Ten astonishing things about the West’s ‘loss' of Africa to China

by Chido Makunike

‘How the West lost Africa to China’ is an increasingly frequent theme of international relations policy analysis. The West’s relations with Africa have not always been happy, but they have been deep and long. Long after slavery and colonialism, the West’s overall presence and influence in Africa are pervasive; so much so that Africa has long been taken for granted as almost ‘belonging’ to the West.

The West has viewed Africa mostly as an object of pity and/or scorn. It was considered that Africa was so dysfunctional and weak that it was not necessary to take it seriously. After all, what choice did Africa have but to be dependent on the West? Especially after the collapse of the Soviet Union, the West’s control, or at least undisputed dominance of Africa could be taken for granted in perpetuity, or so it seemed.       

China’s explosive rise and its escalating trade ties with Africa are changing all this. China is now seen as an alternative to the West in all sorts of ways that few would have imagined as recently as two decades ago. The nature, scope and speed of this historical global re-alignment are generally the angles from which this phenomenon is examined. But this seismic shift is even more astonishing when viewed in light of the countless advantages the West would have been thought to have over China in the race for influence in and over Africa.

Africa is obviously not the West’s to be ‘lost’ by it. Yet there is also no questioning the fact of the West’s long dominance in Africa in trade, investment, the military sphere and countless other areas. These are all areas that China is beginning to muscle in on, with evidence that in the not too distant future, China will eclipse the West in many of them.

Africa’s growing relations with China need not necessarily mean the West is being displaced from Africa. The choice for Africa is not strictly or simply ‘China or the West.’ Instead, Africa has more choices in trade, investment, finance, etc than was the case before China became an obvious global economic player. Most of the many African countries that have growing economic ties with China will continue to have reasonably good relations with the West. Part of what is likely to be seen is a kind of specialization, in which China is engaged in the kind of African infrastructural and other long-term, finance-heavy development the West has shown no interest in, and the West continues its investment in areas like health, ‘civil society ’ and so forth.

However, there is simply no denying that there are going to be increasingly many areas where the interests of China and the West in Africa will clash, such as access to vital finite natural resources. It is to a significant extent in this regard that China has in short order increasingly out-smarted the West.

Here are ten of the huge advantages the West has/had over China in Africa that have nevertheless not slowed the rising Asian giant’s increasing presence and influence.    

1 Zambia’s copper output to hit 1.6m tonnes by 2016

2 Why Africa must take advantage of Europe’s debt crisis

3 Unlimited opportunity for China-Africa cooperation

4 West African skies beckon more carriers

5 Sub-Saharan Africa set for 2012 boom

6 Exporters lose out as Mombasa port congestion intensifies

7 Nigeria, Global Biofuels sign 414 billion-Naira accord

8 Africa trade shields South Africa from euro slowdown

9 Public fury as fuel prices double after Nigerian subsidy ends

10 Rising Asia, Africa trade may spell good tidings for shipping sector

11 Africa Must liberalize internally

12 Tunisia exports up 7.3% in 2011 over 2010

13 Africa to be the only region air traffic is growing strongly

14 China's heavy investment could hurt Africa in face of slowdown

15 Scramble for 'dot africa' internet domain name

16 Free trade area talks point to new African era

17 Structure of China trade ties with Africa must be changed

18 Malawi, Zimbabwe to simplify trade rules

19 New cargo route boosts Cyprus to Africa trade links

20 DP World opens port operations in West Africa

21 Tanzania slaps 25 per cent tariff on Ugandan goods

22 Africa’s hopeful economies

23 European economic slowdown a problem for Africa-WTO

24 Euro Zone debt crisis may threaten African economy

25 Four reasons Africa is rising

26 Australia's trade with Africa rebounds

27 Counterfeit goods strangle legitimate trade in East Africa

28 America vs China in Africa

29 Europe banks shun Africa traders

30 Container shipping industry to incur 2012 losses

31 ECOWAS ministers hold crucial talks over trade with EU

32 Indonesian group to invest $1 billion in Nigeria resources joint venture

33 Chinese firm begins Zimbabwe diamond sales
 










  
 

Zambia’s copper output to hit 1.6m tonnes by 2016

The Chamber of Mines of Zambia (CMZ) has said the current environment coupled with increased investments will push Zambia’s copper production capacity to 1.6 million tonnes per annum by 2016.

CMZ general manager Fred Bantubonse said while that target could be realised, there was need to maintain the current investment climate to attract more investors to the sector.

The target would depend largely on mantaining the current conducive investment climate in the sector. Mr Bantubonse said it would also depend on the laws the Government would put in place to reach the target.

Times of Zambia

Why Africa must take advantage of Europe’s debt crisis

by Craig Falck


The global economic slowdown has wreaked havoc on a number of economies, sending numerous once-powerful nations to their graves. Europe has been badly affected, even more so because of the countries’ debts within the Eurozone and their inabilities pay their multi-billion dollar debts, such as Greece. Italy and Spain are also in trouble, and it’s a problem that isn’t going to go away overnight, no matter how much they pray. In this situation, business needs to come first and African entrepreneurs and businesses need to play hardball and take control over the global economies.

Africa is one of the world’s few growing economies and a number of sectors and industries are performing well when it comes to global trade. While it’s not a nice thing to say, business is business and our continent’s businesses need to take their industries by the neck and become leading figures.

Europe, barring strong countries like the United Kingdom, France and Germany, can no longer control markets as they once did, and Africa has all the potential now to take their place. Africa is the new land of opportunity and new industries are popping up all the time while strong performers are still performing. Industries such as mining and agriculture can meet the needs of Europe as well as the rest of the world without blinking.

African businesses are able to provide a number of products of exceptional and high quality at relatively cheap prices. Agriculture in Africa has boomed in the last few years, and because of the resources at hand and the eagerness of farmers and agricultural entrepreneurs, it will do well for a number of years. This industry is able to surge into the world market and supply the industry’s demand with their produce – all that you need to do is look back at some of the Success Story articles featured on Africa Report to realise the potential that Africa’s agricultural sector has when it comes to international demand and meeting this with their produce.

Even small enterprises such as Balimaya Women’s Association have found a market for their produce internationally. This is the kind of entrepreneurial spirit that Africa needs to embrace when going into the world’s markets to meet demands. People want products and services, and Africa can fill that gap.

As soon as Europe recovers from its money problems, it will once again become a global powerhouse. Now is the time for Africa to take its place among the world’s economic leaders and prove that it is the future, before it’s too late.

Africa Report

Unlimited opportunity for China-Africa cooperation

by Yu Shengnan, Guo Qian

China-Africa new strategic partnership continues to develop rapidly in the second decade of the new century with frequent high-level visits and successful expansion of political, economic, and cultural cooperation.

The cooperation has effectively promoted the economic and social development in the African countries and China, improving people’s living standard, and shows its significance in a world that is undergoing major changes and adjustments.

The further broadened economic cooperation and trade relations between China and Africa in 2011 has pushed the economic development of China and African nations, bringing tangible benefits to the peoples.

China has become the largest trading partner of Africa and Africa stands as China’s fourth largest investment destination. According to Chinese Ministry of Commerce latest data, China- Africa trade volume reached 122.2 billion U.S. dollars in the first three quarters of this year, attaining a year-on-year growth of 30 percent.

The trade volume reached 126.9 billion U.S. dollars last year, and is expected to reach 150 billion - 160 billion U.S. dollars this year.

Meanwhile, China’s non-financial direct investment to Africa totaled 1.08 billion U.S. dollars representing a year-on-year growth of 87 percent.

The new construction contracts in Africa signed by Chinese companies reached 25.2 billion U.S. dollars, and accomplished a turnover of 23.7 billion dollars.

Chinese goods with a wide range fit into different consumption levels in the African market, and meet the people’s life and production needs in Africa. At the same time, coffee, diamonds, handicrafts and other unique African products are favored by Chinese consumers.

China-Africa cooperation projects can be seen in almost every African country, covering agriculture, mining, manufacturing, infrastructure, trade flows and others.

In 2011, Sino-Africa cooperation has been gradually broadened with a good momentum with development in financial, telecommunications, tourism, shipping and other industries.

A number of Chinese financial institutions have started business in Africa and airlines from China and many African countries have launched direct flights.

Development is the most pressing issue facing Africa, yet the weak infrastructure is creating a bottleneck for the development in many African countries.

Therefore infrastructure has been a major focus of China-Africa cooperation. In 2011, infrastructure projects in many African countries were constructed by Chinese enterprises, such as roads, railways, bridges, ports, hospitals, communications and electric power, which have now been completed and put into use.

These projects have not only improved the African people’s living standard and quality of life, but also helped the local residents with employment, improving the skills of local professionals, and promoting the progress of related industries.

While deepening political trust and expanding economic and trade cooperation in 2011, China and African countries maintained close cooperation and communication in humanities, science and technology, health care and other areas.

China-Africa cultural exchanges have been active in 2011. A series of sub-forms have been set up and institutionalized.

In 2010-2011, the Chinese government offered up to 5,710 scholarships to African countries, completed the target of 5,500, which was announced on the Forth Ministerial Conference of the Forum of China-Africa Cooperation (FOCAC) two years ahead of schedule.

The total number of Confucius Institutes and Confucius Classrooms were increased to 28 in 21 African countries. At present, 27 African countries have become the outbound destinations for Chinese tour group, and the tourists number from both sides are growing rapidly.

“Initiative on Livelihoods Science and Technology in Africa”, a vital part of “China-Africa Science and Technology Partner Program”, was launched in Beijing in December this year. The project will provide China’s mature and low-cost practical technology to African countries and support Africa’s construction in medical, agricultural, lighting and other aspects, promoting technology as the supporting role in sustainable economic and social development of African countries.

Previously, China has launched China-Africa agricultural cooperation projects and “Lighting Africa”—energy saving projects. Although China-Africa science and technology cooperation started later than economic cooperation, technology played a huge role in promoting economic development. Thus, China-Africa science and technology cooperation has broad prospects.

Dispatching medical teams to African countries is considered as a remarkable cooperation project, and is carried out over a long period and involves many countries. Since the Chinese government sent the first medical teams abroad in 1963, it has sent 42 medical teams to Africa to date.

Take the Chinese medical aid team to Algeria for example, as the first medical aid team sent to Africa, it won the Algerian government and the people acclaim by treating more than 23 million outpatient visits, 1.7 million inpatient visits, operated 1.4 million surgeries, rescued 160,000 patients in critical condition, successfully completed cardiac surgery, limb replantation and other difficult surgery in the past 48 years.

“China-Africa Brightness Action” gave 1,126 patients with cataracts in Malawi and Zimbabwe free operation between November 2010 and March 2011. It sent the third medical team to Mozambique in September this year.

This year, the worst drought in 60 years has hit the region of the Horn of Africa, which is fueling famine and the highest malnutrition rates in the world.

The Chinese government made great efforts to alleviate the food shortage by providing emergency food and cash aid worth 533 million yuan (about 83.6 million U.S. dollars) to Africa, making it the largest overseas food aid since 1949.

Meanwhile, the Chinese government and the United Nations International Strategy for Disaster Reduction (UNISDR) Secretariat has set up the International Center for Drought Risk Reduction, providing drought monitoring and assessment products to African countries.

Until June this year, the Chinese government has set up agricultural technology demonstration centers in 14 African countries. Since 2009, the Chinese government has sent 16 batches of agricultural technology group to 13 African countries and trained 874 agricultural technicians.

China and Africa also cooperated in the multilateral fields with the former has sent more than 700 agricultural experts to eight African countries under the UNFAO “SPFS” framework.

In addition to inter-governmental cooperation, China has also actively encouraged domestic enterprises to invest in Africa’s agriculture, constructing agricultural infrastructure, transferring agricultural technology, and starting small-scale agriculture cooperation.

In Malawi, Chinese enterprises and China-Africa Development Fund co-invested on cotton planting projects, creating jobs for 50, 000 local farmers upon completion, greatly enhancing the local cotton production and processing capacity, and increasing the income of local farmers.

In DR Congo, Chinese enterprises have invested in corn seedling selection to make local production of corn pass through the World Food Program (WFP) supplier qualification, and helped local farmers master the skills of agricultural production by providing training locally.

China shared its own reform and opening up experience with African countries, setting up six economic and trade cooperation zone in Egypt, Ethiopia, Nigeria, Zambia, and Mauritius.

The cooperation zones have improved the investment environment, attracting foreign direct investment, creating jobs, and playing an important role in changing Africa’s economic structure by optimizing the export structure of African goods, and promoting local manufacture and industrialization.

As China and Africa are facing the task of accelerating economic development and improving people’s living standard, the two economies are highly complementary, with the rich natural and human resources in Africa, and appropriate technology and experience from China. The two sides have wide potential to cooperate in more fields.

Coastweek

Expert disputes Western media claims of Chinese colonialism in Africa

A Chinese expert on African studies has argued against some Western media reports claiming China has been colonizing Africa, stating that Sino-African cooperation has long been mutually beneficial.

“Frankly, China is not Santa Claus sending gifts to Africa, but it’s also not colonizing like some Western media have said... Sino-African cooperation has long been in accordance with the principle of mutual benefit,” Liu Haifang, professor with the African Studies Center of Peking University, was quoted by Tuesday’s Legal Daily as saying.

Liu’s remarks came amid mounting criticism from Western countries over Sino-African relations. Some Western media, quoting European and American scholars, have claimed China was responsible for “the new surgical colonialism” in Africa. “Surgical colonialism” refers to resource extraction by a foreign power that involves a minimum of local disruption.

According to Liu, China National Petroleum Corporation and Sudan’s Ministry of Energy and Mining jointly established Khartoum Refinery Company Limited in 2000, which freed Sudan from having to spend huge amounts on buying refined oil.

The refinery is now the most advanced and largest of its kind in Sudan as well as China’s largest modern refinery overseas.

Figures show that the company irrigated 40,000 square kilometers of deserted grasslands with water reprocessed through its wastewater treatment system. In the past 10 years, the company donated a total of 32.28 million U.S. dollars as charity funds that have supported more than 1.5 million residents.

Liu also cited China’s infrastructure cooperation with Angora, a country ravaged by conflict that persisted for 20 years before ending in 2002.

In November 2003, China’s Ministry of Commerce and Angora’s Ministry of Finance signed an agreement on economic and financial cooperation.

“Five years later, most of the infrastructure facilities in the country had been rebuilt,” said Liu.

Figures show that China imported 22.4 billion U.S. dollars in goods from Angora in 2008, while the country’s exports to Angora stood at 2.9 billion U.S. dollars.

Xinhua

African Union commend cultural exchange between China and Africa

ADDIS ABABA (Xinhua) -- The African Union (AU) has said the cultural exchanges between China and Africa help the two sides further deepen existing cooperation and people-to-people relation.

Interviewed by a team of journalists from China on Thursday, John Kayode Shinkayie, Bureau Chief of the AU Commission Chairperson, said China and Africa have engaged to each other not only at the level of governments but also at people to people relation.

The chief said since the 2006 Forum for China-Africa Cooperation (FOCAC) in Beijing, and after the Sharma El Sheikh ministerial meeting in 2009 in Egypt the two sides have been engaged to each other to further strengthen the overall cooperation between them.

He said the commitments made by China and Africa have been fully implemented further strengthening cooperation between the two parties.

“Africa has been engaged with China extensively after the Beijing summit in 2006.China and Africa have been engaged to each other after the summit of FOCAC in Beijing followed by the ministerial meeting in Sharm El Sheikh, Egypt in 2009,” said Shinkayie.

Cultural exchange plays a great role in forging good ties, he said, adding through cultural means China and Africa are taking their relations to a higher level.

“I think through cultural events, cultural activity we can take further to broaden relationship between China and the governments of Africa. I think it will contribute a great deal to strengthen and deepen the relations between China and Africa,” he said.

Xinhua

West African skies beckon more carriers

by Drew Hinshaw

From Senegal to Sierra Leone, start-ups, decrepit local carriers and even international airlines are out to prove that jet travel can extend beyond deep-pocketed passengers to West Africa's flourishing middle-class and business travelers.

In the past year, Ethiopian Airlines, Kenya Airways Ltd. and even American R&B singer Akon have invested in new local carriers. Air France-KLM SA is in talks to take a 35% stake in Air Ivoire, Ivory Coast's bankrupt carrier. Delta Air Lines Inc., which flies to five cities in the region from the U.S., began flying crowded planes between Accra and Monrovia, Liberia in February.

It's easy to see why.

West Africa has some of the world's fastest-growing economies, including that of Nigeria, the continent's most populous nation. The International Monetary Fund projects that Ghana's economy will grow 13.5% this year.

The International Civil Aviation Organization expects Africans to fly 8% more miles in 2012 and 8.3 % more in 2012, making the continent earth's fastest-growing for air travel behind Asia and the Middle East. And industry analysts say traffic here could expand even faster as competition heats up, pushing prices down.

But the new airlines are flying into some of the world's most dysfunctional airspace.

Runways often lack lights and the hangars, spare parts. Short hops between World War II-era airports frequently cost more than overnight trips to Northern Europe. Africa has the world's highest rate of "hull losses"—the industry's euphemism for crashes.

Many industry executives blame West African governments. Political interference has bankrupted airlines and hobbled collaboration between state-owned carriers. Government fees and ground handling charges are high. West African governments say they are working to make air travel smoother. "We are going to put everything at work so that the prices go to a lowered, affordable rate," says Moussa Diabaté, deputy cabinet director at Ivory Coast's Transport Ministry.

"The challenge we have in Africa is our aeropolitics," says Doreen Owusu-Fianko, managing director of Ghana Airports Co., which operates Accra's airport. "Governments are yet to appreciate the benefits aviation can bring to an economy. A lot of them think aviation is for the wealthy."

Not Starbow's Mr. Friesen. Starbow charges $60 for its Accra to Kumasi flight and $85 for the airline's most expensive flight, an hour-long jaunt to Ghana's north. Both fares are two-thirds what Starbow's next competitor charges, said Mr. Friesen. At the lower rates, Starbow's executives had predicted the number of Ghanaians flying within their country would rise by 25 %—instead, it doubled in October, Starbow's first month.

Competitors are on the taxiway. Ethiopian Airlines last year launched Togo-based ASKY Airlines in partnership with local investors, and plans to use it as a platform for expanding in the region.

Akon, the R&B singer, has helped finance plans by the Senegalese president's son to start Senegal Airlines, which started flights in the region last January. Kenya Airways based its two-month-old West Africa unit, Fly 540, in Accra, next to Starbow's ticket counter.

Next year, there will one more: Africa World, founded by Ghana's Togbe Afede XIV, a king of eastern Ghana's Asogli state. The airline plans to offer the same flights as Starbow, targeting first-time fliers and Chinese immigrants, says Chief Operations Officer Sean Mendis.

"If you make travel easy for them," he says, "one of the first things people like to do—as a sign of their freedom, as a sign of their prosperity—they want to get on a plane, visit some family, do some more business."

"We've proved you can bring affordable flying to Africa," says Mr. Friesen, a former Canadian Airlines International vice president.

A year ago, Mr. Friesen was Air Malta PLC's chief commercial officer, trying to fill flights to the Mediterranean island in a recession-wracked market "where there's not much you can do," he said. Now, in West Africa—where livestock occasionally meander onto runways—he has the opposite problem. On Mr. Friesen's desk lies a map of West Africa, dotted with capitals the Canadian struggles to pronounce, like Ouagadougou in Burkina Faso. By next year, he plans to fly between Accra and four of those capitals. By 2015, all 15.
 
Wall Street Journal

Sub-Saharan Africa set for 2012 boom

If you want to hear some sunny economic forecasts for 2012, it’s best not to go looking in the United States – where GDP will grow by a lackluster 2 percent – or the eurozone, where the economy will actually get smaller this year.

No, if you’re looking for good news you’d be better off turning to the world’s poorest region, sub-Saharan Africa, where the economy is set to grow by nearly 6 percent in 2012.

And that growth won’t be limited to regional powerhouses like Nigeria and South Africa: One third of sub-Saharan Africa’s poorest countries, which have weathered the global economic downturn relatively unscathed, are expected to beat the region’s average growth rate.

Leading the pack is Sierra Leone, a South Carolina-sized West African nation with a population of 6 million. The country’s GDP is set to swell by a mammoth 51.4 percent in 2012, according to the IMF. That’s largely thanks to a single company: the junior mining firm African Minerals, which is mining iron ore in the middle of the country.

African Minerals has already raised $1.4 billion for its Tonkolili iron ore project, which includes a refurbished deep-water port and a 120-mile railway line. That’s very big money in Sierra Leone, where the value of the entire economy was just $1.9 billion in 2010.

Mining investment is also bringing big gains to Niger, a poor West African nation that ranked second from the bottom on the most recent UN Human Development Index. With new uranium mines coming online, Niger is set to become the world’s second-biggest uranium producer by 2014. Thanks to those projects as well as a new oil rig, Niger’s economy will grow by more than 12 percent this year, the IMF predicts.

The other big performers this year will be sub-Saharan Africa’s oil producers, whose export earnings will be buoyed by high global fuel prices. Angola, the region’s second-biggest oil producer after Nigeria, will be among the handful of countries in the region to register double-digit growth in 2012, the IMF predicts, with a forecasted GDP increase of 10.8 percent.

But whether the economic growth in these booming economies will make life any easier for the masses is still an open question.

Of course poverty is still deeply engrained in sub-Saharan Africa, despite the recent growth. In places, that poverty has been exacerbated by jumps in the prices of food, fuel, and other consumer goods. In Ghana, sub-Saharan Africa’s top performer in 2011, the average household still spends more than half of its income on food – a sure sign that money is still tight for many.

But economic growth across the region has made life easier for many. Sub-Saharan Africa’s middle class has been growing steadily since the 1980s, and it totaled more than 350 million in 2010 – that’s more people than live in the entire United States.

Boosting trade within the region is key to making the most of that growing consumer wealth, experts say, and officials are expected to make some headway on economic integration this year.

Negotiations toward a “Grand Free Trade Area of Africa” began in June and will pick back up at the African Union summit in Addis Ababa later this month. Officials say they aim to create a mega free trade zone that would stretch from Egypt to South Africa, covering some two dozen countries and more than half a billion people.

Christian Science Monitor

Exporters lose out as Mombasa port congestion intensifies

by George Omondi

A fresh pile-up of cargo at the port of Mombasa is causing anxiety among exporters as delays in clearance put orders worth billions of shillings at stake.

Traders said a flood of uncollected containers has jammed the facility, with slow clearance by Kenya Revenue Authority (KRA) and Kenya Ports Authority (KPA) adding to their losses.

“The port is overwhelmed by imports. Some of the containers prepared for the export market by mid December are still lying there,” said Peter Kimanga, chairman of the East African Tea Trade Association.

As a result, buyers of Kenya’s tea in Pakistan were opting for orders from Sri Lanka, India and Bangladesh.

“This is the industry’s (tea) peak season yet local producers cannot benefit from high global prices because of slow clearance at the port,” Mr Kimanga said of Kenya’s top foreign exchange earner which raked in Sh97 billion in 2010.

“The ships meant to dock at Mombasa port are forced to bypass the facility to dock at other ports due to clearance headache,” Mr Kimanga said, adding that breakdown in electronic link between KRA and KPA was responsible for the delay.

“These agencies are not sincere when all they do is to blame others for their systems failure because their electronic system is operating at 40 per cent of expected capacity,” said Gilbert Langat, CEO of Kenya Shippers Council.

Officials of both the port and KRA have denied fault. “Our ICT system is managed centrally and every hitch is brought to our attention immediately,” said Kennedy Onyonyi, senior deputy commissioner in charge of marketing and communication at KRA. “We haven’t experience any hitch since December,” he said.

KPA said that cargo owners are behind the delays, adding that it recently announced punitive measures will bring order at the facility.

The port delays highlight the soaring of imports (mainly oil and food items) which widened the country’s current account to 10 per cent of GPD last year – higher than Greece’s according to World Bank Group.

To ordinary citizens, the adverse impact of this gap between imports and exports hit the local market in October last year when shilling deteriorated to Sh107 against the dollar.

“Kenya’s export performance is poor due to a number of factors, including inefficiencies at the port of Mombasa, inadequate and expensive supply of energy,” the World Bank said in its 2011 end-year assessment.

KPA last month threatened to levy punitive charges on cargo owners who fail to collect 10,000 containers within the stipulated 21 days period. Cargo owners who have piled up cleared containers will be surcharged $30 per day on every 20-foot container if it remains in the port days after the official deadline and $45 per day after 25 days.

The shippers council had asked KPA to publish the names of the owners of uncollected cargo if it was serious, but Mr Langat says nothing came out of it.


“It is not fair to just complain and issue threat to faceless cargo owners when you have the power to seize and even auction unclaimed containers,” said Mr Langat, adding that apart from a few connected individuals who have managed to turn the port into a temporary storage yard, the delay is mainly caused by KRA and KPA.

Apart from Kenya, Mombasa is a critical nerve centre for commerce in Africa, linking landlocked countries of Rwanda, Burundi, Uganda, DRC and Southern Sudan to the rest of the world.

This means that every second of delay quickly translates to a loss big enough to be felt across the Great Lakes region. Experts have pointed out that Mombasa port can only be efficient once there is a good network of roads and efficient railway transport that match the influx of imports and exports.

Business Daily Africa

Nigeria, Global Biofuels sign 414 billion-Naira accord

by Elisha Bala-Gbogbo

Nigeria, Africa’s top oil producer, signed a memorandum of understanding with Global Biofuels Ltd. to build 15 integrated biofuel plants for about 414 billion naira ($2.55 billion), the Trade and Investment Ministry said.

Global Biofuels will start “the implementation of an agro- based industrial activity for the production of ethanol, biomass electric power and food, all from a single industrial complex, using sweet sorghum as raw materials,” Olusegun Aganga, Trade and Investment minister, said in an e-mailed statement.

Work on a pilot plant in the southwestern Ekiti State will start in the first quarter and is expected to be completed within 12 months, while 14 additional plants will be established in 14 other states after the pilot project is finished, he said.

About 70 percent of the project will be funded by the Chinese government, while the remaining 30 percent will come from financial institutions including NEXIM Bank, ECOWAS Bank for Investment and Development, Africa Finance Corp., Fond Gari of Togo, and First Bank of Nigeria Plc, the statement said, citing Felix Obada, chief executive officer of Global.

Bloomberg

Africa trade shields South Africa from euro slowdown

Trade with Africa should help to cushion SA in the face of a global slowdown, according to figures from the South African Revenue Service (SARS). SA’s growing exports to Africa this year may help the economy to stave off the alarming prospect of a recession in Europe, its main trading partner. Asia’s rapidly expanding economies will still, without doubt, provide the most important source of demand for local exports in the coming years.

"Africa is very important to us," SARS executive Andrew Fischer said. "For the last few years we have consistently posted a trade surplus with the continent. Without this our trade balance would have been much worse."

Figures due today are likely to show that SA’s trade deficit narrowed last month after expanding to a 10-month peak of R9,6bn in October. Exports fell nearly 10%, dominated by a slowdown in the flow of goods to Europe.

However, during the month SA had a trade surplus of R6,13bn with Africa, contrasting with a deficit of R7,6bn with Europe and a shortfall of R13,4bn with Asia.

"Trade with Africa certainly does help shield us from a European recession to some extent," Nedbank economist Dennis Dykes said yesterday.

Exports account for just 19% of SA’s gross domestic product, making the economy heavily reliant on local consumption. Efforts have been mounting to remove the obstacles to trade flows within Africa, which are hampered by poor infrastructure, customs duties and red tape at border crossings. Despite these challenges, SA’s trade surplus with Africa climbed to R49,6bn last year from R43,6bn in 2009.

In the first 10 months of this year, the surplus amounted to R44,6bn compared with a R44bn deficit with Europe and a R62bn shortfall with Asia.

Significantly, data from SARS show that Africa now takes 27% of SA’s manufactured exports, not far behind the 29% of the total absorbed by Europe. Asia is the destination for 22% of locally manufactured goods.

Asia takes 58% of SA’s mining exports, compared with the 29% which go to Europe. Minerals account for about half of SA’s overall exports in value terms. "This could provide a helpful buffer to any protracted slowdown in European demand," Absa Capital said in a recent note.

Trade and industry director-general Lionel October said yesterday that trade in manufactured goods with Africa was growing "and presents a great opportunity for South African companies".

He said the country’s main exports to Africa were processed food products, automotive components, steel and steel products, chemicals, glass and paper, and packaging. About 90% of SA’s exports to the continent are already manufactured goods. That is good news for the economy’s second-biggest sector, which has contracted for two quarters in a row, putting it into a recession.

SA’s main market in Africa remains Zimbabwe, although Kenya and Nigeria are also important because of their size. Despite widespread poverty, consumption in Africa is growing, supported by a growing middle class.

The African Development Bank estimates middle-class Africans now make up about 34% of the continent’s population of about 1-billion. By 2060, the number of middle-class Africans is likely grow to 1,1-billion, or 42% of the population.

Africa’s economic growth rate also presents good prospects for South African exports. The International Monetary Fund expects economic growth in sub-Saharan Africa to quicken to 6% next year from 5% this year — in line with the pace of expansion in other emerging markets.

Trademarks SA

Public fury as fuel prices double after Nigerian subsidy ends

Ordinary Nigerians and trade unionists have condemned the government for withdrawing a fuel price subsidy which has led petrol prices to more than double in many areas.

Many Nigerians are angry at the announcement, fearing the price of many other goods will also rise.

There have been small protests and the trade unions have called for a strike.

Nigeria is Africa's biggest oil producer, but imports refined petrol.

Years of mismanagement and corruption mean it does not have the capacity to refine oil, turning it into petrol and other fuels.

Analysts say many Nigerians regard cheap fuel as the only benefit they get from the nation's oil wealth. Several previous governments have tried to remove the subsidy but have backed down in the face of widespread public protests and reduced it instead.

The IMF has long urged Nigeria's government to remove the subsidy, which costs a reported $8bn (£5.2bn) a year.

Nigeria's fuel prices

Previous price in petrol stations: $0.40/ litre
New price in petrol stations: $0.86
Previous black market price: $0.62
New black market price: $1.23
Annual cost to government of subsidy: $8bn


Prices have increased from 65 naira ($0.40; £0.26) per litre to at least 140 naira in filling stations and from 100 naira to at least 200 on the black market, where many Nigerians buy their fuel.

There are reports that petrol prices have tripled in some remote areas, while commuters have complained that motorcycle and minibus taxi fares have already doubled or tripled.

Some 200 people have gathered in central Abuja, chanting "Remove corruption, not subsidy."

They are being watched by a large contingent of soldiers and armed police.

There are also reports of protests in the main northern city, Kano.

Announcing the end of the subsidy on Sunday, the government urged people not to panic-buy or hoard fuel.

"Consumers are assured of adequate supply of quality products at prices that are competitive and non-exploitative," it said in a statement.

The government recently released a list of the biggest beneficiaries of the subsidy, who include some of Nigeria's richest people - the owners of fuel-importing firms.

Nigeria's two main labour organisations, the Trades Union Congress and the Nigerian Labour Congress, issued a joint statement condemning the move.

"We alert the populace to begin immediate mobilisation towards the D-Day for the commencement of strikes, street demonstrations and mass protests across the country," the statement said.

"This promises to be a long-drawn battle; we know it is beginning, but we do not know its end or when it will end."

"We are confident the Nigerian people will triumph," it said.

Labour activist John Odah said that judging from past experience, he doubted that the government would use the money saved by removing the subsidy to help ordinary people. He said that the subsidy should have been retained until Nigeria's refineries had been brought up to scratch. "As an oil-producing country, we ought not to be importing fuel in the first place," he said.

He also pointed out that Nigeria does not have many commuter railways, so people have little choice but to use motorcycle and minibus taxis, whose prices are closely linked to the price of petrol.

Fuel smuggling Nigeria is Africa's biggest oil producer but most of the available 2 million barrels per day are exported in an unrefined state.

The country lacks refineries and infrastructure so has to import refined products such as petrol, which is expensive.

However, with the price of fuel much cheaper in Nigeria than in neighbouring countries, the subsidy led to widespread smuggling.

Nigerians are heavy users of fuel, not just for cars but to power generators that many households and businesses use to cope with the country's erratic electricity supply.

The government finance team led by respected pair central bank governor Lamido Sanusi and Finance Minister Ngozi Okonjo-Iweala have long argued that removing the subsidy would free up money to invest in other sectors and relieve poverty. IMF head Christine Lagarde recently praised Nigeria's attempts to "transform the economy."

However, correspondents say the measures just announced could add to the difficulties faced by Nigerian President Goodluck Jonathan, who declared a state of emergency on Saturday in areas hit by Islamist violence.

BBC

Rising Asia, Africa trade may spell good tidings for shipping sector

by Manu Balachandran

Indian shipping companies, reeling under low freight rates and high fuel prices, are bracing up for a better year ahead as rising trade from Asia and Africa may provide a shot in the arm.

The Baltic Dry Index, which measures the cost of transporting raw materials by sea and is the benchmark index for sea-borne trade, is likely to rise 20-25% in 2012 from its average of 1,500 in 2011, say industry experts. The commissioning of new power plants in the country in the next six months will boost freight rates and trading volumes for Indian shipping firms in the second half, though the first half of the year could continue to be tossed under the turbulent macroeconomic environment in Europe, experts say.

India Times

Africa Must liberalize internally

Trade matters, and fair trade matters in particular. The British economist Paul Collier took time to talk with Alexandra Schade and Michael Kröber about trade liberalization and the merits of economic sanctions.


The European: How fair is fair trade?

Collier: First of all, it is very sensible for anybody concerned with development to be concerned about trade. Trade really is more important than aid. And so getting the basis for trade right is indeed a very important thing to focus on. I think there has been a tendency of the fair trade movement to sometime focus too much on particular issues. Fair trade coffee obviously did not increase the demand for coffee. It just switched it from one type of coffee to another type of coffee. The demand of coffee which has been registered as fair trade goes up. The demand of coffee which has not been goes down. So the price of fair trade coffee goes up whereas the price of other coffee goes down. Now that is okay depending on who is actually producing all this coffee. The essence of fair trade is to certify a chain of transaction. So be to credible it has to happen in an environment where governance is good enough to be trusted. Fair trade is a very worthy goal and I don’t want to be too critical of it, but anything to do with the economics of trade can be a bit tricky.

The European: So, if those farmers who produce fair trade products get higher prices for their products, would that not lead poor farmers to actually try to produce fair trade products as well?

Collier: Well, let’s hope. The danger is that all that takes such a long time that in the meantime they are actually poorer. But all this is a diversion from the much larger issues of trade policy where we really need a fair trade movement to get involved. I mean the centerpiece of Europe’s trade policy towards Africa is the economic partnership agreements. So far that has been a euphemism because there have not been many signs of partnership. Africans have been very hostile to what Europe has offered them. Some of that hostility is pretty understandable because the economic partnership proposals from the European Commission really need to be improved. In particular, what they have been demanding is that Africa liberalizes its import tariffs preferentially in favor of Europe. If Europe manages to bully Africa into doing that, it will be very bad news for Africa.

The European: What would that mean for Africa?

Collier: Suppose a European firm is competing with a firm from South Korea and they are both selling the same product. And suppose that the European product is more expensive. But now the South Korean firm would have to pay tariffs when the good was sold in Africa but the European firm would not. So the Africans would end up choosing the European product even though it costs more. And that would be very bad for Africa’s terms of trade. I don’t think you will find a single academic economist supporting that idea that Africa should liberalize preferentially in favor of Europe. But that is what European Commission trade officials have been demanding – ostensibly on our behalf – and we need to tell them that they should not be doing that.

The European: In your opinion, what way is there to improve the economic partnership between Europe and Africa?

Collier: What Europe should be offering to Africa is to say: “Yes, we give you better market access into Europe but in return you Africans should follow the European model and deepen economic integration amongst yourselves.” Africa has been very slow in liberalizing internally. Very often the barriers of trade within Africa are bigger than the barriers facing outsiders. And that is what fair trade should be all about. It is unfair of Europe to demand from Africa that it worsens its terms of trade by giving Europe preferential access. That is the message to the fair trade movement. Trade really matters and fair trade really matters. Right now, the European Commission trade officials are negotiating with Africans and trying to force them to accept the worse for their terms of trade. They are doing that on our behalf and we should stand up and say we don’t want that.

more...The European