Doing Better Business.

[BigMan]

I gotta learn more Ethiopian history

 

[The Odum of Ala Igbo]

I really wish our people did not have to rely on commodities and foreign investment. I say take these crackers bluff and push this referendum


@MansaMusa really like what Ethiopia is doing. I wonder how long it'll take on a timeline to have a majority middle class? The continent needs a consumer class anchor badly.

Ethiopia really needs to curb it's fertility rate to 3 children per woman. If that's done, I can see Ethiopia having an 'okay' consumer class by 2060 or so. There'll be a lot of Ethiopian though.

 

[The Odum of Ala Igbo]

This is something Haiti has been trying to do for a while. Haiti ultimately is an agricultural economy although there has been attempts to bring factories with some limited sucess. I hope Ethiopia succeeds so we can learn how to have a successful agricultural base.

Haiti could easily be a manufacturing hub for the Caribbean and the Americas. However, there's no point in the Haitian gov't sanctioning that economic activity if it doesn't:
a) Create livable wages for Haitian workers
b) Bringing in enough foreign credit
c) Isn't aiding domestic Haitian producers gain access to marketing, technology and best practices
d) Creating partnerships with Haitian textile businesses/making these foreign producers source primary and manufactured products for the fabrication of clothing from Haiti itself. Whether it be cotton, dyes or synthetic fibres that could be also manufactured.

 

[BigMan]

Haiti could easily be a manufacturing hub for the Caribbean and the Americas. However, there's no point in the Haitian gov't sanctioning that economic activity if it doesn't:
a) Create livable wages for Haitian workers
b) Bringing in enough foreign credit
c) Isn't aiding domestic Haitian producers gain access to marketing, technology and best practices
d) Creating partnerships with Haitian textile businesses/making these foreign producers source primary and manufactured products for the fabrication of clothing from Haiti itself. Whether it be cotton, dyes or synthetic fibres that could be also manufactured.

I see Mexico, Colombia, DR and T&T as manufacturing hubs in the Caribbean

 

[The Odum of Ala Igbo]

I see Mexico, Colombia, DR and T&T as manufacturing hubs in the Caribbean

Yes, I do too. Haiti can get there, but its leaders need freedom from US hegemony AND vision

 

[BigMan]

Yes, I do too. Haiti can get there, but its leaders need freedom from US hegemony AND vision

I just don't see it happening u less a true revolution/war occurs

 

[The Odum of Ala Igbo]

Lessons from Kenya’s New, Chinese-funded Railway


20 June 2017

Rebekka Rumpel

Research Assistant, Africa Programme
Despite cost concerns, Kenya’s deal shows that infrastructure agreements with China can be made fairer for citizens of partner countries. Its neighbours should take note.

On 31 May, Kenya’s president, Uhuru Kenyatta, and his election campaign team descended on Mombasa for the inauguration of Kenya’s Standard Gauge Railway (SGR). The SGR is Kenya’s biggest infrastructure project since independence, and its first new railway since Britain opened East Africa to imperial control with the completion of the 'lunatic line' in 1901.

Kenyatta is in the midst of his campaign to secure a second term as president, and hopes the opening of the railway will substantiate his core message to voters: that he has improved the country’s infrastructure and economy. However, the high cost of the project – at a time of spiralling food prices – has clouded the SGR’s grand unveiling. A huge sum is now owed to China, which funded 85 per cent of the SGR’s construction. This represents Kenya’s biggest ever loan, equivalent to 6 per cent of GDP.

The elections on 8 August will reveal whether Kenyatta retains sufficient popularity among Kenyans who are not feeling the benefits of headline national growth to stay in power. But whether the partnership with China can deliver sustainable development will be much harder to determine, and is a question that will shape Kenyan politics for many years to come.

Construction work on the Mombasa–Nairobi SGR began in November 2013 and was completed 18 months ahead of schedule. The government has promised that the railway will bring a number of benefits: reducing transport costs and times by over 60 per cent; carrying ten times more of the cargo unloaded at Mombasa port than the current trains, thereby relieving congested roads; and offering freight costs more than 30 per cent below the prices charged by truck operators.

The $3.8 billion contract to fund the project was signed between the China Road and Bridge Corporation and the government of Kenya in May 2014, under the auspices of China’s immense Belt and Road Initiative. While the minister for transport has declared that the resulting debt could be repaid in four years, this is likely to prove optimistic. Growth forecasts were recently lowered, as the effects of the country’s worst drought in 30 years make themselves felt.

Ordinary Kenyans struggling with high food prices and a shortage of maize flour, the national staple, have therefore not responded to the unveiling of the SGR as enthusiastically as Kenyatta may have hoped. Less than two months before the election, his campaign team will be worrying that voters resent the divergence between Kenyatta’s narrative of a thriving country, fuelled by projects such as the SGR, and their own difficult realities. A number of commentators, both in the press and on social media, have reacted angrily to the cost of the project, which was four times as high as originally estimated, and expressed alarm over the country’s debt burden. Unfavourable comparisons have also been drawn with the SGR linking Djibouti and Ethiopia, which was launched in October 2016. Despite a lower cost of $3.4 billion (80 per cent funded by China’s Exim Bank), the Djibouti–Ethiopia railway is electrified – whereas Kenya’s trains are diesel-powered - and is over 250 kilometres longer than the Nairobi–Mombasa line.

While Kenya’s mounting indebtedness to China is concerning, its SGR deal actually provides a stronger model for sustainable development through partnering with China than Ethiopia’s agreement. At every stage of the process - from the negotiations with China’s Exim Bank (led by Kenyatta himself), to the procurement of construction materials, the compensation of affected landowners, and the implementation of work in Tsavo and Nairobi National Parks – Kenyan organisations and citizens have made their voices heard to secure a better outcome.

All cement for the SGR was supplied by Kenyan businesses; railway cars were made in Kenya; over 25,000 Kenyans were employed and trained; 33 crossing stations, as well as bridges and tunnels, were added to reduce the impact on wildlife; and the National Land Commission had to double its budget for compensation. Many of these issues also proved controversial, particularly land value estimates, working conditions for Kenyan employees, and the stretches of track laid in areas with high levels of biodiversity. Nevertheless, Kenya’s practices compare well to Ethiopia’s, which did not consult with those affected by its railway or offer compensation for the displaced (a frequent flashpoint in the country), provided only 18 wildlife crossings, ensured the employment of one-fifth fewer Ethiopian workers, and has a service being run by Chinese staff until 2021. Kenya’s SGR deal shows that agreements with China can be made fairer for citizens of partner countries.

The next Kenyan government must ensure that it pushes for guarantees on labour rights, more local content, greater procurement transparency, and stronger dialogues with stakeholders in the extension of the SGR to Uganda and Rwanda. Kenya is the second most unequal country in East Africa, and much of the population is becoming increasingly frustrated with growth and grand projects whose benefits do not seem to reach them. Better deals with China will need to play a part in tackling this. Neighbouring Rwanda and Uganda are weighing up their own SGR deals with China and should consider the lessons from Kenya’s and Ethiopia’s experiences.

- See more at: Lessons from Kenya’s New, Chinese-funded Railway

 

[The Odum of Ala Igbo]

1) The railway line was needed between Nairobi and Mombasa
2) The project's financial costs will be mitigated within 10-15 - most likely. That's great news
3) Why the diesel and not electric train, in comparison to Ethiopia's rail line to Djibouti? I think the article is making a bigger stink of this than necessary. Most cargo trains are diesel run, I think.
4) Appears to be a better deal than what Ethiopia got. Plus, there was a lot more local value-added production in the project. Good job, Kenyatta!
5) Still, the benefits for the average Kenyan won't be noticeable. Bread and butter issues are more important that a train. A good leader with visions knows that he/she must do both in order to succeed.

 

[The Odum of Ala Igbo]

Nigeria's fiscal and monetary policy fall apart when it hits reality
Who will finance the budget?

After all the unnecessary political drama, the budget has finally been signed. According to reports, a spending plan of N7.44tn was approved, with proposed capital expenditure of about N2.18tn, non-debt recurrent expenditure of N2.99tn and debt servicing of N1.84tn. Plus, a few other line items. Let the spending begin. It is not clear what the expected revenue in the approved budget is, but the proposal had revenue expectations of N4.94tn. If it’s the same in the approved budget then the deficit is expected to be about N2.5tn. This would be a record deficit, beating last year’s deficit expectation of N2.2tn which was also a record.

If you crunch the numbers you can already see a problem. The federal government is continuing the trend of spending way more than it generates. A popular phrase during the last election was “We are borrowing to pay salaries.” That, unfortunately, is still the same with this year’s budget. To demonstrate, if you deduct the expected debt servicing costs and other statutory transfers from the expected revenue, you are left with a number that is significantly less that non-debt recurrent expenditure. In plain English, we are essentially still borrowing to pay salaries.

Unfortunate as all that is, it is not even half of the story. For a while now, and certainly, since about 2014, the revenue expectations in the budget have been very optimistic. The 2014 budget projected revenues of N6.2tn but actual revenue was N5.5tn. The 2015 budget projected revenues of N5.6tn but actual revenue was N3.99tn. The 2016 budget projected revenues of N4.6tn but actual revenue was N2.9tn. In short, not only have we been planning record deficits, but we have also been overestimating expected revenue, meaning the record deficits were even larger than the record deficits we projected. This is of course, assuming the budgets were fully implemented.

Our struggle to raise external financing in 2016 was well documented. After spending months jumping from one bilateral partner to the other, and from one multilateral agency to the other we finally raised some money from the AFDB, the World Bank, and the much-delayed Eurobond. The domestic borrowing plans were expectedly more successful but came at the cost of crowding out the private sector, and with higher interest rates. However, if we have been overestimating revenue, and therefore running larger deficits than expected in the budget, how have we been financing the revenue shortfalls?

Data from the central bank shines a light on what continues to be a very worrying trend. Between December 2013, and April 2017, claims on the federal government by the central bank have risen from about N678bn to N6.5tn. That is trillion with a ‘T’. These numbers have been driven by overdrafts granted to the federal government by the central bank which stood at N2.76tn as at April and converted bonds which stood at N1.7tn also as at April. The central bank has been effectively financing part of the federal government by fiat. Or to put it bluntly, we moved from borrowing money to pay salaries, to effectively printing money to pay salaries.There was a bit of noise made about this late last year, but since December 2016 and April 2017 credit to the federal government increased from N5tn to N6.5tn, a whopping 30 percent increase in four months! Obviously, the noise was not loud enough.

The Central bank financing of the federal government is rather worrying given the consequences. Credit to the federal government implies an expansion in money supply which theoretically leads to either higher inflation, or higher interest rates, or both. Given that inflation is still high at around at 16.25 percent, and interest rates for the most credit worthy borrowers are north of 17 percent, and up to 30 percent for others, you have to wonder how long the central bank can keep up its financing of the federal government before things start to get out of control.

Monetary policy spiralling out of control, as it did in Zimbabwe and is currently doing in Venezuela, always starts slowly but very quickly descends into chaos. Hyperinflation and currency collapse are not things that Nigeria is immune to. The question for policy makers is, how much longer can we pretend the underhand financing of the federal government by the central bank is not a problem? The root of the issue however is that we still have a federal government that is spending much more than it’s taking in. A federal government that seems unable to bring its spending under control, and a political system that urges it on. If the current trajectory continues then the future is very worrying.

- Nigeria is borrowing to pay salaries. They're borrowing to pay recurrent expenditures. Not even capital expenditure.
- They're also, effectively, printing money to pay salaries. This will expand the money supply and create even more inflation.
- The Central Bank of Nigeria is keeping the gov't afloat.
- This will make life harder for Nigeria's poor, state/federal budgets and eventually Nigeria's ability to borrow from abroad.

 

[Poitier]

What sites are you using for news? @MansaMusa

 

[The Odum of Ala Igbo]

What sites are you using for news? @MansaMusa

African/Africa commentary news sites

 

[Poitier]

African/Africa commentary news sites

links....... i want to see if im missing anything

 

[The Odum of Ala Igbo]

links....... i want to see if im missing anything

Will post links tomorrow! Visiting Montreal

 

[The Odum of Ala Igbo]

links....... i want to see if im missing anything

Howard French is a black journalist who did a lot of work in Africa and in China - Howard French (@hofrench) on Twitter
This blog monitors Nigeria's war against Boko Haram. Occasionally they publish tactical/strategy pieces on the conflict - Vox Peccavi
Nigerian think-tank. Publishes long pieces for free - SBM Intel
London run think-tank. They occasionally provide 'okay' information, but they have an obvious agenda - Africa
This guy's twitter has good updates on the DRC. Has an anti-Kabila bias, which I like - Jason Stearns (@jasonkstearns) | Twitter

 

[The Odum of Ala Igbo]

Feature: Chinese companies powering Ethiopia's ambition to become Africa's manufacturing hub - Xinhua | English.news.cn

Feature: Chinese companies powering Ethiopia's ambition to become Africa's manufacturing hub

Source: Xinhua | 2017-06-20 19:07:14 | Editor: huaxia

Workers go about their work at a construction site in Hawassa, Ethiopia, Feb. 3, 2016. The Hawassa Industrial Park is being built by China Civil Engineering Corporation (CCECC) with a focus on garment manufacture and agro-industry.The park is located 280 km south of the Ethiopian Capital Addis Ababa at the out skirts of the Southern Nations Nationalities and Peoples Region (SNNP) capital Hawassa. (Xinhua /Michael Tewelde)

ADDIS ABABA, June 20 (Xinhua) -- As part of its vision to become the manufacturing hub of Africa, Ethiopia is set to inaugurate the first phase of its flagship Chinese-built Hawassa Industrial Park.

The industrial park is said to be the first Sustainable Textile and Apparel Industrial park in the African continent with state-of-the-art infrastructural capacity.

It is one of the many projects in Ethiopia commissioned by Chinese companies that are engaged in various activities ranging from building industrial parks, setting up factories, constructing railway and other infrastructures.

Built by China Civil Engineering Corporation (CCECC), the Hawassa industrial park located in Hawassa city some 275 km south of the capital Addis Ababa was initially completed in a record time of nine months back in July 2016.

Arkebe Oqubay, Special Advisor to the Ethiopian Prime Minster, speaking in connection with the inaugural ceremony to be held on Tuesday, said that the park would be considered as a model for other industrial parks under construction in the east African country.

He said that the development of sustainable, world class specialized, export-driven and competitive industrial parks is the major target of Ethiopia so as to realize its vision towards economic development and become the manufacturing hub of the African continent.

In addition to the Hawassa industrial park, the east African country has further embarked on the development of similar other industrial zones in Kombolcha, Mekele, Kilinto, Bole Lemmi II, Dire Dawa and Adama among others, of which Mekele and Kombolcha industrial parks to be inaugurated soon.

The Ethiopian government has planned to construct 10 industrial parks across the country aiming at enhancing job opportunities, earning revenue and promoting technology transfer, while majority of the parks are under construction or constructed by Chinese companies.

CCECC, in addition to the Hawassa Industrial Park, is already constructing another industrial park in Adama city, the capital of Oromia regional state, located 99 km southeast of Addis Ababa.

The company has also recently signed a contract agreement to build industrial park in the resort city of Bahir Dar, some 552 km north of Ethiopian capital Addis Ababa, at a cost of 60 million dollars.

A construction worker is seen at the Arerti Industrial Park, Ethiopia, March 23, 2017. The industrial park is being built by the China Communications Construction Company (CCCC). (Xinhua/Michael Tewelde)

Li Wuliang, general manager of CCECC Ethiopia, during the signing ceremony this month, affirmed that the company will strive to finish the 75-hectare Bahir Dar industrial park, which is expected to host eight factory sheds and basic infrastructure utilities, within the agreed nine-month period.

Designed and being built by another Chinese company, China Communications Construction Company (CCCC), Arerti Industrial Park located some 140 km east of the capital city Addis Ababa, is another hope of Ethiopia in its quest to become Africa's manufacturing sector excellence.

Woody Lau, Business Manager at CCCC, has recently told Xinhua that Arerti Industrial Park is expected to employ about 400 persons when the first phase incorporating a ceramic plant is finished at a cost of tens of millions of U.S. dollars.

CCCC is not new to building projects that have had strategic changes to Ethiopia, with its trademark Addis Ababa-Adama expressway, Ethiopia's first toll road, inaugurated in April 2014.

Africa's second most populous nation, with a mostly young population of about 100 million, is presently betting on investments in industrial parks to meet the demands of job market and keep the nation stable and prosperous, while the contribution from Chinese companies is massive and highly visible across the country.