Tunisian exports, valued at 22,767.8 (MTD) in the first 11 months of 2011, increased by 7.3% at current prices, compared to 2010, despite the challenging economic environment.
They resulted from exports of agricultural and food products (39.8%), electrical industries (22.9%) and more modestly textile, garment and Leather (+6.4%). The area of phosphates and derivatives, at the heart of social unrest, saw their exports fall by 36%.
These indicators are far from the performances recorded between 2009 and 2010, when domestic exports recorded a double-digit growth (+20.9%).
According to the National Institute of Statistics (INS), imports valued at 30,596.1 MTD, grew by 5.8% compared to 2010 (January to November). The growth of imports has significantly slowed down compared to 2009/2010 (27%).
However, imports of agricultural products and food staples increased by 28.7% and energy products (+24.6%). Given the difficult situation of the phosphate sector, imports of capital goods, metals and phosphate products recorded continuous declines of 8.3% and 4.5% respectively.
The coverage of imports by exports of around 74.4%, posted a 1% increase compared to 2010. In 2009, this rate amounted to 77%.
African Manager
December 09, 2011
Africa to be the only region air traffic is growing strongly
The latest International Air Transport Association’s assessment of premium and economy travel, prepared by IATA’s Economics unit and based on September data, shows Africa to be the only region where air traffic is growing strongly.
The report warns of declining business confidence and stagnant economic conditions, except for Africa. IATA says its Air Traffic Assessment is a reliable leading indicator of short term economic expectations.
For Africa, the assessment notes that both Premium and Economy travel are expanding at double-figure rates. Although Africa is still a small market, it has proven to be very resilient. Overall air traffic performance for the continent was boosted by the good growth rates experienced in a number of economies. IATA’s report concludes travel within Africa is growing strongly but the traditional main lane between Europe and Africa is seeing travel decline.
Regarding the global performance of air traffic, the IATA report says the number of passengers flying on premium seats once again rebounded despite declining business confidence and economic uncertainty. In September, premium (business + first) passenger numbers rose to a level 6.7% higher than the same month last year, after slowing to 2.3% in August.
“In fact, all of this growth had occurred by May. The September rebound returns the size of the international premium travel market to the level it had reached in May. Premium travel is significantly higher than last year, but has made no further progress since May.”
“For the past few months, we have pointed to the lack of further growth in international trade and the sharp declines in business confidence as reasons for expecting a decline in business travel and premium seat sales. So far, this has not happened. However, it still looks like it is only a matter of time before the deteriorating economic conditions pull premium travel lower” the report predicts.
On cattle class, IATA is more upbeat. “The rebound in economy travel was stronger, taking this market segment to new highs in September. Compared to a year earlier, the number of passengers travelling on economy seats (including premium economy) was 5.8% higher. Although this growth rate is a little less than for premium travel, the bounce in economy travel from the lower levels in August took passenger numbers well above previous highs.”
The report says the strongest economy travel market segments in September were within-Europe and Europe-Far East. “Given the worsening economic conditions in Europe and the sharp fall in consumer confidence, this growth is unlikely to have been driven by leisure travel. More likely business travellers have been trading down from premium to economy”, it speculates.
Addressing the tight financial positions of many airlines, IATA says “Stronger premium and overall passenger numbers in September helped both airline yields and profits in the third quarter. We had not expected the strength to continue this long. An important question is whether strong travel will continue into the fourth quarter. Given deteriorating business confidence and economic conditions, we stick with our view that air travel markets will slow in the months ahead.”
The growth of international trade has proved to be a good indicator of business travel. There is an obvious link with the manufacturing sector, but trade has also been a good proxy for the drivers of business travel in other key sectors, such as finance and consulting. Currently, the signals from international trade are that business travel should slow further.
Citing other indices, the air traffic report says the same signals for a sharp slowdown in premium travel are evident in the purchasing managers’ index of business confidence, averaged across major economies. Changes in business confidence have been a good early warning indicator of changes in premium travel growth, leading changes by up to six months.
“The 2009 upturn in premium travel was signalled, by rising business confidence, six months earlier. This year, business confidence has been steadily declining for more than the last six months. Premium travel has slowed, but both trade and confidence point to very little further growth in premium travel, until economic conditions improve.”
Economist
The report warns of declining business confidence and stagnant economic conditions, except for Africa. IATA says its Air Traffic Assessment is a reliable leading indicator of short term economic expectations.
For Africa, the assessment notes that both Premium and Economy travel are expanding at double-figure rates. Although Africa is still a small market, it has proven to be very resilient. Overall air traffic performance for the continent was boosted by the good growth rates experienced in a number of economies. IATA’s report concludes travel within Africa is growing strongly but the traditional main lane between Europe and Africa is seeing travel decline.
Regarding the global performance of air traffic, the IATA report says the number of passengers flying on premium seats once again rebounded despite declining business confidence and economic uncertainty. In September, premium (business + first) passenger numbers rose to a level 6.7% higher than the same month last year, after slowing to 2.3% in August.
“In fact, all of this growth had occurred by May. The September rebound returns the size of the international premium travel market to the level it had reached in May. Premium travel is significantly higher than last year, but has made no further progress since May.”
“For the past few months, we have pointed to the lack of further growth in international trade and the sharp declines in business confidence as reasons for expecting a decline in business travel and premium seat sales. So far, this has not happened. However, it still looks like it is only a matter of time before the deteriorating economic conditions pull premium travel lower” the report predicts.
On cattle class, IATA is more upbeat. “The rebound in economy travel was stronger, taking this market segment to new highs in September. Compared to a year earlier, the number of passengers travelling on economy seats (including premium economy) was 5.8% higher. Although this growth rate is a little less than for premium travel, the bounce in economy travel from the lower levels in August took passenger numbers well above previous highs.”
The report says the strongest economy travel market segments in September were within-Europe and Europe-Far East. “Given the worsening economic conditions in Europe and the sharp fall in consumer confidence, this growth is unlikely to have been driven by leisure travel. More likely business travellers have been trading down from premium to economy”, it speculates.
Addressing the tight financial positions of many airlines, IATA says “Stronger premium and overall passenger numbers in September helped both airline yields and profits in the third quarter. We had not expected the strength to continue this long. An important question is whether strong travel will continue into the fourth quarter. Given deteriorating business confidence and economic conditions, we stick with our view that air travel markets will slow in the months ahead.”
The growth of international trade has proved to be a good indicator of business travel. There is an obvious link with the manufacturing sector, but trade has also been a good proxy for the drivers of business travel in other key sectors, such as finance and consulting. Currently, the signals from international trade are that business travel should slow further.
Citing other indices, the air traffic report says the same signals for a sharp slowdown in premium travel are evident in the purchasing managers’ index of business confidence, averaged across major economies. Changes in business confidence have been a good early warning indicator of changes in premium travel growth, leading changes by up to six months.
“The 2009 upturn in premium travel was signalled, by rising business confidence, six months earlier. This year, business confidence has been steadily declining for more than the last six months. Premium travel has slowed, but both trade and confidence point to very little further growth in premium travel, until economic conditions improve.”
Economist
December 07, 2011
China's heavy investment could hurt Africa in face of slowdown
by Jennifer Booton
Sub-Saharan Africa is at far greater risk to a slowdown in China than in the eurozone, Fitch says, meaning the region is likely isolated enough to weather Europe’s tumultuous debt storms.
That’s because China plays a critical role is the region’s trading activities, now making up 17% of its total exports and 14% of its imports, a part of the country’s quest for cheap raw materials.
While the European Union is still Africa’s largest trading partner, Fitch estimates that within 10 years China will be a more important trade partner than both the U.S. and EU. In 2010, Africa’s net surplus with China hit $16.9 billion.
SUMMARY
Africa’s net surplus with China hit $16.9 billion in 2010
China to become a more important trade partner to Africa than both the U.S. and EU
Only about 30% of Africa’s total exports ship to the eurzone
The analysis by Fitch comes on the eve of a key eurozone summit that is expected to analyze a financial rescue package in the troubled debt-burdened region.
Only about 30% of Africa’s total exports are headed toward the eurozone, although, there are some regions, like Cape Verde, that ship more than 90%.
“Developments in the eurozone will have an impact on SSA but we do not expect it to have a serious impact on growth,” Richard Fox, head of Middle East and Africa for Fitch Ratings said at a conference in London on Tuesday, according to the Financial Times.
Having been somewhat sheltered from the global trade surplus, Africa is expected to escape relatively unscathed from the eurozone crisis. However, with China's investments surging over the last decade, a slowdown there would be much more detrimental to Africa's growth.
Fitch estimates that total export and import lending to Africa reached $67.2 billion between 2001 and 2010, exceeding World Bank lending to Africa. A majority of the loans were backed by the Chinese and were related to infrastructure, including a $10 billion loan to Ghana for railway and energy infrastructure and a $500 million loan to Angola for roads.
The investments from China are crucial to the region’s growth, with the World Bank estimating that poor infrastructure cuts Sub-Saharan Africa’s GDP growth by 2% a year. To close that gap, annual infrastructure spending of $93 billion over the next decade is needed, the World Bank says, which is approximately what China has invested over the last 10 years.
But China isn’t just lending money for these projects, its companies are also behind much of the building and labor, Fitch says. China’s rapid industrialization and sharp increase in population has caused its demand for oil and other commodities to soar in recent years, which has kept prices competitive in Africa.
While the region as a whole has a trade surplus with China, it is led by oil- and mineral- rich Angola and Zambia, reflected in the 90% of African exports to China that are fuels and mining products.
China is a global leader in commodities imports, and exports to China account for 31% of Angola’s GDP, while those in Zambia amount to 14%.
Fox Business
Sub-Saharan Africa is at far greater risk to a slowdown in China than in the eurozone, Fitch says, meaning the region is likely isolated enough to weather Europe’s tumultuous debt storms.
That’s because China plays a critical role is the region’s trading activities, now making up 17% of its total exports and 14% of its imports, a part of the country’s quest for cheap raw materials.
While the European Union is still Africa’s largest trading partner, Fitch estimates that within 10 years China will be a more important trade partner than both the U.S. and EU. In 2010, Africa’s net surplus with China hit $16.9 billion.
SUMMARY
Africa’s net surplus with China hit $16.9 billion in 2010
China to become a more important trade partner to Africa than both the U.S. and EU
Only about 30% of Africa’s total exports ship to the eurzone
The analysis by Fitch comes on the eve of a key eurozone summit that is expected to analyze a financial rescue package in the troubled debt-burdened region.
Only about 30% of Africa’s total exports are headed toward the eurozone, although, there are some regions, like Cape Verde, that ship more than 90%.
“Developments in the eurozone will have an impact on SSA but we do not expect it to have a serious impact on growth,” Richard Fox, head of Middle East and Africa for Fitch Ratings said at a conference in London on Tuesday, according to the Financial Times.
Having been somewhat sheltered from the global trade surplus, Africa is expected to escape relatively unscathed from the eurozone crisis. However, with China's investments surging over the last decade, a slowdown there would be much more detrimental to Africa's growth.
Fitch estimates that total export and import lending to Africa reached $67.2 billion between 2001 and 2010, exceeding World Bank lending to Africa. A majority of the loans were backed by the Chinese and were related to infrastructure, including a $10 billion loan to Ghana for railway and energy infrastructure and a $500 million loan to Angola for roads.
The investments from China are crucial to the region’s growth, with the World Bank estimating that poor infrastructure cuts Sub-Saharan Africa’s GDP growth by 2% a year. To close that gap, annual infrastructure spending of $93 billion over the next decade is needed, the World Bank says, which is approximately what China has invested over the last 10 years.
But China isn’t just lending money for these projects, its companies are also behind much of the building and labor, Fitch says. China’s rapid industrialization and sharp increase in population has caused its demand for oil and other commodities to soar in recent years, which has kept prices competitive in Africa.
While the region as a whole has a trade surplus with China, it is led by oil- and mineral- rich Angola and Zambia, reflected in the 90% of African exports to China that are fuels and mining products.
China is a global leader in commodities imports, and exports to China account for 31% of Angola’s GDP, while those in Zambia amount to 14%.
Fox Business
Scramble for 'dot africa' internet domain name
by Tim Hume
A proposed new ".africa" internet domain name will provide a stronger brand identity than current little known country domains, while preventing registration revenues flowing abroad, say backers.
DotConnectAfrica, a non-profit organization registered in Mauritius, is one of the groups vying to establish and operate the dot africa name space for businesses and individuals across the continent.
The opportunity has arisen since the Internet Corporation for Names and Numbers (ICANN), the body which manages internet domain names, voted earlier this year to allow new varieties of top-level domains -- the suffix of an internet address.
ICANN will be accepting applications for new generic top-level domains, or gTLDs, between January and April next year, with successful applications expected to be operational by 2013.
Two other groups -- the African Top-Level Domains Association and the African Registry Consortium -- have also expressed an interest in applying to operate ".africa", while the African Union has said it plans to endorse a group to apply for the rights to operate the domain on its behalf.
The African Union Commission also plans to apply to ICANN to operate the ".africa" domain, along with the French and Arabic alternatives ".afrique" and ".afriqia". It is currently running an open tender process for technical organizations to operate the domains on its behalf, which will be included in the AUC's application to ICANN.
DotConnectAfrica executive director Sophia Bekele said that the suffixes for individual African countries -- country code top-level domains, or ccTLDs -- had generally proven unpopular during the decade or so of their existence. Research by her company suggested 80% of African domain name registrants had opted for ".com" or ".org" suffixes instead, which were price competitive, reliable to register and had wide recognition.
By contrast, the ccTLDs were little known, as they were "usually owned by governments, and governments are typically not very good at marketing," she said.
Moctar Yedaly, head of information society for the African Union Commission, said the commission's vision for the .africa domain went beyond the commercial.
"It may well be a very good business in terms of money generating. If it may generate some revenue we can use for the development of ICT in Africa, then that is all very good, but that's not my primary goal," he said. "My primary goal is to ensure the identity of Africa, the image, the culture are well-maintained."
The .africa domain represented all Africans in the same way as the African Union flag, and its dignity needed to be protected. "I wouldn't like to see '.africa' used for something pornographic," he said.
It should operate in the "interests of the community", rather than the interests of individuals in the private sector. "This is for Africa, and Africa is 54 states."
Bekele said that in campaigning to build support for DotConnectAfrica's proposal, the group had encountered a strong response from youth and from business for the notion of a pan-African online identity. More than 3,600 prospective registrants had expressed interest by "pre-registering" with DotConnectAfrica.
She said young developers involved in creating local content felt a stronger affinity with a potential ".africa" suffix than to ".com" domains, while it also appealed to corporates, who would be able to unify their presence across the continent under a single online brand.
John Kariuki is the founder and CEO of AAR Credit Services, a Kenyan-based micro-finance company. The company also operates in Uganda and Tanzania, where it is looking to expand its operations, but currently uses a Kenyan "co.ke" suffix.
"For companies looking to expand throughout Africa, it's a good way of creating a brand identity," he said of the potential domain. "What really appeals to us is expressing that African identity. Sometimes you don't really know where these companies are from."
Bekele said that if her group was successful in its application to establish and operate the domain, it would look offer domains at prices competitive to ".com" registrations -- $5 for students, or between $9 to $19 for small- to medium-enterprises.
A major benefit of the ".africa" domain would be that proceeds from African domain registrations would remain on the continent, rather than flowing offshore. DotConnectAfrica says it plans to reinvest surpluses into developing the African internet sector.
She said there was concern from governments that a ".africa" domain could jeopardize the existing ccTLDs.
"But I can assure you, if there is no '.africa', I don't think there will be any more uptake of the ccTLDs," she said.
However, not everyone is as optimistic about the potential impact of the new generic top-level domains. Ray Valdes, vice-president of web services for tech consultancy Gartner, said that because the new wave of gTLDs went "against the grain of current consumer trends", his company expected most of them to fall short of their goals.
To be successful, the new gTLDs would require a change in consumer behavior, plus a change in how search engines index the internet.
Users would have to type unfamiliar text strings into the address bar of the their browser, at a time when consumers were increasingly relying on search engines and social media to navigate the internet.
He said that given the $185,000 price tag to apply for the new gTLDs, most organizations would be better served by investing in creating faster, more usable sites that are more easily indexed by search engines, and broadening the social media presence of their organization.
However, he did expect a handful of regional-based gTLDs like ".africa" to be successful, depending on how well they were operated and how consumers responded.
ICANN will not make a decision on control of the domain until after the application closes in April next year.
CNN
A proposed new ".africa" internet domain name will provide a stronger brand identity than current little known country domains, while preventing registration revenues flowing abroad, say backers.
DotConnectAfrica, a non-profit organization registered in Mauritius, is one of the groups vying to establish and operate the dot africa name space for businesses and individuals across the continent.
The opportunity has arisen since the Internet Corporation for Names and Numbers (ICANN), the body which manages internet domain names, voted earlier this year to allow new varieties of top-level domains -- the suffix of an internet address.
ICANN will be accepting applications for new generic top-level domains, or gTLDs, between January and April next year, with successful applications expected to be operational by 2013.
Two other groups -- the African Top-Level Domains Association and the African Registry Consortium -- have also expressed an interest in applying to operate ".africa", while the African Union has said it plans to endorse a group to apply for the rights to operate the domain on its behalf.
The African Union Commission also plans to apply to ICANN to operate the ".africa" domain, along with the French and Arabic alternatives ".afrique" and ".afriqia". It is currently running an open tender process for technical organizations to operate the domains on its behalf, which will be included in the AUC's application to ICANN.
DotConnectAfrica executive director Sophia Bekele said that the suffixes for individual African countries -- country code top-level domains, or ccTLDs -- had generally proven unpopular during the decade or so of their existence. Research by her company suggested 80% of African domain name registrants had opted for ".com" or ".org" suffixes instead, which were price competitive, reliable to register and had wide recognition.
By contrast, the ccTLDs were little known, as they were "usually owned by governments, and governments are typically not very good at marketing," she said.
Moctar Yedaly, head of information society for the African Union Commission, said the commission's vision for the .africa domain went beyond the commercial.
"It may well be a very good business in terms of money generating. If it may generate some revenue we can use for the development of ICT in Africa, then that is all very good, but that's not my primary goal," he said. "My primary goal is to ensure the identity of Africa, the image, the culture are well-maintained."
The .africa domain represented all Africans in the same way as the African Union flag, and its dignity needed to be protected. "I wouldn't like to see '.africa' used for something pornographic," he said.
It should operate in the "interests of the community", rather than the interests of individuals in the private sector. "This is for Africa, and Africa is 54 states."
Bekele said that in campaigning to build support for DotConnectAfrica's proposal, the group had encountered a strong response from youth and from business for the notion of a pan-African online identity. More than 3,600 prospective registrants had expressed interest by "pre-registering" with DotConnectAfrica.
She said young developers involved in creating local content felt a stronger affinity with a potential ".africa" suffix than to ".com" domains, while it also appealed to corporates, who would be able to unify their presence across the continent under a single online brand.
John Kariuki is the founder and CEO of AAR Credit Services, a Kenyan-based micro-finance company. The company also operates in Uganda and Tanzania, where it is looking to expand its operations, but currently uses a Kenyan "co.ke" suffix.
"For companies looking to expand throughout Africa, it's a good way of creating a brand identity," he said of the potential domain. "What really appeals to us is expressing that African identity. Sometimes you don't really know where these companies are from."
Bekele said that if her group was successful in its application to establish and operate the domain, it would look offer domains at prices competitive to ".com" registrations -- $5 for students, or between $9 to $19 for small- to medium-enterprises.
A major benefit of the ".africa" domain would be that proceeds from African domain registrations would remain on the continent, rather than flowing offshore. DotConnectAfrica says it plans to reinvest surpluses into developing the African internet sector.
She said there was concern from governments that a ".africa" domain could jeopardize the existing ccTLDs.
"But I can assure you, if there is no '.africa', I don't think there will be any more uptake of the ccTLDs," she said.
However, not everyone is as optimistic about the potential impact of the new generic top-level domains. Ray Valdes, vice-president of web services for tech consultancy Gartner, said that because the new wave of gTLDs went "against the grain of current consumer trends", his company expected most of them to fall short of their goals.
To be successful, the new gTLDs would require a change in consumer behavior, plus a change in how search engines index the internet.
Users would have to type unfamiliar text strings into the address bar of the their browser, at a time when consumers were increasingly relying on search engines and social media to navigate the internet.
He said that given the $185,000 price tag to apply for the new gTLDs, most organizations would be better served by investing in creating faster, more usable sites that are more easily indexed by search engines, and broadening the social media presence of their organization.
However, he did expect a handful of regional-based gTLDs like ".africa" to be successful, depending on how well they were operated and how consumers responded.
ICANN will not make a decision on control of the domain until after the application closes in April next year.
CNN
Free trade area talks point to new African era
An important process that started three years ago began to mo ve in early December as the first round of negotiations to establish a free trade area covering 27 countries in east and southern Africa kicked off in Nairobi, Kenya.
It is envisaged that negotiations for the proposed free trade area (FTA), which promises to be an important instrument for the future of trade and industrialisation in Africa, will be completed in about 36 months.
The three trade blocs involved - the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) - decided in Kampala, Uganda in October 2008 to move towards a free trade agreement.
The intention is to boost intra-regional trade. Because the market will be much bigger, there will be more investment flows, enhanced competitiveness and the development of cross-regional infrastructure. At the same time, the FTA will act as a spur to industrialisation, as countries move from selling primary products to making goods to sell.
Competition with older, established and also bigger emerging economies might be a stumbling block initially, but the huge new market may make it possible for locally manufactured goods to compete with those imported from outside the FTA.
With close to 600-million people live within the FTA, and a combined gross domestic product of $1-trillion, the region could find itself competing in the same league as the likes of China, India, Russia, Brazil, the US and the EU. And it is becoming easier to make the world believe this, because the continent is already being touted as the next economic frontier.
A glance at some figures confirms this view:
Africa's combined consumer spending was US$860-billion in 2008, and will be an estimated $1.4-trillion in 2020.
With 43% of Africans currently under the age of 15, by 2040 there will be 1.1-billion Africans of working age.
Africa already has 52 cities with more than a million inhabitants, more than Europe. By 2030, around fifty percent of Africa's populationi will be living in cities.
Africa's returns on foreign direct investment (FDI) are the highest in the world.
However, the road to setting up the FTA could be a rocky one. South African Trade and Industry Minister Rob Davies has warned that negotiations over industrial policy could be tough. South Africa has just set out to implement its Industrial Policy Action Plan, and talks around the trade in manufactured goods will be of particular concern.
But South Africa does have an advantage. As Davies points out, unlike exports to the rest of the world, a high percentage of exports into Africa are already made up of value-added products.
Other problems would be the levels of protectionism between African countries, restrictive trade permit needs, and very obvious economic disparities.
Additionally, the fact that three existing trade blocs aim to merge into one is a stumbling block as they are at different levels of integration, with different rules and regulations. All of this will be part of the negotiations that started in Decvember.
The fact remains that economic growth in all participating countries will be boosted by increased intra-regional trade. For Africa as a whole, intra-regional trade currently stands at only 12% of all cross-border trade, whereas in Asia the figure is rising toward 50%, and in the European Union towards 80%.
The FTA would also be an important building block towards achieving the vision of the founding fathers of the Organisation of African Unity in 1963 - a continent-wide African Economic Union.
News 24
It is envisaged that negotiations for the proposed free trade area (FTA), which promises to be an important instrument for the future of trade and industrialisation in Africa, will be completed in about 36 months.
The three trade blocs involved - the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) - decided in Kampala, Uganda in October 2008 to move towards a free trade agreement.
The intention is to boost intra-regional trade. Because the market will be much bigger, there will be more investment flows, enhanced competitiveness and the development of cross-regional infrastructure. At the same time, the FTA will act as a spur to industrialisation, as countries move from selling primary products to making goods to sell.
Competition with older, established and also bigger emerging economies might be a stumbling block initially, but the huge new market may make it possible for locally manufactured goods to compete with those imported from outside the FTA.
With close to 600-million people live within the FTA, and a combined gross domestic product of $1-trillion, the region could find itself competing in the same league as the likes of China, India, Russia, Brazil, the US and the EU. And it is becoming easier to make the world believe this, because the continent is already being touted as the next economic frontier.
A glance at some figures confirms this view:
Africa's combined consumer spending was US$860-billion in 2008, and will be an estimated $1.4-trillion in 2020.
With 43% of Africans currently under the age of 15, by 2040 there will be 1.1-billion Africans of working age.
Africa already has 52 cities with more than a million inhabitants, more than Europe. By 2030, around fifty percent of Africa's populationi will be living in cities.
Africa's returns on foreign direct investment (FDI) are the highest in the world.
However, the road to setting up the FTA could be a rocky one. South African Trade and Industry Minister Rob Davies has warned that negotiations over industrial policy could be tough. South Africa has just set out to implement its Industrial Policy Action Plan, and talks around the trade in manufactured goods will be of particular concern.
But South Africa does have an advantage. As Davies points out, unlike exports to the rest of the world, a high percentage of exports into Africa are already made up of value-added products.
Other problems would be the levels of protectionism between African countries, restrictive trade permit needs, and very obvious economic disparities.
Additionally, the fact that three existing trade blocs aim to merge into one is a stumbling block as they are at different levels of integration, with different rules and regulations. All of this will be part of the negotiations that started in Decvember.
The fact remains that economic growth in all participating countries will be boosted by increased intra-regional trade. For Africa as a whole, intra-regional trade currently stands at only 12% of all cross-border trade, whereas in Asia the figure is rising toward 50%, and in the European Union towards 80%.
The FTA would also be an important building block towards achieving the vision of the founding fathers of the Organisation of African Unity in 1963 - a continent-wide African Economic Union.
News 24
Structure of China trade ties with Africa must be changed
by Li Jiabao
China needs to expand its trading volume with Africa and balance its structure, according to experts.
"At present, the trading volume with Africa is quite small and the structure is not balanced. In the near future, China needs to develop new trading opportunities and expand imports from Africa, while promoting investment in Africa by Chinese businesses," said Cheng Zhigang, secretary-general of the China Africa Industrial Forum, in an address to the Second China-Africa Industrial Cooperation and Development Forum.
The forum, held in Beijing on Nov 28 and 29, serves as a platform for officials and experts to discuss the prospects for cooperation between China and Africa and to allow Chinese businesses to investigate investment projects on the continent.
This year, the trading volume between China and Africa is predicted to reach a record $150 billion, despite an unfavorable trading environment in the second half of the year.
However, Cheng said that Africa "accounts for a very small part of China's foreign trade". In 2010, exports to Africa accounted for just 3.79 percent of China's total, while imports from Africa accounted for 4.56 percent of China's total.
"In addition, the top 10 importers to China and Chinese export destinations in Africa haven't changed much in recent years and each country's share of China's foreign trade remained almost unchanged," Cheng said.
Wang Cheng'an, vice-president of the Chinese Society for the Study of African Affairs, said the underdeveloped nature of Africa and its low level of industrialization left the continent with a limited export inventory.
"African exports to China are limited to agricultural and primary products, including minerals and energy products, while China sells its manufactured goods to Africa. But the low level of industrialization in Africa deprives it of added-value and means the structure of trade lacks balance," Wang said.
The level of the imbalance with a number of African countries has provoked criticism from some observers in the West. It has become an important factor affecting the development of Sino-African trade and urgent efforts are required to improve the structure, according to Cheng.
Bieke Antonin Benjamin, first counselor of the Embassy of the Republic of Cote d'Ivoire in Beijing, suggested at the forum that African countries should form regional markets to expand their trading volumes and improve the trading structure. "African economies and the Chinese economy are different. China is very big, but Africa is comprised of many small countries. We need to form both regional and larger markets to improve the trading structure. Otherwise, the situation will not change for a long time," he said.
Cheng called for China to widen the range of goods it imports from Africa and broaden cooperation from traditional fields to promising new areas, including agriculture, manufacturing and human resources training.
In 2010, China exempted 60 percent of the customs duty on goods from the most underdeveloped African countries and "will continue the practice in the future, which will increase China's imports from Africa and benefit the people of Africa.
.
China Daily
China needs to expand its trading volume with Africa and balance its structure, according to experts.
"At present, the trading volume with Africa is quite small and the structure is not balanced. In the near future, China needs to develop new trading opportunities and expand imports from Africa, while promoting investment in Africa by Chinese businesses," said Cheng Zhigang, secretary-general of the China Africa Industrial Forum, in an address to the Second China-Africa Industrial Cooperation and Development Forum.
The forum, held in Beijing on Nov 28 and 29, serves as a platform for officials and experts to discuss the prospects for cooperation between China and Africa and to allow Chinese businesses to investigate investment projects on the continent.
This year, the trading volume between China and Africa is predicted to reach a record $150 billion, despite an unfavorable trading environment in the second half of the year.
However, Cheng said that Africa "accounts for a very small part of China's foreign trade". In 2010, exports to Africa accounted for just 3.79 percent of China's total, while imports from Africa accounted for 4.56 percent of China's total.
"In addition, the top 10 importers to China and Chinese export destinations in Africa haven't changed much in recent years and each country's share of China's foreign trade remained almost unchanged," Cheng said.
Wang Cheng'an, vice-president of the Chinese Society for the Study of African Affairs, said the underdeveloped nature of Africa and its low level of industrialization left the continent with a limited export inventory.
"African exports to China are limited to agricultural and primary products, including minerals and energy products, while China sells its manufactured goods to Africa. But the low level of industrialization in Africa deprives it of added-value and means the structure of trade lacks balance," Wang said.
The level of the imbalance with a number of African countries has provoked criticism from some observers in the West. It has become an important factor affecting the development of Sino-African trade and urgent efforts are required to improve the structure, according to Cheng.
Bieke Antonin Benjamin, first counselor of the Embassy of the Republic of Cote d'Ivoire in Beijing, suggested at the forum that African countries should form regional markets to expand their trading volumes and improve the trading structure. "African economies and the Chinese economy are different. China is very big, but Africa is comprised of many small countries. We need to form both regional and larger markets to improve the trading structure. Otherwise, the situation will not change for a long time," he said.
Cheng called for China to widen the range of goods it imports from Africa and broaden cooperation from traditional fields to promising new areas, including agriculture, manufacturing and human resources training.
In 2010, China exempted 60 percent of the customs duty on goods from the most underdeveloped African countries and "will continue the practice in the future, which will increase China's imports from Africa and benefit the people of Africa.
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China Daily
December 06, 2011
Malawi, Zimbabwe to simplify trade rules
Trade between Zimbabwe and Malawi is expected to increase following the implementation of the Common Market for Eastern and Southern Africa Simplified Trade Regime by the two countries.
The initiative aimed at formalising and facilitating informal cross-border trade is effective from December 1, 2011.
In a joint statement, the Government of Zimbabwe and Comesa said the programme enables traders to benefit from the Comesa Free Trade Area arrangement. Cross-border traders would be allowed a value threshold of US$1 000 per consignment.
"This means that any individual trader with goods or products on the eligible list valued at not more than US$1 000 and the Comesa Simplified Customs Document automatically qualifies for duty- and quota-free entry," said part of the joint statement.
STR is an initiative by Comesa to facilitate trade and reduce poverty by recognising that informal trading, particularly cross-border trade, is an important source of employment.
The initiative is expected to improve the relationship between traders and customs officials at the border, thereby encouraging more small-scale traders to come through the border points than before.
Customs authorities in both countries expect the STR to help increase revenue collection from small traders that would otherwise avoid the borders.
As for the small traders, they now have the opportunity to use a simplified certificate of origin, which allows them not to pay import duties for goods that are wholly manufactured or originating from the Comesa region.
According to the arrangement, goods imported or exported are expected to comply with the normal food safety, plant and animal health regulations including environmental protection.
Six countries have already implemented the Simplified Trade Regime. Zimbabwe and Zambia have already implemented the programme.
Indications are that most cross-border traders are not aware of these facilities and it has not been fully exploited.
Trade between the two countries has been minimal with Zimbabweans importing rice from Malawi. In the region the country's trade is more inclined towards South Africa and Zambia.
Goods manufactured in Zimbabwe are on demand in the region and with increased production locally cross-border trade are likely to increase volumes.
Cross-border trading has emerged a major source of employment for most Zimbabweans and it has proved to be a profitable venture.
With the implementation of the STR more business volumes are likely to be recorded.
Zimbabwe's pace for employment generation has remained low, notwithstanding annual average growth rates of 3-5 percent attained in the 1990s and the strong recovery from 2009 with rates around 8 percent.
The Herald
The initiative aimed at formalising and facilitating informal cross-border trade is effective from December 1, 2011.
In a joint statement, the Government of Zimbabwe and Comesa said the programme enables traders to benefit from the Comesa Free Trade Area arrangement. Cross-border traders would be allowed a value threshold of US$1 000 per consignment.
"This means that any individual trader with goods or products on the eligible list valued at not more than US$1 000 and the Comesa Simplified Customs Document automatically qualifies for duty- and quota-free entry," said part of the joint statement.
STR is an initiative by Comesa to facilitate trade and reduce poverty by recognising that informal trading, particularly cross-border trade, is an important source of employment.
The initiative is expected to improve the relationship between traders and customs officials at the border, thereby encouraging more small-scale traders to come through the border points than before.
Customs authorities in both countries expect the STR to help increase revenue collection from small traders that would otherwise avoid the borders.
As for the small traders, they now have the opportunity to use a simplified certificate of origin, which allows them not to pay import duties for goods that are wholly manufactured or originating from the Comesa region.
According to the arrangement, goods imported or exported are expected to comply with the normal food safety, plant and animal health regulations including environmental protection.
Six countries have already implemented the Simplified Trade Regime. Zimbabwe and Zambia have already implemented the programme.
Indications are that most cross-border traders are not aware of these facilities and it has not been fully exploited.
Trade between the two countries has been minimal with Zimbabweans importing rice from Malawi. In the region the country's trade is more inclined towards South Africa and Zambia.
Goods manufactured in Zimbabwe are on demand in the region and with increased production locally cross-border trade are likely to increase volumes.
Cross-border trading has emerged a major source of employment for most Zimbabweans and it has proved to be a profitable venture.
With the implementation of the STR more business volumes are likely to be recorded.
Zimbabwe's pace for employment generation has remained low, notwithstanding annual average growth rates of 3-5 percent attained in the 1990s and the strong recovery from 2009 with rates around 8 percent.
The Herald
New cargo route boosts Cyprus to Africa trade links
Emirates freight division, Skycargo, has launched a new service on the UAE-Africa trade route, opening up new opportunities for Cypriot firms to trade with Ghana.
Skycargo's 117 tonne capacity Boeing 747 will operate every Friday between Dubai and Ghana, in support of the thriving import and export industry generated by one of the world’s fastest growing economies.
“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,” Emirates’ Hiran Perera said.
Emirates has been operating a passenger service to Accra, with a weekly cargo capacity of 120 tonnes each way in the bellyhold of an Airbus A330-200, since 2004. The new service – to Kotoka International Airport - will operate via Lome, Togo, on the outbound journey and return to Dubai through Frankfurt, Germany.
Perera said: “Africa is a key market for Emirates SkyCargo. We already operate to 20 locations and with Harare and Lusaka set to join our network in February 2012, we look forward to contributing to its continued economic development by facilitating more international trade between the continent and our ever-expanding network of more than 110 destinations.”
Goods from Ghana will be distributed from Dubai to locations across the Middle East, Europe (including Cyprus), the Far East and the United States. Goods going into Ghana include electrical equipment, clothing and mobile phones from the Far East and pharmaceuticals from Cyprus and other European countries.
Cyprus Mail
Skycargo's 117 tonne capacity Boeing 747 will operate every Friday between Dubai and Ghana, in support of the thriving import and export industry generated by one of the world’s fastest growing economies.
“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,” Emirates’ Hiran Perera said.
Emirates has been operating a passenger service to Accra, with a weekly cargo capacity of 120 tonnes each way in the bellyhold of an Airbus A330-200, since 2004. The new service – to Kotoka International Airport - will operate via Lome, Togo, on the outbound journey and return to Dubai through Frankfurt, Germany.
Perera said: “Africa is a key market for Emirates SkyCargo. We already operate to 20 locations and with Harare and Lusaka set to join our network in February 2012, we look forward to contributing to its continued economic development by facilitating more international trade between the continent and our ever-expanding network of more than 110 destinations.”
Goods from Ghana will be distributed from Dubai to locations across the Middle East, Europe (including Cyprus), the Far East and the United States. Goods going into Ghana include electrical equipment, clothing and mobile phones from the Far East and pharmaceuticals from Cyprus and other European countries.
Cyprus Mail
DP World opens port operations in West Africa
by Jon Cuthbert
Senegal and west Africa’s largest container terminal, developed and operated by global marine terminal operator DP World, has been officially opened.
Expanded and upgraded by DP World Dakar following a concession agreement signed in 2007, the terminal’s capacity is more than doubling its capacity from less than 300,000 TEU (twenty-foot equivalent container units) to more than 600,000 TEU.
The opening ceremony at the Port of Dakar was attended by Bara Sady, managing director, Dakar Port Authority, Mohammed Sharaf, chief executive officer, DP World, Joost Kruijning, senior vice president and managing director DP World, Africa, Guido Heremans, CEO, DP World Dakar, and other officials.
“The expansion of the terminal and the upgrading of the facilities and equipment makes DP World Dakar the most modern and efficient terminal in western Africa,” said H.E Sultan Ahmed Bin Sulayem, Chairman, DP World.
“Our experience is that economies grow as efficient infrastructure comes on line and today it opens up a whole new world of economic possibilities for Senegal and West African communities. We are grateful to the Government of Senegal for their support and co-operation in helping to make this possible.”
Since winning the concession in 2007, DP World has introduced window berthing, where vessels book a specific time they can berth, virtually eliminating waiting time at anchorage.
In addition, DP World has reduced truck turnaround time to less than half an hour and introduced clear tariffs and processes supported by technology systems.
Arabian Supply Chain
Senegal and west Africa’s largest container terminal, developed and operated by global marine terminal operator DP World, has been officially opened.
Expanded and upgraded by DP World Dakar following a concession agreement signed in 2007, the terminal’s capacity is more than doubling its capacity from less than 300,000 TEU (twenty-foot equivalent container units) to more than 600,000 TEU.
The opening ceremony at the Port of Dakar was attended by Bara Sady, managing director, Dakar Port Authority, Mohammed Sharaf, chief executive officer, DP World, Joost Kruijning, senior vice president and managing director DP World, Africa, Guido Heremans, CEO, DP World Dakar, and other officials.
“The expansion of the terminal and the upgrading of the facilities and equipment makes DP World Dakar the most modern and efficient terminal in western Africa,” said H.E Sultan Ahmed Bin Sulayem, Chairman, DP World.
“Our experience is that economies grow as efficient infrastructure comes on line and today it opens up a whole new world of economic possibilities for Senegal and West African communities. We are grateful to the Government of Senegal for their support and co-operation in helping to make this possible.”
Since winning the concession in 2007, DP World has introduced window berthing, where vessels book a specific time they can berth, virtually eliminating waiting time at anchorage.
In addition, DP World has reduced truck turnaround time to less than half an hour and introduced clear tariffs and processes supported by technology systems.
Arabian Supply Chain
Tanzania slaps 25 per cent tariff on Ugandan goods
Several Ugandan companies involved in manufacturing and exports of finished products are crying foul after Tanzania recently imposed a 25 per cent tariff on manufactured goods entering its borders.The new measures that were announced in early December 2011 have forced Ugandan manufacturers exporting into Tanzania to pay a 25 per cent Common External Tariff (CET).
Uganda won concessions from her East African partners in the regional integration process to continue exempting its manufacturers from paying import duty on a list of 135 industrial inputs when the cet initially came into force in 2005. Like the duty remission scheme, the list was supposed to lapse at the end of last year but was extended after sustained pressure from the countries’ industrialists.
“Uganda got an extension of the exemption to the end of June 2012. During this period the status quo is likely to remain so that manufacturers in Tanzania and other partners are not disadvantaged,” said a Tanzanian Revenue Authority (TRA) official.At the time of the negotiations, Uganda had the lowest applied tariff rates in the region standing at 0 per cent, 7 per cent and 15 per cent for raw materials, intermediate products and finished, manufactured products respectively.
But the new measure has left goods destined for Tanzania grounded at Port Bell in Luzira, Kampala. The Mukwano Group of Companies, which exports tonnes of detergent, laundry soap, petroleum jelly, edible cooking oil and plastics monthly, has been hit most.
Some ontainers that were destined for Tanzanian ports of Bukoba and Mwanza on Lake Victoria were offloaded from the ship at Port Bell due to the exorbitant new tariff.“We had loaded finished goods worth hundreds of thousands of US dollars but had to offload them and return them back to our warehouses.
This is a great loss to us and Uganda and this move is counterproductive to the spirit of East African integration,” said B. W. Rwabwogo, General Manager – Operations, Mukwano Group of Companies, Uganda.Britania Allied Industries General Manager marketing SK. Sridharan described the new move as an impediment to trade in the EAC region.
The Citizen
Uganda won concessions from her East African partners in the regional integration process to continue exempting its manufacturers from paying import duty on a list of 135 industrial inputs when the cet initially came into force in 2005. Like the duty remission scheme, the list was supposed to lapse at the end of last year but was extended after sustained pressure from the countries’ industrialists.
“Uganda got an extension of the exemption to the end of June 2012. During this period the status quo is likely to remain so that manufacturers in Tanzania and other partners are not disadvantaged,” said a Tanzanian Revenue Authority (TRA) official.At the time of the negotiations, Uganda had the lowest applied tariff rates in the region standing at 0 per cent, 7 per cent and 15 per cent for raw materials, intermediate products and finished, manufactured products respectively.
But the new measure has left goods destined for Tanzania grounded at Port Bell in Luzira, Kampala. The Mukwano Group of Companies, which exports tonnes of detergent, laundry soap, petroleum jelly, edible cooking oil and plastics monthly, has been hit most.
Some ontainers that were destined for Tanzanian ports of Bukoba and Mwanza on Lake Victoria were offloaded from the ship at Port Bell due to the exorbitant new tariff.“We had loaded finished goods worth hundreds of thousands of US dollars but had to offload them and return them back to our warehouses.
This is a great loss to us and Uganda and this move is counterproductive to the spirit of East African integration,” said B. W. Rwabwogo, General Manager – Operations, Mukwano Group of Companies, Uganda.Britania Allied Industries General Manager marketing SK. Sridharan described the new move as an impediment to trade in the EAC region.
The Citizen
Africa’s hopeful economies
Nonetheless his $10 billion fortune is money earned, not expropriated. The Dangote Group started as a small trading outfit in 1977. It has become a pan-African conglomerate with interests in sugar and logistics, as well as construction, and it is a real business, not a kleptocratic sham.
Legitimately self-made African billionaires are harbingers of hope. Though few in number, they are growing more common. They exemplify how far Africa has come and give reason to believe that its recent high growth rates may continue. The politics of the continent’s Mediterranean shore may have dominated headlines this year, but the new boom south of the Sahara will affect more lives.
From Ghana in the west to Mozambique in the south, Africa’s economies are consistently growing faster than those of almost any other region of the world. At least a dozen have expanded by more than 6% a year for six or more years. Ethiopia will grow by 7.5% this year, without a drop of oil to export. Once a byword for famine, it is now the world’s tenth-largest producer of livestock. Nor is its wealth monopolised by a well-connected clique. Embezzlement is still common but income distribution has improved in the past decade.
Severe income disparities persist through much of the continent; but a genuine middle class is emerging. According to Standard Bank, which operates throughout Africa, 60m African households have annual incomes greater than $3,000 at market exchange rates. By 2015, that number is expected to reach 100m—almost the same as in India now. These households belong to what might be called the consumer class. In total, 300m Africans earn more than $700 a year. That’s not much, and many of those people could be pushed back into penury by a small change in circumstance. But it can cover a phone and even some school fees. “They are not all middle class by Western standards, but nonetheless represent a vast market,” says Edward George, an economist at Ecobank, another African banking group
.
As for Africans below the poverty line—the majority of the continent’s billion people—disease and hunger are still a big problem. Out of 1,000 children 118 will die before their fifth birthday. Two decades ago the figure was 165. Such progress towards the Millennium Development Goals, a series of poverty-reduction milestones set by the UN, is slow and uneven. But it is not negligible. And the mood among have-nots is better than at any time since the independence era two generations ago. True, Africans have a remarkable capacity for being upbeat. But it is seems that this time they really do have something to smile about.
Lions and tigers (and bears)
Since The Economist regrettably labelled Africa “the hopeless continent” a decade ago, a profound change has taken hold. Labour productivity has been rising. It is now growing by, on average, 2.7% a year. Trade between Africa and the rest of the world has increased by 200% since 2000. Inflation dropped from 22% in the 1990s to 8% in the past decade. Foreign debts declined by a quarter, budget deficits by two-thirds. In eight of the past ten years, according to the World Bank, sub-Saharan growth has been faster than East Asia’s (though that does include Japan).
Even after revising downward its 2012 forecast because of a slowdown in the northern hemisphere, the IMF still expects sub-Saharan Africa’s economies to expand by 5.75% next year. Several big countries are likely to hit growth rates of 10%. The World Bank—not known for boosterism—said in a report this year that “Africa could be on the brink of an economic take-off, much like China was 30 years ago and India 20 years ago,” though its officials think major poverty reduction will require higher growth than today’s—a long-term average of 7% or more.
There is another point of comparison with Asia: demography. Africa’s population is set to double, from 1 billion to 2 billion, over the next 40 years. As Africa’s population grows in size, it will also alter in shape. The median age is now 20, compared with 30 in Asia and 40 in Europe. With fertility rates dropping, that median will rise as today’s mass of young people moves into its most productive years. The ratio of people of working age to those younger and older—the dependency ratio—will improve. This “demographic dividend” was crucial to the growth of East Asian economies a generation ago. It offers a huge opportunity to Africa today.
Seen through a bullish eye, this reinforces exuberant talk of “lion economies” analogous to the Asian tigers. But there are caveats. For one thing, in Africa, perhaps even more so than in Asia, wildly different realities can exist side by side. Averaging out failed states and phenomenal success stories is of limited value. The experience of the leaders is an unreliable guide to what will become of the laggards. For another, these are early days, and there have been false dawns before. Those of bearish mind will ask whether the lions can match the tigers for stamina. Will Africa continue to rise? Or is this merely a strong upswing in a boom-bust cycle that will inevitably come tumbling back down?
More than diamond geezers
Recently revenues from selling oil and metals have helped to fill treasuries, create jobs and feed an appetite for luxury. In gem-rich Angola, high-grade diamonds are reimported after being cut in Europe to adorn the fingers of local minerals magnates and their molls.
Overall, though, only about a third of Africa’s recent growth is due to commodities. West and southern Africa are the chief beneficiaries. Equatorial Guinea gets most of its revenues from oil; Zambia gets half its GDP from copper. When commodity prices soften or tumble such countries will undoubtedly suffer. But it is east Africa, with little oil and only a sprinkling of minerals, that boasts the fastest-expanding regional economy on the continent, and there are outposts of similar non-resource-based growth elsewhere, such as Burkina Faso. “Everything is growing, not just commodities,” says Mo Ibrahim, a Sudanese mobile-phone mogul who is arguably Africa’s most successful entrepreneur.
When the world economy—and with it commodity prices—tanked in 2008, African growth rates barely budged. “Africa has great resilience,” says Mthuli Ncube, chief economist of the African Development Bank. “A structural change has taken place.”
A long-term decline in commodity prices would undoubtedly hurt. But commodity-led growth on the continent is not as reversible as it used to be. For one thing, African governments have invested more wisely this time round, notably in infrastructure. In much of the continent roads are still dire. But there are more decent ones than there used to be, and each new length of tarmac will boost the productivity of the people it serves long after the cashflow that paid for it dries up. For another, Africa’s commodities now have a wider range of buyers. A generation ago Brazil, Russia, India and China accounted for just 1% of African trade. Today they make up 20%, and by 2030 the rate is expected to be 50%. If China and India continue to grow Africa probably will too.
More jaw-jaw, less war-war
What’s more, many foreign participants in the African commodity trade have become less short-termist. They are likely to stick around after they finish mining; Chinese workers, of whom there are tens of thousands in Africa, have shown a propensity to morph into local entrepreneurs. A Cantonese construction company in Angola recently set up its own manufacturing arm to produce equipment that is difficult to import. Few Western competitors would do the same (though many of their colonial forebears did).
Commodity growth may be more assured than it used to be. But two big drivers of Africa’s growth would still be there even if the continent held not a barrel of oil nor an ounce of gold. One is the application of technology. Mobile phones have penetrated deep into the bush. More than 600m Africans have one; perhaps 10% of those have access to mobile-internet services. The phones make boons like savings accounts and information on crop prices ever more available.
Technology is also aiding health care. The World Bank says malaria takes $12 billion out of Africa’s GDP every year. But thanks to more and better bed nets, death rates have fallen by 20%. Foreign investors in countries with high HIV-infection rates complain about expensively trained workers dying in their 30s and 40s, but the incidence of new infection is dropping in much of the continent, and many more people are receiving effective treatment.
The second big non-commodity driver is political stability. The Africa of a generation ago was a sad place. The blight of apartheid isolated its largest economy, South Africa. Only seven out of more than 50 countries held frequent elections. America and the Soviet Union conducted proxy wars. Capital was scarce and macroeconomic management erratic. Lives were cut short by bullets and machetes.
Africa is still not entirely peaceful and democratic. But it has made huge strides. The dead hand of the Soviet Union is gone; countries such as Mozambique and Ethiopia have given up on Marxism. The dictators, such as Congo’s leopard-skin-fez-wearing Mobutu Sese Seko, that superpowers once propped up have fallen. Civil wars like the one which crippled Angola have mostly ended. Two out of three African countries now hold elections, though they are not always free and fair. Congo held one on November 28th.
Friends and neighbours
Even if many of the world’s most inept states can still be found between the Sahara and Kalahari deserts, governance has improved markedly in many places. Regulatory reforms have partially unshackled markets. A string of privatisations (more than 100 in Nigeria alone) has reduced the role of the state in many countries. In Nigeria, Africa’s biggest resource economy, the much-expanded service sector, if taken together with agriculture, now almost matches oil output.
Trade barriers have been reduced, at least a bit, and despite the dearth of good roads, regional trade—long an African weakness—is picking up. By some measures, intra-African trade has gone from 6% to 13% of the total volume. Some economists think the post-apartheid reintegration of South Africa on its own has provided an extra 1% in annual GDP growth for the continent, and will continue to do so for some time. It is now the biggest source of foreign investment for other countries south of the Sahara.
Somewhat belatedly, Africans are taking an interest in each other. Flight connections are improving, even if an Arab city, Dubai, is still the best hub for African travellers. Blocks of African economies have taken steps towards integration. The East African Community, which launched a common market in 2010, is doing well; the Economic Community of West African States less so. The Southern African Development Community has made the movement of goods and people across borders much easier. That said, barriers remain, and the economy suffers as a result. Africans pay twice as much for washing powder as consumers in Asia, where trade and transport are easier and cheaper.
Foreign investors are no longer just interested in oil wells and mines. They are moving on to medium-sized bets on consumer goods. The number of projects—for example by retail chains such as Britain’s Marks & Spencer—has doubled in the past three years. Despite the boom in mining, the share of total investment going into extractive activities has shrunk by 13%. That said, the riches are far from evenly spread: three-quarters of all investments are in just ten big countries.
The increased interest from outsiders that has been triggered by Africa’s political and technological changes is not, though, the heart of the story. Economic change has made life more rewarding for Africans themselves. They have more opportunities to start businesses and get ahead than they have enjoyed in living memory, and governments are showing some willingness to get out of their way. According to the World Bank’s annual ranking of commercial practices, 36 out of 46 African governments made things easier for business in the past year.
That said, most African countries are still clustered near the bottom of the table. In all sorts of ways African governments need to run their countries more efficiently, more accountably and less intrusively. They also need to offer much better schooling, an area in which Africa woefully lags behind Asia. African businessmen constantly complain about the shortage of skills. Hiring qualified staff can be prohibitively expensive. The return of skilled exiles has helped in some newly peaceful countries, but often foreigners are needed, usually other Africans. Without better education, Africa cannot hope to emulate the Asian miracle.
Africa’s demographic dividend, too, is far from guaranteed. A growing population and a bulge of working-age citizens proved a blessing in Asia. But population growth always has its costs. All those extra people must be fed, educated and given opportunities. If illiberal policies obstruct growth and discourage firms from hiring, Africa’s extra millions may soon be jobless and disgruntled. Some may even take up arms—a sure recipe for disaster, both human and economic.
An abundance of young people is like gearing on a balance sheet: it makes good situations better and bad ones worse. It is worrying that some of Africa’s fastest-growing populations are in economies not performing well at the moment; and fertility rates are not declining as uniformly, or as swiftly, as they did in Asia.
Africa’s extra people are flocking to cities. Some 40% of Africans are city dwellers now, up from 30% a generation ago. By 2025 the number is likely to be 50%. In Asia the rate is currently 52%. This is usually a good thing. Productivity is higher in cities. Transport costs are lower and markets are busier when people live close to each other. In bad times, the tight ethnic jumble of the city can be a powder keg. That said, Africa’s worst wars, such as those in Congo, Rwanda, Sudan and Somalia, have been fought in countries where most people are peasants or livestock herders.
Extra mouths will need to be fed. There is scope for this. Though Africa is now a net food importer, it has 60% of the world’s uncultivated arable land. It produces less per person now than in 1960. Africa’s land is often hard to farm, with large year on year variations in climate (a problem likely to get worse as the Earth heats up). Farmers lack access to capital for fertiliser and irrigation. More roads and storage depots are also needed; much of the harvest rots before it gets to market. And land ownership often raises thorny issues about who belongs to a place and who does not.
Agriculture is a long-term worry. A shorter term concern is how to deal with a coming slowdown and recession in the north. Investors fleeing risky assets in Europe are unlikely to put their cash into Africa. More likely they will pull back some of the money they have already invested there. The signs are that this is already happening. Bankers say the deal flow is slowing. But many remain generally bullish on Africa, convinced that its growth potential will reward patient investors and eventually lure back fickle ones.
Africa’s growth is now underpinned by a permanent shift in expectations. In many African countries people have at last started to see themselves as citizens, with the rights that citizenship brings. Greater political awareness makes it harder for incompetent despots to hold on to power, as north Africa has discovered. Bastions of the continent’s past—destitute, violent and isolated—are becoming exceptions.
Africa is not the next China. It provides only a tiny fraction of world output—2.5% at purchasing-power parity. It is as yet not even a good bet for retail investors, given the dearth of stockmarkets. Mr Dangote’s $10 billion undeniably makes him a big fish, but the Dangote Group accounts for a quarter of Nigeria’s stockmarket by value: it is a small and rather illiquid pond. Nonetheless, Africa’s boom will continue to benefit Africans, serving the billion as well as the billionaires. That is no small feat.
The Economist
European economic slowdown a problem for Africa-WTO
by Clair MacDougall
The euro zone crisis will continue to hamper African countries' trade and economic growth because of the continent's dependence on exporting to European markets, the World Trade Organization chief said in early December 2011.
WTO Director-General Pascal Lamy said there could be a significant decline in the growth of African economies if the euro zone crisis continued to worsen.
"Africa is still dependent on trade with Europe, which is its first trade partner," Lamy said. "The order of magnitude in what you find in economic research is that -1 percent for Europe's growth equals -0.5 percent for Africa's growth."
Trade between the 27-nation European Union, the world's largest trading zone, and its former colonies stood at 278 billion euros ($373 billion) in 2008, according to the European Union's statistics agency Eurostat. The euro zone comprises 17 EU member states.
African countries export commodities and other raw materials including timber, tobacco, cocoa, cut flowers and oil to Europe, as well as textiles, while importing finished products including machinery, chemicals and vehicles.
Lamy said African countries needed to focus on intra-regional trade to mitigate the impacts of the crisis.
"I have no doubt that it will impact Africa's growth in years to come, which is one of the reasons why Africa has to try and become more dependent on other sources of trade than the EU market," Lamy said.
($1 = 0.7446 euros)
Reuters
The euro zone crisis will continue to hamper African countries' trade and economic growth because of the continent's dependence on exporting to European markets, the World Trade Organization chief said in early December 2011.
WTO Director-General Pascal Lamy said there could be a significant decline in the growth of African economies if the euro zone crisis continued to worsen.
"Africa is still dependent on trade with Europe, which is its first trade partner," Lamy said. "The order of magnitude in what you find in economic research is that -1 percent for Europe's growth equals -0.5 percent for Africa's growth."
Trade between the 27-nation European Union, the world's largest trading zone, and its former colonies stood at 278 billion euros ($373 billion) in 2008, according to the European Union's statistics agency Eurostat. The euro zone comprises 17 EU member states.
African countries export commodities and other raw materials including timber, tobacco, cocoa, cut flowers and oil to Europe, as well as textiles, while importing finished products including machinery, chemicals and vehicles.
Lamy said African countries needed to focus on intra-regional trade to mitigate the impacts of the crisis.
"I have no doubt that it will impact Africa's growth in years to come, which is one of the reasons why Africa has to try and become more dependent on other sources of trade than the EU market," Lamy said.
($1 = 0.7446 euros)
Reuters
Euro Zone debt crisis may threaten African economy
by Palash R. Ghosh
The Euro zone debt crisis not only threatens the economic well-being of European countries, but may also spill over to the rest of the globe, including Africa.
Speaking to BBC, the finance ministers of two of Africa’s premier economies, South Africa and Nigeria, worry that the failure by the European Union to contain the crisis will have grave consequences for their countries, particularly with respect to market volatility.
Essentially, Pravin Gordhan of South Africa and Nigeria's Ngozi Okonjo-Iweala warned that the volume or global trade may be reduced by Europe’s fiscal ills, hurting their local economies.
"The new epicenter of the crisis in the euro zone is having a damaging effect on our economies," Gordhan told BBC, partly due to Africa’s dependence on trade with Europe.
Gordhan further accused European officials of ignoring the problems of the rest of the world.
"When European leaders are unable to make the right decisions, we have money moving out of our economies into so-called safe havens," he said. "This has a major effect on our economies and the volatility of our currencies is not useful. [European politicians] do not have the capacity to manage their own backyard on the one hand, and [they must] ensure that they don't damage the rest of the world on the other."
Gordhan said that the debt crisis in Europe is harming economies thousands of miles way.
"All of our economies are now sliding, whether we are in Brazil or India or China or wherever," he said. "That is going to have massive consequences in terms of the overall global outlook."
South Africa, the largest economy on the continent, saw its GDP expand by 1.4 percent in the third quarter, below expectations. Bloomberg reported that the debt crisis in Europe (which buys one-third of the country’s exports) has forced Pretoria to reduce its employment and economic growth targets.
Meanwhile, Okonjo-Iweala of Nigeria lamented that global market volatility has similarly produced volatility in commodity products that Nigeria exports.
"Sixty per cent of demand for Nigeria's products comes from Europe and the US," she said. "What needs to be recognized when these decisions are being made in Europe, is how they can make more use of the dynamism of the developing world.”
Nigeria, African largest oil producer, is facing the threat of inflation, warned the country’s central bank governor, Lamido Sanusi. Speaking at a conference in Mauritius, Sanusi said: “Unless there is a massive threat to reserves, the case for loosening monetary policy has not been made yet. At the moment, inflation remains the threat. There is no clear risk to growth.”
In October, the inflation rate reached 10.5 percent, above the central bank’s 10 percent target.
Bloomberg reported that Lagos is also planning to eliminate fuel subsidies next year in order to save about 1.2 trillion naira ($7.5 billion) in state spending next year. Taking a ”cautious” approach to Europe’s financial problems, Sanusi said the Nigerian government is budgeting for an $70 per barrel oil price for next year’s spending plan, down from $75.
Meanwhile, Okonjo-Iweala also highlighted how the developing economies of the world are far outperforming the advanced nations of Western Europe, North America and Japan.
"It is because many of our economies, even in Africa, have gone through some of the challenges the developed world is now going through," she said.
"We have learnt lessons, we have learnt how to manage our economies to produce sustained growth. Africa has learnt to keep its debt at a sustainable level and is consistent when managing the macro-economy."
IBT
The Euro zone debt crisis not only threatens the economic well-being of European countries, but may also spill over to the rest of the globe, including Africa.
Speaking to BBC, the finance ministers of two of Africa’s premier economies, South Africa and Nigeria, worry that the failure by the European Union to contain the crisis will have grave consequences for their countries, particularly with respect to market volatility.
Essentially, Pravin Gordhan of South Africa and Nigeria's Ngozi Okonjo-Iweala warned that the volume or global trade may be reduced by Europe’s fiscal ills, hurting their local economies.
"The new epicenter of the crisis in the euro zone is having a damaging effect on our economies," Gordhan told BBC, partly due to Africa’s dependence on trade with Europe.
Gordhan further accused European officials of ignoring the problems of the rest of the world.
"When European leaders are unable to make the right decisions, we have money moving out of our economies into so-called safe havens," he said. "This has a major effect on our economies and the volatility of our currencies is not useful. [European politicians] do not have the capacity to manage their own backyard on the one hand, and [they must] ensure that they don't damage the rest of the world on the other."
Gordhan said that the debt crisis in Europe is harming economies thousands of miles way.
"All of our economies are now sliding, whether we are in Brazil or India or China or wherever," he said. "That is going to have massive consequences in terms of the overall global outlook."
South Africa, the largest economy on the continent, saw its GDP expand by 1.4 percent in the third quarter, below expectations. Bloomberg reported that the debt crisis in Europe (which buys one-third of the country’s exports) has forced Pretoria to reduce its employment and economic growth targets.
Meanwhile, Okonjo-Iweala of Nigeria lamented that global market volatility has similarly produced volatility in commodity products that Nigeria exports.
"Sixty per cent of demand for Nigeria's products comes from Europe and the US," she said. "What needs to be recognized when these decisions are being made in Europe, is how they can make more use of the dynamism of the developing world.”
Nigeria, African largest oil producer, is facing the threat of inflation, warned the country’s central bank governor, Lamido Sanusi. Speaking at a conference in Mauritius, Sanusi said: “Unless there is a massive threat to reserves, the case for loosening monetary policy has not been made yet. At the moment, inflation remains the threat. There is no clear risk to growth.”
In October, the inflation rate reached 10.5 percent, above the central bank’s 10 percent target.
Bloomberg reported that Lagos is also planning to eliminate fuel subsidies next year in order to save about 1.2 trillion naira ($7.5 billion) in state spending next year. Taking a ”cautious” approach to Europe’s financial problems, Sanusi said the Nigerian government is budgeting for an $70 per barrel oil price for next year’s spending plan, down from $75.
Meanwhile, Okonjo-Iweala also highlighted how the developing economies of the world are far outperforming the advanced nations of Western Europe, North America and Japan.
"It is because many of our economies, even in Africa, have gone through some of the challenges the developed world is now going through," she said.
"We have learnt lessons, we have learnt how to manage our economies to produce sustained growth. Africa has learnt to keep its debt at a sustainable level and is consistent when managing the macro-economy."
IBT
Four reasons Africa is rising
by Eliot Pence
Since The Economist labeled Africa “the hopeless continent” ten years ago, the continent has changed dramatically for the better. While a number of factors contribute to the continent’s increased growth, four trends in particular standout:
1. Political stability ― Africa has slowly become more stable, if only marginally more democratic. Overall country risk, according to the Economist’s research outfit, EIU, of Senegal, Ghana, and Mozambique is lower than those of other emerging markets generally considered more stable, such as Argentina, Ukraine and the Philippines, and of the 17 elections Africa had this year, the majority were free and fair.
2. The commodities “super cycle” — 2003-08 was the third major commodity price boom since the Second World War (1951-53 and 1973-75 were the others). China’s resource intensive growth prompted the boom and substantially increased demand for Africa’s resources, pushing up the prices of hard and soft commodities by, in some cases, over 250%. In their 2010 report, McKinsey estimated that the commodities boom accounted for about a third of Africa’s growth.
3. Trade and aid — Public Private Partnerships, a concept that emphasizes collaboration between public sector and private actors, has opened up investment opportunities that would otherwise be unfeasible or unattractive by increasing risk sharing, technology transfer and sustainability.
4. A technological boom — Saying Africa “leapfrogged” through technology would underestimate the effect technology has had. Already, Africa has over 500 million mobile subscribers (up from 15 million in 2000). By 2015, Africa will have the highest mobile subscription rate in the world. African companies have also pioneered integrative technologies, such as mobile banking, where 1 in 2 mobile bankers globally is African (actually, Kenyan).
The Economist's reversal (they now dub Africa the "hopeful continent") may well become the bumper-sticker description for Africa’s remarkable change since 2000. But as the Economist itself notes, there remain massive obstacles — not least of which is marked by World Aids Day and the reality that fully 60% of people living with HIV live in Africa.
*Eliot Pence is a Director at the Whitaker Group, a corporate strategy firm focused on sub-Saharan Africa with offices in Washington, DC and Accra, Ghana.
CNN
Since The Economist labeled Africa “the hopeless continent” ten years ago, the continent has changed dramatically for the better. While a number of factors contribute to the continent’s increased growth, four trends in particular standout:
1. Political stability ― Africa has slowly become more stable, if only marginally more democratic. Overall country risk, according to the Economist’s research outfit, EIU, of Senegal, Ghana, and Mozambique is lower than those of other emerging markets generally considered more stable, such as Argentina, Ukraine and the Philippines, and of the 17 elections Africa had this year, the majority were free and fair.
2. The commodities “super cycle” — 2003-08 was the third major commodity price boom since the Second World War (1951-53 and 1973-75 were the others). China’s resource intensive growth prompted the boom and substantially increased demand for Africa’s resources, pushing up the prices of hard and soft commodities by, in some cases, over 250%. In their 2010 report, McKinsey estimated that the commodities boom accounted for about a third of Africa’s growth.
3. Trade and aid — Public Private Partnerships, a concept that emphasizes collaboration between public sector and private actors, has opened up investment opportunities that would otherwise be unfeasible or unattractive by increasing risk sharing, technology transfer and sustainability.
4. A technological boom — Saying Africa “leapfrogged” through technology would underestimate the effect technology has had. Already, Africa has over 500 million mobile subscribers (up from 15 million in 2000). By 2015, Africa will have the highest mobile subscription rate in the world. African companies have also pioneered integrative technologies, such as mobile banking, where 1 in 2 mobile bankers globally is African (actually, Kenyan).
The Economist's reversal (they now dub Africa the "hopeful continent") may well become the bumper-sticker description for Africa’s remarkable change since 2000. But as the Economist itself notes, there remain massive obstacles — not least of which is marked by World Aids Day and the reality that fully 60% of people living with HIV live in Africa.
*Eliot Pence is a Director at the Whitaker Group, a corporate strategy firm focused on sub-Saharan Africa with offices in Washington, DC and Accra, Ghana.
CNN
Australia's trade with Africa rebounds
Australian trade with Africa rebounded in 2010, increasing nearly a third over the year to total $8.5 billion.
Education services exports to Africa were up over 80 per cent since 2005, to $449 million in 2010. Education is now Australia's second largest export to Africa, behind only aluminium ores and concentrates.
Australia's top trading partners in Africa in 2010 were South Africa and Nigeria.
These figures come from a new report, Australia's Trade with Africa and the Middle East, produced by the Department of Foreign Affairs and Trade.
In the Middle East – where Australia's merchandise trade is valued at $10.9 billion – education services are also an important contributor to Australia's export performance, as the fourth highest export behind aluminium ore and concentrates, passenger motor vehicles and wheat.
Australia's key trading partners in the Middle East in 2010 were the United Arab Emirates and Saudi Arabia.
Manufactured products are a key component of Australia's exports to both Africa and the Middle East.
Exports of manufactures to Africa totalled $1.1 billion in 2010, which is more than a third of all merchandise exports to Africa. These manufactures included pharmaceuticals, civil engineering equipment and specialised machinery.
Exports of manufactures to the Middle East were valued at $2.4 billion and comprised more than a third of the total merchandise exports in 2010. The majority of these manufactured exports were elaborately transformed manufactures (ETMs), underpinned by exports of motor vehicles and vehicle parts and accessories.
The publication and analysis is available from the DFAT website.
Education services exports to Africa were up over 80 per cent since 2005, to $449 million in 2010. Education is now Australia's second largest export to Africa, behind only aluminium ores and concentrates.
Australia's top trading partners in Africa in 2010 were South Africa and Nigeria.
These figures come from a new report, Australia's Trade with Africa and the Middle East, produced by the Department of Foreign Affairs and Trade.
In the Middle East – where Australia's merchandise trade is valued at $10.9 billion – education services are also an important contributor to Australia's export performance, as the fourth highest export behind aluminium ore and concentrates, passenger motor vehicles and wheat.
Australia's key trading partners in the Middle East in 2010 were the United Arab Emirates and Saudi Arabia.
Manufactured products are a key component of Australia's exports to both Africa and the Middle East.
Exports of manufactures to Africa totalled $1.1 billion in 2010, which is more than a third of all merchandise exports to Africa. These manufactures included pharmaceuticals, civil engineering equipment and specialised machinery.
Exports of manufactures to the Middle East were valued at $2.4 billion and comprised more than a third of the total merchandise exports in 2010. The majority of these manufactured exports were elaborately transformed manufactures (ETMs), underpinned by exports of motor vehicles and vehicle parts and accessories.
The publication and analysis is available from the DFAT website.
Counterfeit goods strangle legitimate trade in East Africa
by Parselelo Kantai
For $50 (U.S.), you can get yourself a brand new BlackBerry in one of a row of little shops selling cellphones near Jamia Mosque in central Nairobi.
It does not come with a warranty and the shop assistant – briefly lowering his eyes – signals that it is a “Chinese BlackBerry,” exquisitely possessed of all the external brand features of the phone, but none of its applications.
Similar counterfeit brands exist for other phones in similar markets across east Africa’s towns and cities. They sell in the thousands to lower income consumers, unable to afford the real thing, but seduced by big-brand names.
From pharmaceuticals, to cigarettes, foodstuffs, phones, CDs and DVDs, the trade in counterfeits is increasingly biting into the profits of east African manufacturers and traders. Shipped in mostly from Asia and smuggled through the region’s porous borders or through legitimate ports staffed by corrupt officials, they affect virtually all areas of trade.
It does not help that Somalia’s southern port of Kismayu, controlled by the militant group al-Shabaab, has become an entry point for illicit goods.
The trade is increasingly linked to organized crime syndicates, and attempts to fight it are hampered by an unhappy combination of underfunded agencies, uneven regional tax regimes and endemic corruption.
In Kenya, the tobacco industry is the worst affected, with counterfeits representing up to $19-million or 5 per cent of product sales.
“Part of it has to do with the lack of a harmonized tax regime in the [East Africa] Community, the rise of Dubai and China as export outlets and the conflict in Somalia,” says Selena Olende of British American Tobacco in Nairobi. “It’s a regional problem. If there’s a peak in imports, we normally see a corresponding spike in illicit trade.”
While BAT has lobbied governments to address the problem, its efforts are ironically hampered by the stringent Tobacco Control Act, which, owing to its ban on advertising, limits what the company can do to educate consumers about the presence of counterfeit cigarettes.
While east African governments readily acknowledge the problem, they find themselves hamstrung by overworked quality inspectors at the ports and the ingenuity of smugglers. More than 2,000 containers arrive at the ports of Dar es Salaam and Mombasa each day, posing a Herculean task to the small inspection unit.
“Motorbikes have become a great means of transport for counterfeiters and their distributors. They bribe security officers staffing the crossing or use panya [illegal] routes to smuggle a whole container in minutes,” said one inspector quoted in a local daily.
Just as problematic is the lack of a harmonized tax regime. Although the East Africa Community has a common external tariff in place, it is observed more in the breach than in practice. There are still many parallel taxes, with various regimes, some of which are punitive.
To make the EAC common market an enabling platform for accelerated business investment and growth, there is a need to harmonize taxes – excise taxes, VAT and even corporation taxes.
Excise tax on soft drinks, the biggest element of the retail price, is administered differently in all five countries, for instance.
While Tanzania and Burundi charge a fixed rate per litre of beverage, Kenya, Uganda and Rwanda charge rates of 7, 13 and 39 per cent respectively.
“We are engaging with the countries under the umbrella of the East Africa Business Council to lobby for some level of harmonization of these taxes," says Nathan Kalumbu, business unit president for Coca-Cola in central, east and west Africa.
The presence of transporters willing to export illicit goods for small margins has also undermined the operations of legitimate haulers, making legal business almost unsustainable.
“Somalis are killing the transport rates. Because of their competition, nobody can now make money out of it. If somebody makes a little commission from piracy, the only place they can invest and run a decent business is Nairobi,” says Hassan Guleid, a transporter and chairman of the Eastleigh Business District Association.
“So a lot of them now go for trucks, second-hand trucks from Europe. There are hundreds, everywhere. Fuel trucks alone will be in thousands.”
For manufacturers such as Jayesh Shah, head of the Sumaria Group of companies, the results have been little short of disastrous.
“We were the No. 1 detergent company in Tanzania, but we found that, legitimately, we would not be able to compete,” says Mr. Shah. The company had no choice but to sell off its detergent company as a result.
“In Tanzania, there is a lot of business taking place without the payment taxes, and for us as taxpayers it was not making economic sense,” he says.
His company’s turnover has thus fallen from $200-million three years ago to $120-million today.
The Globe and Mail
For $50 (U.S.), you can get yourself a brand new BlackBerry in one of a row of little shops selling cellphones near Jamia Mosque in central Nairobi.
It does not come with a warranty and the shop assistant – briefly lowering his eyes – signals that it is a “Chinese BlackBerry,” exquisitely possessed of all the external brand features of the phone, but none of its applications.
Similar counterfeit brands exist for other phones in similar markets across east Africa’s towns and cities. They sell in the thousands to lower income consumers, unable to afford the real thing, but seduced by big-brand names.
From pharmaceuticals, to cigarettes, foodstuffs, phones, CDs and DVDs, the trade in counterfeits is increasingly biting into the profits of east African manufacturers and traders. Shipped in mostly from Asia and smuggled through the region’s porous borders or through legitimate ports staffed by corrupt officials, they affect virtually all areas of trade.
It does not help that Somalia’s southern port of Kismayu, controlled by the militant group al-Shabaab, has become an entry point for illicit goods.
The trade is increasingly linked to organized crime syndicates, and attempts to fight it are hampered by an unhappy combination of underfunded agencies, uneven regional tax regimes and endemic corruption.
In Kenya, the tobacco industry is the worst affected, with counterfeits representing up to $19-million or 5 per cent of product sales.
“Part of it has to do with the lack of a harmonized tax regime in the [East Africa] Community, the rise of Dubai and China as export outlets and the conflict in Somalia,” says Selena Olende of British American Tobacco in Nairobi. “It’s a regional problem. If there’s a peak in imports, we normally see a corresponding spike in illicit trade.”
While BAT has lobbied governments to address the problem, its efforts are ironically hampered by the stringent Tobacco Control Act, which, owing to its ban on advertising, limits what the company can do to educate consumers about the presence of counterfeit cigarettes.
While east African governments readily acknowledge the problem, they find themselves hamstrung by overworked quality inspectors at the ports and the ingenuity of smugglers. More than 2,000 containers arrive at the ports of Dar es Salaam and Mombasa each day, posing a Herculean task to the small inspection unit.
“Motorbikes have become a great means of transport for counterfeiters and their distributors. They bribe security officers staffing the crossing or use panya [illegal] routes to smuggle a whole container in minutes,” said one inspector quoted in a local daily.
Just as problematic is the lack of a harmonized tax regime. Although the East Africa Community has a common external tariff in place, it is observed more in the breach than in practice. There are still many parallel taxes, with various regimes, some of which are punitive.
To make the EAC common market an enabling platform for accelerated business investment and growth, there is a need to harmonize taxes – excise taxes, VAT and even corporation taxes.
Excise tax on soft drinks, the biggest element of the retail price, is administered differently in all five countries, for instance.
While Tanzania and Burundi charge a fixed rate per litre of beverage, Kenya, Uganda and Rwanda charge rates of 7, 13 and 39 per cent respectively.
“We are engaging with the countries under the umbrella of the East Africa Business Council to lobby for some level of harmonization of these taxes," says Nathan Kalumbu, business unit president for Coca-Cola in central, east and west Africa.
The presence of transporters willing to export illicit goods for small margins has also undermined the operations of legitimate haulers, making legal business almost unsustainable.
“Somalis are killing the transport rates. Because of their competition, nobody can now make money out of it. If somebody makes a little commission from piracy, the only place they can invest and run a decent business is Nairobi,” says Hassan Guleid, a transporter and chairman of the Eastleigh Business District Association.
“So a lot of them now go for trucks, second-hand trucks from Europe. There are hundreds, everywhere. Fuel trucks alone will be in thousands.”
For manufacturers such as Jayesh Shah, head of the Sumaria Group of companies, the results have been little short of disastrous.
“We were the No. 1 detergent company in Tanzania, but we found that, legitimately, we would not be able to compete,” says Mr. Shah. The company had no choice but to sell off its detergent company as a result.
“In Tanzania, there is a lot of business taking place without the payment taxes, and for us as taxpayers it was not making economic sense,” he says.
His company’s turnover has thus fallen from $200-million three years ago to $120-million today.
The Globe and Mail
America vs China in Africa
by Francis Njubi Nesbitt
China’s imminent replacement of the West as the dominant international economic and political force in Africa epitomizes the most dramatic shift in geopolitics since the collapse of the Soviet Union. Yet the United States and Europe, Africa’s traditional trading partners, seem incapable of responding to the challenge and retaking the initiative. Instead, their response has been to wring their hands in despair and make ineffectual noises about human rights and democracy.
A recent Senate hearing on the implications of China’s role in Africa, for instance, concluded that the United States is ceding both its economic and political leadership in Africa. Led by Sen. Chris Coons (D-DE), the panel urged the United States to respond by expanding trade and investments in Africa while defending its democratization agenda. This is a tall order, however, considering that the Obama administration’s top foreign policy priority in Africa is counter-terrorism – a policy that undermines both the trade and human rights agendas.
China has already overtaken the United States as the continent’s main trading partner. According to David Shinn, a former U.S. ambassador to Burkina Faso and Ethiopia, China surpassed the United States as Africa’s main trading partner in 2009. Testifying at a Senate Foreign Relations Committee on African Affairs meeting on November 1, Shinn estimated that China’s trade with African totaled $127 billion in 2010, a 40-percent increase from the previous year, compared to $113 billion for the United States. Today, the energy sector accounts for over 70 percent of China’s trade with Africa. China also imports 30 percent of its oil from African countries.
Senator Coons said at the hearing that China’s rise in Africa is “truly staggering.” Its trade and investment in Africa grew by 1,000 percent between 2000 and 2010, and its growth outpaced that of the United States by over 100 percent last year. The Chinese have focused on critical infrastructure projects such as building refineries, ports, roads, bridges, airports, and railroads. These projects are funded by concessional loans, some of which are interest-free for up to 20 years. Shinn noted that these include recent agreements with Angola for about $14.5 billion, Ghana for $13 billion, and the DRC for $6.5 billion. In return, the Chinese receive access to natural resources such as oil and rare minerals needed for the production of laptops, smart phones, and flat-screen televisions.
China is not the only challenge to the West’s dominance in the scramble for Africa’s resources. Other emerging economies such as India, Russia, Brazil, and Turkey are all investing heavily in Africa. Middle Eastern countries are also leasing large tracts of land in eastern Africa to grow food crops. India and several European countries are also eyeing Africa’s abundance of arable land and water as a solution to their growing food deficits. Iran and Turkey are increasing their business ties with Islamic nations in the Horn and North Africa.
The trend, therefore, is clear: the second scramble for African resources is in full swing. The difference between the first and second scrambles is that the first one involved European powers. Today, there are a multitude of new players led by the United States and China, but also including Brazil, India, Turkey, Iran, and the Persian Gulf States.
Brazil’s trade with Africa, for instance, increased fourfold from 2002 to $20.6 billion in 2010. Brazil’s president Dilma Rousseff announced a new initiative to increase economic ties with Africa after touring the continent earlier last month. This new initiative builds on former President Luiz Inacio Lula da Silva’s calls for renewed engagement with Africa. During his tenure, Silva visited 25 African countries and doubled the number of Brazilian embassies on the continent.
Africa’s new partners recognize that the continent provides immense opportunities for trade and investment. Six of the world’s 10 fastest-growing economies over the last decade are in Africa. The United Nations Human Development Report indicated this year that Africa’s progress in human development (access to education, health care, food, etc) could outpace that of every other region in the next decades. Africa’s immense mineral wealth is dwarfed only by its potential. Geologists believe that three quarters of its reserves are yet to be discovered. The continent already has 40 percent of the world’s gold and over 85 percent of its platinum and chromium. It is also the top producer of vanadium, cobalt, diamonds, and chrome, and its iron ore reserves are staggering. It has 60 percent of the world’s uncultivated arable land.
Africa is destined to play a major role in China’s food security as demand for food threatens to outstrip supply. In a recent paper published by Standard Bank, researchers Simon Freemantle and Jeremy Stevens argue that China is facing a food deficit in the near future. It is unable to produce sufficient food domestically to feed its burgeoning population. As a result, Chinese officials are eyeing Africa’s huge agricultural potential and building relations with friendly countries, such as Mozambique, where China has invested heavily in agricultural development. These investments produce crops such as soybeans, tobacco, coffee, tea, and cotton that are in demand in China. The researchers conclude that “managed well, partnerships with China can be meaningful. However, domestic food security must be placed first. Then, and leveraging Chinese aid, crops suited for China’s demand dynamics can and should be emphasized.”
Africa: Patient or Partner
Faced with these momentous changes in geopolitics, the West seems unwilling, or unable, to respond. The United States and Europe seem stuck in neocolonial perspectives that continue to paint Africa as an impoverished backwater that at most deserves sympathy and at worst contempt. They continue to treat Africans as patients rather than partners. At the subcommittee hearing, for instance, Sen. Coons estimated that 70 percent of the U.S. government’s investments in Africa are directed at health programs to combat HIV/AIDS, malaria, tuberculosis, and other diseases. “We may be winning the war on disease but losing the battle for hearts and minds in Africa,” Sen. Coons told the panel. Although focusing on health is laudable, limiting government engagement solely to health is not. Many Africans consider this a paternalistic approach that ignores priorities of African governments like roads, railroads, oil refineries, ports, and other long-term infrastructure development projects.
In Liberia, for instance, the newly reelected President Ellen Johnson Sirleaf, who came to power in 2006 after a decade of civil war, said that her top priority was rebuilding roads. She was unable to raise funds from Western nations and the World Bank so she turned to the Chinese, who immediately agreed to fund the project. Other examples include Ghana, where China is building an alumina refinery, and Chad and Niger, where it is building oil refineries. Angola also turned to China after its efforts to secure financing for infrastructure development from the West failed. In all these cases, traditional trading partners in Europe and the United States refused to even consider providing loans and expertise for these industrial projects. As Steven Hayes, the president and CEO of the Corporate Council on Africa, told the hearing: “Few U.S. banks will finance companies seeking to do business in Africa.”
Thus these partnerships with China offer African countries opportunities for industrialization that have remained a distant dream since independence. Steven Hayes told the hearing that the Chinese have “helped Africa perhaps more than any [other] nation has helped Africa in any ten-year period directly or indirectly.” Hayes argues that the increased competition for strategic minerals has raised commodity prices and thus national incomes. By investing in long-term development and industry, the Chinese model allows African countries to generate income to repay the loans and avoid accumulating unsustainable debts.
China’s Soft Power
China has longstanding political relations with many African countries. These relations stretch back to the 1950s and the Maoist period, when China offered socialist countries ideologically motivated aid for infrastructure projects such as railroads, stadiums, government buildings, and other development projects. In the early 1970s, for instance, the Chinese helped build the ambitious Tanzania-Zambia (TAZARA) railroad, designed primarily to export copper from landlocked Zambia to Tanzania’s Indian Ocean port of Dar-es-Salaam. During the Cold War, Sino-African relations were defined by shared goals such as South-South cooperation and support for anti-colonial and liberation movements in eastern and southern Africa. In the 1980s, Chinese leaders began to reevaluate their ideology-driven relations with African countries. As China continued its modernization process in the mid-80s, international relations became more pragmatic. By the 1990s these relations were re-centered to focus on partnerships in trade and investment rather than ideology.
Today, China has diplomatic relations with, and embassies in, 50 African countries. It emphasizes personal relations at the highest levels. China’s president Hu Jintao has visited Africa six times. The premier and foreign minister make annual visits to multiple African countries, and the Communist Party regularly invites African leaders to Beijing. During his 2006 tour of Africa, for instance, Premier Wen Jinbao emphasized that China was seeking partnerships based on equality and noninterference in the affairs of other countries. In contrast, the president of the United States and his vice president rarely visit African countries. President Obama has only visited Africa twice since 2008. There is very little personal contact at the presidential and cabinet levels.
This diplomatic offensive is partly motivated by China’s need for allies on the international stage. African states have significant voting power in international organizations such as the UN, the World Trade Organization, and the World Health Organization. As early as 1971, for instance, the African bloc at the UN helped transfer the Chinese seat at the UN Security Council from Taiwan to the People’s Republic of China. China also sought and received support from some African countries on the UN’s human rights committee when the issue of Tibet emerged in 2008. China continues to seek African counties’ support to advance its international agenda of marginalizing Taiwan and countering Western hegemony and criticism of its human rights record at home and abroad.
Chinese officials estimate that they have provided scholarships to 18,000 African students from 50 countries and sent 700 teachers to 33 countries since 1949. Since 2009, the Chinese government has offered 4,000 scholarships to African students every year. The Chinese government has sponsored the establishment of over 20 Confucius Institutes at universities around the continent. These institutes teach Chinese history, culture, and languages and promote cultural exchanges. Chinese news agencies, radio outlets, and television stations have established over 20 bureaus in Africa with regional offices in Nairobi and Cairo. These media organizations offer alternatives to Reuters, AP, CNN, and other Western media.
In addition to education, the Chinese policy of “health diplomacy” is also an example of soft power. China’s ministry of health reports, for instance, that the government had sent 17,000 Chinese medical workers to 48 countries by the end of last year. In addition, over 1,000 Chinese doctors were working in more than 40 African countries in 2009. China has also built over 10 medical facilities and 30 malaria treatment and prevention centers in Africa.
Over the last decade, China has also participated in peacekeeping operations, anti-piracy campaigns, and post-war reconstruction efforts around the continent. There are currently an estimated 1,600 Chinese peacekeepers participating in eight UN peacekeeping missions around the continent.
According to a 2008 study by the Congressional Research Service on China’s “soft power,” these international relations with Africa were outlined in a Chinese government document released in 2006 titled China’s African Policy. The document outlines Beijing’s desire to create “a new type of strategic partnership with Africa.” These guiding principles are based on policy frameworks that go back to the 1950s and include mutual respect, noninterference in other countries’ internal affairs, equality, and peaceful coexistence. Politically, the document calls for personal relations at all levels of government through visits and bilateral commissions. Economically, it pledges duty-free treatment for some African exports, free-trade agreements, and business partnerships. It also foresees greater cooperation in agriculture, science, technology, and cultural exchanges. The document offers to increase training and scholarships for Africans attending Chinese universities.
Africans generally appreciate China’s policy of noninterference in the internal affairs of other countries. This focus on sovereignty means that African governments can choose where to invest the funds according to their national priorities and thus own the development process. In contrast, the West insists on setting priorities that may not be in Africa’s interest. The Washington Consensus, for instance, demands that African countries privatize development projects and cut government spending in social programs such as education and health care. These policies have led to severe underdevelopment and social unrest.
The Chinese, however, are providing billions of dollars in loans to build schools, hospitals, and other medical facilities, often in rural areas. Western conditionality also means that development aid and finance is easily and frequently withheld or withdrawn altogether depending upon the immediate political situation or the political perspectives of those in power in the West. This means that the recipient countries cannot plan ahead and invest in long-term industrialization projects. Chinese development aid and finance comes with long-term guarantees and thus is more likely to be invested in infrastructure projects that stimulate development.
Arms Race?
To date, China has emphasized trade and diplomacy as opposed to defense in its relations with Africa. China has no military bases in Africa. Nevertheless, Beijing has long sold arms to African allies. Most recently arms deals with countries such as Sudan, Zimbabwe, and Nigeria have drawn criticism. In some cases, these shipments have included military aircraft. In 2008, the CRS estimated that China controls about 15 percent of Africa’s small arms market. It is the third-largest exporter of conventional and small arms to Africa after Germany and Russia. China also provides training for military officers and maintains military-military exchanges with a reported 25 African countries.
A November 11 Southern Africa Report piece published by allafrica.com indicated that the Zimbabwe Defense Force had received the first of several consignments of Chinese small arms, including 20,000 AK-47 automatic rifles, uniforms, and dozens of military trucks. These arms shipments were routed through an intermediary country to avoid detection by Western governments that imposed an arms embargo on Zimbabwe in 2002. The report also indicated that Chinese officials are advising Zimbabwe’s intelligence services, and that China provided a $97-million loan to help construct an intelligence training campus outside Harare. In exchange for the arms, China reportedly received “lucrative platinum, lithium, aluminum, zinc, and diamond concessions” in addition to farms to grow food crops. Between 1998 and 2002, when Zimbabwe was involved in the DRC civil war, China reportedly sold $66-million-worth of small arms to Zimbabwe. It has sold 139 military vehicles and 24 combat aircraft to Zimbabwe since 2004.
China’s growing military engagement in countries such as Zimbabwe and Sudan that are under Western sanctions portends a new danger of an arms race with the United States. An arms race seems already underway in East Asia, where President Obama has stationed troops in Australia in response to China’s growing military might. China could very well respond by increasing its alliances with anti-Western governments in Africa. Such an eventuality would be disastrous, especially considering the increased militarization of U.S. foreign policy in Africa – evidenced by the expansive role of the U.S. Africa Command (AFRICOM), which is involved in counterterrorism activities in a dozen African countries, including the deployment of U.S. Special Forces in Uganda and its unofficial role in the Kenyan invasion of Somalia.
At the Senate hearing, critics of China’s role in Africa repeated the oft-heard refrain that Sino-African deals may conflict with international human rights, governance, and environmental norms. They deplored sales of weapons to countries such as Sudan and Zimbabwe that have been accused of human rights abuses by Western governments; the use of imported Chinese workers; and the growth of small-scale Chinese businesses that compete with indigenous entrepreneurs. They also warn that financing heavy industry and construction projects could harm the environment and deplete Africa’s timber and fish stocks.
A recent Human Rights Watch (HRW) report on labor abuses by Chinese-owned copper mines in Zambia epitomizes this perspective. Titled “You’ll be fired if you refuse,” the 122-page report indicates that the mines regularly flout Zambian and international labor regulations. It details horrific health and safety conditions, 12-18 hour shifts, and anti-union activities. According to Daniel Bekele, HRW’s Africa director, “China’s significant investment in Zambia’s copper mining industry can benefit both Chinese and Zambians. But the miners in Chinese-run companies have been subject to abusive health, safety, and labor conditions and longtime government indifference.”
Toward Common Ground
Despite their different approaches, U.S. and Chinese interests in Africa are complementary. Both nations need Africa’s vast energy and mineral resources to sustain their economies. Both nations also seek cordial diplomatic relations with African countries. There are real differences, however, in their economic and political philosophies, particularly when it comes to governance issues. A critical element in finding common ground is respect for all perspectives, especially those of the Africans. An inclusive process would avert growing suspicions that the rest of the world is once again conspiring to loot Africa’s natural resources.
In the energy and mineral sectors, healthy competition could benefit Africa by increasing commodity prices and thus national incomes. The interests in this area are also complementary. China is particularly strong in infrastructure development, while the United States has superior mining technology. Both these strengths are good for Africa. Mineral extraction without infrastructure for refining and manufacturing industries would maintain a global division of labor in which Africa is a mere exporter of raw materials. By funding infrastructure development, China is playing a critical role in the modernization process.
Both countries have strong health-sector programs on the continent that could benefit from collaboration. This is particularly true in the areas of malaria and tuberculosis prevention and treatment. The United States and China could also collaborate on agricultural projects in Africa.
On the security front, there is also ample space for cooperation. China may not support some of the counterintelligence and counterterrorism tactics used by the United States, but their interests converge in the need to curb piracy, drug smuggling, and illegal fishing in the western Indian Ocean. Both the U.S. and Chinese navies are active in the anti-piracy campaign, as they both depend upon the sea lanes in and around the Gulf of Aden to transport critical energy and trade goods. Closer collaboration would reduce tensions and benefit the United States, China, and East Africa.
Finding common ground in trade and development policies would give the United States and the West greater leverage in pressuring China to adhere to international norms on labor, the environment, and human rights in its interactions with Africa. This was evident in 2007, when China publicly rebuked Sudan for its policies in Darfur and supported UN Security Council Resolution 1769, which authorized a peacekeeping force.
In the final analysis, history will show that the rise of China has been good for African development. The Chinese model of “developmental state” has provided an alternative to the Western model of market democracy. China has also funded infrastructure and industrialization projects that the West has refused to fund since the days of colonialism. It is to be hoped that these projects will finally help Africa modernize – a dream that seems attainable for the first time since independence.
*Francis Njubi Nesbitt is a Foreign Policy In Focus contributor and teaches African politics and conflict resolution at San Diego State University. He is the author of Race for Sanctions (Indiana University Press, 2004) and is completing a book on peacemaking in the Horn of Africa.
FPIF
Europe banks shun Africa traders
by Ed Cropley
Some European banks are now refusing to lend to firms trading with Africa, threatening growth in the world’s poorest continent, a senior official of the African Development Bank (AfDB) said in early December.
The AfDB is looking into ways of providing trade finance to firms doing business with Europe, where an interbank credit squeeze has driven up the cost of funding when it is available at all, chief economist Mthuli Ncube said.
The reluctance of some banks to make Africa-related loans as Europe’s own debt crisis turns them increasingly risk-averse is an ominous sign as it repeats one aspect of the 2008 credit crisis.
“With the crunch in Europe the cost is creeping up and the willingness of the banks to extend the credit in the first place is also an issue,” Ncube said in an interview.
In 2009, the Tunis-based AfDB clubbed together with the International Monetary Fund and South Africa’s Standard Bank to provide commercial guarantees to keep imports and exports flowing smoothly.
Since then, the AfDB has received a massive $100 billion capital injection, most of which has been earmarked for infrastructure investment rather than trade finance. Ncube said that emphasis was likely to shift.
“With the credit crunch in Europe we maybe need to look at providing credit more directly,” he said. “Trade finance is an area where we will intervene more visibly. It’s something that we have not done a lot in the past but that is going to change.”
Africa’s trade with Europe was the only affected route, Ncube said, with the resource-rich continent’s exports of minerals and hydrocarbons to the likes of China, India and North America flowing as normal.
He was unable to quantify the extent of the impact on European trade, but any sort of financing hiccup is likely to hit countries such as South Africa and Kenya, for whom Europe is the biggest trading partner.
A European economic slowdown is already hitting demand for African exports. South Africa, the continent’s biggest economy, sends a third of its exports to Europe, and Kenya more than 25 percent.
In 2008, Africa was largely insulated from the first round of the credit crisis triggered by a collapse in the U.S. housing market, but felt the heat subsequently as commodity prices fell, direct investment dried up and Western aid budgets were trimmed.
Ncube said those latter situations were likely to happen again, while remittances from Africans abroad, which totalled $40 billion a year before the crisis, could drop if Europe slid into recession.
“As the economic slowdown continues, Africans working abroad will lose their jobs or become less secure, and so will send less home,” he said.
Reuters
Some European banks are now refusing to lend to firms trading with Africa, threatening growth in the world’s poorest continent, a senior official of the African Development Bank (AfDB) said in early December.
The AfDB is looking into ways of providing trade finance to firms doing business with Europe, where an interbank credit squeeze has driven up the cost of funding when it is available at all, chief economist Mthuli Ncube said.
The reluctance of some banks to make Africa-related loans as Europe’s own debt crisis turns them increasingly risk-averse is an ominous sign as it repeats one aspect of the 2008 credit crisis.
“With the crunch in Europe the cost is creeping up and the willingness of the banks to extend the credit in the first place is also an issue,” Ncube said in an interview.
In 2009, the Tunis-based AfDB clubbed together with the International Monetary Fund and South Africa’s Standard Bank to provide commercial guarantees to keep imports and exports flowing smoothly.
Since then, the AfDB has received a massive $100 billion capital injection, most of which has been earmarked for infrastructure investment rather than trade finance. Ncube said that emphasis was likely to shift.
“With the credit crunch in Europe we maybe need to look at providing credit more directly,” he said. “Trade finance is an area where we will intervene more visibly. It’s something that we have not done a lot in the past but that is going to change.”
Africa’s trade with Europe was the only affected route, Ncube said, with the resource-rich continent’s exports of minerals and hydrocarbons to the likes of China, India and North America flowing as normal.
He was unable to quantify the extent of the impact on European trade, but any sort of financing hiccup is likely to hit countries such as South Africa and Kenya, for whom Europe is the biggest trading partner.
A European economic slowdown is already hitting demand for African exports. South Africa, the continent’s biggest economy, sends a third of its exports to Europe, and Kenya more than 25 percent.
In 2008, Africa was largely insulated from the first round of the credit crisis triggered by a collapse in the U.S. housing market, but felt the heat subsequently as commodity prices fell, direct investment dried up and Western aid budgets were trimmed.
Ncube said those latter situations were likely to happen again, while remittances from Africans abroad, which totalled $40 billion a year before the crisis, could drop if Europe slid into recession.
“As the economic slowdown continues, Africans working abroad will lose their jobs or become less secure, and so will send less home,” he said.
Reuters
Container shipping industry to incur 2012 losses
by Natalie Greve
The international container shipping industry will take a beating in the upcoming financial year as a result of low freight rates, increased shipping capacity and unpredictable trade volumes, predicts South African freight shipping firm Ocean Africa CEO Andrew Thomas.
He says new container vessels ordered in the past four to five years are now entering the market, increasing capacity and competing for market share, which is driving freight rates further downward.
He asserts that while demand for volume is healthy, this has not translated into increased freight rates, and expenses such as fuel costs remain relatively high.
“Significant losses of about $15-billion were observed among the major container shipping lines in 2009, and I believe that we will observe a similar trend in the upcoming year. The industry earnings last year were in the region of $10-million but the 2011 fiscal year is looking like an absolute disaster,” he says.
Most losses have been observed in the Asia to Europe and the Asia to US trade routes, reports Thomas.
Further, he asserts that South Africa’s position within the global network has not protected it from the downturn trend, and the fact that most of the global shipping lines are trading in South Africa has eroded rates within the local industry.
Port of Durban Expansion
Despite weakening global shipping rates, the movement of containers in and out of the Port of Durban has seen a steady increase over the past few years, and Thomas reports that, in 2011, about 2.7- million containers will be moved through the port – a 7% to 8% increase on last year’s figures.
“This growth can be attributed to the increasingly prominent role that South African ports are playing in international trade, which is driving container volumes. Durban itself is an important Southern African hub within the global shipping network,” he says.
The Durban port’s container handling facilities are unable to fully service the growing demand for services owing to inadequate capacity.
Extensive plans for port expansion to accommodate this growing demand have been outlined by the Port of Durban operator, parastatal organisation the Transnet National Ports Authority (TNPA).
Creamer Media’s Research Channel Africa reported in October that the R110.5- billion five-year project, initiated in September 2008, had already included the completion of Phase 1 of the car terminal improvement section, as well as the deepening and widening of the port’s entrance channel, which was completed in 2010.
Improvements to Pier 2, including the installation of port cranes, will be carried out during the 2012/13 financial year.
“There is no doubt that we need addi- tional container handling capacity in the port, and this can be achieved through improvements to the existing container terminal and expansion implementation. While there have been some significant improvements to the Pier 1 facility, there still remains a considerable amount of work to be done,” says Thomas.
He says that, as a result of this lack of capacity, the Port of Durban container- handling industry is not maintaining the levels of efficiencies that it should, and as a result, discretionary volumes of ship- ping cargo are finding alternative ways of entering the market.
“We are seeing ships entering the harbour that cannot load to their maximum capacity as a result of the draught restriction in the port. While the harbour mouth itself has been widened and deepened at significant cost, the shipping berths themselves have not, which prevents us from capitalising on the improvements. We have seen very little economic benefit from the improvements thus far,” says Thomas.
Despite the challenges, he says that stakeholders in the industry are aligning themselves with the TNPA to resolve the capacity issues and acknowledge that they have a role to play in the decision-making process.
Further, Thomas asserts that increased efficiencies at the Port of Durban will only come about through a combination of wise investment and efficiency gains, which can only be achieved through the cooperation of the private sector and the TNPA.
Engineering News
The international container shipping industry will take a beating in the upcoming financial year as a result of low freight rates, increased shipping capacity and unpredictable trade volumes, predicts South African freight shipping firm Ocean Africa CEO Andrew Thomas.
He says new container vessels ordered in the past four to five years are now entering the market, increasing capacity and competing for market share, which is driving freight rates further downward.
He asserts that while demand for volume is healthy, this has not translated into increased freight rates, and expenses such as fuel costs remain relatively high.
“Significant losses of about $15-billion were observed among the major container shipping lines in 2009, and I believe that we will observe a similar trend in the upcoming year. The industry earnings last year were in the region of $10-million but the 2011 fiscal year is looking like an absolute disaster,” he says.
Most losses have been observed in the Asia to Europe and the Asia to US trade routes, reports Thomas.
Further, he asserts that South Africa’s position within the global network has not protected it from the downturn trend, and the fact that most of the global shipping lines are trading in South Africa has eroded rates within the local industry.
Port of Durban Expansion
Despite weakening global shipping rates, the movement of containers in and out of the Port of Durban has seen a steady increase over the past few years, and Thomas reports that, in 2011, about 2.7- million containers will be moved through the port – a 7% to 8% increase on last year’s figures.
“This growth can be attributed to the increasingly prominent role that South African ports are playing in international trade, which is driving container volumes. Durban itself is an important Southern African hub within the global shipping network,” he says.
The Durban port’s container handling facilities are unable to fully service the growing demand for services owing to inadequate capacity.
Extensive plans for port expansion to accommodate this growing demand have been outlined by the Port of Durban operator, parastatal organisation the Transnet National Ports Authority (TNPA).
Creamer Media’s Research Channel Africa reported in October that the R110.5- billion five-year project, initiated in September 2008, had already included the completion of Phase 1 of the car terminal improvement section, as well as the deepening and widening of the port’s entrance channel, which was completed in 2010.
Improvements to Pier 2, including the installation of port cranes, will be carried out during the 2012/13 financial year.
“There is no doubt that we need addi- tional container handling capacity in the port, and this can be achieved through improvements to the existing container terminal and expansion implementation. While there have been some significant improvements to the Pier 1 facility, there still remains a considerable amount of work to be done,” says Thomas.
He says that, as a result of this lack of capacity, the Port of Durban container- handling industry is not maintaining the levels of efficiencies that it should, and as a result, discretionary volumes of ship- ping cargo are finding alternative ways of entering the market.
“We are seeing ships entering the harbour that cannot load to their maximum capacity as a result of the draught restriction in the port. While the harbour mouth itself has been widened and deepened at significant cost, the shipping berths themselves have not, which prevents us from capitalising on the improvements. We have seen very little economic benefit from the improvements thus far,” says Thomas.
Despite the challenges, he says that stakeholders in the industry are aligning themselves with the TNPA to resolve the capacity issues and acknowledge that they have a role to play in the decision-making process.
Further, Thomas asserts that increased efficiencies at the Port of Durban will only come about through a combination of wise investment and efficiency gains, which can only be achieved through the cooperation of the private sector and the TNPA.
Engineering News
ECOWAS ministers hold crucial talks over trade with EU
by Romoke W. Ahmad
West Africa's ministers responsible for coordinating negotiations for the creation of a regional free trade area with the European Union held crucial talks in Accra, Ghana yesterday on the way forward in the negotiations following disagreements over some issues.
The negotiations, launched in 2004 with the adoption of a road map, were intended to produce a successor agreement to various Conventions that had guided trade relations between the two regions which would be compliant with the World Trade Organisation (WTO) rules.
They were to have been concluded by 2007 but have been dogged by divergences mainly over the financing of the EPA Development Programme (EPADP), a $16billion programme for addressing the costs of adjustment and implementation of the EPA; as well as the status of the Community Levy for funding ECOWAS; the most favoured nation (MFN) clause and the scope of market access offer.
Regional leaders have insisted on a credible source of funding the programme in fresh funds from the EU which argues instead that the programme be funded from existing funds under the European Development Fund (EDF) and other sources. The disagreements also relate to the schedule of opening of West Africa's markets to products from the EU which is insisting on an 80-per cent market access over 12 to 15 years while West Africa is offering 70 per cent of its market to be liberalized over 25 years. The region is worried that its burgeoning industries could be destroyed by a deluge of goods from the EU with its agricultural sector becoming a victim to subsidized products from the EU.
The one-day meeting of ECOWAS Trade Ministers together with their counterpart from Mauritania under the aegis of the Ministerial Monitoring Committee (MMC) is to chart a way forward in the negotiations based on the recommendations of a preceding meeting of experts which is also taking place in Accra.
Two ECOWAS Member States - Cote d'Ivoire and Ghana - which signed an interim agreement with the EU in 2007 in order to preserve the trade preferences they enjoy in the EU market are under intense pressure to ratify the agreement by December 2013.
Similarly, Cape Verde which has just been upgraded to a developing country status, which means the loss of its privileges under the existing trade preference arrangement, is also being pressured to sign a bilateral agreement with the EU by the end of December 2011.
The consequence is that the region could be left with a multiplicity of trade regimes which could impact negatively on West Africa's integration efforts.
The regional ministers are therefore expected to issue directives to forestall this scenario which has the potential of affecting the conclusion of the regional EPA before the deadlines to these countries.
The two-day meeting of experts that preceeded that of the ministers has reviewed the status of implementation of the recommendations of the last meeting of the MMC held on 7th May 2010 in Bamako, Mali, as well as the progress on the thematic areas of the negotiations, the EPA Development Programme (EPADP), and the draft text of the EPADP Protocol.
They have also reviewed the market access offer, the Protocol on the rules of origin, preparations for negotiations of trade in services, the creation of an EPA fund and the Common External Tariff (CET) for the region.
Daily Trust
West Africa's ministers responsible for coordinating negotiations for the creation of a regional free trade area with the European Union held crucial talks in Accra, Ghana yesterday on the way forward in the negotiations following disagreements over some issues.
The negotiations, launched in 2004 with the adoption of a road map, were intended to produce a successor agreement to various Conventions that had guided trade relations between the two regions which would be compliant with the World Trade Organisation (WTO) rules.
They were to have been concluded by 2007 but have been dogged by divergences mainly over the financing of the EPA Development Programme (EPADP), a $16billion programme for addressing the costs of adjustment and implementation of the EPA; as well as the status of the Community Levy for funding ECOWAS; the most favoured nation (MFN) clause and the scope of market access offer.
Regional leaders have insisted on a credible source of funding the programme in fresh funds from the EU which argues instead that the programme be funded from existing funds under the European Development Fund (EDF) and other sources. The disagreements also relate to the schedule of opening of West Africa's markets to products from the EU which is insisting on an 80-per cent market access over 12 to 15 years while West Africa is offering 70 per cent of its market to be liberalized over 25 years. The region is worried that its burgeoning industries could be destroyed by a deluge of goods from the EU with its agricultural sector becoming a victim to subsidized products from the EU.
The one-day meeting of ECOWAS Trade Ministers together with their counterpart from Mauritania under the aegis of the Ministerial Monitoring Committee (MMC) is to chart a way forward in the negotiations based on the recommendations of a preceding meeting of experts which is also taking place in Accra.
Two ECOWAS Member States - Cote d'Ivoire and Ghana - which signed an interim agreement with the EU in 2007 in order to preserve the trade preferences they enjoy in the EU market are under intense pressure to ratify the agreement by December 2013.
Similarly, Cape Verde which has just been upgraded to a developing country status, which means the loss of its privileges under the existing trade preference arrangement, is also being pressured to sign a bilateral agreement with the EU by the end of December 2011.
The consequence is that the region could be left with a multiplicity of trade regimes which could impact negatively on West Africa's integration efforts.
The regional ministers are therefore expected to issue directives to forestall this scenario which has the potential of affecting the conclusion of the regional EPA before the deadlines to these countries.
The two-day meeting of experts that preceeded that of the ministers has reviewed the status of implementation of the recommendations of the last meeting of the MMC held on 7th May 2010 in Bamako, Mali, as well as the progress on the thematic areas of the negotiations, the EPA Development Programme (EPADP), and the draft text of the EPADP Protocol.
They have also reviewed the market access offer, the Protocol on the rules of origin, preparations for negotiations of trade in services, the creation of an EPA fund and the Common External Tariff (CET) for the region.
Daily Trust
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