Draft Competition
Policy Presented to Parliament
The long awaited draft Competition Policy has been presented before
the Botswana Parliament. The document is expected to help avert
unfair business practices, anticompetitive behaviour and corporate
conduct in the market place.
Presenting the draft policy, Minister of Trade
and Industry, Neo Moroka asserted that such policy instruments would
help maximise the benefits from trade liberalisation, ensure unrestricted
market entry and free competition in the open economy. "This
draft policy will avert the abuse of market dominance, monopolisation
and cross-border uncompetitive practices that create imperfections
in the market place," he said. He further added that the draft
policy marked an important milestone in the pursuit of sustainable
socio-economic development for the country.
Members of Parliament hailed the introduction
of the draft policy saying it would safeguard and promote growth
and development of citizen-owned small and medium enterprises. Education
Minister, Jacob Nkate supported the draft policy by saying that
it would help in the diversification of the economy. "We have
an open economy that is investor friendly so we need to have such
a policy," he said. Nkate explained - if enacted into law,
the policy would help protect consumer rights and interests. MPs
were in solidarity that the draft policy would encourage efficiency
and competition in the domestic market. Minister of Labour and Home
Affairs, Moeng Pheto said if approved, the draft competition policy
would provide the best means of ensuring that the economy's resources
are put to their best use by encouraging enterprise, efficiency
and widening choice.
The draft competition policy comes at a time when
the country’s government is aggressively reviewing regulations and
policies to attract the much-needed Foreign Direct Investment (FDI).
Other initiatives that would result in attracting the FDI include
the submission of the new Copyright and Neighbouring Rights Bill.
(The Reporter, 05.08.05)
Petrol
still cheapest in Botswana
In a recent briefing, Botswana’s Minerals, Energy and Water Resources
Minister, Charles Tibone, assured Parliament that although Botswana
is set to increase her petrol prices, they remain the lowest in
the Southern African Customs Union (SACU) area. Botswana has only
increased her prices twice in the last nine months despite the surge
in crude oil prices on the international market.
The Minister said that the use of the National
Petroleum Fund (NPF) had helped Botswana cushion the impact of volatile
petrol prices. This is vital as petroleum products are considered
essential commodities in the country.
According to the Minister, southern Africa has
an insignificant say in determining the petrol price internationally.
The region is a price taker not a price setter. Botswana’s dependence
on South Africa for her petroleum needs, means that the country
is also a secondary price taker.
Tibone pointed out that international crude oil
prices affect local product pricing. Therefore his Ministry has
always kept a watchful eye on them. Botswana has formed a Petroleum
Pricing and Operational Committee (PPOC) to effectively address
the issue of pricing.
(Botswana Government Gazette, 08.08.2005)
Botswana
Mauritius sign investment agreement
Botswana’s Minister of Trade and Industry, Neo Moroka, has signed
a bilateral investment treaty with Madan Dulloo, Minister of Foreign
Affairs, International Trade and Cooperation from Mauritius, a step
that is expected to increase the volume of trade between the two
countries.
He emphasised the need to provide assurance to
potential investors in both countries that their investments were
safe, their money could be moved as they saw fit. Moroka said the
treaty “conforms to international rules and principles designed
to protect the interests of foreign investors against the action
of the host government".
Although the treaty includes expropriation and/or
nationalisation of business assets as well as infringement of intellectual
property rights, he reiterated that both countries are committed
to fair and equitable treatment of investors. For this reason each
country has undertaken to “allow each other investors free transfer
of funds relating to their investments and returns in accordance
with our relevant laws".
(Mmegi Business News, 30.08.05)
Technology
to the aid of coffee producers
New technology and fair trade idealism has assured top bids for
quality coffee from cooperative producers in Ethiopia. Average prices
achieved in the first-ever internet auction of its kind for African
coffees were more than double the world market price. The auction
generated more than US$ 187,800 for Ethiopian cooperative farmers.
In the first internet auction of its kind for
African coffees, coffee companies from around the world this week
bid top prices for winning lots from Ethiopian cooperative coffee
producers. The US-based ECAFE Foundation, who organised the auction,
sourced the coffee from 150 cooperatives in eight regions across
the country to reflect the diversity and quality of coffee grown
in Ethiopia.
The auction had been "the culmination of
ECAFE Foundation's 2-year project that worked with Ethiopian coffee
producers to identify high quality coffees and conduct regional
and national cupping competitions to promote them," according
to a statement from the foundation.
Green Mountain Coffee Roasters, a US company,
topped the charts with an auction-high bid of US$ 6.50/pound for
Wotona Bultuma Cooperative's Fair Trade Certified and Organic certified
beans. ECAFE's international jury of cuppers characterised the coffee
as having a "velvety body with balanced fruit notes, pleasant
acidity and lingering berry and honey notes."
As a reflection of a growing trend in coffee auctions,
the second highest bid at US$ 5.50 was placed by a cooperative US
bidding group. These small roasters were eager to support the small
farmers of Ethiopia through the relatively new concept of cooperative
bidding, which allows small roasters to bid competitively against
large coffee companies, according to ECAFE.
In total, the internet auction had generated more
than US$ 187,800 for the farmers, at an average price of US$ 3.22
per pound. This compares very well to the world market price of
US$ 1.30 per pound, according to ECAFE Chief Financial Officer Colleen
Crosby.
All proceeds will be distributed to the cooperatives,
the US foundation guaranteed in its statement. Mr Crosby estimates
that roughly a US$ 75,000 premium over the market was paid for these
distinctive beans, "proving that bidders recognised the exemplary
quality of coffee produced by Ethiopia's cooperatives."
The foundation characterised the groundbreaking
use of internet technology in favour of farming cooperatives as
a great success. "ECAFE is proud to sponsor this groundbreaking
effort to bring the best Ethiopian coffees to the industry. Finally,
farmers at the coop level who produce these exemplary coffees will
receive the prices and the recognition they deserve," said
ECAFE President Willem Boot.
This first ECAFE auction was realised with the
support of ACDI/VOCA, the Coffee Quality Institute, Coffee Corps,
the Specialty Coffee Association of America, the Ethiopian Coffee
& Tea Authorities and the Ethiopian Coffee Unions. ECAFE plans
to continue on the success with more auctions to follow.
African coffee producers during the last years
have fallen victim to lowering coffee prices on the world market,
which have contributed to growing poverty in coffee producing regions.
At the same time, however, Western coffee drinkers have become more
eager to pay elevated prices for specialised coffee products of
a higher quality than the typical mass-produced products.
(Afrol News, www.afrol.com, 08.07.05)
Ethiopian
carrier enjoys edge over competitors
The Ethiopian Airlines (EAL) has designed a project that will enable
it to provide efficient services and thereby satisfy its customers.
Company sources suggest that the project has the
objective of expanding EAL's services and simultaneously maintaining
its competitiveness in the region, by taking into consideration
various technological advancements.
According to an executive in the company’s Marketing and Sales Department,
EAL's performance has been very encouraging in the recent year,
which could have been even better, had the fuel price in the international
market been stable.
EAL secured 4.3 billion Birr (ETB) (1 USD=8.7
ETB) income in the current year by providing services to 1.5 million
passengers, and its revenue exceeded that of the previous year by
almost 26.5 million ETB. Many airlines have been bankrupted and
gone out of the aviation industry due to the ever-increasing fuel
cost in the international market, under the circumstances, EAL's
profitability has been encouraging.
Despite the high competition in the sector, EAL
has flown nearly 86 per cent of incoming and outgoing passengers
with Addis Ababa as departing and destination point during the current
year. As a part of the airlines strategy to offer better services
to domestic flyers, various airports in different parts of the country
have been upgraded over the past few years.
(The Ethiopian Herald, 15.08.05)
Mining
Policy to enhance gains from the sector
The Ethiopian Geoscience and Mineral Engineering Association observes
that the development of the mining sector has been hindered by the
implementation problem of the country's mining legislation.
Speaking at the Ministerial mid-term review meeting
of the African Mining Partnership (AMP) on August 12, Association
President Dr. Gezahegn Yirgu asserted that although the country
has mining registration processes and directives, yet the benefits
from the mineral sector remained negligible due to the lack of implementation
of these legislations.
Dr. Gezahegn also said that the problem was compounded
by the big capital investment required to invest in mining as well
as lack of skilled manpower and the sensitivity of the geopolitical
situation in the Horn of Africa. He said the government should design
a mining policy so as to reap benefit from the sector.
Speaking on behalf of the Minister of Mines, State
Minister, Sinknesh Ijigu said that fair and environmentally friendly
participation of the community, appropriate technology with skilled
human resource should play major role for the development of the
mining sector that ultimately contributes to the poverty alleviation
of the African continent.
According to Sinknesh, enhancing good governance
was vital to promote accountable and transparent management of mineral
resource. She said that strengthening African Mining Partnership
under the auspices of the New Partnership for Africa's Development
(NEPAD) was of paramount importance.
The Second Mid-term Review of AMP Executive Committee
is expected to focus on the outputs and devise the way forward strategy
of the projects identified by AMP member states.
The identified projects include, among others,
artisan and small-scale mining, harmonisation of mining policies,
environmental and sustainable development, human resource development
and promoting foreign investment and indigenous participation in
mining ventures.
(The Ethiopian Herald, 13.08.05)
Regulating
tobacco sale in auction floors necessary
The current anti competitive structure of the tobacco market compounded
by the level of transparency created by the auction system as it
is currently operated enables the big buyers to minutely monitor
all new entrants and sanction them as and when they see an opportunity
to do so. This is a according to a report on Tobacco Sales in Malawi
compiled by Clive Stanbrook a renowned British lawyer.
"One of the reasons that the contract sales
for flue cured tobacco were at better prices than on the auction
floor this year may have been because they were carried out in less
transparent circumstances," claims the report.
Responding to the Stanbrook report, Managing Director
of one of the big buyers of the Malawi leaf, Limbe Leaf Tobacco
Company C.A.M. Graham in a advert said "such transparency does
not lend itself to confidentiality for anyone participating on the
Auction Floors and this "open auction system" may not
suffer sufficient confidentiality for buyers and their customers.
Whether this way of doing things limits competition or not is subject
to debate". Graham in the statement added that the fact that
Dimon and Standard Commercial for example have merged their worldwide
operations thus leaving few buyers in Malawi is not something that
is attributable to Limbe Leaf Tobacco Company".
Graham adds that the tobacco industry generally
and the Malawi industry in particular is at an important phase in
its history in that the structure of producer marketing arrangements
needs to be carefully and responsibly addressed by all stakeholders
in Malawi.
The report says the existing two main buyers have
been able to exclude other buyers from their market both by their
strong market shares and making market access almost impossible
for new entrants.
Stanbrook recommends that the Tobacco Control
Commission [TCC] and the Minister have the power to bring about
some immediate changes that would be beneficial to the growers in
a very short time. "These would be aimed at reducing the transparency
of the auction system and establishing clear competition based conditions,
breach of which would endanger the buyers licence," says Stanbrook.
The report further recommended that government to initiate a criminal
investigation into the buyers cartel.
The TCC is established as a watchdog under the
Control of Tobacco Auction Floors Act. Its duties are among others
to promote and expand the sale of tobacco and most importantly to
control and regulate the sale of tobacco on the auction floors in
Malawi.
(The Chronicle Newspaper, 18.08.05)
Malawi
telecoms sale put on hold
Malawi President Bingu wa Mutharika has ordered the immediate suspension
of the controversial privatisation of the state-run telecommunications
firm. "One or two issues need to be clarified" before
the Malawi Telecommunications Limited (MTL) is sold, the president's
office said. The suspension comes after Directors raised objections
to the sale.
Ken Msonda, who heads the board of directors,
said the price set for the firm was not high enough.
"The proposed price of $30.7m for MTL is
too low to match the value of the firm's assets, projects and its
viability," he said. Press Corporation, a state-controlled
holding company, and the National Insurance Company (Nico), Malawi's
largest insurance firm, are leading a consortium of local and international
partners to buy an 80% stake in MTL, the southern African nation's
only fixed telephone operator. The British Government’s development
finance arm, Commonwealth Development Corporation, is also a part
of the consortium, providing financial assistance.
"MTL has invested over $200m in projects between
1999 and 2005 and it cannot be sold for $30.7mn," added Mr
Msonda. He said the company had assets worth more than $60mn, and
that the company was a lucrative and profitable entity, worth nearly
US$ 750mn.
He said MTL Directors were also concerned about
benefits of its staff, foreign debts, and its 40% shares in the
mobile phone company, Telekom Networks Malawi (TNM).
He accused the Privatisation Commission of fixing
the price tag and offering it to the consortium. "The value
and procedure taken by the commission is not in good faith,"
he said. The consortium was chosen a year ago to buy MTL after a
five-year search for an international partner failed to yield results.
(BBC News, 06.08.05 & The East African Standard,
07.08.05)
Malawi
in need of a National Export Strategy
Realising that vibrancy in exports is essential and is a powerful
driver for economic growth in a globalised world, the Malawi Confederation
of Chambers of Commerce and Industry (MCCCI) has called for the
formulation of a national export strategy.
"Malawi cannot meaningfully grow just depending
on the domestic market alone," Chancellor Kaferapanjira, the
Chief Executive Officer (CEO) of MCCCI challenged a consultative
meeting in Lilongwe in end Aygust. He added: "While the local
market is available in terms of a large population size (12 million
people), Malawi's nominal Gross National Disposable Income (GNDI)
is very low and its growth has been declining over time. A vibrant
export market is the alternative we need." The CEO claimed
the world's fastest growing economies are export oriented.
Malawi's principle export earner is tobacco, which
contributes at least 70 percent of the country's export earnings.
However, this year's tobacco trading season has not been very satisfactory
to many. It was anticipated that, with the selling season in progress
the country would not be experiencing an acute shortages of forex,
yet the situation remains difficult.
Ironically, it is also during the same period (tobacco
trading season) that the local currency was devalued after a long
spate of stability.
With the heavy reliance on tobacco, Kaferapanjira
said, this leaves the country vulnerable to demand shocks on foreign
currency. Malawi's export performance over recent years has been
minimal and even though the country's economy is open as indicated
by an average of 65 percent trade - exports account for little of
the Gross Domestic Product (GDP) ratio between the years 1994 and
2003.
The MCCCI said the export-GDP ratio averaged only
30 percent over the same period, adding that this is an indicator
that shows the ability of a country to create foreign exchange.
"This means that Malawi's production does not generate enough
foreign exchange to finance its imports," he noted.
It was also noted during his presentation that
the average growth of export productivity stands at as low as 2.5
percent per annum, saying the gross output productivity has consistently
remained at an average of 1.2 percent per annum.
He said the reason could be; that there is little
change in technology as well as the impact of HIV and AIDS which
is causing a lot of people to spend most of their productive time
just maintaining their health status.
However, the MCCCI boss said the export sector is faced with a number
of problems that include high transportation costs, high interest
rates and unreliable utilities, which he said reduces the incentive
to greater production. "On average, 55 percent of the cost
of production (COP) is taken up by transportation costs. Problems
of supply continue mainly because Malawi's exports are seasonal,"
he said.
On the transportation problems, he added that
while Nacala is the most cost effective route, it is unreliable.
Malawi has been unable to break the bondage of the excessively high
transport costs of hauling all exports as well as the importation
of raw materials by road transport for many years in favour of the
more advantageous rail and water routes.
(The Chronicle Newspaper, 25.08.05)
MTML stays
ahead
Indian telecommunication giant, Mahanagar Telephone Nigam Limited
(MTNL), now operating in Mauritius through Mahanagar Telephone (Mauritius)
Limited (MTML), is providing cheap and quick services for its customers.
It has already launched its international long distance calls post
paid service, through Carrier Access Code (060) in June 2005.
The service, says Mr. Brijesh Kumar Mittal, Chief
Executive officer, is working effectively and reduces telephone
bills far less normal known telecommunication costs, and a better
quality is offered.
The company aims to cater for fix, mobile and
international long distance calls with high connectivity through
CDMA technology at a cheap rate in Mauritius. MTML is looking to
serve 100,000 lines; 50,000 this year and 50.000 the next year.
Mr Mittal says “Our service aims at bringing true value to the money
that customer pays. The competition is there but, like in a market,
one chooses the best.” He further adds globalisation has turned
the world into a small village where communication has become very
important. MTML, a subsidiary of MTNL, a Govt. of India Enterprise,
hopes to remain a market leader in providing world-class telecom
and IT related services and to become a global player. Mahanagar
Telephone (Mauritius) Ltd. MTML is registered with an Authorised
Capital of Mauritius Rupees (MUR) 600M (1US$ = 29.65 MUR) and paid
up by the capital of MUR 300M.
(News on Sunday, 12-18 August 2005)
Beer
Monopoly ends
Black Eagle, a beer brewed in Mauritius by Universal Breweries,
finally hit the market and put an end to the monopoly held so far
by Mauritius Breweries. The brand name was revealed only on the
launching day. “It has been one of the best kept secrets in product
branding in Mauritius,” Mr. Rajiv Sant, CEO, said. The beer will
be first distributed in Mauritius before moving to the region and
later the world, Mr. Sant declared.
The Minister of Agro-Industry and Fisheries, Mr.
Arvin Boolell, launched the beer in the presence of its three promoters:
Avatar Lit, Raman Sood and Ravi Jaipuria. Mr. Jaipuria is known
as the “Pepsi” king of the India. Dr. Lit is the owner of Sunrise
Radio in the UK while Mr. Sood owns a chain of hotels in India.
“It’s the start of an adventure,” Mr. Sant said and hoped the new
beer would get a warm welcome from the public. A pre-tasting exercise,
he added, had shown that consumers liked the product and they were
eagerly waiting for it.
The brewery located in Nouvelle France, in the
South, employs 150 people. Minister Bolell was happy that all the
employees were recruited from the region and appealed to the promoters
to include community development in their corporate plan.
(News on Sunday, 12-18 August, 2005)
Doubts
raised on anti-dumping legislation
In a recent statement Mosadeq Sahebdin, a veteran consumer activist
representing Institute for Consumer protection (ICP), expressed
his doubts about an anti-dumping policy being beneficial to consumers
of Mauritius. Quoting Michael Finger of the University of Michigan,
he said: “anti-dumping is a witch’s brew of the worst of policy-making,
power politics, bad economics and shameful public administration.
One of the major hurdles in enabling countries to achieve better
market access is the imposition of anti-dumping measures.” “Economists
have long questioned the need for anti-dumping laws as they cause
more harm than good to the economy of the country.”
Mosadeq Sahebdin was reacting to a demand by the
Mauritius Chamber of Commerce and Industry which views that there
is an immediate need for an appropriate anti-dumping legislation
to regulate unfair trade practices in Mauritius.
(News on Sunday, 12-18 August 2005)
Steady signs
of progress
Observers are optimistic that Mozambique will continue to make steady
progress in the years ahead. It used to be one of the poorest countries
in the world but has succeeded in reducing the proportion of the
population living in absolute poverty from 70 to 56 percent in 1997.
Positive results have attracted donor support and Mozambique has
had a number of large-scale construction projects, which boosted
the economy in recent years. With activity relating to these projects
drawing to an end, apprehensions run high that GDP growth might
slow down from 7.8 percent in 2004, to 7.3 percent in 2005 and 6.5
percent in 2006.
Nevertheless, it is anticipated that donor support
will continue in the medium term, and expansion in the private sector
will increase domestic revenue collection. A new Central Revenue
Authority is to be set up this year to expand the tax base.
Inflation has declined from 12.7 percent in 2004
to 7.4% in the current year, although higher fuel prices and import
costs might cause it to rise next year. The trade deficit has also
narrowed.
One of the reasons for Mozambique’s success could
be her diversification from traditional exports, such as fish and
agricultural products. Thanks to increased private investments in
mega-projects, she now exports aluminium and natural gas.
(I-Net Bridge, 19.07.05)
Second
round of reforms on the anvil
The International Monetary Fund (IMF) has urged the Maputo government
to "press ahead with a second wave of structural reforms."
While Mozambique had experienced "impressive progress in recent
years," only new reforms could consolidate this progress.
Takatoshi Kato, the IMF's Deputy Managing Director
told the press in Maputo after having completed his fist visit to
Mozambique. Kato made it clear that the country needed to prepare
for yet another round of painful reforms aimed at liberalising its
economy.
During his stay in Mozambique, the official met
various representatives from the government, including the President
Armando Guebuza, Prime Minister Luisa Diogo and the Minister of
Finance Manuel Chang. He also held discussions with donor agencies
and various civil society groups.
The IMF official congratulated Mozambique on its
"impressive progress in recent years." Real GDP growth
over the past decade had averaged 8 percent - well above its regional
peers and the external position has improved further, against the
backdrop of declining inflation, Mr Kato pointed out.
He attributed this economic success to "sound
macroeconomic policies and structural reforms," carried out
under successive IMF programmes and with substantial donor assistance.
"The progress we have seen is welcome," Mr Kato noted.
However, the still very poor country was "at
a important juncture in its development, and several important challenges
remain to be addressed," he told the press. There was "a
need to press ahead with a second wave of structural reforms - by
strengthening institutions and removing impediments to private economic
activity - to sustain a high and broad-based growth and achieve
substantial and lasting reductions in poverty."
The IMF thus holds that Mozambique needs to go
through another round of painful reforms. In discussions with the
presidency and other Mozambican politicians, Mr Kato had tried to
assure support for new tax reforms, aimed at increasing taxes and
improving tax collection to increase government revenue. He recommended
raising taxes, strengthening tax administration, eliminating tax
exemptions and improving compliance.
Other recommended structural reforms included
"adopting more flexible labour regulations, improving governance
through creation of an accountable judicial system and a transparent
regulatory framework, and improving basic infrastructure especially
in the agricultural sector," according to Mr Kato. At this
stage, no mention of further privatisations was made.
According to the IMF official, his suggestions
had been well received by the Mozambican government, which is totally
dependent on the Fund's goodwill. President Guebuza and several
Ministers had underscored "their determination to respond to
the challenges they face," Mr Kato said. If the government
followed up, the IMF was "committed to working with Mozambique,"
he added.
(Afrol News, www.afrol.com, 26.07.05)
TNC
adheres to labour norms
The "Mozambique Leaf Tobacco" company management has assured
the Mozambican government that the majority of the labour to be
employed in its tobacco-processing unit would be Mozambican nationals.
John Allan, manager for the Africa division of
the American company "Universal Leaf Africa" that owns
the venture, gave this assurance following speculations that the
company was employing mainly foreigners, in detriment of Mozambicans.
A source of the Mozambican Labour Ministry said
that Allan sent a letter to the deputy Labour Minister Soares Nhaca
assuring him that the company will abide by the Mozambican labour
legislation.
The Mozambican government has been discouraging
companies from contracting foreign experts for requirements that
could be met at local level, a move that is being followed to the
letter, as confirmed by the Professional Training and Employment
National Institute (INEFP).
The Labour Ministry praised the move from the
"Mozambique Leaf Tobacco", stating that the government
expects the companies to abide by the rules, because Mozambique
is a sovereign country and has its own rules.
"Mozambique Leaf Tobacco" is investing
40 million dollars in the construction of a tobacco proccessing
factory in Tete.
(Agencia de Informacao de Mocambique, 09.08.05)
Grape industry
- a success story
Nine years ago in Namibia, plantations of seedless grapes were planted.
Now, close to the village of Noordoewer near the border with South
Africa, these high quality grapes of the green Thompson seedless
variety or Dan Ben Hannah and crimson-coloured Red Globe varieties,
are successfully harvested.
Seven grape companies are cultivating 1,300 hectares,
irrigated by water from the nearby Orange River, and another 2,000
hectares will be put to cultivation soon, says Andre Vermaak, general
manager of Namibia's Grape Valley Management Company.
Because of the heat – 50 degrees Celsius in summer
– the grapes mature in November, according to Helmut Angula, Director
General of Namibia's National Planning Commission, which gives them
a competitive advantage. Other grapes from the southern hemisphere
can only be harvested in December.
The African Growth and Opportunities Act (AGOA),
a trade and development programme launched five years ago in the
US, allows African countries to export their products duty and quota-free
to that country. Negotiations are under way to take advantage of
this programme and US agriculture experts will shortly inspect the
Namibian grapes to ensure they meet US pest control and sanitary
standards.
Grape growing provides thousands of workers with
jobs. According to Vermaak, 1,300 Namibians are employed year-round
and another 6,000 workers are hired during the harvesting season.
If additional hectares are planted, 2,000 more jobs will be created.
In 2004, grape earnings totaled 200 million Namibian
Dollars (N$; 1 US$ = 6.6 N$) according to the Namibian Orange River
Table Grape Association.
(Business Report, 19.07.05)
Textile
Co. uses and abuses Namibia
In 2001, a Malaysia-based company, Ramatex, started operations in
Namibia so that it could benefit from the Africa Growth and Opportunity
Act (Agoa), which granted duty-free access to the US market for
companies that produce in African countries "approved"
by the US government. On December 31 2004, the World Trade Organisation's
Agreement on Textiles and Clothing came to an end and Chinese textiles
began flooding global markets. This had severe implications for
Africa's textile industry. Rhino Garments, a subsidiary of Ramatex,
has retrenched about 1 600 workers in Namibia this year, claiming
that this was due to a lack of orders from its customers in the
USA. Herbert Jauch of the Labour Resource and Research Institute
(LaRRI), examines why Rhino Garments closed down and why Namibia's
costs are likely to outweigh the benefits it derived from Ramatex.
Jauch lists the attractions of China as a production
site and potential market for global capital:
• 30 million of the world's 43 million workers
in Export Processing Zones were employed in China in 2002;
• By 2002, China accounted for more than 20 per
cent of world exports in clothing, with its share expected to rise
to about 50 per cent;
• China supplies 70 per cent of all Japanese and
Australian clothing imports;
• Between January and April 2005, Chinese textile
exports to the USA increased by 258 per cent;
• China offers the full production chain from
the production of cotton to the final products and can meet the
demands of the global clothing and sportswear chains;
• China offers extremely fast manufacturing and
transportation times, cheap electricity and has reached high levels
of productivity.
Even extremely low-wage Asian countries like Bangladesh,
Indonesia and Pakistan cannot compete with China in the race for
foreign investment, so it is unlikely any African country can. Jauch
calls it “a classic example of the race to the bottom as far as
labour and environmental standards are concerned” and wonders if
Africa should go that route.
He describes Ramatex's investments as “not designed
to assist Namibia's industrialisation efforts”. He points out all
the special incentives that Namibia granted Ramatex in return for
the company investing in the country:
• Namibia provided infrastructure of more than
N0 million, while Ramatex imported factory panels and machinery
in containers which can now be dismantled and shipped out of the
country, leaving Namibia with factory foundations that are of little
use to the local economy.
• Ramatex was provided with subsidised water and
electricity, which meant that Namibians cross-subsidised a corporation
that already had a turnover of more than US0 million in 2004.
• Ramatex was at times allowed to violate basic
workers' rights, the Namibian Labour Act, the Affirmative Action
(Employment) Act, as well as environmental and municipal regulations.
• Ramatex never increased workers’ wages despite
signing a recognition agreement with the Namibia Food and Allied
Workers Union in 2002.
• There is evidence of groundwater pollution, which
will have a lasting effect on Namibia's citizens.
• No systematic skills transfer to Namibian workers
has taken place as the company only provided some initial training
and imported thousands of production workers from Asia.
• There are no indications of a programme to ensure
technology transfer, which could have contributed to the development
of Namibia's own textile industry in the medium-term.
According to Jauch, a study was carried out by
LaRRI in 2003 which warned that the public funds invested to benefit
Ramatex were equivalent to the wages of all Namibian Ramatex workers
for almost three years.
Jauch concludes that “international experiences
in many 'Third World' countries have shown that an industrialisation
strategy based on the goodwill of foreign investors, coupled with
repressive labour conditions and environmental degradation, is a
recipe for disaster - not for long-term sustainable development.”
He comments that transnationals are “blackmailing” vulnerable states
for concessions in return for promised investment and jobs.
He suggests developing countries should rather
develop a strategy which concentrates on
• systematic support for developing industries
skills and technology transfer for local and regional markets, supplemented
by exports;
• selective and strategic engagement with the global
economy;
• land and agrarian reform;
• the compulsory processing of local raw materials
before they are exported;
• systematic support for local SMEs engaged in
processing;
• awarding all government tenders to local companies,
where possible.
(The Namibian, 11.08.05)
Tullow
Oil to cut Kudu stake
Tullow Oil plans to cut back on its 90 per cent stake in Namibia's
Kudu gas field by the time the first gas is brought onshore, chief
executive Aidan Heavey says. The reduced shareholding will help
the Irish-based oil and gas company to avoid overexposure to one
big project, and paves the way for a new shareholder in the upstream
portion of Namibia's biggest power generation scheme.
The US$1.1bn project involves treating and delivering
gas from the Kudu field to a gas-powered station operated by Namibia
Power Corporation (NamPower) to be commissioned by 2009 with initial
electricity production of 800MW. Tullow management was unwilling
to give details of negotiations to sell a portion of Tullow's operating
interest in Kudu.
Oil analysts were stumped as to who would be interested
in taking on a stake in Kudu, where gas was first discovered in
1974 but never commercialised. Oil multinationals Shell and ChevronTexaco
both pulled out of Kudu after 2001, leaving Energy Africa as the
sole shareholder. Energy Africa, which delisted from the JSE after
being sold to Tullow for US$ 570 mn, subsequently sold 10 per cent
of Kudu to NamPower.
"For a small company to go for a project
like that is way too risky," said one analyst who guessed that
an exploration and production company already exposed to gas was
the most likely fit. Heavey said at a recent results presentation
that a partner would allow Tullow to manage its exposure to Kudu.
He was upbeat about Kudu, describing it as a "superb
asset" whose "time has come". The company, he said,
was planning two appraisal wells because there was "substantial
upside" in the Kudu area, with reserves ranging from 1,2 trillion
cubic feet to nine trillion cubic feet. "South Africa right
now is short of power ... This is the time for Kudu. It's a unique
asset in a unique area," Heavey said.
South Africa is initially expected to import about
200MW of the electricity generated by Kudu. This component could
rise as the plant's second phase is completed, giving it total generation
capacity of 1 600MW. Heavey said the project's first stage involved
offshore development, such as securing approval to carry gas through
diamond mining areas and laying the pipelines. The cost of the first
phase is expected to be split equally between the power station
and the gas field.
(The Namibia, 20.07.05)
Zambia
Namibia for closer ties
A joint communiqué released at the end of Namibian President
Hifikipunye Pohamba's three-day visit to Zambia, announced a strengthening
of ties between the two countries. Zambia’s President Mwanawasa
and Namibia’s President Pohamba committed themselves to personally
supervising the Zambia-Namibia joint agriculture project in Sesheke
district to ensure its success. Other areas identified for enhanced
cooperation include tourism, mining, education, energy, agriculture,
transport and communication.
President Pohamba's visit was marked by cordiality
and the two countries have agreed to support each other on bodies
such as the Southern Africa Development Community (SADC), the African
Union (AU), the Non-Aligned Movement and the United Nations.
(The Times of Zambia, 02.08.2005)
Lending
rates plummet amid competition
Increased competition amongst commercial banks pushed down the average
lending rate to 18.1% in June from 21.3% in May, a central bank
economic and financial indicators report for July has shown. David
Kihangire, the Director of Research at Bank of Uganda (BOU) quoting
the report, said the corresponding rate on foreign currency loans
also declined to 8.4% from 8.9%. "Competition and efficiency
in the financial sector is partly responsible for the decline in
lending rates during the period under review," Kihangire said.
He, however, said lending rates were still high
by Ugandan standards though they were favourable in the region.
"Market competition and our efforts to keep interest rates
low will reduce the rates. This will give the market greater confidence
to plan in the long-run without speculation," said Kihangire.
(New Vision, 27.08.05)
Cooking
oil Cos engage in backbiting
The Uganda National Bureau of Standards (UNBS) has intervened in
a bitter press war between Bidco Uganda Oil Refineries Ltd and Mukwano
Group of Companies. In a letter copied to the Trade and Industry
minister and all state ministers in the ministry, UNBS Executive
Director, Mr Terry Kahuma, described the press war between the two
companies as "unfortunate."
The letter follows Bidco's August 13 full page
'Be aware' advert in the press, in which it attacked "Three
Star" cooking oil, saying it was "blended" whereas
Bidco's "Ufuta" cooking oil was "100 percent pure
palm vegetable oil". "Three Star" is manufactured
by A.K Oils & Fats (U) Ltd, a subsidiary of Mukwano Group of
Companies.
Bidco's advert further said its rival company's
brand carried a 'gross weight' label whereas Bidco's brand had a
'net' weight label. It further said Bidco was "an ethical company
that always upholds integrity."
A.K. Oils & Fats (U) Ltd had earlier advertised its brand saying
it was the only cooking oil brand that had acquired permission to
carry the foodstuff fortification logo.
Kahuma described Bidco's advert as unfortunate
because "it attacked an existing brand which we think is not
ethical."
"Press wars cannot be appropriate as they have the adverse
impact and do not cover all the grounds concerning an issue. For
example, Bidco itself does not comply with the same law regarding
the declaration of weights. BIDCO is also using the food fortification
logo on its cooking oil without having gone through the required
procedures and regulations for the use of the logo," Kahuma's
letter reads in part.
According to the Food and Drugs (Foods Fortification)
Regulations, 2005, which Daily Monitor has seen, the minister of
Health officially owns the official food fortification logo and
authorises, regulates and issues guidelines for its application.
Section 5(2) prohibits the manufacture, importation or selling of
food stuffs identified as fortified unless the same have been fortified
in accordance with the national standards. According to Section
10(2), only fortified foodstuffs approved by the minister are allowed
to use the logo.
"Claims for, or any claims that may imply
food fortification, including the use of the official fortification
logo, shall be reserved only for fortified foodstuffs that are permitted
by the minister," the regulations further say.
However, Bidco Uganda Ltd Managing Director, Mr
Rao Kodey, said his advert was "not intended to hurt anybody
but to educate the consumers." "We have no problem with
the Mukwano Group as our competitor. We appreciate healthy competition
because it is the only way consumers can get quality products that
meet consumer expectations," he said. Bidco Uganda Ltd is a
subsidiary of the Kenyan based Bidco Oil Refineries Ltd. The company
has undertaken a multi billion shilling palm oil growing project
on Bugala Islands on Lake Victoria. Three months ago, it launched
its multi million-dollar factory in Jinja.
Kodey said his company did not break any regulations
since it had submitted the requisite applications to the ministry
of Health and the process of getting the approval for the use of
the fortification mark was underway. "Technically, we meet
all the requirements. It is only a matter of time before we get
the clearance [to use the logo]," he said.
The officer in charge of the food fortification
programme in the ministry of Health, Dr Jacinta Sabiiti, confirmed
that Bidco had indeed submitted its application but declined to
discuss details of the issue in the press.
In another statement, UNBS' Kahuma defended "Three
Star" cooking oil, saying contrary to Bidco's advert, the oil
indeed met the set quality standards. "UNBS wishes to reassure
the public that "Three Star" cooking oil produced by A.K.
Oils & Fats (U) Ltd meets the requirement of Uganda Standards
on cooking oil and its quality has been certified under the UNBS
Product Quality Certification and Marking Scheme," Kahuma's
statement read in part. Additionally, Kahuma said to date only A.K.
Oils & Fats (U) Ltd had been given permission to use the fortification
logo on cooking oil.
It said any company that uses or advertises its
products with the fortification logo without fulfilling requirements
for the relevant standards was doing so illegally.
He said UNBS appeals to all stakeholders to advertise
their products ethically and avoid misleading consumers as well
as pointing out what they consider to be non-conformances on other
product brands. "This is violation of advertising ethics and
it undermines fair competition and trade," he said.
UNBS met all producers of cooking oil in the country
at their offices in Nakawa to discuss the matter.
Kahuma said UNBS appreciated that manufacturers
were not aware of the requirement to display "net weight"
on their packages, preferring to display "gross weight"
because it related better to their loading arrangements, not looking
at the consumers' need to know the net material they were buying.
(Daily Monitor, 23.08.05)
Tax
harmonization required
Igeme Nabeta, Ugandan Minister for Trade, says taxes on goods in
Uganda are high compared to those levied on similar products in
neighbouring countries. He feels that this discrepancy encourages
smuggling – especially in cigarettes and mobile phones.
The ministry of Trade is in consultation with
companies and various other stakeholders in order to explore ways
to resolve the problem. There are short-term mechanisms to stop
smuggling, such as tightening surveillance at the border points,
but the minister believes that the long-term solution would be to
remove tax imbalances in the East African region.
Smuggling causes the government to lose revenue
due to tax evasion and the government needs to curb the practice,
as it appears to be on the increase.
(Daily Monitor, 16.08.05)
Regional
News
Regional telecom network
for COMESA
A regional telecommunications network, known as Comtel, is to be
established for the Common Market for Eastern and Southern Africa
(COMESA) region. It is hoped that this will boost trade relations
within the region. The decision is the result of a report by Telia
Swedtel on telecommunications network interconnectivity and tariff
harmonisation in the area and was financed by the African Development
Bank (ADB).
A privately-owned regional terrestrial telecommunications
network will be linked with national telecommunications/ICT operators
in the Eastern and Southern African region, using existing infrastructure
where available. If there is no infrastructure, new transmission
routes, of fibre-optic cable, digital microwave and satellite systems,
will have to be constructed.
Comtel’s core business will be providing a high-quality
carrier system for regional traffic and charges will be competitive.
Leased circuit facilities will be available on a regional and national
basis for the national telecommunications/ICT operators, increasing
access to telecommunications/ICT services for rural populations.
The Comtel project traverses the following countries: Angola, Botswana,
Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi,
Madagascar, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland,
Tanzania, Uganda, Democratic Republic of Congo, Zambia and Zimbabwe.
The project will cost US$ 240mn and will take
2 years to complete. Anderberg International has been appointed
by the Comtel board of directors as the strategic equity partner
as well as overall project manager.
(Engineering News, 12.07.05)
Tourism
Standards for EAC
Kenya, Tanzania and Uganda have adopted industry standards for tourism
to pave the way for marketing the east African region as a single
tourist destination, according to reports reaching here from the
northern Tanzanian city of Arusha.
In a meeting held in Arusha, the East African
Community Council of Ministers endorsed standard guidelines for
the classification of hotels, restaurants, and other tourist facilities
in a bid to lure large capitals into high quality tourism facilities
and to better management of the hospitality industry within the
region.
The ministers also approved a long-term plan aiming
at marketing and promoting the trio as a single tourist destination.
Under the plan, a panel of experts is expected to study policies
and legislation for the harmonization of the tourism industry in
the region.
Kenya, Tanzania and Uganda with a total population
of more than 90 million, boast or even share various famous scenic
spots including the African highest mountain peak Kilimanjaro, one
of the world's largest wildlife sanctuaries the Serengeti National
Park, and the world's second largest freshwater Lake Victoria.
(15.08.05)
Economic
integration crucial for southern Africa
The South African Reserve Bank governor, Tito Mboweni, has been
on a whirlwind tour to persuade regional Ministers of Finance to
speed up the process of achieving a regional uni-currency. The plan
is that a free trade area should be established by 2008, a SADC
customs union by 2010, a common market by 2015, and a single monetary
union for the sub-region by the year 2016.
Mboweni observes there is an overlap between COMESA
and SADC as some SADC states have membership of both. He wants economic
integration so that eventually the region will compete on an equal
footing with other economic blocs such as the European Union (EU).
There have been complaints that COMESA is failing to ensure that
all its members open up their markets under the Free Trade Area
initiated five years ago- something that adversely affects six SADC
countries that form part of COMESA. They are: Angola, the Democratic
Republic of Congo, Zambia, Swaziland, Malawi and Zimbabwe.
Member states holding dual membership of COMESA
and SADC are finding that they face a number of problems:
• Negative trade imbalances because of lack of
access to markets in other COMESA member states that are part of
the Free Trade Area;
• Stiff competition faced by local industries
in the six SADC nations;
• Rampant smuggling of cheap goods made in other
COMESA countries;
• Restrictions and encumbrances in obtaining entry
visas;
• Bans on some agro-products entering some countries.
If COMESA disbands, the repercussions will be
widespread. COMESA is larger than SADC in terms of membership and
market size, and offers a market double the size of SADC. A loss
of market is likely to cause affected economies to shrink. This,
in turn, will impact on inflation in those economies, as well as
budget deficits. Key requirements for member states seeking admission
to the SADC monetary union is a limitation on central bank borrowing
and a reduction of budget deficits to 5 percent or less of gross
domestic product (GDP) by 2008.
Rumour has it that COMESA’s influence is waning.
Lesotho, Namibia and Swaziland are tagging their national currencies
in a one-to-one exchange rate with the South African Rand (ZAR).
Mozambique and Tanzania have shifted allegiance to SADC. Uganda
sought SADC membership over five years ago, in a move that showed
lack of confidence in COMESA. South Africa aligned itself with Botswana
when it refused to join COMESA in 1994. SADC’s advantage is that
it offers countries access to South Africa, the region’s largest
economy and economic driver.
Former COMESA chief executive officer, Eratsus
Mwencha, has attacked South Africa (SA) for its “protectionist”
approach but Mboweni defends SA’s policy saying it merely recognises
South Africa’s position in the region. SA is the largest trading
partner to almost all SADC countries, and currencies in the SADC
region “will eventually have to converge around the South African
rand and the Botswana pula”.
Mboweni says plans for the Common Monetary Union
are advancing apace. Protocols are being signed. Once they are signatories
to the integrated monetary union, countries will have to keep within
agreed parameters. Non-compliance and disputes will be resolved
by a regional court that will impose hefty fines on governments
failing to adhere. This is the route taken by the European Union.
(Southern Times, 24.08.05)
SADC
Summit to address development issues
The Southern African Development Community (SADC) kicked off its
annual summit here amid calls for addressing challenges in regional
integration, poverty eradication, food crisis and HIV/AIDS.
Heads of state and government from all 14-member
countries, including Madagascar, which will obtain its full membership
after a one-year transition period, will be attending the two-day
meeting. The summit would receive reports and recommendations from
deliberations on a number of issues during the SADC council of ministers
meeting, which took place a just before the summit.
These included a review of the regional socio-political
and economic situation, a focus on food security, challenges facing
SADC and proposed priorities for 2005/06. The priorities focused
on poverty alleviation and sustainable development, agriculture
and food security, gender equity, HIV/AIDS and other infectious
diseases, and peace and stability.
"We must pull together and work hard in ensuring
that SADC succeeds in its agenda of development, economic cooperation
and regional integration," President of Botswana and new SADC
chairman Festus Mogae said at the opening ceremony.
Mogae took over the helm of the 25-year-old regional
bloc from Navinchandra Ramgoolam, newly-elected Prime Minister of
Mauritius. Mogae urged regional leaders to demonstrate their determination
through practical action to end poverty and underdevelopment that
have plagued the region of 200 million people for decades.
He emphasized the importance to avert looming
food crisis in the region, appealing for immediate food assistance
from international community. "This summit is taking place
at a time when most of the region is facing a devastating drought,
which has resulted in low crop yields and a deficit of cereals,"
he said. "This is a harsh reality we have to collectively confront.
Otherwise we shall be caught in a never ending vicious cycle,"
he observed.
(China View, 18.08.05)
