by Rex Chikoko
Malawi has entered into an agreement with Zimbabwe to improve trade for small scale traders operating between the two countries.
Known as the Simplified Trade Regime (STR), the countries will agree on a common list of products that will be traded under much-streamlined conditions including reduced or removed duty.
The STR overcomes problems in proving goods originate in a country and therefore are not subject to duty. It is designed for small consignments, currently defined as $500 or less.
The agreement was disclosed Comesa secretary general Sindiso Ngwenya in Lilongwe during a meeting of ministers ahead of the bloc's head of states and governments summit.
Comesa encourages free trade between countries by abolishing duty on nearly all goods produced locally and sold in members of the bloc.
Mr Ngwenya said that under the Malawi-Zimbabwe STR, a number of new products, including maize – which has lately been Malawi’s major export commodity to Zimbabwe, have been included for simplified trading. He said that the trade bloc had stated promoting the regime to facilitate improved trade for small scale traders in the region.
Currently six Comesa member states are implementing the STR programme within selected border points. The countries are Malawi, Zambia, Zimbabwe, Kenya, Uganda and Rwanda.
Comesa says that although Malawi and Zimbabwe are not yet implementing the STR, there is significant trade between them ranging from agricultural commodities to processed food products among others.
"The trade between the two countries which needs to be harnessed and supported," says Comesa through its e-newsletter.
Trade Information Desks are expected to be established on the designated border posts in the two countries while traders will be sensitised.
Comesa, EAC and SADC encourage “free” trade between countries by abolishing duty on nearly all goods produced locally and sold in members of these regional groupings. Goods “originating” from Member States should therefore pass duty free.
Africa Review
October 12, 2011
Cape Verde police seize $100 million cocaine
by Tamba Jean-Matthew
Cape Verde police have announced the seizure of 1.5 tons of cocaine with a street value of $100 million. The consignment was intercepted October 10 on the country’s biggest island Santiago where the capital, Praia is located.
Analysts say that was the second biggest consignment ever seized in West Africa, which has been the springboard for trafficking narcotics between South America and the rest of the world.
Police sources said the seizure resulted from a tip off from their Dutch counterparts who received the cue from French anti-narcotic units, all of which were working with the sponsorship of the European Union.
The sources further explained that the cocaine was discovered along the beach in Santiago where it was possibly deposited during the weekend by speed boats after it was transferred from a larger vessel that berthed a few kilometres from the coast.
By all indications, the narcotic drug was being smuggled from an unnamed South American country and was destined for European market.
Five people have been arrested in connection with the incident and that the trafficking was led by a Cape Verdean citizen.All five are being held and interrogated by the Cape Verde police.
Before the latest seizure, 7.5 ton of cocaine was largest consignment intercepted on the international waters off Cape Verde by Spanish anti-narcotic agents after the South Sea boat which was carrying the cargo transited through the island country in 2003.
Africa Review
Cape Verde police have announced the seizure of 1.5 tons of cocaine with a street value of $100 million. The consignment was intercepted October 10 on the country’s biggest island Santiago where the capital, Praia is located.
Analysts say that was the second biggest consignment ever seized in West Africa, which has been the springboard for trafficking narcotics between South America and the rest of the world.
Police sources said the seizure resulted from a tip off from their Dutch counterparts who received the cue from French anti-narcotic units, all of which were working with the sponsorship of the European Union.
The sources further explained that the cocaine was discovered along the beach in Santiago where it was possibly deposited during the weekend by speed boats after it was transferred from a larger vessel that berthed a few kilometres from the coast.
By all indications, the narcotic drug was being smuggled from an unnamed South American country and was destined for European market.
Five people have been arrested in connection with the incident and that the trafficking was led by a Cape Verdean citizen.All five are being held and interrogated by the Cape Verde police.
Before the latest seizure, 7.5 ton of cocaine was largest consignment intercepted on the international waters off Cape Verde by Spanish anti-narcotic agents after the South Sea boat which was carrying the cargo transited through the island country in 2003.
Africa Review
October 08, 2011
Mutual funds are best way for retail investors in Africa
by Stephen Cranston
If there are going to be seeking exciting investment returns from Africa, the best way to get access to African equities for a retail investor has to be through a mutual fund (a unit trust, for example) with a dedicated African mandate.
Trying to run a portfolio of African shares, with numerous stockbroking accounts, is not very practical and is expensive. Retail clients in most African markets would feel lucky to pay just 2% commission on deals.
And there is an even stronger case for diversification because of liquidity. In recent weeks , for example, Nigeria has traded about US$17m/day, Kenya $4m/day and Zimbabwe $2m/day. By the time it gets to less liquid markets, such as Ghana or Zambia, a good week’s trade is $1m/week.
A cautionary tale for fund managers is New Star Heart of Africa, a UK-based unit trust that offered daily trading. But in the 2008 financial crisis it could not sell shares fast enough to pay out its unit holders. Eventually it had to sell its entire remaining portfolio at a deep discount.
Renaissance Capital took a bold step in allowing daily trading in its Sub-Saharan Africa (SSA) fund when it opened in October.
“It is much tougher to try to sell a whole month’s demand in one go than allowing daily trading ,” says portfolio manager Sven Richter.
But the SSA fund (which excludes SA and North Africa) is recommended only to hard-core Africa investors.
Others are steered towards the RenCap Frontier F und, which is about 50% invested in Africa. “Kenya, Nigeria and Egypt certainly stack up well in valuation terms against the other main frontier markets such as Indonesia, Vietnam, Pakistan, Argentina and the Ukraine,” says Richter. “In particular, I believe the pessimism about Kenya has been overdone. There has been a severe drought as well as anxiety about next year’s elections, but the share prices discount this and more.”
Dylan Evans, who markets the Stanlib fund range in Europe, says many international investors don’t disagree that there is a compelling case for investment in Africa but it is taking a while for them to act.
John Legat, who manages the Imara African Opportunities Fund, agrees. “Our clients in London are like rabbits in the headlights : they agree with our arguments but will not sign a cheque.”
Memories of the New Star debacle are still fresh.
Investec has the best-developed Africa franchise in SA, with $1,5bn under management. Investec Africa fund manager Roelof Horne says though there is no lock-in to the fund — clients have the opportunity to get out of it once a month — they have almost all remained in the fund with at least a five-year view. It has been in the middle of the pack of the Africa funds , 22nd out of 45 over five years with a negative 6% return in rand . Even with Africa’s high growth, external factors have hit the continent’s shares.
Horne says he adopts a low turnover investment style, but that this does not make the fund a low tracking error fund. As it is there is no definitive Africa excluding -SA benchmark — both Horne and his main SA-based rivals, Coronation Africa Frontiers and Stanlib Africa, measure themselves against London interbank cash rates (known as Libor) rather than the performance of an index.
African markets are dominated by banks — which might be appropriate as a strong banking sector is essential for economic development.
It follows that most of the largest non- SA shares on the continent are banking shares . There are a few exceptions, such as Dangote Cement; Nigerian Breweries; the Senegal-based cellphone provider, Sonatel; and its Kenyan counterpart, Safaricom.
Horne has about 40% of his fund in banks as he believes they are almost all conservative institutions involved in straightforward corporate lending, with little exposure to potential consumer- based bad debts.
Banks such as Kenya Commercial Bank and its rival, Equity Bank, as well as Mauritius Commercial Bank feature in many of the mutual fund portfolios. And there is no doubt that the listed subsidiaries of Barclays and Standard Chartered in Botswana, Zambia and elsewhere provide investors with a level of comfort when it comes to governance standards.
Horne says that after the 2008 shake- up there are some promising bets among the Nigerian banks. He argues that the 2008 crisis, which led to almost half the country’s banks disappearing in a huge consolidation, was a special case.
“One factor was that the price of oil fell in a few weeks from $150/bbl to $30/bbl . A core activity of the banks was funding refined oil imports and they took a big loss. explosion of margin lending to private investors who acquired a taste for stock market trading. They were paying 5% or 10% of the value of the shares and borrowing the rest. When the market collapsed in the 2008 financial crisis, banks were hit hard,” says Horne.
He believes that the Federal Bank of Nigeria’s (the country’s reserve bank) reaction to the crisis has been prudent.
There are certainly a number of blue-chip stocks on the Nigerian Stock Exchange, such as First City Monument Bank and Guaranty Trust Bank.
Peter Townsend, co-manager of Coronation’s Africa funds, says the house has decreased its exposure to financials as they have performed badly recently.
“I don’t believe African banks offer investors a great business model. Disclosure is poor, which makes it hard for us to know how well managed they are.”
One of the dilemmas of Africa, Townsend says, is that some of the better-quality markets, such as Botswana and Morocco, are expensive, mainly because they are propped up by institutional investors subject to exchange controls .
Horne says the most exciting theme for Africa investors is growing consumer spending.
John Mackie, who runs the Stanlib Africa Fund, says that, historically, mines have been more exposed to threats of nationalisation than other businesses — whether it was Zambia in the 1970s or Zimbabwe today.
The Stanlib fund has investments in Zimbabwe such as brewer Delta, cellphone operator Econet, seed producer Seedco and retailer and snack business Innscor, but no mines there. But it does have a few miners in more benign climates, such as African Barrick in Tanzania.
Townsend is somewhat less timid. “Even if Zimplats is given zero credit for its indigenisation programme and you take the worst case, it still potentially has 100% upside.”
Ten years ago, an Africa fund might have focused more on the continent’s rich endowment of commodities. Yet there are few natural resources shares listed on African bourses other than those on the JSE.
“I do not want to invest too heavily into companies whose future depends on the global price of copper or iron ore rather than on Africa’s unique economic fundamentals,” says Horne.
One of the ways to reduce risk might be to invest in SA companies with exposure to Africa. But only a few would qualify in comparison with most of these funds as more than half the turnover should be accounted for from Africa outside SA. MTN is one of the few SA blue chips to qualify.
Even Shoprite and Standard Bank, which have been successful in Africa, do not qualify.
Fungai Tarirah, who runs the Momentum (previously RMB) Africa Fund, has the mandate to invest up to 15% in SA but chooses not to, as it is not what his clients are looking for.
He warns that Africa is particularly vulnerable to external events — the Egyptian market fell 21% in the wake of the revolution. But, he says, “It is essential not to panic about these prices in the short term.”
To maintain liquidity, the fund invests only in shares with trade of more than $100m a quarter, and this means it can only invest in a universe of 90 stocks.
Tarirah says Kenya provides the greatest variety of shares in which to invest, including Africa’s only listed mainstream advertising business, the Scan Group.
Old Mutual was one of the latecomers to the Africa party. Its fund is about a year old.
“It all depends on when you launch the fund,” says fund manager Godwin Sepeng. “When we started, banks and cellphone companies were cheap. The consumer story sounds great, but with Unilever and Nestlé’s Nigerian businesses and breweries such as Guinness Nigeria on p:es of more than 20, they were not offering good relative value.”
Imara’s Legat says it can take years to build up a portfolio, particularly when looking at positions in promising but illiquid markets such as Ghana. “Whatever happens to the world economy, people will want to drink and smoke, which is why I like shares such as BAT Kenya, BAT Zimbabwe and breweries,” he says.
As Legat is based in Harare, he was one of the few managers bold enough to hold Zimbabwe shares throughout the inflationary times, and his fund was rewarded in the aftermath of dollarization in Zimbabwe.
But Legat is digging in for the long haul. “The key to Africa is water but, as a fund manager, I need to translate that fundamental truth into investment success.”
Financial Mail
If there are going to be seeking exciting investment returns from Africa, the best way to get access to African equities for a retail investor has to be through a mutual fund (a unit trust, for example) with a dedicated African mandate.
Trying to run a portfolio of African shares, with numerous stockbroking accounts, is not very practical and is expensive. Retail clients in most African markets would feel lucky to pay just 2% commission on deals.
And there is an even stronger case for diversification because of liquidity. In recent weeks , for example, Nigeria has traded about US$17m/day, Kenya $4m/day and Zimbabwe $2m/day. By the time it gets to less liquid markets, such as Ghana or Zambia, a good week’s trade is $1m/week.
A cautionary tale for fund managers is New Star Heart of Africa, a UK-based unit trust that offered daily trading. But in the 2008 financial crisis it could not sell shares fast enough to pay out its unit holders. Eventually it had to sell its entire remaining portfolio at a deep discount.
Renaissance Capital took a bold step in allowing daily trading in its Sub-Saharan Africa (SSA) fund when it opened in October.
“It is much tougher to try to sell a whole month’s demand in one go than allowing daily trading ,” says portfolio manager Sven Richter.
But the SSA fund (which excludes SA and North Africa) is recommended only to hard-core Africa investors.
Others are steered towards the RenCap Frontier F und, which is about 50% invested in Africa. “Kenya, Nigeria and Egypt certainly stack up well in valuation terms against the other main frontier markets such as Indonesia, Vietnam, Pakistan, Argentina and the Ukraine,” says Richter. “In particular, I believe the pessimism about Kenya has been overdone. There has been a severe drought as well as anxiety about next year’s elections, but the share prices discount this and more.”
Dylan Evans, who markets the Stanlib fund range in Europe, says many international investors don’t disagree that there is a compelling case for investment in Africa but it is taking a while for them to act.
John Legat, who manages the Imara African Opportunities Fund, agrees. “Our clients in London are like rabbits in the headlights : they agree with our arguments but will not sign a cheque.”
Memories of the New Star debacle are still fresh.
Investec has the best-developed Africa franchise in SA, with $1,5bn under management. Investec Africa fund manager Roelof Horne says though there is no lock-in to the fund — clients have the opportunity to get out of it once a month — they have almost all remained in the fund with at least a five-year view. It has been in the middle of the pack of the Africa funds , 22nd out of 45 over five years with a negative 6% return in rand . Even with Africa’s high growth, external factors have hit the continent’s shares.
Horne says he adopts a low turnover investment style, but that this does not make the fund a low tracking error fund. As it is there is no definitive Africa excluding -SA benchmark — both Horne and his main SA-based rivals, Coronation Africa Frontiers and Stanlib Africa, measure themselves against London interbank cash rates (known as Libor) rather than the performance of an index.
African markets are dominated by banks — which might be appropriate as a strong banking sector is essential for economic development.
It follows that most of the largest non- SA shares on the continent are banking shares . There are a few exceptions, such as Dangote Cement; Nigerian Breweries; the Senegal-based cellphone provider, Sonatel; and its Kenyan counterpart, Safaricom.
Horne has about 40% of his fund in banks as he believes they are almost all conservative institutions involved in straightforward corporate lending, with little exposure to potential consumer- based bad debts.
Banks such as Kenya Commercial Bank and its rival, Equity Bank, as well as Mauritius Commercial Bank feature in many of the mutual fund portfolios. And there is no doubt that the listed subsidiaries of Barclays and Standard Chartered in Botswana, Zambia and elsewhere provide investors with a level of comfort when it comes to governance standards.
Horne says that after the 2008 shake- up there are some promising bets among the Nigerian banks. He argues that the 2008 crisis, which led to almost half the country’s banks disappearing in a huge consolidation, was a special case.
“One factor was that the price of oil fell in a few weeks from $150/bbl to $30/bbl . A core activity of the banks was funding refined oil imports and they took a big loss. explosion of margin lending to private investors who acquired a taste for stock market trading. They were paying 5% or 10% of the value of the shares and borrowing the rest. When the market collapsed in the 2008 financial crisis, banks were hit hard,” says Horne.
He believes that the Federal Bank of Nigeria’s (the country’s reserve bank) reaction to the crisis has been prudent.
There are certainly a number of blue-chip stocks on the Nigerian Stock Exchange, such as First City Monument Bank and Guaranty Trust Bank.
Peter Townsend, co-manager of Coronation’s Africa funds, says the house has decreased its exposure to financials as they have performed badly recently.
“I don’t believe African banks offer investors a great business model. Disclosure is poor, which makes it hard for us to know how well managed they are.”
One of the dilemmas of Africa, Townsend says, is that some of the better-quality markets, such as Botswana and Morocco, are expensive, mainly because they are propped up by institutional investors subject to exchange controls .
Horne says the most exciting theme for Africa investors is growing consumer spending.
John Mackie, who runs the Stanlib Africa Fund, says that, historically, mines have been more exposed to threats of nationalisation than other businesses — whether it was Zambia in the 1970s or Zimbabwe today.
The Stanlib fund has investments in Zimbabwe such as brewer Delta, cellphone operator Econet, seed producer Seedco and retailer and snack business Innscor, but no mines there. But it does have a few miners in more benign climates, such as African Barrick in Tanzania.
Townsend is somewhat less timid. “Even if Zimplats is given zero credit for its indigenisation programme and you take the worst case, it still potentially has 100% upside.”
Ten years ago, an Africa fund might have focused more on the continent’s rich endowment of commodities. Yet there are few natural resources shares listed on African bourses other than those on the JSE.
“I do not want to invest too heavily into companies whose future depends on the global price of copper or iron ore rather than on Africa’s unique economic fundamentals,” says Horne.
One of the ways to reduce risk might be to invest in SA companies with exposure to Africa. But only a few would qualify in comparison with most of these funds as more than half the turnover should be accounted for from Africa outside SA. MTN is one of the few SA blue chips to qualify.
Even Shoprite and Standard Bank, which have been successful in Africa, do not qualify.
Fungai Tarirah, who runs the Momentum (previously RMB) Africa Fund, has the mandate to invest up to 15% in SA but chooses not to, as it is not what his clients are looking for.
He warns that Africa is particularly vulnerable to external events — the Egyptian market fell 21% in the wake of the revolution. But, he says, “It is essential not to panic about these prices in the short term.”
To maintain liquidity, the fund invests only in shares with trade of more than $100m a quarter, and this means it can only invest in a universe of 90 stocks.
Tarirah says Kenya provides the greatest variety of shares in which to invest, including Africa’s only listed mainstream advertising business, the Scan Group.
Old Mutual was one of the latecomers to the Africa party. Its fund is about a year old.
“It all depends on when you launch the fund,” says fund manager Godwin Sepeng. “When we started, banks and cellphone companies were cheap. The consumer story sounds great, but with Unilever and Nestlé’s Nigerian businesses and breweries such as Guinness Nigeria on p:es of more than 20, they were not offering good relative value.”
Imara’s Legat says it can take years to build up a portfolio, particularly when looking at positions in promising but illiquid markets such as Ghana. “Whatever happens to the world economy, people will want to drink and smoke, which is why I like shares such as BAT Kenya, BAT Zimbabwe and breweries,” he says.
As Legat is based in Harare, he was one of the few managers bold enough to hold Zimbabwe shares throughout the inflationary times, and his fund was rewarded in the aftermath of dollarization in Zimbabwe.
But Legat is digging in for the long haul. “The key to Africa is water but, as a fund manager, I need to translate that fundamental truth into investment success.”
Financial Mail
Ghana's oil production to increase substantially
Ghana's oil production is set to increase substantially, following the discovery of nine additional oil reserves in the Western Region, the Minister of Energy, Dr Joe Oteng-Adjei, has said.
Already, oil production increased from the initial average of 45,000 barrels per day in January to about 77,000 barrels on average in August this year.
Oteng-Adjei said the total crude oil production from January to September 2011 was about 16.7 million barrels, while there were 24 crude liftings from the field by all the partners.
He said the country earned $337,337,925 from the sale of the first three liftings, totalling 2,980,720 barrels of crude oil, and Ghana also achieved an industry record of 3.5 years (40 months) from discovery of oil to first oil production.
The minister said interest in Ghana’s oil and gas was growing and becoming more competitive, a development that placed the country in a better position to negotiate for better fiscal and petroleum agreements to preserve national interest. He said currently there were 13 different petroleum operations being undertaken along Ghana’s shore line which were at different stages of exploration and development.
On developments in the power sub-sector, he said the government took over the administration of the country amid severe challenges in the power sub-sector, characterised by highly erratic power supply caused by generation, transmission and distribution deficiencies, but all that had been reduced significantly.
He said generation capacity had been increased from 1,810 MW in 2009 to 2,185.5 MW by the addition of 375.5MW of thermal generation, saying the additional capacity was provided by the completion of the Tema Thermal 1 and 2 power plants and the Sunon Asogli Power Plant.
He said as part of the government’s continuing efforts at expanding the generation capacity to 5,000 MW in the medium term, an additional capacity of 265 MW would be ready by the end of 2012 through the completion and inauguration of one unit of the MW out of the 400 MW Bui Hydroelectric Project by December 2012 and 132 MW capacity from the Takoradi 3 Thermal Project by June 2012.
He said the government had secured over $300 million for electrification projects in the three northern regions to improve the accessibility rate by connecting 1,400 communities in the region to the national electricity grid.
Daily Graphic
Already, oil production increased from the initial average of 45,000 barrels per day in January to about 77,000 barrels on average in August this year.
Oteng-Adjei said the total crude oil production from January to September 2011 was about 16.7 million barrels, while there were 24 crude liftings from the field by all the partners.
He said the country earned $337,337,925 from the sale of the first three liftings, totalling 2,980,720 barrels of crude oil, and Ghana also achieved an industry record of 3.5 years (40 months) from discovery of oil to first oil production.
The minister said interest in Ghana’s oil and gas was growing and becoming more competitive, a development that placed the country in a better position to negotiate for better fiscal and petroleum agreements to preserve national interest. He said currently there were 13 different petroleum operations being undertaken along Ghana’s shore line which were at different stages of exploration and development.
On developments in the power sub-sector, he said the government took over the administration of the country amid severe challenges in the power sub-sector, characterised by highly erratic power supply caused by generation, transmission and distribution deficiencies, but all that had been reduced significantly.
He said generation capacity had been increased from 1,810 MW in 2009 to 2,185.5 MW by the addition of 375.5MW of thermal generation, saying the additional capacity was provided by the completion of the Tema Thermal 1 and 2 power plants and the Sunon Asogli Power Plant.
He said as part of the government’s continuing efforts at expanding the generation capacity to 5,000 MW in the medium term, an additional capacity of 265 MW would be ready by the end of 2012 through the completion and inauguration of one unit of the MW out of the 400 MW Bui Hydroelectric Project by December 2012 and 132 MW capacity from the Takoradi 3 Thermal Project by June 2012.
He said the government had secured over $300 million for electrification projects in the three northern regions to improve the accessibility rate by connecting 1,400 communities in the region to the national electricity grid.
Daily Graphic
Why the Kenya shilling is under pressure
by Linus Gitahi
A lot has been written about what is happening to the shilling ranging from 'Juju' to silly things like (political) turf wars to even arguments about printing more cash etc, etc.
However, let us look at the issue objectively. A good place to start is the good old economics of demand and supply.
If we agree that high demand relative to supply pushes up prices and vice versa, then we need to understand what it is that has changed to warrant a huge surge in demand for the dollar and why the supply is not keeping pace with this demand.
To understand this, let us look at what activities supply Kenya with dollars and what is happening in those sectors.
1) Agriculture. Here, tea is the biggest foreign exchange earner. Reports from the Tea Board of Kenya indicate that although our Kenya shillings earnings are up, the kilos sold were down 10 per cent. This means that the absolute dollars earned were lower and farmers only earned more Kenya shillings because of the huge surge in the conversion rate to the Kenya shilling.
The story is similar for coffee .The key cause of this is of course drought which we are only just coming out of.
2) Remittances from the Diaspora. Though I do not have the latest statistics, we know that 80 per cent of the remittances come from the USA. This economy is under so much pressure with one of its worst recessions in living memory that is even threatening the re-election chances of 'our' president...the man from Kogelo.
Kenyans living in the US are busy fighting foreclosures on their mortgages while others are simply out of a job. Many are actually opting to come back to Kenya as evidenced by the high number of mid to senior level management applications companies are receiving from the diaspora.
It's safe therefore to say that inflows from this sector are also under a lot of pressure from these factors.
3) Tourism. The headline for this sector is that tourist numbers are up which is good news because they bring much needed dollars .However, closer scrutiny by the Kenya Tourist Board show that probably owing to the 'softness' of the economies where they are coming from, they too are trading down.
More and more tourists are coming here on packages that even the locals cannot get. I Googled the net and got a package from Italy, on a chartered plane to Mombasa, 7 days in a four star hotel for $700 dollars.
If we say $500 dollars went to the flight and airport taxes and local transfers, then, the tourist would be staying in a four star hotel in MSA for 7 days for a total of $200 dollars....all inclusive....where is that hotel? I need a Holiday!!.
The bigger question as well is with these kinds of deals, how much money actually gets to Kenya physically and who is regulating this?
We can go on and on about the supply side but from the above three examples, it's clear that real dollars would not be increasing in our coffers .This supply side is also very elastic, meaning that a little shaking of the environment sends the dollars away very fast by people not consuming or looking for substitutes.
Reliance on these kinds of supply sources generally makes us more vulnerable to the external environment than other countries dealing with a different set of products.
Let us now look at the demand side. Why do we as a country demand the dollars? Clearly the answer to this is in order to import goods and services. The question then is, what are we importing?
1) Petroleum products. This constitutes one of our bigger bills. The price of oil has been at an all-time high for the last one year and it's threatening to go even higher. Since we do not have substitutes for oil, we pay whatever price is there on the world markets and last time I checked through the window, we are not driving any less. The problem is compounded by use of diesel in our industries as power rationing kicked in as drought dried up our dams and reduced electricity production. Also, our hugely increased construction of our roads has led to unprecedented demand for tar, a by-product of petroleum as well. All this, remember, when our sources of dollars is static or decreasing.
2) Food. This is actually embarrassing but true. Due to our reliance on rain-fed agriculture we have spent a disproportionate amount of dollars importing food. This has included basic foods like maize, (which by the way, we can produce enough to store for a rainy day). This has put a further strain on the dollars .One can only hope we are learning the lessons and we shall invest in mechanizing our agriculture to reduce this dollar expenditure to zero.......In fact, turn food exports to a source rather than application of dollars.
3) Machinery and Equipment. This has been increasing and it's a good sign that our country is headed in the right direction towards industrialization. A closer look though shows that second-hand cars are one of the fastest growing lines. Besides the one-off dollar demand to import the cars, there is the fact that many of these cars are personal vehicles and do not add to production but instead create even more strain on the dollar because of fuel. It's also a fact that they are prone to break downs and need spare parts often...all of which need to be imported. This puts a further strain on the dollar on an ongoing basis.
The characteristic of the dollar needs on the demand side is that it's almost inelastic. You pay what you are asked to because you have no choice. While oil is a commodity widely available, the OPEC cartel ensures that the supply is inelastic (Whatever happened to the Association of coffee exporting countries?).
One other factor about Kenya that has not dawned on many of us is that our traditional source of dollars from exporting to our neighbors is also under pressure. In the 1960's, Kenya became the obvious choice as a manufacturing hub for the region. Many consumer goods would be manufactured in Kenya and exported to the rest of East Africa. With the advent of a free trade bloc called COMESA and the fall of apartheid making trade with South Africa fashionable, most of these multinationals have shifted their manufacturing base for the region to either Egypt or South Africa.
Manufactured goods are then exported directly to Uganda and Tanzania and therefore deny Kenya this traditional source of dollars. These companies include GlaxoSmithKline, Unilever, Cadburys, Colgate, Reckitt Benckiser etc.
If we are not careful, it's going to get worse because Uganda will soon be exporting oil to us while Tanzania is toying with the idea of building a gas pipeline to Kenya and export the stuff to us. What will Kenya export to these two countries to keep our balance of payments anywhere close to sensible? These two countries do not need our tea, coffee or horticulture but they have stuff we badly need. These are the questions we should be seriously asking ourselves.....otherwise, we shall soon be the 'smaller' brother in East Africa.
With this scenario, aren't we even surprised that the dollar has held steady for this long? As we move this country forward and push Vision 2030, we must have a solid plan to do two things in my view.
1) Import substitution where we can....This means producing everything that we have a comparative advantage and save the dollar and,
2) Aggressively export....This has to be an imperative .We must chase those dollars in order to buy what we do not have.
Besides, this will also do one more thing that we are not talking enough about.....Generating lots of employment for our youth.
Africa Review
A lot has been written about what is happening to the shilling ranging from 'Juju' to silly things like (political) turf wars to even arguments about printing more cash etc, etc.
However, let us look at the issue objectively. A good place to start is the good old economics of demand and supply.
If we agree that high demand relative to supply pushes up prices and vice versa, then we need to understand what it is that has changed to warrant a huge surge in demand for the dollar and why the supply is not keeping pace with this demand.
To understand this, let us look at what activities supply Kenya with dollars and what is happening in those sectors.
1) Agriculture. Here, tea is the biggest foreign exchange earner. Reports from the Tea Board of Kenya indicate that although our Kenya shillings earnings are up, the kilos sold were down 10 per cent. This means that the absolute dollars earned were lower and farmers only earned more Kenya shillings because of the huge surge in the conversion rate to the Kenya shilling.
The story is similar for coffee .The key cause of this is of course drought which we are only just coming out of.
2) Remittances from the Diaspora. Though I do not have the latest statistics, we know that 80 per cent of the remittances come from the USA. This economy is under so much pressure with one of its worst recessions in living memory that is even threatening the re-election chances of 'our' president...the man from Kogelo.
Kenyans living in the US are busy fighting foreclosures on their mortgages while others are simply out of a job. Many are actually opting to come back to Kenya as evidenced by the high number of mid to senior level management applications companies are receiving from the diaspora.
It's safe therefore to say that inflows from this sector are also under a lot of pressure from these factors.
3) Tourism. The headline for this sector is that tourist numbers are up which is good news because they bring much needed dollars .However, closer scrutiny by the Kenya Tourist Board show that probably owing to the 'softness' of the economies where they are coming from, they too are trading down.
More and more tourists are coming here on packages that even the locals cannot get. I Googled the net and got a package from Italy, on a chartered plane to Mombasa, 7 days in a four star hotel for $700 dollars.
If we say $500 dollars went to the flight and airport taxes and local transfers, then, the tourist would be staying in a four star hotel in MSA for 7 days for a total of $200 dollars....all inclusive....where is that hotel? I need a Holiday!!.
The bigger question as well is with these kinds of deals, how much money actually gets to Kenya physically and who is regulating this?
We can go on and on about the supply side but from the above three examples, it's clear that real dollars would not be increasing in our coffers .This supply side is also very elastic, meaning that a little shaking of the environment sends the dollars away very fast by people not consuming or looking for substitutes.
Reliance on these kinds of supply sources generally makes us more vulnerable to the external environment than other countries dealing with a different set of products.
Let us now look at the demand side. Why do we as a country demand the dollars? Clearly the answer to this is in order to import goods and services. The question then is, what are we importing?
1) Petroleum products. This constitutes one of our bigger bills. The price of oil has been at an all-time high for the last one year and it's threatening to go even higher. Since we do not have substitutes for oil, we pay whatever price is there on the world markets and last time I checked through the window, we are not driving any less. The problem is compounded by use of diesel in our industries as power rationing kicked in as drought dried up our dams and reduced electricity production. Also, our hugely increased construction of our roads has led to unprecedented demand for tar, a by-product of petroleum as well. All this, remember, when our sources of dollars is static or decreasing.
2) Food. This is actually embarrassing but true. Due to our reliance on rain-fed agriculture we have spent a disproportionate amount of dollars importing food. This has included basic foods like maize, (which by the way, we can produce enough to store for a rainy day). This has put a further strain on the dollars .One can only hope we are learning the lessons and we shall invest in mechanizing our agriculture to reduce this dollar expenditure to zero.......In fact, turn food exports to a source rather than application of dollars.
3) Machinery and Equipment. This has been increasing and it's a good sign that our country is headed in the right direction towards industrialization. A closer look though shows that second-hand cars are one of the fastest growing lines. Besides the one-off dollar demand to import the cars, there is the fact that many of these cars are personal vehicles and do not add to production but instead create even more strain on the dollar because of fuel. It's also a fact that they are prone to break downs and need spare parts often...all of which need to be imported. This puts a further strain on the dollar on an ongoing basis.
The characteristic of the dollar needs on the demand side is that it's almost inelastic. You pay what you are asked to because you have no choice. While oil is a commodity widely available, the OPEC cartel ensures that the supply is inelastic (Whatever happened to the Association of coffee exporting countries?).
One other factor about Kenya that has not dawned on many of us is that our traditional source of dollars from exporting to our neighbors is also under pressure. In the 1960's, Kenya became the obvious choice as a manufacturing hub for the region. Many consumer goods would be manufactured in Kenya and exported to the rest of East Africa. With the advent of a free trade bloc called COMESA and the fall of apartheid making trade with South Africa fashionable, most of these multinationals have shifted their manufacturing base for the region to either Egypt or South Africa.
Manufactured goods are then exported directly to Uganda and Tanzania and therefore deny Kenya this traditional source of dollars. These companies include GlaxoSmithKline, Unilever, Cadburys, Colgate, Reckitt Benckiser etc.
If we are not careful, it's going to get worse because Uganda will soon be exporting oil to us while Tanzania is toying with the idea of building a gas pipeline to Kenya and export the stuff to us. What will Kenya export to these two countries to keep our balance of payments anywhere close to sensible? These two countries do not need our tea, coffee or horticulture but they have stuff we badly need. These are the questions we should be seriously asking ourselves.....otherwise, we shall soon be the 'smaller' brother in East Africa.
With this scenario, aren't we even surprised that the dollar has held steady for this long? As we move this country forward and push Vision 2030, we must have a solid plan to do two things in my view.
1) Import substitution where we can....This means producing everything that we have a comparative advantage and save the dollar and,
2) Aggressively export....This has to be an imperative .We must chase those dollars in order to buy what we do not have.
Besides, this will also do one more thing that we are not talking enough about.....Generating lots of employment for our youth.
Africa Review
New Zambian government imposes, lifts metal exports
The government of new Zambia president Michael Sata has moved quickly to try and plug suspected leaks in income associated with the metal exports on which the economy primarily depends.
Sata has been concerned – analysts say with good reason – about copper exporters misreporting the amount of ore leaving Zambia, and earlier this week suspended export permits, to put new guidelines in place. Sata had already previously said that all export payments would need to be routed via the central bank.
After two days the ban was lifted, reflecting the critical role mineral exports play to the Zambian economy. ''The suspension has been lifted. The job has been done. We don't need 10 years to do the job," mines permanent secretary Godwin Beene said.
"The new measures will come into effect when the Bank of Zambia is ready. For now the exports will continue to be guided by the existing Mines and Minerals Development Act," Beene said.
While miners said they were taking a wait-and-see approach, analysts said some of the drastic moves imposed by Sata's government in only a week may unnerve investors.
Copper producers operating in the country include Canada's First Quantum Minerals, London-listed Vedanta Resources, Glencore International and Metorex of South Africa.
Zambia’s copper sales came to 819000 tons last year. The 10-day ban that was originally announced would have prevented companies from exporting 22500 tons. Copper accounts for three-quarters of Zambia's export earnings but the mining industry contributes only about 10% of tax revenue.
There have been concerns that under the previous administration of Rupiah Banda there had been little oversight over the destination of metal exports , among other allegations of corruption that are emerging.
Copper accounts for three- quarters of Zambia’s export earnings, but the mining industry contributes only about 10% of its tax revenue. Data shows much of the exported copper is destined for Switzerland but little of it shows up in Swiss customs figures, raising questions about transparency.
Reuters
Sata has been concerned – analysts say with good reason – about copper exporters misreporting the amount of ore leaving Zambia, and earlier this week suspended export permits, to put new guidelines in place. Sata had already previously said that all export payments would need to be routed via the central bank.
After two days the ban was lifted, reflecting the critical role mineral exports play to the Zambian economy. ''The suspension has been lifted. The job has been done. We don't need 10 years to do the job," mines permanent secretary Godwin Beene said.
"The new measures will come into effect when the Bank of Zambia is ready. For now the exports will continue to be guided by the existing Mines and Minerals Development Act," Beene said.
While miners said they were taking a wait-and-see approach, analysts said some of the drastic moves imposed by Sata's government in only a week may unnerve investors.
Copper producers operating in the country include Canada's First Quantum Minerals, London-listed Vedanta Resources, Glencore International and Metorex of South Africa.
Zambia’s copper sales came to 819000 tons last year. The 10-day ban that was originally announced would have prevented companies from exporting 22500 tons. Copper accounts for three-quarters of Zambia's export earnings but the mining industry contributes only about 10% of tax revenue.
There have been concerns that under the previous administration of Rupiah Banda there had been little oversight over the destination of metal exports , among other allegations of corruption that are emerging.
Copper accounts for three- quarters of Zambia’s export earnings, but the mining industry contributes only about 10% of its tax revenue. Data shows much of the exported copper is destined for Switzerland but little of it shows up in Swiss customs figures, raising questions about transparency.
Reuters
Chinese vehicle assembler makes mark in Kenya
Chinese automobile company, Foton East Africa, is making a mark in the Kenyan motor industry where most assembly plants have folded up in the recent past.
Foton, which established its $14 million assembly plant outside Nairobi in 2010, has been attracting recognition from Kenyans. Inflationary trends in the country have compelled many Kenyan traders and distributors to acquire the new models of Foton pickups and light trucks due to their low fuel consumption.
At a recent Total Motor Show held in Nairobi, the company sold its entire fleet of commercial and light trucks during the two-day exhibition.
According to the company's general manager in Kenya, Calvin Guo, the feedback from Kenyans and corporate entities who have tried the Foton range of products is overwhelming.
“We are barely a year old and are enjoying a massive response from our customers who congratulate us it terms of our vehicles' performance and after-sale service,” he told Xinhua in an exclusive interview in Nairobi.
Guo said the service plan Foton puts out for its customers in Kenya is the secret behind the company's success in the competitive sector. “We promise our clients a two-year warranty on all Foton units for every 100, 000 km covered. Foton also has a monthly running cost guarantee for a single unit.”
Xinhua
Foton, which established its $14 million assembly plant outside Nairobi in 2010, has been attracting recognition from Kenyans. Inflationary trends in the country have compelled many Kenyan traders and distributors to acquire the new models of Foton pickups and light trucks due to their low fuel consumption.
At a recent Total Motor Show held in Nairobi, the company sold its entire fleet of commercial and light trucks during the two-day exhibition.
According to the company's general manager in Kenya, Calvin Guo, the feedback from Kenyans and corporate entities who have tried the Foton range of products is overwhelming.
“We are barely a year old and are enjoying a massive response from our customers who congratulate us it terms of our vehicles' performance and after-sale service,” he told Xinhua in an exclusive interview in Nairobi.
Guo said the service plan Foton puts out for its customers in Kenya is the secret behind the company's success in the competitive sector. “We promise our clients a two-year warranty on all Foton units for every 100, 000 km covered. Foton also has a monthly running cost guarantee for a single unit.”
Xinhua
Sierra Leone opens government shops to tame price cartels
by Kemo Cham
Under pressure over runaway inflation, Sierra Leone has announced plans to establish what it calls "trade stores" across the country to sell government-acquired rice and other basic commodities at affordable prices.
The government hopes to stabilise high prices using this method after bitterly criticising private businessmen for what it says are "unfair" practices that have seen the cost of living significantly go up.
"We are going to identify what we are going to call trade stores or government stores," said Trade and Industry minister, Richard Conteh. "Never again will we allow unscrupulous business individuals to hold this country to ransom, just because they want to satisfy their own selfish ends," he said.
Sierra Leone authorities say the decision was taken due to the "intransigence" of major importers in the country who it accused of using rice--the staple food--to score political points.
"Even though we have taken all necessary measures, including meeting with these [business] people… we have virtually reached a standstill and we have failed," Dr Conteh said. "As a government, we will take every step necessary to ensure that we have a sufficient supply of basic food commodities throughout the country and at prices that we can afford."
But in an effort to allay fears by importers of the prospect of unfair competition, the minister said the move did not mean that the government was going to open shops everywhere.
Rather, it would enter into agreements with existing traders in various locations to sell commodities at approved prices.
Strict measures have been put in place to prevent hoarding, which the government believes has been a factor in the rising prices.
Presently, the cost of a bag of rice varies across Sierra Leone. But according to the government, its rice will now cost the same throughout its stores.
The new move follows support from Guinea in the form of a consignment of 10,000 tonnes of rice after Freetown sought it's neighbour's assistance. The two countries have signed an bilateral agreement towards the sustainable supply of basic food stuff for their citizens, with the rice cargo being part of the deal. Under intense pressure from shortages and rising prices, the Guinean government ordered a record 700, 000 tonnes of rice, from which Sierra Leone is benefiting.
To increase sustainability, the two governments have also agreed to be jointly ordering rice, oil, flour, among other commodities so as to bring down costs.
The collaboration between Sierra Leone and Guinea also entails plans for eventual graduation from importation to exportation.
"We don’t want to continue this importation much longer, we believe we have all that is required for us to become self-sufficient and able to become exporting countries,” Dr Conteh said.
Sierra Leone also in June signed a memorandum of understanding with Vietnam that requires the latter to bring in a total of 100,000 tonnes of rice between 2011-2015.
Sierra Leone spent $8 million for 14,000 tonnes of rice last year, accounting for 40 per cent of the total imports from Vietnam.
Africa Review
Under pressure over runaway inflation, Sierra Leone has announced plans to establish what it calls "trade stores" across the country to sell government-acquired rice and other basic commodities at affordable prices.
The government hopes to stabilise high prices using this method after bitterly criticising private businessmen for what it says are "unfair" practices that have seen the cost of living significantly go up.
"We are going to identify what we are going to call trade stores or government stores," said Trade and Industry minister, Richard Conteh. "Never again will we allow unscrupulous business individuals to hold this country to ransom, just because they want to satisfy their own selfish ends," he said.
Sierra Leone authorities say the decision was taken due to the "intransigence" of major importers in the country who it accused of using rice--the staple food--to score political points.
"Even though we have taken all necessary measures, including meeting with these [business] people… we have virtually reached a standstill and we have failed," Dr Conteh said. "As a government, we will take every step necessary to ensure that we have a sufficient supply of basic food commodities throughout the country and at prices that we can afford."
But in an effort to allay fears by importers of the prospect of unfair competition, the minister said the move did not mean that the government was going to open shops everywhere.
Rather, it would enter into agreements with existing traders in various locations to sell commodities at approved prices.
Strict measures have been put in place to prevent hoarding, which the government believes has been a factor in the rising prices.
Presently, the cost of a bag of rice varies across Sierra Leone. But according to the government, its rice will now cost the same throughout its stores.
The new move follows support from Guinea in the form of a consignment of 10,000 tonnes of rice after Freetown sought it's neighbour's assistance. The two countries have signed an bilateral agreement towards the sustainable supply of basic food stuff for their citizens, with the rice cargo being part of the deal. Under intense pressure from shortages and rising prices, the Guinean government ordered a record 700, 000 tonnes of rice, from which Sierra Leone is benefiting.
To increase sustainability, the two governments have also agreed to be jointly ordering rice, oil, flour, among other commodities so as to bring down costs.
The collaboration between Sierra Leone and Guinea also entails plans for eventual graduation from importation to exportation.
"We don’t want to continue this importation much longer, we believe we have all that is required for us to become self-sufficient and able to become exporting countries,” Dr Conteh said.
Sierra Leone also in June signed a memorandum of understanding with Vietnam that requires the latter to bring in a total of 100,000 tonnes of rice between 2011-2015.
Sierra Leone spent $8 million for 14,000 tonnes of rice last year, accounting for 40 per cent of the total imports from Vietnam.
Africa Review
West Africa pirates adapt after Nigeria crackdown
by Richard Valdmanis and Jonathan Saul
Nigerian pirate gangs are moving into the waters of neighbouring countries and attacking vessels further offshore after being driven from their coastal haunts by a military crackdown.
The shift to deeper waters mirrors one by their better-known Somali counterparts after pressure from international warships and raises the threat to shipping in the Gulf of Guinea, which is rich in oil and minerals.
Pirate attacks have spiked off the coast of Benin this year while dropping in neighbouring Nigeria, according to the International Maritime Bureau (IMB) watchdog, and attacks may also be on the rise in Cameroon to the south.
"While Somalis are not coming to Nigeria with franchise kits, Nigerians do have smartphones and so can surf the Web and keep an eye on what the Somalis and other pirates are doing and incorporate inspired changes," said Michael Frodl with U.S.-based consultancy C-LEVEL Maritime Risks. "All this represents a growing menace to shipping off Nigeria, Benin, and other West African nations."
London's marine insurance market in August added Benin to its high-risk list, and the vast Gulf of Guinea region could become more risky for shipping, threatening a growing source of oil, metals and agricultural products.
"We believe that this is happening because the Nigerian navy and coastguard has clamped down heavily on piracy in their waters, forcing the pirates to move elsewhere," said IMB manager Cyrus Mody.
A spokesman for Nigeria's military Joint Task Force confirmed that intensified patrols and intelligence operations had led to a drop in piracy in Nigeria. Authorities had made 30 arrests in the past month, he said.
In the latest reported attack in Benin in September, pirates hijacked the Cyprus-flagged Mattheus I some 60 nautical miles offshore -- one of the furthest offshore grabs recorded in West Africa. Benin's patrol boats were hours away and powerless to intervene.
Frodl said the pirates appeared to be moving further offshore not just to avoid coastal patrols "but also to take advantage of ships letting down their guard in waters assumed to be safer."
"The attacks off Benin (...) represent the same sort of pivot we saw from the Somalis when the more ambitious and capable pirates shunned the Gulf of Aden a couple of years ago for the Somali Basin," he said.
The IMB said there have been 19 pirate attacks off Benin this year, compared with none in 2010. Authorities in Cameroon, just south of Nigeria, have also complained of an increase in pirate attacks since 2010.
Unlike off Somalia, West African pirates tend to focus on stealing cash and cargoes instead of kidnapping for huge ransoms. But experts say there have been cases of West African pirates being paid small ransoms to release crews.
The spread of piracy to new territory in the Gulf of Guinea has underlined the need for regional cooperation on maritime security, analysts and security officials said.
Phillip Heyl, the head of the U.S. Africa Command's air and maritime programs, said U.S. military support for West African navies and coastguards -- which has included training and equipment -- was being adjusted.
"In the past, most of our efforts have been bilateral -- between us and a particular country," he said. "Now we are focusing on a regional basis because the solution is regional. Events are picking up in Benin and Togo because Nigeria is stepping up its enforcement efforts."
The French military is also boosting cooperation. Military sources in Benin said France had deployed a surveillance frigate to Benin's waters at the end of August. The French military is also planning anti-piracy training in Benin and Togo in the coming weeks.
The stakes are high for Benin, which depends on its port in Cotonou for some 40 percent of state revenues. A U.S.-funded program to double the port's capacity could also be at risk, the U.S. envoy to Benin said in August.
Benin has asked the United Nations to consider sending an international force to help police the Gulf of Guinea, similar to the NATO and European Union operations to protect shipping from Somali pirates off Africa's east coast. It is also in talks with the United States and France over the possible purchase of boats and surveillance planes. Separately, West African countries are discussing the creation of a regional counter-piracy force.
But concerns are also rising that the pirate gangs could move further west. Officials in Togo and Ghana have said they are boosting maritime security to address the threat.
"We are aware of the increasing piracy attacks in our neighbourhood and we are very much prepared to face any such attacks," Ghana Defence Minister Joseph Henry Smith said.
J. Peter Pham, Africa director for U.S. think-tank the Atlantic Council, said the pirates have no shortage of possible recruits, including former Nigerian rebels in the wake of a government amnesty.
"The attacks seem to be coming from independent criminal gangs composed mainly of, and certainly led by, Nigerians, with perhaps a smattering of other nationalities," he said.
"The fact that the much-vaunted Niger Delta amnesty has benefited largely the leadership rather than the middle or lower ranks of insurgents (...) ensures a ready pool of potential recruits for criminal enterprises."
Reuters
Nigerian pirate gangs are moving into the waters of neighbouring countries and attacking vessels further offshore after being driven from their coastal haunts by a military crackdown.
The shift to deeper waters mirrors one by their better-known Somali counterparts after pressure from international warships and raises the threat to shipping in the Gulf of Guinea, which is rich in oil and minerals.
Pirate attacks have spiked off the coast of Benin this year while dropping in neighbouring Nigeria, according to the International Maritime Bureau (IMB) watchdog, and attacks may also be on the rise in Cameroon to the south.
"While Somalis are not coming to Nigeria with franchise kits, Nigerians do have smartphones and so can surf the Web and keep an eye on what the Somalis and other pirates are doing and incorporate inspired changes," said Michael Frodl with U.S.-based consultancy C-LEVEL Maritime Risks. "All this represents a growing menace to shipping off Nigeria, Benin, and other West African nations."
London's marine insurance market in August added Benin to its high-risk list, and the vast Gulf of Guinea region could become more risky for shipping, threatening a growing source of oil, metals and agricultural products.
"We believe that this is happening because the Nigerian navy and coastguard has clamped down heavily on piracy in their waters, forcing the pirates to move elsewhere," said IMB manager Cyrus Mody.
A spokesman for Nigeria's military Joint Task Force confirmed that intensified patrols and intelligence operations had led to a drop in piracy in Nigeria. Authorities had made 30 arrests in the past month, he said.
In the latest reported attack in Benin in September, pirates hijacked the Cyprus-flagged Mattheus I some 60 nautical miles offshore -- one of the furthest offshore grabs recorded in West Africa. Benin's patrol boats were hours away and powerless to intervene.
Frodl said the pirates appeared to be moving further offshore not just to avoid coastal patrols "but also to take advantage of ships letting down their guard in waters assumed to be safer."
"The attacks off Benin (...) represent the same sort of pivot we saw from the Somalis when the more ambitious and capable pirates shunned the Gulf of Aden a couple of years ago for the Somali Basin," he said.
The IMB said there have been 19 pirate attacks off Benin this year, compared with none in 2010. Authorities in Cameroon, just south of Nigeria, have also complained of an increase in pirate attacks since 2010.
Unlike off Somalia, West African pirates tend to focus on stealing cash and cargoes instead of kidnapping for huge ransoms. But experts say there have been cases of West African pirates being paid small ransoms to release crews.
The spread of piracy to new territory in the Gulf of Guinea has underlined the need for regional cooperation on maritime security, analysts and security officials said.
Phillip Heyl, the head of the U.S. Africa Command's air and maritime programs, said U.S. military support for West African navies and coastguards -- which has included training and equipment -- was being adjusted.
"In the past, most of our efforts have been bilateral -- between us and a particular country," he said. "Now we are focusing on a regional basis because the solution is regional. Events are picking up in Benin and Togo because Nigeria is stepping up its enforcement efforts."
The French military is also boosting cooperation. Military sources in Benin said France had deployed a surveillance frigate to Benin's waters at the end of August. The French military is also planning anti-piracy training in Benin and Togo in the coming weeks.
The stakes are high for Benin, which depends on its port in Cotonou for some 40 percent of state revenues. A U.S.-funded program to double the port's capacity could also be at risk, the U.S. envoy to Benin said in August.
Benin has asked the United Nations to consider sending an international force to help police the Gulf of Guinea, similar to the NATO and European Union operations to protect shipping from Somali pirates off Africa's east coast. It is also in talks with the United States and France over the possible purchase of boats and surveillance planes. Separately, West African countries are discussing the creation of a regional counter-piracy force.
But concerns are also rising that the pirate gangs could move further west. Officials in Togo and Ghana have said they are boosting maritime security to address the threat.
"We are aware of the increasing piracy attacks in our neighbourhood and we are very much prepared to face any such attacks," Ghana Defence Minister Joseph Henry Smith said.
J. Peter Pham, Africa director for U.S. think-tank the Atlantic Council, said the pirates have no shortage of possible recruits, including former Nigerian rebels in the wake of a government amnesty.
"The attacks seem to be coming from independent criminal gangs composed mainly of, and certainly led by, Nigerians, with perhaps a smattering of other nationalities," he said.
"The fact that the much-vaunted Niger Delta amnesty has benefited largely the leadership rather than the middle or lower ranks of insurgents (...) ensures a ready pool of potential recruits for criminal enterprises."
Reuters
New Zambian president reverses sale of bank
New Zambian President Michael Sata on October 3 reversed the takeover of the nation's Finance Bank by the First National Bank of Zambia, which is fully owned by FirstRand, South Africa's second-biggest bank.
"There's no document of sale for Finance Bank and I am directing the Ministry of Finance to take the bank back to its owners immediately," Sata said.
The country's central bank, The Bank of Zambia, said in September FirstRand would pay $5.4 million for the bank, which it 'seized' from its shareholders in 2010 for violating the law through unsound practices, including insider borrowing. The sale was announced in the last weeks of the term of since defeated president Rupiah Banda. FirstRand subsiduary First National Bank of Zambia had been managing Finance Bank for eight months, at the request of the central bank.
Within days of assuming office after winning the September 20 presidential election, Sata dismissed long-serving governor of the Bank of Zambia, Caleb Fundanga and the entire board. A new governor is expected to be appointed any time now. Bwalya Ng'andu was appointed deputy BOZ governor on October 5.
Finance Bank has 34 branches and 16 agencies, as well as about 1,000 employees. It is Zambia's fifth-largest bank.
President Sata ordered his finance minster to to cancel the sale of Finance Bank to FNB Zambia and return it to bank founder and controlling owner Rajan Mahtani. Credit Suisse has a 40 per cent shareholding.
Michael Jordaan, chief executive officer of FirstRand’s First National Bank, said, “We strongly believe that due process was followed and that the agreements reached with the Bank of Zambia were concluded in accordance with Zambian law.''
John Sangwa, a lawyer for Finance Bank’s former Chairman Rajan Mahtani, said the central bank’s decision to dispose of Finance Bank’s assets was “flawed.” Mahtani, who has described the sale of his bank as illegal, was arrested for alleged money laundering last year. The case has complicated political overtones. Mahtani has said the sale of his bank had been "politically motivated" by the previous government.He claimed some debtors tried to avoid repaying their loans by making false allegations against him and the bank.
There were many questions raised about the reasons for and the manner of the sale of Finance Bank to FirstRand, including the valuation of the transaction. However, there have also been concerns raised about what some see as signs of Sata's developing penchant for hasty, unprocedural actions.
Trade Africa
"There's no document of sale for Finance Bank and I am directing the Ministry of Finance to take the bank back to its owners immediately," Sata said.
The country's central bank, The Bank of Zambia, said in September FirstRand would pay $5.4 million for the bank, which it 'seized' from its shareholders in 2010 for violating the law through unsound practices, including insider borrowing. The sale was announced in the last weeks of the term of since defeated president Rupiah Banda. FirstRand subsiduary First National Bank of Zambia had been managing Finance Bank for eight months, at the request of the central bank.
Within days of assuming office after winning the September 20 presidential election, Sata dismissed long-serving governor of the Bank of Zambia, Caleb Fundanga and the entire board. A new governor is expected to be appointed any time now. Bwalya Ng'andu was appointed deputy BOZ governor on October 5.
Finance Bank has 34 branches and 16 agencies, as well as about 1,000 employees. It is Zambia's fifth-largest bank.
President Sata ordered his finance minster to to cancel the sale of Finance Bank to FNB Zambia and return it to bank founder and controlling owner Rajan Mahtani. Credit Suisse has a 40 per cent shareholding.
Michael Jordaan, chief executive officer of FirstRand’s First National Bank, said, “We strongly believe that due process was followed and that the agreements reached with the Bank of Zambia were concluded in accordance with Zambian law.''
John Sangwa, a lawyer for Finance Bank’s former Chairman Rajan Mahtani, said the central bank’s decision to dispose of Finance Bank’s assets was “flawed.” Mahtani, who has described the sale of his bank as illegal, was arrested for alleged money laundering last year. The case has complicated political overtones. Mahtani has said the sale of his bank had been "politically motivated" by the previous government.He claimed some debtors tried to avoid repaying their loans by making false allegations against him and the bank.
There were many questions raised about the reasons for and the manner of the sale of Finance Bank to FirstRand, including the valuation of the transaction. However, there have also been concerns raised about what some see as signs of Sata's developing penchant for hasty, unprocedural actions.
Trade Africa
Morocco's trade deficit expands
Morocco's trade deficit expanded 22.6 percent in the January-August period from a year ago to 122.2 billion dirhams due mainly to higher spending on energy imports, official data showed.
A month earlier, the trade deficit rose 21 percent from the January-July period in 2010.
Tourism receipts over the same period rose 6.4 percent to 40.2 billion dirhams and migrant remittances climbed 7.7 percent to 38.8 billion dirhams, data from the Office des Changes foreign exchange regulatory authority showed.
Morocco's currency is not fully convertible and any growth in tourism and remittances helps mitigate any destabilising impact on the banking system from a net outflow of foreign exchange caused by the surge in the trade deficit.
A continuing surge in the trade deficit, analyst say, can deplete the country's foreign currency reserves and complicate its ability to fund its imports under the current currency regime. Foreign currency reserves now cover import needs for six months, one the lowest coverage levels in several years.
Amid political turmoil hitting Arab countries, private foreign loans and investment stood at 16.2 billion dirhams by end-August, down 12 percent from a year earlier.
The trade deficit figure covers only exports and imports of goods and not services. The country of 33 million has no oil or gas of its own and is one of the world's top grain buyers.
Imports rose 20.7 percent to 235 billion dirhams after the energy import bill rose 43 percent to 56.2 billion dirhams and imports of wheat, maize and sugar rose by over 80 percent to a combined 13.5 billion dirhams.
The average prices of crude oil and wheat rose 31 and 62 percent respectively compared with January-August, 2010. Morocco spent 20.4 billion dirhams on 3.3 million tonnes of crude oil and 7.1 billion dirhams on 2.34 million tonnes of wheat.
The state tendered on Thursday to buy almost 550,000 tonnes of soft wheat, after a four-month hiatus to allow farmers to sell their local produce.
Exports of goods rose 19 percent during January-August from a year earlier to 112.8 billion dirhams. Exports of phosphate and its by-products yielded 30.2 billion dirhams by the end of August, 33.8 percent from a year earlier while they were up by an annual 36.7 percent in July and 44.4 percent in June.
Clothing and textile exports rose 7.7 percent to 17.92 billion dirhams, marking a drop from July when they were up by an annual 9 percent.
The dismantling of trade barriers with key trade partner the European Union and with more direct competitors such as Turkey, Tunisia and Egypt has eroded the competitiveness of Moroccan firms which complain of high costs of energy, poor support by the state in promoting Moroccan brands and complex bureaucracy.
Reuters
A month earlier, the trade deficit rose 21 percent from the January-July period in 2010.
Tourism receipts over the same period rose 6.4 percent to 40.2 billion dirhams and migrant remittances climbed 7.7 percent to 38.8 billion dirhams, data from the Office des Changes foreign exchange regulatory authority showed.
Morocco's currency is not fully convertible and any growth in tourism and remittances helps mitigate any destabilising impact on the banking system from a net outflow of foreign exchange caused by the surge in the trade deficit.
A continuing surge in the trade deficit, analyst say, can deplete the country's foreign currency reserves and complicate its ability to fund its imports under the current currency regime. Foreign currency reserves now cover import needs for six months, one the lowest coverage levels in several years.
Amid political turmoil hitting Arab countries, private foreign loans and investment stood at 16.2 billion dirhams by end-August, down 12 percent from a year earlier.
The trade deficit figure covers only exports and imports of goods and not services. The country of 33 million has no oil or gas of its own and is one of the world's top grain buyers.
Imports rose 20.7 percent to 235 billion dirhams after the energy import bill rose 43 percent to 56.2 billion dirhams and imports of wheat, maize and sugar rose by over 80 percent to a combined 13.5 billion dirhams.
The average prices of crude oil and wheat rose 31 and 62 percent respectively compared with January-August, 2010. Morocco spent 20.4 billion dirhams on 3.3 million tonnes of crude oil and 7.1 billion dirhams on 2.34 million tonnes of wheat.
The state tendered on Thursday to buy almost 550,000 tonnes of soft wheat, after a four-month hiatus to allow farmers to sell their local produce.
Exports of goods rose 19 percent during January-August from a year earlier to 112.8 billion dirhams. Exports of phosphate and its by-products yielded 30.2 billion dirhams by the end of August, 33.8 percent from a year earlier while they were up by an annual 36.7 percent in July and 44.4 percent in June.
Clothing and textile exports rose 7.7 percent to 17.92 billion dirhams, marking a drop from July when they were up by an annual 9 percent.
The dismantling of trade barriers with key trade partner the European Union and with more direct competitors such as Turkey, Tunisia and Egypt has eroded the competitiveness of Moroccan firms which complain of high costs of energy, poor support by the state in promoting Moroccan brands and complex bureaucracy.
Reuters
If Chinese traders in Africa are exploitative, what are Africa countries doing to prevent it?
In the frequent talk about whether booming China is 'colonizing' Africa through rising trade and investment, it is usually taken for granted that the African countries are passive partners. Mention is often made of Chinese companies in Africa underpaying the locals or mistreating them in one way or another. Another common complain about the Chinese economic onslaught throughout China is that Chinese small traders are now encroaching on areas of small business that are supposed to be reserved for locals, and that this is not real 'investment.'
While the Chinese people and government gets most of the flack for these growing complaints, few seem to put the primary responsibility for preventing these practices on the host African governments. Other than urge its citizens to obey host country laws and deal respectfully with the locals, what more can the Chinese government do about millions of its citizens who are doing their own private deals all over the world, and increasingly in Africa?
The complaints about Chinese business practices are heard in Ghana as much as in the many other countries the Asian giant's citizens are flocking to. Among other charges, Chinese traders and businesspeople have been accused of illegal mining activities, pirating local textile-designs, and venturing into the retail sector which by law is a preserve of indigenous entrepreneurs.
Perhaps in exasperation at this issue, a Ghanaian website reports a Chinese official as saying, ''It is [Ghana’s] responsibility to regulate trade. We, on our part, encourage our businesses to respect and abide by local laws and regulations.”
Xie Yajing, Commercial Counsellor of the Department of West Asian & African Affairs at the Chinese Ministry of Commerce, went on to point out that a lot of the Chinese companies in question are not state-owned enterprises but personal, private businesses. She said that while state-owned firms and other registered contractors doing business overseas are regulated by authorities in Beijing, her ministry is not fully aware of the overseas ventures of many private businesspeople, she claimed.
The article goes on to state: Though an increasingly important trade partner, China’s exports into Ghana have not always been welcomed. Local industries fret about cheap and sub-standard Chinese imports which have taken over their markets, and are gradually pushing them to the wall.
Ditto for just about every African market Chinese goods have flooded. Xie Yajing explained this by pointing to different standards which apply in different markets. She said this is one possible reason why, for example, a product that is rejected by the EU market may be permitted to enter Ghana or some other African country.
Not only is this true, but for those African countries that have import standards at all to talk about, how many have the capacity to implement them at the points of entry? What percentage of these imported goods are checked at all, and of those that, how difficult is it for a customs official to be persuaded to look the other way in exchange for a small ''incentive?''
Franklin Cudjoe, an analyst with policy think-tank IMANI Ghana, said, “I absolutely agree with them. You don’t blame foreigners for a lack of focus or proper regulation.
“The other crucial point on the issue of piracy is that we have not invested sufficiently in strengthening our copyright system. If the investments matched the technology that is needed, you wouldn’t have customs officials going after traders selling pirated products that consumers want to buy anyway.
“It is important for the Ghanaian authorities to have technology and software that allows them to crosscheck electronically in order to detect pirated materials at their points of entry.
“Also, the local textile industry is now a very expensive industry due to the cost of production. About 90% of ingredients in textile manufacturing are imported; therefore the combination of import and local taxes makes it difficult for local producers to meet the demand or compete with imports.”
Yajing recognised the lopsided nature of trade between China and Ghana, but said it is largely the outcome of both countries’ economic structures. Exports from Ghana comprise mainly primary resources like cocoa and minerals, while trade in the other direction is made up substantially of high-end manufactures like electronic products, machinery and ICT systems.
If China is 'colonizing' Africa in the ways many of its citizens and companies are doing business here, a lot of the responsibility for that clearly lies at the foot of governments that are not doing their job to control what foreigners do and how they do it.
Trade Africa
While the Chinese people and government gets most of the flack for these growing complaints, few seem to put the primary responsibility for preventing these practices on the host African governments. Other than urge its citizens to obey host country laws and deal respectfully with the locals, what more can the Chinese government do about millions of its citizens who are doing their own private deals all over the world, and increasingly in Africa?
The complaints about Chinese business practices are heard in Ghana as much as in the many other countries the Asian giant's citizens are flocking to. Among other charges, Chinese traders and businesspeople have been accused of illegal mining activities, pirating local textile-designs, and venturing into the retail sector which by law is a preserve of indigenous entrepreneurs.
Perhaps in exasperation at this issue, a Ghanaian website reports a Chinese official as saying, ''It is [Ghana’s] responsibility to regulate trade. We, on our part, encourage our businesses to respect and abide by local laws and regulations.”
Xie Yajing, Commercial Counsellor of the Department of West Asian & African Affairs at the Chinese Ministry of Commerce, went on to point out that a lot of the Chinese companies in question are not state-owned enterprises but personal, private businesses. She said that while state-owned firms and other registered contractors doing business overseas are regulated by authorities in Beijing, her ministry is not fully aware of the overseas ventures of many private businesspeople, she claimed.
The article goes on to state: Though an increasingly important trade partner, China’s exports into Ghana have not always been welcomed. Local industries fret about cheap and sub-standard Chinese imports which have taken over their markets, and are gradually pushing them to the wall.
Ditto for just about every African market Chinese goods have flooded. Xie Yajing explained this by pointing to different standards which apply in different markets. She said this is one possible reason why, for example, a product that is rejected by the EU market may be permitted to enter Ghana or some other African country.
Not only is this true, but for those African countries that have import standards at all to talk about, how many have the capacity to implement them at the points of entry? What percentage of these imported goods are checked at all, and of those that, how difficult is it for a customs official to be persuaded to look the other way in exchange for a small ''incentive?''
Franklin Cudjoe, an analyst with policy think-tank IMANI Ghana, said, “I absolutely agree with them. You don’t blame foreigners for a lack of focus or proper regulation.
“The other crucial point on the issue of piracy is that we have not invested sufficiently in strengthening our copyright system. If the investments matched the technology that is needed, you wouldn’t have customs officials going after traders selling pirated products that consumers want to buy anyway.
“It is important for the Ghanaian authorities to have technology and software that allows them to crosscheck electronically in order to detect pirated materials at their points of entry.
“Also, the local textile industry is now a very expensive industry due to the cost of production. About 90% of ingredients in textile manufacturing are imported; therefore the combination of import and local taxes makes it difficult for local producers to meet the demand or compete with imports.”
Yajing recognised the lopsided nature of trade between China and Ghana, but said it is largely the outcome of both countries’ economic structures. Exports from Ghana comprise mainly primary resources like cocoa and minerals, while trade in the other direction is made up substantially of high-end manufactures like electronic products, machinery and ICT systems.
If China is 'colonizing' Africa in the ways many of its citizens and companies are doing business here, a lot of the responsibility for that clearly lies at the foot of governments that are not doing their job to control what foreigners do and how they do it.
Trade Africa
Tunisia: leather and footwear exports up 12%
Exports of the leather and footwear industries in Tunisia posted a growth of 12.4% in the first eight months of the current year, rising from 630.5 million Tunisian dinars (MTD) in 2010 to 708.5 MTD in 2011.
Imports increased by 7.2%, reaching 444.3 MTD, compared with 414.4 MTD in the same period last year. The trade balance shows coverage of 159.5%.
The growth in the sector's exports is due to the good performance of the complete chains of footwear which reached 399.4 MTD, according to the National Leather and Footwear Centre's newsletter of last August.
Italy is Tunisia’s first customer with 331.9 MTD, i.e. 46.8% of the overall exports. France is second with 212.8 MTD, i.e. 30%, and Germany is third with 76.3 MTD, i.e. 10.8%.
However, Exports to Spain fell by 20.3% in the first 8 months of 2011. Similarly, exports to Hong-Kong declined by 3.2%, dropping from 6.2 MTD to 6 MTD.
Despite this regression, Hong-Kong ranks 5th. Since last month, exports to Cyprus have tripled, increasing from 0.9 MTD to 2.6 MTD.
Imports involve mainly leather, fur skins, accessories and components by means of 255.2 MTD for leather and 79.9 MTD for accessories.
Accessories, components and shoe uppers hold the second and third positions with 79.9 MTD and 57.7 MTD, respectively.
The leather and footwear industry's first supplier of Tunisia is Italy with 205.8 MTD, or 46.3% of the overall imports, followed by France with 104.1 MTD and Germany with 44.3 MTD, and then, Spain, China and India with 16.9 MTD, 16.7 MTD and 13 MTD, respectively.
African Manager
Imports increased by 7.2%, reaching 444.3 MTD, compared with 414.4 MTD in the same period last year. The trade balance shows coverage of 159.5%.
The growth in the sector's exports is due to the good performance of the complete chains of footwear which reached 399.4 MTD, according to the National Leather and Footwear Centre's newsletter of last August.
Italy is Tunisia’s first customer with 331.9 MTD, i.e. 46.8% of the overall exports. France is second with 212.8 MTD, i.e. 30%, and Germany is third with 76.3 MTD, i.e. 10.8%.
However, Exports to Spain fell by 20.3% in the first 8 months of 2011. Similarly, exports to Hong-Kong declined by 3.2%, dropping from 6.2 MTD to 6 MTD.
Despite this regression, Hong-Kong ranks 5th. Since last month, exports to Cyprus have tripled, increasing from 0.9 MTD to 2.6 MTD.
Imports involve mainly leather, fur skins, accessories and components by means of 255.2 MTD for leather and 79.9 MTD for accessories.
Accessories, components and shoe uppers hold the second and third positions with 79.9 MTD and 57.7 MTD, respectively.
The leather and footwear industry's first supplier of Tunisia is Italy with 205.8 MTD, or 46.3% of the overall imports, followed by France with 104.1 MTD and Germany with 44.3 MTD, and then, Spain, China and India with 16.9 MTD, 16.7 MTD and 13 MTD, respectively.
African Manager
Namibian businesses urged to tap into Polish markets
by Nyasha Francis Nyaungwa
A huge business potential exists for Namibian companies that are willing to do business with Poland and other countries in Eastern Europe, an official from the Polish trade and investment promotion section has said.
Ryszard Nowosielski said most local companies were not aware of the business potential of Eastern Europe in particular Poland, Czech Republic, Hungary and Slovakia, commonly referred to as the Vyserhrad group.
According to Nowosielski, the group is the biggest market in Eastern Europe. Its combined GDP is US$1.3 trillion with a population of 60 million people, presenting a huge business opportunity for Namibian businesses.
He said there was a big opportunity for African countries, especially Namibia that was heavily dependent on South African imports, to buy products from Poland as prices in that country are very cheap compared to other EU countries as a result of cheap transport and labour costs. The average monthly salary in Poland is US$1000, and Nowosielski reckons that Namibian companies can save about 20% in costs if they buy their products directly from Poland.
“Our lower salaries are not guaranteed for years to come, because of the opening up of the EU labour market so companies should take advantage of the lower salaries that are currently prevailing at the moment,” he added.
Poland is the biggest manufacturer of LCD TV in Europe and all the big electronic companies such as Philips and Sony are represented in that country. The country is also one of the biggest manufacturers of a number of industrial and consumer goods such as furniture, pharmaceuticals, construction materials, automotive parts, engine oils, food stuff and construction equipment.
Poland exports 80% of its products to the European Union and has a trade surplus with most of its European trading partners. In Africa, South Africa is Poland’s biggest trading partner but Nowosielski said trade with Africa was still small.
“Trade with Africa is growing fast but it is still small. There has been a 50% increase of exports to Namibia but it is still small compared to other European countries.
“For example, Poland’s trade with the other three countries in the Vyserhrad group was US$32 billion in 2010.”
Polish exports to Namibia were valued at US$266,000 in 2009 while imports from Namibia were US$7.518 million. In 2010, Polish exports to Namibia grew 400% to US$1.092 million and imports from Namibia were down to US$6.220 million.
In the first seven months of this year, exports from Poland to Namibia were valued at US$1.557 million while imports currently stand at US$4.252 million.
The Polish commercial counsellor added that there was potential for Namibian tourism to grow.
“A number of tourists are coming to South Africa then to Namibia. Last year alone there were 10 000 tourists from Poland to South Africa and there is a big opportunity for more visitors.”
Nowosielski added that a number of Polish companies are looking for big companies to partner with locally.
“We are currently talking to Pupkewitz about construction and electrical supplies. We are open for cooperation in every area. There is no limit. We are also in talks with various companies here at the show and introducing products that we can offer.
He said Polish companies are particularly interested in Namibian fish products, minerals, charcoal, grapes and some chemicals used in the manufacture of television sets.
Another official from the Polish Trade and Investment section, Slawomir Sonarski, said Poland’s offer to Namibia was very wide.
“We are offering mainly to South Africa some automotive parts. It is likely that you are also importing these parts from South Africa, so it is important for companies to import directly from Poland. The prices of automotive parts from South Africa are five times higher than in Poland so imagine the savings you can get from importing directly from Poland,” Sonarski said.
Namibia Economist
A huge business potential exists for Namibian companies that are willing to do business with Poland and other countries in Eastern Europe, an official from the Polish trade and investment promotion section has said.
Ryszard Nowosielski said most local companies were not aware of the business potential of Eastern Europe in particular Poland, Czech Republic, Hungary and Slovakia, commonly referred to as the Vyserhrad group.
According to Nowosielski, the group is the biggest market in Eastern Europe. Its combined GDP is US$1.3 trillion with a population of 60 million people, presenting a huge business opportunity for Namibian businesses.
He said there was a big opportunity for African countries, especially Namibia that was heavily dependent on South African imports, to buy products from Poland as prices in that country are very cheap compared to other EU countries as a result of cheap transport and labour costs. The average monthly salary in Poland is US$1000, and Nowosielski reckons that Namibian companies can save about 20% in costs if they buy their products directly from Poland.
“Our lower salaries are not guaranteed for years to come, because of the opening up of the EU labour market so companies should take advantage of the lower salaries that are currently prevailing at the moment,” he added.
Poland is the biggest manufacturer of LCD TV in Europe and all the big electronic companies such as Philips and Sony are represented in that country. The country is also one of the biggest manufacturers of a number of industrial and consumer goods such as furniture, pharmaceuticals, construction materials, automotive parts, engine oils, food stuff and construction equipment.
Poland exports 80% of its products to the European Union and has a trade surplus with most of its European trading partners. In Africa, South Africa is Poland’s biggest trading partner but Nowosielski said trade with Africa was still small.
“Trade with Africa is growing fast but it is still small. There has been a 50% increase of exports to Namibia but it is still small compared to other European countries.
“For example, Poland’s trade with the other three countries in the Vyserhrad group was US$32 billion in 2010.”
Polish exports to Namibia were valued at US$266,000 in 2009 while imports from Namibia were US$7.518 million. In 2010, Polish exports to Namibia grew 400% to US$1.092 million and imports from Namibia were down to US$6.220 million.
In the first seven months of this year, exports from Poland to Namibia were valued at US$1.557 million while imports currently stand at US$4.252 million.
The Polish commercial counsellor added that there was potential for Namibian tourism to grow.
“A number of tourists are coming to South Africa then to Namibia. Last year alone there were 10 000 tourists from Poland to South Africa and there is a big opportunity for more visitors.”
Nowosielski added that a number of Polish companies are looking for big companies to partner with locally.
“We are currently talking to Pupkewitz about construction and electrical supplies. We are open for cooperation in every area. There is no limit. We are also in talks with various companies here at the show and introducing products that we can offer.
He said Polish companies are particularly interested in Namibian fish products, minerals, charcoal, grapes and some chemicals used in the manufacture of television sets.
Another official from the Polish Trade and Investment section, Slawomir Sonarski, said Poland’s offer to Namibia was very wide.
“We are offering mainly to South Africa some automotive parts. It is likely that you are also importing these parts from South Africa, so it is important for companies to import directly from Poland. The prices of automotive parts from South Africa are five times higher than in Poland so imagine the savings you can get from importing directly from Poland,” Sonarski said.
Namibia Economist
South Africa promises to ratify Turkish trade deals
Turkish Prime Minister Recep Tayyip Erdogan has been on a visit to South Africa. At joint press conference with his host country's Deputy President, Kgalema Motlanthe, he called for a free trade area agreement and for the waiving of visa requirements between the two countries to increase trade.
A treaty for the promotion and protection of mutual investment was signed in 2000 but has not been implemented. Erdogan said Turkey had ratified it in 2005, but it had never been enforced because South Africa had not yet ratified it.
Erdogan said that total trade between the two countries had reached $2.7 billion in 2008, before dropping to $1.2bn in 2010 because of the global financial crisis. "The trade volume rose to 1 billion USD in the first seven months of 2011, which indicates that we will exceed last year's trade volume. We declared 2005 as the year for opening to Africa, and we have opened 24 embassies so far and planning to raise this number to 33 by 2012," he said.
Answering a question on high tariffs on Turkish goods, Motlanthe said that the relevant ministries of the two countries would work on the matter, stating that tariffs would be revised.
IOL
A treaty for the promotion and protection of mutual investment was signed in 2000 but has not been implemented. Erdogan said Turkey had ratified it in 2005, but it had never been enforced because South Africa had not yet ratified it.
Erdogan said that total trade between the two countries had reached $2.7 billion in 2008, before dropping to $1.2bn in 2010 because of the global financial crisis. "The trade volume rose to 1 billion USD in the first seven months of 2011, which indicates that we will exceed last year's trade volume. We declared 2005 as the year for opening to Africa, and we have opened 24 embassies so far and planning to raise this number to 33 by 2012," he said.
Answering a question on high tariffs on Turkish goods, Motlanthe said that the relevant ministries of the two countries would work on the matter, stating that tariffs would be revised.
IOL
South Africa's MTN Group increases shareholding in Rwanda telcom
South Africa's MTN Group has increased its stake in its Rwanda operation from 55% to 80%, buying the shareholding of Crystal Ventures and the government of Rwanda.
The shares that have changed hands represent 25% of the value of MTN Rwandacell.
Crystal Ventures will retain a 20% interest in MTN Rwanda. Crystal Ventures is said to be owned by three businessmen with close ties to president Paul Kagame. Its unclear origins to become the country's largest investment group has led some to believe it is actually a front for others in the background.
MTN Rwanda was formed 13 years ago and now has 2.7 million subscribers.
Trade Africa
The shares that have changed hands represent 25% of the value of MTN Rwandacell.
Crystal Ventures will retain a 20% interest in MTN Rwanda. Crystal Ventures is said to be owned by three businessmen with close ties to president Paul Kagame. Its unclear origins to become the country's largest investment group has led some to believe it is actually a front for others in the background.
MTN Rwanda was formed 13 years ago and now has 2.7 million subscribers.
Trade Africa
Sudan asks exporters to repay dollar gains quicker
Sudan's central bank said on October 5 export traders needed to repay
foreign currency gains made under some credit facilities within three months instead of six, the latest
measure to fight a scarcity of dollars driving up inflation.
Sudan is fighting a severe economic crisis since losing much of the country's oil revenues to South Sudan when it became independent on July 9. Khartoum witnessed two small protests against high food costs last week.
Annual inflation was 21 percent in August as the costs for food -- much of it imported -- jumped. At the same time the Sudanese pound has slid on the key black market as foreign currency inflows fall with the loss of oil revenues.
To fund exports traders can obtain dollars with a letter of credit under the condition that they return the hard currency but a trader said some businessmen had exploited the rules for currency speculation.
On the black market, the pound had recovered some ground in recent days after authorities sought to clamp down on dealers, traders said.
Reuters
Sudan is fighting a severe economic crisis since losing much of the country's oil revenues to South Sudan when it became independent on July 9. Khartoum witnessed two small protests against high food costs last week.
Annual inflation was 21 percent in August as the costs for food -- much of it imported -- jumped. At the same time the Sudanese pound has slid on the key black market as foreign currency inflows fall with the loss of oil revenues.
To fund exports traders can obtain dollars with a letter of credit under the condition that they return the hard currency but a trader said some businessmen had exploited the rules for currency speculation.
On the black market, the pound had recovered some ground in recent days after authorities sought to clamp down on dealers, traders said.
Reuters
Zambian copper mine receives $500million S African bank loan
South Africa's Standard Bank said Spetmber 30 it has provided a $500 million loan facility to Zambia's largest mining company, Konkola Copper Mines, a unit of London-listed Vedanta Resources.
The loan will be used to refinance shareholder loans from Vedanta, the bank said.
"In addition, Standard Bank is also mandated to arrange and underwrite a $700 million term loan facility to fund investment that will turn the Zambian copper miner into one of the world's leading copper producers, and provide further impetus for growth in the Zambian economy," it said in a statement.
"The funding to KCM is the single largest injection into the Zambian Copper Belt ever by a bank," said Brad Breetzke, head of mining finance at Standard Bank said.
Last year Vedanta announced a $674-million expansion at Konkola to increase output from two million to 7.5 million tonnes per year.
Times Live
The loan will be used to refinance shareholder loans from Vedanta, the bank said.
"In addition, Standard Bank is also mandated to arrange and underwrite a $700 million term loan facility to fund investment that will turn the Zambian copper miner into one of the world's leading copper producers, and provide further impetus for growth in the Zambian economy," it said in a statement.
"The funding to KCM is the single largest injection into the Zambian Copper Belt ever by a bank," said Brad Breetzke, head of mining finance at Standard Bank said.
Last year Vedanta announced a $674-million expansion at Konkola to increase output from two million to 7.5 million tonnes per year.
Times Live
Trade between South Africa and Russia is beginning to take off
by Keith Campbell
South Africa and Russia could double their trade this year in comparison to last year, indicated Russian Natural Resources and Ecology Minister Yuri Trutnev. He was speaking in Pretoria on September 29during the second and last day of the tenth meeting of the bilateral Intergovernmental Committee on Trade and Economic Cooperation (Itec).
In parallel with Itec, there was a meeting of the South Africa-Russia Business Council. “When the Business Council was formed [in 2006], it undertook the responsibility of making trade between our two countries [reach] $1-billion,” said Trutnev. “At the moment it is $300-million. “[By the end of] This year it could come to $600-million to $700-million.”
This year’s meeting of the Business Council was attended, he reported, by about 30 Russian and 70 South African companies. The Business Council is now headed, on the South African side, by Robert Gumede (executive chairperson of GijimaAST) and, on the Russian, by Vladimir Kremer (MD of Renova).
Engineering News
South Africa and Russia could double their trade this year in comparison to last year, indicated Russian Natural Resources and Ecology Minister Yuri Trutnev. He was speaking in Pretoria on September 29during the second and last day of the tenth meeting of the bilateral Intergovernmental Committee on Trade and Economic Cooperation (Itec).
In parallel with Itec, there was a meeting of the South Africa-Russia Business Council. “When the Business Council was formed [in 2006], it undertook the responsibility of making trade between our two countries [reach] $1-billion,” said Trutnev. “At the moment it is $300-million. “[By the end of] This year it could come to $600-million to $700-million.”
This year’s meeting of the Business Council was attended, he reported, by about 30 Russian and 70 South African companies. The Business Council is now headed, on the South African side, by Robert Gumede (executive chairperson of GijimaAST) and, on the Russian, by Vladimir Kremer (MD of Renova).
Engineering News
China, Senegal sign electricity generation deal
Power generation capacity of the Senegalese national electricity company - Senegal and China on September 30 signed an agreement for eight billion FCFA (US$16 million) to improve the power generation capacity of the Senegalese national electricity company (SENELEC) and the building of a hospital in Diamniadio, 40 km from the capital Dakar.
Half of the money will help SENELEC acquire 50 generators and improve its production capacity to end power cuts noted in the region of Dakar.
The region of Kédougou in the south-east, Kolda in the south and Tambacounda in the east would also benefit from new power generation equipment.
The rest of the money will be allocated to the building of a paediatric hospital in Diamniadio.
Afriquejet
Half of the money will help SENELEC acquire 50 generators and improve its production capacity to end power cuts noted in the region of Dakar.
The region of Kédougou in the south-east, Kolda in the south and Tambacounda in the east would also benefit from new power generation equipment.
The rest of the money will be allocated to the building of a paediatric hospital in Diamniadio.
Afriquejet
Cameroon: On eve of election, incumbent promises focus on agriculture
by Pius Lukong and Emily Bowers
Cameroon’s Paul Biya may extend his 29-year rule in an election on Oct. 9 as the splintered opposition fails to take advantage of slumping oil production and the government’s inability to meet poverty reduction goals.
Biya, 78, of the Cameroon People’s Democratic Movement, will compete against 22 candidates for the support of 7.5 million registered voters. His main challenger is John Fru Ndi who is representing the Social Democratic Front party in his third bid for the presidency.
As Africa’s fourth-longest sitting leader, Biya has consolidated power, benefiting from a divided opposition to seek another seven-year term. He is pledging to boost investment in agriculture in a country where half the population make a living from farming and spur economic growth that the World Bank says isn’t fast enough to cut poverty.
While the International Monetary Fund estimates growth will accelerate to 3.8 percent this year from 3.2 percent in 2010, that’s still less than the 5.2 percent expansion in sub-Saharan Africa. The economy is forecast by the IMF to grow 4.5 percent in 2012, compared with 5.8 percent for the region.
Given its current growth trajectory, Cameroon won’t meet goals set by the United Nations to halve poverty by 2015, according to the World Bank.
Biya, who won 71 percent support in the 2004 election, is the longest-serving African leader currently in power after Teodoro Obiang Nguema Mbasogo of Equatorial Guinea, Angola’s Jose Eduardo dos Santos and Robert Mugabe of Zimbabwe.
Cameroon, which borders six other nations on Africa’s West coast, generates about 35 percent of its foreign income from oil, according to the Institute for Security Studies, based in South Africa’s capital, Pretoria. Agriculture makes up about a third of the economy, employs 50 percent of the population and is the source of half of export earnings.
BowLeven Plc, based in Edinburgh, is drilling for oil in Cameroon. Switzerland’s Barry Callebaut AG owns Cameroon’s sole cocoa-processing plant, Sic-Cocoa, with the government. Oil output fell to 5.3 million barrels in the first quarter from 6 million barrels in the same period in 2010, the state-owned National Hydrocarbons Corp. said on May 18.
Both Biya and Fru Ndi have pledged to boost agriculture in Cameroon, which follows Ivory Coast, Ghana and Nigeria as the continent’s fourth-biggest cocoa producer. Cameroon produces arabica and robusta varieties of coffee as well as palm oil.
Biya pledged to created boost youth employment in agriculture to 165,000 by 2014 by boosting farming, cutting taxes on some exports and lowering customs duties on imports of industry equipment, he said in a campaign speech Oct. 4. Fru Ndi also promised to create jobs for young Cameroonians and expand a public health-care program, according to an Oct. 3 report on state-owned broadcaster Cameroonian Radio Television Corp.
Bloomberg
Cameroon’s Paul Biya may extend his 29-year rule in an election on Oct. 9 as the splintered opposition fails to take advantage of slumping oil production and the government’s inability to meet poverty reduction goals.
Biya, 78, of the Cameroon People’s Democratic Movement, will compete against 22 candidates for the support of 7.5 million registered voters. His main challenger is John Fru Ndi who is representing the Social Democratic Front party in his third bid for the presidency.
As Africa’s fourth-longest sitting leader, Biya has consolidated power, benefiting from a divided opposition to seek another seven-year term. He is pledging to boost investment in agriculture in a country where half the population make a living from farming and spur economic growth that the World Bank says isn’t fast enough to cut poverty.
While the International Monetary Fund estimates growth will accelerate to 3.8 percent this year from 3.2 percent in 2010, that’s still less than the 5.2 percent expansion in sub-Saharan Africa. The economy is forecast by the IMF to grow 4.5 percent in 2012, compared with 5.8 percent for the region.
Given its current growth trajectory, Cameroon won’t meet goals set by the United Nations to halve poverty by 2015, according to the World Bank.
Biya, who won 71 percent support in the 2004 election, is the longest-serving African leader currently in power after Teodoro Obiang Nguema Mbasogo of Equatorial Guinea, Angola’s Jose Eduardo dos Santos and Robert Mugabe of Zimbabwe.
Cameroon, which borders six other nations on Africa’s West coast, generates about 35 percent of its foreign income from oil, according to the Institute for Security Studies, based in South Africa’s capital, Pretoria. Agriculture makes up about a third of the economy, employs 50 percent of the population and is the source of half of export earnings.
BowLeven Plc, based in Edinburgh, is drilling for oil in Cameroon. Switzerland’s Barry Callebaut AG owns Cameroon’s sole cocoa-processing plant, Sic-Cocoa, with the government. Oil output fell to 5.3 million barrels in the first quarter from 6 million barrels in the same period in 2010, the state-owned National Hydrocarbons Corp. said on May 18.
Both Biya and Fru Ndi have pledged to boost agriculture in Cameroon, which follows Ivory Coast, Ghana and Nigeria as the continent’s fourth-biggest cocoa producer. Cameroon produces arabica and robusta varieties of coffee as well as palm oil.
Biya pledged to created boost youth employment in agriculture to 165,000 by 2014 by boosting farming, cutting taxes on some exports and lowering customs duties on imports of industry equipment, he said in a campaign speech Oct. 4. Fru Ndi also promised to create jobs for young Cameroonians and expand a public health-care program, according to an Oct. 3 report on state-owned broadcaster Cameroonian Radio Television Corp.
Bloomberg
Nigeria's Dangote begins $115 million cement project in Cameroon
by Stan Okenwa
Nigeria's Aliko Dangote is investing $115 million in a new cement plant in neighboring Cameroon. Dangote is also eyeing another $585 million in investments in the Central Africa Republic, after other massive recent investments in other countries including Senegal and Zambia.
Sketchy details secured from a confidant revealed that the new plant will be built in Cameroon's economic capital and port city of Douala. It will produce some 1.5 million tonnes of cement per year, thereby raising total value of Dangote group in that country to about $700 million.
Cameroon 's government and Dangote had agreed earlier this year on a $100 million cement plant, but the project's terms had since been expanded. Cameroon currently has only one cement producing company, CIMENCAM, with output of about 1 million tonnes from two plants.
Daily Graphic
Nigeria's Aliko Dangote is investing $115 million in a new cement plant in neighboring Cameroon. Dangote is also eyeing another $585 million in investments in the Central Africa Republic, after other massive recent investments in other countries including Senegal and Zambia.
Sketchy details secured from a confidant revealed that the new plant will be built in Cameroon's economic capital and port city of Douala. It will produce some 1.5 million tonnes of cement per year, thereby raising total value of Dangote group in that country to about $700 million.
Cameroon 's government and Dangote had agreed earlier this year on a $100 million cement plant, but the project's terms had since been expanded. Cameroon currently has only one cement producing company, CIMENCAM, with output of about 1 million tonnes from two plants.
Daily Graphic
80% of Botswana's non-mineral exports go to South Africa
by Mbongei Mguni
Botswana Export Development and Investment Authority (BEDIA)-assisted private sector entities have exported goods valued at P380.8 million (1 pula = 0.1371 U.S. dollars) since the 2011/12 financial year began in April, with South Africa the most preferred destination.
According to figures provided by BEDIA, South Africa accounted for 82 percent of exports by the private sector companies between April and August, representing latest available statistics. BEDIA-assisted exports are considered representative of the country's non-core exports, stemming from the agency's export development programme involving numerous private sector players. Botswana's core exports include diamonds, tourism, copper/nickel, gold, textiles and tourism.
While the data reflects a cracking start to the year when compared to the P365 million exported in 2010/11, it also belies the fact that goods sold are still skewed towards minerals.
According to the data, the P312.8 million exported to South Africa since April consists largely of soda ash and salt mined in Sowa Town. For the same period, BEDIA-assisted exports, excluding soda ash and salt, amount to approximately P111 million or less than a third of total exports.
According to Botswana Ash, the country's sole producer of soda ash and salt, most of its production is secured in contract to South African and Zimbabwean manufacturers. Its coarse and fine salt is also popular in South Africa, Zimbabwe, Zambia and the DRC.
BEDIA's Acting CEO, Lameck Nthekela, explained South Africa's allure for local exporters thus: "South Africa is the largest market partly because it's within SACU where exports are duty free and also because of its proximity. Prior to this, beef, beef by-products and leather were popular, but they have declined," he told journalists on Monday.
However, beef could soon be making a comeback as discussions with Angolan and Mozambican authorities for supply arrangements were still underway, Nthekela said. "The BMC recently had large orders from the Mozambique market," he revealed. "Last year, the Commission did not sell to Mozambique; but this year, due to the investment mission, they have secured orders. The Mozambicans' only other supplier has been Swaziland."
Nthekela and his senior management were quick to explain that several other local products were proving popular on the international market. These included fruit juices, maize meal, cooking utensils, bottled water, motorboats, animal medication, pasta, cosmetics, chemical products, tobacco flavouring extracts and electric cables.
According to BEDIA data, Hong Kong and Japan were the destinations of tobacco flavouring extracts produced in Francistown while condoms, military type gear and other products were heading to South Africa. Pasta products and maize meal were being exported to the DRC, Namibia and Angola, while another local company was building a thriving business in Angola for polyethylene tanks and pipes.
Since April, Zimbabwe, the DRC and Hong Kong have been the biggest market for local exports after South Africa.According to BEDIA data, exports to Zimbabwe for all products amounted to P27.5 million, to the DRC P12.5 million, Hong Kong P11 million and Angola P5.4 million.
When soda ash and salt are excluded, the most important export destinations for BEDIA-assisted companies are South Africa, Hong Kong, Zimbabwe and Angola, in descending order.
Together with the services sector led by the multi-billion Pula tourism and hospitality sector, non-mining continues to widen the country's GDP base.
Numerous economists have stressed that non-mining exports were essential as the principal mining commodities such as diamonds and base metals are frequently exposed to the vagaries of global markets.
Mmegi
Botswana Export Development and Investment Authority (BEDIA)-assisted private sector entities have exported goods valued at P380.8 million (1 pula = 0.1371 U.S. dollars) since the 2011/12 financial year began in April, with South Africa the most preferred destination.
According to figures provided by BEDIA, South Africa accounted for 82 percent of exports by the private sector companies between April and August, representing latest available statistics. BEDIA-assisted exports are considered representative of the country's non-core exports, stemming from the agency's export development programme involving numerous private sector players. Botswana's core exports include diamonds, tourism, copper/nickel, gold, textiles and tourism.
While the data reflects a cracking start to the year when compared to the P365 million exported in 2010/11, it also belies the fact that goods sold are still skewed towards minerals.
According to the data, the P312.8 million exported to South Africa since April consists largely of soda ash and salt mined in Sowa Town. For the same period, BEDIA-assisted exports, excluding soda ash and salt, amount to approximately P111 million or less than a third of total exports.
According to Botswana Ash, the country's sole producer of soda ash and salt, most of its production is secured in contract to South African and Zimbabwean manufacturers. Its coarse and fine salt is also popular in South Africa, Zimbabwe, Zambia and the DRC.
BEDIA's Acting CEO, Lameck Nthekela, explained South Africa's allure for local exporters thus: "South Africa is the largest market partly because it's within SACU where exports are duty free and also because of its proximity. Prior to this, beef, beef by-products and leather were popular, but they have declined," he told journalists on Monday.
However, beef could soon be making a comeback as discussions with Angolan and Mozambican authorities for supply arrangements were still underway, Nthekela said. "The BMC recently had large orders from the Mozambique market," he revealed. "Last year, the Commission did not sell to Mozambique; but this year, due to the investment mission, they have secured orders. The Mozambicans' only other supplier has been Swaziland."
Nthekela and his senior management were quick to explain that several other local products were proving popular on the international market. These included fruit juices, maize meal, cooking utensils, bottled water, motorboats, animal medication, pasta, cosmetics, chemical products, tobacco flavouring extracts and electric cables.
According to BEDIA data, Hong Kong and Japan were the destinations of tobacco flavouring extracts produced in Francistown while condoms, military type gear and other products were heading to South Africa. Pasta products and maize meal were being exported to the DRC, Namibia and Angola, while another local company was building a thriving business in Angola for polyethylene tanks and pipes.
Since April, Zimbabwe, the DRC and Hong Kong have been the biggest market for local exports after South Africa.According to BEDIA data, exports to Zimbabwe for all products amounted to P27.5 million, to the DRC P12.5 million, Hong Kong P11 million and Angola P5.4 million.
When soda ash and salt are excluded, the most important export destinations for BEDIA-assisted companies are South Africa, Hong Kong, Zimbabwe and Angola, in descending order.
Together with the services sector led by the multi-billion Pula tourism and hospitality sector, non-mining continues to widen the country's GDP base.
Numerous economists have stressed that non-mining exports were essential as the principal mining commodities such as diamonds and base metals are frequently exposed to the vagaries of global markets.
Mmegi
The deadly impact of piracy on trade
by Ben Coetzee
Trade in Sub-Saharan Africa is slowly but surely
starting to suffer the dire consequences of the stranglehold piracy has
placed on the shipping lanes on both the east and the west coasts of
Africa.
While, during the recent past, most of the efforts to curb piracy
were focussed on the Gulf of Aden and the larger Somalia coastline, a
new threat was developing on the continent’s west coast. Although still
in its infancy stage, this new development may have serious implications
for the continued economic development in Sub-Saharan Africa.
The sustained escalation of incidents of piracy has the potential to strangle international trade around the African coastline, inadvertently causing significant collateral damage to developing countries and countries that have only recently emerged from long civil wars and internal strife.
Shipping companies will have to begin considering alternative shipping routes if their assets are threatened on both the east and west coasts of Africa. It might be more cost effective to take the longer route through the Panama Canal. It might even be safer to take the route through the Suez Canal, even if there is a threat of piracy on entering the Gulf of Aden - at least there will be an international fleet to deter some of the pirates, and this threat will only occur once. The long route around the Southern tip of Africa increases the vulnerability of cargo and personnel on both the east and west coasts, thus presenting a greater chance of attacks from pirates.
Africa must urgently put efforts into the development and deployment of anti-piracy naval and air resources and technical expertise. If Africa wants to ensure that it continues to grow and prosper, this threat has to be addressed head-on. Southern Africa must expedite its response to piracy if it would like to protect its inhabitants from the financial impact of a sustained “War on Piracy” and the associated drain on resources that should have been used to alleviate poverty in the region.
From an economic point of view, having Africa’s access to internationally developed materials such as nuclear reactors, vehicles, tractors, imported and exported food, and other materials reduced will be devastating. More worrying is the impact of a decrease in exports of natural resources from African countries. How will countries generate income to build their nations if there is no opportunity to export their scarce products to the international markets? How will these countries gain access to international funding and loan institutions? And more to the point, how will countries generate funds to pay back existing loans and agreements if they are unable to sell their resources?
Countries with oil and gas resources might feel that they are exempt from the impact of piracy. These countries, however, have to consider that the infrastructure to harvest their natural resources was shipped in from international markets. The expertise to develop, improve and maintain these systems on a technical level, in most cases, does not reside within the countries where these products are used. A pro-active approach against piracy is thus urgently needed to prevent its potential negative impact on much-needed imports.
The sustained escalation of incidents of piracy has the potential to strangle international trade around the African coastline, inadvertently causing significant collateral damage to developing countries and countries that have only recently emerged from long civil wars and internal strife.
Shipping companies will have to begin considering alternative shipping routes if their assets are threatened on both the east and west coasts of Africa. It might be more cost effective to take the longer route through the Panama Canal. It might even be safer to take the route through the Suez Canal, even if there is a threat of piracy on entering the Gulf of Aden - at least there will be an international fleet to deter some of the pirates, and this threat will only occur once. The long route around the Southern tip of Africa increases the vulnerability of cargo and personnel on both the east and west coasts, thus presenting a greater chance of attacks from pirates.
Africa must urgently put efforts into the development and deployment of anti-piracy naval and air resources and technical expertise. If Africa wants to ensure that it continues to grow and prosper, this threat has to be addressed head-on. Southern Africa must expedite its response to piracy if it would like to protect its inhabitants from the financial impact of a sustained “War on Piracy” and the associated drain on resources that should have been used to alleviate poverty in the region.
From an economic point of view, having Africa’s access to internationally developed materials such as nuclear reactors, vehicles, tractors, imported and exported food, and other materials reduced will be devastating. More worrying is the impact of a decrease in exports of natural resources from African countries. How will countries generate income to build their nations if there is no opportunity to export their scarce products to the international markets? How will these countries gain access to international funding and loan institutions? And more to the point, how will countries generate funds to pay back existing loans and agreements if they are unable to sell their resources?
Countries with oil and gas resources might feel that they are exempt from the impact of piracy. These countries, however, have to consider that the infrastructure to harvest their natural resources was shipped in from international markets. The expertise to develop, improve and maintain these systems on a technical level, in most cases, does not reside within the countries where these products are used. A pro-active approach against piracy is thus urgently needed to prevent its potential negative impact on much-needed imports.
Institute for Security Studies
Ghana explores increased trade with Sweden
On 27 September, Swedish Minister for Trade Ewa Björling received a trade delegation from Ghana, headed by Minister for Trade and Industry Hanna Tetteh. Their meeting focused on potential ways of increasing trade between Sweden and Ghana.
Ghana is Sweden's third largest trading partner in sub-Saharan Africa. In 2010, exports to Ghana were worth over SEK 1.3 billion (1 Swedish krona = 0.14713 U.S. dollars). At present, Swedish business interests are mainly concentrated on ICT and mining, but smaller companies in other industries have also set up operations in the country. One such example is Viasat, which is attempting to break into the Ghanaian television market.
Over 20 Swedish companies currently have offices in the country. There is a great deal of interest in Swedish environmental expertise, as is evident, for example, in the project that the Raw Materials Group is running together with Ghana s Environmental Protection Agency on recycling of electronic waste.
StarAfrica
Ghana is Sweden's third largest trading partner in sub-Saharan Africa. In 2010, exports to Ghana were worth over SEK 1.3 billion (1 Swedish krona = 0.14713 U.S. dollars). At present, Swedish business interests are mainly concentrated on ICT and mining, but smaller companies in other industries have also set up operations in the country. One such example is Viasat, which is attempting to break into the Ghanaian television market.
Over 20 Swedish companies currently have offices in the country. There is a great deal of interest in Swedish environmental expertise, as is evident, for example, in the project that the Raw Materials Group is running together with Ghana s Environmental Protection Agency on recycling of electronic waste.
StarAfrica
Western scramble for oil spoils of Libyan war fully on
Western oil companies have not wasted time to seek to benefit from their government's participation in the recent overthrow of Libyan dictator Muammar Gaddafi. The main prize: Libya's vast, mostly still unexplored oil deposits.
London-based oil and gas explorer Heritage Oil PLC became the first new foreign firm to strike a post-Gaddafi oil deal with the announced purchase of a 51% stake in Benghazi-based Sahara Oil Services Holdings Ltd. Established oil companies like Total SA and ENI SpA have resumed some production in Libya, although the latter has reported major damage to its installations that may delay full resumption for months.
A report in Britain's Independent newspaper says ''new oil companies are salivating at the prospect of joining them in exploring the country with the largest oil reserves in Africa.''
Heritage said it was buying its stake in Sahara for $19.5 million in cash, and that the deal would mean the firm will be "well placed to play a significant role in the future oil and gas industry in Libya."
The Independent reports that the company has a track record of going into volatile environments with a view to gaining an early advantage over larger competitors. Chief Executive Anthony Buckingham, a former North Sea diver, founded Heritage in 1993 to explore offshore oil and gas interests in Angola. Controversially, it engaged private military contractors to defeat Unita rebels who had overrun its installations there.
Heritage said it has spent the past five months in Benghazi, former capital and stronghold of the National Transitional Council that overthrew Gadhafi's regime in August. Heritage said it had established a dialogue with senior NTC members during this time, discussions which it said are continuing through Sahara, "with Heritage exploring ways to assist the NTC and the state oil companies rehabilitate certain of their existing fields and recommence production."
But it remains unclear how welcome Heritage will be in Libya. The National Oil Company (NOC) declared the deal void the day after Heritage announced.
Trade Africa
London-based oil and gas explorer Heritage Oil PLC became the first new foreign firm to strike a post-Gaddafi oil deal with the announced purchase of a 51% stake in Benghazi-based Sahara Oil Services Holdings Ltd. Established oil companies like Total SA and ENI SpA have resumed some production in Libya, although the latter has reported major damage to its installations that may delay full resumption for months.
A report in Britain's Independent newspaper says ''new oil companies are salivating at the prospect of joining them in exploring the country with the largest oil reserves in Africa.''
Heritage said it was buying its stake in Sahara for $19.5 million in cash, and that the deal would mean the firm will be "well placed to play a significant role in the future oil and gas industry in Libya."
The Independent reports that the company has a track record of going into volatile environments with a view to gaining an early advantage over larger competitors. Chief Executive Anthony Buckingham, a former North Sea diver, founded Heritage in 1993 to explore offshore oil and gas interests in Angola. Controversially, it engaged private military contractors to defeat Unita rebels who had overrun its installations there.
Heritage said it has spent the past five months in Benghazi, former capital and stronghold of the National Transitional Council that overthrew Gadhafi's regime in August. Heritage said it had established a dialogue with senior NTC members during this time, discussions which it said are continuing through Sahara, "with Heritage exploring ways to assist the NTC and the state oil companies rehabilitate certain of their existing fields and recommence production."
But it remains unclear how welcome Heritage will be in Libya. The National Oil Company (NOC) declared the deal void the day after Heritage announced.
Trade Africa
Why Fairtrade is an unfair deal
by Tim Black
Confectionery company Mars has announced that the UK’s third-favourite chocolate brand, Maltesers, will from April 2012 carry the Fairtrade logo. You can almost hear the whoops of joy from those who frown upon plastic bags, drink ethically sourced coffee and think that having a KFC burger is a form of chicken torture.
In the minds of those who literally buy into ethical shopping, the relationship between consumption and production has never been more magical. It is almost as if the conditions of production are present in the very act of consuming. Just think: with every purchase of a bag of Maltesers, or indeed the similarly Fairtrade-ified Cadbury’s Dairy Milk or the four-finger KitKat, ethical shoppers are not only getting some chocolate; they are helping out the poor cocoa farmers of the developing world, too.
They are not just buying a lunchtime treat; they are ensuring that vanilla planters in Madagascar will be wearing big smiles as they grow and hand pick thousands of vanilla pods. They are not simply planning on seeing how many Maltesers they can get in their mouths all at once; they are sweetening the lives of Paraguayan sugar growers.
Fiona Dawson, the UK managing director of Mars Chocolate, was certainly convinced of the marketing benefits of getting in on the Fairtrade racket: ‘Consumers have been saying for many years that they want and expect big brands to do the right thing. They care deeply about where their food comes from.’ And now consumers will know where their food comes from because the Fairtrade logo tells them: it comes from places they no longer need to feel guilty about. This is literally ‘retail therapy’, where the righteous shopper gets their goods with a side order of penance thrown in.
It doesn’t take a psychologist to notice that there is something more than a bit narcissistic about ethical, Fairtrade-conscious shopping. It really is all about ‘us.’ Yes, there may be a lot of accompanying PR guff about how our consumer choices over here are making their lives better over there, in Africa for instance. But as it is conceived here, the world of production, whether one is thinking of the harvesting of sugar beet or the farming of cocoa, functions as little more than a mirror in which we are encouraged to see ourselves – see ourselves, that is, as good, as morally virtuous. This is not feelgood shopping. This is feel-good-about-yourself shopping.
But in reality, is there much to feel good about? Is the me, me, me nature of ethical shopping blinding us to the reality of Fairtrade?
The purpose of the Fairtrade Foundation, we are told, is to guarantee that the producer gets a good deal. The Fairtrade-labelling system, then, is meant to assure us that, when we buy something with the Fairtrade logo, the producers get a better cut of the cash than they would do otherwise. So we effectively pay a little bit more - hence the price premium - to feel a whole lot better about our purchases. Or at least that’s the theory.
But as researchers pointed out earlier this year, the actuality of Fairtrade is not quite as easy on the self-regarding eye of ethical shoppers as the Fairtrade Foundation would have us believe. For a start, it has been suggested that only 25 per cent of the premium price paid for Fairtrade products reaches the producers. Not only that, already-poor farmers actually have to pay to join up to the Fairtrade scheme. And in doing so, they also have to ensure that their business meets certain requirements, whether it is in their long-term interests or not.
And here we come to the main problem. The Fairtrade Foundation demands certain things of the producers if they are to be accepted on to the scheme. For example, producers have to employ what the Fairtrade Foundation deems to be ‘environmentally sound agricultural practices’ and, to qualify as small producers, they have to ‘rely mainly on their own or their family’s labour.’
It’s almost cruelly ironic: while champions of Fairtrade claim it is freeing producers from the exploitative relations of the market, it simultaneously ties them into the oppressive and exploitative moral relations of ‘us’ and ‘them.’ They have to stick to the letter of ‘our’ vision of the world, in all its sustainable, anti-growth glory. That is, in exchange for a marginally better deal on the market, producers have to adhere to what the Fairtrade Foundation deems to be the right way of farming or harvesting.
This effectively condemns producers desperate for a bit more cash to a low level of material and economic development. In the Fairtrade vision of production, you can forget about the large-scale industrialised production of cocoa; you can forget about the crop-protecting usage of pesticides. What Fairtrade insists upon instead is small-scale cottage industry free of anything that looks too modern, let alone chemical. As Patrick Hayes noted a couple of years ago, citing a WORLDwrite film called The Bitter Aftertaste, Fairtrade locks many Africans into non-mechanised, back-breaking cheap labour ‘as they cull weeds by hand rather than being able to destroy them with chemicals’.
So while Fairtrade might make us feel good when shopping, it does nothing of the sort for those doing the producing. Which is something to bear in mind when enjoying a bag of non-Fairtrade Skittles.
Spiked
Confectionery company Mars has announced that the UK’s third-favourite chocolate brand, Maltesers, will from April 2012 carry the Fairtrade logo. You can almost hear the whoops of joy from those who frown upon plastic bags, drink ethically sourced coffee and think that having a KFC burger is a form of chicken torture.
In the minds of those who literally buy into ethical shopping, the relationship between consumption and production has never been more magical. It is almost as if the conditions of production are present in the very act of consuming. Just think: with every purchase of a bag of Maltesers, or indeed the similarly Fairtrade-ified Cadbury’s Dairy Milk or the four-finger KitKat, ethical shoppers are not only getting some chocolate; they are helping out the poor cocoa farmers of the developing world, too.
They are not just buying a lunchtime treat; they are ensuring that vanilla planters in Madagascar will be wearing big smiles as they grow and hand pick thousands of vanilla pods. They are not simply planning on seeing how many Maltesers they can get in their mouths all at once; they are sweetening the lives of Paraguayan sugar growers.
Fiona Dawson, the UK managing director of Mars Chocolate, was certainly convinced of the marketing benefits of getting in on the Fairtrade racket: ‘Consumers have been saying for many years that they want and expect big brands to do the right thing. They care deeply about where their food comes from.’ And now consumers will know where their food comes from because the Fairtrade logo tells them: it comes from places they no longer need to feel guilty about. This is literally ‘retail therapy’, where the righteous shopper gets their goods with a side order of penance thrown in.
It doesn’t take a psychologist to notice that there is something more than a bit narcissistic about ethical, Fairtrade-conscious shopping. It really is all about ‘us.’ Yes, there may be a lot of accompanying PR guff about how our consumer choices over here are making their lives better over there, in Africa for instance. But as it is conceived here, the world of production, whether one is thinking of the harvesting of sugar beet or the farming of cocoa, functions as little more than a mirror in which we are encouraged to see ourselves – see ourselves, that is, as good, as morally virtuous. This is not feelgood shopping. This is feel-good-about-yourself shopping.
But in reality, is there much to feel good about? Is the me, me, me nature of ethical shopping blinding us to the reality of Fairtrade?
The purpose of the Fairtrade Foundation, we are told, is to guarantee that the producer gets a good deal. The Fairtrade-labelling system, then, is meant to assure us that, when we buy something with the Fairtrade logo, the producers get a better cut of the cash than they would do otherwise. So we effectively pay a little bit more - hence the price premium - to feel a whole lot better about our purchases. Or at least that’s the theory.
But as researchers pointed out earlier this year, the actuality of Fairtrade is not quite as easy on the self-regarding eye of ethical shoppers as the Fairtrade Foundation would have us believe. For a start, it has been suggested that only 25 per cent of the premium price paid for Fairtrade products reaches the producers. Not only that, already-poor farmers actually have to pay to join up to the Fairtrade scheme. And in doing so, they also have to ensure that their business meets certain requirements, whether it is in their long-term interests or not.
And here we come to the main problem. The Fairtrade Foundation demands certain things of the producers if they are to be accepted on to the scheme. For example, producers have to employ what the Fairtrade Foundation deems to be ‘environmentally sound agricultural practices’ and, to qualify as small producers, they have to ‘rely mainly on their own or their family’s labour.’
It’s almost cruelly ironic: while champions of Fairtrade claim it is freeing producers from the exploitative relations of the market, it simultaneously ties them into the oppressive and exploitative moral relations of ‘us’ and ‘them.’ They have to stick to the letter of ‘our’ vision of the world, in all its sustainable, anti-growth glory. That is, in exchange for a marginally better deal on the market, producers have to adhere to what the Fairtrade Foundation deems to be the right way of farming or harvesting.
This effectively condemns producers desperate for a bit more cash to a low level of material and economic development. In the Fairtrade vision of production, you can forget about the large-scale industrialised production of cocoa; you can forget about the crop-protecting usage of pesticides. What Fairtrade insists upon instead is small-scale cottage industry free of anything that looks too modern, let alone chemical. As Patrick Hayes noted a couple of years ago, citing a WORLDwrite film called The Bitter Aftertaste, Fairtrade locks many Africans into non-mechanised, back-breaking cheap labour ‘as they cull weeds by hand rather than being able to destroy them with chemicals’.
So while Fairtrade might make us feel good when shopping, it does nothing of the sort for those doing the producing. Which is something to bear in mind when enjoying a bag of non-Fairtrade Skittles.
Spiked
South Africa eyes 10 percent growth in trade with Macau
by Alexandra Lages
South Africa is looking for a year-on-year increase of 10 percent in trade with Macau, said Gregg Munyai, economic counsellor at the Embassy of the Republic of South Africa in China.
“The trade between the two parties is very low. In truth we had an increase of over 20 percent last year but it is still very low. We are looking forward to increase trade by 10 percent every year from now on,” said Munyai.
Last year, total trade between South Africa and Macau increased by 22.6 percent to around USD 2.9 million.
“There is a lot of potential for trade co-operation between South Africa and Macau,” the South African consul-general to Hong Kong and Macau, Nomatemba Tambo, said.
She singled out the prospects for South Africa’s wine industry, stressing that in 2010 Macau imported wine to the tune of “around USD 170 million,” up by 50 percent from the previous year.
“Last year wine imports from South Africa have gone up by 45 percent to around USD 150,000,” Tambo added.
“With a growing retail market with over 20 million tourists annually, Macau can provide lucrative export opportunities for African wine and other luxury consumer products,” the consul stated.
Food and gaming are other areas that offer trade opportunities for South Africa and Macau. Munyai pointed out that the country has recently enacted the gaming law permitting live gambling.
‘Macau business people who have gambling expertise can invest in these small areas and also in the entertainment industry in South Africa’
Competition from mainland China is a big challenge for these investors. “The biggest one [challenge] is delivery time, because we are very far away from Macau so we cannot very easily compete with the Mainland.”
“We need to have value-added goods that Macau can only get in South Africa, maybe jewellery,” Munyai said.
On the other hand South Africa is trying to attract Macau investors. “We want to encourage the Macau business community to look at South Africa as reliable for investment,” Tambo urged, adding that the main areas are mining, food, electric equipment, among others.
What South Africa is really trying to do is boost trade with mainland China, using Macau as a gateway, Munyai admitted.
“Macau’s business language is similar to South Africa. Language barriers always become a problem in trade relations. We have a Portuguese community within South Africa who is also in business so Macau can help South Africa penetrate China,” he stressed.
South Africa is looking at increasing exports to China in order to balance an import deficit. “We have more or less a USD 10 billion net trade in favour of China so we want to balance that,” he said.
So far the main export from South Africa is raw materials. “We are looking at value-added [products] into China,” he added.
However China’s non-tariff barriers such as high import duties employed to restrict imports are still a challenge for both economic sectors. “Another one is that traditionally South Africa has been focused on Europe so it’s a challenge for us to look East,” he added.
South Africa is mostly looking for Chinese investment in clean energy technology, transportation, car manufacturing, water desalinisation and textile.
Macau Daily Times
South Africa is looking for a year-on-year increase of 10 percent in trade with Macau, said Gregg Munyai, economic counsellor at the Embassy of the Republic of South Africa in China.
“The trade between the two parties is very low. In truth we had an increase of over 20 percent last year but it is still very low. We are looking forward to increase trade by 10 percent every year from now on,” said Munyai.
Last year, total trade between South Africa and Macau increased by 22.6 percent to around USD 2.9 million.
“There is a lot of potential for trade co-operation between South Africa and Macau,” the South African consul-general to Hong Kong and Macau, Nomatemba Tambo, said.
She singled out the prospects for South Africa’s wine industry, stressing that in 2010 Macau imported wine to the tune of “around USD 170 million,” up by 50 percent from the previous year.
“Last year wine imports from South Africa have gone up by 45 percent to around USD 150,000,” Tambo added.
“With a growing retail market with over 20 million tourists annually, Macau can provide lucrative export opportunities for African wine and other luxury consumer products,” the consul stated.
Food and gaming are other areas that offer trade opportunities for South Africa and Macau. Munyai pointed out that the country has recently enacted the gaming law permitting live gambling.
‘Macau business people who have gambling expertise can invest in these small areas and also in the entertainment industry in South Africa’
Competition from mainland China is a big challenge for these investors. “The biggest one [challenge] is delivery time, because we are very far away from Macau so we cannot very easily compete with the Mainland.”
“We need to have value-added goods that Macau can only get in South Africa, maybe jewellery,” Munyai said.
On the other hand South Africa is trying to attract Macau investors. “We want to encourage the Macau business community to look at South Africa as reliable for investment,” Tambo urged, adding that the main areas are mining, food, electric equipment, among others.
What South Africa is really trying to do is boost trade with mainland China, using Macau as a gateway, Munyai admitted.
“Macau’s business language is similar to South Africa. Language barriers always become a problem in trade relations. We have a Portuguese community within South Africa who is also in business so Macau can help South Africa penetrate China,” he stressed.
South Africa is looking at increasing exports to China in order to balance an import deficit. “We have more or less a USD 10 billion net trade in favour of China so we want to balance that,” he said.
So far the main export from South Africa is raw materials. “We are looking at value-added [products] into China,” he added.
However China’s non-tariff barriers such as high import duties employed to restrict imports are still a challenge for both economic sectors. “Another one is that traditionally South Africa has been focused on Europe so it’s a challenge for us to look East,” he added.
South Africa is mostly looking for Chinese investment in clean energy technology, transportation, car manufacturing, water desalinisation and textile.
Macau Daily Times
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