1 National bar code introduced in Tanzania
2 Senegal targets Mali minerals with $1.6 billion railway plan
3 Undersea undersea fiber-optic cable project links Africa with three continents
4 China, East Africa Community in new $500m trade, investment deal
5 Gambian Central Bank cautions about China, India as “new creditors” to poor countries
6 Kenya frees more trade partners from double tax
7 Emirates SkyCargo launches African freight route
8 Africa wants to be like Europe without the currency
9 South Korean company acquires Senegalese tuna cannery
10 Fortunes, and tables, turn for Portugal and Angola
11 African countries urged to ease trade within the continent
12 As rich world sputters, Brazil looks to Africa
13 The WTO has failed developing nations
14 The AGOA problem: Africa's hidden secret
15 $500 million South Africa-Oman joint fund in the pipeline
16 Angola passes law to force oil firms to use local banks
November 29, 2011
National bar code introduced in Tanzania
by Sebastian Mrindoko
Demand for locally made goods is likely to increase as more firms have registered with the GS1 (TZ) National Limited for bar code product identification in export markets and global retail chains. With the bar-code, one can trace the manufacturer, the date the goods were manufactured, where they were manufactured and the contents or ingredients used in the manufacture.
It is believed that this should go a long way in promoting Tanzania’s products world-wide. For example, the nation incurred huge losses when the European Union banned exports of fish fillets from East Africa. If there were proper records about the production chain, all countries could not have suffered that blanket punishment.
Announcing the progress so far made by the local business community in adopting the bar code technology, last week the GS1 (TZ) National Limited Board Chairman, Mr Mmari said 53 companies already registered included small, medium and large enterprises with 521 products currently bearing bar code identification.
Before the nation obtained its “620” for her product identification number, local businesses used to outsource it from Kenya and South Africa for the bar codes, a very expensive move. Mmari said they are working out modalities, which will see them work together with the Tanzania Bureau of Standards (TBS) and the Tanzania Revenue Authority (TRA), to ensure that all products bear a genuine bar code to avoid counterfeit goods.
Moreover, he said, they are planning to establish a Tanzanian products data pool which will enable business people from all over the world to access the local products from the web data. Some of the manufactured goods highly demanded from the neighbouring countries include cement, textile apparels, edible oil, plastic items, iron and steel products, wheat flour as well as paper and paper products.
According to the Bank of Tanzania (BoT) monthly economic review for September, this year, traditional exports performance improved mainly due to the increase in volume and unit prices of coffee and cashew nuts and the export volume of tobacco.
With the bar code for example, the value of exports recorded in August, this year, as displayed in the Central Bank report was 6,588.5 million US dollars compared with 5,355.8 million US dollars recorded in the same period last year.
They could go up. Tanzania’s traditional exports account for 16 per cent of all merchandise exports, while gold accounts for 34 per cent and other exports 50 per cent. According to experts, for a country to get its own bar code is indeed a big step towards improving the business environment and getting rid of the inconveniences experienced by businesses.
The Vice-President of the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA), Yakub Hasham was quoted recently as saying the bar code system has been a blessing for them from a burden of outsourcing the services from outside.
“Getting this bar code is indeed a big step towards improving the business environment and getting rid of the inconveniences that our businesses were facing. I urge members to utilise fully the opportunity to improve their businesses and venture into more markets within the region and worldwide, “ said Hasham.
Tanzania Daily News
Demand for locally made goods is likely to increase as more firms have registered with the GS1 (TZ) National Limited for bar code product identification in export markets and global retail chains. With the bar-code, one can trace the manufacturer, the date the goods were manufactured, where they were manufactured and the contents or ingredients used in the manufacture.
It is believed that this should go a long way in promoting Tanzania’s products world-wide. For example, the nation incurred huge losses when the European Union banned exports of fish fillets from East Africa. If there were proper records about the production chain, all countries could not have suffered that blanket punishment.
Announcing the progress so far made by the local business community in adopting the bar code technology, last week the GS1 (TZ) National Limited Board Chairman, Mr Mmari said 53 companies already registered included small, medium and large enterprises with 521 products currently bearing bar code identification.
Before the nation obtained its “620” for her product identification number, local businesses used to outsource it from Kenya and South Africa for the bar codes, a very expensive move. Mmari said they are working out modalities, which will see them work together with the Tanzania Bureau of Standards (TBS) and the Tanzania Revenue Authority (TRA), to ensure that all products bear a genuine bar code to avoid counterfeit goods.
Moreover, he said, they are planning to establish a Tanzanian products data pool which will enable business people from all over the world to access the local products from the web data. Some of the manufactured goods highly demanded from the neighbouring countries include cement, textile apparels, edible oil, plastic items, iron and steel products, wheat flour as well as paper and paper products.
According to the Bank of Tanzania (BoT) monthly economic review for September, this year, traditional exports performance improved mainly due to the increase in volume and unit prices of coffee and cashew nuts and the export volume of tobacco.
With the bar code for example, the value of exports recorded in August, this year, as displayed in the Central Bank report was 6,588.5 million US dollars compared with 5,355.8 million US dollars recorded in the same period last year.
They could go up. Tanzania’s traditional exports account for 16 per cent of all merchandise exports, while gold accounts for 34 per cent and other exports 50 per cent. According to experts, for a country to get its own bar code is indeed a big step towards improving the business environment and getting rid of the inconveniences experienced by businesses.
The Vice-President of the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA), Yakub Hasham was quoted recently as saying the bar code system has been a blessing for them from a burden of outsourcing the services from outside.
“Getting this bar code is indeed a big step towards improving the business environment and getting rid of the inconveniences that our businesses were facing. I urge members to utilise fully the opportunity to improve their businesses and venture into more markets within the region and worldwide, “ said Hasham.
Tanzania Daily News
Senegal targets Mali minerals with $1.6 billion railway plan
by Rose Skelton
A railway linking the capitals of Senegal and Mali needs about 1.2 billion euros ($1.6 billion) to strengthen the track and lure more of Mali’s mineral exports to Senegal, which hopes to become a regional transportation hub.
The 90-year-old route that crosses 1,233 kilometers (766 miles) of arid, Sahelian terrain would cost 1 million euros per kilometer to boost load capability, said Abdoulaye Lo, general director of l’Agence Nationale des Chemins de Fer du Senegal.
“A high-capacity railway line transporting iron ore and phosphates is extremely important for Senegal,” he said by phone from Dakar yesterday. The track is currently able to handle axle weights of 15 metric tons, Lo said. The goal is for 27 tons, he said.
The bid to improve the route comes as Mali’s mines increase output of gold, iron ore and other minerals. The railway is also a key passage for exports of cotton from and comes as Senegal is keen to attract more goods from neighboring nations in a bid to promote the port at Dakar, operated by DP World Ltd. of Dubai. Trains carried 440,000 tons of goods on the line in 2010, according to Transrail SA, the operator.
The governments of Senegal and Mali, which each hold 11 percent stakes in the line, are looking for funding from the European Union, the World Bank, the African Development Bank and the French Development Agency, said Eric Peiffer, director general of Transrail. Lo did not identify any potential funders.
Derailments
Built after World War I, several ownership changes in the railroad led to low investment until it was privatized in 2003. In this year to October, there were 136 derailments and 291 sections of broken track on the section between Dakar and Thies, according to Transrail.
The line needs “modest improvements” at a cost of 140 billion CFA francs ($283 million) over 10 years just to halt derailments and other accidents that cause delays, Peiffer said in an interview Nov. 25, the same day that work started on a 41.5-kilometer section of track between Dakar and Thies, Senegal’s second-biggest city. That route, which carries passengers as well as goods, will cost 8.1 billion CFA francs and be completed by 2014, he said.
Bloomberg
November 28, 2011
Undersea undersea fiber-optic cable project links Africa with three continents
WASACE is an exciting new international communications system linking the major markets of four continents – Africa, South America, North America and Europe, with undersea fiber-optic cable. It is the largest such project ever mounted in the Atlantic Ocean. The projects’ total fiber length is seven times the circumference of the earth. If the fibers were connected end-to-end, they would stretch three quarters of the way to the moon.
WASACE is the first trans-Atlantic system to deploy the next-generation “100G” technology, with ten times the capacity of previous systems. It represents a total investment of billions of US dollars from investors on four continents, including the international private equity investment firm VIP Must, represented by CEO Patrick Perrin, and the African Development Bank, represented by COO Raymond Zoupko, as well as Brazilian and other investors.
The project is headed by WASACE Cable Company Worldwide Holding a multinational development company represented by CEO Ramon Gil-Roldan of Spain. Project development will be managed by the David Ross Group, represented by CEO David Ross of the US.
The project will provide a heretofore unavailable quantity of affordable Internet communication capacity linking the fast-growing markets of Africa and Latin America with the major commercial markets of North America and Europe, including a first-ever high-capacity cable spanning the South Atlantic.
WASACE Cable Company Worldwide Holding was formed to meet the rapidly-evolving needs of developing markets in the Southern Hemisphere
http://www.wasace.com
WASACE is the first trans-Atlantic system to deploy the next-generation “100G” technology, with ten times the capacity of previous systems. It represents a total investment of billions of US dollars from investors on four continents, including the international private equity investment firm VIP Must, represented by CEO Patrick Perrin, and the African Development Bank, represented by COO Raymond Zoupko, as well as Brazilian and other investors.
The project is headed by WASACE Cable Company Worldwide Holding a multinational development company represented by CEO Ramon Gil-Roldan of Spain. Project development will be managed by the David Ross Group, represented by CEO David Ross of the US.
The project will provide a heretofore unavailable quantity of affordable Internet communication capacity linking the fast-growing markets of Africa and Latin America with the major commercial markets of North America and Europe, including a first-ever high-capacity cable spanning the South Atlantic.
WASACE Cable Company Worldwide Holding was formed to meet the rapidly-evolving needs of developing markets in the Southern Hemisphere
http://www.wasace.com
November 27, 2011
China, East Africa Community in new $500m trade, investment deal
by Adam Ihucha
China has entered into an agreement with the East African Community on economy, trade, investment and technical co-operation.
Officials said the parties, led by EAC Secretary General Richard Sezibera and China Vice Minister for Commerce Jiang Yaoping, discussed priority projects in infrastructure worth over $500 million
The agreement seeks to further open up opportunities for Sino-EAC trade, which in 2010 stood at nearly $4 billion, 39 per cent up from the previous year. In the period under review, Kenya alone saw the value of China’s exports grow by 62 per cent bringing in $1.5 billion.
By September, China’s investments in the EAC hit $750 millio in textiles, shoes, pharmaceuticals, industrial machinery, electronics and ICT.
In the past few months, EAC countries have signed deals with Chinese firms ranging from oil exploration to mining and infrastructure developments.
The new agreement is expected to increase trade and investment through promotion of the commodity trade, joint venture investments, infrastructure and human resource development.
China and the EAC have also created a Joint Committee on Economy, Trade, Investment and Technical Co-operation (JCET) to spearhead the implementation of the agreement.
Mr Yaoping said that China hopes to raise its business investments in the region to $1,500 million by 2013 to stimulate economic growth.
At the trade talks, China and EAC placed emphasis on infrastructure development, an area in which the EAC has great interest and in which China has made big strides.
EAC proposed a number of priority projects which require funding, including the rehabilitation of the Arusha-Holili-Voi Road estimated to cost $566 million, improvement of public facilities (markets, parking bays for long distance drivers and emergency co-ordination) along the EAC Corridors, and feasibility as well as detailed engineering design studies for four priority roads in East Africa.
Chairperson of the EAC Council of Ministers Hafsa Mossi said she looked forward to the EAC-China relationship moving from trade-related to investment- centred.
“China and the EAC need to develop more robust partnerships to spur trading relationships through investments in a broad range of sectors including infrastructure, energy, agricultural production and processing,” Ms Mossi said.
In the energy sector, Ms Mossi mentioned Kenya with over 2,000 Megawatts of geothermal power potential but that only exploits only 127 MW; Rwanda’s potential in methane gas in the Lake Kivu and hydropower potential in Uganda and Tanzania.
A lecturer in development studies at Tumaini University, Dr Gasper Mpehongwa, said China’s entry into East Africa is targeting raw materials like timber, coal, gas, mineral and consumer goods.
Dr Mpehongwa cautioned EAC to be careful in what it wants to offer China. “Let China establish factories in the region and not extract raw materials for their factories back home,” he said.
The East African
China has entered into an agreement with the East African Community on economy, trade, investment and technical co-operation.
Officials said the parties, led by EAC Secretary General Richard Sezibera and China Vice Minister for Commerce Jiang Yaoping, discussed priority projects in infrastructure worth over $500 million
The agreement seeks to further open up opportunities for Sino-EAC trade, which in 2010 stood at nearly $4 billion, 39 per cent up from the previous year. In the period under review, Kenya alone saw the value of China’s exports grow by 62 per cent bringing in $1.5 billion.
By September, China’s investments in the EAC hit $750 millio in textiles, shoes, pharmaceuticals, industrial machinery, electronics and ICT.
In the past few months, EAC countries have signed deals with Chinese firms ranging from oil exploration to mining and infrastructure developments.
The new agreement is expected to increase trade and investment through promotion of the commodity trade, joint venture investments, infrastructure and human resource development.
China and the EAC have also created a Joint Committee on Economy, Trade, Investment and Technical Co-operation (JCET) to spearhead the implementation of the agreement.
Mr Yaoping said that China hopes to raise its business investments in the region to $1,500 million by 2013 to stimulate economic growth.
At the trade talks, China and EAC placed emphasis on infrastructure development, an area in which the EAC has great interest and in which China has made big strides.
EAC proposed a number of priority projects which require funding, including the rehabilitation of the Arusha-Holili-Voi Road estimated to cost $566 million, improvement of public facilities (markets, parking bays for long distance drivers and emergency co-ordination) along the EAC Corridors, and feasibility as well as detailed engineering design studies for four priority roads in East Africa.
Chairperson of the EAC Council of Ministers Hafsa Mossi said she looked forward to the EAC-China relationship moving from trade-related to investment- centred.
“China and the EAC need to develop more robust partnerships to spur trading relationships through investments in a broad range of sectors including infrastructure, energy, agricultural production and processing,” Ms Mossi said.
In the energy sector, Ms Mossi mentioned Kenya with over 2,000 Megawatts of geothermal power potential but that only exploits only 127 MW; Rwanda’s potential in methane gas in the Lake Kivu and hydropower potential in Uganda and Tanzania.
A lecturer in development studies at Tumaini University, Dr Gasper Mpehongwa, said China’s entry into East Africa is targeting raw materials like timber, coal, gas, mineral and consumer goods.
Dr Mpehongwa cautioned EAC to be careful in what it wants to offer China. “Let China establish factories in the region and not extract raw materials for their factories back home,” he said.
The East African
Gambian Central Bank cautions about China, India as “new creditors” to poor countries
by Lamin Jahateh
The Central Bank of The Gambia has expressed concern about the emergence of countries such as China and India as new credit sources to Low Income Countries (LICs), like The Gambia, saying it has “raised new risks and challenges” to the borrowing countries.
China and India are becoming the major creditors for most of the Low Income Countries, including those in the sub-Saharan Africa, as the financial crisis have limited the ability of the financing sources like the World Bank and International Monetary Fund, to give loan.
The Governor of Central Bank of The Gambia, Mr Amadou Colley, while acknowledging the “opportunities” presented by these creditors, said if the borrowing process is not properly articulated, planned and executed, debt can quickly become unsustainable and problematic.
Governor Colley made this statement at the opening ceremony of a-five day training on medium term debt strategy for English speaking West African countries organized by West African Institute for Finance and Economic Management (WAIFEM) in collaboration with the World Bank and International Monetary Fund.
The training, underway at Kairaba Beach Hotel, is aimed at providing participants with the requisite skills for developing a comprehensive debt management strategy, which aims at strengthening capacity in the methodology of medium term debt strategy.
The MTDS, developed by the World Bank and IMF, provides a framework for formulating and implementing a debt management strategy for a country. The MTDS tool primarily focuses on determining the appropriate composition of the debt portfolio, taking into account macroeconomic indicators and market environment.
“Maintenance of debt at sustainable level while achieving growth is one of the most critical issues of overarching importance to public financial management in developing countries,” Central Bank Governor said, adding: “Debt management has grown in complexity in recent times as the scarcity of concessionary financing has caused many developing countries to increasingly turn to commercial sources of credit.”
While emphasizing that borrowing process have to be properly articulated, Governor Colley explained that in the past many countries got into debt difficulties and debt overhang as a result of inappropriate borrowing strategies including on the terms and structure of new debt.
Prof Akpan H. Ekpo, director general of WAIFEM, said developing countries face various policy, institutional, and operational challenges due to weak management capacity and lack of efficient debt markets.
In a statement read on his behalf by Baba Y Musa of WAIFEM, Prof Ekpo said the MTDS is a fiscal management tool that a country can use to evaluate its debt financing option given the dynamics of its macroeconomic situation.
He said the MDTS can help a sovereign country to avoid “expensive mistakes” through evaluation of the cost-risk trade off. “That is to say it identify the optimal way to meet the government financing requirement at least cost with prudent degree of risk or risk measurement,” he explained.
He said the tool can also help a country to consider a range of alternate debt management strategies and assess the performance of the strategies on the basis of cost and risk to enable it to identify preferred strategy.
Eriko Togo, senior economist at the World Bank, said debt management cannot be treated in isolation, saying “it’s about transparency and accountability to the public.”
Christian Mulder of the IMF expresses his optimism about Africa noting that institutions in the continent are developing and technology is also improving.
“While there is a long way to travel, we need to keep building these institutions, to develop skills of personnel to make sound and critical decisions without mistakes,” he said.
The workshop combines lectures and hands-on exercise using a spreadsheet analytical tool to illustrate how a medium-term debt management strategy can be developed, taking into account a country’s macroeconomic constraints and the market environment.
The Gambian Banker
The Central Bank of The Gambia has expressed concern about the emergence of countries such as China and India as new credit sources to Low Income Countries (LICs), like The Gambia, saying it has “raised new risks and challenges” to the borrowing countries.
China and India are becoming the major creditors for most of the Low Income Countries, including those in the sub-Saharan Africa, as the financial crisis have limited the ability of the financing sources like the World Bank and International Monetary Fund, to give loan.
The Governor of Central Bank of The Gambia, Mr Amadou Colley, while acknowledging the “opportunities” presented by these creditors, said if the borrowing process is not properly articulated, planned and executed, debt can quickly become unsustainable and problematic.
Governor Colley made this statement at the opening ceremony of a-five day training on medium term debt strategy for English speaking West African countries organized by West African Institute for Finance and Economic Management (WAIFEM) in collaboration with the World Bank and International Monetary Fund.
The training, underway at Kairaba Beach Hotel, is aimed at providing participants with the requisite skills for developing a comprehensive debt management strategy, which aims at strengthening capacity in the methodology of medium term debt strategy.
The MTDS, developed by the World Bank and IMF, provides a framework for formulating and implementing a debt management strategy for a country. The MTDS tool primarily focuses on determining the appropriate composition of the debt portfolio, taking into account macroeconomic indicators and market environment.
“Maintenance of debt at sustainable level while achieving growth is one of the most critical issues of overarching importance to public financial management in developing countries,” Central Bank Governor said, adding: “Debt management has grown in complexity in recent times as the scarcity of concessionary financing has caused many developing countries to increasingly turn to commercial sources of credit.”
While emphasizing that borrowing process have to be properly articulated, Governor Colley explained that in the past many countries got into debt difficulties and debt overhang as a result of inappropriate borrowing strategies including on the terms and structure of new debt.
Prof Akpan H. Ekpo, director general of WAIFEM, said developing countries face various policy, institutional, and operational challenges due to weak management capacity and lack of efficient debt markets.
In a statement read on his behalf by Baba Y Musa of WAIFEM, Prof Ekpo said the MTDS is a fiscal management tool that a country can use to evaluate its debt financing option given the dynamics of its macroeconomic situation.
He said the MDTS can help a sovereign country to avoid “expensive mistakes” through evaluation of the cost-risk trade off. “That is to say it identify the optimal way to meet the government financing requirement at least cost with prudent degree of risk or risk measurement,” he explained.
He said the tool can also help a country to consider a range of alternate debt management strategies and assess the performance of the strategies on the basis of cost and risk to enable it to identify preferred strategy.
Eriko Togo, senior economist at the World Bank, said debt management cannot be treated in isolation, saying “it’s about transparency and accountability to the public.”
Christian Mulder of the IMF expresses his optimism about Africa noting that institutions in the continent are developing and technology is also improving.
“While there is a long way to travel, we need to keep building these institutions, to develop skills of personnel to make sound and critical decisions without mistakes,” he said.
The workshop combines lectures and hands-on exercise using a spreadsheet analytical tool to illustrate how a medium-term debt management strategy can be developed, taking into account a country’s macroeconomic constraints and the market environment.
The Gambian Banker
November 23, 2011
Kenya frees more trade partners from double tax
by Allan Odhiambo
Kenya has increased the number of double-taxation pacts with key trade partners, signalling resolve to boost in-flow of investments. Parties who get these deals are protected from double taxation, one of the demands keeping investors at bay.
New double-tax treaties (DTTs) with key trade partners such as the East African Community (EAC) and the United Arab Emirates (UAE) have been concluded.
“We reached a deal with other EAC partners on the double tax arrangement and Treasury will make it operational through an official gazette,” David Nalo, the permanent secretary in the ministry of EAC Affairs, said.
The EAC is a key market for the country with one of its members — Uganda — being the single largest exporter of Kenyan goods.
Kenya this week also signed a double tax deal with the UAE, which remains the country’s largest source of imports mainly because of the large quantities of petroleum it supplies to East Africa.
The UAE, with goods worth Sh126 billion or 24.3 per cent of total imports, was the largest source of imports to Kenya in the first eight months of the year.
“The tax treaties are critical in luring investors because no one wants to be pinched twice in terms of taxes,” Sammy Onyango, a partner with Deloitte said.
Double taxation leads to losing significant portion of income. Corporations too face the challenges of double taxation in that apart from paying company taxes on their earnings they could also have their shareholders taxed.
But even with such disadvantages, Kenya has over the years, only had a handful of DTTs with key trade and investment partners, losing out to rivals such as Mauritius with a more favourable tax regime, efficient judicial system and robust asset protection laws.
Kenya has double tax treaties with the UK, Canada, Denmark, Norway, India, Sweden, Zambia and Germany while negotiations are ongoing to sign such an arrangement with France and Italy. It also has draft agreements for negotiation with Seychelles, Nigeria, South Africa, Mauritius, Finland, Russia and Iran.
“The race for investments is tough and each country must prove its case through favourable tax regimes,” Mr Onyango said. Mauritius has given countries in the region a run for their money owing to its favourable tax regime.
For instance, while Kenya only had it place a few DTTs, the Indian Ocean country has more than 30 of them with countries in the region as well as abroad. Uganda, Botswana, Lesotho, Mozambique, Rwanda, South Africa, Swaziland, Tunisia and Uganda are among African nations that have signed double taxation treaties with Mauritius.
Globally it has signed DDTs with fast rising economic tigers such as China and India, Singapore, United Arab Emirates and Malaysia.
Besides the DTTs a review of the business climate in Mauritius showed an attractive package for foreign investors.
For instance, the Mauritius Revenue Authority offers a 15 per cent tax rate on a company’s taxable income which consists of business or trading profits and other passive income. This rate is much lower compared to Kenya where the company tax is pegged at 30 per cent.
Several funds and multi-nationals with a wide portfolio of investment and operations in Kenya and across the eastern and southern Africa are registering holding companies in the Indian Ocean nation as they seek to further grow their footprint.
Rift Valley Railways (RVR), Kibo Fund and AUREOS East Africa Fund LLP (AEAF) are among firms with interest in Kenya that have taken to keeping their registration base in Mauritius.
Business Daily Africa
Kenya has increased the number of double-taxation pacts with key trade partners, signalling resolve to boost in-flow of investments. Parties who get these deals are protected from double taxation, one of the demands keeping investors at bay.
New double-tax treaties (DTTs) with key trade partners such as the East African Community (EAC) and the United Arab Emirates (UAE) have been concluded.
“We reached a deal with other EAC partners on the double tax arrangement and Treasury will make it operational through an official gazette,” David Nalo, the permanent secretary in the ministry of EAC Affairs, said.
The EAC is a key market for the country with one of its members — Uganda — being the single largest exporter of Kenyan goods.
Kenya this week also signed a double tax deal with the UAE, which remains the country’s largest source of imports mainly because of the large quantities of petroleum it supplies to East Africa.
The UAE, with goods worth Sh126 billion or 24.3 per cent of total imports, was the largest source of imports to Kenya in the first eight months of the year.
“The tax treaties are critical in luring investors because no one wants to be pinched twice in terms of taxes,” Sammy Onyango, a partner with Deloitte said.
Double taxation leads to losing significant portion of income. Corporations too face the challenges of double taxation in that apart from paying company taxes on their earnings they could also have their shareholders taxed.
But even with such disadvantages, Kenya has over the years, only had a handful of DTTs with key trade and investment partners, losing out to rivals such as Mauritius with a more favourable tax regime, efficient judicial system and robust asset protection laws.
Kenya has double tax treaties with the UK, Canada, Denmark, Norway, India, Sweden, Zambia and Germany while negotiations are ongoing to sign such an arrangement with France and Italy. It also has draft agreements for negotiation with Seychelles, Nigeria, South Africa, Mauritius, Finland, Russia and Iran.
“The race for investments is tough and each country must prove its case through favourable tax regimes,” Mr Onyango said. Mauritius has given countries in the region a run for their money owing to its favourable tax regime.
For instance, while Kenya only had it place a few DTTs, the Indian Ocean country has more than 30 of them with countries in the region as well as abroad. Uganda, Botswana, Lesotho, Mozambique, Rwanda, South Africa, Swaziland, Tunisia and Uganda are among African nations that have signed double taxation treaties with Mauritius.
Globally it has signed DDTs with fast rising economic tigers such as China and India, Singapore, United Arab Emirates and Malaysia.
Besides the DTTs a review of the business climate in Mauritius showed an attractive package for foreign investors.
For instance, the Mauritius Revenue Authority offers a 15 per cent tax rate on a company’s taxable income which consists of business or trading profits and other passive income. This rate is much lower compared to Kenya where the company tax is pegged at 30 per cent.
Several funds and multi-nationals with a wide portfolio of investment and operations in Kenya and across the eastern and southern Africa are registering holding companies in the Indian Ocean nation as they seek to further grow their footprint.
Rift Valley Railways (RVR), Kibo Fund and AUREOS East Africa Fund LLP (AEAF) are among firms with interest in Kenya that have taken to keeping their registration base in Mauritius.
Business Daily Africa
Emirates SkyCargo launches African freight route
To bolster trade links between the United Arab Emirates and West Africa, Emirates SkyCargo has commenced weekly service to Ghana. The Dubai-based carrier will fly a Boeing 747-400F capable of carrying 117 tonnes to Kotoka International Airport every Friday.
The aircraft will route through Lome, Togo, on the outbound flight and return to Dubai International Airport after stopping at Frankfurt Airport, an Emirates SkyCargo spokesman revealed. Commodities from Ghana will then be dispersed from Dubai to Europe, the Middle East, Asia and the U.S.
This route will complement the carrier’s weekly Airbus A330-200 passenger service to Accra, which offers a belly-hold freight capacity of 120 tonnes. What’s more, Hiran Perera, Emirates’ senior vice president of cargo planning and freighters, said boosting capacity to Ghana was an easy decision.
“Ghana is booming at the moment — exporting items such as oil and gas equipment, pineapples, mangoes, a variety of vegetables, fresh fish and lobsters — so strengthening our commitment to West Africa with the introduction of this weekly freighter makes great business sense,” Perera said in a statement.
Routing the aircraft through Frankfurt is another prudent decision, company officials maintained. They expect these flights to be inundated with machinery, car parts and general merchandise.
The fact that Ghana is growing as a consumer market will also boost freight operations, industry insiders explained. Key items bound for the nation include pharmaceuticals from Europe, electrical equipment, and clothing and mobile phones manufactured in Asia.
Ghana isn’t the only destination Emirates SkyCargo officials have set their sights on, however. The carrier will commence service next year to Lusaka, Zambia; Harare, Zimbabwe; Rio de Janeiro; Buenos Aires; Dublin; Dallas; and Seattle. The African and U.S. routes are of particular importance to the airline, Pradeep Kumar, Emirates’ senior vice president of cargo revenue optimization and systems, told Air Cargo World.
“West Asia/Asia-Pacific accounts for more than half of the cargo we carry, but we anticipate sustained growth throughout Africa and expect Lusaka and Harare to contribute,” Kumar said. “We also have further potential for growth in the U.S. with the addition of Dallas and Seattle to the network.”
Air Cargo World
November 21, 2011
Africa wants to be like Europe without the currency
by Patrick McGroarty
Europe's crisis has created a world of common-market skeptics. Except in Africa.
Although the euro zone is convulsing from debt contagion brought on by the profligacy of its weakest members, several regional trading blocs in Africa are pushing for closer integration among countries big and small.
Enlarge Image
For decades, African technocrats have admired Europe's common market, where open borders and the right to work in any member country are seen as the kind of steps that would boost trade in Africa as well. Those steps are also seen as lowering barriers that now deter investors, allowing smaller African states to thrive alongside larger neighbors.
Archie Machaka, who runs a trucking company based in Zimbabwe, says that what should be a 10-day trip to drive a truckload of copper from a mine in the Democratic Republic of the Congo to a container depot outside Johannesburg in South Africa sometimes takes six weeks. His drivers must wait for exit documents in the Congo that can take a month to process. Then a new customs policy in Zambia, designed to check those papers more thoroughly, can leave his trucks idling for three or four days.
The new border regime "was supposed to improve efficiency, but it's not really coming through," Mr. Machaka said.
Faced with such problems, African countries are seeking more ways to work together.
Since 2000, the Southern African Development Community, encompassing 15 countries from the Congo to South Africa, has been lowering import and export tariffs between members. It plans eventually to eliminate them altogether.
South Africa is particularly keen to boost regional trade as an antidote to sluggish demand from Europe, the country's largest trading partner.
Last month, South Africa's finance minister, Pravin Gordhan, said his country wanted to join with its neighbors to fund large-scale infrastructure projects—such as highways running north into the heart of the continent—and a regional power grid that could attract investment from private South African energy companies. South Africa's National Planning Commission earlier this month recommended synchronizing agricultural policies among southern African countries to share crop surpluses. It also encouraged simple manufacturing in South Africa's lower-wage neighbors to create regional supply chains.
The continent's most advanced regional trade bloc, the East African Community, already guarantees the right to work across Kenya, Uganda, Rwanda, Burundi and Tanzania. Those governments also coordinate some fiscal policies, for instance by releasing their federal budgets on the same day. National parliaments are working on legislation that would further synchronize immigration and tariff laws.
Closer ties are paying off for east Africa's biggest economy: Kenya. In 2010, the bloc surpassed the EU as the top destination for Kenyan exports.
"We want to develop this corridor vigorously and collectively," said Mugo Kibati, director of a government program to overhaul Kenya's economy by 2030 and former chief executive of East African Cables, a telecommunications and power-transmission company.
But Africa is backing away from one prominent aspect of Europe's economic union: a common currency.
An African currency was once seen as an ultimate goal of continental integration. By 2018, leaders in southern Africa had aimed to have a common currency in circulation from South Africa's Cape Town to Kinshasa in the Congo. Not anymore.
"I don't think anyone thinks this is realizable or in fact appropriate," Gill Marcus, governor of South Africa's reserve bank, said last week.
She and other officials have noted repeatedly that the euro zone couldn't reconcile feeble economies like Greece with powerhouses such as Germany. That relationship is akin to South Africa and neighboring Zimbabwe, where three years ago inflation hit an annual rate above 200 million percent. Zimbabwe has abandoned its own currency in favor of the U.S. dollar, halting an economic tailspin.
Even in west Africa, where 14 countries have used a common currency tied to the French franc and the euro since the end of World War II, officials have soured on a broader, independent monetary union. It would need to balance the likes of Nigeria, a significant oil exporter, with tiny Togo, an agrarian country with anemic growth rates.
Such vast discrepancies also mean forming an integrated market would be more difficult in west Africa. In addition to Nigeria's economic muscle and vast population, it's an English-speaking country in a generally Francophone region. A violent five-month power struggle in Ivory Coast earlier this year highlighted the risks countries in the region face in tying their fiscal well-being to one another.
Gains are being made nonetheless. A widening network of transborder highways has slashed the time it takes to transport goods across a region once infamous for its number of road blocks per mile.
Wall Street Journal
Europe's crisis has created a world of common-market skeptics. Except in Africa.
Although the euro zone is convulsing from debt contagion brought on by the profligacy of its weakest members, several regional trading blocs in Africa are pushing for closer integration among countries big and small.
Enlarge Image
For decades, African technocrats have admired Europe's common market, where open borders and the right to work in any member country are seen as the kind of steps that would boost trade in Africa as well. Those steps are also seen as lowering barriers that now deter investors, allowing smaller African states to thrive alongside larger neighbors.
Archie Machaka, who runs a trucking company based in Zimbabwe, says that what should be a 10-day trip to drive a truckload of copper from a mine in the Democratic Republic of the Congo to a container depot outside Johannesburg in South Africa sometimes takes six weeks. His drivers must wait for exit documents in the Congo that can take a month to process. Then a new customs policy in Zambia, designed to check those papers more thoroughly, can leave his trucks idling for three or four days.
The new border regime "was supposed to improve efficiency, but it's not really coming through," Mr. Machaka said.
Faced with such problems, African countries are seeking more ways to work together.
Since 2000, the Southern African Development Community, encompassing 15 countries from the Congo to South Africa, has been lowering import and export tariffs between members. It plans eventually to eliminate them altogether.
South Africa is particularly keen to boost regional trade as an antidote to sluggish demand from Europe, the country's largest trading partner.
Last month, South Africa's finance minister, Pravin Gordhan, said his country wanted to join with its neighbors to fund large-scale infrastructure projects—such as highways running north into the heart of the continent—and a regional power grid that could attract investment from private South African energy companies. South Africa's National Planning Commission earlier this month recommended synchronizing agricultural policies among southern African countries to share crop surpluses. It also encouraged simple manufacturing in South Africa's lower-wage neighbors to create regional supply chains.
The continent's most advanced regional trade bloc, the East African Community, already guarantees the right to work across Kenya, Uganda, Rwanda, Burundi and Tanzania. Those governments also coordinate some fiscal policies, for instance by releasing their federal budgets on the same day. National parliaments are working on legislation that would further synchronize immigration and tariff laws.
Closer ties are paying off for east Africa's biggest economy: Kenya. In 2010, the bloc surpassed the EU as the top destination for Kenyan exports.
"We want to develop this corridor vigorously and collectively," said Mugo Kibati, director of a government program to overhaul Kenya's economy by 2030 and former chief executive of East African Cables, a telecommunications and power-transmission company.
But Africa is backing away from one prominent aspect of Europe's economic union: a common currency.
An African currency was once seen as an ultimate goal of continental integration. By 2018, leaders in southern Africa had aimed to have a common currency in circulation from South Africa's Cape Town to Kinshasa in the Congo. Not anymore.
"I don't think anyone thinks this is realizable or in fact appropriate," Gill Marcus, governor of South Africa's reserve bank, said last week.
She and other officials have noted repeatedly that the euro zone couldn't reconcile feeble economies like Greece with powerhouses such as Germany. That relationship is akin to South Africa and neighboring Zimbabwe, where three years ago inflation hit an annual rate above 200 million percent. Zimbabwe has abandoned its own currency in favor of the U.S. dollar, halting an economic tailspin.
Even in west Africa, where 14 countries have used a common currency tied to the French franc and the euro since the end of World War II, officials have soured on a broader, independent monetary union. It would need to balance the likes of Nigeria, a significant oil exporter, with tiny Togo, an agrarian country with anemic growth rates.
Such vast discrepancies also mean forming an integrated market would be more difficult in west Africa. In addition to Nigeria's economic muscle and vast population, it's an English-speaking country in a generally Francophone region. A violent five-month power struggle in Ivory Coast earlier this year highlighted the risks countries in the region face in tying their fiscal well-being to one another.
Gains are being made nonetheless. A widening network of transborder highways has slashed the time it takes to transport goods across a region once infamous for its number of road blocks per mile.
Wall Street Journal
South Korean company acquires Senegalese tuna cannery
by Natalia Real
Food and the financial sector conglomerate Dongwon Group wants to invest USD 21 million into a Senegalese cannery. The deal was recently signed for the acquisition of the Societe Nouvelle Conserveries du Senegal (SNCDS), a leading cannery in the country.
The move will allow Dongwon Group to build up its presence in Europe and Africa.
“Dongwon will set up a new subsidiary in Senegal, which will operate SNCDS. The move is designed to expand our presence in Africa,’’ a Dongwon spokesman said. “Through the investment, Senegal will be able to create more than 2,000 jobs as well as learn the cutting-edge technology and operating knowhow of Dongwon.’’
Chairman Kim Jae-chul of Seoul-based Dongwon Group participated in the signing event along with Senegal’s Minister of Maritime Economy Khouraichi Thiam, SNCDS Chief Executive Ousseynou Ndiaye and Presidential secretary Abdoulaye Kamara.
SNCDS has an annual output capacity of 25,000 tonnes of canned tuna and other fishery products.
Dongwon runs the key subsidiaries of Dongwon Industries, the world’s top tuna fishing company, and Dongwon F&B, a manufacturer of various processed foodstuffs.
“SNCDS is the largest cannery in Africa. With this acquisition, we will tap into other African countries with potential as well as strengthen our presence in Europe,’’ the Dongwon spokesman explained. “In addition, we plan to supply products from Senegal to the US through StarKist, a company we absorbed a few years ago.’’
Dongwon took over the StarKist division of Del Monte Foods for USD 359 million to set up around two-fifths of the global processed tuna market.
FIS
Food and the financial sector conglomerate Dongwon Group wants to invest USD 21 million into a Senegalese cannery. The deal was recently signed for the acquisition of the Societe Nouvelle Conserveries du Senegal (SNCDS), a leading cannery in the country.
The move will allow Dongwon Group to build up its presence in Europe and Africa.
“Dongwon will set up a new subsidiary in Senegal, which will operate SNCDS. The move is designed to expand our presence in Africa,’’ a Dongwon spokesman said. “Through the investment, Senegal will be able to create more than 2,000 jobs as well as learn the cutting-edge technology and operating knowhow of Dongwon.’’
Chairman Kim Jae-chul of Seoul-based Dongwon Group participated in the signing event along with Senegal’s Minister of Maritime Economy Khouraichi Thiam, SNCDS Chief Executive Ousseynou Ndiaye and Presidential secretary Abdoulaye Kamara.
SNCDS has an annual output capacity of 25,000 tonnes of canned tuna and other fishery products.
Dongwon runs the key subsidiaries of Dongwon Industries, the world’s top tuna fishing company, and Dongwon F&B, a manufacturer of various processed foodstuffs.
“SNCDS is the largest cannery in Africa. With this acquisition, we will tap into other African countries with potential as well as strengthen our presence in Europe,’’ the Dongwon spokesman explained. “In addition, we plan to supply products from Senegal to the US through StarKist, a company we absorbed a few years ago.’’
Dongwon took over the StarKist division of Del Monte Foods for USD 359 million to set up around two-fifths of the global processed tuna market.
FIS
Fortunes, and tables, turn for Portugal and Angola
by Adam Nossiter
The world-turned-upside-down of the European debt crisis reached a new extreme last week when Europe came pleading for lucre where it once only seized it: Africa.
The hands-out visit on Thursday of Prime Minister Pedro Passos Coelho of Portugal to its former colony Angola — once a prime source of slaves, then a dumping ground for the mother country’s human rejects and now swimming in oil wealth — was a milestone of sorts.
While Europe’s financial distress has already revived bad historical memories — 70 years after Nazi occupation, Greeks are grumbling about taking marching orders from German gauleiters — and reversed others — there was talk of a Chinese rescue for the continent that once humiliated it — the Angola-Portugal moment has had no equal in its upfront plaintiveness.
“Angolan capital is very welcome,” Mr. Passos Coelho said in Luanda, the capital city. That may be an understatement: the former colony’s cash could be essential as Portugal is forced to sell off state-owned companies and shutter embassies after a $105 billion International Monetary Fund bailout this year.
“We should take advantage of this moment of financial and economic crisis to strengthen our bilateral relations,” he said gingerly, mindful that Angola’s economy is predicted to grow 12 percent next year while his own country’s is expected to shrink almost 3 percent.
The Angolan president, José Eduardo dos Santos, was gentle after his meeting with Mr. Passos Coelho, using language African leaders are more accustomed to hearing from their European counterparts. “We’re aware of the difficulties the Portuguese people have faced recently,” Mr. dos Santos said. “Angola is open and available to help Portugal face this crisis.”
Angola is rich in cash thanks to its huge oil reserves and its equally significant underinvestment in its own 18 million people. By the end of 2010 it was Africa’s biggest oil exporter, and by the end of June it had $24 billion in international reserves, according to the State Department. But it ranks only 148th on the United Nation’s 187-nation Human Development Index; around two-thirds of the population lives on less than $2 a day.
The Angolan state oil company already owns 12.4 percent of Portugal’s biggest private bank, Millennium BCP, and the president’s daughter Isabel, said by scholars to be not coincidentally the country’s leading businesswoman, bought 10 percent of a dominant Portuguese media company, Zon, in 2009.
“There is this unusual situation where the former colonial power, Portugal, is desperately looking for financial investors,” said Paulo Gorjao of the Portuguese Institute of International Relations and Security. “The Angolans have the money.”
In Portugal, it is not uncommon to hear citizens grumble that the only people who can now afford the luxury shops in Lisbon are Angolans, or to be seated next to businesspeople who are seeking their fortunes in Angola. Hundreds of Portuguese companies operate there, and every major Portuguese construction company and all the major banks have interests there.
Angola has come a long way since it won independence from Portugal in 1975, when the statues of the former colonial masters, explorers and governors were torn from their plinths in Luanda, and 90 percent of the Portuguese settlers fled. A bloody 27-year civil war followed.
The tables have turned; the Portuguese want to come back. The Portuguese or Portuguese-descended population in Angola increased to 91,900 in 2010 from 21,000 in 2003.
Portuguese commentators insisted there were no hard feelings. A headline in the leading newspaper Diário de Notícias read simply: “The power of Angolan oil.”
But government critics in Angola saw irony in Portugal’s quest. “The capital barely has any electricity,” said Rafael Marques de Morais, an anticorruption campaigner. “The basic infrastructures are not being done. And yet the president can say we are ready to bail out Portugal. It’s very offensive.”
“There is still the colonial mentality in Portugal,” he added. “They just want to extract resources and plunder the country. The only difference is this time they didn’t take them by force.”
New York Times
The world-turned-upside-down of the European debt crisis reached a new extreme last week when Europe came pleading for lucre where it once only seized it: Africa.
The hands-out visit on Thursday of Prime Minister Pedro Passos Coelho of Portugal to its former colony Angola — once a prime source of slaves, then a dumping ground for the mother country’s human rejects and now swimming in oil wealth — was a milestone of sorts.
While Europe’s financial distress has already revived bad historical memories — 70 years after Nazi occupation, Greeks are grumbling about taking marching orders from German gauleiters — and reversed others — there was talk of a Chinese rescue for the continent that once humiliated it — the Angola-Portugal moment has had no equal in its upfront plaintiveness.
“Angolan capital is very welcome,” Mr. Passos Coelho said in Luanda, the capital city. That may be an understatement: the former colony’s cash could be essential as Portugal is forced to sell off state-owned companies and shutter embassies after a $105 billion International Monetary Fund bailout this year.
“We should take advantage of this moment of financial and economic crisis to strengthen our bilateral relations,” he said gingerly, mindful that Angola’s economy is predicted to grow 12 percent next year while his own country’s is expected to shrink almost 3 percent.
The Angolan president, José Eduardo dos Santos, was gentle after his meeting with Mr. Passos Coelho, using language African leaders are more accustomed to hearing from their European counterparts. “We’re aware of the difficulties the Portuguese people have faced recently,” Mr. dos Santos said. “Angola is open and available to help Portugal face this crisis.”
Angola is rich in cash thanks to its huge oil reserves and its equally significant underinvestment in its own 18 million people. By the end of 2010 it was Africa’s biggest oil exporter, and by the end of June it had $24 billion in international reserves, according to the State Department. But it ranks only 148th on the United Nation’s 187-nation Human Development Index; around two-thirds of the population lives on less than $2 a day.
The Angolan state oil company already owns 12.4 percent of Portugal’s biggest private bank, Millennium BCP, and the president’s daughter Isabel, said by scholars to be not coincidentally the country’s leading businesswoman, bought 10 percent of a dominant Portuguese media company, Zon, in 2009.
“There is this unusual situation where the former colonial power, Portugal, is desperately looking for financial investors,” said Paulo Gorjao of the Portuguese Institute of International Relations and Security. “The Angolans have the money.”
In Portugal, it is not uncommon to hear citizens grumble that the only people who can now afford the luxury shops in Lisbon are Angolans, or to be seated next to businesspeople who are seeking their fortunes in Angola. Hundreds of Portuguese companies operate there, and every major Portuguese construction company and all the major banks have interests there.
Angola has come a long way since it won independence from Portugal in 1975, when the statues of the former colonial masters, explorers and governors were torn from their plinths in Luanda, and 90 percent of the Portuguese settlers fled. A bloody 27-year civil war followed.
The tables have turned; the Portuguese want to come back. The Portuguese or Portuguese-descended population in Angola increased to 91,900 in 2010 from 21,000 in 2003.
Portuguese commentators insisted there were no hard feelings. A headline in the leading newspaper Diário de Notícias read simply: “The power of Angolan oil.”
But government critics in Angola saw irony in Portugal’s quest. “The capital barely has any electricity,” said Rafael Marques de Morais, an anticorruption campaigner. “The basic infrastructures are not being done. And yet the president can say we are ready to bail out Portugal. It’s very offensive.”
“There is still the colonial mentality in Portugal,” he added. “They just want to extract resources and plunder the country. The only difference is this time they didn’t take them by force.”
New York Times
African countries urged to ease trade within the continent
Amadou Diallo, newly appointed CEO of DHL Freight, said on a
visit to South Africa this week that, while a lot of work had been done
on barriers and complications with regards to intra-African trade, those
in charge should be working harder and faster on the challenges.
Diallo said the one thing entrepreneurs and others investing in South Africa and the continent should not struggle with, was getting their goods to the right markets.
"If a business wants to service Ghana or Nigeria or the Ivory Coast or any other West African country [from South Africa], it needs easy connectivity to be able to ship its goods faster than anybody producing it out of Asia or Europe or the US," Diallo said.
"If countries do not make these processes efficient, goods get stuck at border posts, and these countries risk letting their own entrepreneurs go bankrupt because they cannot service their customers.
"It is becoming more and more important that all African politicians should work on decomplicating intra-Africa trade and developing it faster, as this is all happening very slowly at the moment."
Diallo said that by 2015 around 220million African consumers who are now only able to meet basic needs will be middle-income consumers, increasing the need for trade infrastructure in Africa.
Thomas Nieszner, CEO of DHL for Europe, Middle East and Africa, said air freight volumes in sub-Saharan Africa were expected to grow 6.1% next year and ocean freight by 6.7%. He said in the global forwarding division of DHL Africa was expected to make a double-digit percentage contribution to business in his region.
Diallo said as a logistics company DHL tried to advise countries on how to ease trade.
"The free flow of trade and investment is a basic requirement of creating jobs, so we must be open to and welcome investment in the country and continent. "The biggest challenge is to start talking about Africa in terms of investment opportunities and stop talking just about the Kruger National Park," Diallo said.
He said it was important to persuade governments to promote their markets and facilitate trade.
"That is more important than going to G20 meetings and discussing how the Germans or the Americans have to control the US dollar. "If you are an African trader and you invest in South Africa, the first thing you are interested in is how to get to your market."
Apart from bureaucracy and trade barriers, corruption is also a continuing challenge for free trade in the continent, Diallo said.
Several economies in sub-Saharan Africa feature very low on Transparency International's latest corruption perception index.
Nigeria is at 134 out if 178 countries, level with Zimbabwe. Kenya is at 154 and Angola, which has one of the fastest- growing economies in the region, is at 168.
Transparency International's global corruption barometer shows corruption levels in sub-Saharan Africa increased by 62% in the three years to 2010.
Diallo said when looking at such rankings, especially those worse than 120, "governments ought to feel ashamed".
Businesslive
Diallo said the one thing entrepreneurs and others investing in South Africa and the continent should not struggle with, was getting their goods to the right markets.
"If a business wants to service Ghana or Nigeria or the Ivory Coast or any other West African country [from South Africa], it needs easy connectivity to be able to ship its goods faster than anybody producing it out of Asia or Europe or the US," Diallo said.
"If countries do not make these processes efficient, goods get stuck at border posts, and these countries risk letting their own entrepreneurs go bankrupt because they cannot service their customers.
"It is becoming more and more important that all African politicians should work on decomplicating intra-Africa trade and developing it faster, as this is all happening very slowly at the moment."
Diallo said that by 2015 around 220million African consumers who are now only able to meet basic needs will be middle-income consumers, increasing the need for trade infrastructure in Africa.
Thomas Nieszner, CEO of DHL for Europe, Middle East and Africa, said air freight volumes in sub-Saharan Africa were expected to grow 6.1% next year and ocean freight by 6.7%. He said in the global forwarding division of DHL Africa was expected to make a double-digit percentage contribution to business in his region.
Diallo said as a logistics company DHL tried to advise countries on how to ease trade.
"The free flow of trade and investment is a basic requirement of creating jobs, so we must be open to and welcome investment in the country and continent. "The biggest challenge is to start talking about Africa in terms of investment opportunities and stop talking just about the Kruger National Park," Diallo said.
He said it was important to persuade governments to promote their markets and facilitate trade.
"That is more important than going to G20 meetings and discussing how the Germans or the Americans have to control the US dollar. "If you are an African trader and you invest in South Africa, the first thing you are interested in is how to get to your market."
Apart from bureaucracy and trade barriers, corruption is also a continuing challenge for free trade in the continent, Diallo said.
Several economies in sub-Saharan Africa feature very low on Transparency International's latest corruption perception index.
Nigeria is at 134 out if 178 countries, level with Zimbabwe. Kenya is at 154 and Angola, which has one of the fastest- growing economies in the region, is at 168.
Transparency International's global corruption barometer shows corruption levels in sub-Saharan Africa increased by 62% in the three years to 2010.
Diallo said when looking at such rankings, especially those worse than 120, "governments ought to feel ashamed".
Businesslive
November 18, 2011
As rich world sputters, Brazil looks to Africa
by Stuart Grudgings
Brazil is launching a top-level drive to expand its economic ties with Africa, a sign of how crises in the rich world are pushing faster-growing emerging economies to trade and invest among themselves.
The new initiative, ordered by President Dilma Rousseff after her three-country trip to Africa last month, comes as nervousness grows in Brazil over the impact in the coming months of Europe's debt crisis and lurch toward recession.
Europe's woes, combined with anemic growth in the United States, are already dampening demand for Brazilian exports and will make it more difficult for Brazil to rebound from disappointing growth of around 3-4 percent this year.
In contrast, the eight most promising emerging economies in sub-Saharan Africa, not including South Africa, have grown by an average of 6.6 percent per year over the past decade, according to Deutsche Bank. That is about the same rate as the BRIC group of big emerging countries Brazil, Russia, India and China and faster than emerging Asian economies.
Africa's total share of Brazil's trade remains small at just over 5 percent but Brazil has rapidly grown its footprint in the region in recent years as it tries to catch up with China's burgeoning investments and influence there.
Rousseff ordered the creation of an "Africa Group" this month led by her trade and industry minister, Fernando Pimentel, to refresh its push in the region.
"The crisis has accelerated this strategy," Pimentel said. "There will be a dispute for economic space in Africa, and Brazil has to be positioned there."
Pimentel will lead government officials and business executives this month on a 10-day mission to explore opportunities in the three countries that Rousseff recently visited - Angola, Mozambique, and South Africa.
The new thrust builds on progress made under former President Luiz Inacio Lula da Silva, who visited at least 25 African countries and doubled the number of embassies in the region as he looked to establish Brazil as a leader of the developing world.
Brazil's overall trade with Africa has quadrupled since 2002 to $20.6 billion last year, compared to its $82 billion trade with the European Union. The fast-growing ties are overwhelmingly based on the exploitation of commodities as Africa taps Brazilian firms' expertise in mining, oil exploration and tropical agriculture.
Mining giant Vale opened a $1.7 billion coal mine in Mozambique in May that Pimentel said would give a $1 billion boost to Mozambique's trade balance next year. Brazilian construction firm Odebrecht is the largest private employer in Angola, with activities including food and ethanol production, factories and supermarkets. Petrobras, Brazil's state-controlled oil company, is active in Angola in deep-water drilling.
Brazil sees a growing market for its services and goods related to such investments.
Almost half of sub-Saharan African exports now go to emerging and developing markets compared with less than a quarter in 1990, according to the International Monetary Fund. China alone accounts for about 17 percent of the region's trade, with India and Brazil accounting for 6 percent and 3 percent respectively.
Skeptics say Africa's low level of business diversity and its relatively small economic output limits its potential to become a major trade and investment partner for Brazil.
"It's still a very small market, income is very concentrated and the space for advance is small," said Bruno Lavieri, an economist at Sao Paulo consultancy Tendencias. "Even in the long term it will take decades for Africa to be really an important player in Brazil's trade."
Brazil has also struggled to match China's financial clout in the region as Beijing backs its companies with generous subsidized loans. Jinchuan Group, China's dominant nickel producer, outbid Vale this year when it bought South African mining firm Metorex for more than $1.3 billion.
Pimentel said his group would be looking at creating new financing mechanisms to support Brazilian projects.
But Brazil believes it has a trump card against China that it intends to play in its new economic push -- put simply, that it treats Africans better. Chinese firms have been accused of flouting worker safety laws in some African nations and have also been criticized for importing Chinese workers rather than hiring locally.
"This is our big selling point - that we are arriving in these countries doing more than just selling products and services," said Pimentel. "Brazilian companies have a good image in Africa. This compensates for our fragility in financing compared to China."
Brazil's shared Portuguese language with countries like Angola and Mozambique, ethnic ties, a common history of colonialism and Brazil's success in alleviating poverty and hunger at home also help its brand on the continent.
Embrapa, Brazil's agriculture research agency, has operations in four African countries where it is transferring its technology and expertise in raising crop yields that helped turn Brazil into a tropical farming powerhouse.
Rousseff said during her trip that a pharmaceutical plant being financed and assisted scientifically by Brazil should start next year making cheap anti-retroviral drugs to help Mozambique's fight against AIDS.
Even with competition from China, Africa's rich and largely untapped resources mean Brazil still has huge potential to expand its presence, said Jorge Heine, the CIGI chair in global governance at Canada's Balsillie School of International Affairs.
"Given Brazilian needs and the abundance of natural resources in Africa, it is by no means evident that we are near the limit of the volume of trade between Africa and Brazil," he said.
Reuters
Brazil is launching a top-level drive to expand its economic ties with Africa, a sign of how crises in the rich world are pushing faster-growing emerging economies to trade and invest among themselves.
The new initiative, ordered by President Dilma Rousseff after her three-country trip to Africa last month, comes as nervousness grows in Brazil over the impact in the coming months of Europe's debt crisis and lurch toward recession.
Europe's woes, combined with anemic growth in the United States, are already dampening demand for Brazilian exports and will make it more difficult for Brazil to rebound from disappointing growth of around 3-4 percent this year.
In contrast, the eight most promising emerging economies in sub-Saharan Africa, not including South Africa, have grown by an average of 6.6 percent per year over the past decade, according to Deutsche Bank. That is about the same rate as the BRIC group of big emerging countries Brazil, Russia, India and China and faster than emerging Asian economies.
Africa's total share of Brazil's trade remains small at just over 5 percent but Brazil has rapidly grown its footprint in the region in recent years as it tries to catch up with China's burgeoning investments and influence there.
Rousseff ordered the creation of an "Africa Group" this month led by her trade and industry minister, Fernando Pimentel, to refresh its push in the region.
"The crisis has accelerated this strategy," Pimentel said. "There will be a dispute for economic space in Africa, and Brazil has to be positioned there."
Pimentel will lead government officials and business executives this month on a 10-day mission to explore opportunities in the three countries that Rousseff recently visited - Angola, Mozambique, and South Africa.
The new thrust builds on progress made under former President Luiz Inacio Lula da Silva, who visited at least 25 African countries and doubled the number of embassies in the region as he looked to establish Brazil as a leader of the developing world.
Brazil's overall trade with Africa has quadrupled since 2002 to $20.6 billion last year, compared to its $82 billion trade with the European Union. The fast-growing ties are overwhelmingly based on the exploitation of commodities as Africa taps Brazilian firms' expertise in mining, oil exploration and tropical agriculture.
Mining giant Vale opened a $1.7 billion coal mine in Mozambique in May that Pimentel said would give a $1 billion boost to Mozambique's trade balance next year. Brazilian construction firm Odebrecht is the largest private employer in Angola, with activities including food and ethanol production, factories and supermarkets. Petrobras, Brazil's state-controlled oil company, is active in Angola in deep-water drilling.
Brazil sees a growing market for its services and goods related to such investments.
Almost half of sub-Saharan African exports now go to emerging and developing markets compared with less than a quarter in 1990, according to the International Monetary Fund. China alone accounts for about 17 percent of the region's trade, with India and Brazil accounting for 6 percent and 3 percent respectively.
Skeptics say Africa's low level of business diversity and its relatively small economic output limits its potential to become a major trade and investment partner for Brazil.
"It's still a very small market, income is very concentrated and the space for advance is small," said Bruno Lavieri, an economist at Sao Paulo consultancy Tendencias. "Even in the long term it will take decades for Africa to be really an important player in Brazil's trade."
Brazil has also struggled to match China's financial clout in the region as Beijing backs its companies with generous subsidized loans. Jinchuan Group, China's dominant nickel producer, outbid Vale this year when it bought South African mining firm Metorex for more than $1.3 billion.
Pimentel said his group would be looking at creating new financing mechanisms to support Brazilian projects.
But Brazil believes it has a trump card against China that it intends to play in its new economic push -- put simply, that it treats Africans better. Chinese firms have been accused of flouting worker safety laws in some African nations and have also been criticized for importing Chinese workers rather than hiring locally.
"This is our big selling point - that we are arriving in these countries doing more than just selling products and services," said Pimentel. "Brazilian companies have a good image in Africa. This compensates for our fragility in financing compared to China."
Brazil's shared Portuguese language with countries like Angola and Mozambique, ethnic ties, a common history of colonialism and Brazil's success in alleviating poverty and hunger at home also help its brand on the continent.
Embrapa, Brazil's agriculture research agency, has operations in four African countries where it is transferring its technology and expertise in raising crop yields that helped turn Brazil into a tropical farming powerhouse.
Rousseff said during her trip that a pharmaceutical plant being financed and assisted scientifically by Brazil should start next year making cheap anti-retroviral drugs to help Mozambique's fight against AIDS.
Even with competition from China, Africa's rich and largely untapped resources mean Brazil still has huge potential to expand its presence, said Jorge Heine, the CIGI chair in global governance at Canada's Balsillie School of International Affairs.
"Given Brazilian needs and the abundance of natural resources in Africa, it is by no means evident that we are near the limit of the volume of trade between Africa and Brazil," he said.
Reuters
November 15, 2011
The WTO has failed developing nations
by Aurelie Walker
Ten years ago, a new World Trade Organisation that put developing country needs at the centre of the international trade negotiation agenda was proposed. The Ministerial Declaration adopted at the start of the Doha Development Round of trade negotiations, on 14 November 2001, was a promising response to the anti-globalisation riots of the 1990s.
But the WTO membership has failed to deliver the promised pro-development changes. Finding "development" in the Doha Development Round today is like looking for a needle in a haystack. Developing countries have been completely sidelined by the economic and political interests of global powers.
Here are 10 examples of how the WTO has failed the poor:
1. Cotton: the Fairtrade Foundation revealed last year how the $47bn in subsidies paid to rich-country producers in the past 10 years has created barriers for the 15 million cotton farmers across west Africa trying to trade their way out of poverty, and how 5 million of the world's poorest farming families have been forced out of business and into deeper poverty because of those subsidies.
2. Agricultural subsidies: beyond cotton, WTO members have failed even to agree how to reduce the huge subsidies paid to rich world farmers, whose overproduction continues to threaten the livelihoods of developing world farmers.
3. Trade agreements: the WTO has also failed to clarify the deliberately ambiguous rules on concluding trade agreements that allow the poorest countries to be manipulated by the rich states. In Africa, in negotiations with the EU, countries have been forced to eliminate tariffs on up to 90% of their trade because no clear rules exist to protect them.
4. Special treatment: the rules for developing countries, called "special and differential treatment" rules, were meant to be reviewed to make them more precise, effective and operational. But the WTO has failed to work through the 88 proposals that would fill the legal vacuum.
5. Medicine: the poorest in developing countries are unable to access affordable medicine because members have failed to clarify ambiguities between the need for governments to protect public health on one hand and on the other to protect the intellectual property rights of pharmaceutical companies.
6. Legal costs: the WTO pledged to improve access to its expensive and complex legal system, but has failed. In 15 years of dispute settlement under the WTO, 400 cases have been initiated. No African country has acted as a complainant and only one least developed country has ever filed a claim.
7. Protectionist economic policies: one of the WTO's five core functions agreed at its inception in 1995 was to achieve more coherence in global economic policy-making. Yet the WTO failed to curb the speedy increase in the number of protectionist measures applied by G20 countries in response to the global economic crisis over the past two years – despite G20 leaders' repeated affirmations of their "unwavering" commitment to resist all forms of protectionist measures.
8. Natural disaster: the WTO fails to alleviate suffering when it has the opportunity to do so. In the case of natural disaster, the membership will have taken almost two years to agree and implement temporary trade concessions for Pakistan, where severe flooding displaced 20 million people in 2010 and caused $10bn of damage. Those measures, according to the International Centre for Trade and Sustainable Development, would have boosted Pakistan's exports to the EU by at least €100m this year.
9. Decision-making: the WTO makes most of its decisions by consensus – and achieving consensus between 153 countries is nearly impossible. But this shows another failure of the WTO: to break the link between market size and political weight that would give small and poor countries a voice in the trade negotiations.
10. Fair trade: 10 years after the start of the Doha Development Round, governments have failed to make trade fair. As long as small and poor countries remain without a voice, the role of campaigning organisations, such as Traidcraft and Fairtrade Foundation, which are working together to eliminate cotton subsidies, will remain critical.
The WTO has failed to live up to its promises over the past decade, which reveals a wider systemic problem in the global community. True and lasting solutions to global economic problems can only come when the model of global competitiveness between countries becomes one of genuine cooperation.
The Guardian
Ten years ago, a new World Trade Organisation that put developing country needs at the centre of the international trade negotiation agenda was proposed. The Ministerial Declaration adopted at the start of the Doha Development Round of trade negotiations, on 14 November 2001, was a promising response to the anti-globalisation riots of the 1990s.
But the WTO membership has failed to deliver the promised pro-development changes. Finding "development" in the Doha Development Round today is like looking for a needle in a haystack. Developing countries have been completely sidelined by the economic and political interests of global powers.
Here are 10 examples of how the WTO has failed the poor:
1. Cotton: the Fairtrade Foundation revealed last year how the $47bn in subsidies paid to rich-country producers in the past 10 years has created barriers for the 15 million cotton farmers across west Africa trying to trade their way out of poverty, and how 5 million of the world's poorest farming families have been forced out of business and into deeper poverty because of those subsidies.
2. Agricultural subsidies: beyond cotton, WTO members have failed even to agree how to reduce the huge subsidies paid to rich world farmers, whose overproduction continues to threaten the livelihoods of developing world farmers.
3. Trade agreements: the WTO has also failed to clarify the deliberately ambiguous rules on concluding trade agreements that allow the poorest countries to be manipulated by the rich states. In Africa, in negotiations with the EU, countries have been forced to eliminate tariffs on up to 90% of their trade because no clear rules exist to protect them.
4. Special treatment: the rules for developing countries, called "special and differential treatment" rules, were meant to be reviewed to make them more precise, effective and operational. But the WTO has failed to work through the 88 proposals that would fill the legal vacuum.
5. Medicine: the poorest in developing countries are unable to access affordable medicine because members have failed to clarify ambiguities between the need for governments to protect public health on one hand and on the other to protect the intellectual property rights of pharmaceutical companies.
6. Legal costs: the WTO pledged to improve access to its expensive and complex legal system, but has failed. In 15 years of dispute settlement under the WTO, 400 cases have been initiated. No African country has acted as a complainant and only one least developed country has ever filed a claim.
7. Protectionist economic policies: one of the WTO's five core functions agreed at its inception in 1995 was to achieve more coherence in global economic policy-making. Yet the WTO failed to curb the speedy increase in the number of protectionist measures applied by G20 countries in response to the global economic crisis over the past two years – despite G20 leaders' repeated affirmations of their "unwavering" commitment to resist all forms of protectionist measures.
8. Natural disaster: the WTO fails to alleviate suffering when it has the opportunity to do so. In the case of natural disaster, the membership will have taken almost two years to agree and implement temporary trade concessions for Pakistan, where severe flooding displaced 20 million people in 2010 and caused $10bn of damage. Those measures, according to the International Centre for Trade and Sustainable Development, would have boosted Pakistan's exports to the EU by at least €100m this year.
9. Decision-making: the WTO makes most of its decisions by consensus – and achieving consensus between 153 countries is nearly impossible. But this shows another failure of the WTO: to break the link between market size and political weight that would give small and poor countries a voice in the trade negotiations.
10. Fair trade: 10 years after the start of the Doha Development Round, governments have failed to make trade fair. As long as small and poor countries remain without a voice, the role of campaigning organisations, such as Traidcraft and Fairtrade Foundation, which are working together to eliminate cotton subsidies, will remain critical.
The WTO has failed to live up to its promises over the past decade, which reveals a wider systemic problem in the global community. True and lasting solutions to global economic problems can only come when the model of global competitiveness between countries becomes one of genuine cooperation.
The Guardian
November 14, 2011
The AGOA problem: Africa's hidden secret
by Atim Oton
For the last seven years in my travels across the African continent, I try to pay attention and listen to what things are troubling some African businesses and traders in retail and exports. AGOA is the one word that keeps coming up with excessive groans. In English and French, small African traders are complaining about it.
Created by the Clinton Administration, "the African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000 as Title 1 of The Trade and Development Act of 2000. The Act offers tangible incentives for African countries to continue their efforts to open their economies and build free markets." The U.S. Government intended that the largest possible number of Sub-Saharan African countries would get trade benefits of AGOA. The proclamation was the result of a public comment period and extensive interagency deliberations of each country's performance against the eligibility criteria established in the Act.
My African exporter friends in West Africa usually give me an earful about AGOA -- one called it an unpleasant experience and even came up with an expression Americans Getting Over on Africans, again. When I first heard about AGOA, I was attending a conference run by the Corporate Council of Africa in Washington D.C. At that event, I met Nigeria's Minister of Agriculture who wondered why I was interested in crafts and not oil, as he put it, after all, I was from an oil state in Nigeria. I went to that conference to learn about the craft sector and because a design colleague of mine was speaking.
AGOA should spell opportunity for Africans, but go into Ghana today and you will have a lot of Ghanaians in an uproar about it. Why? Well, the story goes like this. AGOA is meant to help Africans who are ready to export goods into the U.S. but it is creating more opportunities for American companies (profit and not-for-profit) who are more ready to export. The average African exporter is an individual and not a company. He or she is a basic trader, one who flies into the U.S. and sells their goods on the streets or to stores. So, AGOA is not something they would even know about. And when they do find out about it, they usually go to their respective government official -- who gives them the run-around. I know this because I decided to test this out by going to talk with the Nigerian Embassy here in New York and the Nigerian Export Promotion Organization in Lagos.
At the Corporate Council on Africa, I met Leslie Mittelberg who runs Swahili Imports and we talk often enough, so I decided to ask her about AGOA. When I asked her: How well as AGOA worked for African companies, African governments or U.S. companies? Who is taking more advantage of it? And how would you rate it? Leslie was frank: "I give it a zero rating = failure. The process is too complicated for the population we work with. We are yet to have a successful entry." Leslie works with artisan groups who could qualify to be part of AGOA process of selection.
The major problems of AGOA for African companies and countries seems to be "unclear guidelines between U.S. customs and the country of origin. Artisans are unable to do the documentation or understand what goods are eligible and what are not" says Mittelberg. My experience talking with traders is that the paperwork is a nightmare on both sides -- U.S. and their country. And this makes it harder to compete. So, most traders go ahead and pay the duties rather than do the paperwork. Simply, Africans are not prepared at all. And in their own countries, there is little on the ground support for them.
The U.S. government knowing this created Trade Hubs across Africa -- four regional trade hubs in sub-Saharan Africa. The one I am familiar with is the West African Trade Hub. I reached out to hear from them. According to USAID West Africa Trade Hub AGOA Services Manager Abou Fall, "AGOA has resulted in increased trade worldwide and the numbers do not capture that. AGOA has led to a leveraging of resources, it has facilitated dialogue, it has fostered the creation and growth of industry alliances, it has built capacity for doing business -- and all that entails -- on both sides of the Atlantic. AGOA is telling a different story in Africa -- it does not look like the conventional story of increased trade."
In some ways, the hub is right. Trade has increased in Africa, "AGOA not only eliminated the tariffs on 6,400 products -- it also put in place annual forums between U.S. and African governments and initiated the Trade Hubs." That is good news, but the reality on the ground is the average trader, artisan groups and small companies are not experiencing the increase. Quite the opposite. Just take a look at the decrease in the number of traders across New York or the lack of African goods in stores across the countries. Even more so, the number of exporters at trade shows for crafts and gifts have decreased.
In other areas of trade, AGOA is working well. It is building traction and using collaboration and partnerships together. "One of the best examples of the Trade Hub's impact in West Africa is our work in building industry alliances. These are good for the public and private sectors. When we co-founded the African Cashew Alliance in 2006 many people were skeptical of what it could or would do" says Abou Fall.
As much as the USAID West Africa Trade Hub has trained hundreds of exporting companies, customs officials and other stakeholders on AGOA. It admits to some key issues. "Building cooperation and collaboration within an industry is a huge challenge no matter where you undertake it -- when you do that in a region where the regional connections are tenuous, with language and cultural gaps, it's a challenge arguably on another level. Awareness of AGOA -- in the U.S. and in Africa -- is a constraint. And awareness of Africa as a good place to do business is an issue, too, that limits the impact of AGOA."
And more importantly, the issues are enormous for AGOA to work. The trade hub admits that "in order to fully take advantage of AGOA, African countries must resolve issues that hamper their competitiveness such as infrastructure, cost of production, and some "soft" infrastructural issues such as setting up the adequate procedural systems to facilitate exports, and implementing specific sector strategies to boost exports." Are African countries listening to this?
AGOA is up for renewal soon, or more precisely an extension -- the third-country fabric exemption. Fall says, "this exemption means if you are producing apparel using fabric you bought in, say, China, you still benefit from the AGOA preferences. So, the source of the fabric is not disqualifying. In Africa, this exemption is very important because of the lack of capacity to produce fabric. Apparel manufacturers count on AGOA particularly because margins are so thin but potential volumes so high. A further extension of AGOA will also give a signal to investors who have more time to plan out their investment decisions and expand their fledgling operations."
I ask, how beneficial is this third country extension if the raw material is not from Africa? Who benefits? Both -- one African country and the third country -- which might not be African? Trade Negotiations are a tangled web. AGOA is good for Africa, but it needs to be user-friendly for the average African. It needs to be simplified.
Huffington Post
For the last seven years in my travels across the African continent, I try to pay attention and listen to what things are troubling some African businesses and traders in retail and exports. AGOA is the one word that keeps coming up with excessive groans. In English and French, small African traders are complaining about it.
Created by the Clinton Administration, "the African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000 as Title 1 of The Trade and Development Act of 2000. The Act offers tangible incentives for African countries to continue their efforts to open their economies and build free markets." The U.S. Government intended that the largest possible number of Sub-Saharan African countries would get trade benefits of AGOA. The proclamation was the result of a public comment period and extensive interagency deliberations of each country's performance against the eligibility criteria established in the Act.
My African exporter friends in West Africa usually give me an earful about AGOA -- one called it an unpleasant experience and even came up with an expression Americans Getting Over on Africans, again. When I first heard about AGOA, I was attending a conference run by the Corporate Council of Africa in Washington D.C. At that event, I met Nigeria's Minister of Agriculture who wondered why I was interested in crafts and not oil, as he put it, after all, I was from an oil state in Nigeria. I went to that conference to learn about the craft sector and because a design colleague of mine was speaking.
AGOA should spell opportunity for Africans, but go into Ghana today and you will have a lot of Ghanaians in an uproar about it. Why? Well, the story goes like this. AGOA is meant to help Africans who are ready to export goods into the U.S. but it is creating more opportunities for American companies (profit and not-for-profit) who are more ready to export. The average African exporter is an individual and not a company. He or she is a basic trader, one who flies into the U.S. and sells their goods on the streets or to stores. So, AGOA is not something they would even know about. And when they do find out about it, they usually go to their respective government official -- who gives them the run-around. I know this because I decided to test this out by going to talk with the Nigerian Embassy here in New York and the Nigerian Export Promotion Organization in Lagos.
At the Corporate Council on Africa, I met Leslie Mittelberg who runs Swahili Imports and we talk often enough, so I decided to ask her about AGOA. When I asked her: How well as AGOA worked for African companies, African governments or U.S. companies? Who is taking more advantage of it? And how would you rate it? Leslie was frank: "I give it a zero rating = failure. The process is too complicated for the population we work with. We are yet to have a successful entry." Leslie works with artisan groups who could qualify to be part of AGOA process of selection.
The major problems of AGOA for African companies and countries seems to be "unclear guidelines between U.S. customs and the country of origin. Artisans are unable to do the documentation or understand what goods are eligible and what are not" says Mittelberg. My experience talking with traders is that the paperwork is a nightmare on both sides -- U.S. and their country. And this makes it harder to compete. So, most traders go ahead and pay the duties rather than do the paperwork. Simply, Africans are not prepared at all. And in their own countries, there is little on the ground support for them.
The U.S. government knowing this created Trade Hubs across Africa -- four regional trade hubs in sub-Saharan Africa. The one I am familiar with is the West African Trade Hub. I reached out to hear from them. According to USAID West Africa Trade Hub AGOA Services Manager Abou Fall, "AGOA has resulted in increased trade worldwide and the numbers do not capture that. AGOA has led to a leveraging of resources, it has facilitated dialogue, it has fostered the creation and growth of industry alliances, it has built capacity for doing business -- and all that entails -- on both sides of the Atlantic. AGOA is telling a different story in Africa -- it does not look like the conventional story of increased trade."
In some ways, the hub is right. Trade has increased in Africa, "AGOA not only eliminated the tariffs on 6,400 products -- it also put in place annual forums between U.S. and African governments and initiated the Trade Hubs." That is good news, but the reality on the ground is the average trader, artisan groups and small companies are not experiencing the increase. Quite the opposite. Just take a look at the decrease in the number of traders across New York or the lack of African goods in stores across the countries. Even more so, the number of exporters at trade shows for crafts and gifts have decreased.
In other areas of trade, AGOA is working well. It is building traction and using collaboration and partnerships together. "One of the best examples of the Trade Hub's impact in West Africa is our work in building industry alliances. These are good for the public and private sectors. When we co-founded the African Cashew Alliance in 2006 many people were skeptical of what it could or would do" says Abou Fall.
As much as the USAID West Africa Trade Hub has trained hundreds of exporting companies, customs officials and other stakeholders on AGOA. It admits to some key issues. "Building cooperation and collaboration within an industry is a huge challenge no matter where you undertake it -- when you do that in a region where the regional connections are tenuous, with language and cultural gaps, it's a challenge arguably on another level. Awareness of AGOA -- in the U.S. and in Africa -- is a constraint. And awareness of Africa as a good place to do business is an issue, too, that limits the impact of AGOA."
And more importantly, the issues are enormous for AGOA to work. The trade hub admits that "in order to fully take advantage of AGOA, African countries must resolve issues that hamper their competitiveness such as infrastructure, cost of production, and some "soft" infrastructural issues such as setting up the adequate procedural systems to facilitate exports, and implementing specific sector strategies to boost exports." Are African countries listening to this?
AGOA is up for renewal soon, or more precisely an extension -- the third-country fabric exemption. Fall says, "this exemption means if you are producing apparel using fabric you bought in, say, China, you still benefit from the AGOA preferences. So, the source of the fabric is not disqualifying. In Africa, this exemption is very important because of the lack of capacity to produce fabric. Apparel manufacturers count on AGOA particularly because margins are so thin but potential volumes so high. A further extension of AGOA will also give a signal to investors who have more time to plan out their investment decisions and expand their fledgling operations."
I ask, how beneficial is this third country extension if the raw material is not from Africa? Who benefits? Both -- one African country and the third country -- which might not be African? Trade Negotiations are a tangled web. AGOA is good for Africa, but it needs to be user-friendly for the average African. It needs to be simplified.
Huffington Post
November 13, 2011
$500 million South Africa-Oman joint fund in the pipeline
by A. E. James
The formation of a $500-million joint fund for investment in South Africa and Oman is likely to be on the agenda, when the African country’s President Jacob Zuma visits the Sultanate on November 15.
Both the countries have already expressed their intention on the possible formation of an investment fund, on the lines of India Oman Joint Investment Fund.
“It is in the pipeline and we will discuss on that,” said Yusuf Saloojee, South African ambassador to the Sultanate.
Saloojee said although both countries are looking at signing a series of agreements on mutual cooperation, only an agreement on avoidance of double taxation is ready for signing during the President’s visit.
Other proposed areas of cooperation include agriculture, defence, higher education and art and culture.Zuma is leading a 50-member strong business delegation, representing a wide range of industries. Four members from his cabinet are also accompanying him for strengthening economic cooperation between the two countries.
Saloojee earlier said that the two-way trade between Oman and South Africa in 2010 was only $117 million, which is relatively low.
As much as 70 per cent of South Africa’s exports are mainly iron and steel products, while its imports from Oman are mainly mineral products.
The private players in South Africa and Oman have already signed an agreement to form a consortium to establish a large cold storage warehouse facility for fresh produce in Sohar, which will enable re-exports of fresh produce to the entire region from Oman.
The new warehouse facility is coming up at Sohar in coordination with Johannesburg Market, popularly known as Joburg Market — the biggest agency in Africa that facilitates the sale of fresh produce between farmers and buyers. This facility, which is coming up in joint venture with Omani partners, will help South Africa to relocate their present re-export hub from Dubai and will have an investment of $43.7 million.
The Sohar facility is coming up in an area of 10 hectares of land. All major fruits and vegetables will be directly brought to Sohar from South Africa for redistributing in the region, which include neighbouring Gulf Cooperation Council states.
Oman imports citrus fruit, apple, pears and grapes from South Africa, which is presently coming through Dubai’s Jebel Ali port.
Once the facility is established in Sohar, products will reach here fast and there will be a reduction in transportation cost.
Johannesburg Market, a wholly owned entity of the city of Johannesburg Municipality, deals in over 1 million tonnes of fresh produce every year, making it the largest in the world in terms of volume. The market, which has a turnover of $510 million per annum, offers guaranteed year-round supply from some 15,000 producers.
Times of Oman
The formation of a $500-million joint fund for investment in South Africa and Oman is likely to be on the agenda, when the African country’s President Jacob Zuma visits the Sultanate on November 15.
Both the countries have already expressed their intention on the possible formation of an investment fund, on the lines of India Oman Joint Investment Fund.
“It is in the pipeline and we will discuss on that,” said Yusuf Saloojee, South African ambassador to the Sultanate.
Saloojee said although both countries are looking at signing a series of agreements on mutual cooperation, only an agreement on avoidance of double taxation is ready for signing during the President’s visit.
Other proposed areas of cooperation include agriculture, defence, higher education and art and culture.Zuma is leading a 50-member strong business delegation, representing a wide range of industries. Four members from his cabinet are also accompanying him for strengthening economic cooperation between the two countries.
Saloojee earlier said that the two-way trade between Oman and South Africa in 2010 was only $117 million, which is relatively low.
As much as 70 per cent of South Africa’s exports are mainly iron and steel products, while its imports from Oman are mainly mineral products.
The private players in South Africa and Oman have already signed an agreement to form a consortium to establish a large cold storage warehouse facility for fresh produce in Sohar, which will enable re-exports of fresh produce to the entire region from Oman.
The new warehouse facility is coming up at Sohar in coordination with Johannesburg Market, popularly known as Joburg Market — the biggest agency in Africa that facilitates the sale of fresh produce between farmers and buyers. This facility, which is coming up in joint venture with Omani partners, will help South Africa to relocate their present re-export hub from Dubai and will have an investment of $43.7 million.
The Sohar facility is coming up in an area of 10 hectares of land. All major fruits and vegetables will be directly brought to Sohar from South Africa for redistributing in the region, which include neighbouring Gulf Cooperation Council states.
Oman imports citrus fruit, apple, pears and grapes from South Africa, which is presently coming through Dubai’s Jebel Ali port.
Once the facility is established in Sohar, products will reach here fast and there will be a reduction in transportation cost.
Johannesburg Market, a wholly owned entity of the city of Johannesburg Municipality, deals in over 1 million tonnes of fresh produce every year, making it the largest in the world in terms of volume. The market, which has a turnover of $510 million per annum, offers guaranteed year-round supply from some 15,000 producers.
Times of Oman
November 11, 2011
Angola passes law to force oil firms to use local banks
Angola's parliament on November 10 approved a law that forces overseas oil companies to pay their taxes and other transactions through the country's banking system, state news agency Angop reported.
The new law means oil companies active in Africa's second largest crude producer after Nigeria will have to pay their taxes and their bills from overseas sub-contractors and suppliers in dollars through local banks.
Analysts have said the government has shown determination in winning its long battle with the oil companies to force them to use the domestic banks.
Delays in passing oil legislation have deterred foreign partners from investing in Nigeria and turned their focus to Angola, enticed by the prospect of huge finds in ultra-deep water blocks known as sub-salt.
Already present in various deep water blocks off the Angolan coast, Britain's BP, France's Total, and Italy's Eni are among the international majors that were earlier this year awarded concessions to explore promising ultra-deep water blocks known as sub-salt.
Until now, the international oil firms were allowed to use overseas banks for their activities in Angola under a special regime, mainly because the African country's banking system was seen as still developing and unable to handle the transactions.
Angop said the wording of the bill shows the government believes the national financial system has now developed sufficiently to take an active role processing the oil industry's transactions.
Analysts say the Angolan banking sector is solid, with its banks well managed and boasting resilient asset quality.
The country's main banks, which include state-owned Banco Africano de Investimento and local units of Portugal's Banco Espirito Santo and Banco BPI, are set to get a capital boost from the law, with some analysts saying around $10 billion could enter the financial system each year.
Angola's economy relies heavily on oil revenues, which make up around 45 percent of gross domestic product and over 90 percent of export income.
Central bank Governor Jose de Lima Massano said last month the new law will help shore up the country's foreign reserves, an effort seen as crucial to protect the economy from the risk of shocks from possible oil price and demand drops.
Reuters
The new law means oil companies active in Africa's second largest crude producer after Nigeria will have to pay their taxes and their bills from overseas sub-contractors and suppliers in dollars through local banks.
Analysts have said the government has shown determination in winning its long battle with the oil companies to force them to use the domestic banks.
Delays in passing oil legislation have deterred foreign partners from investing in Nigeria and turned their focus to Angola, enticed by the prospect of huge finds in ultra-deep water blocks known as sub-salt.
Already present in various deep water blocks off the Angolan coast, Britain's BP, France's Total, and Italy's Eni are among the international majors that were earlier this year awarded concessions to explore promising ultra-deep water blocks known as sub-salt.
Until now, the international oil firms were allowed to use overseas banks for their activities in Angola under a special regime, mainly because the African country's banking system was seen as still developing and unable to handle the transactions.
Angop said the wording of the bill shows the government believes the national financial system has now developed sufficiently to take an active role processing the oil industry's transactions.
Analysts say the Angolan banking sector is solid, with its banks well managed and boasting resilient asset quality.
The country's main banks, which include state-owned Banco Africano de Investimento and local units of Portugal's Banco Espirito Santo and Banco BPI, are set to get a capital boost from the law, with some analysts saying around $10 billion could enter the financial system each year.
Angola's economy relies heavily on oil revenues, which make up around 45 percent of gross domestic product and over 90 percent of export income.
Central bank Governor Jose de Lima Massano said last month the new law will help shore up the country's foreign reserves, an effort seen as crucial to protect the economy from the risk of shocks from possible oil price and demand drops.
Reuters
November 10, 2011
Nigeria-China trade set to hit $10billion by the end of 2011
The trade volume between Nigeria and China will hit $10billion by the end of 2011, the Chinese government has said. China’s Deputy-Minister for Commerce, Mr. Fu Ziying, disclosed this during a meeting with the Nigerian Minister of Trade and Investment, Olusegun Aganga, in Beijing.
He added that Chinese companies had invested a total of $8.3billion in Nigeria, noting that they were also involved in engineering projects worth $28.1billion in the country.
Jian said the Chinese government would encourage Chinese companies to continue to invest in Nigeria if the Nigerian government could pay more attention to improving the business environment, pursue consistent policies and provide security for foreign investors.
He said, “This year marks the 40th year of bilateral relationship between Nigeria and China. By the end of this year, trade volume between China and Nigeria will be US$10billion. This will be record high. Chinese companies also have actual investments worth US$8.3billion in Nigeria. “We will encourage our companies to step up their investments in your country if the Nigerian government can make the business environment more friendly, ensure consistent policies and provide adequate security for foreign investors.”
He noted that the decision to have a ministry oversee investment issues in Nigeria, however, showed that the government was committed to attracting Foreign Direct Investment into the country, adding that China’s Ministry of Commerce would cooperate with the Nigerian Ministry of Trade and Investment in the area of capacity building for ministry officials. According to the deputy minister, going forward, the two countries should focus on further developing bilateral trade and further increasing the quality of trade between them.
He added that China was willing to take measures to increase the import of oil and non-oil products from Nigeria in order to boost trade. On his part, Aganga, the Nigerian Trade and Investment Minister, noted that Nigeria regarded China as a strategic partner, assuring the Chinese government that the investment climate reform, which the Nigerian government commenced recently, would provide the right environment for the Chinese to further invest in critical areas such as infrastructure.
He urged the Chinese government to make Nigeria a manufacturing zone for most of China’s products, saying that this would help to create more jobs in the country and resolve the trade imbalance issue. “Nigeria has the raw materials and the market needed for fruitful investments. Your country (China) has the capital and technology. An enhanced investment relationship will be a win-win situation for the two countries,” Aganga noted.
He called on the Chinese government to help reduce the infrastructure deficit in Nigeria by encouraging Chinese companies to invest more in power, rail and road projects, adding that “Nigeria will continue to record double-digit growth every year for the next 20 years if infrastructure is fixed.”
The trade and investment minister, however, implored the two countries to sign the Memorandum of Understanding on the trading of quality products to solve the problem of sub-standard goods being imported into Nigeria.
The Vanguard
He added that Chinese companies had invested a total of $8.3billion in Nigeria, noting that they were also involved in engineering projects worth $28.1billion in the country.
Jian said the Chinese government would encourage Chinese companies to continue to invest in Nigeria if the Nigerian government could pay more attention to improving the business environment, pursue consistent policies and provide security for foreign investors.
He said, “This year marks the 40th year of bilateral relationship between Nigeria and China. By the end of this year, trade volume between China and Nigeria will be US$10billion. This will be record high. Chinese companies also have actual investments worth US$8.3billion in Nigeria. “We will encourage our companies to step up their investments in your country if the Nigerian government can make the business environment more friendly, ensure consistent policies and provide adequate security for foreign investors.”
He noted that the decision to have a ministry oversee investment issues in Nigeria, however, showed that the government was committed to attracting Foreign Direct Investment into the country, adding that China’s Ministry of Commerce would cooperate with the Nigerian Ministry of Trade and Investment in the area of capacity building for ministry officials. According to the deputy minister, going forward, the two countries should focus on further developing bilateral trade and further increasing the quality of trade between them.
He added that China was willing to take measures to increase the import of oil and non-oil products from Nigeria in order to boost trade. On his part, Aganga, the Nigerian Trade and Investment Minister, noted that Nigeria regarded China as a strategic partner, assuring the Chinese government that the investment climate reform, which the Nigerian government commenced recently, would provide the right environment for the Chinese to further invest in critical areas such as infrastructure.
He urged the Chinese government to make Nigeria a manufacturing zone for most of China’s products, saying that this would help to create more jobs in the country and resolve the trade imbalance issue. “Nigeria has the raw materials and the market needed for fruitful investments. Your country (China) has the capital and technology. An enhanced investment relationship will be a win-win situation for the two countries,” Aganga noted.
He called on the Chinese government to help reduce the infrastructure deficit in Nigeria by encouraging Chinese companies to invest more in power, rail and road projects, adding that “Nigeria will continue to record double-digit growth every year for the next 20 years if infrastructure is fixed.”
The trade and investment minister, however, implored the two countries to sign the Memorandum of Understanding on the trading of quality products to solve the problem of sub-standard goods being imported into Nigeria.
The Vanguard
Zimbabwe seeks to renegotiate iron ore deal with Indian investor
by Gibbs Dube
Zimbabwean Deputy Mines Minister Gift Chimanikire says the government wants to reopen negotiations on a deal it made with Essar Africa Holdings of India to relaunch the Zimbabwe Iron and Steel Company, now called New Zimbabwe Steel Limited.
Chimanikire said Zimbabwe is in talks with Essar to claw back rights to iron ore reserves granted to Essar under the US$750 million deal. The mineral rights are held by New Zimbabwe Minerals, a subsidiary of the relaunched national steel company.
The deputy minister said Essar is extracting iron ore and preparations to refurbish the Redcliff steel plant are at an advanced stage. Neither Industry Minister Welshman Ncube, who negotiated the deal, nor Essar management, could be reached for comment.
Chimanikire said he hopes the new talks won’t derail the revival of the long-moribund steel maker. “Our concern is that Ncube did not consult the Ministry of Mines when they parceled out huge iron ore deposits to Essar,” Chimanikire said.
Economic commentator Bekithemba Mhlanga said the government should not have signed the agreement with Essar without carefully scrutinizing its terms
VOA
Zimbabwean Deputy Mines Minister Gift Chimanikire says the government wants to reopen negotiations on a deal it made with Essar Africa Holdings of India to relaunch the Zimbabwe Iron and Steel Company, now called New Zimbabwe Steel Limited.
Chimanikire said Zimbabwe is in talks with Essar to claw back rights to iron ore reserves granted to Essar under the US$750 million deal. The mineral rights are held by New Zimbabwe Minerals, a subsidiary of the relaunched national steel company.
The deputy minister said Essar is extracting iron ore and preparations to refurbish the Redcliff steel plant are at an advanced stage. Neither Industry Minister Welshman Ncube, who negotiated the deal, nor Essar management, could be reached for comment.
Chimanikire said he hopes the new talks won’t derail the revival of the long-moribund steel maker. “Our concern is that Ncube did not consult the Ministry of Mines when they parceled out huge iron ore deposits to Essar,” Chimanikire said.
Economic commentator Bekithemba Mhlanga said the government should not have signed the agreement with Essar without carefully scrutinizing its terms
VOA
Nigeria moving to drop fuel subsidy
by Scott Stearns
Nigeria is moving to stop a $7.5 billion consumer-fuel subsidy because the government says it can better spend those funds improving public services. Trade unions oppose the move, saying it will force up the cost of living.
Africa's largest oil producer refines little of its own petroleum. So Nigerian governments have traditionally subsidized the cost of imported fuel to keep consumer prices at about 40 cents per liter.
In its medium-term fiscal report to parliament, Nigeria's budget office says those subsidies will next year cost the government $7.5 billion at a time when rising demand for dollars to purchase refined fuel is making it harder to maintain the value of the Nigerian currency.
So President Goodluck Jonathan's government says it intends to do away with fuel subsidies and spend the money instead on social services and infrastructure.
Rivers State Governor Rotimi Amaechi is a member of Nigeria's National Economic Council which supports the move.
"We believe it is in the interest of this country," said Amaechi. "We will save money for the development of the economy. And at the end of the day we will provide opportunities for the greater percentage of Nigerians.”
Chief Solomon Osiobe says Nigerians should give up their dependency on subsidized fuel for the greater good.
"We Nigerians, we try to make sacrifices for the good of the nation," said Osiobe. "It is good that we make some sacrifice so that means we can move forward. So this removal of fuel subsidy I am in total support of it if it will bring progress to this country.”
Nigerian trade unions are threatening nationwide strikes if fuel subsidies are dropped. Local government worker Evelyn Akpoku says Nigerians can not afford the higher costs that would follow.
"Right now, the people are facing hardship," said Akpoku. "They are unable to even cook with this kerosene problem. Removing the subsidy will increase their problems. Transport will increase. Food will increase because the transporter will have to get his money from the populous who will be boarding their vehicles.”
University of Abuja economics and political science lecturer Abubakar Sadiq Abba says government must convince Nigerians that it will not misuse the money saved.
"Are we sure the leaders in Nigeria are going to utilize this particular amount that they are going to accrue from the removal of subsidy judiciously and prudently? These are questions that every Nigerian is asking,” said Abba.
Economists who favor eliminating the subsidy say it mostly benefits a cabal of a few hundred fuel traders who are getting rich off the price support. Abba says that is no excuse.
"If the government knows this cabal, if the government knows these people why can't they be arrested? Why can't they be prosecuted,” he said.
Local government worker Akpoku agrees.
“What does the federal government mean by the fuel subsidy money going to the wrong hands? The federal government is in charge," said Apoku. "He should find out who the wrong hands are and then remove the money from the wrong hands and send it to the right hands.”
Rivers State Governor Amaechi says those few Nigerians who benefit disproportionately from the fuel subsidy will only grow richer if it is kept in place because of what he says are legitimate concerns over how that money will otherwise be spent.
"What will be the outcome? What are you going to do to improve on the lives of the people," said Amaechi. "If that is the conversation, they have the governors on their side. But if it is to say, 'No, leave the subsidy the way it is,” and a few Nigerians are benefiting from it to the detriment of over 140 million Nigerians, I won't agree to that.”
National Planning Minister Shamsudeen Usman says the government is working with trade unions to put in place economic safety nets to protect lower income Nigerians from higher fuel costs.
VOA
Nigeria is moving to stop a $7.5 billion consumer-fuel subsidy because the government says it can better spend those funds improving public services. Trade unions oppose the move, saying it will force up the cost of living.
Africa's largest oil producer refines little of its own petroleum. So Nigerian governments have traditionally subsidized the cost of imported fuel to keep consumer prices at about 40 cents per liter.
In its medium-term fiscal report to parliament, Nigeria's budget office says those subsidies will next year cost the government $7.5 billion at a time when rising demand for dollars to purchase refined fuel is making it harder to maintain the value of the Nigerian currency.
So President Goodluck Jonathan's government says it intends to do away with fuel subsidies and spend the money instead on social services and infrastructure.
Rivers State Governor Rotimi Amaechi is a member of Nigeria's National Economic Council which supports the move.
"We believe it is in the interest of this country," said Amaechi. "We will save money for the development of the economy. And at the end of the day we will provide opportunities for the greater percentage of Nigerians.”
Chief Solomon Osiobe says Nigerians should give up their dependency on subsidized fuel for the greater good.
"We Nigerians, we try to make sacrifices for the good of the nation," said Osiobe. "It is good that we make some sacrifice so that means we can move forward. So this removal of fuel subsidy I am in total support of it if it will bring progress to this country.”
Nigerian trade unions are threatening nationwide strikes if fuel subsidies are dropped. Local government worker Evelyn Akpoku says Nigerians can not afford the higher costs that would follow.
"Right now, the people are facing hardship," said Akpoku. "They are unable to even cook with this kerosene problem. Removing the subsidy will increase their problems. Transport will increase. Food will increase because the transporter will have to get his money from the populous who will be boarding their vehicles.”
University of Abuja economics and political science lecturer Abubakar Sadiq Abba says government must convince Nigerians that it will not misuse the money saved.
"Are we sure the leaders in Nigeria are going to utilize this particular amount that they are going to accrue from the removal of subsidy judiciously and prudently? These are questions that every Nigerian is asking,” said Abba.
Economists who favor eliminating the subsidy say it mostly benefits a cabal of a few hundred fuel traders who are getting rich off the price support. Abba says that is no excuse.
"If the government knows this cabal, if the government knows these people why can't they be arrested? Why can't they be prosecuted,” he said.
Local government worker Akpoku agrees.
“What does the federal government mean by the fuel subsidy money going to the wrong hands? The federal government is in charge," said Apoku. "He should find out who the wrong hands are and then remove the money from the wrong hands and send it to the right hands.”
Rivers State Governor Amaechi says those few Nigerians who benefit disproportionately from the fuel subsidy will only grow richer if it is kept in place because of what he says are legitimate concerns over how that money will otherwise be spent.
"What will be the outcome? What are you going to do to improve on the lives of the people," said Amaechi. "If that is the conversation, they have the governors on their side. But if it is to say, 'No, leave the subsidy the way it is,” and a few Nigerians are benefiting from it to the detriment of over 140 million Nigerians, I won't agree to that.”
National Planning Minister Shamsudeen Usman says the government is working with trade unions to put in place economic safety nets to protect lower income Nigerians from higher fuel costs.
VOA
South Africa wants to review Wal-Mart deal
South Africa's government on Thursday said that approval of US retail giant's Wal-Mart's $2.04 billion takeover of the local Massmart group was flawed and it should be sent back for review.
The 16.5 billion rand (1.5 billion euro) deal is being challenged by three government ministries who want it sent back to anti-trust authorities who in May gave the world's largest retailer its first foothold in Africa.
"The question before the court is whether the merger can be or not be justified on public interest grounds," senior counsel for the state Wim Trengrove told the Competition Appeal Court.
Trengrove said the Competition Tribunal which approved the merger on May 31 had erred by not requiring that the two companies show how local business would be affected and what measures they would put in place to counter this.
"It should have placed the onus on the merging partners to demonstrate what the extent of the import substitutions will be," he said.
The minsters of trade, economic development and agriculture fear that the merger will affect local suppliers and jobs through the US giant's global buying power and want more measures to protect the local market.
While it does not oppose the merger, the government has argued the hearing was unfair and that the tribunal failed to allow a full airing of concerns and that it did not order that all of the information the state requested be disclosed.
It was "unimaginable" that the companies would make buying decisions on local and global suppliers without calculating the costs, said Trengrove, who argued that the state were not given what should be a "routine" calculation.
In reply, senior counsel Jeremy Gauntlett countered there had been no indication that Wal-Mart and Massmart had "some treasure trove of additional information.
"We don't have the information. Our client didn't get cute," he added, saying supplier lists were not kept.
The parties argue that there is no evidence that the trade balance will be affected through increased imports, saying that did not make commercial sense in most cases.
Trade unions have also criticised the deal, with an appeal lodged by the South African Commercial, Catering and Allied Workers Union that is being heard at the same time.
A group of protesters demonstrated outside the Cape High Court where the hearings are set to continue Friday and possibly Monday.
The two companies are opposing the review and appeal.
Wal-Mart was given the go-ahead by the Competition Tribunal on May 31 to buy a 51 percent stake in Massmart, provided the US retailer does not lay off any workers for two years.
The retailer also agreed to a 100 million rands ($15 million) fund to develop South African local manufacturers but the government says that this the ministers said this might not be enough.
Massmart runs nine wholesale and retail chains with 288 stores in 14 African countries.
AFP
The 16.5 billion rand (1.5 billion euro) deal is being challenged by three government ministries who want it sent back to anti-trust authorities who in May gave the world's largest retailer its first foothold in Africa.
"The question before the court is whether the merger can be or not be justified on public interest grounds," senior counsel for the state Wim Trengrove told the Competition Appeal Court.
Trengrove said the Competition Tribunal which approved the merger on May 31 had erred by not requiring that the two companies show how local business would be affected and what measures they would put in place to counter this.
"It should have placed the onus on the merging partners to demonstrate what the extent of the import substitutions will be," he said.
The minsters of trade, economic development and agriculture fear that the merger will affect local suppliers and jobs through the US giant's global buying power and want more measures to protect the local market.
While it does not oppose the merger, the government has argued the hearing was unfair and that the tribunal failed to allow a full airing of concerns and that it did not order that all of the information the state requested be disclosed.
It was "unimaginable" that the companies would make buying decisions on local and global suppliers without calculating the costs, said Trengrove, who argued that the state were not given what should be a "routine" calculation.
In reply, senior counsel Jeremy Gauntlett countered there had been no indication that Wal-Mart and Massmart had "some treasure trove of additional information.
"We don't have the information. Our client didn't get cute," he added, saying supplier lists were not kept.
The parties argue that there is no evidence that the trade balance will be affected through increased imports, saying that did not make commercial sense in most cases.
Trade unions have also criticised the deal, with an appeal lodged by the South African Commercial, Catering and Allied Workers Union that is being heard at the same time.
A group of protesters demonstrated outside the Cape High Court where the hearings are set to continue Friday and possibly Monday.
The two companies are opposing the review and appeal.
Wal-Mart was given the go-ahead by the Competition Tribunal on May 31 to buy a 51 percent stake in Massmart, provided the US retailer does not lay off any workers for two years.
The retailer also agreed to a 100 million rands ($15 million) fund to develop South African local manufacturers but the government says that this the ministers said this might not be enough.
Massmart runs nine wholesale and retail chains with 288 stores in 14 African countries.
AFP
Swiss not turned on by African food
Mohamadou Houmfa
“There are some curious locals who buy our products from time to time. But our regular customers are Africans and their Swiss in-laws,” says Mrs Malambu, the manager of the ‘Africa Food’ grocery.
“Some of our African brothers have adopted the country’s eating habits”, Mrs Malambu notes. There are many reasons for the Swiss indifference towards African cuisine. “African dishes take time prepare. Not everyone has the patience”, explains the Congolese woman.
According to Galetto, who manages a grocery store called Global Food in Lausanne, “in terms of quality, African cuisine is not very good. A lot of flour is used, which makes it high in calories. When the food is heavy, the Swiss people have digestive problems”.
In fact, people in Switzerland eat lighter meals than their African counterparts. That is why fruit and vegetables tend to sell better. “Customers mostly prefer fair-trade products like, for instance pineapples from Kenya”, reveals Monica Weibel from the communications office of Migros in Geneva.
Migros is the largest supermarket chain in Switzerland. A similar trend is also observed at the Co-op, another supermarket chain, where tomatoes from Morocco, vegetables from Kenya, and avocados and pineapples from South Africa are among the most popular African products.
The limited availability of African products in Switzerland is not only due to the eating habits of the Swiss population. Many retailers and experts have deplored the constraints of the Swiss market. “The agricultural sector in Switzerland is amongst the most protected in Europe”, jointly admit Carine Smaller from the IISD (International Institute for Sustainable Development) and Jonathan Hepburn from the ICTSD (International Centre for Trade and Sustainable Development).
“For instance, import tariffs on South African and Namibian meat and on potatoes from North Africa are as high as 389% and 307%, respectively”, denounces Hepburn. “The Swiss market is a small market and producers here are not competitive. That’s why the government imposes such high tariffs”, explains Carine Smaller.
Importers it seems are the ones paying the price. “Cameroon, for example, does not have trade agreements with Switzerland. Therefore, the products we import from that country are overtaxed”, complains Galetto.
In order to circumvent these trade barriers, Jonathan Hepburn suggests that African countries negotiate better terms of trade. “African countries can influence tariffs through agreements such as the Doha Accords”, he explains. However, the difficulties we face with importing are not only due to Swiss regulations. Mr Tabot, the manager of an Ethiopian restaurant called “Awash”, complains about the complications of importing spices from Ethiopia: “It’s not easy to import because of Ethiopian customs duties. We pay so much tax and that it ends up discouraging us from importing”.
Yet, the State Secretary for Economic Affairs (SECO) which is based in the capital, Bern, has recommended that the Swiss government increases imports. Hans-Peter Egler, Head of the Trade Promotion Unit at SECO, noted that “Switzerland has been implementing, since April 2007, new regulations for preferential tariffs and has introduced a quota-free policy for products from least developed countries (LDCs). The Swiss Import Promotion Programme, has been set up to promote imports from developing countries. Furthermore, public-private partnerships support the development of a sustainable value chain for the cocoa, coffee and walnut industries”.
Despite all the difficulties, official figures indicate that trade between Africa and Switzerland is growing. According to SECO, agricultural imports have increased from 89 million Swiss francs (71 million Euros) in 2006 to 187 million Swiss francs (150 million Euros) in 2010. Hopefully, other sectors of the African food industry will also benefit from this positive trend in the future.
Radio Netherlands
“There are some curious locals who buy our products from time to time. But our regular customers are Africans and their Swiss in-laws,” says Mrs Malambu, the manager of the ‘Africa Food’ grocery.
“Some of our African brothers have adopted the country’s eating habits”, Mrs Malambu notes. There are many reasons for the Swiss indifference towards African cuisine. “African dishes take time prepare. Not everyone has the patience”, explains the Congolese woman.
According to Galetto, who manages a grocery store called Global Food in Lausanne, “in terms of quality, African cuisine is not very good. A lot of flour is used, which makes it high in calories. When the food is heavy, the Swiss people have digestive problems”.
In fact, people in Switzerland eat lighter meals than their African counterparts. That is why fruit and vegetables tend to sell better. “Customers mostly prefer fair-trade products like, for instance pineapples from Kenya”, reveals Monica Weibel from the communications office of Migros in Geneva.
Migros is the largest supermarket chain in Switzerland. A similar trend is also observed at the Co-op, another supermarket chain, where tomatoes from Morocco, vegetables from Kenya, and avocados and pineapples from South Africa are among the most popular African products.
The limited availability of African products in Switzerland is not only due to the eating habits of the Swiss population. Many retailers and experts have deplored the constraints of the Swiss market. “The agricultural sector in Switzerland is amongst the most protected in Europe”, jointly admit Carine Smaller from the IISD (International Institute for Sustainable Development) and Jonathan Hepburn from the ICTSD (International Centre for Trade and Sustainable Development).
“For instance, import tariffs on South African and Namibian meat and on potatoes from North Africa are as high as 389% and 307%, respectively”, denounces Hepburn. “The Swiss market is a small market and producers here are not competitive. That’s why the government imposes such high tariffs”, explains Carine Smaller.
Importers it seems are the ones paying the price. “Cameroon, for example, does not have trade agreements with Switzerland. Therefore, the products we import from that country are overtaxed”, complains Galetto.
In order to circumvent these trade barriers, Jonathan Hepburn suggests that African countries negotiate better terms of trade. “African countries can influence tariffs through agreements such as the Doha Accords”, he explains. However, the difficulties we face with importing are not only due to Swiss regulations. Mr Tabot, the manager of an Ethiopian restaurant called “Awash”, complains about the complications of importing spices from Ethiopia: “It’s not easy to import because of Ethiopian customs duties. We pay so much tax and that it ends up discouraging us from importing”.
Yet, the State Secretary for Economic Affairs (SECO) which is based in the capital, Bern, has recommended that the Swiss government increases imports. Hans-Peter Egler, Head of the Trade Promotion Unit at SECO, noted that “Switzerland has been implementing, since April 2007, new regulations for preferential tariffs and has introduced a quota-free policy for products from least developed countries (LDCs). The Swiss Import Promotion Programme, has been set up to promote imports from developing countries. Furthermore, public-private partnerships support the development of a sustainable value chain for the cocoa, coffee and walnut industries”.
Despite all the difficulties, official figures indicate that trade between Africa and Switzerland is growing. According to SECO, agricultural imports have increased from 89 million Swiss francs (71 million Euros) in 2006 to 187 million Swiss francs (150 million Euros) in 2010. Hopefully, other sectors of the African food industry will also benefit from this positive trend in the future.
Radio Netherlands
The truth about the Chinese in Africa
by Charlie Pistorius |
...the layman, the non-economist, from the “average” citizen working in the informal sector, just getting by, to the seemingly high-end middle class workers taking the time to text and/or call in their opinions, are too a large degree venomously anti-China. Of course there is no new revelation about this fact.
Personally I work in the socio-political and economic space in dealing with BRIC and other frontier and emerging markets’ engagement in Africa. My focus is on large commercial and industrial deals, especially high-level dialogue, as well as small-and-medium trading initiatives … in all, capturing the opportunity and growth story that is Africa today.
We constantly have to defend the basic fundamentals that underpin the Chinese deals, their trade and political interactions. Yet as I am by no means an apologist, I do however want to briefly untangle just a modicum of the blatantly false and baseless arguments against the Chinese in Africa. This debate would require a book in itself, and there is no better one than the acclaimed Prof Brautigam’s ‘The Dragon’s Gift’ – which expertly and stoically debunks the many myths so liberally and limply salted with hot-blooded ire by the masses against the emerging giant.
One can most certainly empathise and understand the anger at loosing ones job, and the ensuing blame game that follows. There is a need to vent on to some wrongdoer. Yet don’t be so quick to blame the Chinese, instead blame neoclassic economics, the sort that flourished in the modern era under liberal free trade policies, open markets, and most of all, comparative advantages.
The sort of comparative advantage that insist you shift your productive efforts into those sectors and industrious exploits where you retain a competitive edge. Unfortunately, beyond resources – natural to hard and soft commodities – South Africa cannot hope to compete with the emerging giant economies like China. We have already lost our textile base because of basic trade advantages. The Asian emerging ‘factory of the world’ economies simply have a low-cost and skilled production process which is unrivalled, in cost, speed and efficiency.
The fact that really bites and hurts us as a country, is the double-edged sword of this comparative advantage trade flow. Consumers like cheap goods, the poor suddenly have access to previously unaffordable basics and absolute necessities (this single fact has been a true godsend in Africa), and the non-Gucci shopper can enjoy more disposable income via cheaper gadgets and apparel. Manufacturers like cheap goods as an intermediary or final product in the processing chain, it is the key ingredient of profitability and shareholder happiness.
That is to say, cheap goods are fine if they are of decent quality, and the Chinese have come leaps and bounds from the old days (a mere decade ago) where their goods were tainted as cheap but of substandard quality. Today I hear from managers in tech to construction and engineering industries that the equipment and goods they source from China compares and competes with the best.
Yet in all this, ‘Proudly South African’ is forgotten. Where is the balance in rather spending more, but supporting the local manufacturing sectors, even if that means cutting back and facing frugal spending.
South Africa cannot afford a trade war, which is inevitable if it would bring back inhibiting import quotas and tariffs. And if we decided to become protectionist by complimenting policy with strong subsidies for specific sectors, then again we risk WTO sanctions. This is in large part a moot point, because unlike China’s stockpile of US$3.2trn in foreign exchange reserves (almost ten-times that of South Africa’s entire GDP), South Africa doesn’t have the fiscal ability to afford subsidies for sectors where we simply cannot compete on a comparative trade advantage. Already, as a means of supporting Africa’s least-developed countries’ enterprises, China has implemented duty-free access into its market for near 600 exportable products (mostly industrial goods) from these African countries. Yet far more homegrown incentives are needed.
South Africa does however have a state that can man-up and look towards utilising taxation and loosening other forms of targeted legislation with the specific purpose of spurring industrial growth.
Deputy President Motlanthe’s statement during his China trip a couple of weeks ago could very well be read as a harbinger of a State Development story to come … in the domestic sphere that is. Commenting on the role of a need for strong leadership in Africa, he said “the state has to play a leading role in reshaping the economy so that it is better able to meet the needs of our people, particularly the working class, as well as the urban and the rural poor." Arguably, if China could teach us anything, it is in its excellent and enabling management of their state-owned enterprises, which has not only been the pillar of outward growth, but has successfully supported the creation of a fiercely competitive and robust private sector (which today contributes roughly three-quarters of its GDP).
Economist in this country widely believe and proclaim that it is time to avert our gaze from Panda-bashing, and instead start talking about how to fix our own internal broken labour laws and bureaucratic ‘black holes’, and address the dire lack of artisanal and technical skills training.
I have been in dialogue with African businessmen and eminent African scholars, and it is struck me as positively refreshing to hear how often the following sentiment is raised: South African labour needs a change in their working culture, a reshaped mind-set, one that shifts away from pure means of entitlement towards one of productive rewards – where disciplined hard work is rewarded via productivity, and not hand outs.
The other key arguments that debases the claims of blaming the Chinese, is that as much as there are indiscretions on the ground and imbalances in the trade and commercial engagement story, the New Scramble for Africa as led by the Chinese, and the way in which they approach African nations (with business-first ethics and without, or shall we say relatively limited domestic interference), has opened the floodgates to many new opportunities.
On the tailcoats of China’s rampant drive, India (especially) has followed suit closely, Brazil and Russia too, and increasingly the Turkish and South Koreans are aggressively vying for a foothold. The emerging players in Africa are offering not only a direct challenge to the traditional partners, but they are offering a wider pool of financing, opening up previously untapped resource projects, and most importantly, allowing for a new dialogue towards bargaining for commercial favour. This ‘arbitrage’ process (perfectly akin to open market dynamics) is creating a convergence towards “better” practices on the ground.
With the likes of Zambia’s new populous (outwardly anti-Chinese) President Michael Sata, we are seeing African stakeholders waking to the realisation that they now have in their hands the power to gain more beneficial terms of trade and commercial outcomes with the BRICS and beyond emerging players - from use of local labour, domestic contractors and reinvested capital for positive local skills and technical feedback.
In a subsequent contribution I will untangle the BRICS’ Way into Africa, touching on the different modus operandi of these and other emerging players, their different appetite for risk, long-term investment horizons, and their way in changing the rules of the game in Africa.
*Charlie Pistorius is schooled in applied mathematics, finance, economics and history. He works for Frontier Advisory (Pty) Ltd - a leading capital advisory and research firm specialising in emerging markets. He also writes a topical blog at -www.toseque.com
Moneyweb
...the layman, the non-economist, from the “average” citizen working in the informal sector, just getting by, to the seemingly high-end middle class workers taking the time to text and/or call in their opinions, are too a large degree venomously anti-China. Of course there is no new revelation about this fact.
Personally I work in the socio-political and economic space in dealing with BRIC and other frontier and emerging markets’ engagement in Africa. My focus is on large commercial and industrial deals, especially high-level dialogue, as well as small-and-medium trading initiatives … in all, capturing the opportunity and growth story that is Africa today.
We constantly have to defend the basic fundamentals that underpin the Chinese deals, their trade and political interactions. Yet as I am by no means an apologist, I do however want to briefly untangle just a modicum of the blatantly false and baseless arguments against the Chinese in Africa. This debate would require a book in itself, and there is no better one than the acclaimed Prof Brautigam’s ‘The Dragon’s Gift’ – which expertly and stoically debunks the many myths so liberally and limply salted with hot-blooded ire by the masses against the emerging giant.
One can most certainly empathise and understand the anger at loosing ones job, and the ensuing blame game that follows. There is a need to vent on to some wrongdoer. Yet don’t be so quick to blame the Chinese, instead blame neoclassic economics, the sort that flourished in the modern era under liberal free trade policies, open markets, and most of all, comparative advantages.
The sort of comparative advantage that insist you shift your productive efforts into those sectors and industrious exploits where you retain a competitive edge. Unfortunately, beyond resources – natural to hard and soft commodities – South Africa cannot hope to compete with the emerging giant economies like China. We have already lost our textile base because of basic trade advantages. The Asian emerging ‘factory of the world’ economies simply have a low-cost and skilled production process which is unrivalled, in cost, speed and efficiency.
The fact that really bites and hurts us as a country, is the double-edged sword of this comparative advantage trade flow. Consumers like cheap goods, the poor suddenly have access to previously unaffordable basics and absolute necessities (this single fact has been a true godsend in Africa), and the non-Gucci shopper can enjoy more disposable income via cheaper gadgets and apparel. Manufacturers like cheap goods as an intermediary or final product in the processing chain, it is the key ingredient of profitability and shareholder happiness.
That is to say, cheap goods are fine if they are of decent quality, and the Chinese have come leaps and bounds from the old days (a mere decade ago) where their goods were tainted as cheap but of substandard quality. Today I hear from managers in tech to construction and engineering industries that the equipment and goods they source from China compares and competes with the best.
Yet in all this, ‘Proudly South African’ is forgotten. Where is the balance in rather spending more, but supporting the local manufacturing sectors, even if that means cutting back and facing frugal spending.
South Africa cannot afford a trade war, which is inevitable if it would bring back inhibiting import quotas and tariffs. And if we decided to become protectionist by complimenting policy with strong subsidies for specific sectors, then again we risk WTO sanctions. This is in large part a moot point, because unlike China’s stockpile of US$3.2trn in foreign exchange reserves (almost ten-times that of South Africa’s entire GDP), South Africa doesn’t have the fiscal ability to afford subsidies for sectors where we simply cannot compete on a comparative trade advantage. Already, as a means of supporting Africa’s least-developed countries’ enterprises, China has implemented duty-free access into its market for near 600 exportable products (mostly industrial goods) from these African countries. Yet far more homegrown incentives are needed.
South Africa does however have a state that can man-up and look towards utilising taxation and loosening other forms of targeted legislation with the specific purpose of spurring industrial growth.
Deputy President Motlanthe’s statement during his China trip a couple of weeks ago could very well be read as a harbinger of a State Development story to come … in the domestic sphere that is. Commenting on the role of a need for strong leadership in Africa, he said “the state has to play a leading role in reshaping the economy so that it is better able to meet the needs of our people, particularly the working class, as well as the urban and the rural poor." Arguably, if China could teach us anything, it is in its excellent and enabling management of their state-owned enterprises, which has not only been the pillar of outward growth, but has successfully supported the creation of a fiercely competitive and robust private sector (which today contributes roughly three-quarters of its GDP).
Economist in this country widely believe and proclaim that it is time to avert our gaze from Panda-bashing, and instead start talking about how to fix our own internal broken labour laws and bureaucratic ‘black holes’, and address the dire lack of artisanal and technical skills training.
I have been in dialogue with African businessmen and eminent African scholars, and it is struck me as positively refreshing to hear how often the following sentiment is raised: South African labour needs a change in their working culture, a reshaped mind-set, one that shifts away from pure means of entitlement towards one of productive rewards – where disciplined hard work is rewarded via productivity, and not hand outs.
The other key arguments that debases the claims of blaming the Chinese, is that as much as there are indiscretions on the ground and imbalances in the trade and commercial engagement story, the New Scramble for Africa as led by the Chinese, and the way in which they approach African nations (with business-first ethics and without, or shall we say relatively limited domestic interference), has opened the floodgates to many new opportunities.
On the tailcoats of China’s rampant drive, India (especially) has followed suit closely, Brazil and Russia too, and increasingly the Turkish and South Koreans are aggressively vying for a foothold. The emerging players in Africa are offering not only a direct challenge to the traditional partners, but they are offering a wider pool of financing, opening up previously untapped resource projects, and most importantly, allowing for a new dialogue towards bargaining for commercial favour. This ‘arbitrage’ process (perfectly akin to open market dynamics) is creating a convergence towards “better” practices on the ground.
With the likes of Zambia’s new populous (outwardly anti-Chinese) President Michael Sata, we are seeing African stakeholders waking to the realisation that they now have in their hands the power to gain more beneficial terms of trade and commercial outcomes with the BRICS and beyond emerging players - from use of local labour, domestic contractors and reinvested capital for positive local skills and technical feedback.
In a subsequent contribution I will untangle the BRICS’ Way into Africa, touching on the different modus operandi of these and other emerging players, their different appetite for risk, long-term investment horizons, and their way in changing the rules of the game in Africa.
*Charlie Pistorius is schooled in applied mathematics, finance, economics and history. He works for Frontier Advisory (Pty) Ltd - a leading capital advisory and research firm specialising in emerging markets. He also writes a topical blog at -www.toseque.com
Moneyweb
Power cuts to cut Senegal's 2011 economic growth
by David Lewis
The International Monetary Fund has revised down Senegal's economic growth forecast for 2011 to 4 percent, from 4.5 percent, due to the country's power cuts, according to an IMF statement.
The IMF said that inflation, which rose earlier in the year on higher food and fuel prices, should average around 3.6 percent for 2011.
Looking ahead, the Fund said spending on power generation and road projects should see economic growth in 2012 rise to 4.4 percent while inflation should remain below 3 percent.
Reuters
The International Monetary Fund has revised down Senegal's economic growth forecast for 2011 to 4 percent, from 4.5 percent, due to the country's power cuts, according to an IMF statement.
The IMF said that inflation, which rose earlier in the year on higher food and fuel prices, should average around 3.6 percent for 2011.
Looking ahead, the Fund said spending on power generation and road projects should see economic growth in 2012 rise to 4.4 percent while inflation should remain below 3 percent.
Reuters
Lesotho: Government to turn its back on textile industry
by Kristin Palitza
Lesotho’s textile sector – the country’s largest employer - is regarded by many as the only way out of the poverty trap in a tiny kingdom where more than half of the population lives on less than 1.25 dollars a day. But what many do not know is that the government and the World Bank have unofficially turned their backs on the sector and will soon cut important subsidies.
Makhoase Lethibelane, 30, works 10 long hours each day as a label printer at the Shinning Century Limited textile factory in Lesotho’s capital Maseru. Her work is repetitive, draining and badly paid. At the end of each month, Lethibelane takes home a meagre salary of 122 dollars. Her income not only has to support herself and her eight-year-old daughter, but also her unemployed parents. Still, Lethibelane says she feels "lucky to have a job, since many others have lost theirs."
Lesotho is one of Africa’s largest textile manufacturers, with the majority of its exports destined for the United States. The country boasts some 40 textile and apparel plants. But since the global economic crisis caused textile exports to dwindle, many of this country’s 60,000 textile workers lost their jobs.
At Shinning Century, half of the factory’s machines stand idle. Managing director Jennifer Chen says she had to lay off two-thirds of her staff over the past couple of years. She only employs 500 to 600 workers at the moment.
"We lost many orders due to the financial crisis," explains Chen. Some of her main customers, well- known U.S. brands GAP and Banana Republic, moved their business to China or Vietnam when the economic meltdown hit in order to save money on lower salaries in Asia, she says.
For the past few years, Lesotho had been a favourite textile-manufacturing destination due to the African Growth and Opportunities Act (AGOA), a tariff-preference programme designed by the U.S. government in 2004 to attract business to Africa.
The impact was immediate: numerous Asian investors took advantage of AGOA benefits and set up their factories in Lesotho. The number of textile jobs tripled in a country where nearly half the population is unemployed and one in four is HIV-positive.
"AGOA secures us business because it offers duty-free supply without quota limitations," says Chen, who hails from Taiwan. In addition, textile manufacturers have been receiving heavy subsidies from Lesotho’s government to keep the country attractive compared to Asian countries, where minimum salaries and worker’s rights are seldom observed.
Even though who benefits most from AGOA remains questionable – almost all of Lesotho’s clothing factories are owned by Asian immigrants who reap the main profits while Basotho workers scrape by on survival wages – both factory owners and the Basotho people have firmly placed their hopes on the revival of the local textile industry, eager to emulate Mauritius’ success in creating a competitive, high- end export market for textiles.
Poverty levels in this small Southern African constitutional monarchy have reached dramatic levels after the economic crisis caused a 60 percent decline of Lesotho’s share of Southern African Customs Union revenue and a drop in global diamond prices. Alternating floods and droughts have ruined subsistence agriculture, leaving tens of thousands food insecure.
According to the World Bank, Lesotho’s Gini coefficient – which measures inequality and ranges from 0, or perfect equality, to 1, or perfect inequality – is at 0.63 among the highest in the world. It has by far surpassed the threshold of 0.4 at which serious inequality could lead to social unrest.
With AGOA poised to expire in 2015, and Lesotho's preferential status with the U.S. thereby under threat, textile manufacturers as well as textile unions have been trying to come up with alternatives to rescue an industry on which the livelihoods of 40,000 workers and their families depend. "We have to find ways to develop a regional supply chain in the Southern African Development Community (SADC)," reckons Chen.
Union representatives demand diversification and expansion of the industry to stay competitive. "We need to start manufacturing production materials locally, like fabric, zips, hangers, buttons," says United Textile Employees general-secretary Bahlakoana Lebakae. "At the moment all our raw materials come from the East."
But unbeknown to unions and manufacturers, Lesotho’s government has made different plans.
"The textile sector lacks profitability. It’s no longer competitive internationally. Government has given up on it and clearly indicated to us it can’t subsidise the textile (industry) any longer," World Bank Lesotho senior operations officer Macmillan Anyanwu told IPS.
After consultation with the World Bank, Lesotho’s government decided to ditch the textile sector, to eventually cut the subsidies and instead invest in agriculture, horticulture, water management and tourism. "We need to diversify away from textiles into other areas," hinted Prime Minister Pakalitha Mosisili in February.
With the help of the World Bank, the government has been piloting new sector development since 2009.
"We are trying to find markets for (agricultural) products and water supply in and outside the (SADC) region. We also focus on increasing the capacity of small to medium-sized businesses and improving border services to boost economic growth," says Anyanwu, explaining some of the steps government has taken with the support of the World Bank.
By 2013, when the pilot phase comes to an end, government will officially adjust its economic policy to invest in the most promising sectors. What will become of the thousands of textile workers and their families remains unclear.
IPS News
Lesotho’s textile sector – the country’s largest employer - is regarded by many as the only way out of the poverty trap in a tiny kingdom where more than half of the population lives on less than 1.25 dollars a day. But what many do not know is that the government and the World Bank have unofficially turned their backs on the sector and will soon cut important subsidies.
Makhoase Lethibelane, 30, works 10 long hours each day as a label printer at the Shinning Century Limited textile factory in Lesotho’s capital Maseru. Her work is repetitive, draining and badly paid. At the end of each month, Lethibelane takes home a meagre salary of 122 dollars. Her income not only has to support herself and her eight-year-old daughter, but also her unemployed parents. Still, Lethibelane says she feels "lucky to have a job, since many others have lost theirs."
Lesotho is one of Africa’s largest textile manufacturers, with the majority of its exports destined for the United States. The country boasts some 40 textile and apparel plants. But since the global economic crisis caused textile exports to dwindle, many of this country’s 60,000 textile workers lost their jobs.
At Shinning Century, half of the factory’s machines stand idle. Managing director Jennifer Chen says she had to lay off two-thirds of her staff over the past couple of years. She only employs 500 to 600 workers at the moment.
"We lost many orders due to the financial crisis," explains Chen. Some of her main customers, well- known U.S. brands GAP and Banana Republic, moved their business to China or Vietnam when the economic meltdown hit in order to save money on lower salaries in Asia, she says.
For the past few years, Lesotho had been a favourite textile-manufacturing destination due to the African Growth and Opportunities Act (AGOA), a tariff-preference programme designed by the U.S. government in 2004 to attract business to Africa.
The impact was immediate: numerous Asian investors took advantage of AGOA benefits and set up their factories in Lesotho. The number of textile jobs tripled in a country where nearly half the population is unemployed and one in four is HIV-positive.
"AGOA secures us business because it offers duty-free supply without quota limitations," says Chen, who hails from Taiwan. In addition, textile manufacturers have been receiving heavy subsidies from Lesotho’s government to keep the country attractive compared to Asian countries, where minimum salaries and worker’s rights are seldom observed.
Even though who benefits most from AGOA remains questionable – almost all of Lesotho’s clothing factories are owned by Asian immigrants who reap the main profits while Basotho workers scrape by on survival wages – both factory owners and the Basotho people have firmly placed their hopes on the revival of the local textile industry, eager to emulate Mauritius’ success in creating a competitive, high- end export market for textiles.
Poverty levels in this small Southern African constitutional monarchy have reached dramatic levels after the economic crisis caused a 60 percent decline of Lesotho’s share of Southern African Customs Union revenue and a drop in global diamond prices. Alternating floods and droughts have ruined subsistence agriculture, leaving tens of thousands food insecure.
According to the World Bank, Lesotho’s Gini coefficient – which measures inequality and ranges from 0, or perfect equality, to 1, or perfect inequality – is at 0.63 among the highest in the world. It has by far surpassed the threshold of 0.4 at which serious inequality could lead to social unrest.
With AGOA poised to expire in 2015, and Lesotho's preferential status with the U.S. thereby under threat, textile manufacturers as well as textile unions have been trying to come up with alternatives to rescue an industry on which the livelihoods of 40,000 workers and their families depend. "We have to find ways to develop a regional supply chain in the Southern African Development Community (SADC)," reckons Chen.
Union representatives demand diversification and expansion of the industry to stay competitive. "We need to start manufacturing production materials locally, like fabric, zips, hangers, buttons," says United Textile Employees general-secretary Bahlakoana Lebakae. "At the moment all our raw materials come from the East."
But unbeknown to unions and manufacturers, Lesotho’s government has made different plans.
"The textile sector lacks profitability. It’s no longer competitive internationally. Government has given up on it and clearly indicated to us it can’t subsidise the textile (industry) any longer," World Bank Lesotho senior operations officer Macmillan Anyanwu told IPS.
After consultation with the World Bank, Lesotho’s government decided to ditch the textile sector, to eventually cut the subsidies and instead invest in agriculture, horticulture, water management and tourism. "We need to diversify away from textiles into other areas," hinted Prime Minister Pakalitha Mosisili in February.
With the help of the World Bank, the government has been piloting new sector development since 2009.
"We are trying to find markets for (agricultural) products and water supply in and outside the (SADC) region. We also focus on increasing the capacity of small to medium-sized businesses and improving border services to boost economic growth," says Anyanwu, explaining some of the steps government has taken with the support of the World Bank.
By 2013, when the pilot phase comes to an end, government will officially adjust its economic policy to invest in the most promising sectors. What will become of the thousands of textile workers and their families remains unclear.
IPS News
Demand for mobile payment offer African banks huge trade potential
Mobile-savvy consumers in Africa want to do more with their phones and that presents huge commercial and business opportunities for the continent’s banks and their merchant partners, a new report titled: Mobile Africa Report 2011 has said.
According to the African Development Bank, there were fewer than two million mobile phone users in the continent 13 years ago. The number grew to over 400 million in 2009.In Tanzania, official figures show that mobile users increased from about 36,000 in 1998 to 21.2 million at the end of March this year. The number is projected to reach 36.6 million by 2015.
“Banks and other providers now recognise the potential of reaching millions of prospective customers, especially the rural population who account for more than 60 per cent of Africa’s total population and have no access to banking services,” authors of the report note.
“An increasing number of banks and financial institutions are using mobile advertising to share information and promote services. As financial institutions embrace mobile phones as a distinct channel - not just a supplement to PC banking - their number-one challenge is the same as they faced when first rolling out online banking: consumer confidence,” they add.
In countries such as Kenya, or South Africa, research indicates that users have a higher propensity to make e-commerce and m-commerce transactions with 46 per cent of Kenyan and 43 per cent of South African users having made remote purchases via mobile Internet, fixed Internet and telephone respectively.
The most popular items for remote purchases are downloads and virtual gifts, with 25.99 per cent of South Africans and 30.13 per cent of Kenyan’s polled in a recent survey having purchased these items.
With a successful mobile banking platform and an effective education, more awareness can lead to greater demand for m-commerce services. Other m-commerce services on African users’ wish-lists include buying tickets (movies, transport), buying groceries and paying restaurant bills.
Experts argue that this provides many opportunities for banks to partner with merchants such as cinema operators, supermarket chains and even fast food or restaurant outlets.
In South Africa, Standard Chartered allows consumers to use their phones to check their bank account balance, manage credit cards or loans, pay bills, transfer money between accounts and more. However consumers are often required to register first from a PC before being able to bank with a phone.
“When done correctly, mobile banking can create and grow new markets, enabling consumers in a variety of settings to save money and pay bills and in the process create value in communities.”
Four years ago, mobile operator Safaricom launched M-Pesa in Kenya. The mobile company, which introduced the first mobile payment scheme in Africa on March 6, 2007, has since witnessed this service being introduced in several African countries by other mobile operators, including its competitors in Kenya.
Mobile payment services have now been launched in South Africa, Madagascar, Uganda, Côte d’Ivoire, Senegal and Tanzania. By early this year M-Pesa in Kenya was used by 10 million people around the country and had transferred Ksh135.38 billion ($1.8 billion) representing about five per cent of GDP.
In Tanzania, M-Pesa, which was launched in 2008, has over two million customers, who are served through a network of 10,000 agents.
“Since its launch in 2008, M-Pesa has played an instrumental role in changing the way money is sent, saved, and used to buy daily needs, by Vodacom customers across the country. Over the last three years, the M-Pesa mobile money solution has become ingrained in the lives of Vodacom customers,” Vodacom Tanzania said last month in a statement when announcing that it now has 10 million mobile phone users.
“The key to M-Pesa’s success, in Kenya and a growing number of countries, is the African love affair with the cell phone. Sometime in 2011, the continent will cross a threshold of mobile phone use, with one mobile phone for every African adult,” reads a part of the mobile report.
According to research firm Juniper, the number of active users of mobile money services in the world is predicted to double in the next two years, exceeding 200 million by 2013. Nearly 40 per cent active users in 2015 are estimated be in the Africa & Middle East region.
“Consumers in Africa are looking for a robust e-commerce solution that delivers security, accessibility, acceptance, ability and a global reach,” says Mr Manoj Kohil, Airtel chief executive officer and joint managing director.
Currently it is estimated that Africa has close to 500 million mobile phone users and an unbanked population of 230 million households. It is expected that by 2014, Africa will see 56 per cent mobile penetration.
But East African banks are proving slow to embrace the Internet, and systems that take mobile e-commerce payments, reported Kenya’s leading software developers at the recent AITEC Banking and Mobile Money Conference in Nairobi.
Cell phone penetration is estimated at 98 percent in South Africa. According to the Tanzania Communications Regulatory Authority (TCRA) mobile phone penetration in Tanzania stood at 47 per cent last year
“Interestingly, in Africa, some consumers might not have shoes, but they have a cell phone,” according to Mr Brian Richardson, a former banker and founder of mobile payment services firm Wizzit of South Africa.
By the end of 2008, the company had an estimated 250,000 customers in South Africa, and today it has two million customers across Africa and Europe. Customers can use their cell phones for such functions as viewing bank statements, sending money and paying bills, all with low transaction fees.
Mobile banking is an example of cell phones being used in innovative ways to bypass the gaps in traditional infrastructure in Africa — in this case the shortage of bricks-and mortar banks in rural areas, and lack of Internet access.
“It’s very difficult to build a sustainable, viable economy when the bulk of your population is unbanked. There is the equivalent of $2 billion under mattresses in South Africa at any time. If even a portion of that was in banks, it would have a huge impact on the economy,” Mr Richardson argues.
The Johannesburg-based company has since expanded into Zambia, Rwanda, Tanzania and Romania, and plans to launch in three more African countries, with talk of expanding into other major emerging markets.
According to a 2009 survey by the World Bank’s Consultative Group to Assist the Poor, about 2.7 billion people globally do not have banking services. Access to banking can help people to lift themselves out of poverty by providing ways to save money and make payments without having to travel.
The Citizen
According to the African Development Bank, there were fewer than two million mobile phone users in the continent 13 years ago. The number grew to over 400 million in 2009.In Tanzania, official figures show that mobile users increased from about 36,000 in 1998 to 21.2 million at the end of March this year. The number is projected to reach 36.6 million by 2015.
“Banks and other providers now recognise the potential of reaching millions of prospective customers, especially the rural population who account for more than 60 per cent of Africa’s total population and have no access to banking services,” authors of the report note.
“An increasing number of banks and financial institutions are using mobile advertising to share information and promote services. As financial institutions embrace mobile phones as a distinct channel - not just a supplement to PC banking - their number-one challenge is the same as they faced when first rolling out online banking: consumer confidence,” they add.
In countries such as Kenya, or South Africa, research indicates that users have a higher propensity to make e-commerce and m-commerce transactions with 46 per cent of Kenyan and 43 per cent of South African users having made remote purchases via mobile Internet, fixed Internet and telephone respectively.
The most popular items for remote purchases are downloads and virtual gifts, with 25.99 per cent of South Africans and 30.13 per cent of Kenyan’s polled in a recent survey having purchased these items.
With a successful mobile banking platform and an effective education, more awareness can lead to greater demand for m-commerce services. Other m-commerce services on African users’ wish-lists include buying tickets (movies, transport), buying groceries and paying restaurant bills.
Experts argue that this provides many opportunities for banks to partner with merchants such as cinema operators, supermarket chains and even fast food or restaurant outlets.
In South Africa, Standard Chartered allows consumers to use their phones to check their bank account balance, manage credit cards or loans, pay bills, transfer money between accounts and more. However consumers are often required to register first from a PC before being able to bank with a phone.
“When done correctly, mobile banking can create and grow new markets, enabling consumers in a variety of settings to save money and pay bills and in the process create value in communities.”
Four years ago, mobile operator Safaricom launched M-Pesa in Kenya. The mobile company, which introduced the first mobile payment scheme in Africa on March 6, 2007, has since witnessed this service being introduced in several African countries by other mobile operators, including its competitors in Kenya.
Mobile payment services have now been launched in South Africa, Madagascar, Uganda, Côte d’Ivoire, Senegal and Tanzania. By early this year M-Pesa in Kenya was used by 10 million people around the country and had transferred Ksh135.38 billion ($1.8 billion) representing about five per cent of GDP.
In Tanzania, M-Pesa, which was launched in 2008, has over two million customers, who are served through a network of 10,000 agents.
“Since its launch in 2008, M-Pesa has played an instrumental role in changing the way money is sent, saved, and used to buy daily needs, by Vodacom customers across the country. Over the last three years, the M-Pesa mobile money solution has become ingrained in the lives of Vodacom customers,” Vodacom Tanzania said last month in a statement when announcing that it now has 10 million mobile phone users.
“The key to M-Pesa’s success, in Kenya and a growing number of countries, is the African love affair with the cell phone. Sometime in 2011, the continent will cross a threshold of mobile phone use, with one mobile phone for every African adult,” reads a part of the mobile report.
According to research firm Juniper, the number of active users of mobile money services in the world is predicted to double in the next two years, exceeding 200 million by 2013. Nearly 40 per cent active users in 2015 are estimated be in the Africa & Middle East region.
“Consumers in Africa are looking for a robust e-commerce solution that delivers security, accessibility, acceptance, ability and a global reach,” says Mr Manoj Kohil, Airtel chief executive officer and joint managing director.
Currently it is estimated that Africa has close to 500 million mobile phone users and an unbanked population of 230 million households. It is expected that by 2014, Africa will see 56 per cent mobile penetration.
But East African banks are proving slow to embrace the Internet, and systems that take mobile e-commerce payments, reported Kenya’s leading software developers at the recent AITEC Banking and Mobile Money Conference in Nairobi.
Cell phone penetration is estimated at 98 percent in South Africa. According to the Tanzania Communications Regulatory Authority (TCRA) mobile phone penetration in Tanzania stood at 47 per cent last year
“Interestingly, in Africa, some consumers might not have shoes, but they have a cell phone,” according to Mr Brian Richardson, a former banker and founder of mobile payment services firm Wizzit of South Africa.
By the end of 2008, the company had an estimated 250,000 customers in South Africa, and today it has two million customers across Africa and Europe. Customers can use their cell phones for such functions as viewing bank statements, sending money and paying bills, all with low transaction fees.
Mobile banking is an example of cell phones being used in innovative ways to bypass the gaps in traditional infrastructure in Africa — in this case the shortage of bricks-and mortar banks in rural areas, and lack of Internet access.
“It’s very difficult to build a sustainable, viable economy when the bulk of your population is unbanked. There is the equivalent of $2 billion under mattresses in South Africa at any time. If even a portion of that was in banks, it would have a huge impact on the economy,” Mr Richardson argues.
The Johannesburg-based company has since expanded into Zambia, Rwanda, Tanzania and Romania, and plans to launch in three more African countries, with talk of expanding into other major emerging markets.
According to a 2009 survey by the World Bank’s Consultative Group to Assist the Poor, about 2.7 billion people globally do not have banking services. Access to banking can help people to lift themselves out of poverty by providing ways to save money and make payments without having to travel.
The Citizen
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