1 Foreign investors eye African consumers
2 Is East Africa ready for a common currency?
3 Senegal's shoe capital faces competition from China
4 India, Tanzania sign double taxation avoidance treaty
5 Strong trade growth evident between Africa and Malaysia
6 ECOWAS and trade barriers
7 Zimbabwe, Malawi plan simplified trade regime
8 South African workers pay the price for cheap Chinese imports
9 Nigeria is Ghana's biggest source of investment
10 West African cocaine trade shoots up
11 India, Tanzania trade set to grow
12 Zambia records trade surplus
13 Malawi-China trade jumps 400 percent
14 Malaysia Africa Business Forum to be held 18 June 2011
15 Why Nigeria is yet to take advantage of AGOA
16 Tanzania's Tanga Port increases cargo capacity
May 30, 2011
Foreign investors eye African consumers
by Andre-Michel Essoungou
When the world's biggest retail company, the US-based Walmart, announced in September 2010 a plan to buy South African retailer Massmart for a staggering US$4.2-billion, eyebrows were raised. Foreign investors in Africa have tended to put their money in the riches that lie beneath its soil, where the profits are higher.
In fact, the steady growth of foreign direct investment (FDI) flows to the continent during most of the past decade has mostly been concentrated in extractive sectors, especially oil (see Africa Renewal, January 2005).
Yet, much like Walmart, a growing number of major investors are now betting on the continent's ultimate wealth, Africans themselves, according to the World Investment Report 2010 by the UN Conference on Trade and Development (Unctad).
And for all the shock that Walmart's foray into Africa initially prompted, when it announced in December that it was seeking to acquire only 51 percent of Massmart's shares for $2.5-billion, the transaction was still second to the continent's biggest business deal unrelated to natural resources. Late in March 2010, a record $10.7-billion transaction took place as Kuwait's telecommunication company Zain sold its African assets to Bharti, an Indian competitor.
Overall, the Unctad report notes, amidst a recent slump in FDI flows to Africa (see graph): "The services sector, led by the telecommunications industry, became the dominant FDI recipient."
Across the continent, new deals involving major foreign corporations are becoming a common occurrence in sectors previously considered unattractive to investment heavyweights. Nestl�, a Swiss food company, announced plans to spend $1-billion by 2013 for acquisitions in various African countries, including the Democratic Republic of the Congo, Nigeria and Angola. Less than two years ago, Nestl�'s main competitor, France's Danone, bought the yoghurt and desserts division of Clover, South Africa's leader in fresh cultured dairy products.
Such developments call "for reassessment of FDI in Africa, as a different picture emerges," the Unctad report argues. Potentially, development experts note, an increase in FDI flows to infrastructure, services and retail sales could have a far more positive impact on African economies. Unlike investments in the extractive industries, investments in consumer-oriented sectors often lead to the creation of many more jobs and stimulate consumer spending.
Africa's booming middle class, with its recently acquired purchasing power, is the main reason behind the new FDI trend on the continent. Various researches suggest that the number of Africans who can afford to buy more than the necessities of daily life is rising rapidly.
A much-talked-about report by McKinsey, a US-headquartered multinational consulting firm, estimates that the continent is home to around 50-million middle-class households (defined as those with incomes of at least $20,000), as many as in India. (The report, entitled "Lions on the Move: The Progress and Potential of African Economies", was published in June 2010.)
One in every 10 Africans, says a different study by a French aid agency, is already a "solvent consumer," one who can afford the latest smartphones, the newest computers and dinners at trendy restaurants.
The rise of this middle class is linked to the strong economic performances recorded in many African countries since the end of the 1990s. Average economic growth has been around 5 percent a year, while the average inflation rate fell to 8 percent from an earlier high of 22 percent.
From 2000 to 2010, six of the world's 10 fastest-growing economies were in sub-Saharan Africa, reports The Economist, an authoritative London weekly. In fact, the publication argues that Africa is the site of "the surprising success story of the past decade," high praise from a magazine that is generally not very enthusiastic about the continent.
Strong and sustained growth rates, and not only in the oil-rich countries that benefited from booming demand from emerging economies, provided a platform from which numerous households moved upwards in income.
And while growth in oil-producing countries usually did not result in massive job creation, growth in other countries did create some employment, in turn boosting domestic consumption. In South Africa, Tunisia, Egypt and Morocco, Africa's four most advanced and diversified economies, domestic consumption became the largest contributor to growth in recent years, says the McKinsey report.
Africa's improved economic performances are also a result of good economic policies and improved political contexts, maintained the World Bank in its report Africa Development Indicators 2007. In Ghana, Uganda and Tanzania, for example, business-friendly policies opened new markets to investors. Angola and Rwanda became fast-growing economies after long civil wars.
Some also argue that a continental development plan has helped as well. The New Partnership for Africa's Development (Nepad), adopted by African leaders in 2001, "did help shape a new, more positive perception of Africa," argues Patrick Osakwe, an economist with the UN Economic Commission for Africa and co-author of a study on FDI to Africa.
By emphasising the importance of good governance, Osakwe told Africa Renewal, the plan illustrated a momentous shift in the way Africans seek to interact with the rest of the world.
For a continent so long regarded by outside observers as "hopeless," the coming years will bring more good news, various analysts say. Africa weathered the global recession better than most regions of the world, and its recent economic performance is second only to that of Asia, according to several international institutions. Over the next five years, The Economist recently projected, "The average African economy will outpace its Asian counterpart."
Such promising prospects are central to Walmart's expansion plans in Africa. Other major Western investors are likely to follow the US giant, analysts say. One reason is that the continent's combined consumer spending is forecast to reach $1.4-trillion by 2020, up from $860-billion in 2008. Companies from emerging economies such as China, India and Brazil are already strengthening their positions in the region.
As foreign investors rush to benefit from the rise of the new categories of African consumers, prosperity still remains elusive for too many other Africans. According to the UN Food and Agriculture Organisation, 250-million people in Africa are undernourished.
"To expand prosperity, African leaders need to invest in infrastructure and education, to diversify their economies, so that many more people can benefit from growth," argues Osakwe.
Others note that improving the standard of living of the poor not only makes business sense, but is also a political necessity, as suggested by the recent waves of protests across North Africa. Not addressing people's economic rights, UN High Commissioner for Human Rights Navi Pillay pointedly remarked this January, causes grievances "to fester and eventually erupt on a large scale."
www.southafrica.info
When the world's biggest retail company, the US-based Walmart, announced in September 2010 a plan to buy South African retailer Massmart for a staggering US$4.2-billion, eyebrows were raised. Foreign investors in Africa have tended to put their money in the riches that lie beneath its soil, where the profits are higher.
In fact, the steady growth of foreign direct investment (FDI) flows to the continent during most of the past decade has mostly been concentrated in extractive sectors, especially oil (see Africa Renewal, January 2005).
Yet, much like Walmart, a growing number of major investors are now betting on the continent's ultimate wealth, Africans themselves, according to the World Investment Report 2010 by the UN Conference on Trade and Development (Unctad).
And for all the shock that Walmart's foray into Africa initially prompted, when it announced in December that it was seeking to acquire only 51 percent of Massmart's shares for $2.5-billion, the transaction was still second to the continent's biggest business deal unrelated to natural resources. Late in March 2010, a record $10.7-billion transaction took place as Kuwait's telecommunication company Zain sold its African assets to Bharti, an Indian competitor.
Overall, the Unctad report notes, amidst a recent slump in FDI flows to Africa (see graph): "The services sector, led by the telecommunications industry, became the dominant FDI recipient."
Across the continent, new deals involving major foreign corporations are becoming a common occurrence in sectors previously considered unattractive to investment heavyweights. Nestl�, a Swiss food company, announced plans to spend $1-billion by 2013 for acquisitions in various African countries, including the Democratic Republic of the Congo, Nigeria and Angola. Less than two years ago, Nestl�'s main competitor, France's Danone, bought the yoghurt and desserts division of Clover, South Africa's leader in fresh cultured dairy products.
Such developments call "for reassessment of FDI in Africa, as a different picture emerges," the Unctad report argues. Potentially, development experts note, an increase in FDI flows to infrastructure, services and retail sales could have a far more positive impact on African economies. Unlike investments in the extractive industries, investments in consumer-oriented sectors often lead to the creation of many more jobs and stimulate consumer spending.
Africa's booming middle class, with its recently acquired purchasing power, is the main reason behind the new FDI trend on the continent. Various researches suggest that the number of Africans who can afford to buy more than the necessities of daily life is rising rapidly.
A much-talked-about report by McKinsey, a US-headquartered multinational consulting firm, estimates that the continent is home to around 50-million middle-class households (defined as those with incomes of at least $20,000), as many as in India. (The report, entitled "Lions on the Move: The Progress and Potential of African Economies", was published in June 2010.)
One in every 10 Africans, says a different study by a French aid agency, is already a "solvent consumer," one who can afford the latest smartphones, the newest computers and dinners at trendy restaurants.
The rise of this middle class is linked to the strong economic performances recorded in many African countries since the end of the 1990s. Average economic growth has been around 5 percent a year, while the average inflation rate fell to 8 percent from an earlier high of 22 percent.
From 2000 to 2010, six of the world's 10 fastest-growing economies were in sub-Saharan Africa, reports The Economist, an authoritative London weekly. In fact, the publication argues that Africa is the site of "the surprising success story of the past decade," high praise from a magazine that is generally not very enthusiastic about the continent.
Strong and sustained growth rates, and not only in the oil-rich countries that benefited from booming demand from emerging economies, provided a platform from which numerous households moved upwards in income.
And while growth in oil-producing countries usually did not result in massive job creation, growth in other countries did create some employment, in turn boosting domestic consumption. In South Africa, Tunisia, Egypt and Morocco, Africa's four most advanced and diversified economies, domestic consumption became the largest contributor to growth in recent years, says the McKinsey report.
Africa's improved economic performances are also a result of good economic policies and improved political contexts, maintained the World Bank in its report Africa Development Indicators 2007. In Ghana, Uganda and Tanzania, for example, business-friendly policies opened new markets to investors. Angola and Rwanda became fast-growing economies after long civil wars.
Some also argue that a continental development plan has helped as well. The New Partnership for Africa's Development (Nepad), adopted by African leaders in 2001, "did help shape a new, more positive perception of Africa," argues Patrick Osakwe, an economist with the UN Economic Commission for Africa and co-author of a study on FDI to Africa.
By emphasising the importance of good governance, Osakwe told Africa Renewal, the plan illustrated a momentous shift in the way Africans seek to interact with the rest of the world.
For a continent so long regarded by outside observers as "hopeless," the coming years will bring more good news, various analysts say. Africa weathered the global recession better than most regions of the world, and its recent economic performance is second only to that of Asia, according to several international institutions. Over the next five years, The Economist recently projected, "The average African economy will outpace its Asian counterpart."
Such promising prospects are central to Walmart's expansion plans in Africa. Other major Western investors are likely to follow the US giant, analysts say. One reason is that the continent's combined consumer spending is forecast to reach $1.4-trillion by 2020, up from $860-billion in 2008. Companies from emerging economies such as China, India and Brazil are already strengthening their positions in the region.
As foreign investors rush to benefit from the rise of the new categories of African consumers, prosperity still remains elusive for too many other Africans. According to the UN Food and Agriculture Organisation, 250-million people in Africa are undernourished.
"To expand prosperity, African leaders need to invest in infrastructure and education, to diversify their economies, so that many more people can benefit from growth," argues Osakwe.
Others note that improving the standard of living of the poor not only makes business sense, but is also a political necessity, as suggested by the recent waves of protests across North Africa. Not addressing people's economic rights, UN High Commissioner for Human Rights Navi Pillay pointedly remarked this January, causes grievances "to fester and eventually erupt on a large scale."
www.southafrica.info
Is East Africa ready for a common currency?
by Teo Kermeliotis
Just as the eurozone is being threatened by faltering economies, East Africa is moving closer to its own monetary union. But some are asking if it's ready for a common currency, and in light of Europe's troubles, if it should even have one. Under an ambitious plan, Kenya, Uganda, Tanzania, Rwanda and Burundi are targeting 2012 for adopting a common currency.
Having already established a customs union in 2005 and a common market in 2010, the five member-states of the East African Community (EAC) hope that the economic integration will boost regional trade, decrease exchange-rate volatility, and attract foreign investors.
Dr Richard Sezibera, the recently-appointed Secretary General of the EAC, says: "The financial, fiscal and monetary integration is good for our region.
"It will help our region improve its competitiveness, deal with volatility that has been a problem in our region, lead to an easing of business -- including easier capital flows from within the region -- and make the financial integration much easier.
The promise of a better financial outlook in an integrated market of more than 130 million people has not gone unnoticed by the world's strongest economies.
Earlier this week, China became the latest state to appoint a representative to the EAC secretariat, following the example of countries such as the United States, the United Kingdom and France.
However, some analysts remain skeptical about the timing of the common currency plan as well as its viability. They question the feasibility of the 2012 target, warning that the implementation of a monetary union is a challenging and convoluted process.
"There are a number of prerequisites that need to be met in order for a single currency to be fully adopted," says Phumelele Mbiyo, Standard Bank's Senior Africa Strategist for Global Market Research.
Mbiyo stresses the need for "a fair amount of macroeconomic convergence" between the EAC member countries, especially with regard to inflation rates and fiscal deficit.
"My concern is that, especially when it comes to monetary policy conducts, I don't think that there is necessarily a fair amount of correspondence in what happens between all those countries," he adds.
Drawing parallels with the economic woes experienced currently within the eurozone, Mbiyo argues that "it is not a clear-cut case that a single currency or a monetary union is necessarily a good thing."
He predicts that if the EAC member-states moved toward enforcing a single currency, they could face many of the problems the eurozone has been experiencing in recent months.
"I think one needs to be a bit more circumspect in evaluating the possibility of potential benefits of a monetary union," he says.
Mbiyo goes on to add that the 2012 date is not an achievable target and calls for a harmonization of policies and regulation across the region.
"There has to be a fairly long period of a trial macroeconomic policy coordination before a monetary union is adopted," he says. "So I wouldn't say that within the next three years that would be feasible."
Mbiyo's view is shared by Jaindi Kisero, the economics editor of Nation Media Group, a major news organization across East Africa, who describes the 2012 target as "totally unrealistic."
"These guys are trying to jump the gun," says Kisero, who points out the striking dissimilarities among the economies in the region, citing differences in capital control, interest rates and financial markets flow. We are very far off from having what it takes to have a monetary union," he adds.
Some analysts warn that deeper integration within the EAC is hindered by existing limitations in terms of the movement of capital and labor, despite the introduction of a common market.
"Although import duties on intra-EAC trade have been eliminated, numerous and extensive non-tariff barriers remain, impeding trade among members," says Martine Guerguil, the head of the IMF's African division.
Guerguil calls for the introduction of policy reforms in order for the EAC common market to become fully effective.
"Forceful efforts to remove these barriers are required for the common market to become a reality," she says.
While Sezibera says 2012 remains the target for a single currency, he acknowledges that there are still many obstacles the EAC needs to overcome -- notably the harmonization of economies and regulatory practices.
"But most importantly there is a need to mobilize the political will from all the actors to move forward the agenda," he says.
He adds: "There is a need to improve all sectors of society, from the decision makers, parliamentarians, business communities and others to support the agenda and therefore generate political momentum for deeper integration."
CNN
Just as the eurozone is being threatened by faltering economies, East Africa is moving closer to its own monetary union. But some are asking if it's ready for a common currency, and in light of Europe's troubles, if it should even have one. Under an ambitious plan, Kenya, Uganda, Tanzania, Rwanda and Burundi are targeting 2012 for adopting a common currency.
Having already established a customs union in 2005 and a common market in 2010, the five member-states of the East African Community (EAC) hope that the economic integration will boost regional trade, decrease exchange-rate volatility, and attract foreign investors.
Dr Richard Sezibera, the recently-appointed Secretary General of the EAC, says: "The financial, fiscal and monetary integration is good for our region.
"It will help our region improve its competitiveness, deal with volatility that has been a problem in our region, lead to an easing of business -- including easier capital flows from within the region -- and make the financial integration much easier.
The promise of a better financial outlook in an integrated market of more than 130 million people has not gone unnoticed by the world's strongest economies.
Earlier this week, China became the latest state to appoint a representative to the EAC secretariat, following the example of countries such as the United States, the United Kingdom and France.
However, some analysts remain skeptical about the timing of the common currency plan as well as its viability. They question the feasibility of the 2012 target, warning that the implementation of a monetary union is a challenging and convoluted process.
"There are a number of prerequisites that need to be met in order for a single currency to be fully adopted," says Phumelele Mbiyo, Standard Bank's Senior Africa Strategist for Global Market Research.
Mbiyo stresses the need for "a fair amount of macroeconomic convergence" between the EAC member countries, especially with regard to inflation rates and fiscal deficit.
"My concern is that, especially when it comes to monetary policy conducts, I don't think that there is necessarily a fair amount of correspondence in what happens between all those countries," he adds.
Drawing parallels with the economic woes experienced currently within the eurozone, Mbiyo argues that "it is not a clear-cut case that a single currency or a monetary union is necessarily a good thing."
He predicts that if the EAC member-states moved toward enforcing a single currency, they could face many of the problems the eurozone has been experiencing in recent months.
"I think one needs to be a bit more circumspect in evaluating the possibility of potential benefits of a monetary union," he says.
Mbiyo goes on to add that the 2012 date is not an achievable target and calls for a harmonization of policies and regulation across the region.
"There has to be a fairly long period of a trial macroeconomic policy coordination before a monetary union is adopted," he says. "So I wouldn't say that within the next three years that would be feasible."
Mbiyo's view is shared by Jaindi Kisero, the economics editor of Nation Media Group, a major news organization across East Africa, who describes the 2012 target as "totally unrealistic."
"These guys are trying to jump the gun," says Kisero, who points out the striking dissimilarities among the economies in the region, citing differences in capital control, interest rates and financial markets flow. We are very far off from having what it takes to have a monetary union," he adds.
Some analysts warn that deeper integration within the EAC is hindered by existing limitations in terms of the movement of capital and labor, despite the introduction of a common market.
"Although import duties on intra-EAC trade have been eliminated, numerous and extensive non-tariff barriers remain, impeding trade among members," says Martine Guerguil, the head of the IMF's African division.
Guerguil calls for the introduction of policy reforms in order for the EAC common market to become fully effective.
"Forceful efforts to remove these barriers are required for the common market to become a reality," she says.
While Sezibera says 2012 remains the target for a single currency, he acknowledges that there are still many obstacles the EAC needs to overcome -- notably the harmonization of economies and regulatory practices.
"But most importantly there is a need to mobilize the political will from all the actors to move forward the agenda," he says.
He adds: "There is a need to improve all sectors of society, from the decision makers, parliamentarians, business communities and others to support the agenda and therefore generate political momentum for deeper integration."
CNN
Senegal's shoe capital faces competition from China
by Drew Hinshaw
For years, the little town of Ngaye Mekhe was Senegal's shoe capital. The craftsmen here produced shoes for the nation and people came from all over to buy footwear made here. But then in 2000 this town's cobbling business began to die.
Ngaye Mekhe is a village of craftsmen, blacksmiths, horse-driven cart jockeys and above all, shoemakers. It smothers the country road with open-air racks of red sandals, yellow babouches, green loafers and flip-flops galore. All are locally, proudly made.
“Everybody knows that this is the capital of shoes,” local shop owner Momodou Thiam said. “Original Senegalese shoes.”
Emphasis on original. In a bruising verdict on Africa’s industrial might, most Senegalese shoes are no longer made in Senegal. This artsy footwear synonymous with "thiossane" — Wolof heritage — is increasingly cobbled in China.
China’s exports to Africa blossomed tenfold in the last decade. Senegal’s imports from China tripled from $140 million in 2005 to $414 million in 2009, according to the government statistics agency. In 2009, Senegal, exported back just $24 million worth of goods — peanuts, mostly.
Imports of shoes — including Chinese versions of Ngaye Mekhe’s shoes — grew 64 percent in the same period.
“This is our thiossane, our culture, the work of our grandparents,” said 38-year-old Ibrahima Pene, who has been carving soles since he was 13. “But around 2000, it began to collapse. Now, in 2011, this industry is dead.”
Crasftspeople throughout West Africa are grappling with such bewildering currents of globalization.
In Ghana, Chinese knock-offs undercut traditional batik fabrics — although, to be fair, batik cloths originated in Java, and were printed in Holland for centuries, long before they became the iconic African cloth.
In Burkina Faso, souvenir peddlers sell synthetic cowry shells — those shells, a medieval African talisman that happened to have come from the Maldives, via British ships.
Meanwhile, Nigerian DVD racks pit Thai-copied bootlegs of American movies against Nigerian-made films — which are, in turn, heavily influenced by Mexican soap operas.
In a world of such inside-out global trade, a village so strapped for cash as Ngaye Mekhe can hardly keep up.
“Truthfully, those less expensive Chinese shoes are not the problem,” Thiam said. “Our problem is our own lack of money.”
With a little bit of capital, cobbler after cobbler in the village said they would build their nation’s first leather liming plant — a processing factory where cow hides are tossed in an alkaline soup that singes prickly hairs and loosens the skin. For lack of that simple alkaline vat, Ngaye Mekhe depends on Senegalese middlemen who sell the craftsmen $8-a-pound leather from Italy or Spain.
“We are full of cows in Senegal,” Pene said. “All we lack is a processing plant for leather. If we had that, we could bring the price down, while preserving the quality,” agreed Moctar Gueye, a shoemaker.
A plant, Gueye added, would require some loans, yet credit here flows in spurts and fits as inconsistent as the electricity.
Like hundreds of his young neighbors who have moved to Dakar, Gueye, too, has left Ngaye Mekhe. The world-traveled, two-time award winning shoe designer moves from trade show to trade show schlepping giant white sacks of shoes, which he sells to any foreigner who will spare a moment to hear the story of his town — unless they’re Chinese.
“I don’t sell to them, because they might go home and copy it,” he said. Instead he keeps changing his styles, improvising new designs faster than they can be duplicated. “We’re not running in place,” he said. “We want to improve our know-how and occupy a part of the American market.”
Back in Ngaye Mekhe, his colleagues watch TV in their idle workshops, ignoring their handcranked sewing machines — which are made in China. All are surrounded by an absurd surplus of handcrafted shoes that nobody seems able to sell.
“It must be the economic crisis,” Thiam said. “The demand for these shoes is so low. Some people have gone to Dakar, but usually they don’t find work, and they come right back. At least here you don’t have to pay rent.”
“The town is dead,” he said. “But if you had seen this town back then.”
Global Post
India, Tanzania sign double taxation avoidance treaty
by Saubhadra Chatterji
Indian Prime Minister Manmohan Singh on May 28 announced a new line of credit (LoC) of $180 million for Tanzania. The two countries also signed a double-taxation avoidance treaty and agreed to work together to curb piracy and terrorism.
On the last day of his official engagements in Africa, Manmohan Singh pitched for greater economic cooperation between the two countries and offered an LoC of $180 million for a drinking water supply project in the capital. He also announced a fresh grant of $10 million for capacity building projects in the social and educational sectors.
The two sides also agreed to facilitate the process of diversifying and increasing the investment of Indian companies operating on Tanzanian soil. The two countries also signed a double-taxation avoidance treaty, which Tanzanian President Jakaya Mrisho Kikwete said was important for bilateral trade.
While Singh called for increasing Indian investment in Tanzania, the Tanzanian president said he wanted India to help in manufacturing, information technology, textiles, tractors and irrigation equipment. “We want India to invest in information and communication technology,” Kikwete said. The two sides also signed a joint action plan for the small and medium industries. Indian investment in Tanzania currently stands at $1.3 billion.
Later in the day, Singh also inaugurated the Dar es Salaam institute of technology.
After the bilateral talks, Singh said India and Tanzania would intensify consultations and coordination to combat piracy and terror threats. Speaking on the the problems faced due to pirates, Kikwete said, “Insurance costs are going up. Ships are taking longer routes, and so, transportation costs too, are rising.” He said during the past few months, there were 27 attacks on ships within Tanzania's territorial waters.
Business Standard
Indian Prime Minister Manmohan Singh on May 28 announced a new line of credit (LoC) of $180 million for Tanzania. The two countries also signed a double-taxation avoidance treaty and agreed to work together to curb piracy and terrorism.
On the last day of his official engagements in Africa, Manmohan Singh pitched for greater economic cooperation between the two countries and offered an LoC of $180 million for a drinking water supply project in the capital. He also announced a fresh grant of $10 million for capacity building projects in the social and educational sectors.
The two sides also agreed to facilitate the process of diversifying and increasing the investment of Indian companies operating on Tanzanian soil. The two countries also signed a double-taxation avoidance treaty, which Tanzanian President Jakaya Mrisho Kikwete said was important for bilateral trade.
While Singh called for increasing Indian investment in Tanzania, the Tanzanian president said he wanted India to help in manufacturing, information technology, textiles, tractors and irrigation equipment. “We want India to invest in information and communication technology,” Kikwete said. The two sides also signed a joint action plan for the small and medium industries. Indian investment in Tanzania currently stands at $1.3 billion.
Later in the day, Singh also inaugurated the Dar es Salaam institute of technology.
After the bilateral talks, Singh said India and Tanzania would intensify consultations and coordination to combat piracy and terror threats. Speaking on the the problems faced due to pirates, Kikwete said, “Insurance costs are going up. Ships are taking longer routes, and so, transportation costs too, are rising.” He said during the past few months, there were 27 attacks on ships within Tanzania's territorial waters.
Business Standard
Strong trade growth evident between Africa and Malaysia
by Ghaz Ghazali
Malaysia’s trade with Africa has increased over six folds from RM4.28 billion in 2001 to RM25 billion last year, says Malaysia External Trade Development Corporation (Matrade).
The agency also noted that the average annual growth rate between the two parties within this period was 22.3 per cent.
“Bilateral trade expanded by 51.7 per cent last year against 2009 to US$5.11 billion (RM17.99 billion). Top trading partners for Malaysia were Egypt, South Africa, Benin, Togo, Djibouti, Algeria, Ghana, Nigeria, Mauritius and Tanzania,” said Matrade.
More specifically, exports expanded by six folds from RM3.02 billion in 2001 to reach RM15.79 billion last year, it added, while imports rose by eight folds from RM1.27 billion in 2001 to RM9.21 billion last year.
Throughout January to March this year, bilateral trade between Malaysia and Africa was valued at RM6.7 billion, with total exports valued at RM3.97 billion and total imports at RM2.73 billion. Additionally, the country recorded a trade surplus of RM6.57 billion with Africa to date.
“Palm oil continued to be the major export to Africa, amounted to 48.9 per cent share of total exports in 2010. Exports of these products expanded by 77 per cent to reach RM7.72 billion.
“On the other hand, major imports from the region comprised mainly crude petroleum, which constituted 43 per cent of total share of import, valued at RM3.93 billion,” it highlighted.
Further demonstrating the significance of the Malaysia-Africa trade partnership, Matrade would be organising the Malaysia-Africa Business Forum (MABF) this June 18 at the Putrajaya International Convention Centre. The forum, themed ‘Exploring New Dimensions,’ would be held in conjunction with the Langkawi International Dialogue (LID) 2011 here.
Borneo Post
Malaysia’s trade with Africa has increased over six folds from RM4.28 billion in 2001 to RM25 billion last year, says Malaysia External Trade Development Corporation (Matrade).
The agency also noted that the average annual growth rate between the two parties within this period was 22.3 per cent.
“Bilateral trade expanded by 51.7 per cent last year against 2009 to US$5.11 billion (RM17.99 billion). Top trading partners for Malaysia were Egypt, South Africa, Benin, Togo, Djibouti, Algeria, Ghana, Nigeria, Mauritius and Tanzania,” said Matrade.
More specifically, exports expanded by six folds from RM3.02 billion in 2001 to reach RM15.79 billion last year, it added, while imports rose by eight folds from RM1.27 billion in 2001 to RM9.21 billion last year.
Throughout January to March this year, bilateral trade between Malaysia and Africa was valued at RM6.7 billion, with total exports valued at RM3.97 billion and total imports at RM2.73 billion. Additionally, the country recorded a trade surplus of RM6.57 billion with Africa to date.
“Palm oil continued to be the major export to Africa, amounted to 48.9 per cent share of total exports in 2010. Exports of these products expanded by 77 per cent to reach RM7.72 billion.
“On the other hand, major imports from the region comprised mainly crude petroleum, which constituted 43 per cent of total share of import, valued at RM3.93 billion,” it highlighted.
Further demonstrating the significance of the Malaysia-Africa trade partnership, Matrade would be organising the Malaysia-Africa Business Forum (MABF) this June 18 at the Putrajaya International Convention Centre. The forum, themed ‘Exploring New Dimensions,’ would be held in conjunction with the Langkawi International Dialogue (LID) 2011 here.
Borneo Post
ECOWAS and trade barriers
The Economic Community of West African States (ECOWAS), an accord by a 15 member regional grouping is expected to eliminate all tariffs, restrictions and quotas and by so doing, facilitate free movement of people, goods and services and thereby promote social and economic harmonisation, deepen trade and encourage large-scale investment.
But for 36 years that ECOWAS has been in existence, the regional group is still far from achieving its goals, particularly that of creating a strong economic union. The subject of trade barriers has been a recurring issue in the industry. The debate on this topical issue came up recently again in Lagos at the initiative of Lagos Chamber of Commerce and Industry (LCCI).
The forum emphasised the need for African countries, West African countries in particular, to trade with each other. The issue has even become one of global concern with US Secretary of State, Hillary Clinton, calling on African countries to increase trade with each other to realize the enormous potential that exists within the continent. Although ECOWAS have made strides towards free trade, full market integration remains an ambition.
Intra-regional trade remains a relatively small part of the ECOWAS economic activity, accounting for about 10 per cent of the total trade of the member states. In 2008, the total ECOWAS intra-regional trade was valued at US$6.9 billion, while total ECOWAS trade with the world was valued at US$64.4 billion.
The value of ECOWAS intra-regional trade has over the years been increasing from US$3.2 billion in 2002 to peak at US$9.9 billion in 2006 before it nose-dived to US$6.6 billion and US$6.9 billion in 2007 and 2008 respectively.
With regards to Nigeria’s level of ECOWAS intra-regional trade, the aggregate non-oil exports stood at US$189.96 million in 2009 declining from US228.81 in 2008 and representing 9.7 percent of Nigeria’s non-oil export in 2009 account to the 2009 CBN Annual Account.
The low level of ECOWAS intra-regional trade, is largely traced to some tariff and non-tariff barriers, some of which include lack of appropriate / adequate infrastructure in the region that is characterised by lack of poor rail systems, roads, energy etc. This is more compelling when viewed against the empirical evidence that cargo volumes have leaped about 300 per cent from 4.7 million tonnes in 1998 to 13.4 million tonnes in 2008 without corresponding increase/improvement on basic logistical infrastructure; barriers to movement of goods and services, due to multiple check points/border posts with attendant consequences of time and cost overruns and eventual uncompetitive pricing of goods at market destination.
There are other underlying constraints that have, over the years, stood as stumbling blocks to the realisation of the ECOWAS goals. There is deep seated distrust among member states, which fundamentally limit the depth and progress in regional integration. There are systemic problems that hamper the development of national economies and invariably impede the regional integration. There is the reluctance to adhere to integration programmes due to concerns over losses and uneven gains. Insufficient analytical and technical support also limits implementation of some integration instruments, for instance, the trade liberalization scheme.
Trade experts have advanced that trade can be a powerful force for growth and poverty reduction. They argue countries that have increased the share of trade in their GDP have grown faster and reduced poverty more rapidly. They have therefore stressed the need for trade facilitation to reduce the complexity and cost of the trade transaction process and ensuring that all these activities take place in an efficient, transparent and predictable manner.
Important players in the process of trade facilitation include government/government agencies, transporters/logistic providers, finaciers/insurers, and traders. Since trade facilitation reduces transaction costs, allows for faster delivery/clearance, predictable trade rules, increased foreign investments, reduced corruption, increased revenue and increased compliance, these important players must ensure that the process flies high.
Business Day
But for 36 years that ECOWAS has been in existence, the regional group is still far from achieving its goals, particularly that of creating a strong economic union. The subject of trade barriers has been a recurring issue in the industry. The debate on this topical issue came up recently again in Lagos at the initiative of Lagos Chamber of Commerce and Industry (LCCI).
The forum emphasised the need for African countries, West African countries in particular, to trade with each other. The issue has even become one of global concern with US Secretary of State, Hillary Clinton, calling on African countries to increase trade with each other to realize the enormous potential that exists within the continent. Although ECOWAS have made strides towards free trade, full market integration remains an ambition.
Intra-regional trade remains a relatively small part of the ECOWAS economic activity, accounting for about 10 per cent of the total trade of the member states. In 2008, the total ECOWAS intra-regional trade was valued at US$6.9 billion, while total ECOWAS trade with the world was valued at US$64.4 billion.
The value of ECOWAS intra-regional trade has over the years been increasing from US$3.2 billion in 2002 to peak at US$9.9 billion in 2006 before it nose-dived to US$6.6 billion and US$6.9 billion in 2007 and 2008 respectively.
With regards to Nigeria’s level of ECOWAS intra-regional trade, the aggregate non-oil exports stood at US$189.96 million in 2009 declining from US228.81 in 2008 and representing 9.7 percent of Nigeria’s non-oil export in 2009 account to the 2009 CBN Annual Account.
The low level of ECOWAS intra-regional trade, is largely traced to some tariff and non-tariff barriers, some of which include lack of appropriate / adequate infrastructure in the region that is characterised by lack of poor rail systems, roads, energy etc. This is more compelling when viewed against the empirical evidence that cargo volumes have leaped about 300 per cent from 4.7 million tonnes in 1998 to 13.4 million tonnes in 2008 without corresponding increase/improvement on basic logistical infrastructure; barriers to movement of goods and services, due to multiple check points/border posts with attendant consequences of time and cost overruns and eventual uncompetitive pricing of goods at market destination.
There are other underlying constraints that have, over the years, stood as stumbling blocks to the realisation of the ECOWAS goals. There is deep seated distrust among member states, which fundamentally limit the depth and progress in regional integration. There are systemic problems that hamper the development of national economies and invariably impede the regional integration. There is the reluctance to adhere to integration programmes due to concerns over losses and uneven gains. Insufficient analytical and technical support also limits implementation of some integration instruments, for instance, the trade liberalization scheme.
Trade experts have advanced that trade can be a powerful force for growth and poverty reduction. They argue countries that have increased the share of trade in their GDP have grown faster and reduced poverty more rapidly. They have therefore stressed the need for trade facilitation to reduce the complexity and cost of the trade transaction process and ensuring that all these activities take place in an efficient, transparent and predictable manner.
Important players in the process of trade facilitation include government/government agencies, transporters/logistic providers, finaciers/insurers, and traders. Since trade facilitation reduces transaction costs, allows for faster delivery/clearance, predictable trade rules, increased foreign investments, reduced corruption, increased revenue and increased compliance, these important players must ensure that the process flies high.
Business Day
Zimbabwe, Malawi plan simplified trade regime
by Mafu Sithabile
The Common Market for Eastern and Southern Africa (COMESA) says plans are at an advanced stage to launch the simplified trade regime (STR) between Malawi and Zimbabwe. Currently, the trade regime under pilot implementation only applies at Mwami Border Post between Malawi and Zambia. It allows small and informal cross-border traders to have payment of duty scrapped off on specified goods whose value does not exceed $500.
STR is an initiative by Comesa to facilitate trade and reduce poverty by recognising that informal trading, particularly cross-border trade, is an important source of employment.
"The Ministry of Industry and Trade in Malawi is already discussing the initiative with Comesa and Zimbabwe. Soon, meetings to agree the list of common products between the countries will be held," Daniel Njiwa, Comesa’s private sector development specialist told, Business News last week.
When the trade regime was being launched on April 30 2010, there were indications that it will also be extended to Zimbabwe in the same year. However, that did not happen.
Last week, officials from the Comesa Secretariat in Zambia were in the country to train small-scale traders in Blantyre, Mwanza, Mzimba and Mchinji on the requirements of the STR and to assess its impact one year after its launch.
Njiwa, one of the trainers, said the training sessions came at the right time when most of them were failing to understand the whole concept of STR. He said overall, the STR has helped in improving the relationship between traders and customs officials at the border, thereby encouraging more small-scale traders to come through the border points than before.
"The customs authorities have appreciated that the STR has helped in raising revenues from small traders that would otherwise avoid the borders. As for the small traders, they now have the opportunity to use a simplified certificate of origin which allows them not to pay import duties for goods that are wholly-manufactured or originating from the Comesa region," he explained.
On its part, the Malawi Export Promotion Council (Mepc) said the trade regime was established to ensure that informal cross-border trade is formalised and that the benefits of the regional integration are filtered down to those involved.
"As a result of this initiative, it is believed that these traders are being motivated to use formal channels instead of informal [ones]. In the process, they benefit from the duty and quota free entry of their goods and avoid paying unnecessary unauthorised charges," said Mepc research and projects officer Maurice Chimbilima Gondwe in a statement.
On the other hand, he said, the mainstreaming cross-border trade from informal to formal is enabling government to have better data for improved planning and policy making.
The Nation
The Common Market for Eastern and Southern Africa (COMESA) says plans are at an advanced stage to launch the simplified trade regime (STR) between Malawi and Zimbabwe. Currently, the trade regime under pilot implementation only applies at Mwami Border Post between Malawi and Zambia. It allows small and informal cross-border traders to have payment of duty scrapped off on specified goods whose value does not exceed $500.
STR is an initiative by Comesa to facilitate trade and reduce poverty by recognising that informal trading, particularly cross-border trade, is an important source of employment.
"The Ministry of Industry and Trade in Malawi is already discussing the initiative with Comesa and Zimbabwe. Soon, meetings to agree the list of common products between the countries will be held," Daniel Njiwa, Comesa’s private sector development specialist told, Business News last week.
When the trade regime was being launched on April 30 2010, there were indications that it will also be extended to Zimbabwe in the same year. However, that did not happen.
Last week, officials from the Comesa Secretariat in Zambia were in the country to train small-scale traders in Blantyre, Mwanza, Mzimba and Mchinji on the requirements of the STR and to assess its impact one year after its launch.
Njiwa, one of the trainers, said the training sessions came at the right time when most of them were failing to understand the whole concept of STR. He said overall, the STR has helped in improving the relationship between traders and customs officials at the border, thereby encouraging more small-scale traders to come through the border points than before.
"The customs authorities have appreciated that the STR has helped in raising revenues from small traders that would otherwise avoid the borders. As for the small traders, they now have the opportunity to use a simplified certificate of origin which allows them not to pay import duties for goods that are wholly-manufactured or originating from the Comesa region," he explained.
On its part, the Malawi Export Promotion Council (Mepc) said the trade regime was established to ensure that informal cross-border trade is formalised and that the benefits of the regional integration are filtered down to those involved.
"As a result of this initiative, it is believed that these traders are being motivated to use formal channels instead of informal [ones]. In the process, they benefit from the duty and quota free entry of their goods and avoid paying unnecessary unauthorised charges," said Mepc research and projects officer Maurice Chimbilima Gondwe in a statement.
On the other hand, he said, the mainstreaming cross-border trade from informal to formal is enabling government to have better data for improved planning and policy making.
The Nation
South African workers pay the price for cheap Chinese imports
by Nkepile Mabuse
China is now South Africa's biggest trading partner. But cheap Chinese imports are threatening local industries and thousands of ordinary South Africans are paying the price.
Trade between South Africa and China increased from more than $8 billion in 2006 to a record $20 billion last year. As a result China has now overtaken the U.S. as South Africa's biggest trading partner.
Unlike Europe and America, China continued to invest in South Africa throughout the global economic crisis, lessening the blow to the South African economy. However, its investment is proving to be a double-edged sword because South Africa's once successful textile sector is now struggling to cope with cheap Chinese imports flooding their market.
The repercussions are being felt across the country as thousands of workers struggle to keep their low-paid jobs.
Kwazulu-Natal, a rural village near South Africa's west coast, initially appears far removed from global events and their consequences. But the impact of China's growth is being harshly felt in this remote corner.
Sindi Mkalipi, a local clothing factory worker, irons 70 pieces of clothing an hour to earn $34 a week. She wakes up at 5:30 every morning to begin her hour-long journey to the factory. She is the only employed member of her family and with seven mouths to feed her job is vital to their survival.
"We earn very little, but at least I can buy a pack of maize meal, some chicken pieces and a bus ticket," she says. "It's better than not earning anything at all."
In a country where more than a third of the population is jobless she is only too aware that many people would be willing to take her job.
The South African government expects a machinist in this kind of factory to earn a minimum of $68 a week -- twice what Mkalipi earns. But Alex Liu, Mkalipi's boss and the factory owner, says he cannot pay that and stay in business.
Liu came to South Africa a decade ago with other members of the Chinese Chamber of Commerce and Industry, to exploit business opportunities. The irony of the situation is not lost on him.
"Some of our members are really considering to close down here and relocate their factories to other neighboring countries, like Lesotho or Swaziland," he says.
In neighboring Lesotho, the minimum wage is $32 per week. But in South Africa manufacturers are either trimming their workforce or closing down entirely.
According to the South African Clothing and Textile Workers Union, in the last three years more than 18,000 people have lost their jobs in the sector.
With employers like Liu calling for a lower minimum wage, South Africa finds itself in a situation where it is desperate to create work, but unable to guarantee what the government considers decent pay.
However, South African Trade and Industry Minister Rob Davies believes that although China may be shrinking the local clothing sector, South Africa and the continent at large benefit from its huge mining investments.
"China and the industrialization of China is what is propelling the mineral boom and its one of the major areas in which Africa is experiencing a growth surge which is, in fact, placing Africa as the next growth story after China, India and Brazil," he said.
That is probably of little comfort to South Africa's ailing textile industry, or Mkalipi, and other workers like her.
CNN
China is now South Africa's biggest trading partner. But cheap Chinese imports are threatening local industries and thousands of ordinary South Africans are paying the price.
Trade between South Africa and China increased from more than $8 billion in 2006 to a record $20 billion last year. As a result China has now overtaken the U.S. as South Africa's biggest trading partner.
Unlike Europe and America, China continued to invest in South Africa throughout the global economic crisis, lessening the blow to the South African economy. However, its investment is proving to be a double-edged sword because South Africa's once successful textile sector is now struggling to cope with cheap Chinese imports flooding their market.
The repercussions are being felt across the country as thousands of workers struggle to keep their low-paid jobs.
Kwazulu-Natal, a rural village near South Africa's west coast, initially appears far removed from global events and their consequences. But the impact of China's growth is being harshly felt in this remote corner.
Sindi Mkalipi, a local clothing factory worker, irons 70 pieces of clothing an hour to earn $34 a week. She wakes up at 5:30 every morning to begin her hour-long journey to the factory. She is the only employed member of her family and with seven mouths to feed her job is vital to their survival.
"We earn very little, but at least I can buy a pack of maize meal, some chicken pieces and a bus ticket," she says. "It's better than not earning anything at all."
In a country where more than a third of the population is jobless she is only too aware that many people would be willing to take her job.
The South African government expects a machinist in this kind of factory to earn a minimum of $68 a week -- twice what Mkalipi earns. But Alex Liu, Mkalipi's boss and the factory owner, says he cannot pay that and stay in business.
Liu came to South Africa a decade ago with other members of the Chinese Chamber of Commerce and Industry, to exploit business opportunities. The irony of the situation is not lost on him.
"Some of our members are really considering to close down here and relocate their factories to other neighboring countries, like Lesotho or Swaziland," he says.
In neighboring Lesotho, the minimum wage is $32 per week. But in South Africa manufacturers are either trimming their workforce or closing down entirely.
According to the South African Clothing and Textile Workers Union, in the last three years more than 18,000 people have lost their jobs in the sector.
With employers like Liu calling for a lower minimum wage, South Africa finds itself in a situation where it is desperate to create work, but unable to guarantee what the government considers decent pay.
However, South African Trade and Industry Minister Rob Davies believes that although China may be shrinking the local clothing sector, South Africa and the continent at large benefit from its huge mining investments.
"China and the industrialization of China is what is propelling the mineral boom and its one of the major areas in which Africa is experiencing a growth surge which is, in fact, placing Africa as the next growth story after China, India and Brazil," he said.
That is probably of little comfort to South Africa's ailing textile industry, or Mkalipi, and other workers like her.
CNN
Nigeria is Ghana's biggest source of investment
Ghana's Deputy Minister of Trade and Industry , Mr. Joseph Annan, has disclosed that Nigeria is leading in Foreign Direct Investment (FDI) flow into Ghana, with an estimate of over $1 billion in the service sector, especially in banking and insurance sector in Ghana.
Annan who spoke during a stakeholders’ forum on breaking trade barriers in the West Africa sub-region organised by the Lagos Chamber of Commerce and Industry (LCCI), said the trade between both countries is estimated to be over $620 million.
The Minister said intra-Africa trade accounts for only 9 per cent of Africa’s international trade, lower than any other region in the world but noted that this aggregate figure understates the importance of intra-Africa trade.
According to Annan, 17 per cent of all Africa exports are to other African countries while fuel export is excluded. In his words, “intra-African trade is more important to the average African country than to the continent as a whole.”
The Minister identified high transport cost and poor infrastructure as one of the constraints to West African trade, stating that transport cost are extremely high between both countries.
He gave example with the road freight tariffs in sub-Saharan Africa, which are in the range of $0.04-0.14 per tonne and per kilometre compared to $0.01-0.04 per tonne and per kilometre in other developing regions.
Annan said that trade to landlocked countries is costly with import costs three to five times the global average. “It takes 116 days to move a container from Bangui, Central Africa Republic, to the nearest port” he said.
Annan said the overall poor state of infrastructure is exacerbated by the legacy of colonial trading patterns, which emphasised trade with Europe rather than with neighbouring territories. He pointed out that the time consuming and costly border measures and un-harmonised and cumbersome regulatory systems are even greater barriers to trade than poor physical infrastructure.
He further noted that crossing a national boundary incurs a 4 per cent increase in trade cost, irrespective of the distance covered and said that from a recent survey of firms in African countries, revealed that 85 per cent experienced increased costs, over 50 per cent lost business and almost 25 per cent lost or damaged cargo; all due to border controls.
He stated the need for efficient and harmonised customs procedures to reduce trade costs and intra-regional trade will require greater harmonisation of behind-the-border regulations.
He said that improving Africa’s inter-state road network could expand trade by $250 billion over 15 years, at a cost of only $32 billion.
This Day
Annan who spoke during a stakeholders’ forum on breaking trade barriers in the West Africa sub-region organised by the Lagos Chamber of Commerce and Industry (LCCI), said the trade between both countries is estimated to be over $620 million.
The Minister said intra-Africa trade accounts for only 9 per cent of Africa’s international trade, lower than any other region in the world but noted that this aggregate figure understates the importance of intra-Africa trade.
According to Annan, 17 per cent of all Africa exports are to other African countries while fuel export is excluded. In his words, “intra-African trade is more important to the average African country than to the continent as a whole.”
The Minister identified high transport cost and poor infrastructure as one of the constraints to West African trade, stating that transport cost are extremely high between both countries.
He gave example with the road freight tariffs in sub-Saharan Africa, which are in the range of $0.04-0.14 per tonne and per kilometre compared to $0.01-0.04 per tonne and per kilometre in other developing regions.
Annan said that trade to landlocked countries is costly with import costs three to five times the global average. “It takes 116 days to move a container from Bangui, Central Africa Republic, to the nearest port” he said.
Annan said the overall poor state of infrastructure is exacerbated by the legacy of colonial trading patterns, which emphasised trade with Europe rather than with neighbouring territories. He pointed out that the time consuming and costly border measures and un-harmonised and cumbersome regulatory systems are even greater barriers to trade than poor physical infrastructure.
He further noted that crossing a national boundary incurs a 4 per cent increase in trade cost, irrespective of the distance covered and said that from a recent survey of firms in African countries, revealed that 85 per cent experienced increased costs, over 50 per cent lost business and almost 25 per cent lost or damaged cargo; all due to border controls.
He stated the need for efficient and harmonised customs procedures to reduce trade costs and intra-regional trade will require greater harmonisation of behind-the-border regulations.
He said that improving Africa’s inter-state road network could expand trade by $250 billion over 15 years, at a cost of only $32 billion.
This Day
West African cocaine trade shoots up
by Drew Hinshaw
The amount of cocaine trafficked through West Africa to Europe may have doubled since 2006 and drug cartels are cooperating with al-Qaeda in the region, an official with the United Nations Office on Drugs and Crime said.
As much as 80 metric tons of cocaine, worth $1.2 billion, might pass through West Africa to Europe this year, Manuel de Almeida Pereira, legal adviser to the Vienna-based anti-crime unit of the UN, said in an interview on May 17.
Much of the product comes from South America and is brought across the Atlantic by plane, then transited toward Europe through the Middle East, he said. Drug cartels are beginning to share weapons, information, safe houses, and other assets with al-Qaeda in the Islamic Maghreb, Pereira said, citing “sources of intelligence we cannot reveal.”
“I’m sure that they are in this country,” Pereira said from Bissau, the capital of Guinea-Bissau on West Africa’s Atlantic coast. “This is a new trend we have to address.”
Three Malians were detained in Ghana in December 2009 and extradited to the U.S., where they were charged with trafficking cocaine in order to finance terrorism. The case is ongoing. The arrests “and other reports and congressional testimony suggest that there may be collaboration between drug traffickers and terrorist organizations in the region,” the Congressional Research Service said in a report in February, 2010.
Guinea-Bissau
Al-Qaeda in the Islamic Maghreb operates in North Africa and has kidnapped and ransomed foreigners in countries like Mali, Niger and Mauritania.
In a May 18 interview, Guinea-Bissau’s Attorney General Amine Michel Saad said terrorist activity in the country has become “a reality.”
“This is more a problem for Europe and the U.S. and other Western countries than it is for Guinea-Bissau,” Saad said.
UNODC is also concerned that cartels trafficking Afghan heroin into the U.S. are passing through West African states, particularly Nigeria and Guinea-Bissau, Pereira said.
“This is a very recent trend that we are still studying,” he said. Saad described those concerns as “speculation.”
UNODC’s estimates of cocaine trafficked through West Africa don’t include Guinea-Bissau, where the state’s inability to patrol the islands beyond its capital has made the former “a blank in terms of statistics,” Pereira said.
The coastal country of 1.5 million people doesn’t have a single helicopter, airplane or boat that can monitor activity in its 80 islands, where much of drug trafficking is thought to take place.
“The areas where we have narco-trafficking are those where we can’t even reach, no matter what’s happening there,” Saad said. “It’s an impossibility.”
Local Consumption
UNODC is also concerned about West African consumption of drugs, particularly crack cocaine, Pereira said. In the past year, the organization witnessed a rise in the amount of crack being sold locally, often at prices as low as 14,000 CFA francs ($30) a gram.
The crack trade poses a security threat to regional states, particularly Guinea-Bissau, which has only one rehabilitation center and no prisons.
“This will increase violence, this will increase robberies, this will increase many forms of criminality,” he said. “This is a weak society, it can be destroyed.”
Bloomberg
The amount of cocaine trafficked through West Africa to Europe may have doubled since 2006 and drug cartels are cooperating with al-Qaeda in the region, an official with the United Nations Office on Drugs and Crime said.
As much as 80 metric tons of cocaine, worth $1.2 billion, might pass through West Africa to Europe this year, Manuel de Almeida Pereira, legal adviser to the Vienna-based anti-crime unit of the UN, said in an interview on May 17.
Much of the product comes from South America and is brought across the Atlantic by plane, then transited toward Europe through the Middle East, he said. Drug cartels are beginning to share weapons, information, safe houses, and other assets with al-Qaeda in the Islamic Maghreb, Pereira said, citing “sources of intelligence we cannot reveal.”
“I’m sure that they are in this country,” Pereira said from Bissau, the capital of Guinea-Bissau on West Africa’s Atlantic coast. “This is a new trend we have to address.”
Three Malians were detained in Ghana in December 2009 and extradited to the U.S., where they were charged with trafficking cocaine in order to finance terrorism. The case is ongoing. The arrests “and other reports and congressional testimony suggest that there may be collaboration between drug traffickers and terrorist organizations in the region,” the Congressional Research Service said in a report in February, 2010.
Guinea-Bissau
Al-Qaeda in the Islamic Maghreb operates in North Africa and has kidnapped and ransomed foreigners in countries like Mali, Niger and Mauritania.
In a May 18 interview, Guinea-Bissau’s Attorney General Amine Michel Saad said terrorist activity in the country has become “a reality.”
“This is more a problem for Europe and the U.S. and other Western countries than it is for Guinea-Bissau,” Saad said.
UNODC is also concerned that cartels trafficking Afghan heroin into the U.S. are passing through West African states, particularly Nigeria and Guinea-Bissau, Pereira said.
“This is a very recent trend that we are still studying,” he said. Saad described those concerns as “speculation.”
UNODC’s estimates of cocaine trafficked through West Africa don’t include Guinea-Bissau, where the state’s inability to patrol the islands beyond its capital has made the former “a blank in terms of statistics,” Pereira said.
The coastal country of 1.5 million people doesn’t have a single helicopter, airplane or boat that can monitor activity in its 80 islands, where much of drug trafficking is thought to take place.
“The areas where we have narco-trafficking are those where we can’t even reach, no matter what’s happening there,” Saad said. “It’s an impossibility.”
Local Consumption
UNODC is also concerned about West African consumption of drugs, particularly crack cocaine, Pereira said. In the past year, the organization witnessed a rise in the amount of crack being sold locally, often at prices as low as 14,000 CFA francs ($30) a gram.
The crack trade poses a security threat to regional states, particularly Guinea-Bissau, which has only one rehabilitation center and no prisons.
“This will increase violence, this will increase robberies, this will increase many forms of criminality,” he said. “This is a weak society, it can be destroyed.”
Bloomberg
India, Tanzania trade set to grow
by Victor Karega
Dar es Salaam. India’s trade balance with Tanzania is set to grow in the coming years because of the duty free component policy for the latter’s agricultural products.This has been revealed ahead of the visit of India’s Premier Manmohan Singh in Tanzania. According to the Indian high commissioner, Mr Kocheril Bhagirath, India has biggest buyers of Tanzanian agricultural products, something, which adds value to the production of agriculture goods in Tanzania.
“Our trade balance is expected to get bigger due to India’s introduction of the duty free component policy for agricultural products from Tanzania. “We have been importing products, such as beans and cashewnuts, both of which have a big market in India.
We hope that the volume of trade, especially supply of agricultural products from Tanzania to India will increase,” he said yesterday. He was briefing the media on the state visit of Indian Prime Minister, who arrives in Dar es Salaam today. Mr Bhagirath said at the moment the trade value between India and Tanzania stands at $1.3 billion (about Sh2 trillion).
He said the trade was expanding, and they would like to balance it. He explained that Tanzania’s agriculture products receive benefits that reach up to the level of ordinary farmers. India spends a total of $220 million annually on imports of cashewnuts and beans from Tanzania, he said.
He pointed out that the visit of Premier Singh to Tanzania was extremely special in that he has old links with Tanzania based on the concept of South-South cooperation.He explained that with all the experience it has India was working very well in transferring the technology it has and capacities. This has proved very beneficial for Africa, he said.
On Indian projects in Tanzania, he said they are very promising g. He gave the example of the technology at the DIT that was operating well, education and e-medicine which will come into operation next week. On trade between India and Africa, he said it was expected to grow from $46 billion to $70 billion in the next four years.
The envoy said the thrust of India-Africa cooperation was on capacity building in human resource development. This was something about which Prime Minister Singh was very clear about, he said.
However, Ambassador Bagirath clarified that India was not competing with China as far as Africa was concerned. He said their partnership with Africa has existed for over one century.
The Citizen
Dar es Salaam. India’s trade balance with Tanzania is set to grow in the coming years because of the duty free component policy for the latter’s agricultural products.This has been revealed ahead of the visit of India’s Premier Manmohan Singh in Tanzania. According to the Indian high commissioner, Mr Kocheril Bhagirath, India has biggest buyers of Tanzanian agricultural products, something, which adds value to the production of agriculture goods in Tanzania.
“Our trade balance is expected to get bigger due to India’s introduction of the duty free component policy for agricultural products from Tanzania. “We have been importing products, such as beans and cashewnuts, both of which have a big market in India.
We hope that the volume of trade, especially supply of agricultural products from Tanzania to India will increase,” he said yesterday. He was briefing the media on the state visit of Indian Prime Minister, who arrives in Dar es Salaam today. Mr Bhagirath said at the moment the trade value between India and Tanzania stands at $1.3 billion (about Sh2 trillion).
He said the trade was expanding, and they would like to balance it. He explained that Tanzania’s agriculture products receive benefits that reach up to the level of ordinary farmers. India spends a total of $220 million annually on imports of cashewnuts and beans from Tanzania, he said.
He pointed out that the visit of Premier Singh to Tanzania was extremely special in that he has old links with Tanzania based on the concept of South-South cooperation.He explained that with all the experience it has India was working very well in transferring the technology it has and capacities. This has proved very beneficial for Africa, he said.
On Indian projects in Tanzania, he said they are very promising g. He gave the example of the technology at the DIT that was operating well, education and e-medicine which will come into operation next week. On trade between India and Africa, he said it was expected to grow from $46 billion to $70 billion in the next four years.
The envoy said the thrust of India-Africa cooperation was on capacity building in human resource development. This was something about which Prime Minister Singh was very clear about, he said.
However, Ambassador Bagirath clarified that India was not competing with China as far as Africa was concerned. He said their partnership with Africa has existed for over one century.
The Citizen
Zambia records trade surplus
Zambia has recorded a trade surplus of K1.1 trillion, representing a growth of about 27.8 per cent from K865.0 billion the previous month.
The K1,105.4 billion surplus means that the country exported more in April 2011 than it imported in the same month in nominal terms.
Central Statistical Office (CSO) acting director John Kalumbi said since January 2011, the country has had monthly trade surpluses with the highest value at K1,484.3 billion registered in January.
The lowest was recorded in February 2011 amounting to K645.2 billion.
Speaking when he presented the CSO monthly bulletin in Lusaka yesterday, Mr Kalumbi said Zambia’s major export products in April were intermediate goods comprising copper, cathodes and a section of refined copper and copper blister accounting for 91.4 per cent.
“Other exports were from the consumer goods, raw materials and capital goods which accounted for about 8.6 per cent of the total exports in April and March 2011. The country has been a net exporter of intermediate goods, mainly metal and their articles accounting for an average of 90.7 per cent of the total exports,’’ Mr Kalumbi said.
Commenting on Zambia’s metal exports and non-traditional exports (NTEs), Mr Kalumbi said there had been a decrease in the total value of exports from K3, 674.4 billion to K3, 544.0 billion between April and March 2011.
The overall contribution of metals and their products to the total export earnings in April and March 2011 averaged about 86.0 per cent.
“The share of NTEs recorded an average of about 14.1 per cent in revenue earnings between April and March 2011,’’ he said.
Zambia’s major exports to Switzerland accounted for 53.6 per cent and the products exported were cathodes and sections of cathodes of refined copper.
He said about 17.7 per cent of the products were exported into China with copper blisters representing 45.5 per cent and cathodes and sections of cathodes of refined copper stood at 33.2 per cent.
South Africa was the third major destination accounting for 14.1 per cent with main export products being cathodes and sections of cathodes of refined copper stood at 60.2 per cent.
Other articles of cobalt contributed about 15.3 per cent to the country’s total exports.
Mr Kalumbi said the United Kingdom was the fourth major export destination of Zambia’s total exports accounting for 4.0 per cent.
The major export products were cathodes and sections of cathodes of refined copper accounting for about 97.7 per cent.
The Democratic Republic of Congo (DRC) was the fifth major export for Zambia representing 3.5 per cent.
Collectively, the five countries accounted for 92.9 per cent of Zambia’s total export earnings in April 2011.
Times of Zambia
The K1,105.4 billion surplus means that the country exported more in April 2011 than it imported in the same month in nominal terms.
Central Statistical Office (CSO) acting director John Kalumbi said since January 2011, the country has had monthly trade surpluses with the highest value at K1,484.3 billion registered in January.
The lowest was recorded in February 2011 amounting to K645.2 billion.
Speaking when he presented the CSO monthly bulletin in Lusaka yesterday, Mr Kalumbi said Zambia’s major export products in April were intermediate goods comprising copper, cathodes and a section of refined copper and copper blister accounting for 91.4 per cent.
“Other exports were from the consumer goods, raw materials and capital goods which accounted for about 8.6 per cent of the total exports in April and March 2011. The country has been a net exporter of intermediate goods, mainly metal and their articles accounting for an average of 90.7 per cent of the total exports,’’ Mr Kalumbi said.
Commenting on Zambia’s metal exports and non-traditional exports (NTEs), Mr Kalumbi said there had been a decrease in the total value of exports from K3, 674.4 billion to K3, 544.0 billion between April and March 2011.
The overall contribution of metals and their products to the total export earnings in April and March 2011 averaged about 86.0 per cent.
“The share of NTEs recorded an average of about 14.1 per cent in revenue earnings between April and March 2011,’’ he said.
Zambia’s major exports to Switzerland accounted for 53.6 per cent and the products exported were cathodes and sections of cathodes of refined copper.
He said about 17.7 per cent of the products were exported into China with copper blisters representing 45.5 per cent and cathodes and sections of cathodes of refined copper stood at 33.2 per cent.
South Africa was the third major destination accounting for 14.1 per cent with main export products being cathodes and sections of cathodes of refined copper stood at 60.2 per cent.
Other articles of cobalt contributed about 15.3 per cent to the country’s total exports.
Mr Kalumbi said the United Kingdom was the fourth major export destination of Zambia’s total exports accounting for 4.0 per cent.
The major export products were cathodes and sections of cathodes of refined copper accounting for about 97.7 per cent.
The Democratic Republic of Congo (DRC) was the fifth major export for Zambia representing 3.5 per cent.
Collectively, the five countries accounted for 92.9 per cent of Zambia’s total export earnings in April 2011.
Times of Zambia
Why Nigeria is yet to take advantage of AGOA
by Siaka Momoh
The African Growth and Opportunity Act (AGOA) was passed as part of the Trade and Development Act of 2000 by the United States to facilitate two-way trade between the US and sub-Sahara Africa (SSA), and was expectedly accepted with enthusiasm by industry stakeholders.
But how has the programme fared here, and in Africa generally, 10 years after?
This was an issue that cropped up at a media interactive session with Joseph D. Stafford, US consul general, in Lagos.
AGOA provides participating countries in SSA with the most liberal access to the US market, available to any country or region. It covers 6,500 product items, after the extension of GSP preferences to a further 1,800 product lines, including numerous food products, handbags, gloves, footwear, iron and steel items, automotive components and vehicles. Countries meeting the ‘apparel provisions’ further qualify for duty-free access.
As an American trade and tariff initiative, AGOA is unique in three ways:
•The 37 African states, whose businesses are currently able to make use of AGOA, are not required to open their markets to US trade;
•AGOA’s access to the US market is relatively unfettered - over 80 percent of AGOA nations’ products enter the US without paying any duties or tariffs, and
•Textile businesses in AGOA countries can make use of third country fabrics to produce finished goods, which can still be exported to the US market duty-free under AGOA.
However, good as this programme is, Nigeria is yet to take full advantage of it, because it has against all entreaties, chosen to remain a mono-cultural economy. An analysis of the trade data by the product sector reveals the distribution of exports into the US under AGOA. It shows that there are three sectors: energy-related products, textiles and apparel, and transportation equipment that account for the vast bulk (over 90 percent) of exports currently qualifying for AGOA benefits.
Agricultural products and minerals and metals have also been successfully exported by other African countries to the US under AGOA; but AGOA-eligible exports in the remaining product categories are still insignificant.
Nigeria shines only in the ‘energy-related products sector. Nigeria has failed woefully in the ‘textiles and apparel,’ ‘agricultural products’ and ‘mineral and metals’ sectors, where we have the potential to do so.
At the recent media interactive session with the US Consul-General in Lagos, it was revealed that in 2010 the US exports to sub-Saharan Africa exceeded $17 billion, while US imports from the region were greater than $65 billion.
This looks good on the surface, but when you are confronted with the details, you find out that export of crude oil and petroleum products accounts largely for the AGOA trade progress in question. And Nigeria accounts for over 50 percent of crude oil and petroleum product export from Africa to the US accounting for 33.2 million barrels of the 66.0 million barrels sold by Africa to the US (December 2010).
Stafford corroborated this by saying, “My overall perception of AGOA in Nigeria is that it is doing an excellent job with Nigeria benefiting from AGOA, principally in respect of export of oil. But we want to see the imprint in the export sector beyond oil,” he noted.
In addition, going by BusinessDay's investigation from 2009 to 2010, the US imports from SSA increased by 39 percent to reach $65 billion, an increase that was mostly due to a 40 percent jump in crude oil imports (accounting for 81.4 percent of total US imports from SSA with both price and quantity increasing.) This growth closely parallels the large increase in total crude oil imports from virtually all oil producing trading partners (including non-AGOA eligible countries).
US imports from Nigeria increased by 60 percent (recall Nigeria accounts for over 50 percent of US oil import from Africa), from Angola by 28 percent, from the Democratic Republic of Congo by 60 percent, and Gabon by 80 percent.
US imports from South Africa also grew by 40 percent, driven mainly by increases in diamonds imports. US imports from Ghana rose by 103 percent due to an increase in cocoa imports (gained from Ivory Coast’s political instability and negatively affected cocoa industry).
In 2010, AGOA imports were $44 billion, 31 percent more than in 2009, mainly due to a 33 percent increase in AGOA petroleum product imports. Petroleum products continued to account for the largest portion of AGOA imports, with a 91 percent share of overall AGOA imports.
With these fuel products excluded, AGOA imports were $4 billion, increasing by 18 percent. US imports of AGOA chemical and related products increased by 39 percent, AGOA minerals and metals by 94 percent, AGOA agricultural products by 44 percent, and AGOA transportation products by 15 percent. AGOA textiles and apparel imports decreased by 20 percent and AGOA machinery related products by 44 percent.
The top-five AGOA beneficiary countries include: Nigeria, Angola, South Africa, Republic of Congo, and Chad. Other leading AGOA beneficiaries are Gabon, Democratic Republic of Congo, Lesotho, Kenya, Cameroon, and Mauritius.
BusinessDay’s investigation also revealed that US total trade (exports plus imports with SSA) increased by 32 percent from 2009 to 2010, as both exports and imports increased. The expansion in trade is consistent with the overall growth in US trade, with the world (a 22 percent increase in 2010). US exports to SSA increased by 13 percent to $17 billion (mostly due to increases of vehicles exports).
Of the top-five African destinations for US products, exports to Nigeria rose by 10 percent, to South Africa by 26 percent, to Ghana by 37 percent, and to Gabon by 42 percent.
Exports to Liberia increased by 101 percent; to Angola decreased by 9 percent, and to Kenya by 45 percent. Exports of electrical machinery (including telecommunications equipment) to SSA continue to decrease (-8 percent).
Industry stakeholders and experts have advanced reasons for Nigeria’s failure to take advantage of AGOA.
Olajumoke Familoni, CEO, International Centre for Leadership Development, argues that tariff and non-tariff barriers in developed countries pose a significant obstacle to developing country exports.
“While developed countries generally maintain relatively low average trade barriers, their highest trade barriers tend to apply to goods that developing countries export,” she noted.
The World Bank and Oxfam estimate that trade barriers erected by developed countries cost developing countries $100 billion a year. Non-tariff barriers also pose significant problems. For instance, agricultural subsidies encourage production and put downward pressure on agricultural prices.
Michael Moore, former director general, World Trade Organisation, estimates that removing all tariff and non-tariff barriers “could result in gains for developing countries in the order of $182 billion in the services sector, $162 billion in manufactures, and $32 billion in agriculture.
“The US has partially addressed these trade distortions through AGOA and should commit to eliminating all remaining tariffs on goods from eligible nations, and unilaterally phasing out agricultural subsidies,” Familoni stated.
For Muda Yusuf, director general, Lagos Chamber of Commerce and Industry: “Export business is about global competitiveness, from both quality and price perspectives. The poor showing of Nigeria in AGOA is a reflection of the fundamental weaknesses in the economy as reflected in the high cost of doing business.
For as long as operating cost remains high, no significant progress can be made in the non-oil export sector. The tragedy of the Nigerian economy is that domestic firms cannot even access the domestic market.
The market has been taken over by products from other parts of the world, especially Asia. Our major attraction to the world is that we offer robust market opportunities. Not much value can be created in an economy that has weak infrastructures. Yet value creation has a lot to do with competitiveness. The way forward is to address the fundamental barriers to competitiveness of Nigerian firms,” he said.
For Femi Boyede, country facilitator on trade and enterprises, ECOWAS Ten, this situation could be said to be unfortunate only to the extent that we have made deliberate efforts, based on specific strategy to break into the AGOA market and have failed.
“The fact is we have not,” he says. He argues that the Obasanjo administration made some administrative blunder in the past regarding the administration of the Nigerian Export Promotion Council (NEPC).
“For AGOA, Nigeria’s ‘fate’ can still be salvaged. It is a matter of strategy. It is a matter of developing new exporters specifically for that market. I hope the appropriate authorities will see this need,” he says.
Moreover, AGOA-eligible nations are required to eliminate all duties on imports from other eligible sub-Saharan African nations by 2010.
Olajumoke argues that “Trade between African countries faces many hurdles, including poor infrastructure, corruption, and informal barriers such as onerous regulations. However, many African countries continue to maintain tariff barriers on goods from their neighbors that increase prices for consumers. As a result, interregional trade makes up only about 10 percent of the area’s total exports, significantly less than levels in every other region of the world except the Middle East.
According to Marian Tupy of the Cato Institute, “Strikingly, trade liberalisation within SSA could increase intra-SSA trade by 54 percentn, and account for over 36 percent of all the welfare gains that SSA stands to receive as a result of global trade liberalisation.
“Nigeria, one of the largest AGOA economies, heavily protects its market from imports, setting average duty levels for agricultural and non-agricultural products at average applied tariffs of 50.2 percent and 25.3 percent respectively, and 29 percent overall.”
There is need for a rethink. The Lusaka 10th Annual Forum, coming up in June should be used as a platform to discuss problems highlighted and proffer solution.
Businessday Online
The African Growth and Opportunity Act (AGOA) was passed as part of the Trade and Development Act of 2000 by the United States to facilitate two-way trade between the US and sub-Sahara Africa (SSA), and was expectedly accepted with enthusiasm by industry stakeholders.
But how has the programme fared here, and in Africa generally, 10 years after?
This was an issue that cropped up at a media interactive session with Joseph D. Stafford, US consul general, in Lagos.
AGOA provides participating countries in SSA with the most liberal access to the US market, available to any country or region. It covers 6,500 product items, after the extension of GSP preferences to a further 1,800 product lines, including numerous food products, handbags, gloves, footwear, iron and steel items, automotive components and vehicles. Countries meeting the ‘apparel provisions’ further qualify for duty-free access.
As an American trade and tariff initiative, AGOA is unique in three ways:
•The 37 African states, whose businesses are currently able to make use of AGOA, are not required to open their markets to US trade;
•AGOA’s access to the US market is relatively unfettered - over 80 percent of AGOA nations’ products enter the US without paying any duties or tariffs, and
•Textile businesses in AGOA countries can make use of third country fabrics to produce finished goods, which can still be exported to the US market duty-free under AGOA.
However, good as this programme is, Nigeria is yet to take full advantage of it, because it has against all entreaties, chosen to remain a mono-cultural economy. An analysis of the trade data by the product sector reveals the distribution of exports into the US under AGOA. It shows that there are three sectors: energy-related products, textiles and apparel, and transportation equipment that account for the vast bulk (over 90 percent) of exports currently qualifying for AGOA benefits.
Agricultural products and minerals and metals have also been successfully exported by other African countries to the US under AGOA; but AGOA-eligible exports in the remaining product categories are still insignificant.
Nigeria shines only in the ‘energy-related products sector. Nigeria has failed woefully in the ‘textiles and apparel,’ ‘agricultural products’ and ‘mineral and metals’ sectors, where we have the potential to do so.
At the recent media interactive session with the US Consul-General in Lagos, it was revealed that in 2010 the US exports to sub-Saharan Africa exceeded $17 billion, while US imports from the region were greater than $65 billion.
This looks good on the surface, but when you are confronted with the details, you find out that export of crude oil and petroleum products accounts largely for the AGOA trade progress in question. And Nigeria accounts for over 50 percent of crude oil and petroleum product export from Africa to the US accounting for 33.2 million barrels of the 66.0 million barrels sold by Africa to the US (December 2010).
Stafford corroborated this by saying, “My overall perception of AGOA in Nigeria is that it is doing an excellent job with Nigeria benefiting from AGOA, principally in respect of export of oil. But we want to see the imprint in the export sector beyond oil,” he noted.
In addition, going by BusinessDay's investigation from 2009 to 2010, the US imports from SSA increased by 39 percent to reach $65 billion, an increase that was mostly due to a 40 percent jump in crude oil imports (accounting for 81.4 percent of total US imports from SSA with both price and quantity increasing.) This growth closely parallels the large increase in total crude oil imports from virtually all oil producing trading partners (including non-AGOA eligible countries).
US imports from Nigeria increased by 60 percent (recall Nigeria accounts for over 50 percent of US oil import from Africa), from Angola by 28 percent, from the Democratic Republic of Congo by 60 percent, and Gabon by 80 percent.
US imports from South Africa also grew by 40 percent, driven mainly by increases in diamonds imports. US imports from Ghana rose by 103 percent due to an increase in cocoa imports (gained from Ivory Coast’s political instability and negatively affected cocoa industry).
In 2010, AGOA imports were $44 billion, 31 percent more than in 2009, mainly due to a 33 percent increase in AGOA petroleum product imports. Petroleum products continued to account for the largest portion of AGOA imports, with a 91 percent share of overall AGOA imports.
With these fuel products excluded, AGOA imports were $4 billion, increasing by 18 percent. US imports of AGOA chemical and related products increased by 39 percent, AGOA minerals and metals by 94 percent, AGOA agricultural products by 44 percent, and AGOA transportation products by 15 percent. AGOA textiles and apparel imports decreased by 20 percent and AGOA machinery related products by 44 percent.
The top-five AGOA beneficiary countries include: Nigeria, Angola, South Africa, Republic of Congo, and Chad. Other leading AGOA beneficiaries are Gabon, Democratic Republic of Congo, Lesotho, Kenya, Cameroon, and Mauritius.
BusinessDay’s investigation also revealed that US total trade (exports plus imports with SSA) increased by 32 percent from 2009 to 2010, as both exports and imports increased. The expansion in trade is consistent with the overall growth in US trade, with the world (a 22 percent increase in 2010). US exports to SSA increased by 13 percent to $17 billion (mostly due to increases of vehicles exports).
Of the top-five African destinations for US products, exports to Nigeria rose by 10 percent, to South Africa by 26 percent, to Ghana by 37 percent, and to Gabon by 42 percent.
Exports to Liberia increased by 101 percent; to Angola decreased by 9 percent, and to Kenya by 45 percent. Exports of electrical machinery (including telecommunications equipment) to SSA continue to decrease (-8 percent).
Industry stakeholders and experts have advanced reasons for Nigeria’s failure to take advantage of AGOA.
Olajumoke Familoni, CEO, International Centre for Leadership Development, argues that tariff and non-tariff barriers in developed countries pose a significant obstacle to developing country exports.
“While developed countries generally maintain relatively low average trade barriers, their highest trade barriers tend to apply to goods that developing countries export,” she noted.
The World Bank and Oxfam estimate that trade barriers erected by developed countries cost developing countries $100 billion a year. Non-tariff barriers also pose significant problems. For instance, agricultural subsidies encourage production and put downward pressure on agricultural prices.
Michael Moore, former director general, World Trade Organisation, estimates that removing all tariff and non-tariff barriers “could result in gains for developing countries in the order of $182 billion in the services sector, $162 billion in manufactures, and $32 billion in agriculture.
“The US has partially addressed these trade distortions through AGOA and should commit to eliminating all remaining tariffs on goods from eligible nations, and unilaterally phasing out agricultural subsidies,” Familoni stated.
For Muda Yusuf, director general, Lagos Chamber of Commerce and Industry: “Export business is about global competitiveness, from both quality and price perspectives. The poor showing of Nigeria in AGOA is a reflection of the fundamental weaknesses in the economy as reflected in the high cost of doing business.
For as long as operating cost remains high, no significant progress can be made in the non-oil export sector. The tragedy of the Nigerian economy is that domestic firms cannot even access the domestic market.
The market has been taken over by products from other parts of the world, especially Asia. Our major attraction to the world is that we offer robust market opportunities. Not much value can be created in an economy that has weak infrastructures. Yet value creation has a lot to do with competitiveness. The way forward is to address the fundamental barriers to competitiveness of Nigerian firms,” he said.
For Femi Boyede, country facilitator on trade and enterprises, ECOWAS Ten, this situation could be said to be unfortunate only to the extent that we have made deliberate efforts, based on specific strategy to break into the AGOA market and have failed.
“The fact is we have not,” he says. He argues that the Obasanjo administration made some administrative blunder in the past regarding the administration of the Nigerian Export Promotion Council (NEPC).
“For AGOA, Nigeria’s ‘fate’ can still be salvaged. It is a matter of strategy. It is a matter of developing new exporters specifically for that market. I hope the appropriate authorities will see this need,” he says.
Moreover, AGOA-eligible nations are required to eliminate all duties on imports from other eligible sub-Saharan African nations by 2010.
Olajumoke argues that “Trade between African countries faces many hurdles, including poor infrastructure, corruption, and informal barriers such as onerous regulations. However, many African countries continue to maintain tariff barriers on goods from their neighbors that increase prices for consumers. As a result, interregional trade makes up only about 10 percent of the area’s total exports, significantly less than levels in every other region of the world except the Middle East.
According to Marian Tupy of the Cato Institute, “Strikingly, trade liberalisation within SSA could increase intra-SSA trade by 54 percentn, and account for over 36 percent of all the welfare gains that SSA stands to receive as a result of global trade liberalisation.
“Nigeria, one of the largest AGOA economies, heavily protects its market from imports, setting average duty levels for agricultural and non-agricultural products at average applied tariffs of 50.2 percent and 25.3 percent respectively, and 29 percent overall.”
There is need for a rethink. The Lusaka 10th Annual Forum, coming up in June should be used as a platform to discuss problems highlighted and proffer solution.
Businessday Online
Tanzania's Tanga Port increases cargo capacity
by Ally Hamisi
Tanga Port, on the north-eastern Tanzania coast, has increased cargo handling from 435,000 tons in 2007 to 650,000 tons this year due to improved infrastructure and enhanced services.
Port Manager Awadh Masawe said the improvement recorded so far was a result of deliberate steps by the Tanzania Ports Authority (TPA) to restore the port's lost glory.
"We embarked on the improvement project to by installing new infrastructure as well as develop cargo handling skills of our staff," he said,
Masawe said the improvement project began in earnest last year and was expected to be completed next month (June). In the 1960 and 70s Tanga port was famed for exporting thousands of tones of sisal, tea and coffee.
However, Masawe said in year that followed the collapse of the sisal market the port's handling dropped as the infrastructure became dilapidated thus discouraging many importers from using the port.
"The situation cost us dearly as we lost many customers", he said adding, "They decided to run to neighbouring ports within and outside the country for better service," said Masawe.
The Port Manager said TPA was now engaged in promotional campaigns aimed at winning back lost customers and attracting new ones. "Our services are now better and we can serve our customers more efficiently than before," he said. Commenting on the implementation of the project to construct a new port at Mwambani area which would cater for all landlocked countries in the Great Lakes region, Masawe said construction has already started and was going on well. Some Tshs 1.7billion (US$1.13 million) had already been paid in compensation to owners of land in the implementation area and that a feasibility study had also been conducted.
Being a shallow port, visiting Ocean going vessels have to anchor at the outer anchorage reached by pontoons which take cargoes to and from the ships.
The city of Tanga, on the Indian Ocean, is near the border with Kenya, and an important railroad terminus, connecting northern Tanzania interior to the sea using the Tanzania Railways Company line that links up to the Central Line.
Businessweek
Tanga Port, on the north-eastern Tanzania coast, has increased cargo handling from 435,000 tons in 2007 to 650,000 tons this year due to improved infrastructure and enhanced services.
Port Manager Awadh Masawe said the improvement recorded so far was a result of deliberate steps by the Tanzania Ports Authority (TPA) to restore the port's lost glory.
"We embarked on the improvement project to by installing new infrastructure as well as develop cargo handling skills of our staff," he said,
Masawe said the improvement project began in earnest last year and was expected to be completed next month (June). In the 1960 and 70s Tanga port was famed for exporting thousands of tones of sisal, tea and coffee.
However, Masawe said in year that followed the collapse of the sisal market the port's handling dropped as the infrastructure became dilapidated thus discouraging many importers from using the port.
"The situation cost us dearly as we lost many customers", he said adding, "They decided to run to neighbouring ports within and outside the country for better service," said Masawe.
The Port Manager said TPA was now engaged in promotional campaigns aimed at winning back lost customers and attracting new ones. "Our services are now better and we can serve our customers more efficiently than before," he said. Commenting on the implementation of the project to construct a new port at Mwambani area which would cater for all landlocked countries in the Great Lakes region, Masawe said construction has already started and was going on well. Some Tshs 1.7billion (US$1.13 million) had already been paid in compensation to owners of land in the implementation area and that a feasibility study had also been conducted.
Being a shallow port, visiting Ocean going vessels have to anchor at the outer anchorage reached by pontoons which take cargoes to and from the ships.
The city of Tanga, on the Indian Ocean, is near the border with Kenya, and an important railroad terminus, connecting northern Tanzania interior to the sea using the Tanzania Railways Company line that links up to the Central Line.
Businessweek
May 24, 2011
India to offer Africa $5 billion credit to nurture trade
by Otto Bakano
Indian Prime Minister Manmohan Singh told African leaders on May 24 that India will make loans to nurture economic growth on the continent where China is already a big step ahead. The south Asian country will notably offer African nations $5 billion (3.6 billion euros) in credit lines over three years, he told a trade summit here.
"Africa possesses all the prerequisites to become a major growth pole of the world in the 21st century. We will work with Africa to enable it to realise this potential," Singh said. "I'm happy to announce that India will continue to support efforts at infrastructure development, regional integration and capacity building and human ressources development in Africa," the Prime Minister said.
He said India will offer five billion dollars of credit lines to African nations over the next three years.
At the last India-Africa summit in New Delhi in 2008, India offered 5.4 billion dollars in concessionary credit lines over a five-year period.
Some of the human resources projects India has set up on the continent and plans to develop further include the India Africa Institute of Foreign Trade in Uganda, the India-Africa Institute of Information Technology in Ghana, the India Africa Diamond Institute in Botswana, and the India-Africa Institute of Education, Planning and Administration in Burundi.
"In the three years since the first India-Africa summit, Indian trade and investment in Africa have significantly increased," noted Alex Vines of the London-based think-tank Chatham House in a report last week.
Last year, India's imports from Africa were worth $20.7 billion, compared with $18.7 billion the previous year, and its exports stood at $10.3 billion the same year.
India's investment in Africa is mainly in the private sector, notably in telecommunications, pharmaceuticals and manufacturing.
But those numbers are small compared with the Chinese presence. China has mainly built infrastructure projects in exchange for access to resources, and its bilateral trade with the continent in 2010 totalled $126.9 billion, according to official figures.
Africa, despite being home to most of the world's poorest countries, is richly endowed with minerals, oil and other natural resources.
India has been looking to diversify its energy sources and reduce its dependency on the Middle East which supplies two-thirds of its energy imports.
The 2008 India-Africa summit saw India give preferential market access to exports from all the Least Developed Countries, many of them in Africa, as well as increase credit lines to Africa. India also aims to bolster its diplomatic and security presence in Africa.
In 2008, its navy joined the anti-piracy patrols in the key shipping routes of the Gulf of Aden and the Indian Ocean where rampaging Somali pirates continue to hijack merchant vessels. Both regions also back each other for a permanent seat at the UN Security Council under envisaged reforms of the world body.
On leaving the Addis Ababa summit Singh will make an official visit to Tanzania, where India has investments worth $1.3 billion (915 million euros).
India has also come in for criticism from rights groups and the west, although to a lesser extent than China, for not making its projects on the African continent conditional on its partners' human right records.
AFP
Indian Prime Minister Manmohan Singh told African leaders on May 24 that India will make loans to nurture economic growth on the continent where China is already a big step ahead. The south Asian country will notably offer African nations $5 billion (3.6 billion euros) in credit lines over three years, he told a trade summit here.
"Africa possesses all the prerequisites to become a major growth pole of the world in the 21st century. We will work with Africa to enable it to realise this potential," Singh said. "I'm happy to announce that India will continue to support efforts at infrastructure development, regional integration and capacity building and human ressources development in Africa," the Prime Minister said.
He said India will offer five billion dollars of credit lines to African nations over the next three years.
At the last India-Africa summit in New Delhi in 2008, India offered 5.4 billion dollars in concessionary credit lines over a five-year period.
Some of the human resources projects India has set up on the continent and plans to develop further include the India Africa Institute of Foreign Trade in Uganda, the India-Africa Institute of Information Technology in Ghana, the India Africa Diamond Institute in Botswana, and the India-Africa Institute of Education, Planning and Administration in Burundi.
"In the three years since the first India-Africa summit, Indian trade and investment in Africa have significantly increased," noted Alex Vines of the London-based think-tank Chatham House in a report last week.
Last year, India's imports from Africa were worth $20.7 billion, compared with $18.7 billion the previous year, and its exports stood at $10.3 billion the same year.
India's investment in Africa is mainly in the private sector, notably in telecommunications, pharmaceuticals and manufacturing.
But those numbers are small compared with the Chinese presence. China has mainly built infrastructure projects in exchange for access to resources, and its bilateral trade with the continent in 2010 totalled $126.9 billion, according to official figures.
Africa, despite being home to most of the world's poorest countries, is richly endowed with minerals, oil and other natural resources.
India has been looking to diversify its energy sources and reduce its dependency on the Middle East which supplies two-thirds of its energy imports.
The 2008 India-Africa summit saw India give preferential market access to exports from all the Least Developed Countries, many of them in Africa, as well as increase credit lines to Africa. India also aims to bolster its diplomatic and security presence in Africa.
In 2008, its navy joined the anti-piracy patrols in the key shipping routes of the Gulf of Aden and the Indian Ocean where rampaging Somali pirates continue to hijack merchant vessels. Both regions also back each other for a permanent seat at the UN Security Council under envisaged reforms of the world body.
On leaving the Addis Ababa summit Singh will make an official visit to Tanzania, where India has investments worth $1.3 billion (915 million euros).
India has also come in for criticism from rights groups and the west, although to a lesser extent than China, for not making its projects on the African continent conditional on its partners' human right records.
AFP
India woos Africa with aid, technology
by Nirmala George
India is setting up a diamond processing facility in Botswana. In Uganda, it's building a center to train businesses about global markets. In four of Africa's poorest countries, Indians are helping cotton farmers improve their yields.
Across Africa, India is reaching out with a generous mix of aid, education and technology transfers it hopes will pay rich dividends in the global scramble for natural resources.
Over the weekend, Indian Prime Minister Manmohan Singh and scores of business leaders flew to Ethiopia for a meeting with African leaders aimed at prying open doors for greater business opportunities.
India's interest in Africa is not surprising. The country has long-standing ties to the continent and a serious energy shortage for its rapidly growing economy. And it has a rival, China, that has become a major player in many African economies.
While New Delhi insists its goal in Africa is not to counter Beijing's moves, India clearly wants to broaden its footprint on the continent, trying to make sure its growth is not hobbled by a shortage of raw materials.
India is also looking to Africa to bolster its foreign policy goals, especially its bid for a seat on an expanded U.N. Security Council. New Delhi also wants closer defense ties with African states bordering the Indian Ocean in the fight against terrorism and piracy.
Publicly, though, India's efforts are not only about self-interest.
"India is interested in Africa not just because of its resources; it is also actively participating in the economic development of Africa," said Shyamal Gupta of the Confederation of Indian Industry.
Indian investments in African countries have been growing at a fast clip, with around 250 Indian companies investing mainly in telecommunications, chemical and mining companies.
But in the past decade, China has plowed billions of dollars into Africa, building roads, bridges, railways and power installations in return for access to markets and resources. China's trade with Africa is expected to top $110 billion by the end of this year.
India hopes to increase its current $46 billion trade with the continent to $70 billion by 2015. The government is also doubling its credit lines to Africa to $5.4 billion.
New Delhi is particularly interested in energy. India imports around 70 percent of its oil and is seeking new suppliers in oil-rich Africa. Also, India is looking for uranium to power its ambitious civil nuclear program.
But while India's goals may be similar to China's, New Delhi says it has chosen a softer, more nuanced path.
Officials in New Delhi stress that India's links with Africa are centuries-old, with trade well entrenched across the Indian Ocean and buttressed by a million-strong Indian diaspora across Africa. And thousands of Africans have earned degrees from Indian universities and technological institutes on scholarships funded by the Indian government.
Indian officials say New Delhi's engagement with Africa is focused on helping African companies improve their skills by sharing technology and processing metals locally rather than merely exporting the raw ore.
"India's commitment to Africa mainly involves enhancing human skills and capacity building," said Ruchita Beri, an Africa specialist at New Delhi's Institute for Defense Studies and Analyses.
India's expertise in information technology, production of inexpensive medicines, and lower manufacturing costs make it an attractive place for African businesses to seek partnerships as they try to modernize and diversify their economies, most of which depend on exporting raw materials.
But India's outreach also has its critics, who accuse New Delhi of turning a blind eye to corrupt and dictatorial regimes.
India's state-owned oil company has invested in Sudanese oil, and New Delhi avoided criticizing Khartoum at the height of the Darfur crisis.
"India has enjoyed less Western scrutiny over its Africa policy than China," Alex Vines, Africa expert at the London-based think tank Chatham House, said in a report on India's engagement with the continent.
Africa's resources are drawing not just China and India. Apart from the United States and the European Union, Beri says other players are also muscling in, with Malaysia, Brazil and Turkey investing in African countries in return for markets.
But India's decades of assistance should give it an advantage, Beri said.
The Republic
India is setting up a diamond processing facility in Botswana. In Uganda, it's building a center to train businesses about global markets. In four of Africa's poorest countries, Indians are helping cotton farmers improve their yields.
Across Africa, India is reaching out with a generous mix of aid, education and technology transfers it hopes will pay rich dividends in the global scramble for natural resources.
Over the weekend, Indian Prime Minister Manmohan Singh and scores of business leaders flew to Ethiopia for a meeting with African leaders aimed at prying open doors for greater business opportunities.
India's interest in Africa is not surprising. The country has long-standing ties to the continent and a serious energy shortage for its rapidly growing economy. And it has a rival, China, that has become a major player in many African economies.
While New Delhi insists its goal in Africa is not to counter Beijing's moves, India clearly wants to broaden its footprint on the continent, trying to make sure its growth is not hobbled by a shortage of raw materials.
India is also looking to Africa to bolster its foreign policy goals, especially its bid for a seat on an expanded U.N. Security Council. New Delhi also wants closer defense ties with African states bordering the Indian Ocean in the fight against terrorism and piracy.
Publicly, though, India's efforts are not only about self-interest.
"India is interested in Africa not just because of its resources; it is also actively participating in the economic development of Africa," said Shyamal Gupta of the Confederation of Indian Industry.
Indian investments in African countries have been growing at a fast clip, with around 250 Indian companies investing mainly in telecommunications, chemical and mining companies.
But in the past decade, China has plowed billions of dollars into Africa, building roads, bridges, railways and power installations in return for access to markets and resources. China's trade with Africa is expected to top $110 billion by the end of this year.
India hopes to increase its current $46 billion trade with the continent to $70 billion by 2015. The government is also doubling its credit lines to Africa to $5.4 billion.
New Delhi is particularly interested in energy. India imports around 70 percent of its oil and is seeking new suppliers in oil-rich Africa. Also, India is looking for uranium to power its ambitious civil nuclear program.
But while India's goals may be similar to China's, New Delhi says it has chosen a softer, more nuanced path.
Officials in New Delhi stress that India's links with Africa are centuries-old, with trade well entrenched across the Indian Ocean and buttressed by a million-strong Indian diaspora across Africa. And thousands of Africans have earned degrees from Indian universities and technological institutes on scholarships funded by the Indian government.
Indian officials say New Delhi's engagement with Africa is focused on helping African companies improve their skills by sharing technology and processing metals locally rather than merely exporting the raw ore.
"India's commitment to Africa mainly involves enhancing human skills and capacity building," said Ruchita Beri, an Africa specialist at New Delhi's Institute for Defense Studies and Analyses.
India's expertise in information technology, production of inexpensive medicines, and lower manufacturing costs make it an attractive place for African businesses to seek partnerships as they try to modernize and diversify their economies, most of which depend on exporting raw materials.
But India's outreach also has its critics, who accuse New Delhi of turning a blind eye to corrupt and dictatorial regimes.
India's state-owned oil company has invested in Sudanese oil, and New Delhi avoided criticizing Khartoum at the height of the Darfur crisis.
"India has enjoyed less Western scrutiny over its Africa policy than China," Alex Vines, Africa expert at the London-based think tank Chatham House, said in a report on India's engagement with the continent.
Africa's resources are drawing not just China and India. Apart from the United States and the European Union, Beri says other players are also muscling in, with Malaysia, Brazil and Turkey investing in African countries in return for markets.
But India's decades of assistance should give it an advantage, Beri said.
The Republic
India to invest $4.78 billion in Ethiopia
India has offered to invest $4.78 billion in various projects in Ethiopia over the next few years, of which nearly $1 billion is already on ground or in the pipeline, Indian Commerce and Industry Minister Anand Sharma said May 21.
India is the largest foreign investor in Ethiopia with approved investment of $4.78 billion, Sharma said after meeting Ethiopian Prime Minister Meles Zenawi.
The Indian minister, who is on a four-day official visit to Ethiopia, emphasised the need for strengthening business and economic ties between the two countries.
Sharma also co-chaired India-Africa Trade Ministers Meeting held at the African Union Commission here. The meeting took place ahead of the second India-Africa Forum Summit to be held May 24-25.
India Times
India is the largest foreign investor in Ethiopia with approved investment of $4.78 billion, Sharma said after meeting Ethiopian Prime Minister Meles Zenawi.
The Indian minister, who is on a four-day official visit to Ethiopia, emphasised the need for strengthening business and economic ties between the two countries.
Sharma also co-chaired India-Africa Trade Ministers Meeting held at the African Union Commission here. The meeting took place ahead of the second India-Africa Forum Summit to be held May 24-25.
India Times
Is Fair Trade really fair?
by Jan Marchal
As the world celebrated World Fair Trade day on 14 May, we decided to revisit the concept of Fair Trade. The Fair Trade label is designed to protect local producers and workers in Africa, and around globe, against exploitation. But is it really fair?
“The fair trade model is not any fairer than the free market”, declares Sushil Mohan, who teaches international trade at Dundee University, Scotland. He also published the study ‘Fair Trade with the Frost’ in 2010. He explains: “While Fair Trade may be critical of the free market, it nevertheless behaves like any other label, seeking to increase its market shares. Moreover, the label lacks a long-term development strategy, as it does not alter the existing producer-consumer dynamics”.
Fair Trade is directly involved with producers’ cooperatives like the Gumuntido cooperative of coffee producers in Uganda. In addition to the international market price, the cooperative receives 0.07 euros per 450 gram (10 dollar cents). “The cooperative sells all its coffee to Fair Trade”, says Gumuntido’s Deputy Director, Nakusi Florence Fiona. “We don’t sell our products on the conventional market because we are not familiar with its workings”, she adds. Mohan is critical of the label: “Fair Trade is not giving producers the opportunity to benefit from the free market, which can offer much more opportunities for growth”.
Fair Trade products account for less than one percent of world trade. The Fair Trade label comprises 2.8 million producers, with an annual global turnover of 3.4 billion euros. However, despite an annual growth of 20%, the President of the Fair Trade Alliance in the Netherlands, Huub Jansen, admits that “the market remains rather limited”.
He adds: “But Fair Trade is also a driving force that promotes a fairer and more transparent world trade, as well as the improvement of production standards”. In the past 20 years, various labels promoting sustainable growth for producers and environmental protection were created. These include UTZ, Rainforest Alliance and Alter Eco. “Brands are working on transparency along their production chain and towards fairer trade practices, because that’s what consumers want”, Jansen remarks.
Although Mohan acknowledges the catalyst role of the Fair Trade label, he does not think it is a sustainable solution in the fight against poverty. Like any other goods, Fair Trade products are made from raw products purchased in producing countries, then transformed and packaged in Europe. According to Mohan “a truly fair trade would be one that promotes the local production of end products, so that the added value goes to local producers. But Fair Trade is silent on this issue”.
According to Jansen “Fair Trade is open to the idea of developing countries manufacturing end products. However, taxes on end products are higher than on raw products and there are also concerns for quality”. Meanwhile Kamau Benfom, Marketing Director of Starcafé, a Ugandan coffee company, calls on European companies: “we currently export to the eastern African market and are ready to export our products to
Europe. However, we need an established company to pave the way and assist us in improving the quality of our products”. Gumuntido’s Nakusi Fiona confirms: “Yes, we would sell our coffee to Starcafé if the terms are good.”
http://www.rnw.nl/africa/article/fair-trade-really-fair
As the world celebrated World Fair Trade day on 14 May, we decided to revisit the concept of Fair Trade. The Fair Trade label is designed to protect local producers and workers in Africa, and around globe, against exploitation. But is it really fair?
“The fair trade model is not any fairer than the free market”, declares Sushil Mohan, who teaches international trade at Dundee University, Scotland. He also published the study ‘Fair Trade with the Frost’ in 2010. He explains: “While Fair Trade may be critical of the free market, it nevertheless behaves like any other label, seeking to increase its market shares. Moreover, the label lacks a long-term development strategy, as it does not alter the existing producer-consumer dynamics”.
Fair Trade is directly involved with producers’ cooperatives like the Gumuntido cooperative of coffee producers in Uganda. In addition to the international market price, the cooperative receives 0.07 euros per 450 gram (10 dollar cents). “The cooperative sells all its coffee to Fair Trade”, says Gumuntido’s Deputy Director, Nakusi Florence Fiona. “We don’t sell our products on the conventional market because we are not familiar with its workings”, she adds. Mohan is critical of the label: “Fair Trade is not giving producers the opportunity to benefit from the free market, which can offer much more opportunities for growth”.
Fair Trade products account for less than one percent of world trade. The Fair Trade label comprises 2.8 million producers, with an annual global turnover of 3.4 billion euros. However, despite an annual growth of 20%, the President of the Fair Trade Alliance in the Netherlands, Huub Jansen, admits that “the market remains rather limited”.
He adds: “But Fair Trade is also a driving force that promotes a fairer and more transparent world trade, as well as the improvement of production standards”. In the past 20 years, various labels promoting sustainable growth for producers and environmental protection were created. These include UTZ, Rainforest Alliance and Alter Eco. “Brands are working on transparency along their production chain and towards fairer trade practices, because that’s what consumers want”, Jansen remarks.
Although Mohan acknowledges the catalyst role of the Fair Trade label, he does not think it is a sustainable solution in the fight against poverty. Like any other goods, Fair Trade products are made from raw products purchased in producing countries, then transformed and packaged in Europe. According to Mohan “a truly fair trade would be one that promotes the local production of end products, so that the added value goes to local producers. But Fair Trade is silent on this issue”.
According to Jansen “Fair Trade is open to the idea of developing countries manufacturing end products. However, taxes on end products are higher than on raw products and there are also concerns for quality”. Meanwhile Kamau Benfom, Marketing Director of Starcafé, a Ugandan coffee company, calls on European companies: “we currently export to the eastern African market and are ready to export our products to
Europe. However, we need an established company to pave the way and assist us in improving the quality of our products”. Gumuntido’s Nakusi Fiona confirms: “Yes, we would sell our coffee to Starcafé if the terms are good.”
http://www.rnw.nl/africa/article/fair-trade-really-fair
Namibia seeks mineral windfall tax
by Servaas van den Bosch
Namibia is looking to introduce a minerals windfall tax to enable the state to benefit more from the country's vast mineral resources, Mines and Energy minister Isak Katali has said.
The move is the latest by Namibia, home to some of the world's largest uranium reserves, to increase its share of the money made by mining companies. Investors were already worried by its recent decision to grant any future rights to strategic minerals, including uranium, to a state company.
"It is my view that as the custodian of the mineral resources, the state should also benefit in good times beyond normal taxes and royalties," Katali said in his opening speech at the annual general meeting of the Namibian Chamber of Mines.
"In bad times, it is the same government that the industry will look to for measures aimed at protecting and supporting the industry to weather the storm until good times are back again. I am talking about windfall taxes to enable government to achieve this objective."
He then asked the chamber to provide him with proposals for a tax system that would boost state revenue.
Mike Leech, the chamber's president and also the managing director of Rio Tinto's Rossing mine, said he was surprised by the minister's announcement.
"This was just thrown in by the minister, although it has been talked about in the past. We need to sit down and think about this," he told Reuters. Namibia produces 10 percent of the world's uranium, but with new mines coming on stream, output is expected to quadruple within the next few years.
Two operating uranium miners in Namibia include the Rossing mine and Paladin Energy's Langer Heinrich mine.
Future potential producers include Areva's Trekkopje mine and Extract Resources' Rossing South project.
Earlier this year, a South African minister key in economic policy-making said that Africa's biggest economy was also thinking about overhauling its minerals tax regime to cash in on high commodity prices.
Zambia's President Rupiah Banda, on the contrary, ruled out windfall taxes for mining companies, which have been enjoying record copper prices, saying in March that changing the rules for foreign investors was plainly bad business.
Reuters
Namibia is looking to introduce a minerals windfall tax to enable the state to benefit more from the country's vast mineral resources, Mines and Energy minister Isak Katali has said.
The move is the latest by Namibia, home to some of the world's largest uranium reserves, to increase its share of the money made by mining companies. Investors were already worried by its recent decision to grant any future rights to strategic minerals, including uranium, to a state company.
"It is my view that as the custodian of the mineral resources, the state should also benefit in good times beyond normal taxes and royalties," Katali said in his opening speech at the annual general meeting of the Namibian Chamber of Mines.
"In bad times, it is the same government that the industry will look to for measures aimed at protecting and supporting the industry to weather the storm until good times are back again. I am talking about windfall taxes to enable government to achieve this objective."
He then asked the chamber to provide him with proposals for a tax system that would boost state revenue.
Mike Leech, the chamber's president and also the managing director of Rio Tinto's Rossing mine, said he was surprised by the minister's announcement.
"This was just thrown in by the minister, although it has been talked about in the past. We need to sit down and think about this," he told Reuters. Namibia produces 10 percent of the world's uranium, but with new mines coming on stream, output is expected to quadruple within the next few years.
Two operating uranium miners in Namibia include the Rossing mine and Paladin Energy's Langer Heinrich mine.
Future potential producers include Areva's Trekkopje mine and Extract Resources' Rossing South project.
Earlier this year, a South African minister key in economic policy-making said that Africa's biggest economy was also thinking about overhauling its minerals tax regime to cash in on high commodity prices.
Zambia's President Rupiah Banda, on the contrary, ruled out windfall taxes for mining companies, which have been enjoying record copper prices, saying in March that changing the rules for foreign investors was plainly bad business.
Reuters
Tanzania suspends food exports to curb inflation
Tanzania said on May 17 it has halted food exports to tame rising prices of staple goods, which have pushed the east African country's inflation rate higher for six straight months.
Tanzania's inflation rate rose to 8.6 percent in April from 8.0 percent in March on higher food and fuel prices, mirroring rising inflation across east Africa.
"We will not allow the export of food, especially maize, between April, May and June," Tanzania's Agriculture Minister Jumanne Maghembe told state-run television channel TBC1.
He said the government has imposed export curbs because of worries about rising food prices and domestic supply shortages.
The price of food, which carries the biggest weight in the basket of goods and services used to measure domestic inflation, is a sensitive issue in Tanzania where the majority of the people live in poverty.
The National Bureau of Statistics (NBS) said on Monday the inflation rate could start to decline if the government takes policy measures to curb the increase, but analysts see it staying high.
The government said it has directed officials at the country's strategic grain reserve to start selling maize to markets in urban centres whenever shortages of the country's staple food occur. (Reporting by Fumbuka Ng'wanakilala.
Reuters
Tanzania's inflation rate rose to 8.6 percent in April from 8.0 percent in March on higher food and fuel prices, mirroring rising inflation across east Africa.
"We will not allow the export of food, especially maize, between April, May and June," Tanzania's Agriculture Minister Jumanne Maghembe told state-run television channel TBC1.
He said the government has imposed export curbs because of worries about rising food prices and domestic supply shortages.
The price of food, which carries the biggest weight in the basket of goods and services used to measure domestic inflation, is a sensitive issue in Tanzania where the majority of the people live in poverty.
The National Bureau of Statistics (NBS) said on Monday the inflation rate could start to decline if the government takes policy measures to curb the increase, but analysts see it staying high.
The government said it has directed officials at the country's strategic grain reserve to start selling maize to markets in urban centres whenever shortages of the country's staple food occur. (Reporting by Fumbuka Ng'wanakilala.
Reuters
India-Africa trade to reach $70 bn by 2015
by Nayanima Basu
This summer it is destination Africa for India Inc. Political leaders, industrialists and businessmen are increasingly looking to tap the resource-rich countries of the world’s second largest continent even as two-way trade between India and Africa is poised to reach $70 billion by 2015 from $46 billion at present.
Prime Minister Manmohan Singh would be leading a high-powered delegation to Africa, starting May 23. He would visit Ethiopia and Tanzania in an effort to take the Indo-African relationship to the next level by forging greater trade and investment ties.
Tanzania was the co-chair of the first India-Africa Forum Summit, held in Delhi in April. The second summit is scheduled to take place in Ethiopia, which is the seat of the 53-nation African Union. Prior to the PM’s visit, Minister of Commerce and Industry Anand Sharma would be inaugurating an ‘India Show’ in Addis Ababa on May 20 followed by a meeting of all the African trade ministers and a CEOs' conclave to enhance the partnership between India and Africa. Sharma would also meet Ethiopian Prime Minister Meles Zenawi for strengthening bilateral trade and investment ties between both the countries.
During his two-day visit, Sharma is also expected to discuss the issue of accessing Indian markets by the African countries, including implementation of Duty Free Tariff Preferences Scheme (DFTP) for the least developed countries, which mainly provides reduction of duties on 85 per cent of India's tariff lines.
India is also expected to offer technical help to the African countries in the Doha round of global trade talks and in areas of dispute settlement under World Trade Organisation (WTO).
“India is interested in Africa not just because of its resources, it is also actively participating in the economic development of Africa. We are focusing on promoting trade, investments, health and education. There are lots of opportunities for collaboration between Indian and African businesses to grow. Trade between India and Africa has grown by more than 400 per cent in the past five years and is expected to grow at a rapid pace, as there is a large area of existing cooperation. Tatas were the first ones from India to foray into the African continent way back in the 1970s. Besides, India's relationship with Africa goes long back with great historical ties,” said Syamal Gupta, special adviser to Tata International and chairman, Africa Council, Confederation of Indian Industry (CII).
India’s investments in Africa is estimated to be over $50 billion with vast potential of it rising further in sectors such as in infrastructure, power, agriculture, food processing and packaging, engineering and other sectors.
The value of India’s total trade with the top 15 partner countries in Africa has a share of more than 90 per cent of the total trade in that continent. Among these 15 countries, Nigeria and South Africa have the lion's share of 25.53 per cent and 21.91 per cent, respectively, according to a study by Federation of Indian Chambers of Commerce and Industry (Ficci).
Private sector investments by Indian firms into Africa are estimated to be $5 billion, exacluding the $10.7 billion Bharti Airtel-Zain deal. About 245 Indian firms have investment linkages with Africa. On the other hand, African investments to India is estimated to be $170 million cumulatively from 2000 to 2010. Some of the top investors are South Africa ($ 110 million), Morocco ($21 million), Kenya ($19 million), Seychelles ($17 million), Nigeria ($7 million), Tunisia ($ 4 million) and Ghana ($ 3million), according to CII.
The prime minister has already announced $5 billion line of credit to Africa, which has a gross domestic product (GDP) of around $1.6 trillion. Africa is home to 90 per cent of world’s cobalt, 50 per cent gold, 98 per cent chromium, 70 per cent tantalite, 64 per cent manganese and 34 per cent uranium. At present, 11 African countries are amongst the top 10 global resource countries in at least one major mineral.
“The political leadership should emphasise on creating a platform to enable business leaders of both sides to interact further in identifying the next level of opportunities of mutual interest, while incorporating business-friendly policies by their own governments,” said B Muthuraman, chairman, Tata International Ltd.
India and the South African Customs Union (SACU) is currently engaged in having a preferential trade agreement. SACU consists of Botswana, Lesotho, Namibia, South Africa and Swaziland. In January this year, Sharma held a bilateral meeting with his South African counterpart Rob Davies to scale up bilateral trade to $15 billion by 2014 from $10 billion at present.
Indian diaspora in Africa is the second largest in the world. With 2.8 million Persons of Indian Origin (PIO), South Africa, Kenya, Tanzania and Uganda account for the largest share.
Indian conglomerates, both in the public as well in the private sector, have considerable presence in some large African countries with huge investments. These include Tata Group, Coal India, Reliance Industries, BHEL, Essar, Mahindra, Bharti Airtel, Kirloskar and Dr Reddy’s.
“It is one continent where we have tremendous opportunity. Our business in Africa has grown in excess of Rs 100 crore today from Rs 40-50 crore eight years back. We are present in 17 countries and almost 30 per cent of our export revenue comes from the African markets,” said P K Uppal, executive director (International Operations Division), BHEL.
BHEL has around 17-20 ongoing projects in Africa across eight to nine countries, employing 3,000 people that includes Indians as well as locals.
Tata Africa Holdings has a strong presence in over 10 African countries, with investments exceeding $100 million. The group operates in major industrial sectors such as information systems, engineering services, materials, consumer products and chemicals. Some of their major subsidiaries are Tata Zambia, Tata Holdings Mozambique, Tata Holdings Tanzania and Tata Ghana.
Business Standard
This summer it is destination Africa for India Inc. Political leaders, industrialists and businessmen are increasingly looking to tap the resource-rich countries of the world’s second largest continent even as two-way trade between India and Africa is poised to reach $70 billion by 2015 from $46 billion at present.
Prime Minister Manmohan Singh would be leading a high-powered delegation to Africa, starting May 23. He would visit Ethiopia and Tanzania in an effort to take the Indo-African relationship to the next level by forging greater trade and investment ties.
Tanzania was the co-chair of the first India-Africa Forum Summit, held in Delhi in April. The second summit is scheduled to take place in Ethiopia, which is the seat of the 53-nation African Union. Prior to the PM’s visit, Minister of Commerce and Industry Anand Sharma would be inaugurating an ‘India Show’ in Addis Ababa on May 20 followed by a meeting of all the African trade ministers and a CEOs' conclave to enhance the partnership between India and Africa. Sharma would also meet Ethiopian Prime Minister Meles Zenawi for strengthening bilateral trade and investment ties between both the countries.
During his two-day visit, Sharma is also expected to discuss the issue of accessing Indian markets by the African countries, including implementation of Duty Free Tariff Preferences Scheme (DFTP) for the least developed countries, which mainly provides reduction of duties on 85 per cent of India's tariff lines.
India is also expected to offer technical help to the African countries in the Doha round of global trade talks and in areas of dispute settlement under World Trade Organisation (WTO).
“India is interested in Africa not just because of its resources, it is also actively participating in the economic development of Africa. We are focusing on promoting trade, investments, health and education. There are lots of opportunities for collaboration between Indian and African businesses to grow. Trade between India and Africa has grown by more than 400 per cent in the past five years and is expected to grow at a rapid pace, as there is a large area of existing cooperation. Tatas were the first ones from India to foray into the African continent way back in the 1970s. Besides, India's relationship with Africa goes long back with great historical ties,” said Syamal Gupta, special adviser to Tata International and chairman, Africa Council, Confederation of Indian Industry (CII).
India’s investments in Africa is estimated to be over $50 billion with vast potential of it rising further in sectors such as in infrastructure, power, agriculture, food processing and packaging, engineering and other sectors.
The value of India’s total trade with the top 15 partner countries in Africa has a share of more than 90 per cent of the total trade in that continent. Among these 15 countries, Nigeria and South Africa have the lion's share of 25.53 per cent and 21.91 per cent, respectively, according to a study by Federation of Indian Chambers of Commerce and Industry (Ficci).
Private sector investments by Indian firms into Africa are estimated to be $5 billion, exacluding the $10.7 billion Bharti Airtel-Zain deal. About 245 Indian firms have investment linkages with Africa. On the other hand, African investments to India is estimated to be $170 million cumulatively from 2000 to 2010. Some of the top investors are South Africa ($ 110 million), Morocco ($21 million), Kenya ($19 million), Seychelles ($17 million), Nigeria ($7 million), Tunisia ($ 4 million) and Ghana ($ 3million), according to CII.
The prime minister has already announced $5 billion line of credit to Africa, which has a gross domestic product (GDP) of around $1.6 trillion. Africa is home to 90 per cent of world’s cobalt, 50 per cent gold, 98 per cent chromium, 70 per cent tantalite, 64 per cent manganese and 34 per cent uranium. At present, 11 African countries are amongst the top 10 global resource countries in at least one major mineral.
“The political leadership should emphasise on creating a platform to enable business leaders of both sides to interact further in identifying the next level of opportunities of mutual interest, while incorporating business-friendly policies by their own governments,” said B Muthuraman, chairman, Tata International Ltd.
India and the South African Customs Union (SACU) is currently engaged in having a preferential trade agreement. SACU consists of Botswana, Lesotho, Namibia, South Africa and Swaziland. In January this year, Sharma held a bilateral meeting with his South African counterpart Rob Davies to scale up bilateral trade to $15 billion by 2014 from $10 billion at present.
Indian diaspora in Africa is the second largest in the world. With 2.8 million Persons of Indian Origin (PIO), South Africa, Kenya, Tanzania and Uganda account for the largest share.
Indian conglomerates, both in the public as well in the private sector, have considerable presence in some large African countries with huge investments. These include Tata Group, Coal India, Reliance Industries, BHEL, Essar, Mahindra, Bharti Airtel, Kirloskar and Dr Reddy’s.
“It is one continent where we have tremendous opportunity. Our business in Africa has grown in excess of Rs 100 crore today from Rs 40-50 crore eight years back. We are present in 17 countries and almost 30 per cent of our export revenue comes from the African markets,” said P K Uppal, executive director (International Operations Division), BHEL.
BHEL has around 17-20 ongoing projects in Africa across eight to nine countries, employing 3,000 people that includes Indians as well as locals.
Tata Africa Holdings has a strong presence in over 10 African countries, with investments exceeding $100 million. The group operates in major industrial sectors such as information systems, engineering services, materials, consumer products and chemicals. Some of their major subsidiaries are Tata Zambia, Tata Holdings Mozambique, Tata Holdings Tanzania and Tata Ghana.
Business Standard
India, 14 African nations to strengthen mutual trade
India and 14 key African nations have vowed to strengthen mutual trade, taking note of the potential provided by the combined population of 2.2 billion and a GDP of $3 trillion.
Expressing confidence that the India-Africa trade would reach $70 billion by 2015 from $46 billion, a joint statement of African Union Commission (AUC) and India said the economic ties can be improved by an agreement between New Delhi and African regional Economic Communities.
The statement was issued after a meeting of trade ministers and officials of India and AUC countries. As many as 14 African countries were represented at the meeting also attended by India's Commerce and Industry Minister Anand Sharma.
In the run-up to the India-Africa Forum Summit this week, attended by Prime Minister Manmohan Singh, it said, "We are confident that the Summit would go a long way in strengthening economic ties between the two sides".
Besides, the increasing mutual trade, the India- Africa investment reached $90 billion in 2010.
Though Africa was late to catch up, the continent has been growing in the recent few years by a fast pace. Despite the global woes, Africa's economy expanded by 4.7 per cent in 2010 and is expected to grow by over 5 per cent in the coming years, giving opportunities to India.
Eyeing rich natural resources in the continent along with the growing economy, leading Indian business houses are exploring business possibilities in Africa.
CII has mounted a high-level delegation along with the minister comprising among others Sunil Bharti Mittal of the Bharti Group and Adi Godrej of the Godrej Group.
Mittal had few years ago completed a major telecom acquisition in the continent.
The AUC members include Ethiopia, Chad, Malawi, Namibia, South Africa and Senegal.
http://economictimes.indiatimes.com/news/economy/foreign-trade/india-14-african-nations-to-strengthen-mutual-trade/articleshow/8492297.cms
Expressing confidence that the India-Africa trade would reach $70 billion by 2015 from $46 billion, a joint statement of African Union Commission (AUC) and India said the economic ties can be improved by an agreement between New Delhi and African regional Economic Communities.
The statement was issued after a meeting of trade ministers and officials of India and AUC countries. As many as 14 African countries were represented at the meeting also attended by India's Commerce and Industry Minister Anand Sharma.
In the run-up to the India-Africa Forum Summit this week, attended by Prime Minister Manmohan Singh, it said, "We are confident that the Summit would go a long way in strengthening economic ties between the two sides".
Besides, the increasing mutual trade, the India- Africa investment reached $90 billion in 2010.
Though Africa was late to catch up, the continent has been growing in the recent few years by a fast pace. Despite the global woes, Africa's economy expanded by 4.7 per cent in 2010 and is expected to grow by over 5 per cent in the coming years, giving opportunities to India.
Eyeing rich natural resources in the continent along with the growing economy, leading Indian business houses are exploring business possibilities in Africa.
CII has mounted a high-level delegation along with the minister comprising among others Sunil Bharti Mittal of the Bharti Group and Adi Godrej of the Godrej Group.
Mittal had few years ago completed a major telecom acquisition in the continent.
The AUC members include Ethiopia, Chad, Malawi, Namibia, South Africa and Senegal.
http://economictimes.indiatimes.com/news/economy/foreign-trade/india-14-african-nations-to-strengthen-mutual-trade/articleshow/8492297.cms
US, Africa trade hits $17.1billion in 2010
Trade relations between the US and Africa amounted to more than 17.1 billion dollars in 2010, acoording to Ms Constance Hamilton, the Deputy Assistant US Trade Representative for Africa.
Hamilton said in Addis Ababa that the trade between the two sides recorded about 12 per cent increase in 2010 when compared to the figures in 2009. She, however, said the trade balance was in favour of her country. Hamilton said that crude oil was the leading product on the African export trade list followed by clothing and cereals.
According to her, aircraft, vehicles, computers and other science and technology products top the list of the U.S. export to Africa. She said her office would continue to implement the African Growth and Opportunity Act (AGOA) which was established by the U.S. government to open up markets and improve the investment climates in African countries.
“Our markets are open to African products without tax. African businessmen should take this advantage. Currently, not many products from Africa are found in the U.S. markets”, she said.
Hamilton, however, attributed the low number of African products in the U.S. to problems associated to energy, transportation and infrastructure.
“The U.S. will focus on infrastructure development, provision of energy and adequate transportation in Africa to enable its industries to operate effectively”, she said. She said security, energy and infrastructure were some of the basic needs of U.S. investors planning to invest in Africa.
Vanguard
Hamilton said in Addis Ababa that the trade between the two sides recorded about 12 per cent increase in 2010 when compared to the figures in 2009. She, however, said the trade balance was in favour of her country. Hamilton said that crude oil was the leading product on the African export trade list followed by clothing and cereals.
According to her, aircraft, vehicles, computers and other science and technology products top the list of the U.S. export to Africa. She said her office would continue to implement the African Growth and Opportunity Act (AGOA) which was established by the U.S. government to open up markets and improve the investment climates in African countries.
“Our markets are open to African products without tax. African businessmen should take this advantage. Currently, not many products from Africa are found in the U.S. markets”, she said.
Hamilton, however, attributed the low number of African products in the U.S. to problems associated to energy, transportation and infrastructure.
“The U.S. will focus on infrastructure development, provision of energy and adequate transportation in Africa to enable its industries to operate effectively”, she said. She said security, energy and infrastructure were some of the basic needs of U.S. investors planning to invest in Africa.
Vanguard
'Fair trade' is a crock
by Dalibor Rohac*
If you want to help out Third World farm workers, ignore the "Wake up the World" campaign. Don't have a "fair trade" breakfast -- or anything else. The "fair trade" label is a crock.
You're likeliest to see the "fair trade" label at high-end coffee shops and grocery stores -- especially ones with a "progressive" clientele. The certification is supposed to let you enjoy your latte without feeling guilty for exploiting the Ethiopian or Ecuadoran who harvested the beans.
Oh, the likes of Angelina Jolie and Colin Firth endorse it -- but the main value it brings is the consumer's feeling of socially conscious satisfaction.
Not helped: Third World farmworkers, like this one working with a Venezuelan cocoa harvest, get no direct benefit from "fair trade" products.
Fair-trade-certified products -- coffee, bananas, cocoa, etc. from developing countries -- have boomed this last decade. US sales of fair-trade goods rose from $15 million to $48 million from 2005 to 2009.
Most people think "fair trade" guarantees better pay for agricultural workers in developing countries. The Fair Trade USA Web site insists, "We can change the world by changing our breakfast."
Sorry: What the organized fair-trade movement actually does is simply provide selected producers of cash crops in such nations with guaranteed minimum prices for their products. The direct benefits are small and rarely go to the least well-off. Worse, fair trade can hinder economic development.
Consider how it all works.
Again, "fair trade" merely guarantees certain producers a minimum price for a commodity. This gives farmers a safeguard against price drops, which can come in handy if they can't access more sophisticated forms of financial hedging.
But how much does fair trade actually help poor people? Most fair-trade producers are outside Sub-Saharan Africa, the world's poorest region. Mexico has 51 fair-trade cooperatives; Ethiopia has four and Burundi just one.
And the main benefit flows to fair-trade cooperatives -- groups of landowners, not laborers. The certification includes no incentives for the owners to pay higher wages to farmworkers, who tend to be poorer and more vulnerable.
It even tends to exclude the poorer landowners. Certification involves significant up-front costs -- $2,000 to $4,000 -- and annual inspections that require paying sizable fees. In a developing nation, that's a big hurdle.
And the folks shut out of the scheme are worse off. With a minimum price guaranteed, the fair-trade insiders can produce more with lower risks -- increasing the overall size of the crop and thus depressing prices for the folks who couldn't afford to buy their way in.
Even fair-trade supporters must admit that the scheme doesn't solve the problem of underdevelopment. No nation has become rich by earning a slightly higher return on a cash crop. Most developed countries have succeeded by allowing their economies to grow more sophisticated and diversified -- adding areas of production that pay more to workers and owners.
That is, there's more money in making chocolate than in growing cocoa -- and 90 percent of the world's cocoa, but only 4 percent of its chocolate, is produced in developing countries.
But "fair trade" -- guaranteeing a minimum price for certain crops -- locks part of the labor force into basic agriculture, discouraging it from moving "higher up the ladder" to better long-term opportunities in manufacturing, services or more sophisticated forms of agriculture. A study of Guatemala's fair-trade coffee industry by the Mercatus Center at George Mason University concluded that fair trade strongly encouraged production mediocrity.
Finally, "fair trade" encourages a particular business model at the expense of others. To qualify for registration in the fair-trade scheme, farmers need to form cooperatives that satisfy certain requirements of communal decision-making and transparency. Why, exactly -- other than badly dated ideology -- should we prefer landowner cooperatives over private companies that adhere to high standards of workers' welfare and social and environmental responsibility?
Ultimately, only private entrepreneurship and businesses can pull the developing world out of poverty. But entrepreneurs flourish only in a situation of good governance, stable property rights and business-friendly legal institutions. Rather than falling for marketing ploys that use poor people as pawns, we should work to improve the business environment in developing countries.
Low-income countries around the world don't need our pity and handouts; they need economic policies that work. "Fair trade" may mean well, but that's just not good enough.
*Dalibor Rohac is a research fellow at the Legatum Institute in London.
New York Post
If you want to help out Third World farm workers, ignore the "Wake up the World" campaign. Don't have a "fair trade" breakfast -- or anything else. The "fair trade" label is a crock.
You're likeliest to see the "fair trade" label at high-end coffee shops and grocery stores -- especially ones with a "progressive" clientele. The certification is supposed to let you enjoy your latte without feeling guilty for exploiting the Ethiopian or Ecuadoran who harvested the beans.
Oh, the likes of Angelina Jolie and Colin Firth endorse it -- but the main value it brings is the consumer's feeling of socially conscious satisfaction.
Not helped: Third World farmworkers, like this one working with a Venezuelan cocoa harvest, get no direct benefit from "fair trade" products.
Fair-trade-certified products -- coffee, bananas, cocoa, etc. from developing countries -- have boomed this last decade. US sales of fair-trade goods rose from $15 million to $48 million from 2005 to 2009.
Most people think "fair trade" guarantees better pay for agricultural workers in developing countries. The Fair Trade USA Web site insists, "We can change the world by changing our breakfast."
Sorry: What the organized fair-trade movement actually does is simply provide selected producers of cash crops in such nations with guaranteed minimum prices for their products. The direct benefits are small and rarely go to the least well-off. Worse, fair trade can hinder economic development.
Consider how it all works.
Again, "fair trade" merely guarantees certain producers a minimum price for a commodity. This gives farmers a safeguard against price drops, which can come in handy if they can't access more sophisticated forms of financial hedging.
But how much does fair trade actually help poor people? Most fair-trade producers are outside Sub-Saharan Africa, the world's poorest region. Mexico has 51 fair-trade cooperatives; Ethiopia has four and Burundi just one.
And the main benefit flows to fair-trade cooperatives -- groups of landowners, not laborers. The certification includes no incentives for the owners to pay higher wages to farmworkers, who tend to be poorer and more vulnerable.
It even tends to exclude the poorer landowners. Certification involves significant up-front costs -- $2,000 to $4,000 -- and annual inspections that require paying sizable fees. In a developing nation, that's a big hurdle.
And the folks shut out of the scheme are worse off. With a minimum price guaranteed, the fair-trade insiders can produce more with lower risks -- increasing the overall size of the crop and thus depressing prices for the folks who couldn't afford to buy their way in.
Even fair-trade supporters must admit that the scheme doesn't solve the problem of underdevelopment. No nation has become rich by earning a slightly higher return on a cash crop. Most developed countries have succeeded by allowing their economies to grow more sophisticated and diversified -- adding areas of production that pay more to workers and owners.
That is, there's more money in making chocolate than in growing cocoa -- and 90 percent of the world's cocoa, but only 4 percent of its chocolate, is produced in developing countries.
But "fair trade" -- guaranteeing a minimum price for certain crops -- locks part of the labor force into basic agriculture, discouraging it from moving "higher up the ladder" to better long-term opportunities in manufacturing, services or more sophisticated forms of agriculture. A study of Guatemala's fair-trade coffee industry by the Mercatus Center at George Mason University concluded that fair trade strongly encouraged production mediocrity.
Finally, "fair trade" encourages a particular business model at the expense of others. To qualify for registration in the fair-trade scheme, farmers need to form cooperatives that satisfy certain requirements of communal decision-making and transparency. Why, exactly -- other than badly dated ideology -- should we prefer landowner cooperatives over private companies that adhere to high standards of workers' welfare and social and environmental responsibility?
Ultimately, only private entrepreneurship and businesses can pull the developing world out of poverty. But entrepreneurs flourish only in a situation of good governance, stable property rights and business-friendly legal institutions. Rather than falling for marketing ploys that use poor people as pawns, we should work to improve the business environment in developing countries.
Low-income countries around the world don't need our pity and handouts; they need economic policies that work. "Fair trade" may mean well, but that's just not good enough.
*Dalibor Rohac is a research fellow at the Legatum Institute in London.
New York Post
‘Conflict minerals’ fears drive down DRCongo tin sales 90%
by Michael J. Kavanagh
Sales of tin ore from Democratic Republic of Congo’s North Kivu province fell more than 90 percent in April as companies avoided trade in so-called “conflict minerals,” a provincial mining official said.
Mineral producers stopped buying from the eastern region in anticipation of new U.S. rules aiming to prevent armed groups from profiting from the sale of tin ore, tungsten, gold, and coltan, the head of North Kivu’s Mines Division, Emmanuel Ndimubanzi, said.
The government is hastening plans to validate mines in the region that are free of armed groups and child labor in order to adhere to the proposed regulations, Ndimubanzi said on May 20 by phone from Goma, the provincial capital. “We need to validate the mines so the minerals can be accepted,” he said.
The rules will require U.S. companies to disclose whether certain minerals used in their products could have supported conflict in Congo, according to a draft copy on the Securities and Exchange Commission’s website. The Organization for Economic Cooperation and Development, two electronics-industry trade groups and the United Nations have also developed their own guidelines with Congolese and regional mining officials to help regulate the trade.
Congo is the largest supplier of tin ore in Africa, and the fifth largest in the world. Eastern Congo, which has endured more than 15 years of conflict, also has large deposits of gold and coltan, a mineral used in electronics.
On May 21, Mines Minister Martin Kabwelulu said Malaysia Smelting Corp., the world’s third-biggest producer of tin and largest buyer of Congolese tin ore, would contribute $10 million to a tagging program managed by tin-industry group ITRI Ltd. to help legitimize the tin ore and coltan trade. MSC will likely enter into a joint venture with the country to mine tin ore in the east as part of the deal, Kabwelulu said.
The Penang, Malaysia-based company announced April 1 it would stop buying ore from Central Africa that was not properly tagged and traced.
“The hope is that companies will be able to trade in Congo as long as they do their due diligence instead of just pulling out,” Gregory Mthembu-Salter, author of the UN’s due-diligence guidelines, said by phone from Kinshasa, the capital. “For the moment, companies appear to have decided it’s easier not to buy from Congo than risk damaging their reputations.”
Army Involvement
Congo’s army is removing its soldiers from mines in the east, including Bisie, Congo’s largest tin ore mine, to allow trade to resume, army spokesman Lt. Colonel Sylvain Ekenge said May 20.
Last November, the UN published a report saying almost all of eastern Congo’s most productive mines were under army or rebel control.
“Soldiers cannot be in mines and cannot exploit minerals and they can only enter mines to combat threats to security,” Ekenge said by phone from Kinshasa. “Once they’ve put down the threat they must return to their positions.”
Ndimubanzi confirmed that Bisie and the Omate gold mine were free of Congolese soldiers and that Congolese mining police would soon secure them.
Bloomberg
Sales of tin ore from Democratic Republic of Congo’s North Kivu province fell more than 90 percent in April as companies avoided trade in so-called “conflict minerals,” a provincial mining official said.
Mineral producers stopped buying from the eastern region in anticipation of new U.S. rules aiming to prevent armed groups from profiting from the sale of tin ore, tungsten, gold, and coltan, the head of North Kivu’s Mines Division, Emmanuel Ndimubanzi, said.
The government is hastening plans to validate mines in the region that are free of armed groups and child labor in order to adhere to the proposed regulations, Ndimubanzi said on May 20 by phone from Goma, the provincial capital. “We need to validate the mines so the minerals can be accepted,” he said.
The rules will require U.S. companies to disclose whether certain minerals used in their products could have supported conflict in Congo, according to a draft copy on the Securities and Exchange Commission’s website. The Organization for Economic Cooperation and Development, two electronics-industry trade groups and the United Nations have also developed their own guidelines with Congolese and regional mining officials to help regulate the trade.
Congo is the largest supplier of tin ore in Africa, and the fifth largest in the world. Eastern Congo, which has endured more than 15 years of conflict, also has large deposits of gold and coltan, a mineral used in electronics.
On May 21, Mines Minister Martin Kabwelulu said Malaysia Smelting Corp., the world’s third-biggest producer of tin and largest buyer of Congolese tin ore, would contribute $10 million to a tagging program managed by tin-industry group ITRI Ltd. to help legitimize the tin ore and coltan trade. MSC will likely enter into a joint venture with the country to mine tin ore in the east as part of the deal, Kabwelulu said.
The Penang, Malaysia-based company announced April 1 it would stop buying ore from Central Africa that was not properly tagged and traced.
“The hope is that companies will be able to trade in Congo as long as they do their due diligence instead of just pulling out,” Gregory Mthembu-Salter, author of the UN’s due-diligence guidelines, said by phone from Kinshasa, the capital. “For the moment, companies appear to have decided it’s easier not to buy from Congo than risk damaging their reputations.”
Army Involvement
Congo’s army is removing its soldiers from mines in the east, including Bisie, Congo’s largest tin ore mine, to allow trade to resume, army spokesman Lt. Colonel Sylvain Ekenge said May 20.
Last November, the UN published a report saying almost all of eastern Congo’s most productive mines were under army or rebel control.
“Soldiers cannot be in mines and cannot exploit minerals and they can only enter mines to combat threats to security,” Ekenge said by phone from Kinshasa. “Once they’ve put down the threat they must return to their positions.”
Ndimubanzi confirmed that Bisie and the Omate gold mine were free of Congolese soldiers and that Congolese mining police would soon secure them.
Bloomberg
Wal-Mart entry may lead to South African import surge
South Africa's Trade Minister Rob Davies said Wal-Mart Stores Inc.'s bid to buy a majority stake in Massmart Holdings Ltd. may result in a "surge" in imports that could have a "destabilizing" impact on the economy.
"Companies have got to comply with the labor laws," Davies said in an interview. An increase in imports may undermine the country's job creation goals, he said.
The South African government and labor unions oppose Wal- Mart's proposed 16.5 billion rand ($2.3 billion) acquisition of a 51 percent stake in South Africa's largest wholesaler. As many as 4,000 jobs could be lost should Massmart shift just 1 percent of its procurement to imports, a government witness said during Competition Tribunal hearings on the purchase.
"These fears are unfounded and unsupported by any evidence to the Tribunal, and are indeed largely based on historical misperceptions and distorted accounts of Wal-Mart," Jeremy Gauntlett, senior counsel for the two companies, said at the hearings yesterday.
Wal-Mart's acquisition of Chile's Distribucion y Servicio D&S SA in 2009 resulted in a doubling of exports from the Latin American country of its products, D&S Chief Executive Officer Enrique Ostale Cambiaso said at the hearings. Exports are expected to double again this year while the company is also able to provide lower prices locally for consumers, he said.
The acquisition of Massmart is Wal-Mart's second-biggest after the $11 billion takeover of U.K. retailer Asda in 1999. Wal-Mart aims to use Massmart to lead its expansion in sub- Saharan Africa. It intends to expand Massmart's South African business, which will be accompanied by job growth, Andy Bond, Wal-Mart's executive vice-president responsible for the U.K. and Africa, said at the hearing on May 11.
Massmart Chief Executive Officer Grant Pattison said on May 9 that the company plans to expand trading space by 20 percent over the next three years. Growth in floor space will boost sales by a similar margin and will also increase jobs while securing current posts, said Pattison.
The Competition Tribunal will give its final ruling on the transaction by May 31. The Commission, which in February recommended to the Tribunal that the transaction should be approved without any conditions, recently revised its stance on the transaction. The commission, which probes bids and makes proposals to the Tribunal, wants 503 Massmart workers who were fired last year to be reinstated and force existing labor agreements to be honored for the next three years.
Wal-Mart and Massmart yesterday offered not to cut jobs for two years and pledged to uphold existing labor agreements for as long as the Competition Tribunal sees fit, according to the companies' closing argument submissions. While the companies still maintain no conditions should be imposed, it also offered to establish a 100 million rand supplier development fund if the transaction is approved, according to the submissions.
SFGate
"Companies have got to comply with the labor laws," Davies said in an interview. An increase in imports may undermine the country's job creation goals, he said.
The South African government and labor unions oppose Wal- Mart's proposed 16.5 billion rand ($2.3 billion) acquisition of a 51 percent stake in South Africa's largest wholesaler. As many as 4,000 jobs could be lost should Massmart shift just 1 percent of its procurement to imports, a government witness said during Competition Tribunal hearings on the purchase.
"These fears are unfounded and unsupported by any evidence to the Tribunal, and are indeed largely based on historical misperceptions and distorted accounts of Wal-Mart," Jeremy Gauntlett, senior counsel for the two companies, said at the hearings yesterday.
Wal-Mart's acquisition of Chile's Distribucion y Servicio D&S SA in 2009 resulted in a doubling of exports from the Latin American country of its products, D&S Chief Executive Officer Enrique Ostale Cambiaso said at the hearings. Exports are expected to double again this year while the company is also able to provide lower prices locally for consumers, he said.
The acquisition of Massmart is Wal-Mart's second-biggest after the $11 billion takeover of U.K. retailer Asda in 1999. Wal-Mart aims to use Massmart to lead its expansion in sub- Saharan Africa. It intends to expand Massmart's South African business, which will be accompanied by job growth, Andy Bond, Wal-Mart's executive vice-president responsible for the U.K. and Africa, said at the hearing on May 11.
Massmart Chief Executive Officer Grant Pattison said on May 9 that the company plans to expand trading space by 20 percent over the next three years. Growth in floor space will boost sales by a similar margin and will also increase jobs while securing current posts, said Pattison.
The Competition Tribunal will give its final ruling on the transaction by May 31. The Commission, which in February recommended to the Tribunal that the transaction should be approved without any conditions, recently revised its stance on the transaction. The commission, which probes bids and makes proposals to the Tribunal, wants 503 Massmart workers who were fired last year to be reinstated and force existing labor agreements to be honored for the next three years.
Wal-Mart and Massmart yesterday offered not to cut jobs for two years and pledged to uphold existing labor agreements for as long as the Competition Tribunal sees fit, according to the companies' closing argument submissions. While the companies still maintain no conditions should be imposed, it also offered to establish a 100 million rand supplier development fund if the transaction is approved, according to the submissions.
SFGate
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