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S.A Faces “The Worst Drought” In 130 Years

AGRICULTURE: Dire water shortages from rivers running dry in South Africa’s Eastern Cape and the central and southern part of the Western Cape, in what AgriSA terms the “worst drought in 130 years”, have focused attention on the lack of regional infrastructure plans and a regulating authority to oversee water pricing, according_ to Business Report.

South Africa’s leading business daily says that emergency measures have had to be taken, including trucking in water and a planned desalination plant at Knysna to avert a disaster facing mainly dairy and vegetable farmers, who have dedicated supply lines to retail outlets but have cut back on their production. AgriSA Western Cape chief executive Carl Opperman said:“This will have a ripple effect down the supply chain ultimately.”

AgriSA predicted that countless farmers were facing insolvency in the coming year. It blamed this on years of neglect of infrastructure with no significant dams being built for lean times, as well as departmental dilly-dallying on allowing farmers to raise farm dam capacity.

At present, the country’s Water and Environmental Affairs Minister Buyelwa Sonjica determines water prices after negotiating with water boards, which sell water to municipalities. The argument is that an independent water regulator would provide the platform for realistic prices. Opperman said a number of southern Cape rivers running from the Outeniqua Mountains ran into the sea within six hours of rain falling in the catchment area. This water could otherwise be stored.

For example, the Ernest Robertson Dam on the Groot Brak River near George in the southern Cape is 90 percent full but its capacity is just 0.4 million cubic metres. The Wolwedans Dam on the same river, with a capacity of 25 million cubic metres, is 39 percent full, down from more than 90 percent a year ago.

The Garden Route Dam on the Swart River has a capacity of 9 million cubic metres but is now only 30 percent full, down from 92 percent a year ago, according to the Department of Water Affairs.

Water is reportedly being pumped from the Orange River from a tunnel at Gariep Dam in the Free State into the Fish River to ensure appropriate supply for the Port Elizabeth, Uitenhage and other cities in the Nelson Mandela Bay Metropole in the Eastern Cape.

Orascom Appeals Against Algerian Tax Charge

Egyptian Telecom company Orascom has filed an appeal against Algerian tax authorities for allegedly overcharging it. The company says it has paid about $120 million (against back taxes that Algeria says it owes), in order for the appeal to go through.

The Algerian tax authority alleged, in November 2009, that the mobile telephone operator owed $596.6Million in back taxes and penalties for 2005-2007. “In order to file its appeal… Algerian law requires OTA (Orascom Telecom Algerie) to pay 20% of the taxes and penalties alleged to be owing,”, Orascom said in a statement. It said it had made the payment.

Orascom shareholders agreed to an $800Million rights issue to make up for lost dividends from its Algeria unit, which operates under the brand name Djezzy, until the tax issue is resolved.

Djezzy, which had revenue of $1.8 billion in 2007, provides Orascom with more than 50 percent of its cash flow.

Orascom runs mobile phone operations from North Africa to North Korea, and earlier this month won approval in Canada to go ahead with a start-up wireless operation called Glob alive, in which it owns an indirect stake.

Counterfeiting Is Hampering Trade In The Mahgreb

The Agadir Free Trade Agreement (AFTA) has overcome some initial obstacles to increase trade among Tunisia, Egypt, Morocco and Jordan, but further success hinges on intellectual property rights (IPR), according to the proceedings of a workshop held in Tunis.

“Industrial intellectual property and patents are … central to ensuring trade,” the head of Tunisia’s National Institute for Standardisation and Industrial Property, Aymen Mekki told workshop experts from AFTA member states and the European Union.

AFTA, which Morocco, Tunisia, Egypt and Jordan signed in Agadir in 2004 with EU support, aims to boost the integration of southern Mediterranean countries into the European policy sphere. The agreement took effect in January 2007, but by 2008, member countries were still mulling arbitration to end long-standing trade disputes. Nevertheless, workshop presenters said AFTA had enabled the signatories to increase trade among themselves by 45%.

Still Intellectual Property Rights remain a pan-Maghreb concern. A 2008 report by Tunisia’s Trade Ministry, for example, notes 54 complaints in a single year by Tunisian industrialists claiming damage due to counterfeiting of goods, mainly food, cleaning supplies and cosmetics. And IPR violations remain a regional plague affecting Algeria and other countries.

“Protection of intellectual property is typically of the utmost importance,” Mekki said at the workshop, which was organised by Tunisia’s Trade Ministry and a body set up to boost AFTA’s implementation, the Agadir Technical Unit (ATU), in collaboration with European and Maghreb experts.

“[AFTA] can’t be developed unless all parties involved are assured that their respective rights are protected, especially given that the agreement includes the Agadir member states on the one hand and the EU states on the other,” added Mekki.

Algeria Exports FaIl 45%

ECONOMY: Algerian exports totalled $39.5 billion during the first eleven months of 2009, marking a 45.4% decline over the same period in 2008, the National Centre for Informatics and Statistics (CNIS) reported on December 21, 2009. Algeria’s trade balance surplus shrank from $36.35 billion in 2008 to $4.2 billion in 2009. Imports, however, showed a decline of just 2.2% compared to 2008.

MANUFACTURING: Chinese To Be The New Owner of Volvo

Hong Kong listed Zhejiang Geely Holding Group Company Limited, is about to be the owner of the iconic Volvo brand.

Ford, the American automobile manufacturer, confirms that all “substantive commercial terms relating to the potential sale of Volvo Car Corporation have been settled between Ford and Geely and they both anticipate that a definitive sale agreement will be signed in the first quarter of 2010”.

The final documentation, financing and government approvals are likely to be closed in the second quarter, subject to the appropriate regulatory approvals.

Zhejiang Geely is headquartered in Hangzhou, in mainland China. It has six manufacturing bases of complete vehicles and power assemblies respectively in Linhai, Ningbo and Luqiao in Zhejiang Province as well in Shanghai, Lanzhou and Xiangtan, with the manufacturing capacity of annually producing 300,000 complete vehicles and 300,000 engines and transmissions.

Ford says in a statement that the prospective sale will ensure Volvo has the resources, “including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement its core One Ford strategy”. While Ford will continue to cooperate with Volvo Cars in several areas after the possible sale, the company does not intend to retain a shareholding in the business.

Telecom Egypt buys out Algeria’s only private telephone operator

TELECOM EGYPT HAS ACQUIRED THE entire capital of Lacom, the only private fixed telecommunications operator in Algeria. Telecom Egypt and another Egyptian company, Orascom, had each previously owned 50% of Lacom’s capital. Algerie Telecom, the largest provider of fixed, mobile and internet services is slated for privatisation in the first half of 2008(story above).

… Nigerian Foreign reserves rise to $58.3 billion

NIGERIA’ RESERVES rose to 58.3 Billion dollars (37.4 billion euros) in February 2008 from 54.79 billion dollars the previous month, the Central Bank of Nigeria (CBN) has said. The bank said the reserves had grown steadily in the last three years, driven by high crude oil prices in the international market. Oil prices simmered down in February 2008 after hitting a record 111 dollars per barrel overnight, but analysts said prices remain on the boil due to a sharp fall in the value of the US dollar.

New York’s main oil futures contract, light sweet crude for delivery in April, was at 109.78 dollars per barrel in Asian trade, down 55 cents from its all-time closing high of 110.33 dollars in New York. The CBN said the reserves level, which hit 45 billion dollars in 2005, dropped to 32 billion dollars after Nigeria paid 12.4 billion dollars in debt owed to governments in the Paris Club of creditors. It said reserves began to build from April 2006, when the total came to 37 billion dollars. The total then went to 41.95 billion in December 2006 and to 42.65 billion in the first weeks of 2007. The Paris Club in 2005 cancelled 18 billion dollars of Nigeria’s debt, leaving a total of 12.4 billion dollars, including arrears and interest. Nigeria, Africa’s biggest oil producer with a daily output of 2.6 million barrels at peak production level, derives around 95 percent of its foreign earnings from the oil sector.

FINANCIALS: Africa is the new money frontier

IN THE FIRST SEVEN MONTHS OF 2007, Africa saw $ 8.2-billion of new listings, already 13% higher than last year. Nigeria, not South Africa, was the largest recipient of inflows for new listings. Africa has seen foreign investment inflows triple in the past decade from $1 0-billion to $30-billion a year. In a sense, Africa is coming on to the radar screen of foreign investors.


Political and economic stability has resulted in GDP growth for the continent at 5.8% in 2007 and market performances are outstanding, with countries like Nigeria showing returns in excess of 100% in dollars. Since 1995 there has been, at least, one African equity market among the top 10 best-performing markets in the world. And it is not only oil and other resources that are fuelling growth. Some favourite picks in the Investec Africa fund include Egyptian cellphone provider Orascom and Nigeria’s Access Bank.

Orascom has seen a 100% growth in its subscriber base this year. Since 2005 it has grown its subscriber base from 15-million to 50-million. Analysts say Orascom’s current PE of 12 times is not unduly expensive. In Nigeria bank consolidation has been a major theme with the number of banks decreasing from 89 to 25 in two years. Access Bank grew its bottom line 500% in 2007 and is growing its loan book at 100%. No wonder Standard Bank of South Africa bought into IBTC, one of Nigeria’s 25 banks. Investec launched its Africa Fund two years ago and inflows have been way ahead of expectation. When it launched it considered that having inflows of $500-million to $1 -billion within five years would be a real achievement. In two years it has already had inflows of more than $500- million, with a further $250-million committed to the fund. Even countries such as Zimbabwe are attracting attention. Imara’s Zimbabwe fund had to be closed temporarily in April 2007, because the demand was overwhelming with $9-million flowing in the first two weeks after launch. There has been a switch in the type of investor looking at Africa from high-net-worth European and United Kingdom individuals to more institutional investors, including the United States. Investec is hosting a group of trustees from US retirement funds coming to check out Africa. They represent massive local government retirement funds and make minimum investments of $250-million. While the appetite for Africa is growing, liquidity is not growing at the same pace and remains a constraint. However, commentators believe that as interest increases, so will liquidity. In the meantime the low levels of liquidity can go in investors’ favour.

Telecomms: Algerie Telecom to be privatised by June

THE ALGERIAN GOVERNMENF PLANS TO privatise Algérie Telecom in the first half of 2008, communications minister Boudjema Haichour has said. But the state would maintain a majority stake in the firm, Haichour stressed. The government is seeking to partner with a foreign company in order to bring more technological added value. Companies interested in the estimated $3 billion deal include Etisalat, France Telecom, Telefonica, Portugal Telecom and Deutsche Telecom. Algérie Telecom operates 3.5million fixed lines, 4million mobile lines and provides Internet service throughout the country. Haichour said the company plans to launch 3G mobile services by June of 2008.

Cairo: 2050, The Project

By Ahmed El Maghraby

CAIRO: 2050 IS ALONG-TERM PLAN FOR Cairo, which aims at reversing urban deterioration and improving the quality of life. The city has had an explosive growth over the years. Today, Cairo accounts for 22 percent of Egypt’s population and 43 percent of the country’s urban population. 55 percent of all universities, 46 percent of all hospital beds and 43 percent of all jobs lie within the Cairo region.

If we leave the situation as it is, in the year 2022 we will probably be living in a city… of 28 million people. We have to do something, this is not a choice, this is not something that we can wait on. We must move now.

I’m not saying that we should move now to try to keep the population at 16 million. I’m only hoping that we can contain the increase in the population of Greater Cairo to 24 million rather than 28 million. ‘That’s a huge number, but it’s a good target.

The housing ministry is for the first time producing comprehensive development plans for the different governorates and districts of Egypt. It is the fist time that a development plan had been formulated for the more than 4,600 villages in Egypt. New urban developments across Egypt, including Upper Egypt and the Red Sea, made possible by the new roads being built, will lead to a population shift away from Cairo. We are also increasing the rate at which we are developing the new urban cities or new communities to encourage settlements at faster rates there to relieve the pressure on greater Cairo. The housing ministry has a programme for establishing new villages near old ones to curtail the growth of buildings on agricultural land. The target is to build about 400 new villages to absorb 4 million people by 2022.

To lessen overcrowding, ministries are being relocated to an area near New Cairo. The ministry is also working to improve traffic flows around Cairo. All 13 of Cairo’s water stations are being either rebuilt or renovated to increase capacity. We ran at full capacity in the summer of 2007, but in the summer of 2008 and those after we will go to a much more normal situation where there is capacity to absorb the increasing population, at least until 2030. – Adapted from a lecture by Ahmed El Maghraby, Egypt Minister of Housing and Urban Development, at the American Chamber of Commerce, in June2007…

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