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Tag Archives: Africa’s economy

From Global Dominance to Global Responsibility: The case of the rising “sun” in CHINA. By A. ANANGA Michael, 2 August 2016


It is amazing how far the Chinese have come, and it is scary to imagine how far they are willing and able to go. In the early 70s, when Maoism was the doctrine and vision in China, America was quick to label such ambitions as “The Soft Yellow Threat, very Shakespearian in nature; full of sound and fury, signifying nothing.” How wrong the United States was then and is now. China over the last 30 something years has experienced a renaissance economically and socially that rivals any such outburst in the history of nations. GDP has never been higher, per capita income is on the rise, exports are sky rocketing, and the Chinese brand and market has never had better credibility. To give China’s rise a sense of context, the number of billionaires in China has gone quadrupled fold in the last decade. This statistic encapsulates the contemporary China success story in the 21st century.

Examples abound; in today’s corporate landscape, being present in China is a corporate sine qua non for most Fortune 500 companies. These days, a study of the Chinese model of comparative business strategy is a must in any Business School worthy of its name. In today’s nonstop business cycle, an association with China be it in project finance, venture capital deals, outsourcing of resources is seen as instant credibility! Today’s China has given out more loans to receiving countries than the World Bank in 2010. Nice! America essentially financed its so called “war on terror” in Afghanistan and Iraq on selling U.S. Treasury Bonds to China. As this article is being typed out, the State Department and Department of Treasury in the United States are meeting with a high powered delegation from China in Washington, D.C. to negotiate “terms of trade” to offset the huge US/China trade deficit. The question that begs an answer is; is this the same China the United States characterized as “The Yellow Threat…signifying nothing” some 40 years back? I think not. How times have changed. And ROLES, too.

Today, most goods around the world, in part or in whole, have passed through China. The relevance of the Chinese economy, its growing residual income and her buying or purchasing power is clearly shaping the future and order of global business and strategy as we know it. Today’s China is bold, confident, assertive, resolute about its objectives, and has a clear vision of where the country sits from an economic, military, geopolitical and social standpoint. From the horn of Africa, to the Asian panhandle, from North America to Europe and the Middle East, China’s presence can be felt, it has impact beyond borders and its foot prints is shaping and will define the landscape of tomorrow’s world in commerce and industry.

But how should the Chinese handle this “power”? With power comes responsibility; a huge one. Will China be the “globocop” who shrugs everybody to get what she wants at any cost? (21st century Sino – Asian Pacific Hegemony). I don’t think so, though the latter description is a characterization of another world power. Your guess is as good as mine. Will China be the global leader who will hand out economic grants and loans with “no strings” attached as to how a receiving country should use the funds, or question a receiver country’s corporate or public governance? If the Chinese policy in giving grants to African countries is any indication as to the last question, there is nothing to worry about, for China doesn’t meddle in the sovereign affairs of a receiving country in giving loans or grants. Will China be that global leader who shall always side with Russia and North Korea just to “stick it” to the Americans, and not base her foreign relations with the West on any aforethought or policy considerations as it seems to be the case thus far? Will the China of today be so obsessed with obtaining natural resources around the world that she will stop at nothing to get them, and in doing so not share technology transfer with the host countries? Is China ultimately a friend or foe to most countries it seeks to open relationships with for economic reasons?

How will a renewed partnership with China be moving forward? What will be the face and attitude of the “NEW and BOLD CHINA?” These are some of the fundamental questions we as policy analysts and macro economic and political economy pundits should be asking in the wake of the China –Africa Forum 2016 in Johannesburg, South Africa. Rightly or wrongly, China is clearly the future of global business. How African countries seize opportunities with this impending global dominant power will shape the future of the African horn moving forward. History is watching and shall judge us by our actions, not words.

Mr Ananga is a Senior Corporate Counsel at C.S.P.H (The Hydrocarbons Prices Stabilization Fund). He is Vice President at CACLiTA.

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Posted by on August 2, 2016 in Africa Development

 

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Making local government in Africa more autonomous for the continent’s renaissance, by Chofor Che, 16 May 2013


There has been much talk on Africa’s renaissance especially by the World Bank and the African Development Bank. This renaissance is occurring in Africa while countries especially in Europe are still grappling with the effects of the global economic crises.

In 2012, the IMF stepped down its forecast for global growth and improvement for 2013 from 4.1% to 3.9%. According to the IMF’s updated World Economic Outlook, which is published twice each year, ‘Downside risks continue to loom large, importantly reflecting risks of delayed or insufficient policy action’.

Local government in Africa has a great part to play in the continent’s renaissance, but is not yet autonomous administratively and financially. Decisions which could have been taken by authorities like mayors are still taken by central governments.

Local government in Africa has a significant influence on the quality of life of the grassroots; especially as they are responsible for the provision of essential services like sanitation, health and water. One of the main reasons why local governments in Africa have failed in service delivery in the wake of the global crisis is because even though they have the greatest potential for being effective, they are the furthest removed from the central authorities and the donor community. Most local governments in Africa like those of Cameroon, Gabon, Central African Republic and Chad are yet to be administratively and financially autonomous. There is also little or no intergovernmental relations between local government and other spheres of government in these countries. Financial transfers from the central government to local government usually delay.

Many central governments in Africa have even resorted to slashing material resources and fiscal transfers to local government. Slashing local government transfers in the case of a fiscal shortfall means cutting back on essential services such as health care and quality water supply. In Swaziland for instance, supplies of anti-retroviral drugs to local government, has been slashed by central government as a result of the global financial crunch, especially as donors have cut back on the assistance they used to give to this country towards fighting the HIV/ AIDS pandemic.
It is time to reflect seriously on local government’s role in Africa’s renaissance. One of such ways is the twinning of municipalities in Africa as well as other parts of the world, so as to boost the participation of local government in issues traditionally reserved for central government like international business and investment. This would definitely entail lessening the numerous trade barriers that exists among African nations.

It is also important for the powers including administrative and financial powers of local government in Africa, to be constitutionalised. In this way, local government will be able to make effective decisions affecting the local populace in essential service delivery areas such as health care and water supply.

Autonomy to local government does not mean that there should be no supervision of this sphere of government especially by regional government. Local government should be supervised without any usurpation of powers.
There is also need for municipal personnel especially municipal executives like the mayors and municipal managers to be well trained and educated. The central government, the regional governments as well as other partners such as universities, need to join efforts to train municipal officials and executives.

There is also need for intergovernmental relations between all spheres of government in African states. If spheres of government in African states cooperate among themselves, the continent’s renaissance can be rapidly achieved, especially as ideas on budgeting; service delivery, as well as trade can be shared across the board.

Corruption is another canker-worm eating into the economic fabric of local government in Africa. There exist numerous anti-corruption measures including lengthy legislation on the continent, but the problem of effective implementation remains the greatest dilemma.

Africa’s renaissance definitely needs unified efforts from governments including local governments and a serious boost from free market engineers in Africa and Europe. Coordinated action with autonomous local governments in Africa having a legally defined role can speed up Africa’s renaissance.

 

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Examining the 2012 Financial Development index rankings of African States by the World Economic Forum , By Chofor Che, 31 October 2012


The Financial Development Report measures and examines the factors allowing the development of financial systems in a couple of economies around the world. It aims to furnish a comprehensive modus operandi for states to benchmark various aspects of their financial systems and put in place priorities for economic improvement. It is published annually so that states can benchmark themselves and track their progress over time. Since 2008, the year that the Financial Development Report was first launched, financial systems around the world have been hit with a couple of devastating crises. From crippling unemployment, serious housing bubbles, unsustainable debt levels and economic stagnation, few states have been spared. Even emerging economies, which showed relative strength during this period, have been unable to decouple successfully from Western markets.

The Report presents the rankings of the Financial Development Index, developed by the World Economic Forum in partnership with business leaders, public figures, the academic community, and multilateral organizations. It puts together an enormous amount of data to create an assessment of the various aspects of complex financial systems, including the business environment, the institutional environment, capital markets, financial stability, banks, and overall capital availability and access.

The Report appeals to a large audience such as policy-makers, business leaders, academics and different organizations of civil society. It aims to provide policy-makers with a balanced perspective on which aspects of their country’s financial system are most important and with the ability to empirically calibrate this view relative to other countries.

In the 2012 Report, Hong Kong is ranked first, with the United States of America coming in second place. Concerning African states, South Africa is ranked 28th, as compared to being ranked 29th in 2011. The next African state on the list is Egypt, which is ranked 53rd, as compared to being ranked 49th in 2011. Egypt is followed by Kenya, ranked 54th, Ghana ranked 56th Tanzania ranked 60th and Nigeria 61st. It is rather unfortunate that central African states like Cameroon, the Democratic Republic of Congo, Equatorial Guinea, Gabon and Congo Brazzaville, do not feature in the top 62 of this ranking.

Judging from Africa’s performance according to the rankings of the 2012 Report, it is obvious that there are still concerns with the business environment, the institutional environment, capital markets, financial stability, banks, and overall capital availability and access, in African states. This in effect means that African states need to address issues of corruption as well as poor financial management plaguing their economic and financial improvement. The key lies in the central governments of African states and most especially central African states to create a friendly business environment in their states, as well as an institutional environment, for capital markets to flourish.

 
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Posted by on October 31, 2012 in Uncategorized

 

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Is China good or bad for Africa?By Peter Eigen, CNN, 29 October 2012


Editor’s note: Peter Eigen is a member of the Africa Progress Panel, chaired by Kofi Annan. He is the founder and chair of the Advisory Council, Transparency International, and chairman of the Extractive Industries Transparency Initiative. The views expressed are the author’s own.

China’s growing presence in Africa is one of the region’s biggest stories, but even seasoned analysts cannot decide whether this booming relationship is good or bad for Africa.

Critics say Chinese strategy is entirely self-promotional, aimed at maintaining access to Africa’s precious mineral resources even when that means propping up odious governments. China’s supporters say the Asian superpower is strictly neutral and business-oriented, preferring to generate economic growth not a dangerous dependency on aid.

China has certainly been contributing to Africa’s economic growth, both in terms of trade and with building infrastructure. All over the continent, it has built roads, railways, ports, airports, and more, filling a critical gap that western donors have been shy to provide and unblocking major bottlenecks to growth.

The rehabilitated 840-mile Benguela railway line, for example, now connects Angola’s Atlantic coast with the Democratic Republic of Congo and Zambia. And Chinese-financed roads have cut journey times from Ethiopia’s hinterland to the strategic port of Djibouti, facilitating livestock exports.

Meanwhile, bilateral trade between Africa and China continues to grow at an extraordinary pace, reaching $160 billion in 2011 from just $ 9 billion in 2000.

Read more at Is China good or bad for Africa?

 
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Posted by on October 30, 2012 in Uncategorized

 

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Africa’s economy: Bulging in the middle, (A boom in sub-Saharan Africa is attracting business talent from the rich world). The Economist/Print version, 20 October 2012 [reposted 26 October 2012]


AFTER giving a speech at a business conference in London a young analyst chatted with investment executives in the audience, then followed two of them to a nearby hotel lobby. Over glasses of Chablis the executives raved about their company’s worldwide network of extravagantly decorated offices and their fat annual bonuses. Then they offered the analyst a job. What surprised him was not their interest, nor the chunky salary, but the place where they wanted him to help invest their millions: west Africa, the most backward part of a poor continent.

In recent years investors have been piling into Lagos and Nairobi as if they were Frankfurt and Tokyo of old. Anaemic growth in the rich world has made sub-Saharan Africa an attractive destination for money and its managers. Foreign direct investment has increased by about 50% since 2005. Once regarded as casinos, local capital markets now seem less risky. J.P. Morgan has just added Nigeria to its government-bond index for emerging markets; South Africa had hitherto been the only African country on its list. The American bank, the world’s biggest underwriter of emerging-market debt, predicts that adding Nigerian bonds to its benchmark will lure an extra $1.5 billion to the country. New funds will pay for so far non-existent infrastructure on a continent with a land mass equivalent to that of China, India, Japan, America, Mexico and Europe combined.

Some business people remain sceptical about Africa’s long-term prospects. Sales blather in Western financial circles hailing an African “golden age” is overblown. Most Africans are still poor, even if local managers drive flashy cars. A gaggle of truly wretched states is still trapped in misery and is unlikely to attain even modest prosperity soon. A recent survey found that nine out of 11 countries in the world at “extreme risk” of having a food crisis are African.

Read more at Africa’s economy Bulging in the middle

 
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Posted by on October 26, 2012 in Uncategorized

 

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