Africa News blog

African business, politics and lifestyle

Will Africa’s mega trade bloc take off?

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Three African trading blocs comprising some 527 million people and with an estimated gross domestic product of $624 billion, have agreed to move towards a free trade area. It would span 26 countries from Egypt to South Africa, and would go a long way towards streamlining some of the continent’s numerous trading blocs. Africa is home to some 30 regional trade arrangements, and on average each nation belongs to about four groups, according to international financial institutions. This has led to conflicting and overlapping agreements.

So in a move to ease some of these issues, heads of state who chair the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), and the Southern African Development Community (SADC),  met in the Ugandan capital to draw up a pact on integration, and eventually hoping to have a unified customs union. Ugandan President Yoweri Museveni said at the meeting’s opening that: “The greatest enemy of Africa, the greatest source of weakness has been disunity and a low level of political and economic integration.” The meeting’s final communiqué said a timeframe for integration would be considered in one year. Rwandan President Paul Kagame cautioned delegates that African nations must make sure to enforce the protocols and treaties that they’ve adopted. Heads of state at the meeting stressed the need to create economies of scale, bigger markets equal more opportunities to grow, they said.

But many of the existing blocs have already run into trouble. The EAC’s integration, for example, has had some hiccups because some member countries felt their economies would be dominated by neighbours.

So, should Africa think bigger and bigger or try to work on existing institutions? Do you think the creation of a free trade zone spanning COMESA, SADC and the EAC will take off, or will it just remain on the drawing board? What do you see as the major challenges in implementing this agreement?

Will global crisis hurt remittances to Africa?

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Employee counts money at foreign currency exchange in TokyoIt seems everyone in Africa has family members living abroad.

Just stop someone on the street and ask if they have a cousin, a brother, or a sister living in Europe, the United States or elsewhere around Africa, and most likely they’ll say that they have two or three or more. Remittances from those loved ones total some $40 billion per year, according to the United Nations. In some countries, diaspora money makes up more than 20 percent of the gross domestic product, and analysts say, remittance cash may be as much as 50 percent higher than current estimates due to informal transfers.

But there is growing concern that this money could be a victim of a spiralling crisis in global financial markets.

Motlanthe greeted with relief, but South Africa’s problems are not over

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Kgalema Motlanthe takes the oath of office as South Africa’s president in Cape TownSouth Africans have widely greeted new President Kgalema Motlanthe, many of them with a sense of relief after the bitter and divisive power struggle between his ousted predecessor Thabo Mbeki and Jacob Zuma, leader of the ruling African National Congress.

Motlanthe, quiet spoken and dignified, struck exactly the note the public were looking for when he took office, sober but smiling gently – a huge contrast to the theatrical ebullience of Zuma and the aloof, intellectual style of Mbeki, who was seen as arrogant and out of touch with his people.

How will Africa weather financial storm?

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Kenyan Maasai herdsmen walk on the animal migration corridor at the Nairobi National Park November 12, 2007. REUTERS/Antony Njuguna

Isolation might seem like a good idea when it comes to the storm sweeping global finance and there is no doubt that African countries are among the most isolated in the world economy.

Avoiding the impact seems unlikely, though, particularly at a time when Africa as a whole has been enjoying its fastest growth for decades and the continent has become an increasingly popular investment destination – not only for Asian countries in search of resources but for frontier investors willing to take higher risks for higher returns.

How quickly can Zimbabweans expect economic change?

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zimbabwe_talks_handshake.jpgFor Zimbabwe’s long-suffering people, the true meaning of the signing of a power-sharing agreement between President Robert Mugabe’s ZANU-PF and the opposition MDC would be how quickly it leads to an improvement in their daily lives. An economic crisis that began in 1998 has turned the once prosperous Southern African country into a basket case economy with the world’s highest inflation at over 11 million percent. Millions of Zimbabwean’s who have fled across the borders to escape unemployment and severe shortages are waiting to see if the political deal will result in economic rebound paving the way for their return.

The agreement negotiated by South African President Thabo Mbeki provides for the sharing of power between veteran President Robert Mugabe and Morgan Tsvangirai, leader of the main opposition Movement for Democratic Change (MDC). Tsvangirai takes on the new role of Prime Minister with extensive powers, with Mugabe’s 28-year hold on power significantly eroded.

Trust the ingenuity of the Zimbabwean people

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tupy.jpgMarian L. Tupy, The Cato Institute 

All economies, no matter how decrepit, can be revived through good institutions and economic freedom. That said, it is impossible to predict how quickly the people of Zimbabwe will be able to enjoy a notable improvement in their standard of living.

Zimbabwe today is one of the least politically and economically free countries in the world. The speed of Zimbabwe’s social and economic recovery will depend on the speed and extent of reforms.

Recovery possible in three years

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 makumbe.jpgJohn Makumbe, University of Zimbabwe

 The signing of an agreement between Robert Mugabe’s ZanuPF party and the two formations of the MDC marks the beginning of an exciting period in the political history of Zimbabwe. The national economy has been devastated by, inter alia, disastrous political and economic policies formulated and implemented by the Mugabe regime. Fortunately, most of the development and economic infrastructure still remains largely intact, and the Zimbabwean economy could recover from the current meltdown in a fairly short time.

Zimbabweans are reputed to be hard-working people. Although many highly skilled Zimbabweans have since left the country for greener pastures both in the region and further afield, the country still boasts a highly skilled labour force.

Saving Kenyan forest. Is it a turning point?

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mau-forest3.jpgAfter a decade of rampant destruction of the Mau forest water catchment in western Kenya, the country’s coalition government seems firmly united in trying to save the complex before more serious damage is inflicted on the economy.

U.N. officials say this is no longer simply an environmental issue but something that has huge importance for the whole country. Already two of the top three foreign exchange earners — tourism and tea — are feeling the impact of falling water levels which have also forced the postponement of a major hydro-electric project. 

How will Zuma’s resumed court battle affect South Africa?

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Jacob Zuma, the embattled leader of South Africa’s ruling African National Congress (ANC) launched a big fight for his political life on Aug. 4, asking the  Pietermaritzburg High Court to dismiss a graft case against him that could stop him becoming president next year. If his application is rejected, a full corruption trial could follow later this year and South Africa could head into a protracted period of tension and uncertainty. Read the following insights from leading analysts and have your say on how the legal process could affect South Africa:

gottschalk_resized1.jpegKeith Gottschalk, the University of the Western Cape (see full analysis)

“Jacob Zuma’s Zuma’s legal team has already proved, year after year that, if you have a bottomless pocket such as taxpayers, you can protract litigation, U.S.-style for the better part of a decade.”

Markets shrug off Zuma case

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Adenaan Hadien, Cadiz Holdings

adenaan_resized.JPGPietermaritzburg may well have been brought to a standstill with the resumed corruption case of Jacob Zuma in the High Court, but I suspect the same would not be true for local markets.  Certainly, if last week’s market performances are anything to go by, then reactions are likely to be muted.  Last Thursday, the Constitutional Court dismissed all four of Zuma’s appeals to prevent the state from using potentially damaging evidence against him in his corruption trial.  On Monday, Zuma’s legal team submitted an application for a permanent stay of prosecution, arguing that his constitutional rights have been violated.  This application and the round of appeals which may follow if, as is expected, it was rejected, would again delay things.
On the week, the local currency gained over 4% against South Africa’s trading partners’ currencies and bonds enjoyed gains last seen in the late-1990s.  Equities put in a more mixed performance on the week, due to the oscillating woes of resources against financials and industrials.  The performances of bonds were even more impressive, given the higher-than-expected consumer inflation figures released on Wednesday.  Granted, Thursday’s producer inflation numbers were more encouraging.

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