Tag / Africa

by Mike Poverello

Namibia buys into ‘Single Window’ concept

From April 12-13, Southern African Trade Hub (aka USAID) presented Single Window as a cutting-edge tool for trade facilitation to the Ministry of Industry and Trade, Ministry of Finance, Customs and other private sector organizations, explaining how a NSW for Namibia could improve the Trading Across Borders index ranking, which currently stands at 142 out of 183 countries. Single Window is a crucial instrument that will eliminate inefficiency and ineffectiveness in business and government procedures and document requirements along the international supply chain, reduce trade transaction costs, as well as improve border control, compliance, and security.

Benefits for Government: A Single Window will lead to a better combination of existing governmental systems and processes, while at the same time promoting a more open and facilitative approach to the way in which governments operate and communicate with business. Traders will submit all the required information and documents through a single entity, more effective systems will be established for a quicker and more accurate validation and distribution of this information to all relevant government agencies. This will also result in better coordination and cooperation between the Government and regulatory authorities involved in trade-related activities.

Benefits for trade: The main benefit for the trading community is that a Single Window will provide the trader with a single point for the one-time submission of all required information and documentation to all governmental agencies involved in export, import or transit procedures. As the Single Window enables governments to process submitted information, documents and fees both faster and more accurately, traders would benefit from faster clearance and release times, enabling them to speed up the supply chain. In addition, the improved transparency and increased predictability would further reduce the potential for corrupt behaviour from both the public and private sector.

If the Single Window functions as a focal point for the access to updated information on current trade rules, regulations and compliance requirements, it will lower the administrative costs of trade transactions and encourage greater trader compliance. The Permanent Secretary for the Ministry of Industry and Trade underscored the need for Namibia to proceed with the Single Window concept, and advised participants that his Ministry, together with the Ministry of Finance, would jointly package the Single Window concept and submit it to Cabinet for Government approval.

In Southern Africa, Mauritius already has an effective Single Window, which is reflected in its “Trading Across Borders” ranking of 21. Mozambique recently launched its pilot Single Window. SATH will support and facilitate the processes for the establishment of a Botswana National Single Window system to streamline cross border trade. The current SATH Trans Kalahari Corridor (TKC) Cloud Computing Connectivity program, which is being piloted between Botswana and Namibia, provides an ideal technology platform for linking Botswana and Namibia Single Windows, leveraging the investment by BURS, Namibia Customs and SATH to date in the development of this system. SATH is currently in the process of gauging support for National Single Window in South Africa.

Excuse my cynicism, but the SA Trade HUB  has yet to demonstrate the viability of its Cloud Computing solution between Namibia and Botswana Customs. What is reported above is the usual sweet and fluffy adjectives which accompany most international customs and trade ICT offerings, ignoring prerequisite building blocks upon which concepts such as Cloud and Single Window may prove beneficial and effective. Past project failures in Africa are usually blamed on the target country in not bedding down or embracing the new process/solution – never the vendor. Given the frequency of technology offerings being presented by donor agencies on unwitting national states, there seems little foreign interest in ‘bedding down’ or ‘knowledge transfer’ than the ‘delivery of expensive technology’.

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by Mike Poverello

Enhancing South Africa’s and Africa’s development through Regional and Continental Integration

Hardly a week goes by without some or other African politician waxing lyrical about continental integration, continental trade diversification, and a wholesome analysis of the ‘barriers’ which prevent the African continent  from reaching its full economic potential. No doubt I’m a bit biased in relaying the recent ‘public lecture’ of our deputy President Kgalema Motlanthe at the University of Finland – read the full speech here! Plenty of insight clearly delineating a plethora of barriers; yet, are we African’s so naive not to have identified these barriers before? Evidently yes.

In recent weeks, on the local front, we have learnt that One Stop Border Posts (OSBPs) is the solution to non-tariff barriers. This topic was drilled amongst the press till it got boring. The focus soon thereafter shifted to the implementation of a border management agency (BMA) – all of government under one roof – so simple. The reality is that there is no silver-bullet solution to African continental integration. Of this, affected business, Customs administrations and the international donor community is acutely aware. While the WTO and the multitude of trade lawyers will ‘yadder’ on about ‘diversification’ in trade, the reality is that Africa’s raw materials are even more sought after today than at an any time before. Certainly those countries which contain vast resources of oil and strategic minerals are about to reap the benefits. So why would African countries be concerned about diversification when the petro-dollars are rolling in? Perhaps greed or lack of foresight for the medium to long-term well-being of countries and their citizens? The fact remains, without homegrown industries producing goods from raw materials, most of  Africa’s eligible working class will continue to be employed by foreign mineral moguls or the public service.

Several customs and infrastructure solutions have over the last few years emerged with the usual credential of “WCO or WTO compliant”. Africa has been a guinea pig for many of these solutions – ‘experiments’ if you prefer. Literally millions of dollars are being spent every year trying out so-called ‘best-of-breed’ technology which users unfortunately accept without much questioning. The cart is being placed before the horse. Why? because the underlying route cause/s are not being identified, understood (sufficiently) and prioritized. Insofar as there exists no silver bullet solution, neither is there a single route cause in most cases. Unfortunately, donor aid often comes with its own pre-conceived outcomes which don’t necessarily tie in with those of the target country or the well-being of the continent.

While governments like to tout the ‘big-hitting’ projects, there are several ‘less exciting’ (technical) areas which countries can address to kick-start the process. One of these has even been recognised by the likes of the World Bank and OECD notwithstanding capital-intensive programs which promised much and have not delivered fully on their promise.  The issue at hand is the harmonisation of customs data. It might at first sound irrelevant or trivial, yet it is the key enabler for most Customs Modernisation initiatives. While there is still much anticipation in regard to the forthcoming deliberation and outcome of the WCO’s Globally Networked Customs (GNC) initiative at June’s WCO Policy Commission session in Brussels, there is significant support for this approach on the African continent. The momentum needs to be maintained.

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by Mike Poverello

What westerners don’t understand about modern economy

Why is the Chinese economy thriving while that of the West is in crisis? The answer is of great relevance to Africans who have for decades embraced development models created in the boardrooms of Western capitals. Source: AllAfrica.com

Social dumping, unfair competition, undervaluation of the Chinese currency, the Yuan … these is some of the blame that most Western economists and politicians are laying on China. What about if this small beautiful world was off-target?

The growth of China and its strategic position as the first world emerging power have caused unprecedented disarray among the former powerful nations and a consistent visual navigation among Western economists and politicians who were undeniably a few years ago a reference for the success of their economic model which seemed to be irreplaceable. There was a state of complete disarray over 10 years in developed countries struggling to find a compass to better guide their ideas and understand where the position of the East is over the 21st century.

WHAT WOULD HAPPEN IF COMPETITIVENESS TOOK A NEW FACE?

It is disconcerting to see Western economists take childish considerations to explain their lack of competitiveness with China and saying that a huge industrial desert seems to have comfortably established itself in the West and arguing that employees are low wage-earners in China. It is not true. This assertion is wrong because wages are twice lower in Africa and South America than in China, although these two regions of the world do not attract the same amount of investments. The real reasons lie elsewhere.

1. There is a strong state in China exercising influence in almost all the economic process with clear and visible objectives to help millions of Chinese out of poverty.

2. In the make-up of product cost, labour accounts for about 2 to 4 percent or 10 percent at most. It is absurd that in the West, people use the issue of alleged high wages as an excuse to justify non-competitiveness of businesses. If an Italian producer put an item in the market for 100 Euros, whereas his/her Chinese rival is able to sell the same item for 25 Euros, the 200 percent difference cannot be justified as 10 percent of labour cost.

Even if wage cost was granted for free to Europeans producers, there will always be a 190 percent gap to be filled. Focusing on the value, the West will possibly find an initial solution to its current economic crisis which is, unfortunately, at its beginning; a solution to the costs of industrial architecture in the country, purchase of raw materials, the quality of vocational training and logistics to capture the customers who are at the other side of the world. We will review this issue below.

3. State purchased raw materials: Each manufacturer in the West has to find inputs on his own throughout the world, but China is using other methods through state giants to combine all purchases and, therefore enabling the country to be more successful and enjoy the best purchase conditions than a private Western individual waging a humanitarian war.

4 State semi-finished products: A car manufacturing company, for example, in the West has to get supplies from sub-contractors, but in China the government provides necessary stuff and bike manufacturers, for instance, will buy state-provided parts.

It is the same case for air-conditioner manufacturers and other key economic sectors; where an Italian manufacturer has to ensure alone the whole production, his Chinese counterpart, with whom he will be competing in the market, will only deal with a part of the production process, very often, when it comes to assembling and selling items. The parts that Chinese assemble in their factories are donated by their government in need of more revenues by creating more jobs with a view of revitalizing the national economy.

5. Energy is not sold in the opinion of the Chinese. In terms of stock exchange capitalisation, according to the news article published in the magazine Fortune Global for 2010, among the seven largest companies in the world, six of them are dealing with energy: American, British and Dutch companies and the three others are Chinese.

But the most interesting thing is the gap between Western and Chinese companies regarding the profits made by the former; they are higher than for the latter. For example, oil company Shell with 97,000 employees makes $20.116 billion in profits; Exxon Mobile with 103,000 employees generated a net profit of $30.40 billion. The Chinese company Sinopec seems to lag behind; with its 640,000 employees it made only $7.63 billion while its counterpart China National Petroleum, employing 1.5 million people, made just a profit of $14.37 billion.

According to conventional assessments in the West, Shell and Exxon are to be praised for their good job. However, in the pragmatic view of the Chinese, high profits are an indicator of impediment to nation to remain competitive. Chinese authorities consider that business competitiveness begins with energy cost. Companies operating in the energy sector should make profits to conduct their own market research and to explore potential customers, whereas in the West, generating huge profits will delight shareholders, because their names will be on the list of richest individuals in the world.

This different view on the economy was even more acute in 2008 during the crisis marked by a rapid rise in crude oil prices in the markets enabling all Western oil companies to make historically high profits. Exxon Mobile, for example, says there has been an 11 percent increase in its profits last year, $45 billion compared with 2007’s figures in France.

During the same year, the French company Total said that its profits were $22 billion (17 billion Euros), but its Chinese rival, Petrochina, a leader in terms of quantity of petroleum products, lost money because, I think, a very smart political decision made by Beijing government on freezing fuel prices led to a drastic drop of 22 percent in the net income in order to allow Chinese companies to remain always the most competitive in the world.

It is obvious that many petroleum products, such as plastic toys, car accessories, and packaging materials are made in China. Labour costs are not cheaper in the country, but the government expects real benefits at the end of the production line in terms of job creation, accumulating foreign currencies and trade surplus. China is not speculating foolishly in everything that moves, because it can cause a hard blow to the economy following the current situation of the West. China has set a clear objective to distribute generated wealth, to contribute to help millions of people out of poverty, and not to praise the glory of people whose names are on the annual list of the world billionaires in Forbes news.

In terms of petroleum products in Europe, it seems that those in power want to have their cake and eat it at the same time. We want business competitiveness, but at the same time put a 77 percent tax on energy products, accounting for nearly 40 percent in the make-up of the cost of finished products to be transported to the shop and delivered; even the travelling cost incurred by the buyer can also be taken into consideration.

The rise in oil prices is similar to this, but it is even worse in the electricity sector in China, which is almost free of charge. In 2010, power company State Grid Beijing Corporation, the top in the world, with its 1,564,000 employees and hundreds of millions of subscribers, made only $4.56 billion in profits, that is to say less than $5 billion generated by EDF, the French Power company, in 2009 (before it plummeted to 74 percent in 2010 due to setbacks suffered in foreign markets). This company has 158,000 employees, 10 times less people working for its Chinese rival and the number of its subscribers as well is 20 times fewer. The truth is that EDF, a state-owned company’s subscribers are like pigeons that need to be plucked with increases at the beginning of each year by using various pretexts, such as approval is to be obtained for a change in the oil price when it rises.

LOGISTICS AS A GEOSTRATEGIC TOOL FOR POWER

China has got sea behemoths that determine very often political prices. It is not dumping, but operators are just charged at cost price. For example, China Ocean Shipping Company (COSCO), owner of 201 container ships equivalent of 900,000 20-feet average size of a container, allowing freight forwarders to charge 20-40 feet containers from China for delivery in any port in Europe at incredibly low prices, in line with the goals the Chinese government wants to achieve in terms of export. It means that COSCO, a state-owned company, is not looking for profits for itself but looking for benefits of the whole Chinese nation. It is a very powerful geostrategic instrument contributing to the achievement of objectives, winning potential markets in order to bring the Chinese coasts closer to the rest of the world. So, the paradoxical thing is that the cost of land transport within Europe is often four times more expensive than a 30-day maritime transport from China to Europe. We know that 75 percent of trades in Europe are done between European countries and it is easy to guess that this represents an opportunity for China in the coming years if nothing is done by European economists to find a long-term solution to the current economic situation.

On 7 June, 2010, Cosco purchased parcels of land for 1.90 billion Yuan sold by Shanghai local authorities, meaning that this area will become in 10 years the first financial centre in the world. The real estate business is still under the Chinese government control. In fact, out of 11 parcels of land offered for sale, nine were purchased at auction by state-owned companies and only two were purchased by Chinese private companies.

The image of Cosco reflects the versatility of Chinese state-owned giant companies controlling almost everything in the industrial sector, ranging from port management ($ 3.4 billion to handle containers in the port of Piraeus in Greece in 2008) to real estate through the construction of ships and manufacture of containers.

This type of business provides the company with great advantages relating to competitiveness of Chinese businesses while their rivals have to go through a wide range of specializations, let’s say, to make as much profit as possible, according to the capitalist development model. For example, the French branch of COSCO, headquartered in Paris, has been operating in all the French port cities, primarily as a shipping company in the field of consignment, ship repair and air freight in order to achieve the same objective as a new product out of a Chinese factory and it should reach every destination without suffering any penalties regarding transportation or logistics.

In June 2011, 52 Airbus A320 were built in a new plant in Tianjin, China. Once again COSCO acted as a major contractor to execute programmes of Tianjin Airbus Company and was responsible for shipping heavy pieces from Europe to Tianjin, especially barge, inland and maritime transportation of containers, including domestic air transport to the unit in Tianjin.

Once again, the choice of a Chinese state-owned company is not made by chance, but it is the result of a geostrategic decision carefully thought out. In fact, COSCO has been chosen to conduct the same operation, but in the opposite direction, from China to Africa, for assembling an aircraft called XIAN MA-60, with which China pledged to replace the bad habits of Africans who buy only old airplanes from the West. This type of airplanes have been proved as real flying coffins over Africa and are paradoxically more expensive than the new ones built in China. The Chinese company, Xia MA-60, has already been providing equipment to Zimbabwe, Burkina, Burundi and South African airlines.

The Chinese People Daily newspaper of May 25, 2011 said that British Caledonian and Laos Airline and Sri Lankan Air-Force are serving about a hundred destinations and several companies in Asia, Africa and South America. Some indiscreet sources in Beijing report that COSCO will shortly transport aircraft pieces from Chinese coasts to Africa, in the port city of Kribi in Cameroon, where a deep water port is being built to dock large boats.

When the European Aeronautic and Defence Space (EADS) was installed in China, the Chinese government required this company to purchase a large number of its aircraft, but the country is planning to build airplanes for Africa to be used on African soil. Chinese economists and strategists are showing that they understand what Western economists are still struggling to understand about modern economy. The West cannot persist to be successful alone while everything goes perfectly. It’s the right time to help them build new partnerships with other countries to help them when tough times come, because you can provide them with means and opportunity to find a way out.

DEMOCRATIC WEAKNESS

If the democracy of universal suffrage was something so wonderful, there’s no doubt that the West would prefer to keep it or even hide it as a military secret with a view of using its advantage over the rest of the world. If democracy of universal suffrage could allow the development of a nation, it is obvious that the West would not commit itself to back ad hoc opposition groups in such countries to help them become redoubtable rivals in terms of industrial and intellectual production. The truth is quite different and much bitterer. The West understands that one reason for its decline is universal suffrage democracy which brought to power the most mediocre personalities, provided that they are supported by rich people who rarely serve public interest.

The mediocrity of politicians was accompanied by economists trapped over the alleged unwavering superiority of ultra-liberalism. We saw famous economists in Spain, Greece, Portugal, France and Italy arguing that Germany should provide financial assistance to European countries in crisis, because they believe that Germany has been generating huge revenues from the sale of large saloon cars in those countries.

This kind of reasoning betrays the state of collapse of the economists who are unable to understand that Germany cannot afford to save itself and the beginning of its economic crisis is a matter of time; all Western countries seem to be unaffected by this situation because they are governed by the same economic models. The worst is that, the same nations are planning to compete with China. How can they achieve if they refuse to do the easiest exercise in order to share profits generated by Germany, and they have to wonder if they can manage to sell their items in Germany, the first marketplace in the European Union?

The truth is that these economists have already surrendered themselves and given up fighting for lack of ideas. They are moving on to the secondary plan saying that the West would become a tourist destination for people coming from developing countries. President Barack Obama revealed on January 18, 2012 at a tourist park in Florida that he wants to make the United States the first tourist destination in the world in order to boost employment. Mr. Obama does not know that tourism has never helped a country to develop.

He is challenging France as the first tourist destination in the world with 77 million visitors in 2010 (against 59 million in the United States, the second), but the country would not have faced the current financial crisis if tourism was a magic wand. Western economists who believe they have found a miraculous plan to end the crisis by predisposing infrastructure to house rich people from China, India and Brazil, will ask themselves why the French Riviera, the prestigious place for tourist attraction in Paca region where the number of poor people is paradoxically the highest than in the rest of the country.

No country will be able to fight poverty if some people refuse to be in the production trade. Even the richest tourist in the world is not going to consume alone food for five people and if he has to import it to meet his needs, he will return to the starting point, regardless of the difficulty he will encounter to become a specialist on rich people. As some Western paedophiles visited Thailand, the Mauritius government fearing the spread of sex tourism in the country decided to promote luxury tourism.

Unfortunately, 30 years later, drugs are being smuggled into the capital Port Louis by luxury yachts and private jet aircraft, which are not controlled by the authorities who do not want to offend the rich. Nevertheless, we wonder if the current crisis in the West can transform institutional racism because only white people could enter the United States without a visa. The keen interest of the American president in tourism will be a progress for the world, primarily Taiwan, a long-standing US ally, will be the first country to benefit from it. The truth is that the North in crisis is no longer attracting many people, even the poor from the South.

INTELLECTUAL COMPETITION

According to an article by Christine Murris published in Valeurs Actuelles, a French magazine, dated 19 January 2012, in France only 14,700 students enrolled at engineering schools out of 16,800 seats available in 2011. The worst thing happened to graduate engineers in 2010: only 42 percent of them have been able to create wealth. The others have been hired by job speculators in the financial sector. Before students’ graduation, several insurance companies and banking institutions are interested in their mathematical skills to make them earn more money without making any efforts.

At the same time, nine universities out of 11 in Tianjin, the third largest city in China, provide engineering education. In the West, political power is held by people who studied law or literature, whereas in Chine political power is in the hands of engineers. So, we can now understand why Chinese and Western young people are keenly interested in a wealth creating profession. However, both parties are competing with each other. It is surprising to see that all measures taken against industrial desertification in the West will not affect the true values of the whole society.

Today, there is a real intellectual competition among nations. A nation will develop if it has the ability to be ahead of the competition by making sure that sufficient numbers of people are trained and are available to work for factories where they can imagine and create things.

The West believed for over two centuries that intelligence was related to the DNA of so-called white Caucasians. The West is unable to take up a huge challenge represented by the East; that is to say engineers’ competition. A computer and a phone get old after three months of use, that’s the challenge. Symbols are not going to change things.

NATIONALLY COMMUNIST AND INTERNATIONALLY CAPITALIST

In the 2011-2012 report of the forum of 1600 European companies operating in China, it is said that China is a communist country on the national level and capitalistic abroad. This severe report says that ‘it must be particularly good for China to practice the most unbridled export-oriented economic liberalism policy while building up fundamentals of state-controlled economic system in the domestic market following the examples of the Soviet.’ This 338-page report signed by the chairman of European Union Chamber of Commerce, Davide Cucino, and his general secretary, Dirk Moens, reflects the frustration of all Western entrepreneurs operating in China in the hope of getting a billion Chinese consumers. They have no choice other than exporting from China to their native countries.

We are all concerned by this and we need to review thoroughly any economic theories of the two previous centuries taking no consideration of a country’s possibility to play two roles simultaneously: A communist system practiced within the country and unbridled capitalism abroad. Without this rewriting, there is no solution to competitiveness of Western businesses. It may even reduce to nothing the labour cost in the West and will not change significantly the path of the race towards the wall when the issue is vitiated by an uncontrolled variable, such as the role played by the state in modern economy.

WHAT LESSONS FOR AFRICA?

Mandatory privatisation urged by the International Monetary Fund and the World Bank are monumental blunders not be made. For example, the privatisation of the state-owned power company, SONEL, in Cameroon taken over by AES, a US private company, was a strategic mistake of great importance because not only electricity cuts continued but also in a country that intends to develop from its industries, the energy price, especially for electricity, should be determined in comprehensive policy measures to ensure that businesses remain competitive and are better prepared to operate and increase their shares in the international market.

The recipe that Western-educated Africans applied providing that tax should be levied on everything that moves is another strategic mistake that leads straight to failure.

The urgency for Africa is to produce wealth and the government should make sure that production is effective on a large-scale and distributing it will be easier if there is something to share. Africa must export its finished products in order to get foreign currencies necessary to the welfare of its people. The strategic energy prices (gas, diesel, electricity) are more important than the low cost of labour. Taxing people trading at the edge of paved roads may give the illusion of alleviating the state financial burden in Africa. This is a wrong revenue economic system in the West that impedes African competitiveness.

The issue Westerners are faced with is the morality of their system. African economists must endeavour to draft their own economic theories that take into consideration the African interests and realities, instead of being in a permanent standby in order to occupy a subordinate position in Western institutions .In my opinion, what is needed is the courage and independence of African economists to distance themselves from the formulas developed by bureaucrats in Washington to find their own way through new African variables. These variables modified in the context of the 21st century would do a great honour to intellectuals who have the ambition to be creators of a new Africa.

So, an international institution acting against the interest of Africa but dedicated to defend the interest of the West will be created. Africans must ask themselves why the European Union failed to prevent China from investing in Africa. Why the US administration, as well, failed to slow Chinese investment in Africa. Regardless of this, everybody wants to work in the future for Western institutions. How is it that Africa will be out of poverty with Chinese investment than the International Monetary Fund (IMF) turning everything upside down by taking a stand?

In early August 2011 in Nouakchott, Mauritania, the African Caucus was held, a meeting of African countries and their creditors, led by the IMF director. What can be remembered from the meeting is the excitement about a thousand billion dollars that China had drawn from its reserves to inject into the African economy (as a comparison, the famous Marshall Plan worth of $100 billion, is 10 times lower than the former).

There was astounding news from Burundian authorities, very happy for signing contracts with China, they feared reprisals from the IMF. On December 21, 2010 in virtue of a decree, the US President Barak Obama excluded the Democratic Republic of Congo from the list of African countries eligible for the AGOA project and no duty-free export to the United States from the country was possible, because of massive Chinese investments in DR Congo, even if the official reasons for this were the decline of democracy in the country.

Paradoxically, while taking advantage of AGOA and exporting finished products to the United States, authorities in Congo really needed someone to invest in their country to set up processing plants. How can we blame them for accepting Chinese funds?

African municipalities must compete in a smart way to create wealth and therefore create jobs for their own people. Ninety percent of the Bibles used by many religious groups in the United States are printed in China. Most of those printers are owned by local governments deriving income from this business to pave new roads and create more jobs. Municipalities are able to create resources that can ensure the emergence of a strong state in a position to resist and stop the selfish and individualist force. Otherwise, it is not excluded that the continent will free itself from the yoke of the West and to see an internal yoke of a few clans who cheerfully install a revenue economy, exactly the same model that is leading the West into a wall.

Jean-Paul Pougala, a Cameroonian, is director of the Institute of Geostrategic Studies in Geneva, Switzerland.

by Mike Poverello

South Africa – Considering Rhino Horn Trade

South Africa is considering whether to approach the international community with a proposal to trade in rhino horn, Environment Minister Edna Molewa told MPs on Wednesday. Opening debate in the National Assembly on her department’s budget, she said this included engaging “major role players, including international and regional partners [and] potential consumer states”.

Molewa’s remarks come 10 months ahead of the 16th congress of the Convention on International Trade in Endangered Species (Cites), set to take place in Bangkok, Thailand, in March next year. According to reports, South Africa is sitting on an estimated 20-ton stockpile of rhino horn; some of it in private hands, some stored by conservation authorities. The price of the horn, should the Cites moratorium on trade be lifted, has been estimated at more than R500,000 a kilogram.

Molewa has declined to say how much rhino horn is held by government-managed parks and reserves.”Due to security risks, the department cannot publicly announce the amount of stocks being held by these agencies”. On Wednesday, she said her department was involved in an “extensive” preparatory process ahead of the Cites congress.

“This will include discussions on whether or not to approach the international community with a proposal to trade in rhino horn.” On the rhino poaching crisis in South Africa, Molewa said 199 rhino had been killed so far this year. “We are very, very deeply concerned,” she told the House. Earlier, briefing journalists at Parliament, Molewa said South Africa would not table a document at the next Cites meeting calling for the rhino horn trade moratorium to be lifted.

“No, not this time around. We are still considering all options, as well as probabilities towards that direction. We have not decided yet. Let it be clear. “We are still doing some very serious work in analysing whether we need to move in that direction or not.”

Among the things that needed to be done before trade could be resumed was “to ensure we get to know who the partners are on the other side”.Policies had to be in place “that do not allow any shenanigans to operate in the system,” Molewa said. “There are just too many things to do before we can place the discussion before the conference of parties. We are not yet there.”

Hmmmm! Would seem that the temptation for monetary profit is so compelling – R500,000/kg. Given the frequent outbursts at incidence of poaching and the horror pictures which normally accompany such reports how about burning the rhino horn reserves? That will send a clear message on government’s concern and intent.There exists a similar parallel where the importation of second-hand motor vehicles are banned in South Africa, but condoned because certain neighbouring countries want them. The old adage – ‘laws are meant to be broken’ comes to mind.  Source: SAPA

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by Mike Poverello

Zimbabwe: Dependence on SA Imports ‘Risky’

ZIMBABWE’S export trade promotion body, ZimTrade, has warned against over-reliance on South African imports, stressing that Harare could plunge into a serious economic crisis should its southern neighbour experience unexpected production and supply challenges. South African producers of basic commodities, automobile services, chemicals, agricultural inputs and farm produce have taken advantage of a significant weakness in Zimbabwean firms’ capacity to service the domestic market, which has triggered widespread shortages of locally manufactured goods.

South Africa and Zimbabwe have intensified trade relations, but the balance of trade has always been in favour of South Africa, Africa’s largest economy. In March, South Africa’s Deputy Minister of the Trade and Industry, Elizabeth Thabethe, flew into Zimbabwe with a delegation of 45 businesspeople to intensify the hunt for new markets for her country’s companies north of the Limpopo. The business delegation comprised companies in the infrastructure (rail, telecommunication and energy), manufacturing, agriculture and agro-processing, mining and mining capital equipment, as well as information and communication technology.

Zimbabwe labour unions are reportedly facing tremendous pressure from workers to campaign against an overflow of South African products into Zimbabwe to allow for the resuscitation of local industries to create jobs, have said Harare had “turned into a supermarket” for South African products. (Huh? strange since so many of the eligible working Zimbabweans have gainful employment in South Africa. Sounds more like labour union politicking)

If South Africa, for example, is to experience a supply hitch, this will be transmitted directly into Zimbabwe’s production and consumption patterns. The appreciation of the rand in the second quarter of 2011, for instance, resulted in price increases on the domestic market.In other words, heavy dependency on imports will leave an economy susceptible to world economic shocks, according to ZimTrade.

Statistics provided by the Department of Trade and Industry (dti) of South Africa in March, indicated that exports to Zimbabwe increased to R15,5 billion in 2011, from R15,1 billion in 2010, while Zimbabwe’s exports to that country increased to R2,9 billion in 2011, from R1,3 billion in 2010. The statistics indicate that South Africa imported US$1 billion worth of goods and services from the Southern African Development Community trade bloc, with 37 percent of the imports coming from Zimbabwe. The dti said imports from South Africa represented 45 percent of Zimbabwe’s total imports. Therefore, according to ZimTrade, “A growing trade deficit could increase the country’s risk of imported inflation and a direct transmission of shocks into the economy.

South Africa has also been Zimbabwe’s major source market for industrial inputs. The United States, Kuwait, China, Botswana and Zambia were Zimbabwe’s other major trading partners in 2011.However, the dti statistics indicated that Harare had narrowed its trade deficit with Africa’s largest economy in 2011 to R12,6 billion, from R13,7 billion in 2010. This translates to about US$12 million and US$13 million respectively

The dti deputy minister, Thabethe acknowledges that “South Africa and Zimbabwe are not only geographical neighbours. The two countries share historical and cultural linkages. Furthermore, South Africa’s economy is inextricably linked to Zimbabwe’s economy due to its geographical proximity to Zimbabwe whose political and economic welfare has a direct impact on South Africa”. Source: The Herald (Zimbabwe)

by Mike Poverello

East Africa – Harmonisation of Border Procedures

Operations of all agencies working at border posts should be harmonised if the East African countries are to easily facilitate movement of goods and persons at their borders, Trade Mark East Africa (TMEA) has said. TMEA is a multi-donor funded agency that provides support for increased regional trade and economic integration in East Africa.

It takes a trader importing goods from the EAC member countries an average of 30 minutes to process documents, at the Gatuna/Katuna border. Border agencies need to collaborate on planning, monitoring, organisation and other related activities to ease the movement of traders, according to Theo Lyimo, TMEA’s director of Integrated Border Management and One Stop Border Posts.

This was at the sidelines of a one-day workshop on the establishment of the Integrated Border Management Concept and presentation on the final design of Kagitumba One Stop Border Post facilities. “Integrated border management should have a system controlling all the agencies at the borders and this will help to eliminate all trade challenges affecting the region including high prices of products, high costs of transport and others,” he noted. He cited the Chirundu Integrated border management between Zambia and Zimbabwe which he said had totally cleared trade barriers between the two countries.

However, though the One Stop Border Post (OSBP) had been introduced at some borders of the EAC member countries, they are yet to yield the expected results as traders still encounter some challenges.

The establishment of Integrated Border Management has been recognised as one of the ten building blocks of Customs in the 21st Century, a new strategic perspective and policy agreed upon by heads of the world’s customs administrations to shape the role of Customs in the current century, a century with unique demands.

Better border management entails coordination and cooperation among all the relevant authorities and agencies involved in border regulatory requirements,” said Tusabe Jane Nkubana, chairman of the exporters association, welcomed the border management saying that traders have always been affected by delays at the border posts leading to an increase in the cost of goods.

Delays at the borders are some of the non-tariff barriers affecting us in the region, and if the operations of agencies are harmonised, this would reduce on the time we spend clearing goods at the borders. Transport costs in East Africa are regarded amongst the highest in the world damaging the region’s ability to trade competitively in the international market, according to economic experts. Source: AllAfrica.com

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by Mike Poverello

Border Posts, Checkpoints and Intra-African Trade

You may recall earlier this year the African Development Bank and the WCO agreed to a partnership to advance the economic development of African countries by assisting Customs administrations in their reform and modernization efforts.

The AfDB’s regional infrastructure financing and the WCO’s technical Customs expertise will complement each other and improve the efficiency of our efforts to facilitate trade which includes collaboration in identifying, developing and implementing Customs capacity building initiatives by observing internationally agreed best practice and supporting Customs cooperation and regional integration in Africa.

In addition, the partnership will seek to promote a knowledge partnership, including research and knowledge sharing in areas of common interest, as well as close institutional dialogue to ensure a coherent approach and to identify comparative advantages as well as complementarities between the WCO and AfDB. Customs professionals, trans-national transporters and trade practitioners will find the featured article of some interest. It provides a synopsis of the key inhibitors for trade on the continent, and will hopefully mobilise “African expertise” in the provision of solutions and capacity building initiatives.

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by Mike Poverello

Dry Ports – their growing role in international trade

Transnet Freight Rail

With rapid regional development of African port infrastructure and regional road corridors, the importance of inland multi-modal hubs is gaining traction. Increasing inter-African port competitiveness, with some countries happy to liberalize their economic trade engagements for increased foreign direct investment will put pressure on traditional emerging economies. In recent weeks there have been several public utterances concerning South Africa’s perceived demise as the ‘gateway to Africa’.

“If a gateway is supposed to be a transmission belt between global and regional markets and production facilities, the question should be whether South Africa can use its physical and material infrastructure to fulfil a connecting function between Africa and the rest of the world”, says Peter Draper senior fellow at the South African Institute for International Affairs. 

Global player General Electric recently chose Nairobi as its sub-Saharan hub – following companies like Coca Cola, Nestle and Heineken – and it based its decision partly, say trade academics, on South Africa’s unpredictable policy environment. With the rehabilitation of the East and West Coasts of Africa, some of it by resource companies needing to find more convenient export routes, trade patterns are starting to change in the region. In time, it is likely that Durban will be just one more port handling regional trade, rather than the main one.

A dry port is generally a rail terminal situated in an inland location with rail connections to one or more container seaports. Container freight trains run excursions between the seaports and the dry port, on a service timetable that is integrated with the schedules of the container ships arriving at the seaport.

Seaports have grown larger as world trade has increased, and they now lack space to expand and are restricted by congestion on the various routes into the port. While the access to the port from the sea may be highly efficient, with radar-guided systems for tracking the ships and sophisticated ship-to-shore facilities for speedy loading and unloading, land routes out of the seaport can be slow and congested.

The road and rail links are often too congested and inadequate to deal with the traffic from the port. This problem can be eased by a dry port consisting of rail and multi-modal terminals situated inland from the seaport.

In many instances, particularly in South Africa, port facilities are in close proximity to the center of the city, because historically the city grew up around the port. This means that road traffic both to and from the port has to make a circuit through the city along congested motorways or smaller roads. This problem can partially be overcome by the more efficient use of existing rail links to move the freight from the quayside to an inland dry port. The last two decades saw a decline in the ability of the rail service to meet increasing dry port to seaport needs. Over utilization of road transport not only deteriorates the roads but causes significant bottlenecks at sea port terminals.

The infrastructure available at the dry port is similar to that of a seaport in terms of the logistics and the facilities for importers and exporters. The dry port is equipped to handle cargo and transfer freight to warehouses or open storage.

Development of dry ports has become possible owing to the increase in multi-modal transit of goods utilising road, rail and sea. This in turn has become increasingly common due to the spread of containerisation which has facilitated the quick transfer of freight from sea to rail or from rail to road. Dry ports can therefore play an important part in ensuring the efficient transit of goods from a factory in their country of origin to a retail distribution point in the country of destination. Source: AllAfrica.com

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by Mike Poverello

Moving goods efficiently to inland cities – a case for inland container depots

Port of Agapa, NigeriaNearly one in three African countries is landlocked, accounting for 26% of the continent’s landmass, and 25% of the population, or more than 200 million people, indicating that current population growth trends, including the development of population megacities distant from coastal locations will become powerful drivers of inland markets.

At the 3rd Annual Africa Ports, Logistics & Supply Chain Conference, APM Terminals’ Director of Business Development and Infrastructure Investments for the Africa-Middle East Region, Reik Mueller stated that “Ports will compete to become preferred gateways to move goods efficiently to inland cities and landlocked countries” Mr. Meuller added that “The future prosperity of these nations depends on access to the global economy and new markets; high-growth markets need inland infrastructure and logistics capabilities along development corridors. The ports that can provide the best and most efficient connectivity to those Inland markets will be the winners”.

Citing the recent success in reducing port congestion through Inland Container Depots (ICDs) now in operation outside of the APM Terminals operated port of Luanda, Angola, the Meridian Port Services joint venture in Tema, Ghana, and the ICD which was opened four km from APM Terminals Apapa, the busiest container terminal in Nigeria and all of West Africa, Mr. Mueller made the case for integrated transportation solutions, “Importers are not going to wait for improved infrastructure; the cargo will simply move to other ports” said Mr. Mueller.

Mueller described a new model for transportation planning and development in West Africa in which port and terminal operations shift focus from “container lifts” toward “integrated container transport solutions. Dry ports and inland markets are the untapped, overlooked opportunity markets of the future in Africa”. Now ain’t this a contrast to views on the southern tip of the continent – the continent’s biggest port without efficient inland corridors and networks must jeopardize investor confidence not to mention export profitability.   Sources: DredgingToday.com, PortStrategy.com and Greenport.com.

by Mike Poverello

Who Will Be Africa’s Brazil?

Will there ever be an “African Brazil”? Who will that be? Angola? Congo? Ethiopia? Nigeria? South Africa? Flip that question: what will it take for an African country to become a new Brazil? A lot. First, it will take governments that do not spend or borrow too much, and independent central banks that keep inflation low. That is, the first order of business is a stable “macroeconomic framework.” Brazil managed to do that, but only after decades of rampant inflation and financial crises. Many African countries are making progress in that direction, but none is quite there. Read this objective review by Marcelo Giugale, World Bank’s Director of Economic Policy and Poverty Reduction Programs for Africa. Source: The Huffington Post

by Mike Poverello

African Bank and WCO create partnership to strengthen customs administrations

Brussels, 30, January 2012 – The African Development Bank (AfDB) and the World Customs Organization (WCO) will work together, to enhance the capacity of Customs administrations in Africa. This declaration was made today in Addis Ababa, Ethiopia, during the signing ceremony of a comprehensive Memorandum of Understanding, on the margins of the 18th African UnionSummit. The summit, which is taking place in Ethiopia from 23-30 January, is focusing on boosting intra-African trade – an area in which Customs administrations can play a vital role in strengthening national and regional economies in Africa.

The enhanced cooperation between AfDB and the WCO will help advance the economic development of African countries by assisting Customs administrations in their reform and modernization efforts.

The partnership includes collaboration in identifying, developing and implementing Customs capacity building projects by observing internationally agreed best practices and supporting Customs cooperation and regional integration in Africa. For the full article follow this link or the WCO News feed below in the left margin.

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by Mike Poverello

Aircargoshop – a revelation for shippers

The following piece suggests that the realisation of AEO obligations on shippers is real and will be augmented by support systems that may marginalise the highly competitive freight forwarding industry.  While there is a suggestion of cost savings due to non-reliance of shippers on traditional forwarding agents, I believe this is a short-sited view as the ‘real challenge’ lies in whether or not shippers are up to the task in meeting these obligations given their unfamiliarity with customs and transport requirements. I see many shippers having to recruit experienced customs and forwarding experts to maximise their compliance given the burgeoning obligations materializing in international shipping!

In October 2011, Aircargoshop an online booking portal provided shippers the possibility to book their own airfreight without involvement of the traditional shipping agent via the online portal Aircargoshop. This is a development that might have important consequences for the closed airfreight industry. As a consequence the online booking portal offers a lower-priced, more efficient and more transparent process for aircargo booking.

Founder Paul Parramore of Rhenus Logistics suggests that this system will bring down the cost of airfreight by as much as 50%. The Dutch Shipping Council EVO, gave the system the thumbs up and said that it will revolutionise the manner in which the freight business is currently being conducted.

Joost van Doesburg, a consultant with EVO said that in the long run restructuring of the industry is necessary in order to meet the challenges of the 21st century. Many of the forwarders will lose out, but the system is geared towards cost effectiveness and being competitive. He also added that if the forwarder is to add value to the supply chain, then he has to comply to adapting to the system rather than working against it.

On the home front, a recent article featured on the website Freight into Africa reports that the South African Cross Border Transporters Association (SACBTA) will be introducing a similar system which is currently under development for the cross border road freight industry. It will be called “ROAFEonline” or shortened form of Road Freight online which will allow the customer to book directly his freight with accredited SACBTA members hence cutting out the middleman and brokers.

All payments can and will be done online and this system will integrate with SARS EDI (Would like to hear more on this!). The consignor will only have to ensure that his goods are loaded onto the truck, the rest will be done by the system. The cost per transaction to the customer will be a paltry R100.00 in relation to a few thousand Rands normally swallowed up by the middlemen.

Based on our estimations a regular consignor can save up to R3-5 million Rands per annum which hopefully will be passed onto the consumer. With the looming integration of the SADC countries towards one stop clearing, it makes sense to further integrate the system. So whether you are in Dar es Salaam or Lubumbashi, you can now book your freight from Cape Town without having to go through a string of brokers. You also have the assurance that your cargo will be loaded by an accredited SACBTA transporter who complies to the standards set out by SACBTA. It will facilitate consolidations as any accredited transporter will at any given time be able to see what cargo is available. If Transporter A has only 20 tons, he can check which other transporter on the system has another 8 tons to Dar es Salaam for example. The transporters can then consolidate a load on the system which will happen in a shorter period of time than say for instance waiting a month to fill a tri axle.

This system will have many other functionalities that have been incorporated like online tracking, bar coding, which will give the consignor and consignee piece of mind knowing at any given time where their cargo is. It will also be accessible to border agents and customs officials who will be in a position to extract vital information on any consignment long before it actually gets to a border.

The system will go into testing around March of this year and if all goes well should be ready for implementation by the latter part of 2012 or early 2013. We hope that this will go a long way towards restructuring the industry for the better. It has long been the desire of SACBTA to allow industry players to come on board to create a better industry. However, there has been very little interest shown in transforming the industry and we feel this system will by virtue of its nature, transform the industry whether industry players are willing participants or not. Source: Freight into Africa and various own sources.

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by Mike Poverello

Heartless!

Fellow blogger ZIMDEV paints a bleak picture for casual cross border traders – Cross border trade has been the lifeline for many unemployed Zimbabweans who make a living buying and selling goods from various neighbouring countries. Late last year, the Zimbabwean government together with the Zimbabwe Revenue authority have introduces a ban on the use of the $300 rebate on most goods. The new tariffs are quite steep and leave no room for profit for the traders. Cross border traders, fed the nation when Zimbabwean shops were empty. They travel across borders, bringing in goods that are not available in Zimbabwe and play a vital role in the economy. One visit to Beitbridge will prove just how vital the cross border trade is to Zimbabwe. It is disheartening to see the government’s reaction to cross border trade.

Instead of enabling and facilitating trade, the government is stifling and discouraging trade and enterprise. Importers of blankets, footwear, refrigerators, stoves and other electrical gadgets now pay 40% of the purchasing price plus a flat rate of US$5 per unit as duty. Government is also now charging between 10% and 25% duty on basic commodities such as maize meal, cooking oil, potato chips, baked beans and mixed fruit jam. The consignment of goods is also charged according to the weight of the goods, each kilo being charged at $3. Cross border trade has been dealt a heavy blow.

While continental and regional efforts wax lyrical about future ‘free trade’ in the Africa, domestic efforts and policy appear to be in contradiction, or perhaps the political utterances at regional trade and AU conferences are mere hot air!  Read the full article here! Surely this should be a case for closer diplomatic collaboration between Zimbabwe and its neighbours, or are the ‘cross border traders’ the enemy?

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by Mike Poverello

Africa – Information Technology’s Dangerous Trend

Here’s some food for thought…

For the past few decades, emerging technologies such as biotechnology, microelectronics, information technology and communications technologies have become central to the socioeconomic development of nations. These technologies improve productivity and facilitate better living standards when they penetrate into societies. Among them, information technology (IT) has become the most dominant; IT has revolutionized almost every aspect of our lives, public and private, by connecting individuals, institutions and governments in mutually dependent ways. With its ease of adoption, this interdependence has scaled rapidly, unlike any other technology in modern history. In Africa, for example, despite decades of using electricity, no one can claim that the continent has fully adopted it. The same applies to the aerospace and biochemical industries, among others.

IT is good for developing countries — it empowers people and improves their lives. But, in many African countries, the successes afforded by IT can backfire if it becomes a too-dominant focus. Take Nigeria for example: Despite decades of crude oil exploration, it cannot claim that it has developed indigenous domain expertise in that industry. If the MNCs depart, Nigeria will cease to remain an oil-producing nation, as it lacks the local ability to explore, extract and sustain production. But in the IT industry, most Nigerian firms are well-positioned for any challenge.

The success of IT in Africa has reached a level where it is being dangerously over-emphasized. From The World Bank to The African Union, everyone is talking about IT. IT events are very common everywhere, not to mention the Google, Microsoft, and Blackberry platform-based competitions that are being endlessly unleashed as these brands jockey for position on the continent. The Nigerian government has created a new ministry to focus solely on IT and related areas. And African leaders are neglecting most non-IT technologies. Across most African universities, the only funded and active labs are the IT labs. University administrators are happy to tout how they equipped IT labs, though everything else is broken. Agricultural engineering students are more focused on IT than on learning to build next-generation farm machinery. It’s a troubling pattern, as everyone wants to be seen as IT-savvy.

While IT can be applied to any field, the way Africa is promoting it sets a dangerous precedent. In my continent, “information technology” has become synonymous with “technology” itself. If you don’t know IT, you’re not a techie. You can master diesel engines and polymer technology, but without expertise in IT, few believe that you belong in the technology sector.

So, what’s the danger? Everyone wants to be an IT guy. No one remembers that we still need food. At the University of Nairobi, I recently asked a group of agricultural science students about their plans upon graduation. Only one wanted to stay in agriculture; others are making apps for farmers. Yes, they know more about mobile operating systems and mobile payments than they do about farming! The farms are now IT labs. And while you can simulate farming on tablets, you can’t eat the virtual fruit.

Pick up a typical newspaper on the continent, and you’ll find that the technology column has been changed to an IT column. Newspapers write about Google, Blackberry, Facebook and Apple in the technology section, but non-IT companies — though they’re technology firms — are rarely reported on. Tech journalism is now IT journalism. Even the governments have confused technology policy with IT policy.

I firmly believe that IT has helped Africa, and that it has a role to play as the continent advances. But, there needs to be a balance. The continent needs techies in mining, geology, semiconductors, agriculture, chemicals, and other areas besides IT, and government must ensure that IT does not create a situation that will destroy the continent’s capacity to feed her citizens and compete in the future. Source: Harvard Business Review

by Mike Poverello

Greetings for 2012

العربية: الخريطة الهجائية لأفريقيا English: Or...

As my leave break draws to a close I thought it opportune for ‘Africans’ to maintain a positive view on developments on the continent, not that international affairs elsewhere on the globe give any cause for joy. To this I append an article “Its time for Africa” that will hopefully reinforce sentiment in both government and trade quarters on the ‘attractive’ or ‘potential’ opportunities which our continent has to offer. I look forward to a new year of interesting times and challenges. Enjoy the read.