05 Apr

Africa Signs Free-Trade Deal to Replace Existing Agreements

African leaders signed accords setting up a continental free-trade area that’s expected to boost commerce within the 55-member African Union and eventually supplant a patchwork of existing agreements.

More than 40 nations signed the African Continental Free Trade Area agreement, or AfCFTA, which commits governments to removing tariffs on 90 percent of goods and phasing in the rest in future. The agreements will still require ratification by the individual governments and will only come into force when ratified by at least 22 countries.

“The promise of free trade and free movement is prosperity for all Africans, because we are prioritizing the production of value-added goods and services that are Made in Africa,” Rwandan President Paul Kagame said before the leaders began signing the agreements. “The advantages we gain by creating one African market will also benefit our trading partners around the world.”

Intra-Africa trade stands at about 16 percent of the continent’s total, compared with 19 percent in Latin America and 51 percent in Asia, according to the AU. The agreement could increase this by half for Africa, the United Nations Economic Commission for Africa estimates.

Read more at Bloomberg.com

04 Apr

S.Africa mulling privatisation in Ramaphosa reform drive

South Africa will consider partially privatising struggling state-owned companies as part of wide-ranging reforms set in motion by President Cyril Ramaphosa since he came to power last month, the head of the National Treasury said on Saturday.

Dondo Mogajane said South Africa was at the end of a credit downgrade cycle after Moody’s held its investment-grade rating and raised its outlook on Friday, partly because of Ramaphosa’s plan to reform state companies.

“For me, I see it as the end,” Mogajane told Reuters in an interview.

“Moody’s are saying there are things we can do and these are the things we will be focused on,” he added, highlighting plans to stabilise debt, revamp state firms and boost growth in sectors such as agriculture and tourism.

A downgrade to a “junk” rating by Moody’s would have seen South Africa removed from Citi’s World Government Bond Index, and could have triggered up to 100 billion rand ($9 billion) in asset sales by foreign investors.

Investors have cheered Ramaphosa’s arrival and his choice of respected ministers in key roles, including former finance minister Pravin Gordhan as minister of public enterprises.

Gordhan is tasked with turning around state companies that have plunged public finances into crisis in recent years, including heavily indebted power utility Eskom and South African Airways (SAA), which is on the brink of bankruptcy.

“Why not?” Mogajane said when asked if it was possible parts of government-owned companies could be sold.

“There have to be new ways of looking at these things. Are we talking privatisation? Are we talking equity partnership? Let’s give an opportunity for new ministers to unpack what it means.”

Mogajane gave as theoretical examples the sale of 49 percent of SAA and of attracting private investors by splitting up the generation, transmission and distribution sections of Eskom, one the world’s biggest power utilities.

His comments are likely to go down badly with powerful trade unions, sections of the ruling African National Congress (ANC) and the Economic Freedom Fighters, a disruptive red-beret-wearing opposition party.

Read more at Reuters.com

27 Dec

Mild Desert Winds Spell Good News for Cocoa Crop in Top Producer

A record crop in biggest producer Ivory Coast helped push the cocoa market into a surplus in the 2016-17 season. Prices tumbled and are headed for a second annual decline.

With the 2017-18 season now well underway, all eyes are on the main crop, the larger of two yearly harvests that runs from October through March. Now is a crucial time as the harvest’s at its peak. The Harmattan, dry desert winds from the Sahara, usually blow from December to February and can have a big impact on crops in Ivory Coast and neighbouring Ghana.

Regulator:

Ivory Coast’s cocoa regulator, Le Conseil du Cafe Cacao, has increased its forecast for the 2017-18 main crop harvest to 1.4 million to 1.45 million tons from a previous 1.35 million tons, a person familiar with the matter said last week.

Good rains in the past few months mean that production will probably be higher than anticipated for the second part of the main crop, starting in January, said the person, who asked not to be identified because the projection hasn’t been made public. The forecast assumes that the Harmattan remains mild and doesn’t damage cocoa pods.

Farmers:

After heavy rains in October and November, the Harmattan is now underway in most of the cocoa-growing regions. But it’s been mild so far and it’s often mixed with light rains, said Joseph Gueu, a farmer near Danane in the west of the country. That’s unusual for this time of year. Output has been good so far and young pods are growing well, he said.

Not everyone is so positive though. Too much rain has resulted in brown rot on many pods and reduced production said Alassane Sogodogo, who manages a cooperative near the Liberian border. The rain also damaged roads in the area, making it difficult to send cocoa to the port. The weather has since improved, he said.

To read the full article, click here. 

19 Dec

Mining Wins as Chile and South Africa Back Pro-Business Leaders

In Chile, the world’s largest copper producer, voters returned billionaire Sebastian Pinera to the country’s presidency, with a promise to reduce corporate taxes and cut red tape. In South Africa — the top producer of platinum and also rich in gold, coal, ferro-chrome, iron ore and other minerals — the ruling party backed Cyril Ramaphosa as its new leader, putting him on a path to replace Jacob Zuma as the country’s president.

The political shifts are good news for the likes of BHP Billiton Ltd., Rio Tinto Group, Glencore Plc and Anglo American Plc, which have billions of dollars tied in mines in South Africa or Chile — and, in some cases, in both nations.

While Pinera made his fortune in banking and an airline, he’s seen as close to the mining industry, and certainly more friendly than President Michelle Bachelet, who raised corporate taxes and empowered labor unions. Pinera has promised to keep some of the reforms of Bachelet, but also make economic growth and attracting investment his priority.

Ramaphosa, a businessman turned politician who will now have to fight national elections in 2019, was once a business partner of commodities giant Glencore, including a joint venture investing in coal. The new leader of the African National Congress, which has won each national election since the end of apartheid in 1994, plans to run on a reformist agenda.

How both politicians would deliver their pro-growth programs is far from clear, however. Hence, it may be premature for miners to cheer. And, in a worse case scenario, their business-friendly programs could backfire into the mining industry if they trigger social unrest.

For Ramaphosa, it would be a difficult balance; before his political and business career, he was a mining union leader. The new ANC head will have to deal with multiple crises, from sovereign debt downgrades and power blackouts to a local mining industry that has virtually thrown the towel in after Zuma pushed ahead with controversial reforms known as the mining charter.

To read the full article, click here.

19 Dec

African Roses Hitch Ride to U.S. as Ethiopian Growers Go Global

Ethiopia’s burgeoning flower-growing industry is setting its sights on the U.S. in a bid to break the dominance of Latin American producers in supplying roses and other blooms to the world’s largest economy.

State-owned Ethiopian Airlines Enterprise is evaluating freighter flights through Miami — the main entry point for U.S. flower imports — Los Angeles or New York, regional manager Girum Abebe said in an interview. The company currently transports stems there only in the bellies of passenger jets.

Ethiopia has become a major force in global floriculture in the past two decades, exploiting a tropical high-altitude climate that provides year-round natural light combined with hot days and cold nights perfect for bringing plants into bloom. The conditions mirror those found in the Andes, where growers in Ecuador and Colombia currently dominate flower exports to the U.S.

“Ten or 15 years ago Ethiopia was not exporting a single rose, but now we have earned our position in the world market,” Girum said. “North America has been the major importer of horticulture products from other parts of the world, so we want to have part of that.”

Ethiopian flower exports are currently focused on Europe, and have made the country Africa’s second-biggest producer after Kenya and fourth-equal worldwide, according to Rabobank research based on 2015 figures. About 80 percent of Ethiopian production is flown to the Netherlands, the center of the global flower trade, and re-exported from there.

‘Bigger Blooms’

“Most people don’t know it but the flower market is very much a global one,” Amsterdam-based Rabobank floriculture analyst Cindy van Rijswick said. “Ethiopia is doing so well because its labor costs are a bit cheaper than Kenya and if anything its climate is even better, producing bigger blooms.”

European flower sales have been flat in recent years, encouraging growers to look at opportunities for penetrating trans-Atlantic markets, she said.

To read the full article, click here. 

08 Dec

Rural Baron Emerges as Kingmaker in South Africa’s ANC Race

A former school teacher who’s been linked to a succession of scandals in South Africa has emerged as a likely kingmaker in the contest to decide who will become the next leader of the ruling party and probably the country.

David Mabuza, who calls himself “the cat” because of his political survival skills, emerged as a power broker within the African National Congress by signing up tens of thousands of new members in the rural eastern Mpumalanga region where he is the party’s chairman and provincial premier. As a result, he’ll lead the second-largest voting bloc to the ANC’s national elective conference that begins on Dec. 16 and ends Dec. 20 in Johannesburg.

The contest pits Deputy President Cyril Ramaphosa against Nkosazana Dlamini-Zuma, President Jacob Zuma’s ex-wife and the former chairwoman of the African Union Commission. While Mabuza persuaded 223 of the party’s Mpumalanga branches to opt for a consensus leader rather than endorse anyone, neither of the two contenders are likely to withdraw and he’ll hold considerable sway over who they will eventually back.

“The fight is going down to the wire,” Susan Booysen, a political science professor at the University of Witwatersrand’s School of Governance in Johannesburg, said by phone. “A few hundred votes could be crucial at the end of the day. Mabuza has multiple stakes in the game. He can be the kingmaker.”

Mabuza, 57, who is widely known by his initials DD, said in a Dec. 1 interview that the ANC needs to avoid a bruising leadership battle that could cost it support in 2019 elections. Backing for the party, which has ruled since Nelson Mandela led it to power after the end of apartheid in 1994, already slumped to a record low in last year’s municipal vote. Support fell because of widespread discontent over Zuma’s leadership and allegations that he allowed members of a wealthy family who are in business with his son to influence the awarding of cabinet posts and state contracts.

To read the full article, click here. 

05 Dec

Sierra Leone ‘Peace Diamond’ Undersells for Over $6 Million At Auction

A Christian pastor had given away the more than 709-carat diamond so the government could fund local development projects. Officials hope its sale will also help combat illicit smuggling in the modern industry.

Sierra Leone sold one of the world’s largest diamonds at an auction in New York on Monday, fetching a lower-than-expected price of $6.5 million (€5.5 million).

The egg-sized, 709-carat “Peace Diamond” is one of the largest ever discovered in Sierra Leone and between the 10th and 15th largest ever found.

The international diamond trading network that handled the auction, the Rapaport Group, said the stone had gone to British billionaire and jeweler, Laurence Graff.

Diamond for peace

The stone was dubbed “Peace Diamond” after the Christian pastor who found it gave it away in the hope it would allow the government of Sierra Leone to raise money for local development projects.

The government said Monday it will use the $3.9 million in tax revenue from the sale to fund clean water, electricity, schools, health centers and roads.

Officials said they also hoped the sale will help combat the West African country’s illicit diamond trade.

“Peace diamond” plays on the term “blood diamond,” which were diamonds rebel groups sold during Sierra Leone’s brutal civil war in the 1990s to buy arms and ammunition. In many cases, groups used slave labor to mine the stones.

The UN enacted a ban on all diamond exports from the country until 2003, but illicit smuggling continues to mark the modern diamond trade.

‘New day in Sierra Leone’

The government had expected the stone, the first ever to be sold at a public auction, to fetch $7 million.

Senior officials were nonetheless optimistic about the sale’s effects on the illicit diamond trade in Sierra Leone.

“It will encourage all the diggers back home,” said Chief Paul Ngaba Saquee, head of Sierra Leone’s eastern Kono district where the diamond was found.

“Instead of being ripped off in some dark corners when they find their diamonds, that they will bring it and put it on the table in front of the government,” he said, adding: “Maybe this is going to be the beginning of a new day in Sierra Leone.”

Source: http://allafrica.com/stories/201712050002.html

30 Nov

EU Pledges Increased African Investments to Slow Migration

European Union leaders pledged to increase investments in Africa to assist development and help stem the arrival of thousands of migrants who are desperate to flee poverty.

Speaking at a gathering of heads of states of the continents in Ivory Coast’s commercial capital, Abidjan, European Council President Donald Tusk said Wednesday the bloc was “ready to do more” to create jobs and economic opportunities for Africa and its people.

“We have to be ambitious,” Antonio Tajani, President of the European Parliament, said at the same gathering. “There needs to be a true Marshall Plan for Africa.”

The two-day meeting in Ivory Coast takes place as the EU plans to make 8 billion euros ($9.5 billion) available to improve migration control from the Middle East and Africa. In September, the European Parliament adopted a separate 4.1 billion euro plan for Africa that’s meant to generate 44 billion euro in investment and address root causes of migration.

Solutions to Africa’s problems “require significant financial resources, much more than what African resources alone can afford,” Ivory Coast President Alassane Ouattara said. “Our appeal will be for the growth of investments from Europe, public and private.”

Europe is grappling to stem the biggest wave of asylum seekers since World War II, as anxiety over the issue is stoking populism and drives electoral gains by far-right parties from France to Hungary.

Libya Slaves

The plight of African migrants was highlighted this month by videos of what the International Organization for Migration described as slave markets in Libya, scenes that are dominating the summit’s talks.

Leaders and officials of the EU, AU and United Nations met Wednesday with Libyan Prime Minister Fayez Mustafa Al-Sarraj to find solutions for this “atrocious and unbearable situation,” French President Emmanuel Macron told reporters.

Libya agreed to allow access to its territory for the parties to evacuate the camps “where these barbaric scenes” have been identified and to speed up the repatriation of migrants to their countries of origin, he said.

Governments across the two continents will reinforce cooperation to dismantle trafficking networks and their funding mechanisms while the EU may help to pay for the repatriation of migrants to their countries of origin.

A lasting solution to illegal migration will require that Libya solve its political crisis, Macron said. “It is indispensable to reconstitute a durable state and a political balance as part of the roadmap that has been decided,” he said.

Source: https://www.bloomberg.com/news/articles/2017-11-29/eu-pledges-increased-african-investments-to-slow-migration

15 Nov

Kenya’s Economy Could Face a Bleak 2018

Kenya is facing an economic storm in 2018 in the aftermath of two disputed elections. Saddled with the triple threat of austerity measures to pay for those votes, slowing credit growth and new accounting rules for banks, Kenya now risks missing the government’s forecast for 6 percent economic growth next year, according to lenders including Nairobi-based Stanbic Bank Kenya Ltd. Investec Bank Ltd. strategist Chris Becker says expansion could slow to as little as 1 percent.

“With growing headwinds, there is no longer any room for complacency,” said Ronak Gopaldas, an independent analyst, formerly at FirstRand Ltd.’s investment banking unit in Johannesburg. The new administration should “refocus its attention to the economy, which has been on the back-burner for the better part of the year,” he said.
The country’s Treasury has already cut this year’s growth target to 5 percent from 5.9 percent as the protracted election furor damped investment and a drought curbed farm output.
Now key indicators for East Africa’s largest economy, the regional hub for multinationals including IBM Corp. and Toyota Motor Corp., are flashing warnings signs, with the latest Purchasing Managers’ Index, a measure of private-sector activity, falling to a record low and bank loans growing the slowest in more than a decade.

After a court annulled an Aug. 8 election, Kenya held a rerun of the vote on Oct. 26, that was boycotted by the main opposition coalition. President Uhuru Kenyatta’s Jubilee Party also won the second ballot, which is now being challenged in the Supreme Court.

The nation’s 2.6 trillion-shilling ($25.1 billion) budget was amended to include “austerity measures” for the current fiscal year to accommodate unplanned expenditures such as the rerun of the election, Treasury Secretary Henry Rotich said in September. The Treasury has revised its 2017-18 budget deficit forecast to 8.5 percent of gross domestic product from 6.8 percent. The government recorded a 9.2 percent shortfall in year through June 2017.

Read more: Kenya’s Economy Could Face a Bleak 2018

10 Nov

Exporting to Nigeria: Tips and insights

Nigeria is still, by a slim margin, the biggest economy in Africa, despite the economic woes of the past two years. A population of anything between 180 million to 200 million people makes its consumer market in particular of great interest to investors, manufacturers and exporters around the world. The country manufactures relatively few of the products it consumes and despite efforts to increase local industry, it remains largely import dependent.

However, despite the multitude of opportunities that Nigeria presents to exporters, getting a product into the market can be a challenging exercise.

Nigeria’s main port complex is in the commercial capital of Lagos, a city of an estimated 20 million people – a major market in itself – but also the shipping gateway for imports and exports for the whole nation.

The facility, comprising the Lagos Port Complex and Tin Can Island Port in the Apapa area of Lagos city, is one of the busiest in Africa. It is also by far the main portal for trade into and out of this large country, processing 97% of containers. The only other port of size, Onne, is focused on the oil and gas industry around Port Harcourt, and there are a few other, smaller, ports.

As a result, there is usually serious congestion at Lagos. The high volumes are just part of the problem. Other challenges include poor infrastructure, inadequate and often poorly functioning equipment, the demands of different agencies located there, onerous bureaucracy and general issues related to officialdom.

Clearance time in Lagos port is between seven and 14 days. Once clearance is complete, it takes, in a best-case scenario, 48 hours to get the product out of the port. However, this can take longer depending on other factors, as currently being experienced with the rebuilding of the access road to the port, and any problems in the manifest or other documents.

Having a competent cargo clearing and forwarding company is vital to navigate the process. Exporting to Nigeria requires detailed knowledge of requirements. A simple mistake in documentation or process can lead to cargo sitting in port for weeks or even months, with hefty demurrage charges.

It is important for an exporter to be on top of any changes in documentation and import requirements. Do not wait for the importer in Nigeria to alert you to what is needed; rather do your own homework.

Read more: Exporting to Nigeria