All posts tagged africa


Tunisian Turnaround

By Toyin Akinosho

Why an uprising in Tunis, of all places?

Tunisia, under the ousted president, Zine el-Abidine Ben Ali, was the most competitive economy on the African continent. In the World Economic Forum 200812009 Global Cornpetitiveness -Report, the country ranked first in Africa and 36th globally for economic competitiveness, well ahead of Portugal (43), Italy (49) and Greece (67).

Ben Ali’s country had been one of the three which had jostled for that Number 1 position for the past 10 years, The others are Botswana and Mauritius.

The irony is that Africa’s high achieving states are some of its least populated. Which means that however prosperous the country is, the wealth doesn’t translate into huge economic engines as noticeable as South Africa, Egypt or Nigeria. Botswana hosts two million people. Mauritians are fewer; they are 1.2Million. Tunisia’s population is much larger than these two, combined, but even with 10 million people, it is still les populated than many countries in Africa.

It is however, the one country where significant value is added to raw materials and turned to competitive exports.

By 2000, Tunisia had averaged 6% growth rate for eight years and become, perhaps, the most rapidly industrializing nation in Africa. As the 21st century arrived, Tunisia was boasting of mechanical and electrical industries expanding at 7% per annum, textiles at 6%. “There is one scientific technician per 2,000 inhabitants of the country”, declared one government report, released in 2000, “a rate comparable more with an Asian tiger like Malaysia than any African country, with per capita income leapfrogging from $30 in 1956 to $3000 in 1998”. The report claimed that poverty levels had been crunched from 33% in 1967 to 6.2% in 1997. Life expectancy had risen from 50years in 1956 to 73years at the end of 2000. Infant mortality dropped from 60 to 30 per thousand in the same space of time, the report claimed.

The former president, who escaped to exile after angry crowds took over the capital, was working, in his own words, ‘to move Tunisia up from “emerging economy” status to “developed nation” status by 2008’.

It didn’t happen. The global economic crisis, among others, slammed the brakes on his ambition. At the end of 2009, GDP growth had slowed down to 3%. Tunisia had 13% of the work- force unemployed. Yet, in comparison with the rest of the continent, this percentage of people out of work wasn’t a dramatically high rate. Afterall, South Africa, the continent’s  engine room, has 25% of its workforce unemployed.

Tunisia’s inflation was also a modest 3.5% in 2009 and the population below poverty line by 2005, the latest that the World Bank could come up with, was 3.8%, a good figure, by African standards.  Despite the 3% GDP growth in 2009, Tunisia’s growth rate for the ten years between 1999 to 2009  averaged 5% per annum and its GNP/capita level was the third highest in Africa.

 “Tunisia is the best organized country in the Mahgreb’ the Swedish export trade council proclaimed in 2009, using data from the IMF and the CIA fact book. “It had the region’s highest development index”.

The biggest export industry is the mechanical sector, especially automotive components, which maintained a strong and steady growth averaging 20 % between 2004 and 2009. The textile and clothing industry sector is the largest employer of the manufacturing industries employing more than 200,000 persons. Tunisia is the 5th supplier of clothing of Europe, exporting trousers, jeans, business trousers, women lingerie, and work clothing, The food industry’s share of value added remained constant over the period between 2004 and 2009, representing 27% of the production. Exports of agro-food sector increased from 1 227 million dinars in 2004 to 1, 592 million dinars in 2008. Still, it was a tidal wave of angry youths, protesting rising food prices,  that forced Ali to resign and flee.

The overall media analysis of the crisis, which had left a hundred people dead, had expectedly focused, not on the economy, but on the politics, with the perception of corruption of Ben Ali’s immediate family being shown as one of the triggers of the mass riot that forced the president out of the palace.

Ben Ali came to power in 1987 after ousting Bourguiba, then president- for- life, in a coup. He installed himself as prime minister. He was elected president with 99% of the vote in the elections he conducted in 1989, two years after coming to power. Six opposition parties participate on this occasion. His party, the RCD, wins all 141 seats in the national assembly In 1994, Ben Ali again called for elections. He polled 99.9% of the vote in an election in which he was the only presidential candidate, drawing international condemnation. Five years later, in 1999, he again received 99.44% of the votes in the general election to win a third spell as the country’s most powerful person.

Three years later Ali amended Tunisia’s constitution to allow a president to stay in power until the age of 75 and be re-elected unlimited times. Two years after that he was re-elected once more, again receiving an unlikely 94.5% of the votes. Opposition party the Democratic Progressives withdrew two days before the vote) branding Tunisia’s political system “a masquerade of democracy”.

Mr Ben Ali has delivered one of Africa’s most robust economies in his twenty three year rule, but has been less than sensitive in handling the politics of his country. Tunisia has not been immune from the hardline Islamist influence threatening to sweep the Maghreb. Attacks from groups allied with Al Queda have grazed the security infrastructure in the last four years. In 2006 a dozen hardline lslamists were killed in shoot-outs with security forces in the capital, Tunis.

Yet the anger on the streets in the Tunis, with everything about the ousted president, including his economic achievements considered trash-able, allows the possibility of the emergence of a far right Islamic group which may not necessarily continue the progressive economic development.

Western Europe has been keen on trading with Tunisia, Europe’s northernmost neighbour, because of its openness to investors and, more crucially, its ability to rein in terrorist groups. As Tunisia expands the space for democracy, will its economic fortunes turn around?


NATIONHOOD: Sudanese Priest Accuses China Of Selfishness

An influential Sudanese priest has accused China of pursuing a damaging policy of economic gain in Sudan, at the expense of optimum quality of life in the large central African country.

“China is looking only for minerals, they are looking for economic benefit. That is all”, Archbishop Daniel Deng, leader of the Episcopal Church of the Sudan said during a visit to Lambeth Palace in London in mid January 2010. “That is damaging the country”, he said. “They are not even making peace.”

Deng said that the Chinese  “are not interested in whether Sudan goes to war or not. That is not their mission, that is not their problem,”

Deng was joined by the Archbishop of Canterbury Dr Rowan Williams, who recommended a single high level figure to act as a mediator between the feuding parties and called on China to play a “positive” role in peace efforts. The Archbishops later expressed their concerns in a meeting with the British Prime Minister Gordon Brown.


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.

Why?

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.


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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