"1.2 billion opportunities" #Africa

But slow growth, ballooning deficits and #debt that has increased 18x in 7 years, will make the path to prosperity fraught with pitfalls. 

1.2 billion opportunities

THE ECONOMIST
Apr 21

FOR A LOOK at the African boom at its peak, do as a multitude of foreign investors have done and fly into Abidjan, the capital of Ivory Coast. Visitors arrive in an air-conditioned hall where a French-style café sells beers, snacks and magazines. There is advertising everywhere, for mobile-phone companies, first-class airline tickets and a new Burger King. The taxi into the city smoothly crosses over a six-lane toll bridge. On the way to the Plateau, the city's commercial core, cranes, new buildings and billboards jostle for space on the skyline. In the lagoon, red earth piles up where yet another new bridge is under construction. 

Just five years ago, Ivory Coast seemed like a lost cause. Having been defeated in an election at the end of 2010, the then president, Laurent Gbagbo, refused to leave office. The victorious opposition leader and now president, Alassane Ouattara, mounted a military offensive to force Mr Gbagbo out. French troops seized the airport to evacuate their citizens (the country used to be a French colony). Protesters were gunned down by troops, foreign businesses were looted and human-rights activists gave warning about mass graves being dug.

Ivory Coast still has problems, as shown by a terrorist attack in March that killed 22 people. But its economy is the second-fastest-growing in Africa (after Ethiopia, which is much poorer), expanding by almost 9% per year. Foreign investment is pouring in. As well as the Burger King, Abidjan now has a Carrefour supermarket, a new Heineken brewery, a Paul bakery and plenty of new infrastructure. Sharp-suited, French-educated ministers explain in perfect English what they are doing to "open up", "improve the ease of doing business" and "sustainably grow the middle class". Expensive hotels, such as the reopened $300-a-night Ivoire, are booked up; their bars are full of affluent people striking deals. The country's three port terminals, the biggest of which is being expanded by Bolloré, a French industrial firm, are working at full capacity, importing cars and electronics and exporting cocoa, coffee and cashew nuts.

This is the Africa of business magazines and bank ads: a continent that is rising at a prodigious pace and creating profitable new markets for multinational firms. But Abidjan also has plenty of reminders that it has been here before. For all of the new buildings springing up, its impressive skyline is still dominated by crumbling 1960s and 1970s concrete modernism. The roads may be new, but the orange taxis that ply them are still ancient fume-spewing Toyota Corollas, remnants of an earlier boom. For the two decades after independence from France in 1960, Ivory Coast enjoyed an economic miracle. Then, quite suddenly, the price of cocoa and coffee plunged and the boom faded as quickly as it had begun.

Reasons to worry

The deepest fear of today's investors in Africa is that it may be happening again. In Ivory Coast's neighbour, Ghana, thousands of government workers have been marching in the streets in the past few months to protest against their rising cost of living. Ghana relies on oil and gold, both of which have fallen in price, as well as cocoa. That, plus prodigious government borrowing, has caused a crisis. One US dollar now buys 4 cedi, the local currency; in 2012, it bought not quite two. Growth has halved since 2014, and Ghana is running a budget deficit of 9% of GDP and a current-account deficit of 13%.

According to the World Bank, in the year to April last year the terms of trade deteriorated in 36 out of 48 sub-Saharan African countries as the price of their commodity exports fell relative to the cost of their imports, mostly manufactured goods. Those 36 countries account for 80% of the continent's population and 70% of its GDP. Eight countries, including two giants, Angola and Nigeria, derive more than 90% of their export revenues from oil, which has recently plummeted far below the price needed to draw in new investors. Growth across sub-Saharan Africa dropped to 3.7% in 2015, far below East Asia's 6.4% and nowhere near enough to create enough jobs for the continent with the world's youngest and fastest-growing population. The World Bank expects it to tick up again, but only to 4.8% in 2017.

Countries that happily borrowed from international investors over the past few years have now found themselves shut out of the markets. The stock of outstanding sovereign bonds in the region had risen from less than $1 billion in 2009 to over $18 billion in 2014. If growth continues at a decent clip, that should be manageable. But if it stops, interest rates of 10% or more on dollar-denominated bonds will make refinancing difficult.

The continent's two biggest economies, Nigeria and South Africa, are already in deep distress. The reasons are different, but both have suffered from commodity-price falls as well as from atrocious economic management. The IMF, although loathed in much of Africa, is back, providing a $ 1billion loan to Ghana and preparing another for Zambia. Some fear a return to 2000, when this newspaper described Africa as the "hopeless continent".

Yet despite that, Nairobi's thriving malls and Abidjan's humming ports show that there are plenty of reasons to stay optimistic. The economic conditions have got worse, but this is a very different continent from two decades ago, when troops from eight African countries were fighting in Congo alone. Wars still rage in South Sudan, Somalia, Mali and northern Nigeria, and violence bubbles in places like eastern Congo, the Central African Republic and Burundi. But broadly speaking, most of sub-Saharan Africa is now peaceful. Elections seem increasingly less likely to result in strife, even if they still generally return incumbents, and more and more often for unconstitutional third terms. The governments that come to power are still often corrupt and inefficient, but far less brazenly so than those of cold war despots such as Mobutu Sese Seko of Congo or Jean-Bedel Bokassa of the Central African Republic.

Africa's 1.2 billion people also hold plenty of promise. They are young: south of the Sahara, their median age is below 25 everywhere except in South Africa. They are better educated than ever before: literacy rates among the young now exceed 70% everywhere other than in a band of desert countries across the Sahara. They are richer: in sub-Saharan Africa, the proportion of people living on less than $1.90 a day fell from 56% in 1990 to 35% in 2015, according to the World Bank. And diseases that have ravaged life expectancy and productivity are being defeated—gradually for HIV and AIDS, but spectacularly for malaria. Some of the gains may seem modest, but given that living standards across Africa declined during the 30 years after independence they are sufficiently established to prove lasting.

And for all that oil and metals have come to dominate economies such as Nigeria's and Congo's, the boom broadened beyond natural resources. Mobile telephones have transformed commerce across Africa, and now smartphones and feature phones (which are halfway between dumb and smart) are taking hold. In 2014, the latest year for which figures are available, 27% of Nigerians owned a smartphone. In many African countries 4G mobile-phone infrastructure is the only thing that works well, but it works at least as well as in much richer countries, and a lot can be built on it. What began with mobile-money systems such as Kenya's M-Pesa is now branching into bank accounts, savings accounts, loans and insurance. That in turn is helping people rise out of poverty and invest in their future.

This special report will argue that despite some deep and entrenched problems, African businesses offer hope too. It is clearly risky to make sweeping judgments about an entire continent with 54 countries and 2,000 languages. This report draws on visits to various countries in sub-Saharan Africa, but four in particular: South Africa, Nigeria, Kenya and Ivory Coast, all coastal, urbanised and relatively rich. They certainly do not represent the whole of Africa, but your correspondent picked them because they each illustrate a different aspect of business across Africa as a whole. The businesses covered have not yet transformed the continent, but they show that African firms are capable of extraordinary innovation—if only they can be set free.

See the article on The Economist here:

1.2 billion opportunities Economist – Apr 14, 09:00

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#African #bonds: Handle with care

Africa's bond rush: Handle with care

African governments must use bond revenues to address critical growth constraints, while global conditions are in their favour.

Sub-Saharan Africa has a $7bn potential bond pipeline in 2013. Zambia and Rwanda recently issued heavily over-subscribed bonds, and analysts anticipate issuances from Nigeria, Angola, Ghana (its second), Kenya and Zambia (again). Tanzania has hired a rating adviser as a precursor to a bond issuance in due course, with Mozambique an outside bet.
This is only partly a response to the continent's robust growth. Low yields elsewhere (especially in the eurozone and the US) - as well as excess global liquidity due to quantitative easing - are the global trends pushing bond-hunters to Africa. "There is a lot of excess liquidity internationally and some of that is being used to buy high-yielding assets in Africa," says Mason Cranswick, director of fixed income credit at Credit Suisse.
So the current window of opportunity will not last forever, meaning funds raised must be used by African governments to address critical growth bottlenecks such as infrastructure; highlighted by both recent issuers as an investment priority. "Once liquidity starts drying up, there is a risk that some of the funds will be pulled from Africa. But I think if we keep our momentum we can still attract that capital," says Mr Cranswick. "If we can keep up with the infrastructure, I think we can stay attractive with the rest of the world."
While government bonds could help address Africa's enormous infrastructure deficit, it is no magic bullet. "The binding constraint is debt sustainability issues around these countries," says Mthuli Ncube, chief economist for the African Development Bank. Rwanda could not go much further than $430m, he says. Regional infrastructure bonds can supplement government's efforts, and innovative moves - such as Ethiopia's diaspora bond to raise funds for the Renaissance Dam - can also help. But in the longer term, says Mr Ncube, "what is needed is a deepening of domestic capital markets. That is a process that requires an incredible sequence of reforms.”

http://www.thisisafricaonline.com/Analysis/Africa-s-bond-rush-Handle-with-care

The MasterMetals Blog

Can Matt Damon Bring Clean Water To Africa? | Fast Company

Can Matt Damon Bring Clean Water To Africa?

By Ellen Mcgirt

Article location:http://www.fastcompany.com/magazine/157/can-this-man-save-this-girl

Matt Damon, water warrior. He's not that interested in fancy galas as a way to raise money. "That seems very analog," he says. | In the Dogon region of Mali, a girl from the small village of Songhe scoops up water from a pit that has been dug deep into a dried-up riverbed. Mali faces continual water shortages, despite a rich aquifer. | Photographs by Damon Winters/The New York Times/Redux pictures (Damon); Stuart Franklin/Magnum (Girl)

EVERY 20 SECONDS, A CHILD DIES FROM A WATER-RELATED DISEASE.ABOUT 80% OF SEWAGE IN DEVELOPING COUNTRIES IS DISCHARGED UNTREATED.MORE PEOPLE HAVE CELL PHONES THAN ACCESS TO A DECENT TOILET.3.6 MILLION PEOPLE DIE EACH YEAR FROM WATER-RELATED DISEASES.LESS THAN 1% OF THE WORLD'S FRESH WATER IS READILY ACCESSIBLE FOR DIRECT HUMAN USE.NEARLY 1 BILLION PEOPLE LACK ACCESS TO SAFE WATER.MILLIONS OF WOMEN AND CHILDREN SPEND SEVERAL HOURS A DAY COLLECTING WATER FROM DISTANT, OFTEN POLLUTED SOURCES.Water.org is on track to raise $10 million in 2011, up from $4 million in 2010. The primary use of that money is not as a handout to well drillers. Rather, Water.org tends to negotiate deals between microfinance institutions and communities

July 22, 2011

Tags: Leadership, Ethonomics, Magazine, Social Responsibility

Once upon a time, Matt Damon went for a long walk in rural Zambia. The devoted family man and method philanthropist was accompanying a 14-year-old Zambian girl who had no idea that her hiking companion was an Academy Award-winning international heartthrob.

The walk came toward the end of a 10-day African journey, a systematic primer on the complexities of the continent's extreme poverty that had been organized for Damon by staffers from his friend Bono's ONE campaign. Damon was on a quest to understand what it meant to be really, really poor. "It was like a mini course in college," he says. Every day brought a different subject: urban AIDS, microfinance, education, and, finally, water. While walking with the young teen on her hour-long trudge to collect water for her family, something clicked. "We talked the whole time [through a translator]. When I asked her what she wanted to do when she grew up -- 'Do you want to stay here?' " he says, pointing to the memory of the dusty village -- "she got shy all of a sudden." As they returned, both toting 5-gallon jugs of water filled at the well, she finally confessed her dream: to go to the big city, Lusaka, and become a nurse. Damon recalled his dreams at the same age, when he and best friend Ben Affleck were plotting their way from Boston to casting agents in New York. That connection opened the door for Damon. "I remembered so well the feeling of being young, when that whole world of possibility was open to you."
But while Damon's dream was made possible by Amtrak, the girl's was possible only because somebody drilled a borewell near her home -- and, yes, an hour's walk for water is good news in lots of places in the world. Nearly 1 billion souls lack access to clean water; three times that number lack access to proper sanitation. "This is not something that most 14-year-olds have to go through," says Damon, 40. Without access to the water, his companion would have been unable to go to school and would likely have been forced into a precarious fight for life, spending her days scavenging for often-filthy water in unhealthy and unsafe environments. "Now she can hope to be a nurse and contribute to the economic engine of Zambia," he says. "Of all the different things that keep people in this kind of death spiral of extreme poverty, water just seemed so huge." He pauses. "And it doesn't have to be."
Damon tells me this story on a rainy spring day in Manhattan, after a full schedule of board meetings for Water.org, the charity he cofounded in 2009, three years after his Zambia trip, with longtime water expert, and now dear friend, Gary White. It has been a long day but a good one, and Damon has more news to share. He checks his watch. "I have to pick up my daughter from school. Come along and we'll keep talking," he tells me. As we make our way from a conference room at McKinsey in Midtown (a board member works there) to a car waiting on the street, I watch passersby light up in recognition and try to catch his eye. In spite of his attempt to blend in -- Damon is wearing glasses, a splash of whiskers, and a Panavision baseball cap -- he is unmistakable. And he never fails to return a smile. "Clearly my strong suit is and will be trying to get people to care about this issue," he says of his primary role. "Our vision is clean water and sanitation for everyone, in our lifetime ..." he trails off. "So we better get to work."
For all his star power, though, Damon is more than just the pretty face of Water.org. He has turned himself into a development expert. This would seem like an obvious and necessary first step for someone embracing the global water crisis as a personal mission. But, in fact, it's highly unusual for a celebrity to dive this deep into a problem this daunting. Whether talking microfinance strategy with rural bankers, giving detailed reports from the field at the annual Clinton Global Initiative, or personally thanking donors like PepsiCo CEO Indra Nooyi, Damon has quietly developed the cred of a program geek. "If you want to understand how this works," he says, sounding more like an anthropologist than a celebrity spokesperson, "there is no substitute for going there and talking to people in their homes." It's an approach he comes by honestly. His mother, a professor of early childhood education, spent part of her summers living with local families in Guatemala and Mexico, attending language school in preparation for her field research. She brought her impressionable teenage son along. "She specialized in nonviolent conflict resolution," Damon explains. In war-torn areas like El Salvador, she interviewed children, studied their artwork, and documented their trauma. "So I'd seen extreme poverty at an early age," he says. "I knew what it was, and I always cared about it." He has replicated her research process, immersing himself in the business of social enterprise until he found the cause that he felt passion for -- water.
Damon reads as equal parts hardworking, ambitious, grounded, and caring, the kind of celebrity you'd want your son to be if you had a son who could get both the girl and the point of fame. He's a son who'd make a mother proud. "She doesn't say it quite that way," he says. "It's not the way she talks. She says, 'I affirm him.' Hang on a sec." As he hops out of the car to go pick up the eldest of his four daughters, a charming tween who will never have to fetch water for her family, he smiles and looks affirmed.

In 2009, Damon and Gary White cofounded Water.org. That same year, they visited this town in the Indian state of Tamil Nadu. Their initial trips into the field included a foray to South African slums while Damon was shooting Invictus. | Courtesy of Water.org

THE BUSINESS OF philanthropy is a difficult one, often as challenging to decipher as the problems it aims to solve.

Nuclear industry in turmoil after Japan quake | Reuters

Nuclear industry in turmoil after Japan quake

By Julie Gordon and Lynn Adler
3:26pm EDT

* Uranium stocks hardest hit, Cameco down over 14 pct
* Germany put nuclear plants on hold, Italy pushes forward
* Utility shares fall, nuclear reactor builders down

TORONTO/NEW YORK, March 14 (Reuters) - Investors hammered companies that build nuclear reactors and supply them with fuel on Monday as Japan struggled to avert a meltdown at a stricken reactor, on fear that the whole sector could be in for a downturn, in the short and medium term at least.
But analysts said the industry could recover from the stock market setback as negative perceptions fade, and the current price slump might be a buying opportunity.
"Meltdown is a very big word in people's minds, so I think that the public sentiment is probably going to swing against nuclear power," said BMO Capital Markets analyst Edward Sterck. "But I don't think this is the end of the nuclear industry."
"With the hype that some commentators are making that this is the end of the nuclear energy, I think we're going to possibly see an overreaction in the stock prices. At some point there will be value there."
Japan's crisis, already the worst nuclear accident since the 1986 Chernobyl disaster, hit shares of industry giants like General Electric (GE.N: Quote, Profile, Research, Stock Buzz) and Hitachi (6501.T: Quote, Profile, Research, Stock Buzz), along with uranium producers Cameco (CCO.TO: Quote, Profile, Research, Stock Buzz) and Areva (CEPFi.PA: Quote, Profile, Research, Stock Buzz), and power utilities like Entergy (ETR.N: Quote, Profile, Research, Stock Buzz) and Exelon Corp (EXC.N: Quote, Profile, Research, Stock Buzz).
The Japanese reactors were designed to withstand earthquakes, but Friday's quake was a record for Japan, and a devastating tsunami knocked out backup power, causing and deepening the problems.
With the 24-hour news agenda focused on the possibility of a meltdown at one or more reactors in Japan, analysts said the market will need time to recover from losses.
"We need to see those reactors brought under control before people start to review the situation with a little more perspective," Sterck said.
Nuclear power accounted for about a third Japan's of energy generation before the quake, and the damage has raised concerns about future of the industry there.

WikiLeaks: ANC a 'complete mess'

Again, nothing really new here.  Just makes it clear to all...

WikiLeaks: ANC a 'complete mess'

JOHANNESBURG, SOUTH AFRICA Feb 20 2011 12:33

The ANC is a "complete mess" and its young cadres have no interest in history, but simply want access to jobs and personal enrichment, according to United States embassy cable obtained by City Press through the whistleblower website WikiLeaks.

According to the cable, the ANC's Gauteng spokesperson Dumisa Ntuli told a US diplomat that crippling divisions were plaguing the ruling party.

Ntuli, who has denied discussing internal ANC issues with the US embassy, did not mince his words about the party, according to the cable, which is dated October 29 2009.

He reportedly said the party was deeply divided not only between supporters of President Jacob Zuma and former president Thabo Mbeki, but "along multiple other lines", City Press reported.

"There are die-hard Zuma supporters, the pro-labour people, the communists, the pro-Mbeki people and no one speaks for the same things," Ntuli is quoted as saying in the cable.

"Party leaders are seeking ways to restructure and unify the party so that younger members understand the history and values of the ANC.

"However, according to Ntuli these efforts are not going well and will only lead to failure.

'Jockeying for positions'
"He said: 'The younger cadres have no interest in the history of the ANC. They want access to jobs and personal enrichment.'

"Worse than the lack of interest in history, [Ntuli] claimed, is that they will not listen to, or respect senior officials."

Ntuli apparently told the diplomat party members were "mostly focused on jockeying for positions to be decided upon at the 2012 national congress".

He said: "The party isn't even focused on the 2011 elections."

Ntuli, who the diplomat came to regard as an Mbeki loyalist, said the "Zuma government will not come close to delivering" on the party's resolutions.

He said the ANC was concerned that it would lose to the Democratic Alliance in the Tshwane metro during the 2011 local government elections.

"We have big internal problems in Tshwane," he is quoted as saying.

He reportedly attributed the "problems" to "infighting over government positions".

Ntuli said this week that he had not seen the cable.

"I am just surprised, because I never had any meeting with the embassy about those issues," he told the paper.

On Saturday, Beeld newspaper reported that according to a diplomatic cable published by WikiLeaks, ANC treasurer general Mathews Phosa told US ambassador Donald Gips on December 17 2009 that he was worried about "continuing tension" between the ANC and its alliance partners.

The conversation took place amid a bitter dispute between senior members of the ANC-led alliance.

A few weeks earlier, ANC Youth League president Julius Malema had described South African Communist Party deputy general secretary Jeremy Cronin as a "white Messiah".

This, after Cronin noted that Malema and others only thought of "bling" when they spoke about the nationalisation of mines.

Phosa said even though the "anti-communism" call in the ANC was increasing, the clashes had more to do with personalities than with anything else.

According to the document, Phosa told the diplomat: "Everyone talks about 2012. The league thinks Mantashe's roles as Communist Party chairman and secretary general of the ANC [are] in conflict with each other."

Phosa also revealed details of a closed meeting where Malema accused Mantashe of having a conflict.

Phosa said the ANC needed time to cool off, otherwise the 2012 party congress would be "worse than Polokwane".

Phosa said this week that he would not comment on the cable.

"As a lawyer I do not have to authority to comment on documents that I have never seen, and which have been written by a third party." - Sapa
Source: Mail & Guardian Online
Web Address: http://www.mg.co.za/article/2011-02-20-wikileaks-anc-a-complete-mess

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Analysis: Big miners make brave bet on record commods boom | Reuters

Analysis: Big miners make brave bet on record commods boom

(Reuters) - Any investors willing to bet that the commodities boom is running out of steam may need both courage and patience: major miners have wagered more than $110 billion on the opposite view.

BHP Billiton (BHP.AX), Rio Tinto (RIO.AX) and Xstrata (XTA.L) have committed themselves in the last two weeks to spending vast sums on expanding production of iron ore, copper, coal and other raw materials over the next five years.
In decades past, that would signal the beginning of the end, the exuberance that leads to oversupply and tumbling prices, but this time the miners say it's different -- and, for once, commodity markets are inclined to believe them.
"The growth fundamentals certainly support these big expansion projects," said John Robinson, chairman of investment vehicle Global Mining Investments (GMI.AX) whose funds are managed by BlackRock (BLK.N), the world's biggest asset manager.
The difference this time can be summed up in a word: China. Or maybe two: China, India.
UNPRECEDENTED
Industrialization and urbanization on the scale of China are unprecedented: in three decades, the proportion of its people living in cities has more than doubled to 45 percent, creating record demand for steel and its raw materials.
China boasts around 170 cities with more than one million residents, compared to Europe with about 35, and there are still 300 to 400 million people expected to move from the countryside to the city over the next 20 years, most of whom will live in the country's rapidly expanding forests of apartment blocks.
A typical 90-square-meter (970-square-foot) apartment in China needs six tonnes of steel and each tonne of steel requires 1.7 tonnes of iron ore. And every new building needs to be wired with copper and powered mostly by coal-fired electricity.
Add a fast-urbanizing India to the mix and it's not hard to see why billions are being spent to dig more iron ore, the primary ingredient in steel-making.
SOME DOUBTS
Outright pessimists are hard to find in commodities markets, but doubts are growing, especially over the near-term outlook, with traded iron ore prices and copper at record highs and steel-making coal prices up more than 30 percent in 12 months.
Some analysts say inflationary concerns and rising interest rates in China, coupled with forecasts for slowing growth in emerging markets overall, could take the polish off commodities.
"We have seen record highs...but you can clearly see that demand is cooling down a little on the current high prices," Commerzbank analyst Daniel Briesemann said.
Though iron ore and coal prices have yet to show signs of softening, copper is off its peaks, touching a three-week low on Thursday, and aluminum has seesawed as London Metals Exchange inventories near record highs.Read the rest here:

Analysis: Big miners make brave bet on record commods boom | Reuters

Myth of Africa’s ‘resource curse’

Myth of Africa's 'resource curse'

Diamond rush ... Fortune hunters digging for diamonds in Marange RELATED STORIES Mining, agriculture: the game changers A BELIEFthat I find to be fundamentally flawed is the so-called "resource curse of Africa". That belief is based on an equally flawed notion that because of the abundance of mineral wealth in Africa, the continent finds itself mired in endless conflicts, poverty and disease. While I understand the frustration behind the peddlers of this belief, what they fail to discern is an emerging momentum in African countries to realise fully their mineral wealth potential for the benefit of their citizens. I believe that this steady momentum has been born out of an honest reflection of what is holding us back, and how to overcome this. At a basic level, the main drawback can be narrowed to a poor or still nascent organisational capacity. Many conventional economic solutions have been tried and failed (e.g. ESAP I, II) in many parts of Africa probably because they focused a lot on the economy at an aggregate level. As in physics, real and game-changing progress was achieved through the study and understanding of interaction of the smallest particles of the universe. In analysing economic development, it is also important to understand how and why some basic economic activities operate the way they do.

Congo's east: Still smuggling | The Economist

Still smuggling

A warlord goes about his business

Congo's east

Feb 10th 2011 | KINSHASA AND GOMA | from PRINT EDITION

BOSCO NTAGANDA is a Congolese army general and former rebel leader wanted by the International Criminal Court (ICC) for recruiting child soldiers. On February 3rd a plane from Nigeria landed in Goma, capital of North Kivu in the Democratic Republic of Congo, and a group of his men swiftly unloaded $6.5m in cash. Pursued by police through Goma’s streets, they ferried the money to one of the general’s compounds. The plane was later loaded with over 400kg of gold, worth around $19m at today’s prices. But the authorities seized the gold and arrested the passengers—an American, a Frenchman, and two Nigerians—for trafficking.
According to the UN, General Ntaganda, once deputy to the warlord Laurent Nkunda, oversees a vast mineral-smuggling operation in eastern Congo. It is manned by former rebel allies who, under a peace deal, are now part of the army. The trade—legal and illegal—in gold, tin ore and coltan from the region is worth hundreds of millions of dollars. In September, in an attempt to clamp down on smuggling, the Congolese president, Joseph Kabila, imposed a ban on most mining in the east. Mr Kabila wants to root out “mafias”, he says, which include both the army and the armed militias that control the region’s mineral trade. That trade has fuelled more than 15 years of war, killing and displacing millions. But the prohibition has done little to limit the smuggling.
General Ntaganda, a Tutsi, is presumed to have the backing of neighbouring Rwanda, run by Paul Kagame, also a Tutsi. Rwanda may well have more influence in the Kivus than Congo’s own government, 1,000 miles (1,600km) away in Kinshasa. Even with an ICC indictment hanging over his head, the general freely walks around Goma. During the day he plays tennis on clay courts in the shadow of Goma’s restless volcano, Nyiragongo. At night he dines in lakeside restaurants frequented by UN and aid workers and the local elite.

Outside the town, his soldiers continue to plunder and rape. On New Year’s Day Lieutenant Colonel Kibibi Mutwara, who fought with General Ntaganda’s rebels, allegedly ordered his men to attack the village of Fizi in South Kivu province in retaliation for the murder of a soldier. At least 62 women, men, and children were raped, according to hospital officials. Unusually, Colonel Mutwara has been arrested. The trial, along with ten of his men, will begin shortly in Baraka, a nearby town.
Mr Kabila says that Congo needs peace before it can have justice. But General Ntaganda and men like him are a growing embarrassment to the Congolese, the Rwandans, the UN, and the ICC. Last month Luis Moreno Ocampo, the ICC’s chief prosecutor, said that the general’s arrest was his “next objective.” But the ICC’s power is limited and in this case depends largely on the governments of Rwanda and Congo.
Mr Kabila faces re-election in November. Arresting the general could rekindle the widespread support he had in the Kivus at the last vote in 2006—supposing he can maintain some semblance of peace afterwards. And if Rwanda ended its support for a man wanted by the ICC, that could help repair the damage to its reputation from a messy election season of its own last year. Will they turn on the general?

from PRINT EDITION | Middle East & Africa

Congo's east: Still smuggling | The Economist: "- Sent using Google Toolbar"

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What Resource Curse? - By Charles Kenny | Foreign Policy

What Resource Curse?

Is it really true that underground riches lead to above-ground woes? No, not really.

BY CHARLES KENNY | DECEMBER 6, 2010

Bad news: Mozambique has just discovered between 6 trillion and 8 trillion cubic feet of gas sitting off its shoreline -- quite enough for commercial production. This on top of a recent coal-mining boom is destined to make the country a major natural resource exporter. Joining the East African country in recent misfortune is Papua New Guinea, scheduled to start exporting $30 billion worth of natural gas, and Afghanistan -- particularly blighted by the discovery of iron, copper, cobalt, gold, and lithium deposits with a combined value over $1 trillion. Oh, lackaday. Whatever chance they had of sustaining a stable, economically robust democracy is surely down the pit latrine now.

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How so? Enter the resource curse -- the idea that the more stuff dug out from on or under a country, the slower it will grow and the higher the risk it will descend into civil war. Versions of the curse have been around for some time. Back in the 1970s, economists worried about "Dutch disease." Countries that exported a lot of gas or oil would see their exchange rates go up as a result. This, in turn, could make their manufacturing exports uncompetitive. But the idea really picked up steam in the mid-1990s, when Jeffrey Sachs and Andrew Warner, then both at Harvard University, found that countries that exported more agricultural products, minerals, and fuels saw slower economic growth.
Sachs and Warner highlighted Dutch disease and its knock-on effects as the likely cause. But other researchers looking at the same data argued that the link might be through empowering kleptocratic leaders with resource rents or the destabilizing political impact of easy money. In a matter of a few years, resource exports were charged with a host of ill effects -- not least, low education spending, unstable government, civil war, corruption, and poor governance.
The curse is the type of counterintuitive idea that makes for a great newspaper op-ed. Nonetheless, the curse is also the kind of counterintuitive idea where intuition may have been right to begin with. In 1997, the World Bank produced some measures of total natural resource wealth -- including agricultural land, mineral and oil resources, and protected areas. The richest countries in terms of resources per citizen were Australia, Canada, New Zealand, and Norway. Their average income per head in 2008 was $24,430. Jordan and Malawi were at the bottom of the list. Jordan has a per capita income of $5,702; Malawi's is $744. Looking at mineral wealth alone, Venezuela and Norway were at the top, while Belgium, Benin, Ghana (before the recent oil discoveries), and Nepal were at the bottom. While Ghana's oil discovery suggests one problem with the rankings -- rich countries have been better explored for mineral deposits -- nonetheless, the list hardly suggests that resource scarcity is the secret to rapid growth.
Looking at recent growth across countries, Swiss economist Christa Brunnschweiler concludes that economies with greater resource wealth actually grew faster between 1970 and 2000 than resource-poor countries. She also finds no evidence that greater resource wealth is associated with weaker institutions, a finding repeated by Daron Acemoglu at the Massachusetts Institute of Technology.
Together with her colleague Erwin Bulte, Brunnschweiler also looked at the link between natural resources and civil disorder. They found that countries with more natural resource wealth were less likely to descend into civil war in the first place. The same result held whether they were using a broad measure of resource wealth or focused only on minerals or oil. Elsewhere, Stephen Haber and Victor Menaldo of Stanford University and the University of Washington, respectively, studied the relationship between oil revenues and democracy over time across countries. They found that democracies were actually made more resilient by growing oil revenues -- while they couldn't find an impact one way or another when it came to autocracies. Sure, there are cases where oil revenues and autocracy increased together. It is just that there are at least as many cases where that didn't happen -- and more cases where democracy strengthened as revenues went up.
How to reconcile these results with all the papers and articles that find a curse? Earlier studies looked at the importance of natural resource exports at a particular moment in time. There, the relationship holds -- high dependence on resource exports is associated with lower growth and risk of civil war. But that's a strange way to measure "the curse of resources." According to the usual story, the curse involves the misfortune of sitting atop an oil field or diamond-bearing rocks. It's a story of abundance -- as examined by Bulte and Brunnschweiler -- not dependence.
And dependence has got to do with a lot of other things besides mineral reserves. It is true that many countries that rely heavily on natural resource exports are poor and unstable. That's because poor and unstable countries are rarely globally competitive in banking or computer design (it's hard to develop a flourishing microchip industry as the bullets fly). Natural resources are pretty much the only thing such countries have a comparative advantage in trading. Again, countries don't get rich if all they do is produce crops and dig stuff out of the ground. Getting rich takes a vibrant services sector and at least some manufacturing. So countries where digging stuff out of the ground is an especially large part of what goes on in the economy are in trouble. But they are in trouble because they've failed so miserably to create an environment where services and manufacturing can flourish -- not because they happen to have a diamond deposit.
Do kleptocratic regimes exploit natural resources to pad their bank accounts, buy off opponents, and purchase weapons to cow holdouts? Of course they do. Exploiting, padding, bribing, and bullying are what kleptocrats do best. But they are equal-opportunity exploiters. If natural resource rents aren't available, they'll find something else -- and maybe do something worse to get it. For every Gen. Sani Abacha skimming billions off Nigeria's oil wealth, there is a Field Marshal Idi Amin massacring Ugandans by the thousands without the aid or incentive of significant mineral resources.
Happily for those countries stuck atop piles of diamonds or lakes of oil, then, it turns out the resource curse must have been enchanted by a pretty feeble witch. Once you look at the evidence more carefully, the usual argument is turned on its head. Countries that rely on natural resources for a large part of their output are indeed cursed -- by poor quality government and an institutional environment that stifles the growth of manufacturing and services. That's the good news for Afghanistan, Mozambique, and Papua New Guinea: They won't necessarily get any poorer or more unstable thanks to their massive mineral reserves. But bad news follows, too: Given the comparatively weak state of their current institutions, the countries are unlikely to use the money generated to become the next Norway, either.
That's why the most heralded talisman against the resource curse -- improving institutions through greater transparency and oversight -- makes sense regardless. In fact, because so much of the revenues from extractive industries flow through governments, improved oversight might be a particular help after a mineral find. The Extractive Industries Transparency Initiative, for example, publishes audited statements regarding payments from industry to government in royalties and taxes. Another approach, championed by Todd Moss at the Center for Global Development, is to pass on oil revenues directly to citizens -- a model adopted in Alaska. These are good ideas, and it is great news that Mozambique and Afghanistan have signed up to the Transparency Initiative.
But at heart, they are good ideas because all governments should be more transparent and increase the flow of resources to communities, no matter what's under their land. Blaming oil wealth for poverty, though, is like blaming treasure for the existence of pirates.

GIANLUIGI GUERCIA/AFP/Getty Images

Charles Kenny is a senior fellow at the Center for Global Development and a Schwartz fellow at the New America Foundation.

What Resource Curse? - By Charles Kenny | Foreign Policy

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Mugabe Cancels Visit to Ecuador Following Wiesenthal Center Protest | Simon Wiesenthal Center

Mugabe Cancels Visit to Ecuador Following Wiesenthal Center Protest

Buenos Aires, September 28, 2010

Zimbabwe’s dictator, Robert Mugabe cancelled a scheduled trip to Ecuador, where he was to receive a Doctorate Honoris Causa in Civil Law from Bishop Walter Crespo Guarderas, self-declared head of “the Anglican Province of Ecuador”. Mugabe’s host has been linked with former Bishop of Harare, Dr. Nolbert Kunonga’s “Anglican Province of Zimbabwe”, and was charged, in 2001, with allegedly supplying arms to the FARC terrorist movement of Colombia.

The Simon Wiesenthal Center had expressed indignation at the planned visit to Quito, due to take place following the UN General Assembly in New York.

In a letter to Ecuador’s Foreign Minister, Ricardo Patiño, Dr. Shimon Samuels (Wiesenthal Center Director for International Relations) and Sergio Widder (Director for Latin America) had noted that “Mugabe’s dictatorship has, for over three decades, set a record in human rights violations… his troops’ massacre of over 20,000 Matabele, in 1983-84, has been denounced as genocide and documented by the African Union”, adding, “Mr. Minister, lead the way in declaring this tyrant persona non grata throughout the Americas”.

“Investigate Mugabe’s host, Reverend Walter Crespo, for reported links with Zimbabwe’s oppressive system and publicly condemn this honorary doctorate award initiative”, had urged Samuels.

“Mugabe’s presence in Ecuador would offend human rights victims and whitewash such abuses in Latin America”, had added Widder.

Following its protest, the Center received an official letter from Ecuador’s Foreign Ministry stating that Mugabe had cancelled his “private visit” to that country.

“We construe from this diplomatic response that the tyrant is not welcome in Ecuador and hope that this sets a precedent throughout Latin America”, concluded Samuels and Widder

For further information contact Shimon Samuels at +336 09770158, or Sergio Widder at +54911 4425-1306, join the Center on Facebook, www.facebook.com/simonwiesenthalcenter, or follow @simonwiesenthal for news updates sent direct to your Twitter page or mobile device.

The Simon Wiesenthal Center is one of the largest international Jewish human rights organizations with over 400.000 members. It is an NGO at international agencies including the United Nations, UNESCO, the OSCE, the Council of Europe, the OAS and the Latin American Parliament

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Mugabe Cancels Visit to Ecuador Following Wiesenthal Center Protest | Simon Wiesenthal Center

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Why Africa won’t be the next Bric | beyondbrics | FT.com

Why Africa won’t be the next Bric

August 27, 2010 5:26pm

by Barney Jopson

Prompted by this week’s application from South Africa for Bric “membership”, the man who coined the acronym - Jim O’Neill of Goldman Sachs - asks in today’s FT whether Africa as a whole could become the next Bric.
On several measures he says the continent has a reasonably strong case, but he notes that its biggest economies would still need to raise their games on many fronts - and he misses some more profound weaknesses in the Africa-as-a-Bric idea.
O’Neill created the Bric acronym in 2001 as a neat way of grouping together four countries that shared the potential for generating rapid growth, attracting foreign investment, and reshaping the global economy.
Ngozi Okonjo-Iweala, managing director at the World Bank, latched onto the idea of Africa joining the group in a speech earlier this year in which she sold it as a “trillion dollar economy”.

It’s high time Africa saw and presented itself as the fifth Bric, an attractive destination for investment, not just aid. This is realistic and within reach. As Nelson Mandela said, “It always seems impossible until it’s done”.

But before you can decide where to squeeze an “a” into the acronym, old Africa hands will jump in to say that it’s nonsense to compare it to a single country: not only is Africa a continent, it’s arguably the most diverse on the planet in terms of economics, politics, culture and the environment.
What’s more, 20 African countries have populations of less than 5m people. O’Neill is alive to that and focuses his discussion on the biggest African economies.

If you … look at the potential of the 11 largest African economies for the next 40 years (by studying their likely demographics, the resulting changes in their working population and their productivity) their combined GDP by 2050 would reach more than $13,000bn, making them bigger than either Brazil or Russia, although not China or India.

But even those 11 are highly diverse - including two of the biggest, Egypt and Nigeria. And due to Africa’s lamentable roads and railways, as well as its internal border restrictions, many of them function as isolated economic islands.
Afro-optimists would say regional trading blocs are changing that, but the reality is that only about 10 to 12 per cent of African trade takes place with other African countries, according to a study from the UN Economic Commission for Africa and others.
For those reasons, it doesn’t make a lot of sense to suppose that Africa’s biggest economies will follow the same development trajectories over the next few years, let alone the next few decades.
Yet it’s worth remembering that the Bric grouping initially attracted flak for not having any coherence either, but its runaway popularity with western businesses and investors has given the four countries more in common than they had before.
Funnily enough, one thing they share is a growing hunger for mineral resources from Africa (notably Nigeria, Angola, the Democratic Republic of Congo, and Sudan).
But it’s doubtful whether any country other than South Africa has the right mix of factors to make it an attractive destination for serious western investment, across a broader range of sectors, which could rival that going to the Brics.
Earlier this year Shanta Devarajan, the World Bank’s chief economist for Africa, responded with a dose of scepticism to Okonjo-Iweala’s call:

The distinguishing feature of the Brics is that they are both middle-income and large. So it’s not clear how any individual African country can aspire to being a Bric. Countries such as Malaysia or Chile may be more appropriate models for most African countries.

To achieve their “2050 potential”, O’Neill says African countries need more macroeconomic stability, less external debt, a stronger rule of law, better education, (even) more mobile telephones, and a purge of corruption.
But it’s worth paying more attention to the parallel trends of population growth (seen as a good thing by many investors in India and Brazil) and job creation (a difficult task that most African governments are failing to manage).
Each of the Bric countries have their own pockets of poverty, and in some parts of Africa poverty is actually falling. But too many countries are producing more people than they can employ. And not only does that limit their potential as new consumer markets. It has ugly consequences in terms of crime, conflict and social unrest that can strangle economic growth.
Related reading:
Building Brics, FT
Is Russia the best Bric after all? beyondbrics
Why Africa won’t be the next Bric | beyondbrics | FT.com

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DRC: Independent Audit Of First Quantum Mining Firm To Be Launched

DRC: Independent Audit Of First Quantum Mining Firm To Be Launched

The Democratic Republic of Congo plans to audit the operations of First Quantum Minerals Ltd. in the country to examine “suspected wide-scale misconduct,” Bloomberg reported Aug. 31, citing Mines Minister Martin Kabwelulu. A body engaged in financial auditing will carry out the investigation, which will look into allegations that First Quantum illegally exported copper ore without fully declaring it.

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Rogers Says World Needs Higher Interest Rates, Commodities Set to Advance - Bloomberg

Rogers Says World Needs Higher Interest Rates, Commodities Set to Advance

By Bloomberg News - Aug 25, 2010

China and other global economies should increase interest rates to contain a surge in inflation, said investor Jim Rogers, chairman of Rogers Holdings.

“Everyone should be raising interest rates, they are too low worldwide,” Rogers said in a phone interview from Singapore. “If the world economy gets better, that’s good for commodities demand. If the world economy does not get better, stocks are going to lose a lot as governments will print more money.”

China’s central bank hasn’t increased rates since November 2007. In the U.S., the Federal Reserve this month left the overnight interbank lending rate target in a range of zero to 0.25 percent, where it’s been since December 2008, while the European Central Bank has kept its key interest rate at a record low of 1 percent.

Policy makers in Malaysia, South Korea, Taiwan and Thailand have increased the cost of borrowing at least once this year, while India has boosted rates four times in five months.

The global economy is at the risk of prolonging a recession after reports over the past two days showed U.S. home sales plunged by a record and Japan’s export growth slowed for a fifth month in July, he said.

“We never got out of the first recession,” Rogers said. “If the U.S. and Europe continue to slow down, that’s going to affect everyone. The Chinese economy is 1/10 of the U.S. and Europe and India is a quarter of China, they can’t bail us out.”

Rogers, who predicted the start of the global commodities rally in 1999, said he was short emerging markets and stocks and long on commodities.

“Commodities will go above their old high sometime in the next decade even if they only grow 5 to 6 percent annually,” said Rogers, who is a consultant for the Dalian Commodity Exchange.

Rogers said he would resume buying China’s stocks if they were to tumble as they did during the aftermath of the global financial crisis in 2008, when they plunged 65 percent. “I haven’t bought since the fall of 2008,” he said. “It it were to happen again, I hope that I’m smart enough to buy again.”

--Allen Wan. With assistance from Chua Kong Ho. Editors: Richard Frost, Linus Chua

To contact the Bloomberg News staff on this story: Allen Wan in Shanghai at awan3@bloomberg.net

®2010 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Rogers Says World Needs Higher Interest Rates, Commodities Set to Advance - Bloomberg

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