 in 2010.
TICTS, a private company that operates Dar es Salaam's container terminal, handled 325,557 TEUs in 2009.
"New shipping lines are showing interest in calling at Dar es Salaam and current shipping lines are also looking to increase the frequency of calls by adding vessels to their current east Africa rotation," the port operator's chief executive officer Neville Bissett said.
The port operator said it had invested in additional cargo handling equipment and installed a new terminal operating system to improve efficiency at the port, which is struggling with traffic congestion.
Bissett said the port would improve to meet the future demands of Tanzania and its neighbouring land-linked countries and to place Dar es Salaam as the leading port in Africa.
Dar es Salaam port has a capacity to handle 3.1 million tonnes of general cargo.
In addition to Tanzania, the port handles cargo to and from the Democratic Republic of the Congo (DCR), Zambia, Uganda, Rwanda, Malawi and Burundi.
Reuters
Tanzania International Container Terminal Services (TICTS), a unit of Hutchison Port Holdings, said it plans to move 373,000 twenty-foot equivalent units (TEUs) this year, up from 337,547 in 2010.
TICTS, a private company that operates Dar es Salaam's container terminal, handled 325,557 TEUs in 2009.
"New shipping lines are showing interest in calling at Dar es Salaam and current shipping lines are also looking to increase the frequency of calls by adding vessels to their current east Africa rotation," the port operator's chief executive officer Neville Bissett said.
The port operator said it had invested in additional cargo handling equipment and installed a new terminal operating system to improve efficiency at the port, which is struggling with traffic congestion.
Bissett said the port would improve to meet the future demands of Tanzania and its neighbouring land-linked countries and to place Dar es Salaam as the leading port in Africa.
Dar es Salaam port has a capacity to handle 3.1 million tonnes of general cargo.
In addition to Tanzania, the port handles cargo to and from the Democratic Republic of the Congo (DCR), Zambia, Uganda, Rwanda, Malawi and Burundi.
Reuters
Zimbabwe cellphone operator receives Chinese bank loan
by Fanuel Kangondo
Zimbabwean mobile phone operator NetOne last week received a shot in the arm when it signed a US$45 million loan agreement with the China Exim Bank to fund network expansion and other modernisation projects.
Stanbic Bank will handle the fund disbursement for the projects to be undertaken by Huawei Technologies of China, long-term partners with NetOne.
NetOne managing director Mr Reward Kangai said, "This is an exciting development since we were waiting for capital injection to oil our operations, especially on network expansion and modernisation. This money will be channelled towards not only rolling out more base stations in previously uncovered areas to cast our coverage net even wider, but also towards providing our customers with access to the Internet," he said.
NetOne is a State-owned mobile phone service provider that has been lagging behind the two other companies in the sector, Econet and Telecel, due to capital constraints.
The loan was ratified by Parliament late last year and comes with a grace period of five years during which only the interest and no principal is payable by NetOne to the Chinese bank.
The loan could not have come at a more opportune time as other competing networks, Econet and Telecel are racing with the rollout of 3G and 4G technology which has improved Internet access for most cellphone users.
Mr Kangai said his company was looking forward to increased co-operation between China Exim Bank and Huawei Technologies in the company's next phase of development of the network as it seeks to improve performance.
"We are currently rolling out wireless broadband base stations to ensure that our customers can soon be accessing high speed wireless services on our network. NetOne is already rolling out high-speed wireless infrastructure, and this shot in the arm by China Exim Bank, could not have come at a more opportune time, given the high capital requirements for such an infrastructure deployment."
Net One has two mobile switching centres, one from Huawei Technologies in the southern region stationed in Bulawayo that was upgraded in 2009 with a marked improvement of service quality and the other in Harare supplied by Nokia Siemens Networks.
NetOne recently replaced its old legacy MSC in Harare with a 'soft switch' that uses the Internet Protocol (IP) for routing calls, a move that was not only a major technological leap but also expanded the capacity of the network.
With the other firms investing heavily in broadband service, NetOne will have to accelerate its rollout programme to ensure that it keeps abreast of the latest trends in communications. Taking advantage of its wide network coverage, the mobile phone company has to focus on retaining its customers while at the same time adding value to the services they provide.
Zimbabwean mobile phone operator NetOne last week received a shot in the arm when it signed a US$45 million loan agreement with the China Exim Bank to fund network expansion and other modernisation projects.
Stanbic Bank will handle the fund disbursement for the projects to be undertaken by Huawei Technologies of China, long-term partners with NetOne.
NetOne managing director Mr Reward Kangai said, "This is an exciting development since we were waiting for capital injection to oil our operations, especially on network expansion and modernisation. This money will be channelled towards not only rolling out more base stations in previously uncovered areas to cast our coverage net even wider, but also towards providing our customers with access to the Internet," he said.
NetOne is a State-owned mobile phone service provider that has been lagging behind the two other companies in the sector, Econet and Telecel, due to capital constraints.
The loan was ratified by Parliament late last year and comes with a grace period of five years during which only the interest and no principal is payable by NetOne to the Chinese bank.
The loan could not have come at a more opportune time as other competing networks, Econet and Telecel are racing with the rollout of 3G and 4G technology which has improved Internet access for most cellphone users.
Mr Kangai said his company was looking forward to increased co-operation between China Exim Bank and Huawei Technologies in the company's next phase of development of the network as it seeks to improve performance.
"We are currently rolling out wireless broadband base stations to ensure that our customers can soon be accessing high speed wireless services on our network. NetOne is already rolling out high-speed wireless infrastructure, and this shot in the arm by China Exim Bank, could not have come at a more opportune time, given the high capital requirements for such an infrastructure deployment."
Net One has two mobile switching centres, one from Huawei Technologies in the southern region stationed in Bulawayo that was upgraded in 2009 with a marked improvement of service quality and the other in Harare supplied by Nokia Siemens Networks.
NetOne recently replaced its old legacy MSC in Harare with a 'soft switch' that uses the Internet Protocol (IP) for routing calls, a move that was not only a major technological leap but also expanded the capacity of the network.
With the other firms investing heavily in broadband service, NetOne will have to accelerate its rollout programme to ensure that it keeps abreast of the latest trends in communications. Taking advantage of its wide network coverage, the mobile phone company has to focus on retaining its customers while at the same time adding value to the services they provide.
Ugandan importers face frustration at Kenyan ports
by Jacob Mulaku
Stringent, tedious and rather illogical measures put in place by the Kenya Revenue Authority to curb the dumping of transit cargo into the local market, has seen Ugandan importers threatening to withdraw the use of the port of Mombasa and instead divert the business to the neighbouring port of Dar es salaam in Tanzania, which they say has fair and flowing system of cargo clearance.
Most affected are used car importers who have to put up with long delays and extra costs in the fitting of the introduced e-seal to help in the delivery of the vehicles to the border of Malaba or Busia.
The seal under the name of Electronic Cargo Tracking System is to help in the monitoring of the car movements from the time it leaves the port until it arrives at the point of exit into Uganda, giving no room for diversion into the local market.
The importers have complained that despite KRA putting the measure in place, they don’t have the capacity to deal with the same.
This reporter wanted to know the procedure involved, and so he approached Mr Paul Miguni of Bayonne Freight Forwarders Ltd."This process is just an opening for corruption; the idea in itself is pure corruption," said Mr Miguni."The idea is said to be a KRA initiative, the contract was awarded to SGS (an inspection firm).We don’t understand how the contract ended up in another private firm's hands, who are charging exorbitant fee for the installation of the gadget.
Moreover, they don’t have the capacity to handle the large volume of cars that leave the port every day, making us stuck with our clients cars for days and at the same time incurring extra port charges on top of the normal charges," Mr Miguni lamented.
It is now official that all cars on transit to Uganda whose engine capacity exceeds 2000cc have to be fitted with this special tracking gadget before being released from the port by KRA.
Initially, it was a requirement that one pays $850 (almost equivalent of freight charged from Japan to Mombasa), but upon complain from the clearing and forwarding agents and the importers the fee was drastically reduced to $100 as deposit, an additional of $15 for a three day use of the gadget and $6 thereafter daily until the gadget is demounted from the car at the border point.
The question many importers are asking is "how does this process help KRA other than just giving business to a private firm?" Suspicion is high that the company awarded the tender could be in one way or the other be related to senior ranking officials at KRA.
"These measures are not in good faith and genuine, we believe this is yet another scandal that calls for investigation by the Anti Corruption Authority," said a clearing agent at the port of Mombasa.
The Ugandan importers are now threatening to move to the port of Dar es salaam due to delays at the port of Mombasa and high costs involved in clearance of their cargo at Mombasa.
France 24
Stringent, tedious and rather illogical measures put in place by the Kenya Revenue Authority to curb the dumping of transit cargo into the local market, has seen Ugandan importers threatening to withdraw the use of the port of Mombasa and instead divert the business to the neighbouring port of Dar es salaam in Tanzania, which they say has fair and flowing system of cargo clearance.
Most affected are used car importers who have to put up with long delays and extra costs in the fitting of the introduced e-seal to help in the delivery of the vehicles to the border of Malaba or Busia.
The seal under the name of Electronic Cargo Tracking System is to help in the monitoring of the car movements from the time it leaves the port until it arrives at the point of exit into Uganda, giving no room for diversion into the local market.
The importers have complained that despite KRA putting the measure in place, they don’t have the capacity to deal with the same.
This reporter wanted to know the procedure involved, and so he approached Mr Paul Miguni of Bayonne Freight Forwarders Ltd."This process is just an opening for corruption; the idea in itself is pure corruption," said Mr Miguni."The idea is said to be a KRA initiative, the contract was awarded to SGS (an inspection firm).We don’t understand how the contract ended up in another private firm's hands, who are charging exorbitant fee for the installation of the gadget.
Moreover, they don’t have the capacity to handle the large volume of cars that leave the port every day, making us stuck with our clients cars for days and at the same time incurring extra port charges on top of the normal charges," Mr Miguni lamented.
It is now official that all cars on transit to Uganda whose engine capacity exceeds 2000cc have to be fitted with this special tracking gadget before being released from the port by KRA.
Initially, it was a requirement that one pays $850 (almost equivalent of freight charged from Japan to Mombasa), but upon complain from the clearing and forwarding agents and the importers the fee was drastically reduced to $100 as deposit, an additional of $15 for a three day use of the gadget and $6 thereafter daily until the gadget is demounted from the car at the border point.
The question many importers are asking is "how does this process help KRA other than just giving business to a private firm?" Suspicion is high that the company awarded the tender could be in one way or the other be related to senior ranking officials at KRA.
"These measures are not in good faith and genuine, we believe this is yet another scandal that calls for investigation by the Anti Corruption Authority," said a clearing agent at the port of Mombasa.
The Ugandan importers are now threatening to move to the port of Dar es salaam due to delays at the port of Mombasa and high costs involved in clearance of their cargo at Mombasa.
France 24
Bribes proving costly for West African truckers
by Niels Rasmussen
In 2010, transport stakeholders in the public and private sectors in West Africa launched Borderless, a regional advocacy campaign to remove trade barriers. As more and more people understand how road governance and inefficient systems and procedures contribute to high transport costs, the Borderless campaign is providing them with a platform to resolve these problems.
The issue of poor road governance is most visible at checkpoints along primary trade corridors across West Africa. At these checkpoints, drivers – even of legal and roadworthy trucks - face delays and bribes that contribute to the region’s high transport costs – costs that seriously hurt the region’s ability to compete in world markets.
That’s the take-home lesson of a unique monitoring and reporting system set up by the regional body, l’Union economique et monetaire ouest africaine (UEMOA), and the USAID West Africa Trade Hub, where I am the director of transport.
UEMOA and the USAID Trade Hub have published quarterly reports on the extent of the problem since 2006. Drivers voluntarily collect data as they haul loads from ports in Abidjan, Dakar, Lome and Tema to the capitals of landlocked Burkina Faso and Mali, Ouagadougou and Bamako, respectively. The USAID Trade Hub’s transport specialists conduct verification tours of the routes to cross-check the information that drivers collect.
Certainly, the region’s high transport costs are not all attributable to the corrupt practices of unscrupulous officials at checkpoints. Comprehensive studies of all costs that traders incur when they import or export goods to or from West Africa are leading to a better understanding of why the region has such high transport costs. The USAID Trade Hub published the first of these studies in April 2010, looking at the Tema-Ouagadougou corridor; the next ones will look at costs on the Lome-Ouagadougou and Tema-Bamako corridors.
Separate studies by the World Bank and the USAID Trade Hub have revealed that restrictive regulations of the trucking sector also contribute to the high cost and inefficiency of the West Africa transport industry.
The Borderless advocacy campaign also considers regional trade policy: the ECOWAS Trade Liberalization Scheme is a set of protocols, decisions and resolutions that are meant to harmonize procedures and policies across the region, ultimately leading to a free trade area. Studies by the USAID Trade Hub in five countries show that Member States are not fully implementing the scheme.
I’m pleased to introduce this work in this first blog entry and interested to hear feedback on it. In the next column, I’ll talk more in depth about how our work is leading to real change.
Trust
In 2010, transport stakeholders in the public and private sectors in West Africa launched Borderless, a regional advocacy campaign to remove trade barriers. As more and more people understand how road governance and inefficient systems and procedures contribute to high transport costs, the Borderless campaign is providing them with a platform to resolve these problems.
The issue of poor road governance is most visible at checkpoints along primary trade corridors across West Africa. At these checkpoints, drivers – even of legal and roadworthy trucks - face delays and bribes that contribute to the region’s high transport costs – costs that seriously hurt the region’s ability to compete in world markets.
That’s the take-home lesson of a unique monitoring and reporting system set up by the regional body, l’Union economique et monetaire ouest africaine (UEMOA), and the USAID West Africa Trade Hub, where I am the director of transport.
UEMOA and the USAID Trade Hub have published quarterly reports on the extent of the problem since 2006. Drivers voluntarily collect data as they haul loads from ports in Abidjan, Dakar, Lome and Tema to the capitals of landlocked Burkina Faso and Mali, Ouagadougou and Bamako, respectively. The USAID Trade Hub’s transport specialists conduct verification tours of the routes to cross-check the information that drivers collect.
Certainly, the region’s high transport costs are not all attributable to the corrupt practices of unscrupulous officials at checkpoints. Comprehensive studies of all costs that traders incur when they import or export goods to or from West Africa are leading to a better understanding of why the region has such high transport costs. The USAID Trade Hub published the first of these studies in April 2010, looking at the Tema-Ouagadougou corridor; the next ones will look at costs on the Lome-Ouagadougou and Tema-Bamako corridors.
Separate studies by the World Bank and the USAID Trade Hub have revealed that restrictive regulations of the trucking sector also contribute to the high cost and inefficiency of the West Africa transport industry.
The Borderless advocacy campaign also considers regional trade policy: the ECOWAS Trade Liberalization Scheme is a set of protocols, decisions and resolutions that are meant to harmonize procedures and policies across the region, ultimately leading to a free trade area. Studies by the USAID Trade Hub in five countries show that Member States are not fully implementing the scheme.
I’m pleased to introduce this work in this first blog entry and interested to hear feedback on it. In the next column, I’ll talk more in depth about how our work is leading to real change.
Trust
India exempts Least Developed Countrys' exports from duty
by Ndinawe Simpelwe
Indian High Commissioner to Zambia Ashok Kumar says his country will grant duty-free access to exports from Least Developed Countries (LDCs) on 85 per cent of India's total tariff lines.
Speaking during the interactive seminar between the Indian Business Council of Zambia (IBCZ) and the Zambia Revenue Authority (ZRA), Kumar said the Indian government would unilaterally provide preferential market access for exports from 50 LDCs, 34 of which are in Africa.
“This scheme grants duty-free access on exports from the LDCs on 85 per cent of India's total tariff lines. On another 9 per cent of India'stariff lines, India would grant preferential duty access as per the prescribed margin of preference,” Kumar said.
Kumar advised investors to take advantage of the scheme to build trade between Zambia and India.
He said the duty-free access and the tariff lines would provide duty-free and preferential market access on 94 per cent of India's total tariff lines.
Kumar also said he expected Indian investment in Zambia to increase in the next three years.
He said Konkola Copper Mine (KCM) of Vedanta Resources Plc had injected US$1.5 billion in the mine up to 2009.
He said he expected KCM's investment to reach US$3 billion in the next three years. Kumar said more Indian investment in different sectors was expected as the IBCZ continued to play an important role in Zambia's economy.
“Taurian Manganese Limited, one of the group of companies of Dharni Sampda Private Limited in India invested US$17 million in 2010 and plans to invest another US$200 million for setting up a ferro alloy plant in Zambia,” he said.
And ZRA Commissioner General Wisdom Nhekairo said the ZRA needed partnerships that would enable the country collect correct amounts of tax.
Nhekairo said ZRA was facing challenges at the clearing points due to poor infrastructure.
He said this made it difficult for the authority to collect the accurate amounts of tax.
“By the end of this year we will have scanners at almost all clearingpoints that will help capture everything entering or leaving the country. This will eventually reduce tax evasion and smuggling at borders,” said Nhekairo.
Post Zambia
Indian High Commissioner to Zambia Ashok Kumar says his country will grant duty-free access to exports from Least Developed Countries (LDCs) on 85 per cent of India's total tariff lines.
Speaking during the interactive seminar between the Indian Business Council of Zambia (IBCZ) and the Zambia Revenue Authority (ZRA), Kumar said the Indian government would unilaterally provide preferential market access for exports from 50 LDCs, 34 of which are in Africa.
“This scheme grants duty-free access on exports from the LDCs on 85 per cent of India's total tariff lines. On another 9 per cent of India'stariff lines, India would grant preferential duty access as per the prescribed margin of preference,” Kumar said.
Kumar advised investors to take advantage of the scheme to build trade between Zambia and India.
He said the duty-free access and the tariff lines would provide duty-free and preferential market access on 94 per cent of India's total tariff lines.
Kumar also said he expected Indian investment in Zambia to increase in the next three years.
He said Konkola Copper Mine (KCM) of Vedanta Resources Plc had injected US$1.5 billion in the mine up to 2009.
He said he expected KCM's investment to reach US$3 billion in the next three years. Kumar said more Indian investment in different sectors was expected as the IBCZ continued to play an important role in Zambia's economy.
“Taurian Manganese Limited, one of the group of companies of Dharni Sampda Private Limited in India invested US$17 million in 2010 and plans to invest another US$200 million for setting up a ferro alloy plant in Zambia,” he said.
And ZRA Commissioner General Wisdom Nhekairo said the ZRA needed partnerships that would enable the country collect correct amounts of tax.
Nhekairo said ZRA was facing challenges at the clearing points due to poor infrastructure.
He said this made it difficult for the authority to collect the accurate amounts of tax.
“By the end of this year we will have scanners at almost all clearingpoints that will help capture everything entering or leaving the country. This will eventually reduce tax evasion and smuggling at borders,” said Nhekairo.
Post Zambia
Niger ups oil reserves estimate
Niger has doubled to 650 million barrels its estimate of oil reserves currently being developed at the Agadem block with China National Petroleum Corporation (CNPC).
The new figure was announced on state television lby Energy Minister Djibo Salamatou Gourouza after a visit to the site. She added that daily production was put at 100,000 barrels a day, of which 20,000 was for domestic use.
Niger has previously said pumping would begin this year.
Reuters
The new figure was announced on state television lby Energy Minister Djibo Salamatou Gourouza after a visit to the site. She added that daily production was put at 100,000 barrels a day, of which 20,000 was for domestic use.
Niger has previously said pumping would begin this year.
Reuters
Canada seeks closer economic ties with Africa
Canada was the largest foreign investor in Africa's mining industry and its businesses were well positioned to take a leading role in the continent's economic development, a senior official has said.
Peter Van Loan, the Canadian Minister of International Trade, was addressing a symposium on "Africa Rising: Entrepreneurship and Innovation Frontiers" in Canada's largest city of Toronto, an official release says.
In 2010, bilateral trade with Africa reached almost 13 billion Canadian dollars (13.2 billion U.S. dollars).
On Jan. 27, 2011, Canada announced the start of free trade negotiations with Morocco, its first partner on the African continent and seen as a gateway to Mediterranean and North African markets.
Xinhua
Peter Van Loan, the Canadian Minister of International Trade, was addressing a symposium on "Africa Rising: Entrepreneurship and Innovation Frontiers" in Canada's largest city of Toronto, an official release says.
In 2010, bilateral trade with Africa reached almost 13 billion Canadian dollars (13.2 billion U.S. dollars).
On Jan. 27, 2011, Canada announced the start of free trade negotiations with Morocco, its first partner on the African continent and seen as a gateway to Mediterranean and North African markets.
Xinhua
Rwanda completes fibre optic network
Rwanda has completed construction of a 2,300 kilometre (1,380 miles) fibre optic telecommunications network across the country to link it to undersea cables running along the east African coast, the country's communication minister said.
The project, which began in October 2009 at a cost of $95 million, was set up to boost access to various broadband services, boost electronic commerce and attract foreign direct investment through business process outsourcing.
"The fibre optic project will initially be operated by an independently-managed government entity on an open access model to accommodate infrastructure sharing with the private ICT services providers," said Ignace Gatare, the minister in charge of information and communication technology.
"The ultimate goal is to progressively transfer the business to a private business."
Although only about 12 percent of the population in the land-locked country has access to the Internet, the information and communication industry generated revenues of about 87 billion Rwandan francs in 2009, rising by 12 percent in 2010, the minister said, quoting provisional data.
The national fibre-optic network is already connected to the undersea cable system through two major regional links, including one from Mombasa in Kenya, through Uganda. It is also connected to another undersea cable from Dar es Salam.
"Initiatives to activate the links have been launched and discussions between Rwanda telecommunication operators that include MTN Rwanda, Tigo Rwanda and Rwandatel and regional cable operators are ongoing," the minister said.
Reuters
The project, which began in October 2009 at a cost of $95 million, was set up to boost access to various broadband services, boost electronic commerce and attract foreign direct investment through business process outsourcing.
"The fibre optic project will initially be operated by an independently-managed government entity on an open access model to accommodate infrastructure sharing with the private ICT services providers," said Ignace Gatare, the minister in charge of information and communication technology.
"The ultimate goal is to progressively transfer the business to a private business."
Although only about 12 percent of the population in the land-locked country has access to the Internet, the information and communication industry generated revenues of about 87 billion Rwandan francs in 2009, rising by 12 percent in 2010, the minister said, quoting provisional data.
The national fibre-optic network is already connected to the undersea cable system through two major regional links, including one from Mombasa in Kenya, through Uganda. It is also connected to another undersea cable from Dar es Salam.
"Initiatives to activate the links have been launched and discussions between Rwanda telecommunication operators that include MTN Rwanda, Tigo Rwanda and Rwandatel and regional cable operators are ongoing," the minister said.
Reuters
Subscribe to:
Posts (Atom)