Comesa situation bulletin May 2013

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Update on the situation in various COMESA countries.

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Comesa situation bulletin May 2013

  1. 1. COMESA  SITUATION  BULLETIN   Volume 5 – N o 5- May 2013 - Monthly published by AFRIKASOURCES Edited by AFRIKASOURCES – Author: Jean Philippe PAYET [CEO-Senior analyst] The content of this publication is based on a selection of news browsed by our services. Request for a more detailed analysis at payet@afrikasources.com – © Afrikasources Consult Ltd                               After  polls,  eyes  on   Kenya’s  future       Kenya’s new president, Uhuru Kenyatta (a former finance minister), has appointed his former colleague, the Harvard- educated Mr Henry Rotich as Cabinet Secretary for the National Treasury. Mr Rotich was the head of macroeconomics at the treasury in the finance ministry since March 2006. Mr Kenyatta also named diplomat Amina Mohamed as foreign secretary nominee, the first woman to be nominated for the post since independence in 1963. Other nominees included James Macharia, a banker, for the health ministry, and Fred Matiangi for the information portfolio. Kenya's private sector is upbeat about the economy after President Uhuru Kenyatta announced some major reforms during his inauguration speech. Key among the Kenyatta's pledges was the promise to drastically ease the business registration process in the country. Kenya is currently ranked among countries in Africa where business registration processes are painstakingly long but the country’s good performance has been underpinned by overall strong economic policies. More: Business Daily - http://tinyurl.com/cvpv2xq Sudan - Sudanese insurgents have carried out their first combined attack, a surprise push into a strategic and previously peaceful region, but analysts doubt the rebels' readiness to take Khartoum by force. Swaziland - ANC called for the democratisation of neighbouring Swaziland, in a rare public rebuke of the country's ruling monarchy. Mauritius - Floods devastated the Mauritian capital, Port-Louis, on Mar. 30. 11 people were killed, a hundred were wounded and thousands of dollars of damage was caused. Emergency services were overwhelmed and unable to provide effective response to the disaster. Djibouti – Following parliamentary election on February, President Guelleh named former defence minister Abdoulkader Kamil Mohamed to replace longtime ally Dileita Mohamed Dileita who had served as prime minister since 2001. Egypt – The country will keep all state-owned firms in public hands, President Mohammed Morsi says in a speech, calling a halt to a flawed privatisation programme that failed to kick-start the country’s economy. Millions  missing  in   Congolese  mining  taxes       Congo has attracted international firms like Freeport-McMoRan, Glencore and Randgold to mine its rich copper, cobalt and gold deposits, but remains one of the most corrupt countries. Tax authorities have failed to account for $88 million in revenue from the booming mining sector, according to Mack Dumba Jeremy, national coordinator in Congo for the Extractive Industries Transparency Initiative (EITI). "DGRAD (the Tax Agency) must prove that the money actually arrived in the public treasury in 2010. If they can't then the executive committee of EITI will go to the courts in order to launch an inquiry into the whereabouts of this $88 million," said Jeremy. EITI is an international initiative which aims to improve transparency in resource-rich countries by tallying up the amount paid by companies and how much governments say they receive. At the same time, London-listed ENRC is facing a corruption probe led by Britain's Serious Fraud Office following internal investigations and whistleblower allegations concerning various assets in Africa. The UK Listing Authority (UKLA) has also ordered a "diagnostic review" of its acquisitions in DR Congo, including a 2010 acquisition that handed it control of copper mines held by rival First Quantum Minerals Ltd until they were seized by the Congolese government. Ethiopia is negotiating with Brazil, Russia and India to finance and build rail links after agreeing terms last year with Chinese and Turkish companies for other routes. The country (Africa’s second-most populous nation), is building 4,744 kilometers of electrified railway lines at a cost of 110.8 billion birr ($5.9 billion) as it seeks to reduce road-transport costs constraining the continent’s fastest growing non-oil producing economy over the past decade. Growth may slow to 6.5 percent this year and next, compared with average growth of 8.7 percent over the past five years, according to International Monetary Fund data. Ethiopia operates a state-led economy and is prioritizing investment in infrastructure as it seeks to transform one of the world’s least developed countries into a middle-income nation by 2025. The decision to use electric trains is because Ethiopia, which has the continent’s second-biggest hydropower potential, generates cheap electricity and spends all of its estimated $3 billion annual export earnings on importing fuel. Foreign investors are granted contracts on condition that 60 % of the funding is provided by their countries “policy banks” in foreign exchange, Ethiopian Railways Corp. General Manager Getachew Betru said. Ethiopia  Courts  BRICS   for  Rail  Projects     A team from the International Monetary Fund (IMF) visited Moroni from March 13 to 22, 2013 for its 5th mission to review the Union of Comoros' Extended Credit Facility (ECF). According to M. Harry Trines (Head of the mission), « Performance under the programme has been satisfactory. All the quantitative targets for end-December 2012 were met, as were four of the five structural benchmarks under the programme ». Therefore, the country will receive a disbursement of USD3.45 million from the IMF. However, the IMF called on the country to forge ahead with the privatisation of Comores Telecom in 2013: « Areas of focus included the implementation of the organizational frameworks for the public administration, continued improvement in banking supervision, privatization of Comores Telecom, and reforms of the public utility (MAMWE) and “Société Comorienne des Hydrocarbures” ». Establishing reliable electricity and energy supplies is crucial to sustaining economic growth and improving the business environment. Few days later, the World Bank approved a grant of US$3 million to help Comoros scale up an emergency response in parts of the island hit by devastating floods.In the past decade, when GDP growth was at its strongest, absolute poverty has climbed from 16.7% to almost 20%. IMF  supports  Comoros    
  2. 2. JOIN OUR NETWORK: http://investincomesa.ning.com   Author: Jean Philippe PAYET - The content of this publication is based on a selection of news browsed by our services. Request for a more detailed analysis at payet@afrikasources.com – © Afrikasources Consult Ltd NEXT EDITION: June 7th 2013   IMF  prescriptions  hurt   Malawi  say  NGOs     Markets  are  Endorsing  Path   to  Growth     Recent  increase  in  Uganda’s  military  expenditure  even  amidst  global  and   regional   defence   cuts   might   be   the   latest   indication   of   President   Museveni’s  strategy   to  fasten  his  grip   on  power   and   his  influence   on  the   region.   It   comes   at   a   time   when   a   new   report   by   SIPRI,   indicates   that   globally  and  regionally,  military  expenditure  is  declining  :  2012  saw  military   expenditure  in  Sub-­‐Saharan  Africa  drop  by  3.2  %.   Uganda  was  the  second  largest  importer  in  the  Sub-­‐Saharan  region  of  arms   between   2008-­‐2012   accounting   for   15   per   cent   after   South   Africa’s   24   percent.  It  also  reportedly  bagged  17  %  of  the  of  the  small  arms  and  light   weapons;  assault  rifles  and  submachine  guns,  transferred  in  Sub-­‐Saharan   Africa  and  Kenya,  Uganda’s  other  regional  military  competitor,  17%  23%  in   the  Arms  Flow  to  Sub-­‐Saharan  Africa  report.   Sudan   is   always   cited   among   what   whets   Museveni’s   arms   appetite.   Recently,  the   country  complained   to  the   African  Union   that  Uganda   was   supporting   rebellion   in   Sudan   and   Sudanese   media   reported   that   Khartoum  was  in  talks  with  forces  opposed  to  President  Museveni.   The  African  diaspora  is  a  major  source  of  foreign  income  so  large  that  it  now   outstrips  foreign  aid  sent  by  Western  donors.  Nearly  140  million  Africans  live   abroad.  The  money  they  send  back  home,  remittances,  is  worth  far  more  -­‐  in   value  and  usefulness  -­‐  than  the  development  donations  by  Western  financial   institutions.   The  exact  amount  of  these  remittances  is  unknown  because  not  all  of  it  is   sent   through   official   banking   channels.   But   the   official   volume   to   the   continent  has  gradually  increased  over  the  years,  from  $11  billion  in  2000  to   $60  billion  in  2012,  according  to  the  World  Bank.  As  a  proportion  of  gross   domestic   product,   remittances   in   Africa   range   from   next-­‐to-­‐nothing   to   almost  five  per  cent.   Worldwide  remittances  to  developing  countries  were  $351  billion  in  2011,  far   exceeding  the  $129  billion  in  official  development  assistance,  according  to   the  World  Bank.   More on Africa in Fact, April 2013: Aid-The bottomless pit The  6 h  Conference  of  the  African  Ministers  in  charge  of  Integration  [COMAI  6]  was  held  in  Mauritius  on  15  to  19  April  2013.  The  theme  of  this  year’s  conference   was  ‘Governance  of  Integration’.   Discussions   focused   on   the   status   of   integration   in   Africa   and   the   implementation   of   COMAI   V   recommendations,   consideration   and   adoption   of   the   recommendations  of  the  Experts  meeting,  consideration  and  adoption  of  the  Draft  Ministerial  Declaration.  Panel  discussions  involved  several  sub-­‐themes,   namely  Pan  Africanism  and  Integration,  Impact  of  Globalisation  on  the  Governance  of  Integration  in  Africa  and  the  furtherance  of  African  leaders’  interest  in   the  integration  process.   One  important  decision  relates  to  the  formation  of  a  Second  Bloc  of  combined  RECs  as  endorsed  by  the  18th  Ordinary  Session  of  the  AU  Assembly  in  January   2012.  This  would  be  an  emulation  of  the  Tripartite  Arrangement  (between  EAC/SADC/COMESA).  The  second  bloc  is  being  set  up  to  undertake  consultations   and  eventual  negotiations  with  other  regional  groupings  on  the  process  of  continental  free  trade  area  with  a  view  to  enhancing  Intra  African  Trade.   Other   key   recommendations   include   devoting   one   of   the   ordinary   sessions   of   the   AU   Summit   to   development   and   integration,   convening   a   consultative   meeting  on  the  ‘Blue  Economy’,  commissioning  a  study  to  propose  ways  and  means  for  the  rapid  integration  of  Island  States  and  landlocked  countries  as  well   as  the  facilitation  of  the  movement  of  people.   Challenges  impending  regional  integration  in  Africa  remain,  said  AUC  Deputy  Chairperson  Erastus  Mwencha,  emphasizing  in  this  regard,  the  governance  and   the  lack   of   clear   implementation   and   accountability  mechanism,   among  others.   The  inefficient  free   movement  of   persons  across   the  continent;   the   over-­‐ reliance  on  donor  funding  for  financing  integration  projects;  the  insufficient  citizen  ownership  and  the  lack  of  an  enabling  environment  for  a  people-­‐centered   approach  to  policy  making,  as  well  as  the  low  implementation  rate  of  numerous  signed  and  ratified,  with  insufficiently  transposed  legal  texts  into  national   legislation  and  the  intra-­‐African  trade  which  remains  low  at  10-­‐12  per  cent  of  the  continental  total;  were  among  the  major  obstacles  featured  by  M.  Mwencha.   More:  http://foreign.gov.mu/English/COMAI%20VI/Pages/default.aspx     6th  CONFERENCE  OF  AFRICAN  MINISTERS  IN  CHARGE  OF  INTEGRATION  [Mauritius]   In the face of severe economic hardship and an ominous economic growth prognosis for the foreseeable future, the Malawi Chamber of Commerce and Industry (MCCCI) was quoted as claiming that the economic reforms that critics have been against are actually the necessary cure for the country. But for the Council for Non-Governmental Organisations in Malawi (Congoma), International Monetary Fund (IMF) prescriptions imposed on Malawi such as a combined dose of currency devaluation; floatation of the kwacha and removal of subsidies of fuels is hurting Malawians. Following a mission in April, IMF decided to released US$19.6m ECF funding to Malawi. Indeed, “Malawi’s performance under the fund-supported program has been commendable despite a difficult environment. The policy reforms have begun to yield positive results, including increased availability of foreign exchange. The government also successfully rolled out its social protection programs,” said the IMF Team. IMF had suspended ECF in 2011 over what they called failure by then ruling Democratic Progressive party government led by the late president Mutharika. President Joyce Banda who came into power after the death of Mutharika saw devaluation as ‘necessary evil’. She devalued the kwacha by almost 50% and later floated it. As a result the cost of basic goods rose dramatically pushing the inflation rate well above 35 percent. Rwanda’s debut on the global bond market raised $400 million with an offering that was heavily over-subscribed by nearly eight times. Final yield on the 10-year bonds of 6.875% was less than reported expectations in the low-7% area, due to strong buyer interest. Proceeds will go to repayment of bank loans, infrastructure such as a hydropower project, expansion of the national airline RwandAir, and the completion of a convention center in the capital of Kigali. Fitch, which affirmed a “B” rating on Rwanda, noted its “solid economic policies and a track record of structural reforms, macroeconomic stability, and low government debt” (23.3% of GDP in Rwanda, compared to the median of 43.5% among B- rated peers). Certainly, the country is not without its challenges; it is landlocked, which vastly increases transportation costs for imported goods, and more electrical generation capacity is needed. It is often clouded by geopolitics, most notably the morass of conflict in the neighboring Democratic Republic of the Congo (DRC). Kagame draws criticism for being too tightly controlling, and human rights watchers charge the country suppresses political opposition and free speech. Critics highlight that the country is already the first beneficiary of Donors Aid in Africa. Are  Uganda  and  Sudan  entering  arms  race  ?   Why  Diaspora’s  Money  is  good   REGIONAL  NEWS  

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