‘Flying out of Africa’, an essay on China -Africa relations

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The following article featured in BusinessLive (eEdition) on 25 July 2019. It is authored by John Grobler. The article was compiled with the financial support of Journalismfund.eu’s Money Trail grant programme. 

Chinese ‘lying money’, or fei qian, is an ancient form of value exchange. But its modern incarnation is blamed for stripping Africa of its resources.

The secret of Chinese commercial success in Africa, as suggested by an 18-month investigation into the drugs-for-abalone and rosewood trade and a major Namibian tax fraud case, is an ancient system that not only allows African countries to be robbed of taxes, but also plays a part in financing the global $270bn-a-year wildlife contraband trade.

Fei qian, or “flying money”, dates back about 1,200 years, to the Tang Dynasty in China. In its simplest modern incarnation, it is a low-cost and trusted method of remitting money, much like the Islamic hawala system. For example, a person who wants to send funds to a recipient in Africa will pay a fei qian broker in China. For a commission, the broker will arrange that a counterpart in Africa pays the recipient, again for a commission. The two fei qian brokers later settle their account through, for example, the transfer of commodities of equivalent value — but also sometimes through less salubrious methods such as transfer mispricing or invoice manipulation.

In practice, the system relies on the systematic underinvoicing of Chinese imports into Africa and a seamless chain of payments system in which accounts are settled through the transfer of high-end — and often illicit — goods such as abalone, rosewood, rhino horn and ivory. In brief: goods are undervalued on their import documentation; they are then sold for cash; and that undeclared cash is subsequently channelled into high-end commodities that are remitted to China to balance the fei qian books.

“The trick behind fei qian is that the money never actually leaves China,” says a former Singaporean finance expert, speaking on condition of anonymity. “It’s just the commodities that get moved around” as part of a longer payment chain among the Chinese diaspora.

Unlike barter trade, fei qian is not a straight swap; it is an exchange in stored value that leaves no paper trail, except in the books of the fei qian operators themselves. What makes the system even more impenetrable, the investigation has found, is that these operators mostly seem to be older, well-established women working in a closed network of mutually trusted contacts.

This nexus, and lack of paper trail, means fei qian is largely invisible. But it occasionally appears as a gaping hole in a country’s balance of payments account with China – as Namibia has discovered in an ongoing import-tax fraud investigation.

Jack Huang, a business associate of President Hage Geingob, and Laurentius Julius, a former Walvis Bay customs official and now a customs clearing agent, are among eight suspects facing 3,215 charges of fraud and money laundering in the Windhoek high court. Continue reading →

Preparing for legislation on verification of container weights

High quality 3D render shipping container during transportPort Technology International – The work by the Maritime Safety Committee (MSC), within the auspices of the International Maritime Organization (IMO), on the verification of container weights prior to loading on to a ship is progressing. Currently, expectations are that legislation will come into force in 2017 at the latest, and possibly in 2016.

Many terminal operators are concerned about how to comply with the upcoming legislation, and how it will impact on logistic flows in terminals.

One of the challenges facing terminals is how to weigh containers with little or no impact on operations. Transferring containers to separate weighing stations will affect productivity. Terminals are likely to need additional space and transportation capacity to cope effectively.

Solutions that weigh containers as part of existing logistic flows and operations will therefore deliver significant advantages for terminal operators.

Weighing alternatives

This article outlines technologies that are available for managing weighing or verifying weight. It should be noted that requirements for weight accuracy is not included in the current draft text from the IMO and will likely put further constraints on available options. The discussion here indicates what level of accuracy can be expected from the various options available.

Three different types of weighing or load measurement devices will be discussed: commonly available weigh bridges; load sensing devices in cranes and other lifting equipment and load sensing devices fitted to, or integrated into spreader twistlocks.

Weigh bridges

The first system that comes to mind when looking at weighing a container is the weigh bridge. Weigh bridges are a longestablished and recognised technology to measure the weight of a vehicle. When the weight of the container being carried by a vehicle is of interest, the tare weight of the vehicle must be deducted. The measuring accuracy of the weigh bridge is very high but the tare weight deduction process either introduces additional inaccuracies or becomes complicated and time consuming.

If a standard vehicle tare weight is used, the inaccuracy comes from such things as variations in fuel level, driver weight and the weight of miscellaneous materials also loaded in the vehicle. These may seem like minor aspects when considering a truck carrying a 40ft container, but it easily adds up to a few hundred kilos, thereby significantly affecting the accuracy of the container weighing process. The alternative to using a standard tare weight is to include weighing of the unloaded vehicle in the process. This will give an accurate vehicle tare weight and ultimately, an accurate container weight, but it adds steps to the process which takes time and uses terminal resources.

Using weigh bridges to weigh containers is likely to result in changes to the internal logistics of most existing terminals. All containers entering terminals by road would have to pass through the weighing station. The most critical factor in this scenario would be to have sufficient weigh bridges to avoid the bottlenecks and resulting congestion.

Containers arriving by train or sea (for transhipment) would have to be sent to a weighing station, a step which is uncommon in terminal logistics today. This additional step would tie transporting vehicles to specific containers for longer periods of time ultimately resulting in additional resources being needed to handle the same container volumes. Sufficient resources in terms of weigh bridges and transportation space therefore need to be allocated to avoid congestion
and delays.

Another situation which would require a specific process to be in place is where vehicles arrive at the terminal gate with two twenty-foot containers loaded. Weigh bridges can only determine combined weight. Because containers have to be weighed separately, this would imply a relatively complicated process involving not only the truck carrying the equipment but also terminal resources to facilitate the loading and unloading of the containers.

Load sensing devices in cranes or other lifting equipment

The second type of load measuring device is, in effect, several devices with common features. This group includes load sensors and devices on ship-to-shore (STS) cranes; rubber-tyred gantry (RTG) cranes; railmounted gantry (RMG) cranes; mobile harbour cranes; reach stackers; straddle carriers and so on. Most of the load sensing devices in this group are used for safety and/or stability systems, but the information is available to provide weight information with some limitations as outlined below.

The biggest question mark related to these systems is accuracy. Will the accuracy of these systems meet the requirements to come? The answer is most probably no, but until the requirements are defined, this option should be mentioned. Sensors in these devices are typically fitted to rope and chain anchors, in trollies or on booms. Distance from the container, and the dynamic effect this introduces adds to inaccuracy. These systems will typically have a measuring accuracy of plus or minus five percent. Source: Port Technology International

Singapore – megaport to double its TEU capacity

Singapore is relocating its transshipment port operations to Tuas in 10 years, a move that will add 65 million TEU in annual capacity, nearly doubling today’s capacity at local PSA terminals, announced Transport Minister Lui Tuck Yew. Consolidating transshipment operations at Tuas will bolster efficiency, economies of scale, eliminate inter-terminal transfers and result in cost savings and increased productivity.

Located close to the island’s industrial centre, Tuas is a new port development that can handle up to 65 million TEU annually, nearly double Singapore’s present capacity at PSA terminals. The first phase of Tuas is scheduled to open in 10 years, ahead of the 2027 expiration of the leases of Singapore city terminals at Tanjong Pagar, Keppel, and Pulau Brani, noted Dredging Today.

The recently completed Terminals 1 and 2 of Pasir Panjang will be merged in Tuas as well. But PSA Singapore will proceed with Phases 3 and 4, which will cover 250 hectares and add 15 new berths with a six kilometre quay.

The Pasir Panjang expansion, which is estimated to cost about US$3.5 billion, will increase PSA Singapore’s maximum draft from 16 to 18 metres to accommodate fully laden 18,000 TEUers now on order. By 2020, both phases will add an annual capacity of 15 million TEU, bringing the port total to 50 million TEU, but is still less than the additional Tuas planned capacity, which alone is estimated to handle 15 million TEU on completion. Source: www.seanews.com