459 posts tagged economy
459 posts tagged economy
LONG before Baobab became a lowly journalist he scraped a living as a lowly academic. “If you’re so clever why aren’t you rich?” was a favourite tease of his less bookish but better-paid peers. The Africa Progress Report, prepared by an expert panel led by Kofi Annan (pictured), a former UN secretary-general, was unveiled last week at the World Economic Forum conference in Cape Town, and deals with a more wounding provocation. If Africa is so resource-rich, it asks, why are its people not better educated, its children well nourished and its adults longer-lived?
The study notes a large gap in mineral-rich countries between incomes and broader gauges of living standards like the UN’s human-development index. Twenty countries in sub-Saharan Africa are classified as “resource-rich” by the IMF. Of these 14 are placed higher in the world rankings based on GDP per person than they are by their score on the UN index. Angola, for instance, is the 110th richest country measured by GDP per person but is ranked 148th on the development scale.
This in part is a familiar tale of the resource curse. The battle for the spoils from oil, gold or diamond wealth is a cause of political instability and a check on other forms of enterprise. Export earnings drive up the exchange rate, making it harder for jobs-rich local farming or manufacturing to compete with cheap imports. But there is more to the story, says the panel. The continent is not benefiting as much as it should be from its minerals partly because of the poor deals it cuts with foreign mining firms.
One problem is that mining assets are sold on the cheap. The panel looked at five deals struck between 2010 and 2012 in the Democratic Republic of the Congo, and compared the sums for which the mines were sold with independent assessments of their value. It found that the valuation gap was a staggering $1.36 billion, double the state’s annual budget for health and education. And these deals are just a small subset of all the bargains struck, says the report.
It also highlights some of their puzzling details. For instance ENRC, a London-listed Kazakh mining firm which is currently being investigated by the Serious Fraud Office in Britain, waived its rights to buy out Congo’s stake in a mining enterprise only to then acquire it for $75m from a company owned by Dan Gertler, an Israeli businessman, which had paid $15m for it just months earlier. Mr Gertler has long and close ties with Joseph Kabila, Congo’s president.
African countries also fail to adequately tax the profits from mining, says Mr Annan’s panel. Zambia’s copper exports were worth $10 billion in 2011 but its tax receipts from mining were a meagre $240m. The widespread use by mining firms of offshore investment vehicles as conduits for mining profits creates scope for tax avoidance. Their use is not restricted to rich-world companies. Much of the oil that Angola ships to China is via the China International Fund. Its trading prices are not made public.
Despite these many problems the panel is loth to succumb to what its report calls “resource pessimism”. Instead it calls on the G8 group of rich countries to work together to make tax avoidance harder. African countries should favour investors that create bigger spillovers for the local economy. They should publicise the details of asset sales so that outsiders can judge whether a good bargain was struck for their citizens.
Business also has a responsibility, says Strive Masiyiwa, founder of Econet Wireless and a panel member. Firms making deals in Africa are more experienced than the officials with whom they negotiate and often take full advantage. Mr Masiyiwa’s advice to them is not to cut deals in this way. “You’ll embarrass yourself down the line,” he says.
President Mahama, who was giving the keynote address at “The Times” of London CEO Summit Africa which was held at the Savoy Hotel in London said the International Monetary Fund’s (IMF) projection of 10 countries with high annual growth rate on the continent, including Ghana, could become a mirage if the disturbing cycle of unemployment is not highlighted and addressed.
He stressed that the extent of joblessness could be better appreciated if one considers that Africa’s rapidly expanding labour force could hit 1.1 billion by the end of 2014, making “the continent’s collective labour force bigger than that of China and India”.
In calling for the effective management of the continent’s collective labour force, therefore, President Mahama pointed out that it ought to be understood as part of a bigger problem that provides opportunities for the provision of infrastructure to support the projected 50 percent of the population who will migrate to Africa’s urban centres within the next 15 years.
He cautioned that instead of urbanization merely resulting in the indiscriminate mushrooming of slums in African cities, Africa should seize the opportunity to provide equitably, infrastructure such as modern roads, social housing, commercial malls, safe drinking water, and reliable power generation and transmission systems for its rapidly growing population.
He observed that “If I am constantly calling for investment in Africa’s human resource, it is because I recognize that human capital, properly trained and harnessed, remains the key to Africa’s socio-economic and political development”.
He pointed out that Ghana has learnt lessons, both from its own past and the history of other nations. He stressed that these lessons have informed Ghana’s strategic decision to empower local participants as critical players in the country’s newly emerging oil and gas industry.
In order that its effect could be concretized, President Mahama said a draft legislation instrument on local content was being examined to ensure a perfect integration of the extraction of the natural resource with the local economy through gas processing, fertilizer production and refinement of petroleum products among others.
In view of this overarching objective, President Mahama continued,
“Africa is seeking partnerships for the mutual benefit of both investors and its people. A partnership that would transfer technology to the continent, a partnership that will create jobs, a partnership that will ensure growth and a decent life for its people”.
As the African Union celebrates its 50th anniversary this year, it is still younger and less integrated than the 56-year-old body that is now the European Union, and, according to politicians and diplomats, has a big advantage over the Europeans as it charts its own path of integration.
Africa can see where Europe has tried to move too far, too fast. But it can also see where the Europeans have succeeded, as it plans its own path towards greater integration.
“Africa in particular has a need to integrate to take advantage of its massive resource economies of South Africa, Angola, Ethiopia, the Sudans and probably the whole Sahel area – and growing populous economies such as Nigeria and the Democratic Republic of the Congo,” former South African Trade and Industry Minister Alec Erwin told IPS.
Erwin negotiated his country’s trade, cooperation and development accord with Brussels, and has extensive experience in dealing with the EU.
A key enabling factor for achieving sustainable prosperity is the growth of intra-African trade as well as trade with the rest of the world. Djibouti is blessed with a strategic position.
Ethiopia, a thriving country and economy of over 80 million people, relies extensively on Djibouti as its pathway to the sea. We hope to become a gateway not just for our immediate neighbours but for all of East Africa - connecting the region to markets in Europe, the Middle East and Asia and bringing economic benefits to our citizens and the region.
Al-Shabaab, though they do not yet understand this, belong to the past. Somalis have seen for themselves the horrors of their nihilistic foreign agenda and want no part of it. As a result, our enemies have seen their territory and morale, their fighters and finances diminish rapidly, as they acknowledged in a desperate open letter last month to Ayman al Zawahiri, their ideological puppet master in al-Qaeda.
The truth is that Somalia has turned a corner and there is no going back. I lead a reforming government that is restoring Somalia to the community of nations. Every week brings fresh evidence of the new normality: human rights legislation, diplomatic visits, security sector reform, sports clubs reopening, the extension of government to newly liberated areas, new businesses opening, economic recovery, piracy attacks declining, international partnerships strengthening, international relations expanding.
According to Professor Mthuli Ncube, Chief Economist and Vice President of the African Development Bank (AfDB), Africa should start using China as a ladder to play a major role in the global economy.
“I think Africa should have a strategy for China,” Prof Ncube said April 26, 2013 during a media interaction in Tunis.
According to Prof Ncube, China has a strategy for Africa but the continent has no strategy for China. The AfDB Chief Economist says the continent’s strategy should be that, Africa should see China as a ladder on which it can climb in terms of the global value chain.
“We should see Africa’s manufacturing sector beginning to make different parts for various final goods which are produced in China,” he said, adding that,
“Africa should become the factory to the world just like China became one in the last 15-20 years ago.”
“I think that is how Africa should begin to see itself in terms of climbing the ladder on the back of China,” he stated.
Prof. Ncube however advised African countries to diversify their economies so that growth will be inclusive. China’s influence has driven Africa’s economy to expand further.
For instance trade between China and Africa reached about $200 billion in 2012 and the Asian powerhouse plans to provide Africa a $20 billion line of credit, its President Xi Jinping announced when he visited Tanzania March 25, 2013.
“President Jonathan is scheduled to leave Abuja for Cape Town tomorrow and will, at the invitation of President Jacob Zuma, undertake a state visit to South Africa ahead of the opening of the World Economic Forum on Wednesday.” Abati said.
The Forum themed “Delivering on Africa’s Promise” is expected to provide a platform for African leaders in government, business and civil society and their counterparts from other regions of the world to discuss further on the continent’s integration agenda and “renew their commitment to a sustainable path of growth and development that will further unlock Africa’s potentials and talents.”
The President will be accompanied on the trip by the Governors of Zamfara, Anambra and Bayelsa states, Senator Smart Adeyemi, Honourable Abubakar Momoh, Alhaji Aliko Dangote, Mr. Jim Ovia, Chief Oba Otudeko and Mr. Tony Elumelu.
Several ministers including the Minister of Foreign Affairs, Ambassador Olugbenga Ashiru, the Minister of Finance and Coordinating Minister for the Economy, Mrs. Ngozi Okonjo-Iweala, the Minister of Petroleum Resources, Mrs. Diezani Allison-Madueke, the Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, the Minister of Agriculture, Dr. Akinwunmi Adesina and the Minister of Mines and Steel Development, Alhaji Musa Mohammed Sada will also be on the presidential delegation.
The President will also participate in the Grow Africa Investment Forum and thereafter honour an invitation by his South African counterpart, Jacob Gedleyihlekisa Zuma to discuss ways of improving trade and economic relations between Nigeria and South Africa.
During the visit, he will also deliver an address to the South African Parliament, co-chair a meeting of the South Africa/Nigeria Business Forum with President Zuma and hold separate meetings with the Chairmen of the Management Boards of MTN, Toyota and Nissan in South Africa.
A young woman, she gave up a top job in the US with finance company Merrill Lynch to return to Mogadishu.
“The hardest thing is the social life. You are used to going anywhere and doing what you want back home in the States, but here you can’t just jump in the car and go down to the store. It’s not safe enough,” Ms Abdulkadir says.
She smiles in agreement when I tell her that a British-Somali had greeted me that afternoon by asking: “How are you enjoying Mogadishu? We call it the open prison!”
Ms Abdulkadir cannot drive anywhere without armed guards, in part because she works in the prime minister’s office.
“We’re rebuilding Somalia. For me, it’s worth it,” she says.
For some women, just being in Somalia can make a difference.
“I tell girls about my own experiences - like getting a degree and how hard I’ve worked. Sometimes it’s the first time they’ve really thought about whether they could go to university,” says Ms Hassan.
“People tend to think if you sell things to Africa, you can sell them inferior things,” he observed. “I think that will be the biggest mistake you can make. The consumer in Africa is as much aware of quality as anybody else,” he added.
Van Zyl remains unconcerned about growing competition from budget Chinese and Indian manufacturers in Africa, saying that Toyota’s Etios brand is targeted at cost-conscious drivers, and is selling at the rate of about 2,000 units a month. Toyota, which has a presence in 54 African countries and takes a 14% market share across the continent, is expecting auto markets in East and West Africa to grow by up to 5% this year.
But the South African market may pose challenges. A new survey indicated that in the first quarter of 2013, consumer confidence in the nation had fallen to its lowest level in nine years, a trend that is likely to have an impact on household spending.
The chief economist at First National Bank, which helped compile the survey, noted that a “combination of deteriorating real disposable income growth, slower credit extension and higher prices for imported durable goods probably persuaded many consumers to postpone their durable goods purchases”.
The economic prospects of the continent are looking up according to the World Bank. By 2015, our growth could outstrip the rest of the world and maintain a steady 5% climb. While this may not seem like a lot, 5% is purportedly enough to lift significant citizens, of many nations, out of poverty. Much of that growth has been attributed to high prices of commodities, i.e. all those industries the Chinese government has invested in and currently has a foot in. Still other sources of growth are the programs being implemented by nations, and local governments on the ground.
More interesting is that the cross-continental growth is not based on one model copied over and over for each succeeding nation. For example, Rwanda’s agricultural industry has seen an increase in maize and cereal from 2006 to 2011 as a result of a government program that offered low cost fertilizer to subsistence farmers who pooled their plots of land together with other farmers and specialized in growing one crop. Innovations like that in governance and creative incentive structures based on clear knowledge of a particular nation’s citizens are some of the hallmarks of successful growth programs.
Reblogged from africaisdonesuffering