Essential The Africa the Media Doesn't Tell You About

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Tanzania Says Economy Will Expand by a Fifth After GDP Rebasing
By Alawi Masare Jun 23, 2014 8:50 AM ET

Tanzania’s government expects the size of the economy to increase by 20 percent after rebasing the country’s gross domestic product data to factor in expanding industries such as mining and natural gas.

The revised figures will be released in September, Daniel Masolwa, a manager at Tanzania’s National Bureau of Statistics, said in an interview June 21 in Morogoro, about 170 kilometers (106 miles) west of the commercial hub of Dar es Salaam. The base year for computing economic output will be changed to 2007 from 2001, Masolwa said today in a text message.

Mining accounts for just 4 percent of Tanzania’s GDP even though the nation is Africa’s fourth-largest gold producer, with miners including Africa Barrick Gold Plc (ABG) exporting the metal. It also has the only known deposit of the gemstone tanzanite at the foot of Mount Kilimanjaro.

Tanzania, which has natural-gas reserves estimated at 50.5 trillion cubic feet, is building a pipeline and plans to develop a liquefied-natural gas plant to become an exporter of the fuel. It already produces gas for domestic consumption.

Other African nations are recalculating their GDP figures, including Nigeria, which this year overtookSouth Africa as the continent’s biggest economy after the rebasing process. Kenya also expects the size of its economy to grow after updating GDP figures that are scheduled to be announced in September.

Tanzania’s 53.2 trillion-shilling ($32 billion) economy relies on agriculture to generate a quarter of its output and 85 percent of exports, according to the United Nations.

To contact the reporter on this story: Alawi Masare in Dar es Salaam at amasare@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Sarah McGregor, Paul Richardson

 

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In search of the African middle class
Economists are fond of saying that one in three Africans are now middle class. But who are they talking about

Businesses are being tempted by notions of the 'new African consumer', eager to loosen their purse strings. Photograph: Per-Anders Pettersson/Getty Images
"Africa Rising" stories have become old news in English-speaking media, so much so that Africa is a Country called them a meme not long ago. But only a few have run in French news outlets, and one such op-ed [fr] recently made it to Le Monde. The piece has a specific flavour for a couple of reasons: a condescending and prescriptive tone, also known as the Françafrique touch, as its title trumpeting that "Africa is on the right tracks" (L'Afrique est bien partie) makes clear; an emphasis on the rise of the "African middle class", portrayed as the cornerstone of the "African economic revolution", whose origins are to be found in "diversifying and emancipating economies", enabling "endogenous growth" that is free of the "dependency on raw materials exports" because it is "driven by consumption". Such a nice Cinderella story! Who would guess that a little over a decade ago Africa was mostly described as "the hopeless continent"?

Cape of Good Hope
This rosy picture can be traced back to the strategic briefs and equity research notes published from 2010 onwards by Boston Consulting Group, McKinsey, Goldman Sachs (pdf) or Deloitte (pdf), advertising "the new African consumer", finally in a position to spend some cash in brand new supermarkets. In a time when growth rates of industrialised countries stutter and when the Chinese and Indian engines of the global economy are somewhat slowing down, financial analysts and investment consultants can't get enough of the one thing that they have dismissed for so long: Africa.

"That's where the flavour is," said Thabo Ncalo recently, manager of the Africa fund for investment group Stanlib, "the frontier markets," like Côte d'Ivoire, Nigeria or Rwanda. Close your eyes and let your imagination do the rest: hundreds of millions of purses loosening their strings.

Of course it's difficult to sell such a vision if "Africa" remains associated with deadly conflicts, food crises and looming poverty. Thus baiting scaredy-cat investors and lobbying the media with the "African middle class" is downright genius: there's enough actual change taking place all over the continent to make the notion look respectable, and it remains vague enough to accommodate any expectation and get traction across the board. This is where development organisations, in their quest for better aid efficiency and alternatives to aid, join forces with investors. But despite the evidence piling up of how misleading it can be, change in African countries continues to be examined through its reflection in western mirrors rather than for itself – and "the rise and rise of the African middle class," as Deloitte called it, is no exception.

Despite evidence of how misleading it can be, change in African countries continues to be examined through its reflection in western mirrors. Photograph: Kim Ludbrook/EPA
In April 2011 The Africa Bank of Development released a market brief on"The Middle of the Pyramid: Dynamics of the African Middle Class" (pdf). Since then the estimated number of middle class Africans has been arbitrarily set at 350 million, sometimes delivered as the more dramatic soundbite "one in three Africans". The bank goes on to explain that, given their higher revenues from salaried jobs or small business ownership, and the ensuing economic security, "Africa's emerging consumers are likely to assume the traditional role of the US and European middle classes as global consumers".

The chief economist and vice president of the bank at the time, Mthuli Ncube, gave it straight to CNN: "it's a call to say 'look, please invest in Africa'". Sure enough, if the new is made to look like the old, it gains the reassuring quality of being just the same. In that respect, the "African middle class" is a means to an end, a programmatic concept: rationalise to normalise, normalise to legitimise.

'Growing pains'
To call such a construct fragile is an understatement. The Africa Bank of Development defines "middle class" as those spending between $2 and $20 per day. By its own admission though, about 60% of those only spend between $2 and $4 per day and remain in what the bank calls a "floating class", a vulnerable position "barely out of the poor category" with "the constant possibility of dropping back in the event of any exogenous shocks". It seems indeed that trying to recognise the American "service class" or the European petite bourgeoisie in today's African societies only goes so far.

This prompted Thandika Mkandawire, professor of African development at the London School of Economics, to label the bank's version of a middle class a "stretch concept". Also sobering is the geographical dispersion of this middle class: most of the African upper middle class (spending $10-$20 per day) lives in north Africa, which does not bode well with all the talk of frontier markets stimulated by a new white collar generation south of the Sahara.

The interesting thing about the sub-classes is their evolution and what that says about socio-economic dynamics. A growing number of Africans are indeed lifting themselves out of poverty but, contrary to the African economic revolution narrative, this is not happening overnight. Sixty-one percent of Africans still live below the $2 poverty line according to the Africa Bank of Development. Equally important is the fact that very few seem to transition from the "floating class" to actual middle class territory. In fact, the share of the three top brackets has remained almost identical over the last four decades.

This is crucial to discussing African middle classes: the gap between the floating class and the lower middle class is much wider than it looks on paper. In December 2011, the Agence Française de Développementreleased the results of several country-level studies on middle class(es) in Africa [fr] (pdf). "I place myself in the middle," said a respondent in Kenya, "but there is a big gap between us and the rich… We can consider ourselves as members of the middle class, we are strugglers, because we have to manage to get what we want."

There's enough actual change taking place all over the continent to make the notion of a burgeoning middle class look respectable. Photograph: Mort Rosenblum/AP
Sure, six of the 10 fastest-growing economies are African, but seven of the 10 most unequal countries in terms of income distribution are too. Among them, the still-number-one economy of the continent: South Africa, where the unemployment rate is close to 25%. Poster boy Nigeria is not that different: hailed for its top growth and diversifying economy – the latter in no small part due to billionaire Aliko Dangote's growing empire – it is also fast becoming the country where the super-rich fly out their lunchwhile the rest of the Nigerians are stuck in slow-motion traffic.

In Angola, where dazzling economic growth is making investors weak at the knees after three decades of an on-and-off civil war, the China International Trust and Investment Company built an entire city outside of Luanda specifically aimed at the middle class. It has 750 eight-storey apartment blocks intended to house 500,000 people, and yet, as Louise Redvers reported last year, only a few thousands live there: the development is too expensive for the vast majority of Angolans, but not nearly enough for the minority who can actually afford it.

As Jumoke Balogun from CompareAfrica bluntly put it the view from the ground is that Africa is rising and Africans are not.

Middle of the road
The World Bank has put together its own concept of "global middle class," academics have offered alternative income brackets to better represent the middle class of developing countries and insightful comparisons have been made with the Chinese notion of "little prosperity" (xiaokang<). Andy Sumner, the economist made famous by his New Bottom Billion charge against Paul Collier, has also put forward the interesting concept of "catalyst class". Yet few seem in a hurry of answering what "African middle class" means beyond fine-tuning its mathematical formula.

But making middle class a development-approved equivalent of middle-income group dismisses the socio-political discussion of class almost entirely. By which I do not mean the faith inherited from Tocqueville that a burgeoning middle class will necessarily put African societies on to the path of democracy – according to the 80′s mantra, was that not the job of the "elites"?; in the 90′s, that of the "civil society"? – but instead the ever-evolving process of its own formation. But fixated on wealth, the discussion on middle classes in Africa misses out on the other two pillars of social stratification: social status and political power.

As soon as those two are factored in, discussing the "African middle class" as a homogenous entity seems absurd, and so it should. Thinking that what separates the senior civil servant from the street hawker or the country head of a multinational from the shop owner is a matter of daily expenditure amounts to looking at their reality through the wrong end of the telescope: the bigger picture is that they live in different worlds. And similar daily expenditure of middle class Ghanaians and middle class South Africans do not guarantee that they long for the same things either.

 

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It's difficult to tempt investors if 'Africa' remains associated with deadly conflicts, food crises and looming poverty. Photograph: Alamy
For here lies the rub: the material culture that the notion of "middle class" posits as shared consciousness is articulated to a strong sense of individualism, which is borderline contradictory with the idea of class. All the more reasons for the analysis to consider the representations which members have of themselves as a group and the historical context in which such groups are being shaped.

The infamous South African "Black Diamonds" are a testament to this prerequisite. Emerging from the ANC's affirmative action policy of Black Economic Empowerment in post-apartheid South Africa, they initially, if briefly, represented success and hope for black people formerly oppressed as an underclass. Yet the name, acquired through their involvement in gold and diamond mining, has since then become a symbol of personal greed in the eye of most South Africans and a derogatory term after it became associated with the new ruling class.

Out with the old, in with the new
Freed from its prescriptive shackles, the middle class framework could however prove beneficial to cut through some of the more polarized categories of analysis: formal and informal sectors, legal and illegal activities or public and private sectors. Many of the "neither-poor-nor-rich" Africans work multiple jobs across those categories. Local NGO staffers in Dakar have sheep on the terrace of their houses to fatten and sell. Shop owners in Conakry and Ouagadougou own small plots of land outside the city that they farm in their spare time. Primary school teachers in Nairobi give as much private lessons outside school as they teach inside their classroom.

They have cellphones and email addresses but many can't afford health insurance. They own a car but sometimes need to save for weeks to have it fixed. They speak multiple languages but fear they won't be able to pay for their children's education. They want a better life but don't know that it will come to pass. Whatever bracket they fall into, these are the people who represent the bulk of African middle classes. They are not preoccupied with a trip to the mall on Sundays, their gaze is fixed on the horizon: the next year and beyond.

Another assumption obscures our vision of African middle classes. Because the notion of class is so intertwined in western national trajectories, little effort is made to discuss today's African middle classes past the nation-state framework, as if all middle-class Cameroonians lived in Cameroon for example. But they are coming of age in a context of greater international connectedness, and evidence shows that the people most susceptible to be international migrants are neither the poorest – who can't afford it – nor the richest – who have already "made it" – but those in between.

But by fixating on wealth, the discussion misses out on the other two pillars of social stratification: social status and political power. Photograph: Nic Bothma/EPA
Contrary to popular opinion, the number one destination of African international migrants are the 53 other African countries beside their own, not the west. Can it be said that African middle classes are born, to some extent, through migration journeys?

Think of the Burkinabe plantation workers in Côte d'Ivoire, whose capital on return is as much the money they saved as the fancy music they bring back, and whose prestige of "having done the Côte" (avoir fait la Côte) establishes them in a stratum of their own, the diaspos. Or the Congolese studying in Dakar and Saint Louis universities, where they rely on small jobs and family support to make ends meet; later learning their trade inMorocco, earning their first paychecks and finally returning to Brazzaville to get the rare, well-paid jobs that their migratory credentials assure.

Somalia's president, Hassan Sheikh Mohamud, is the symbol of such middle class success through step migration: from the agricultural town of Jalaqasi to Mogadishu, to Bhopal, India for education, back to Somalia where he worked for NGOs and UN organisations, ultimately co-founding the Peace and Development Party in 2011 before being elected president in September 2012.

That's not to mention the tens of thousands of teachers, nurses and entrepreneurs hidden among the millions of refugees across the continent: are they still middle class Africans? Will they ever be again? What do they consider themselves in the mean time? Then there are those living outside the continent, involving themselves in their homeland's economic and political affairs, either individually or as diasporas: should the economic position, social status and political engagement of their members be assessed in the eye of their host country, their home country or both? And what about non-African immigrants: the senior French citizens retiring in Morocco and Tunisia [fr],the Portuguese fleeing unemployment in Angola and Mozambique or the Chinese setting up shop in Lesotho, are those new kinds of middle classes in Africa too?

Many more questions like these remain to be asked and so many of those deserve better answers than "the African middle class" wrapped in a bow and delivered to our doorstep courtesy of norm entrepreneurs and Money Incorporated. At the bottom of the pyramid are those on whom narratives are imposed and who have limited means to resist; at the top are those who have decided on their narrative and are writing their memoirs already; and in between is where the action is, where narratives overlap, clash or fuse because Africans are playing the field unencumbered by the nay-sayers or the yay-sayers. There is much to be learned about that life; and who better to tell these stories of in-betweenness than members of the middle classes themselves, African journalists, artists, bloggers and academics?

 

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Ethiopia Becomes China’s China in Global Search for Cheap Labor
By Kevin Hamlin, Ilya Gridneff and William Davison Jul 22, 2014 5:01 PM ET

July 23 (Bloomberg) –- China's making big strides into Africa. Bloomberg's Ilya Gridneff heard about a Chinese shoe manufacturer that set up shop in Ethiopia. He went to check it out.
Ethiopian workers strolling through the parking lot of Huajian Shoes’ factory outside Addis Ababa last month chose the wrong day to leave their shirts untucked.

Company President Zhang Huarong, just arrived on a visit from China, spotted them through the window, sprang up and ran outside. The former People’s Liberation Army soldier harangued them loudly in Chinese, tugging at one man’s aqua polo shirt and forcing another’s shirt into his pants. Nonplussed, the workers stood silently until the eruption subsided.

Shaping up a handful of employees is one small part of Zhang’s quest to profit from Huajian’s factory wages of about $40 a month -– less than 10 percent the level in China.

“Ethiopia is exactly like China 30 years ago,” said Zhang, 55, who quit the military in 1982 to make shoes from his home in Jiangxi province with three sewing machines and now supplies such brands as Nine West and Guess?. “The poor transportation infrastructure, lots of jobless people.”

Almost three years after Zhang began his Ethiopian adventure at the invitation of the late Prime MinisterMeles Zenawi, he says he’s unhappy with profits at the Dongguan Huajian Shoes Industry Co. unit, frustrated by “widespread inefficiency” in the local bureaucracy and struggling to raise factory productivity from a level he says is about a third of China’s.


Photographer: Ilya Gridneff/Bloomberg
Ethiopian employees work inside the Huajian Shoes' factory outside Addis Ababa.

Four Tongues
Transportation and logistics that cost as much as four times those in China are prompting Huajian to set up its own trucking company. And the use of four languages in the plant -- Ethiopia’s national language, Amharic; the local tongue, Oromo; English and Chinese -- further complicates operations, Zhang says.

It takes two hours to drive 30 kilometers (18 miles) to the Huajian factory from the capital along the country’s main artery, illustrating the challenges. Oil tankers and trucks scream along the bumpy, potholed and, at times, unpaved road. Goats, donkeys and cows wander along the roadside and occasionally into bumper-to-bumper traffic. Minibuses and dented taxis, mostly blue Ladas from the country’s past as a Soviet ally, weave through oncoming traffic coughing a smoggy exhaust.

Huajian is nonetheless becoming a case study of Ethiopia’s emerging potential as a production center for labor-intensive products from shoes to T-shirts to handbags. In a country where 80 percent of the labor force is in agriculture, manufacturers don’t have to worry about finding new workers. Its population of about 96 million is Africa’s second-largest after Nigeria’s.


Photographer: Ilya Gridneff/Bloomberg
Chinese and Ethiopian work supervisors stand for inspection by their President Zhang... Read More

Seeking Investment
A combination of cheap labor and electricity and a government striving to attract foreign investment makes Ethiopia more attractive than many other African nations, saidDeborah Brautigam, author of “The Dragon’s Gift: The Real Story of China in Africa” and a professor of international development and comparative politics at Johns Hopkins University’s School of Advanced International Studies in Washington.

“They are trying to establish conditions for transformation,” Brautigam said in a telephone interview. “It could become the China of Africa.”

Huajian’s 3,500 workers in Ethiopia produced 2 million pairs of shoes last year. Located in one of the country’s first government-supported industrial zones, the factory began operating in January 2012, only three months after Zhang decided to invest. It became profitable in its first year and now earns $100,000 to $200,000 a month, he said, calling it an insufficient return that will rise as workers become better trained.

Fleeing China
Under bright fluorescent lights, amid the drone of machines, workers cut, glue, stitch and sew Marc Fisher brown leather boots bound for the U.S. Meanwhile, supervisors monitor quotas on whiteboards, giving small cash rewards to winning teams and criticism to those falling short.

 

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Photographer: Ilya Gridneff/Bloomberg
Huajian Chairman Zhang Huarong said, “Ethiopia is exactly like China 30 years ago.”

China, Africa and global retailers all have stakes in whether Ethiopia and such countries as Tanzania, Rwanda and Senegal become viable production bases for labor-intensive products. Promoting trade, boosting employment and spurring investment are among the topics that will be discussed on August 4-6 at the first White House U.S.-Africa Leaders Summit in Washington.

African nations have a compelling opportunity to seize a share of the about 80 million jobs that China will export as its manufacturers lose competitiveness, according to Justin Lin, a former World Bank chief economist who now is a professor of economics at Peking University.

‘Manufacturing Powerhouse’
Chinese Premier Li Keqiang and Ethiopian Prime Minister Hailemariam Desalegn, who met on May 4, backed the move of Chinese industries to Ethiopia. China is “supporting Ethiopia’s great vision to become Africa’s manufacturing powerhouse,” Hailemariam told reporters at a joint press conference in Addis Ababa.

Weaker consumer spending in the U.S. and Europe after the financial crisis prompted global retailers to hasten their search for lower-cost producers, said Helen Hai, head of China Africa Consulting Ltd. in Addis Ababa. She ran Huajian’s Ethiopia factory until July of last year.

While China’s inland regions offered manufacturers a cheaper alternative to the export-linked coastal areas, rising costs and a limited pool of available workers now are undermining that appeal.

Average factory pay in Henan, about 800 kilometers from the coast, rose 103 percent in the five years ended in September and 80 percent in Chongqing, 1,700 kilometers up the Yangtze River. In the same period, salaries rose 82.5 percent in Guangdong, where Huajian has its base in the city of Dongguan.

‘Great Potential’
Cost inflation in countries including China has prompted Hennes & Mauritz AB, Europe’s second-biggest clothing retailer, to work with three suppliers in Ethiopia. The nation has “great potential” for production, H&M head of sustainability Helma Helmersson said in an April interview.

China’s average manufacturing wage is 3,469 yuan ($560) per month. Pay at the Huajian factory ranges from the basic after-tax minimum of $30 a month to about twice that for supervisors. By contrast, average manufacturing wages in South Africa, Africa’s biggest manufacturer, are about $1,200.

The duty-free and quota-free access that Sub-Saharan Africa enjoys for the U.S. and EU markets gives additional savings thanks to the African Growth and Opportunity Act for the U.S. and the EU’sEverything But Arms accord for the poorest countries. Import tariffs on shoes made in China range from 6 percent to as much as 36 percent, Zhang said.

Past-Future Business
A spokeswoman for Guess? confirmed that a licensee has done business with the Huajian Ethiopia factory in the past and may do so in the future.

A spokesman for Sycamore Partners, which owns Nine West, declined to comment on its business relationships and whether it has a relationship with Dongguan Huajian Shoes Industry Co. Marc Fisher Footwear is making shoes in the Ethiopia factory, Jaclyn Weissman, a spokeswoman for the company, wrote in an e-mail.

Signs of Ethiopia’s allure include factories outside Addis Ababa set up by leather goods maker Pittards Plc of the U.K. and Turkish textile manufacturer Ayka Tekstil. Foreign direct investment in the nation surged almost 250 percent to $953 million last year from the year before, according to estimates by the United Nations Conference on Trade and Development.

Zhang spends about half his time in Ethiopia, he says. During the visit last month, he spoke to about 200 uniformed Huajian supervisors, a mix of Ethiopians and Chinese, gathered in the parking lot. A giant plasma screen mirrored the crowd as Zhang hurried onto the stage.

Chant, March
He berated those assembled for a lack of efficiency, then praised them for their loyalty to Huajian, his words translated into Amharic and Oromo. He ordered them to march on the spot, to turn left and to turn right, all chanting together in Chinese.

“One two one,” they chanted. “One two three four,” as they marched in step. Slogans followed: “Unite as one.” “Improvement together.” “Civilized and efficient.”

They sang the “Song of Huajian,” whose words urged “We Huajian people” to bravely move forward, to hold the banner of Huajian high and to “keep our business forever.” Chinese supervisors led the song, their Ethiopian colleagues stumbling over some words and struggling to keep up.

Later, Zhang explained that he can’t be as tough on the staff as he would like.

“Here the management cannot be too strong as there will be a problem with the culture,” he said via a translator. “In China you can be strong, but not here. The conditions here mean we have to show respect. On one hand we have to have strict requirements; on the other hand we have to take care of them. They have their own dignity. They may be poor but we have to respect their dignity.”

Labor Demands
About 200 of the workers rebelled in early 2013, going on strike for two days after demanding a share of profits following a period in which Huajian’s orders surged, said Hai. The incident was resolved with the help of Ethiopian labor officials, she said.

Five workers interviewed at the factory on July 10 described a workplace of strict standards, with rewards for good results and penalties such as docked pay for ruined shoes.

Taddelech Teshome, 24, said her day starts at 7:20 a.m. after her Chinese employers provide employees with a breakfast of bread and tea. When her morning shift ferrying shoes from the factory floor to the warehouse is over, she gets fed the national staple, sour bread, for lunch. After work, a Huajian bus takes her to nearby Debre Zeit, a town where she rents a room with her sister for $18 a month.

Following Sister
She came to Huajian just over a year ago from her home 165 kilometers away in Arsi region after her sister started at the factory.

“The work is good because I pay my rent and I can look after myself,” she said, wearing an aqua Huajian polo shirt. “It’s transformed my life.” Taddelech said she wants to work for two more years at the plant and become a supervisor. She eventually aspires to build her own house.

With inflation at 8 percent -- down from 40 percent in July 2011 -– saving cash is tough. Mohammed al-Jaber, who earns $30 a month for gluing shoe linings eight hours a day six days a week, said he can add to his pay with perfect attendance each month -- a $7.50 bonus -- and overtime. Any extra gets sent home to his family in the Arsi region.

Once famine-plagued Ethiopia, run by former rebels since they overthrew a socialist military junta in 1991, is seeking investment to support a growth rate that’s expected to fall to 7.5 percent this year from 9.7 percent in 2013. The population is expanding annually by 2.9 percent, at a time when the urban unemployment rate is 17.5 percent.

Economic Transformation
Ethiopia aims “to transform the economy” via industrialization by attracting foreign investors to zones where key public services will be concentrated, State Minister Of Finance Ahmed Shide said in an interview in Addis Ababa.

One appeal for China: Ethiopia follows a similar tightly controlled, state-heavy economic model. Opposition parties won only one out of 547 parliamentary seats at the last election in 2010.

Ties are strong between the Communist Party of China and the Ethiopian Peoples’ Revolutionary Democratic Front: On July 10, Central Committee Political Bureau member Guo Jinlong visited Ethiopia and met with Prime Minister Hailemariam. The two pledged to enhance cooperation, the official Xinhua news agency said.

Key Bottlenecks
Ethiopia’s heavy public investment in infrastructure using credit from Chinese state banks promises to relieve some key bottlenecks. The Export-Import Bank of China is funding a railway from Addis Ababa to landlocked Ethiopia’s main port in neighboring Djibouti. Ethiopia lost its coastline when Eritrea became independent in 1993.

The Chinese and Ethiopian governments also are investing in hydroelectric plants -- including what will be Africa’s largest, the domestically funded Grand Ethiopian Renaissance Dam on the Blue Nile -- that should increase Ethiopia’s power supply five-fold by 2020.

That may help overcome obstacles including the supply of electricity and cumbersome customs and tax procedures. In May, a World Bank team went to visit a textile factory in the Eastern Industrial Zone, where the Huajian plant is located, and found they are faced with daily power outages lasting for hours, Ethiopia country director Guang Zhe Chen said.

Sustainable Power
“There’s a big issue if you can’t ensure sustainable power supply for industrial zones,” he said.

While countries like Ethiopia have the potential to host Asian manufacturers, a “surge” hasn’t occurred, in part because of trade logistics constraints. “Getting things in and out of Ethiopia is very expensive and time consuming.”

Ethiopia slipped one place to 125th in the World Bank’s 2014 Doing Business rankings for 189 economies. It was behind China, at 96th, and ahead of competitor Bangladesh, which ranked 130th, the Washington-based lender said on its website.

It’s easy to forget that China’s infrastructure also was rudimentary at a similar stage of development, said Lin. He recalls that the first time he made the 96-mile trip between Shenzhen and Guangzhou in southern China in the early 1980s it took more than 12 hours, including long waits for ferries to cross rivers. The same trip now can be done in two hours.

“There were no bridges,” Lin said in an interview.

Nor were workers accustomed to modern production techniques. When auto-parts maker Asimco Technologies Ltd. began manufacturing in China in the 1990s, workers weren’t responsive to training, said Tim Clissold, former president of the Beijing-based company and author of a memoir, “Mr. China.”

Smiling Politely
“It was very difficult to deliver improvements at individual factories,” he said. “You could do training, and everyone smiles politely and then continues doing what they were doing before.”

Now, rising Chinese wages that Zhang calls “an inevitable trend” are pushing Huajian to try to increase its workforce in Ethiopia to as many as 50,000 within eight years.

A model of a planned new plant at the edge of Addis Ababa is displayed at the factory. The 126-hectare (341-acre) complex, partly financed by more than $300 million from Huajian, will include apartments for workers, a “forest resort” district and a technical university.

At the gathering in the parking lot, after supervisors sang Huajian’s company song, Zhang dismissed the Ethiopian contingent. Then he continued haranguing the Chinese managers. To make his point that structure was needed to keep employees in focus, he thrust a broomstick toward them repeatedly, then toward the remote camera that was feeding to the plasma screen, the image blurring with each prod.

Then he left the stage, laughing and raising a triumphant fist.

 

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Ghana plans to export electricity to Nigeria
OCTOBER 2, 2014 BY OYETUNJI ABIOYE 137 COMMENTS

Minister of Power, Prof. Chinedu Nebo
| credits: File copy

Ghana says it is planning to export thousands of megawatts of electricity to Nigeria, Ivory Coast and other neighbouring countries that have power deficit.

The Ghanaian President, Mr. John Mahama, who made the disclosure at the Africa Global Business and Economic Forum in Dubai on Wednesday, said his government had made huge investments in power generation that would enable the country to export excess electricity to Nigeria and others.

“We have given priority to electricity generation in our country. We have prioritised energy in such a way that we want to become the hub for power production in West Africa. We want to generate electricity to the point that excess power can be exported to Nigeria, Ivory Coast and other countries that have power deficit,” he said.

To achieve this dream, Mahama said his country had secured export-import financing from China as well as special funds from Abu Dhabi to commence series of power generation projects, adding that a third hydropower dam project was already at an advanced stage.

The Ghanaian leader spoke in a panel discussion along with President Paul Kagame of Rwanda and President Mulatu Wirtu of the Federal Democratic Republic of Ethiopia.

Mahama added, “Where Africa faces some of its challenges lies its biggest opportunities. We are leveraging on public-private sector partnership to build infrastructure. Be it roads, electricity, ports or communication systems; if we create the right environment, investors will come.

“Creating the right environment that will attract foreign direct investment is key.”

In achieving this, the Ghanaian leader joined Kagame and Wirtu to emphasise the need for African governments to strengthen anti-corruption agencies in their various countries.

“Issues of accountability and transparency are very important. There must be mechanism to fight corruption. We all have institutions but the major thing is resourcing them to effectively fight corruption and perform effectively,” he noted.

According to Kagame, African governments must create a system that is not sympathetic to corruption, saying this would help drive the required Foreign Direct Investment into the continent.

He said, “It is one thing to have the institutions; it is another thing to allow them to work. Governance and structure must be in place to make them to work,” he said.

“African governments must fix infrastructure, investment in development of education and skills, and also enhance connectivity among African countries.”

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Nigeria’s Unity Bank Records 900% Jump In Profit
October 3, 2014 Onyedimmakachukwu Business, Finance/Money

VENTURES AFRICA – One of Nigeria’s leading financial lender Unity Bank said its pretax profit for the first nine months of its financial year jumped 900.3 percent to N12.01 billion ($73.13 million) from N1.20 billion in the corresponding period of last year.

But the rise in the bank’s was considerably smaller, increasing by 7.45 percent to N48.77 billion ($296.8 million) from N45.39 billion ($276.2 million) last year.Unity Bank had in September raised $117.4 million from sale of shares to existing shareholders in a bid to bolster its capital base and finance working capital as the country’s Central Bank implements stricter international regulations.


The 38.45 billion shares, sold at N0.50 each, was oversubscribed, with the bank to saying it will refund excess subscription monies to shareholders.

One of the very few Nigerian banks headquartered in capital city of Abuja, Unity Bank recently signed a partnership with global communications provider, SkyVision Global Networks Ltd for its satellite-based Virtual Private Network (VPN) services to connect the bank’s head office to its numerous branch offices nationwide.

http://www.ventures-africa.com/2014/10/nigerias-unity-bank-records-900-jump-in-profit/

 

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IMF Praises Ivory Coast’s ‘Stronger Than Expected’ Economic Performance
October 3, 2014 Onyedimmakachukwu Commodities & Currencies, Investing

VENTURES AFRICA – The International Monetary Fund has described Ivory Coast’s macroeconomic performance in the first half of 2014 as solid, praising its strong strong economic activity, particularly in the construction, public work and service sectors. Inflation remained subdued.

IMF said Ivory Coast’s macroeconomic prospects for the remainder of 2014 and 2015 are encouraging. Real Gross Domestic Product (GDP) growth is expected to reach about 8 percent in 2014 and 2015. The draft 2015 budget aims at supporting near and medium-term growth through a further expansion of public investment.

The IMF had held discussions on the sixth review of Côte d’Ivoire’s economic and financial program supported by an arrangement under the Extended Credit Facility (ECF). An IMF team led by Michel Lazare had visited Abidjan for the discussions which were held from September 17 to October 2, 2014.

According to the team’s analysis, Ivory Coast’s “Inflation remained subdued. Budget execution was also satisfactory with stronger-than-expected revenue performance and expenditures contained to budgeted amounts. As a result, the basic primary balance recorded a small surplus compared to a deficit projected under the program. All performance criteria and indicative targets for end-June 2014 under the ECF arrangement were met”.

In July, Ivory Coast, spelt the French way as Côte d’Ivoire, successfully issued a Eurobond, raising $750 million to help finance its budget, extend average debt maturities and repay some domestic debt.

“Progress has been made in accelerating public procurement processes with a view to reducing sole-source contracting, the IMF said, adding that the mission welcomes the authorities’ plans to set up a single Treasury account and further restructure public banks.

The mission also said it welcomed the authorities’ intentions to reinforce the financial position of the energy sector and clear the stock of domestic arrears. However the fund added that discussions will continue in coming weeks on the financial modalities needed to achieve these objectives which are essential to keep public finances on a firm footing in the years ahead.

Ivory Coast has rode on the back of stability since the 2001 political turmoil to achieve a meteoric economic growth that has it performing better than the government even expected. Yesterday, British Miner Amara Mining disclosed that it will invest $400 million over the next two years to build a mine in the country’s Ivory Coasts’s largest Gold Deposit.

French West Africa’s largest economy and world leading exporter of Cocoa, Ivory Coast is seeking to grow its long-neglected mining sector in a bid to diversify its budding economy.

http://www.ventures-africa.com/2014...-stronger-than-expected-economic-performance/

 

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In the medical response to Ebola, Cuba is punching far above its weight

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By Adam Taylor October 4
Extra help arrives to help contain the Ebola outbreak in West Africa, which has claimed mor than 3,300 lives. (Reuters)
While the international community has been accused of dragging its feet on the Ebola crisis, Cuba, a country of just 11 million people that still enjoys a fraught relationship with the United States, has emerged as a crucial provider of medical expertise in the West African nations hit by Ebola.

On Thursday, 165 health professionals from the country arrived in Freetown, Sierra Leone, to join the fight against Ebola – the largest medical team of any single foreign nation, according to the World Health Organization (WHO). And after being trained to deal with Ebola, afurther 296 Cuban doctors and nurses will go to Liberia and Guinea, the other two countries worst hit by the crisis.

Cuba is, by any measure, not a wealthy country. It had a Gross Domestic Product (GDP) of slightly more than $68 billion in 2011, according to the World Bank, putting it a few places higher than Belarus. At $6,051, its GDP per capita was less than one-sixth of Britain's. However, its official response to Ebola seems far more robust than many countries far wealthier than it – and serves as further proof that health-care professionals are up there with rum and cigars in terms of Cuban exports.

Cuba's universal health-care system enables such an export. The country nationalized its health care shortly after its revolution, ending private health care and guaranteeing free health care in its constitution. The results have been widely praised. In 2008, evaluating 30 years of Cuba's "primary health care revolution," the WHO noted impressive strides that the country had made in certain health indicators. "These indicators – which are close or equal to those in developed countries – speak for themselves," Gail Reed noted, pointing to a huge reduction in number of deaths for children under five years old and Cuba's high life expectancy of 77 years.

Cuba's health-care success is built upon its medical training. After the Cuban revolution, half of the country's 6,000 doctors fled and the country was forced to rebuild its work force. The training system grew so much that by 2008, it was training 20,000 foreigners a year to be doctors, nurses and dentists, largely free of charge.

Ebola isn't the first time that Cuban health workers have been sent to deal with a global disaster. Even back in 1960, immediately after the revolution, Cuba sent doctors to Chile to help in the aftermath of a devastating earthquake, and the practice has continued for decades since. In 2005, Cuba even offered to send medical workers to the United States after Hurricane Katrina in 2005 (they were apparently rebuffed).

Reuters reports that Cuba currently has around 50,000 health workersworking in 66 countries. Despite the high-profile acts of charity, the medical diplomacy more often seemed to serve more practical purposes – an estimated 30,000 health workers are currently in Venezuela as a partial payment for oil, for example. Exported medical expertise is predicted to net Cuba $8.2 billion in 2014, according to a recent report in state newspaper Granma. There are hopes that medical tourism and exported medical technology could one day provide similar figures.

It's not a simple picture. Critics have complained that Cuba has begun to sacrifice the health of its citizens at home to make money sending medical workers abroad, and the conditions for these medical workers themselves have been criticized – The Los Angeles Times reported earlier this year that a significant number of Cuban health-care workers in Venezuela have fled the country to escape "crushing" workloads.

Even so, Cuba's oversized response to Ebola seems to have brushed aside these criticisms, for now at least. The number of Cuban medical staff in Sierra Leone, Liberia and Guinea looks set to be more than those sent from far-larger countries like China. Israel, a wealthier country with a similar population, caused controversy this week when it rejected calls to send medical teams.

“Money and materials are important, but those two things alone cannot stop Ebola virus transmission,” Dr Margaret Chan, director-general at the World Health Organization, said last month. “Human resources are clearly our most important need."

 

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Africa: Marriott to Build 50 Hotels in Nigeria, South Africa, Egypt
By Obinna Chima
Marriott International Incorporated plans to build about 50 hotels in Nigeria, South Africa and Egypt each before 2020, to benefit from a surge of travelers, the company's president for the Middle East and Africa, Alex Kyriakidis has revealed.

Bloomberg quoted Kyriakidis to have explained that the plan is to add 10,000 hotel rooms apiece in Africa's three biggest economies, targeting "super growth" based on their economic potential and tourist attractions.

Speaking in an interview in Addis Ababa, Kyriakidis said: "We see tremendous growth opportunities in Egypt." "As Nigeria's economy powers on, the demand for hotel rooms is going to be substantially greater."

The Bethesda, Maryland-based company sees the region as its highest revenue-growth market to 2020, Kyriakidis added. The owner of brands including Ritz-Carlton and Renaissance is boosting its presence in Africa after purchasing Cape Town-based Protea Hospitality Holdings for about $200 million in April.

It would open nine hotels with a total of 1,300 rooms in the next 14 months in Ethiopia, Rwanda, Ghana, Uganda and South Africa, Kyriakidis added.

Occupancy rates at the chain's hotels in Egypt's capital, Cairo, and at Red Sea resorts have increased to 60 per cent to 75 per cent from 30 per cent to 45 per cent since the May election of President Abdel-Fattah El-Sisi, he said.



Security concerns in Nigeria triggered by deadly bomb attacks won't deter Marriott from further investment in the West African nation as the company is planning over the long term, its Chief Executive Officer Arne Sorenson had said.

The company is also boosting its presence in the Middle East, where it is focusing on the United Arab Emirates and Saudi Arabia, Kyriakidis added.

The Starwood Hotels & Resorts Worldwide Incorporated had also disclosed plans to add as much as 20 hotels in Africa over the next four years, as the US owner of the Sheraton and St Regis brands takes advantage of rising travel in the continent. The US firm is seeking to add mainly five-star properties to its existing set of 37 hotels,

Its senior vice president for acquisitions and development in Africa and the Middle East, Neil George had confirmed that five of the new sites are earmarked for Nigeria, Africa's biggest economy and most populous nation with about 170 million people.

International hoteliers are seeking to expand in African countries to exploit an increase in travel and higher economic growth rates than in the US and Europe.

With Agency Report