This one is not as far fetched as it may seem…. and opens even more possibilities… I would rather money be spent on this type of energy development rather than an oil pipeline …
Yes HUMANS are in some ways batteries or potential chargers of batteries in just doing what they already do except with specially fitted items .. no change you human behavior at all…. sounds good to me.
What is a nontraditional Strategic Planner?
The easy answer is one that does not use the same format as Boston Consulting Group or Booz Allen. But that is too easy. See the large firms are often brought in to help boost someone else’s plan or to Design and implement a Management Information System. But who challenges the Top Management of Major Companies today. The short answer is almost nobody. And the reasons are as obvious as fear and as subtle as brown nosing.
A NON traditional Strategic Planner can come in many forms but for the sake of this post… and of course to bolster my own work,,, I would like to share with you my approach to Strategic Planning.
Let’s start with a simple idea. Often the problem that a person or company thinks they are facing is not really the problem but a symptom. There are other times that the problem is misstated. But realizing that the core issues are not being addressed is an afterthought most of the time.
Then there is the failure to see the future with greater accuracy. A bold statement given that NO ONE can see the future but we can predict with greater accuracy the further we extend our information sources outside of the Core Business.
In deciding a future for a company it is always important to identify issues affecting the employees, the Supplies and the Customers.
The Non traditional approach will see what is happening in these entities world and what is the potential that their business or behavior will be affected. Not just stopping there but going even further as to what may be happening in the Communities from Local to National to International and then what is happening in Technology outside of your core.
The purpose of this extensive network information gathering is to provide not only data for current operations but to see where the future may be affected by those external forces.
One need only look at Facebook’s phenomenal growth and now Facebook is facing n uncertain future in how to grow as the number of subscribers is flattening out and they look to Apps to grow or to change the paradigm in how their growth is measured.
Changing the paradigm is always an interesting way to change the future of a company… the Companies that are most successful do this on a regular basis and are leaders. The rest are followers and will grow or decline in response to how quickly they can adapt.
But there is another approach that is often over looked. When companies/ organizations or even societies face uncertain futures the Questions that are posed are usually a knee jerk reaction to a change in environment. WE HAVE A PROBLEM they say… but as I said above the problem they state is usually just a symptom and if treated as the sole problem does not address what is really going happening.
Sometime the problems are “unsolvable” in the context that they are presented. This is where my favorite technique is used the most and to the greatest advantage,
“IF YOU CANT SOLVE THE PROBLEM YOU ARE FACING YOU ARE FACING THE WRONG PROBLEM”
The second part of this is also appropriate in evaluating if the supposed problem is really a problem or just a symptom
“CHANGE THE DEFINITION OF THE PROBLEM TO COME UP WITH WORKABLE SOLUTION”
This also opens the door to not only being an industry leader but ancillary business with limited windows of opportunity and fabulous returns on investment.
A Practical Example;
Egypt: a Country of 80+ million people that depend on the Nile River.. There is a nearly a century old Treaty brokered by the British that dictated the amount of water that must flow to Egypt from the riparian Countries (those upstream and on the Blue and White Nile Rivers). This was not just for the use of the Egyptian people but to prevent the salty water of the Mediterranean from moving up the Nile River and contaminating Fresh water (potable water) supplies.
Most of these countries are breaking the treaty for various reasons. The most egregious of these is Ethiopia which claims the water as its own for purposes of Industrial, Hydro Electric, Dams, Commercial, Agricultural and human consumption without regard to Egypt’s critical needs. Adding to this siphoning off of water is the study by Egypt that even with all the water previously guaranteed by the treaty it would have water shortage problems by 2016.
The PROBLEM that is stated is that these riparian countries must release the water to Egypt. In all frankness that will not happen. Egypt has said it vies the taking of this necessary water as an act of war, and they appear to be justified. But WAR in a conventional manner is not a resolution to the problems Egypt really faces.
Some have suggested that Egypt use Desalinization plants that consume power that is still in short supply in Egypt and if Fossil Fuel is used then the huge cost is difficult to bear for the industrial nations of Europe and North America let alone Egypt Egypt has authorized a nuclear power plant they hope will help but it does not sole the REAL PROBLEM.
From my statements above you know that I have attempted to redefine the problem. The problem is how much water flows through the Nile River. You may at first say that is obvious and given the current attempts to resolve the problem as most see it (that being the Riparian countries excessive use) that there is little hope of getting more water to the Nile. But you would be wrong in assuming that the above listed actions are the ONLY methods of getting water to flow in the Nile.
There is another way to bring water to the Nile… and yes I have found it… but I will not give it away at this time. This is how I do strategic planning… not only can I bring more water to the Nile for less than 500 million US Dollars but I can create and sustain 10’s of thousands of new jobs in the process. These jobs go a long way to improve the economy of Egypt and to foster greater stability as well. Basically this plan addresses several of Egypt’s needs at the same time.
How can Egypt pay for this… that answer is simple as well. With the exception of maybe 5 million dollars upfront the Entire project can be paid for with no other funds from Egypt or loans Guaranteed by Egypt or even by giving away things to outsiders. Others will pay if for no other reason than peace
This is the type of strategic planning I do. Find issues that appear to have no solution redefine those problems, devise a strategy that will not only address that particular problem but also other problems in the environment, incorporate other “benefits” into the solutions presented, and just as important find the economic benefit that pays for the solutions as implemented. It is a NON traditional manner of Strategic Planning… but something I think should be more main stream in all areas of business, government and society.
To be a truly effective Strategic Planner we must look beyond the reality presented to see if that is truly the reality. Challenge the conventional thinking and come up with creative but executable methods that incorporate benefits that are far reaching assure a future positive outcome. It is not easy although it may appear to be. It takes a mindset that is not rigid, is flexible, and a think tank type approach. Simply it takes thought and creativity which few have today.
I am not soliciting business as I turn down 50 times more projects then I take on because most who seek my skills are not really looking for ideas they are looking for approval for their own. I am very very selective and of course expensive… but I generate returns far greater than most as I believe the economic realities demand profits in one way or another.
I am better in explaining things in person then I am in writing… as is the case for many my mind is usually faster than my fingers but I hope I was able to at least give you food for your thought processes
Craig Eisele
June 6, 2008
This blog entry (number 2 in a series) is to try and express my viewpoints on the current state of the USA Economy, my predictions for the future and how we are no longer a localized economy but now are part of a GLOBAL economy.
Where are we NOW? Commodity Prices:
Before I go into the Global Economy for Commodities and Fuel/power Prices I need to say that a LOT (maybe as much as one third in some cases) of the increase of Costs is from the weak dollar … as such, most of this post is dedicated to the supply and demand issues of the global econony.
The has been great interest in Oil prices… as well as there should be… I talked about Oil being in our everyday life before… as a commodity…. But I need to address some misconceptions about what the general public believes about the Price of Oil today.
First: OIL IS A COMMODITY… that means the prices are subject to supply and demand…. There is NO QUESTION that China and India play a significant role in the new use of oil… as a fuel and as a commodity for other applications…. This is a result of the rest of the world using those countries for lower prices thus bring in more Currency (Money) into those countries and lifting them out of the poverty (and to satisfy our own greed for more at lower prices and greater profits) that we saw them suffering from… now that we have awoken the sleeping giant, so to speak, there is no putting them back to sleep. They will continue to demand oil and other commodities at an ever increasing rate of consumption.
We have been duped into believing that “Speculators” are to blame for higher prices… if South West Airlines is a speculator then you are right… but the reality is that it is GLOBAL DEMAND that pays these exorbitant prices we are seeing… and as I said before… there is NO GOING BACK.
IF we produce more oil it will only keep up with the demand worldwide. While it may make us less dependent on oil for our own needs the prices we will pay in the USA will be based upon WORLD PRICES… not our domestic (USA) production. To believe otherwise is just foolish. Additionally, currently we are importing only about 30 percent of our domestic needs.
We are not entitled to lower fuel prices… it is what it is and we will not sell for less than the world price unless we become a socialist society and subsidize our oil… and that will never happen… or at least I hope we will never become a socialist country. Our sense of entitlement is what is causing a great many problems for us in this country today… and it needs to be put into proper perspective.
Many Americans want to know why China or India Consumption of oil is hurting us here… it is simply business…. I business you do not want to hear about but at least need to understand….The companies that drill for oil are not federal Government Oil Companies… they are in the business to make money… the basic model of Business is that thing called supply and demand… Because I drill and pump crude oil in the USA does not mean that I am obligated by any law to sell it in the USA… as a businessman when I get something out of the ground I can sell it to the highest bidder…. If the USA does not want my product but someone in another country wants it… then I am entitles to sell it to any country (with few exception) I want to … THAT IS BUSINESS. To expect that I should sell it to you at any cheaper price is unreasonable… and bad business… and since these companies that do pump crude oil have other people who own stock (real ownership) of their companies… then they have a legal (fiduciary) obligation to maximize profits for their owners… remember again… we are NOT a socialist Country. Additionally to punish me for selling at the market price with a windfall profits tax is unreasonable… you may not like my profits… but they are legitimate and are mine… additionally I will increase prices to compensate for the “surcharge” tax on my profits.
If we really want Oil Companies to become energy companies then we need to develop incentives to foster the Oil Companies to become “Energy Companies” release in the Fall of 2008….
As I said you did not want to hear that… but those are the basic facts of life today, as we know them! Painful is it not?? Yet this has been the standard model of capitalism for hundreds of years and is not going to change anytime soon.
The same is true of cheap food and household energy use and even in other commodities like gold and Steel and copper (used in your wiring I might add) (I will address health care in another post… and you will NOT like what I have to tell you there either).
The ONLY way of getting a better price is to strengthen the dollar… but our past practices in our country have caught up with us and now we have financial troubles with Credit availability (after years of easy credit) and even with interest rates low we are not able to get the benefits of those cheap rates. Yet is we raise interest rates to fight the higher costs (also known as inflation) we will cause greater harm to the overall economy… the government and the Federal Reserve are in quite a conundrum and there is no quick fix to this problem of a stringer dollar… so do NOT anticipate things getting better quickly.
As bad as things are now they will get better based upon what has already happened… and I fear for many Americans with the Winter Heating Season just ahead (yes we are actually almost there and it is only the beginning of summer) as any American who drives to work and makes less than 40,000 per year per household will find themselves financially in the red (to me this is the new Poverty level in the USA). Elderly Americans on fixed incomes will suffer the most and the Cost of Living adjustments are not accurately reflection the actual increase of cost on the average family… and how can they when the supposed US Index for the Average hourly wage is over 17 dollars an hour…. That shows how skewed the Inflation indexes are by the number of “high wage” earners there are in this country… it is, simply, out of control.
In a future post I will give the bad news … I NOW expect oil to reach 250 dollars a barrel by sometime in 2010… unless the dollar gets better fast…. However with the choices for president and the policies I see coming down the road… that may not be able to be done (remember the discussion on Fiscal and Monetary policy and the effects). Hence 5 dollar a gallon gas will be cheap by comparison…
Corn Prices :
When we find other uses for Commodities outside the normal and regular use we create a demand for additional supply of that commodity. Corn, however, has had a double whammy effect. Yes I am talking first about Global Demand… Most of us think of corn as a food product for our table in many different forms…. Many of us forget that beef and chicken and even pork is raised for slaughter through the use of “feed corn” for them to consume to get these products…. Now also remember that farmers have limited amount of land to use… they also want to get the most out of every acre of land they farm… and currently feed corn is a great provider of revenue.
AS we increased the standard of living for impoverished countries like India and China… they consumption patters changed…. Meaning they now eat more of the Meats I described above…. Those meats also require the feed corn to produce. …Hence demand for feed corn went up and farmers produced more feed corn as a result.
The second whammy was the production (and subsidy by our government) of Ethanol. This non-food use for Corn drove the demand beyond the normal supply and demand curve and as we have seen dramatically increased prices… while the effectiveness of using Ethanol is being debated and alternatives are being developed this demand will not come down and prices will remain high.
What has surprised me about this is, that it was not expected by so many people…. Using a food in a way that is not a food product would naturally increase the demand for that product. As a note…. using Sugar Cane for ethanol will also raise food prices… yet the government may be more willing to do this because of the health consequences of sugar (yes gaining weight).
Corn prices are a direct result of GLOBAL DEMAND and the traditional supply and demand pricing but in a global context.
Energy Costs:
Generally we think of energy as the gasoline we put into our cars. This is true but we consume electricity in ever greater quantities then ever before. Heating, Air-conditioning, lighting TV’s Computers… ALL requiring Energy…. Energy is derived from many sources… Nuclear is being touted as a future provider of energy to wean us off of fossil fuels… but the COST to produce which is said to be low… will NOT reflect in lower prices to the Consumer…. The pricing index will show that they will sell this energy at lose to the same price as Coal or Diesel or natural gas plants… this seems to be the case with Hydro electric now. OLD power plants, are increasing prices, because of consumption, they are not lowering them. Yes the prices of oil and Coal have a lot to do with the international (Global) demand… and the prices have been going up dramatically…. So while we like to think we are better off with “alternative Fuels” and Alternative generation facilities” we are kidding ourselves if we think that will reduce our costs by very much at all… Making electricity… the production of power is a business and as such they obligation is to get the highest price for the product as possible. WE are not entitled to lower power costs!
Electricity is a produced commodity from a natural resource commodity…. At least for now.
Post #3 will be about credit, housing prices and maybe the stock market and Global Currencies
If you have been reading these posts… I will eventually get to the part where I make recommendations for the future… but I still need to explain more about where are are and how we got here.
Craig Eisele
OK… maybe I am not going to actually do a study… most of my data is allegoric (from stories). But it is a reality that Aid to Africa is not efficient for many reasons that are solvable.
When aid is given with strings attached such as the mandated use of the donor counties personnel or equipment and supplies then it is not aid to Africa it is aid to the Donor Countries’ manufacturing or consulting firms. Expert costs can be triple or even quadruple the cost of the same services in the Donor Countries because of travel, housing (to the donor countries standards) and high salaries of Donor country employees sent to Africa.
I have traveled to Africa frequently and have been in approximately 20 countries in the continent. While Greed, fraud and corruption do exist, it is the cost of goods and services that donor countries provide that takes a great deal of the AID that is supposedly given. Cash sent to most African Countries is subject to redistribution because of other more pressing needs. And sometimes the Strings on the aid have profound negative effects on other parts of the recipient African Countries economy and existing farming or manufacturing enterprises. There is an article in this blog about Namibia and Angola and the Cattle ranching that has been devastated by some of those strings to aid there.
I understand that Donor Countries want to try and maximize benefits to their domestic enterprises when giving aid… but competition for those aid funds can significantly reduce costs and maximize the benefit of the AID to the recipient countries.
Let me move to a different part of this issue… the raising of funds for Aid Organizations. Former President Bill Clinton has stated (paraphrased) that if there was profit to be made in solving global poverty then there would be no global poverty…. But that statement is based upon a false premise… that global poverty can be solved… I am adamant on this.. GLOBAL POVERTY CANNOT BE SOLVED…. Not in my life time… and not even in this century… poverty will always be with us as long as we are a society that functions on money… someone will always be at the bottom of the scale and hence we will always have poverty. This is a fact of life that cannot be dismissed out of hand. (Please note I am not tackling the issue of the measurement of poverty or its definition at this time… maybe later)
What we can do is significantly reduce poverty by revamping and reorganizing the AID that is given and the manner in which it is given.
People think that AID is free… it is not… every aid organization has to raise funds.. that take time, personnel and money… however we can make guidelines on how much of the aid given is actually used for those ongoing fund raising and strategizing efforts as well as the Organizations basic operations and expenses.. For this I am in favor of a sliding scale ranging from 3.5% to 20% depending on the total amount raised per year. This is not include the actual administration of the project (for which I feel not more than 20 % should be allocated to non-resident administration of the ACTUAL Project)
From personal experience:
I have been forming a new NGO (Non-Government Organization) and NPO (Not for Profit Organization) called the Africa Genesis Project. The mission is to “rehabilitate” the sub Saharan “trade routs” in this region. The studies have already been done showing the benefit in trade for the respective countries (a cost benefit analysis). But it does not even begin to show the increase in employment, local economies and the attraction to FDI (Foreign Direct Investment) that would accompany such a project.
The Cost for this is fast approaching 50 BILLION US Dollars. Is that a lot of money?? Yes it is… but in comparison to the 60 Billion dollars in aid for AIDS in Africa than this is smaller and brings more advantages (in my opinion) and allows the aid for AIDS to be delivered more effectively and efficiently to a greater number of people. I agree with the need for AIDS assistance… but I also know that the people of Africa need more.When it costs only 1,000 dollars to send a container to a Kenya Port but 10,000 dollars to take it inland at twice the time and takes 5 days to repair the truck afterwards,… this is an abomination and the extra costs are something the Africans cannot afford.
But how can we raise such amount of funds for the overall rehabilitation of Africa?? If ANYONE expects that Africa can finance this with its current economic situation and with the Debt that it already has, then that person is not fathoming the realities of the condition of Africa and worse is dismissing the prolonged suffering of hundreds of millions of people in Africa. Further it has allowed countries like China to take advantage of this situation to give “no string” loans that continue to exacerbate the problems in Africa.
The ONLY way to really help Africa is one MASSIVE injection of Aid that can transform most of Africa into a productive society. That aid can ONLY come from Governments around the world. That raises a major problem in how to even start such a fund raising effort to implement this project.
My calculations indicate I need 50 million dollars to START this project and 500 Million Dollars to continue to promote and administer the Africa genesis Project over 7 years.
Why so much?? One word answer… POLITICS!!!
I cannot even get an appointment with my own congressional or senate representative in the United States to present this project… and the form in which I presented is not in “proper form” with the relevant brochures and packages needed to promote such a massive project. Multiply that effort with my need to approach the governments of the United Kingdom, France and the rest of the EU, Japan. Australia, Canada, and the Middle East as well as many other countries, (as this is a global issue requiring a global solution) then you start to see not only the massive size of the Africa Project in Rehabilitating these trade routes, but the Global Efforts needed to see it though. And the ONLY way is to hire (at a significant cost) “Consultants” (lobbyists) who can effectively get this project into the hands of those who can make it happen in their respective Governments.
The Africa genesis Project will Guarantee that 96% of ALL money raised for the project will be spent directly on the project and not on fundraising, promotion or administrative expenses of the organization itself. Further that NO Distribution will be to any government organization UNLESS that Organization has actually performed or is performing real work on this roads project. Simply ONLY those actually working on the Road Project will be paid and 80 percent of ALL work must be by Local African Companies and using African employees.
We realize that a lot of Equipment must be purchased for this project. It is expected that Caterpillar and John Deer will receive about 500 million dollars each for equipment and spare part orders… HOWEVER WE MUST be able to negotiate process to reduce costs and maximize benefits to AFRICA. We will NOT tolerate paying even list, let alone OVER list as Caterpillar and John Deer have indicated in my limited discussions with them. The same for every other manufacture and supplier of other equipment, materials and supplies… COSTS will be PARAMOUNT in our vigilance to assure that this work can be done UNDER BUDGET. It is though our “lobbying” efforts that we will make sure that any “strings” attached to the aid given by donor countries for domestic purchases allow us to make bidding and negotiations fair practice in our efforts to supply this project. We cannot allow unfair profits (windfalls) to accrue to anyone on the backs of Africa and its people.
And yes, even I need to get paid, as I am not independently wealthy. So for those of you questioning that, I assure you I am NOT working for free and expect compensation that is reasonable for a project of this size. However I will note that I already know that there are many problems and issues that will need to be addressed on a project this size that will NOT be in the budget … hence my “compensation” will mostly be used for the resolution of those issues and to support the Africa Genesis Organization in its endeavors. Fist Aide Stations, water well drilling, education assistance and the like are just some of those things that are NOT in the Budget for this project and need to be taken care of but NOT from the 96% of the funds that were donated and are to be used ONLY for the Road rehabilitation project as already identified.
If you are a regular reader of this blog you know I have proposed creating a “backbone” infrastructure project that would transverse Africa as well as circumnavigate the Entire Continent, that would end up being approximately 70,000 Kilometers in length. This “backbone would have a 4 to 6 lane modern highway, an Electric Power line transmission, a railroad, and Fiber Optics and Oil and Gas and water pipelines, ALL TO BE FINANCED AND OPERATED BY PRIVATE (non governmental) INVESTMENT. This Investment could approach 1 trillion dollars over 10 to 15 years.
My plans for Africa my be grandiose to some… but a real vision was needed to solidify the continent for economic, and political and peace issues and the overall heath and welfare of the people of Africa… this is my mission… to transform Africa into a place where aid is not needed as much as it is now, and to improve the human sprit of all Africans.
Craig Eisele
The energy accords were signed during a business conference in Cape Town between France and South Africa.
In a major part of the France-South Africa energy deal, French energy giant Alstom will build a 1.36 billion coal-fueled power plant in South Africa, where energy is in desperately short supply. South Africa’s electricity crisis has been called a national emergency by the government. South Africa is one of the few African nations with a booming economy, and it needs power for its many activities such as mining and manufacturing.
Bravo, the name of the planned French-constructed power station, will be erected in the northeastern Mpumalanga province and will have a capacity of 4,740 megawatts. Alstom of France signed the deal with Eskom, South Africa’s state power utility, with the President of France and South African chief Thabo Mbeki looking on.
The second contract between the French Development Agency and Eskom was worth 100 million euros and will fund new power-generating wind turbines. A third deal, between the South African government and French nuclear giant Areva, will provide professional training. The apartheid regime that ended in 1994 kept the country black majority uneducated and most lack the skills training necessary to work in nuclear energy.
The French company Areva is bidding against the U.S.’s Westinghouse to construct up to 12 nuclear reactors between now and 2025 in South Africa, whose government has not awarded the contract to either yet. South Africa sees nuclear power as its best chance to solve its energy crisis in the future. Sarkozy voiced his strong ambitions for France to win all the coal and nuclear power plant contracts up for grabs in South Africa.
The energy accords were only the latest in a sweeping list of relationship-changing initiatives put forth by the President of France during his South African visit. Many other agreements covering energy, transport, science and tourism were also signed by France and South Africa. French leader Sarkozy further discussed overhauling France’s participation with South Africa in the areas of defense, democracy and human rights.
The President of France stressed that France’s relationship with South Africa, never a colony of France, should serve as a model for the West’s new relationships Africa countries. Carla Bruni, Sarkozy’s new bride, visited an employment project for women in the poor township of Khayelitsha, and joined him at a visit to an AIDS clinic. Bruni also met Wednesday with wives of disappeared Chad opposition leaders.
France’s President arrived in South Africa after a brief stop in Chad, a former French colony that has seen almost ten years of turmoil and never yet enjoyed true democracy.
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There is a dirge being sung all over the world. Its sombre tones sound ominous. It is sung so often that at the mention of the title listeners want to switch off but they don’t. It is as if they are waiting for a more cheerful variation to be introduced, but so far each variation has been more disturbing than the foregoing variations. The theme of the song is Energy.
How Eskom plunged South Africa in darkness
In a previous newsletter I referred to the increase in the number of emails received from investors abroad who are anxious to know what impact the Eskom fiasco is making on the economy.
The questions are pertinent:
What has gone wrong over the past eight weeks?
How soon will full energy supply be restored?
What is the likelihood of another massive collapse in the future?
What are the direct implications for the mining and minerals sector?
What type of capex is required to meet short term demand?
How much will have to be spent to meet energy demand in the long term?
What action is being taken right now to cope with the crisis?
Most people in South Africa know the answers to these questions – or they think they do. For the benefit of persons who may have a skewed picture of the energy crisis in South Africa and also for the benefit of investors and other interested parties abroad who would like to know more about the latest developments, I will I will try to sum up the situation.
What has gone wrong over the past eight weeks?
Ask a Black South African man whether he is looking forward to his wedding day and he will say: “Too much!” That is his way of saying that he is really looking forward to the occasion. Ask him whether his job is being affected by power failures, he will say: “Too much!”
So, what has gone wrong over the past eight weeks? Too much!
The sudden collapse of Eskom, a government utility, was the culmination of a series of errors over a period of several years.
The South African government had been warned of an impending ‘meltdown’ four years ago and on numerous occasions since. The warnings have been ignored. The result: no expansion took place over the past four years.
Bad planning.
Incompetent, bungling and greedy managers who were more interested in lining their pockets than in performing their duties. It was recently revealed that Eskom will pay its under-performing top management R7,2-million in performance bonuses.
Inadequate procurement policies. SA’s power crisis follows years of under spending by Eskom on generators.
Electricity exported at lower prices than that paid by the South African public while two major gold, two platinum and two manganese mines were compelled to close down on Black Friday, 25 January and during the following week.
An acute skills shortage.
Poor maintenance.
Eskom has blamed wet coal for dismal power station performance. It is true that the country experienced extremely wet weather for weeks since January but depleted coal stockpiles also played a part.
How soon will energy supply be restored?
First priority is to replenish depleted stockpiles. Eskom is aiming to secure 45 million tons of coal over a 2-year period. So far Eskom has contracted 37m tons to augment its stock pile. Stockpile stood at 3.3 days in January. Now at 5 days. Eskom is looking at 5.4m tons before winter.
The next step would be to modify coal handling facilities to prevent coal from getting wet.
Procurement policies would have to be reviewed.
Scheduled load shedding is seen as an immediate way of reducing the shocks experienced by industry and commerce as well as households.
About a week ago, in a reply to an enquirer I naively stated that with cooperation from all sectors – reducing power consumption by 10% – Eskom can just about cope. The very next day the country’s vulnerability was exposed when it was hit by untimely cold weather. Immediately everything went wrong for Eskom.
Wet and cold weather during February and March resulted in a huge surge in the demand for electricity. Eskom was unable to cope. On 18 March, nine overworked generators tripped. A further nine were down due to planned maintenance. Many Johannesburg suburbs were without power causing heavy traffic congestion and delays.
What is the likelihood of another massive collapse in the future?
The situation is now totally unpredictable. Reuters UK reported that South Africa’s power system is stable but vulnerable. Just how vulnerable is demonstrated by what has happened in just the past few days.
When Eskom said power to the country’s vital gold and platinum mines may have to be cut if more generators failed, local mining shares tumbled immediately.
“Is Eskom insolvent”?
This question was asked on a radio programme. It is not unlikely that the question will echo in parliament. There is a lack of transparency on the part of Eskom especially as far as its finances are concerned. Just when it seems that Eskom is playing open cards, new revelations about irregularities are reported.
Raymond Parsons, the business convenor at Nedlac, the government, labour and business negotiating chamber said on 19 March 2008 that Eskom’s credibility could be restored only if it’s costing and finances were independently audited. So what does that tell you?
What are the direct implications for the mining and minerals sector?
Needless to say coal miners and coal transport contractors will benefit greatly.
Mines, all operating mines, new mines and mines poised to start producing are apprehensive. The Chamber of Mines of South Africa and member mines have undertaken to cooperate with Eskom by reducing power consumption, but confidence in the government’s ability to deal with the situation is flagging.
What type of capex is required to meet short term demand?
Eskom is opening up three power stations that were mothballed in the 1980’s when Eskom had excess capacity. Capital expenditure needed to refurbish and open up Camden (in ?), Grootvlei (2009) and Komati (2010) power stations will cost R16 billion (US$2bn)
How much must be spent to meet energy demand in the long term?
A new coal-fired power station called the Medupi Plant which is to be built in Limpopo, the northern province, will cost R78 billiion ($10bn). I’m prepared to stick my neck out and say that expenditure will be considerably higher and that Eskom will not be able to meet the deadline of 2015.
Why the negative remark?
Eskom is asking for a 60% price increase. A private-sector generating company, who wished not to be named, reportedly said: “That 60 percent average price increase implies that Eskom’s marginal cost of bringing on its mega coal projects is way, way higher than we, as a private sector company, are building capacity for.”
Brian Dames, head of Eskom’s generating division, is speaking about a R300 billion ($48bn) investment drive. With so many factors, including load shedding, that could have a negative effect on economic growth, will Eskom succeed in attracting investors?
How can investors be confident when Xstrata/Merafe Resources JV, for example, are deferring plans to double the capacity of its Project Lion ferrochrome smelter because Eskom told users they could not guarantee supply.
How realistic are Eskom’s plans? Must we believe that all factors had been taken into consideration? Eskom must supply 150Mt coal to power stations in the provinces of Mpumalanga and Kwa-Zulu where most of the power stations are situated. Road and rail networks are inadequate. Tutuka power station near Standerton needs 10.6 Mt but New Denmark colliery can only supply 5.1Mt. The rest will have to be trucked and that at a delivery capacity of one truck every 6 minutes. Roads are already crumbling.
Like a scalded cat Eskom is running around to find quick solutions to its problems. Its first move was to resort to unscheduled power shedding. Following outcries from various sectors a system of scheduled power shedding was introduced. Realising that its appeal to its users to reduce electricity consumption by 10% fell on deaf ears Eskom resorted to a plan to raise its tariffs by 14,2 percent this year.
On past occasions when I drove through Johannesburg’s affluent suburbs at night I often wondered how much electricity was being consumed by owners of well-lit properties. Rows of lights mounted on exterior walls, houses illuminated like movie sets and illuminated swimming pools conjured up a magical picture. Some lights were burning throughout the day.
Eskom, realising that customers in the higher income bracket people were not going to switching off security lighting or underfloor and pool heating, air conditioners and other electrical gadgets, then planned to introduce a new “time-of-use” tariff structure aimed at getting affluent domestic users to slash consumption by 10 percent.
Unable to deal with the power crisis Eskom called for power hikes that would hit consumers hard in the pocket. So the latest move is the power utility’s call for an increase of 60% in tariffs.
The South African Chamber of Commerce and Industry described Eskom’s proposal as “very radical”. The Chamber said the move would hamper business competition and growth.
Trade unions, the ruling political party, the ANC, as well as the opposition parties came out strongly against the proposed price hike of 60% and said that the increases would lead to a higher cost of living, making electricity inaccessible to poorer customers and threaten thousands of jobs.
Along came a columnist who argued that when the price of electricity is increased it is unlikely that consumers will reduce intake. More electricity will be used than can be supplied. A 100 percent increase might make a difference but South Africans, used to low energy prices, will not be moved to cut down on energy usage. “Fuel prices have risen 500% over a relatively short period, but that has not stopped people from driving”, he said.
Eskom is in a terrible predicament:
Increase tariffs, and the economy will suffer.
Use the money generated by increased tariffs to fund its multi-billion-rand build programme, and be left without sufficient funds to cover the costs of primary energy inputs such as coal and diesel. Eskom is now paying 25%-30% more than budgeted.
Avoid dealing with really competent and reliable overseas suppliers of capital equipment because of not being BEE compliant, and prepare from some high-voltage shocks.
Fail to restore credibility or to be more transparent, and destroy investor confidence.
Raise all the funds needed for implementing plans to build another 10 or 15 or 20 power supply facilities, and see whether this will reduce the time needed to construct such facilities.
Try to transport of coal by road from new and existing coal mines to new and existing power stations on deteriorating roads, and see how long it will take the government to upgrade such roads. Already all South African roads are in a bad state. Some 50-billion rands will be needed over the next five years to bring roads up to international standards.
Build more coal-fired power stations, and get walloped by clean air legislation,
Pump more foul fossil fuel emissions into the air, and make a handsome contribution to earth warming.
Get approval form the National Energy Regulator of SA (Nersa) for the increase of 60% on top of R60-billion provided by the treasury, and see how crippling inflation is going to affect the economy.
1. What is a market for shares called?
2. What is a block of cast metal called?
3. Many mining companies are concentrated in this city on the Canadian west coast
4. Platinum-bearing pyroxenite layer originally termed the Lombaard Reef was later changed to the name of a well-known geologist. Who was he?
5.The thickness of the lithosphere, the solid portion of the earth.
50 km
!00 km
200 km
6. A woman who marries a man for his money is called;
a. A gold-digger
b. A gold coiner
c. A gold prospector
7. Where was the world’s richest concentration of gold discovered?
a. Klondike
b. The Witwatersrand
c. Barberton
8. Besides Johannesburg, there is another city in Africa that is also called the city of gold. Is it:
a. Accra in Ghana
b. Addis Ababa inEthiopia
c. Timbuktu in Mali
9. Co is the symbol of a hard, brittle, metallic element. Is it:
a. Cobalt
b. Corundum
c. Copper
10. When a letter or document is to be read by a person other than the addressee, we c.c. it. What does c.c. stand for?
A man in a hot air balloon realized he was lost. He reduced altitude and spotted a man below. He descended a bit more and shouted, “Excuse me, can you help me? I promised a friend I would meet him half an hour ago, but I don’t know where I am.”
The man below replied, “You are in a hot air balloon hovering approximately 30 feet above the ground. You are between 40 and 42 degrees north latitude and between 58 and 60 degrees west longitude.”
“You must be an engineer,” said the balloonist.
“I am,” replied the man, “but how did you know?”
“Well,” answered the balloonist, “everything you told me is technically correct, but I have no idea what to make of your information, and the fact is I am still lost.”
The man below responded, “You must be a manager.”
“I am,” replied the balloonist, “how did you know?”
“Well,” said the man, “you don’t know where you are or where you are going. You made a promise which you have no idea how to keep, and you expect me to solve your problem. The fact is you are exactly in the same position you were in before we met, but now, somehow, it’s my fault.”
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Regards
The Infomine-Africa Team
Trans-African Group of Companies is pleased to announce that as of 1 March 2008 it has opened up an office in Paris, France.
Our telephone number there is :
+ (33) 172813949 or from France 0172813949
We look forward to opening up several more office in the coming months and our web site will be updates accordingly.
A link to our web site is located to the right of this page… or you can simply click here to access our web site directly.
http://transafricandevelopementcompany.com
Thank you.
Power Crunch – Southern Africa Must ‘Run While Others Walk’
The Herald (Harare)
NEWS
28 January 2008
Posted to the web 28 January 2008
By Munetsi Madakufamba
Harare
AS southern Africa enters its second year of crippling energy shortages as accurately predicted by the Southern African Power Pool about four years ago, massive short-term projects of close to US$8 billion will need to be fast tracked over the next couple of years to get the region out of the present situation.
Electricity shortages have in recent weeks severely affected some Southern African Development Community member states leading to scheduled and, in some cases, unscheduled power cuts. From last year, load shedding has been introduced in countries such as Namibia, South Africa, Zambia and Zimbabwe.
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Faced by mounting pressure from industry and domestic consumers, South Africa’s power utility Eskom announced mid-January that it will discontinue electricity exports to neighbouring countries to meet local demand.
The Sunday Independent quoted Andrew Etzinger, Eskom’s chief of demand side management as saying South Africa’s electricity reserves had dropped during the past year from seven percent to minus 17 percent due to a decline in generation performance.
Etzinger said it would take at least another seven years before the situation could get back to normal. “The fact is in this country, for a long time we have had a surplus of electricity at a cheap price — far cheaper than in other industrial nations. “So it has made sense for the giant investors, whose plant needs massive amounts of electricity, to invest here,” Etzinger said.
“All that’s happened now is that we have to manage the resource differently. “It is simply going to cost investors more — this does not mean that they have to halt their future projects,” he added. South African industrialists say the power shortages are costing them billions of Rand, especially the mines and smelters, which consume most of the country’s electricity.
Southern African countries, which relied on South Africa for their energy sources have had to turn to other sources in the region.
For example, Swaziland which imports 80 percent of its electricity from South Africa is currently in talks with Mozambique.
In a major development for the southern African region, Mozambique recently took over ownership of the giant Cahora Bassa Dam and the hydroelectric power company from former colonial power, Portugal.
Sadc member states agreed last year to fast track short-term generation projects, which will add 6 700 megawatts by 2010 to the regional power grid at a cost of US$7,88 billion.
SAPP, which administers the regional power network, predicted that beginning 2007, the combined power generation reserve capacity in the region would be lower than the peak demand.
In response, Sadc member states have initiated a number of short, medium to long term generation projects as well as some rehabilitation projects that will guarantee the region the much-needed energy security.
Current installed capacity in the region is 53 000 MW of which dependable capacity is only about 41 000 MW against demand of 42 000 MW.
The region requires a reserve margin of 10 percent if its economies are to operate smoothly.
With some of Africa’s fasted growing economies, Sadc’s electricity generation capacity has not increased in tandem with the growth in demand.
Available statistics show that power growth demand in the region has averaged three percent a year over the past decade on the back of economic expansion of around five percent.
With the region having already run out of surplus capacity, SAPP says the problem would likely be overcome by 2010 if planned projects are implemented and commissioned on schedule.
Energy security becomes more pertinent given that the Sadc Free Trade Area, which takes effect this year, is set to spur even more growth in the region. Sadc would also be seeking to enhance its preparedness ahead of the 2010 Soccer World Cup.
If the current situation is to be brought under control, southern African countries may need to take heed of a famous statement by the visionary Mwalimu Julius Nyerere.
Mwalimu once said of the continent’s development, “Africa needs to run while others walk”.
That is perhaps what southern Africa needs to avoid dampening investor confidence generated by the Free Trade Area and the 2010 World Cup. Power pooling is at the core of regional socio-economic development.
SAPP, which manages the Southern African Energy Grid connecting most of the landlocked Sadc member states, has developed a roadmap which seeks to address current challenges.
The SAPP roadmap seeks to boost southern Africa’s electricity generation capacity, with almost 50 short- and long-term projects underway or planned for future development.
The long-term generation projects alone are expected to add 32 000 MW to the regional grid at a cost of US$32 billion.
The plan is to double the region’s generation capacity over the next 20 years through new plants and transmission inter-connectors.
Since 2004, SAPP member utilities have also commissioned rehabilitation projects that have contributed 1140 MW to the regional grid.
Once implemented, the current short-term projects are expected to clear the current 1 000 MW shortfall while creating a regional generation surplus of 5 000 MW or 10 percent by 2013.
The major proposed power plants include the Inga III in the Democratic Republic of Congo with a capacity of 3600 MW, the Kudu Gas Plant in Namibia with a capacity of 800 MW and the Kafue Lower with a capacity of 600 MW.
Notable inter-connectors include the Westcor inter-connector extending from the Inga III in DRC to Angola, Namibia, Botswana and onward to South Africa.
Regional energy cooperation also seeks to facilitate the development of other energy resources such as biomass and biofuels, to augment the power sector capacity.
There is also potential for the region to strengthen self-sufficiency in petroleum and gas resources by undertaking joint regional exploration and development.
Continent in the Dark
The Monitor (Kampala)
NEWS
29 January 2008
Posted to the web 28 January 2008
Kampala
THE signing of a 92 million euro ($136 million) loan from the European Investment Bank (EIB), last week, to finance the construction of the 250 megawatt Bujagali hydro-electric power project is a shot in the arm for Uganda’s efforts to attract increased direct foreign investments.
This project, slated for completion in 2011, gives Uganda an edge over Africa’s economic powerhouse, South Africa, which is reeling from continued daily power cuts following generation and other operational problems at Eskom, the country’s power company. Eskom generates 95 per cent of the electricity used in South Africa.
(shortage of) power to neighbouring countries because of acute domestic shortages. Zimbabwe, which imports about 40 per cent of its electricity from South Africa, and Mozambique are the worst affected.
Eskom Enterprises has operations on the African continent with its head office being located in Johannesburg, South Africa, and other offices in Uganda, Nigeria and Mali.
Although the power cuts have affected the whole country, the commercial capital, Johannesburg, has been worst hit and Eskom says it would be foolhardy to attract major industrial projects until the situation has been resolved by the middle of next decade.
Eskom’s finance director, Bongani Nqwababa, was quoted by Business Day last week as saying “it is a question of supply and demand. It would be irresponsible now to aggressively pursue energy-intensive businesses.”
Investments
Though these may not be the kind of businesses that the Ugandan Investment Authority (UIA) is gunning for at the present stage of the country’s industrial development, there can be little doubt that there are plenty of other related investments that UIA can pick up as a result of the crisis in South Africa.
Small and Medium sized businesses (SMEs) have been hit hardest by the power cuts with dozens forced to shut and more closures expected if the crisis continues, says South Africa’s black business umbrella body, the National African Federated Chamber of Commerce and Industry (NAFCOC).
Nafcoc President Buhie Mthethwa says the body, which has 300000 members, will approach the government soon with requests for compensation for small enterprises which had lost perishable goods during the blackouts and cannot afford to buy generators to protect their remaining stocks.
Dozens of Nafcoc members, who represent black, coloured and Indian enterprises, are forced out of business by the chronic power outages which add to problems they already face from rising interest rates and restricted access to credit.
Growth in the economy has steadily accelerated since democracy was introduced in 1994 and the government wants to boost the pace to a sustainable rate of 6 per cent from 5.4 per cent in 2006 -a 25-year peak. It also aims to halve unemployment and poverty by 2014.
But now, there is mounting concern that power shortages will put more constraints on a growth rate hampered by a global slow-down as well as higher interest rates.
Credit Guarantee economist Luke Doig says the impact of the power cuts will lead to an escalation in liquidations and debt insolvencies. It will hit Small and Medium-scale Enterprises (SMEs) hard as they didn’t have many resources.
Jeff Osborne, the chief executive officer of Retail Motor Industry Organisation, says power shortages were hitting used car dealers, petrol stations, motor mechanics and panel beaters, which were mainly SME).
These are the same mid-term, long-term knock-on problems Uganda is attempting to avoid or mitigate with the construction of the Bujagali power project; problems that its detractors seem oblivious to.
According to an economic and financial evaluation study carried out three years ago by an independent consulting firm Power Planning Associates Limited (UK), Uganda’s electricity demand is expected to grow by 7.6 per cent per year on average between 2005 and 2020.
To help meet this demand, between 2006 and 2010, Uganda is expected to lease and commission 150 MW of oil fueled power generation as well as some generation from bagasse, a sugar-cane derivative used for renewable power generation, and from small hydro-power plants.
Private generation
Last week’s announcement that Electro- Maxx, an indigenous private power company, will start producing 10 megawatts (MW) of thermal power by June this year is part of the planned exercise to add capacity to Uganda’s power sector.
Electro-Maxx was granted a power generating licence from the Uganda Electricity Authority (ERA). ERA’s decision was communicated in a letter to the company dated January 21 following public hearings last December in Tororo where local leaders and the community gave the project the go ahead.
The $32 million project to be erected at the Tororo power substation will use Heavy Fuel Oil (HFO). And is expected to feed into the national grid.
A power purchase agreement has been executed between Electro-Maxx and the Uganda Electricity Transmission Company to supply power for 18 hours daily.
According to ERA, heavy-fuel oil is much cheaper than light diesel oil and Electro-Maxx will not require additional subsidies.
The government currently pays out billions of shillings in subsidizing expensive power to consumers.
Uganda’s current power demand is estimated at 380 MW while the maximum supply capacity stands at 251MW leaving a gap of about 129 MW.
“The 10 MW heavy-fuel project by Electro-Maxx is therefore highly needed to contribute towards reduction of the current deficit,” ERA said.
Currently, Uganda has a thermal installed capacity of 100 MW but it’s all generated through burning of diesel whose price has continued to rise.
Electro-Maxx chairman Patrick Bitature said the company would later apply to double or triple its capacity.
The plant was originally planned to be built in Mbarara but was shifted to Tororo to lower the cost of fuel transportation through Kenya.
Bujagali
The power supply generated from Bujagali would also enable 50-100 MW of expensive oil fueled thermal generation capacity to be retired. It is also expected that the commissioning of Bujagali in 2011 would help reduce the average cost of supply to end-users by up to 10 per cent compared to prevailing prices in constant terms.
The study found that the commissioning of Bujagali will have a small but positive impact on economic growth, balance of payments and the fiscal balance.
Uganda’s workforce is expected to double over the next 15 years, making the creation of jobs through expanded industry, tourism, and commercial services critical.
Our Energy-Rich Dark Continent
The Monitor (Kampala)
COLUMN
4 November 2007
Posted to the web 5 November 2007
By Muniini K. Mulera
Kampala
Few experiences have brought home Africa’s infrastructural challenges than a night flight I took from Johannesburg to London on June 10, 2005.
The British Airways Boeing 747 takes off from the Oliver Tambo International Airport in a northerly direction, leaving behind an endless sea of lights that showcase the wealthy expanse of gold-rich Gauteng.
The modern jet passenger enjoys the benefit of tracking his whereabouts as the plane makes its progress. A live map on a personal television screen reveals which city and country is 35,000 feet below you.
From the air, Johannesburg’s millions of glittering bulbs seem to merge with the millions of equally brilliant stars over Tshwane, known to some as Pretoria. No surprises so far. Fully 80 percent of South African households have electricity in their homes.
But soon all is darkness, interrupted by small clusters of light in the distance. Rancistown, Botswana’s second-largest urban centre comes into view. It’s much smaller than Jo’burg, of course, but it is brightly lit nevertheless.
Botswana, one of Africa’s most well managed states, is now counted among the upper-middle income countries. Yet even Botswana, like most of Africa, remains in the dark. Only about 24% of its citizens, the majority of whom live in the major towns, have access to electricity. Electrification has reached only 12% of Botswana’s rural areas.
The lights of Francistown soon disappear into the distance.
Then ahead and all around us, pure, pitch-black darkness that seems endless. We are over Zambia. Darkness. No surprise. Only 23% of Zambians, mostly urban dwellers, have access to electricity. Look! There in the distance! Lusaka. The pitch-black countryside makes its amber-coloured lights appear brighter than they probably are.
Darkness returns. But wait! Aren’t we over the Ndola-Kitwe-Mufulira-Chingola belt? Why do I see only a few scattered lights in this copper-rich area? Perhaps it is load-shedding night tonight.
Total darkness again, at once beautiful and frightful. We are over the Congo Free State, immortalised by Joseph Conrad in his Heart of Darkness, a tale set on the mighty Congo River, second longest in Africa. The skies are clear. No clouds. I should see Lubumbashi somewhere down there, my map says. I see nothing but darkness in this super-rich part of Africa.
Ahead is the River Congo, which drains a vast area of more than 1.6 million square miles, and has enormous but untapped hydro power. The Congo Free State, one of the richest territories on earth, has the potential to produce up to 55 gigawatts of electricity. It currently produces only 5 per cent of that. Only 6 percent of all Congolese have access to electricity.
The Inga dam which straddles the Congo River has the potential to light up the entire Great Lakes Region, Southern and Central Africa and parts of the West and North, without help from other dams of Africa. Now, I am not a fan of hydropower.
The vagaries of Africa’s climate make reliance on a steady flow of water a hazardous undertaking. Better to invest in alternative sources, such as solar, wind, thermal and nuclear energy. But for the moment, Africa has abundant hydro-potential, right there in the endless darkness below.
I am lost in these thoughts, as I peek through the window, into an infinite darkness that hides King Leopold’s ghost and those of his African heirs who have looted and left Congo and the rest of Africa in darkness. The Dark Continent is a reality tonight, not some eighteenth century European’s derogatory comment.
I see it all around me, for thousands of kilometers, over hours of fast jet flight, above the richest part of the world. The plane roars on, over Cameroon, 80% of whose population has no access to electricity. Then over Nigeria, oil-rich Nigeria, less dark than Congo, but dark still.
A country which has raked in over $400 billion from oil exports over the last 30 years, Nigeria should be better lit than I see. Whereas 40% of Nigerians have access to electricity, most of these are urban dwellers. Only 10% of the country’s rural households have access to electricity.
In fact these figures could be worse. The overall figure for Africa is 24%. In Kenya, 15% of the citizens have access to electricity. The figure for Tanzania is 7%, but only 2% of the rural population. Lesotho and Malawi, 6% each. Rwanda and Uganda, 5% each. Chad, 2%. You get the point, Tingasiga.
The plane roars on. I pick up a few flickering lights over northern Nigeria, reminding me of my childhood fantasies of Bacwezi herdsmen grazing their cattle by candlelight on mountaintops.
I wake up over Libya. I must have fallen asleep somewhere over the vast desert that is Niger. Just as well. I have been spared thoughts of tens of thousands of Africans trekking on foot across the extremely cold, dark and treacherous desert on their way to Europe, in search of jobs.
Libya is bathed in lights, the entire desert country seemingly lit by millions of terrestrial stars. We fly over the large shining port city of Tripoli before bidding a fond farewell to Africa.
Soon we are over southern Europe, its hundreds of millions of street lights visible everywhere. Not even the clouds can hide the luminous truth beneath.
But I am still thinking about the trillions of dollars worth of gold and oil and natural gas and rubber and diamonds and copper and uranium and bauxite and silver and water and timber and wildlife and…… the list is endless.
All that wealth is owned by hundreds of millions of bright Africans at home and in the Diaspora with the potential to transform our great continent. Notice how everything in Africa always seems to have potential? But if Europeans can do it, we can do it. Of that I am certain.
AfDB Group Supports Energy and Finance Management Projects in Egypt and Angola
African Development Bank (Tunis)
PRESS RELEASE
14 November 2007
Posted to the web 14 November 2007
Tunis
The Boards of Directors of the African Development Bank (AfDB) Group approved today in Tunis, loans amounting US$ 334.27 million to finance energy and financial management support projects in Egypt and Angola.
The Bank approved US$325 million for Egypt and US$ 9.27 million for Angola.
Egypt – The project aims at increasing the generation capacity of the Unified Power System (UPS) by about 4% in the year 2012, to meet the electricity demand on the system in the short-to-medium term. When completed, it will contribute toward making sufficient and reliable power available to various consumers including households, agriculture, business and industries. The project will enhance the overall goal of sustaining economic growth by providing adequate energy at minimum cost to the various economic sectors thereby improving the standard of living of the population.
The project is estimated to cost US$ 1,322.73 million. The AfDB loan will cover 24.5% of the total cost. Other financiers are the Islamic Development Bank (IDB), the Arab Fund (AFESD), the Kuwait Fund (KFAED), and the Egyptian Electricity Holding Company (EEHC).
In November 2006 the Bank supported comprehensive structural and financial reforms initiated by the government of Egypt with a loan of US$ 500 million, the highest amount ever approved by the institution for any of its regional member countries.
The ADB Group began operations in Egypt in 1974. To date, its commitments in the country stand at US$ 2.5 billion in 49 operations.
Angola – For its part, Angola will receive a loan of US$ 9.27 million from the African Development Fund (ADF), the concessional window of the Bank Group, for its Financial Management Support Project (PAGEF), which seeks to strengthen institutional capacities in the areas of state property management, and internal and external audit systems, with a view to ensuring transparent and efficient public finance management in order to promote more equitable economic growth.
PAGEF falls within the strategic context of the Government’s General Program and its interim Poverty Reduction Strategy Paper (PRSP-I), which aims in particular, for “the creation of a favorable macroeconomic framework for growth and poverty reduction” and “institutional capacity building and improvement of governance”. By promoting transparency and strengthening the integrity of the budget system, through greater accuracy of budgets and General State Accounts (GSA) as well as effective external audits by the Court of Auditors, the PAGEF will contribute to the enhancement of financial governance, necessary for macroeconomic stability and improvement in the business environment for private sector activities.
It is in line with the Bank’s intervention strategy in Angola, as defined in the Results-based Country Strategy Paper (RBCSP 2005-2007), especially the thrust on creating an enabling environment for private sector development.
The cost of the project is estimated at UA 6.57 million. The loan will cover 89.7% of the costs. The Angolan government will provide the remaining UA 0.68 million or 10.3% of the total cost of the project.
The Bank Group’s operations in Angola started in 1983. To date, the Group has committed a total of UA 298.07 million, about US$ 469.3 million in 32 operations in the country.
The following Article exemplifies the need that Trans-African Development Strategies (TADS) has been promoting… that being a CONTINENT wide “Backbone” for Basic Infrastructure. It is only through this focus on the backbone of things like an electric transmission and suitable production facilities that countries and their neighbors will be able to assure themselves of consistent and reliable access to basic infrastructure.
Craig Eisele
House Backs African Energy Commission
The Herald (Harare)
NEWS
21 November 2007
Posted to the web 21 November 2007
Harare
The House of Assembly has ratified the African Energy Commission, which seeks to harness the continent’s energy resources and collectively address energy shortages.
Minister of Energy and Power Development Cde Mike Nyambuya said the Convention, which was concluded on July 11 2001, was necessitated by the severe shortage of energy in Africa.
He said many African countries had constrained industrial development for many years in spite of the enormous conventional energy potential and vast deposits of new and renewable energy resources. The Convention realised that Africa must harness its energy resources and make them available to meet the energy needs of its people in order to be able to develop and provide an alternative to deforestation and use of firewood as a primary sources of energy.
The Convention, he said, recognised the need to co-ordinate the actions of African countries to develop their energy resources and deal jointly with various problems relating to their efficient and rational exploitation and utilisation, in order to ensure socio-economic development. Some of the aims of the Convention were to promote research and development and encourage the transfer of technology in the energy sector, enhance integration, collective self-reliance, security and reliability of energy supply. It also seeks to harmonise procedures and standards in the energy sector. The Convention also seeks equitable cost sharing in the implementation of the protocol in a spirit of good governance and transparency. It also seeks to promote partnership among enterprises and institutions of member states through, among other things, the creation of favourable conditions for that purpose.
Contributing to the debate, Binga Member of Parliament, Mr Gabuza Joel Gabbuza (MDC) said the Convention was noble but bemoaned the delay in bringing it to Parliament. He wondered why a Convention signed in 2001 would only be brought to Parliament for ratification six years later. “Zimbabwe stands to benefit more than any other country but we wonder why it took this long,” said Mr Gabbuza. Cde Nyambuya conceded that it was not prudent to take long to bring the Convention to Parliament for ratification.
“For bringing to Parliament this late, obviously someone did not do his job properly,” said Cde Nyambuya.
UN Environment Agency Announces New Projects to Boost Clean Energy
UN News Service (New York)
NEWS
8 November 2007
Posted to the web 8 November 2007
The United Nations Environment Programme (UNEP) today announced the launch of a pair of projects worth some $100 million in the tea and sugar industries designed to boost the use of clean energy and stimulate development in Africa.
Both projects aim to develop new forms of local energy generation to help rural areas overcome poverty, cut dependency on imported and expensive fossil fuels, and contribute to reducing greenhouse gas emissions, UNEP said in a news release.
The tea initiative, which will deliver small-scale hydro-electric power to plantations across East Africa, is expected to reach over 8 million people in the tea industry. Burundi, Kenya, Malawi, Mozambique, Rwanda, Uganda, Tanzania and Zambia are among the countries which have already endorsed the initiative.
“Tea is known to be good for you; now it is also getting better for the environment,” said UNEP Executive Director Achim Steiner.
He also hailed the decision by some countries in East Africa to establish power purchase agreements, which are contracts that allow unconventional generators of electricity to sell surplus power back to the grid, saying it “has opened up a raft of new opportunities for cleaner and renewable energy generation.”
In a separate but related initiative, a project funded by the Global Environment Facility (GEF) will help farmers use waste from the sugar industry to generate electricity – a move UNEP said will fuel sustainable economic growth.
The project aims to reach approximately 10 million sugar farmers and their dependents in Ethiopia, Kenya, Malawi, Sudan, Swaziland, Uganda and Tanzania.
The sugar initiative builds on the successes achieved in Mauritius, where up to 40 per cent of the country’s electricity needs are met by waste by-products from the sugar industry, UNEP said.
The paper copied below is OLD… but sadly still paints a relatively close and poignant picture of the status of Infrastructure Development. It can be accessed directly in the web at: http://www.afdb.org/pls/portal/
We at Trans-African Development have a potential Solution to this dilemma that faces Africa… it is to build a BACKBONE of Infrastructure…. From Major Highways to Electrical transmission Facilities and transmission lines to Fiber Optic and Railroads… but we need the Cooperation of African Nations and Organizations to implement this . I will write more on this int he near future… but for now… this “picture” of African Infrastructure is very revealing.
ECONOMIC RESEARCH PAPERS NO. 46
AFRICAN DEVELOPMENT BANK
Infrastructure in Africa: The Record
By: Afeikhena Jerome
University of Ibadan, Nigeria
The views and interpretations in this paper are those of the author and not necessarily those of the African Development Bank.
INFRASTRUCTURE IN AFRICA: THE RECORD
1. Introduction
In recent years, there has been a resurgence of interest in infrastructure development and Policy reform in developing economies, with much of the debate centering on efficiency
of use and an increased role for private sector participation in the provision of Infrastructure (Jimenez, 1995; Mody, 1996; Kerf and Smith, 1996; and World Bank,1994). The apparent interest emanates principally from the growing realization that human and physical infrastructure are critical elements for economic growth and poverty reduction. Infrastructure plays a pointed, often decisive-role in determining the overall
productivity and development of a country’s economy, as well as the quality of life of its citizens.
A broader source of interest, however, derives from the generally poor performance of state-owned monopolies, combined with the rapid globalization of the world economies, which has brought into sharp focus the economic costs of inadequate infrastructure and prompted a growing number of developing countries to seek new initiates in promoting competition, private entry and foreign interest in the provision of Infrastructure.
The term ‘infrastructure’ was coined during the Second World War by military strategists to indicate wide-ranging elements of war logistics. Thereafter, development Economists began to use the term interchangeably with ‘overhead capital’ considered to include: those services without which primary, secondary and tertiary production activities cannot function. In its widest sense, it includes all public services from law and order through education and public health to transportation, communication, power and water supply as well as such agricultural overhead capital as irrigation and drainage systems (Hirschman, 1958: 83).
There is no consensus in the literature on a common definition of infrastructure. What remains indisputable, however, is that is that they share some common characteristics which have hitherto been used to justify state involvement in their provision and financing. These characteristics include scale economies in production, consumption externalities and non-excludability. They are equally not generally tradeable.
Broadly defined, infrastructure refers to all basic inputs into and requirements for the proper functioning of the economy. They are usually grouped into two. The first category is social infrastructure, such as education and health which facilitate the supply if skilled and healthy personnel to manage and operate other resources. They also enhance the economic, political and social empowerment of the populace, with the
attendant positive effects on poverty alleviation and efficient use of national resources.
The second category is often referred to as economic infrastructure. Mody (1997) defines this category of infrastructure as the facilities that provide society with the services necessary to conduct daily life and to engage in productive activities. These include power, transportation, telecommunications, water, sanitation and safe water disposal, among other things.
This report is devoted to the study of the complementary physical infrastructure, comprising telecommunications, power, transport (roads, railways, ports and airports), water supply, and sewerage.
Infrastructure has a pervasive influence on the whole economy.
Telecommunications, electricity and water are used in the production process of virtually every sector of an economy, while transportation is necessary for the distribution of
commodities. The quantity and quality of these services are therefore an important determinant of private sector productivity and output. In fact, there is a strong association
between the availability of certain infrastructure -telecommunications (in particular), power, surfaced roads and safe water – and per capita GDP2. The relationship involves both the supply side, in terms of the contribution of infrastructure to the generation of higher GDP, and the demand side, as higher incomes in turn generate higher demands for infrastructure services. Infrastructure thus makes an important contribution to expanding output.
Africa trails the rest of the world, both in the extent and quality of infrastructure. Notwithstanding the large amount of scarce economic resources absorbed in the development of infrastructure in Africa, there is clear evidence that the provision of infrastructure has been much below standard both in terms of quantity and quality in relative and absolute terms. Infrastructure bottlenecks continue to exist, particularly in the management of current stock.
Traditionally, infrastructure services have been viewed as public goods and the primary responsibilities for their provision have been entrusted to the government-owned
`natural monopolies’. Consequently, these sectors have become inextricably entangled with the public sector that dominated it. While the performance of government-owned
providers of infrastructure, vary from one country to another, their overall performance in Africa has been very poor. The sector is characterized by operational inefficiency, lack of technological dynamism and poor service to consumers. In addition to their inadequacy, the provision of infrastructural services in most African countries is characterized by high prices compared with per capita incomes and long waiting time (several years in some countries) between the time of application for services and actual connection.
The cost of waste, in terms of forgone economic growth and lost opportunities for poverty reduction and environmental improvements, are unimaginably high. Poor infrastructure is a major obstacle to the region’s economic growth, and adversely affectsthe living standards of its people. Inadequate infrastructure adversely impacts on health, education and the capacity for effective governance as well as on the ability of industries to compete in international markets. Most evaluations of structural adjustment programmes in Africa point to deficiencies in infrastructure as a major cause of poor
supply response in economies under reform (Ghura and Hadjimichael, 1996).
The provision of efficient infrastructure is important for the development of the continent particularly in view of the fact that many of its countries are landlocked. As shown in recent literature on the economics of geography, nearly all landlocked countries in the world are poor, except a handful in Western Europe that are closely integrated into the EC via an efficient infrastructure which facilitates low-cost trade.
This chapter takes stock of the state of infrastructure in Africa, investigates more deeply the root causes of the present unsatisfactory outcomes and explores the strategies and policies that can be instituted to improve infrastructure delivery in the pursuit of the overarching objectives of private-sector-led growth and poverty reduction. Accordingly, the paper is divided into four sections. The database on infrastructure in Africa is presented in section 2 while the record of infrastructure service is the focus of section 3.
An appraisal of the causal factors in the dismal performance is conducted in section 4.
2. Data on Infrastructure in Africa
Data on the different types of infrastructure in Africa are sketchy and difficult to find in one publication. An extensive database of physical infrastructure stock for a cross-section
of 102 countries have been compiled and presented in the Appendix. The database has been compiled for 53 African countries by region according to ADB classification. To
allow for comparison, similar data is presented for 17 countries in Latin America, 8 countries in South East Asia and 24 OECD countries. The database comprises six measures:
. Population, GNP per capita and percentage of population with access to safe water and sanitation;
. Kilometres of paved roads;
. Kilometres of railway lines;
. Statistics on the power sector;
. Telecommunication statistics; and
. Information technology.
Apart from physical stocks, the database also provides some measures of the quality of infrastructure.
White It is imperative to sound a note of caution on these global statistics given their comparative basis, it should be noted, however, that the data provides a rough, albeit, useful
basis for analyzing the development of infrastructure on a comparative global and regional basis. The data reveals a strong association between infrastructure capacity and level of development. Countries with lower income level are associated with lower levels of infrastructure capacity and service provision. It should be borne in mind that the
performance of most African countries in all the indicators is quite dismal.
3. The Record of Infrastructure in Africa
It is crucial to examine in greater details the situation in the major infrastructure sub-sectors with a view to highlighting the peculiarities of each sub-sector. For each type of infrastructure , the section examines the state of the available networks, tariffs charged, supply and demand patterns, service quality; industry bottlenecks, and environmental
consideration.
3.1 Telecommunications
Telecommunications infrastructure lies at the heart of the information economy. Countries lacking modern telecommunications system cannot compete effectively in the
global economy. The telecommunications industry in Africa has made limited progress despite concerted efforts and programs aimed at modernizing and expanding the sub-sector.
3.1.1 Networks
Despite the giant strides which a number of African countries have taken in reforming the telecommunications sub-sector in recent years, telecommunication coverage in Africa is amongst the lowest in the world. There are more telephones in Brazil than the whole of Africa. While Brazil has 15,105.9 main telephone lines, Africa has only 13, 695.1 main telephone lines. Africa accounts for only two per cent of telephone main telephone lines globally as shown in chart 1. Low network densities, long waiting
Source : International Telecommunication Union.
Chart 1: Main telephone lines
Africa2%
America32%
Asia28%
Europe36%
Oceania2%
times for access to services, and clear willingness of some users to pay for access to the service illustrate the significant shortage of telecommunications services in the region.
The most common measure of telecommunications access is teledensity or the number of main telephone lines per 100 inhabitants. In 1996, teledensity varied from 0.08 in
Democratic Republic of Congo to 34.01 in Reunion. Africa averages 1.85 compared to 30.38 in the Americas, 6.02 in Asia, 30.60 in Europe and 40.39 in Oceania.
There are substantial differences among the African sub-regions, with four countries currently in the forefront; namely, Reunion 34.01, Seychellis 19.51, Mauritius 16.21 and
South Africa 10.2 . The laggards are sub -Saharan African countries with an average teledensity of 0.52. As many as 34 countries in Africa still have a teledensity of less than 1. These differences among countries are associated in part with variations in per capita GDP In part, GDP per capita may serve as an indicator of the extent of a country’s rural population, which tended to receive fewer infrastructure services than urban areas did. It may also reflect the affordability of services. However, a nation’s teledensity is usually quoted as an average thus masking regional variability. For example, the distribution of telephone networks in South Africa presents striking internal contrasts. The average teledensity in South Africa is 10.05, but on a provisional level, this ranges between 22 in Gauteng (the region around Johannesburg and Pretoria) and 2 in the Northern pronvince.
The distribution of telecommunications services is biased in most African countries in favour of the urban areas, which account for over 80 per cent of the services, while the
rural areas, where over 80 per cent of the population reside, enjoy 20 per cent of the service.
About 72.9 per cent of telecommunications mainlines were in urban areas in 1995 compared to 27.1 per cent in rural areas. Two countries, however, had most of their telephone mainlines located in rural areas. These are Sao-Tome and Principe (87.0 percent) and Central African Rep. (57.0 per cent).
In terms of quality, networks are burdened with a high percentage of outmoded equipment and high fault rates. The information on faults per main lines, a standard measure of service quality, indicates that the average faults per 100 main lines for the region in 1996 was 78.1 compared with an average rate of 8.9 for America, 19.9 for Europe, 43.7 for Asia and 47.8 for Oceania. The recorded fault rates in the region,
however, range widely- from 1.0 (Eritrea) to 937.5(Guinea).
The most effective route to increasing service quality is the installation of digital exchanges. African countries are striving to modernize their systems – albeit at great cost – in order to remain plugged into the global network. Many telecommunications authorities in Africa, especially in those countries undergoing reforms are installing digital technologies and costly equipment in order to become competitive. In the absence of local manufactures, African countries are dependent on industries outside the region for the purchase of telecommunications equipment and spare parts. Such imports are generally made on a non- selective basis of ‘ready-made’ packages with little room for adaptation to local needs through local enterprise and know-how. Consequently, telecommunications services in Africa do not have the usual multiplier effects (via research and development, local manufacturing, services and employment) as they do in other regions of the world.
Table 1:
Comparative Statistics on Telecommunications Indicators in Africa and the Rest of
the World (1996)
SEE THE ORIGINAL REPORT WITH LINK AT TOP TO VIEW CHARTS AND DATA
i HAVE DEBUGGED ONLY UP TO HERE FOR THE READERS CONVENIENCE IN CHANGING FORMATING… PLEASE GO TO THE LINK ABOVE TO READ THIS 57 PAGE PDF FILE WITH GRAPHIC CHARTS.
Source: International Telecommunication Union
3.1.2 Supply and Demand Patterns
Comparative Telecommunications Statistics for
Africa and the rest of the WorldPer 100 inhabitantMain lines per employeeSatisfied demand (%) 1996Fault per 100 machines peryear
Source: International Telecommunication Union.
Large waiting lists are evident in several African countries, but the demand for telephone connections is in all likelihood considerably higher. A sizable latent demand Lies concealed since prospective users do not even register on waiting lists until there is a realistic chance of receiving a telephone connection. The overall average expected waiting time for services in Africa for 1996 was 3.5 years, the highest in the world, compared with 0.3 in America, 0.7 in Asia and 2.4 in Europe as shown in chart 3. Ten countries recorded a waiting time greater than 10 years. These are Algeria, Eritrea,
Ethiopia, Gambia, Malawi, Mozambique, Sao Tome & Principe, Sierra Leone and Tanzania. With such long waiting times in African economies, there may well be a significant number of discouraged potential subscribers who have not yet joined the
queue for services.
Development of cellular networks in African economies provides one example of customers’ willingness to pay for quick access to reliable services. This willingness is particularly true of businesses and high-income households. While the cellular network penetration rates are still comparatively small, (7.9 per cent of total telephone subscribers in 1996 ranging between 1.1 in Kenya and 18.3 in South Africa), the growth rates in the number of subscribers are considerable in some countries. This level of demand has been achieved despite the fact that charges for cellular services are substantially above those for fixed services in the region and those for cellular services in the EU. Surveys of business users in the region confirm this willingness to pay
for quick access to reliable telecommunications services.4
The introduction of competition has been most notable in mobile cellular and other value-added services, with almost half of the Africa countries allowing more than one provider in these areas. In the majority of markets where cellular mobile services are now provided, private capital has been introduced in the form of joint ventures with state-owned enterprises or stand-alone private ventures
3.1.3 TARIFFS
The structure of tariffs falls relatively heavily on businesses and more lightly on households, but the overall level remains low in most countries. In several African countries, there is no clear practice of pricing services, hence rough and ready norms for billing are adopted. Call waiting and forwarding for residential customers remains largely the domain of dominant local providers.
While detailed data on long-distance and international tariffs are not available, average monthly subscription and installation charges for households and businesses
provide some indication of tariff levels and structures. Table 2 presents average monthly subscription charges and connection rates for both household and business consumers by regions in the world. A comparison across these regions reveals that telecommunications tariff in Africa is the lowest in the world relative to both the global average and other
regions in the world. The relatively low levels of tariffs in much of the region limit the extent to which internal cash flows and private finance can be raised for new investments.
Most countries, characterized by underinvestment and low network growth, are unlikely to break out without reform of the tariff structure. As a rule, those countries at more
advanced stages of development have adjusted tariff structures to allow for more balanced charges between households and businesses and have raised the overall level of
tariffs. The need for investment in this sector to expand capacity and improve service quality is substantial. The necessary expansion in networks will not be achieved without
recourse to private finance. However, unlocking this finance will require a commercial approach to telecommunications and credible reform of tariff structures.
Table 2:
Telephone Tariffs in Africa and Other Regions in 1996 (US$)
3.1.4 Reform Activities the Sector
The telecommunications sector in Africa faces a challenging future given the number of internal and international constraints confronting telecommunications administration, and the demand for value-added services by increasingly sophisticated consumers. Many African countries are already committed to reforms in the field of telecommunications,
including promotion of private sector participation. In the past few years, a domino effect has occurred in Africa’s Telecommunications sector resulting in a flurry of reform
activities which put the continent at par with the developments in other regions. Some of the major reforms being carried out include creation of a regulatory environment to accommodate private companies, institution of well-defined tariff regimes, privatization of state-owned telecommunications operations; and licensing independent telephone companies to provide value added services.
Reform efforts across the region focused initially upon the separation of the telecommunications and postal operations and, subsequently, upon the development of separate regulatory agencies. By 1998, 27 countries in Africa had separated their postal and telecommunications operations, and 30 countries had corporatized the primary operator.
In the regulatory sphere, 18 countries across Africa had undertaken the establishment of a separate regulatory agency by 1998. However, most telecommunications regulatory agencies so far created in Africa have limited powers -the
sector ministry retain the authority to issue directives to the regulator, appoint the heads of the agency, and control the agency’s funding. In Uganda, for example, the ministry in
charge of telecommunications is also responsible for tariff approval and the establishment of licence fees, while in Namibia, the operator is responsible for numbering, tariffs and interconnection rates. In many instances, the establishment of the regulatory agency has occurred in tandem with the privatisation process. In other countries, the introduction of
a regulator has occurred prior to the initiation of liberalization and privatisation plans, such as in Botswana, Mauritius, Nigeria, Tanzania and Zambia.
Privatisation of state-owned national carriers in Africa began in 1989 with the sale of the majority of shares in Guinea-Telecom in Guinea-Bissau, and STP/CST of Sao
Tome and Principe in the same year. Between 1989 and 1997, close to 25 per cent partially privatised their state-owned telecommunications operator. In addition, six more countries have initiated, or announced, plan to sell equity stake in their state-owned telecommunication operator to private investors. However, competition in nation-wide basic services is allowed in just two markets, Ghana and Uganda, where second national operator licenses have been issued.
The cumulative effect of these reforms is a substantial increase in telecommunications infrastructure. In 1996, Africa recorded its highest annual growth rate of 10 per cent in telephone main lines. The highest growth rates were recorded by Botswana, the Gambia, Cape Verde and Mauritius. North African countries, however, recorded marginal decline.
3.2 Internet Access
Internet is today one of the most dynamic telecommunication markets in Africa in spite of the fact that the region remains behind the rest of the world in informatics and information
technology, accounting for less than 1 per cent of global spending in the sub-sector.
Over the past five years, the number of African countries with access to the internet has risen dramatically. It was first introduced to Africa through a range of initiatives by national,
international and non-governmental organizations, Internet is now clearly becoming a commercial undertaking with increasing private investment. Most of the countries (47 of the 54 nations) in the region have developed some form of Internet access in capital cities, either through local dialup, store and forward e-mail with a gateway to the internet, or through a full leased-line service. About 44 countries and territories have achieved full Internet public access services at least in capital cities. There are only five countries- Comoros, the Republic of Congo, Eritrea, Libya and Somalia that do not have plans for full internet assess.
3.2.1 Network
The key indicators of internet development are: (1) the number of host computers, (2) the number of internet service providers (ISPs) and (3) the number of users.
a. Internet host computers: In 1997, there were 129,326 internet host computers in Africa, of which 122,025 were in South Africa, 3,310 in North Africa and 3, 991 in Sub-
Saharan Africa. The density of internet hosts was 28.16 hosts per 10,000 people in South Africa, 0.25 in North Africa and 0.07 in Sub-Saharan Africa. The average for Africa was
1.70.
b. Internet Service Providers (ISPs): About half of the countries in Africa allow competition and have more than one ISP. Of the 300 or so ISPs in the region, around 200
offer full internet services. South Africa has the highest concentration of ISPs with nearly 80
service providers.
c. Internet Users: In 1997, there were 896,120 Internet users on the continent of Africa, in addition to 800,000 in South Africa. This is equivalent to approximately six users for each
host computer. The number of users averages about one user per 5,000 people (excluding South Africa with a rate of one to 65 people), compared to a global figure of one internet
user per 45 people; or one per 6 in Europe and North America.
3.2.2 Tariffs
The high price of internet connections and personal computer (PCs) relative to income is a major inhibiting factor to a wider use of internet in Africa.. Estimated PCs per 100 inhabitants in 1996 was just 0.66 compared with 15.87 in America, 9.56 in Europe and 30.31 in Oceania. Considering the lower incomes of most African countries, it is unrealistic to expect widespread Internet usage on the continent. As the internet market in Africa becomes increasingly liberalized, and market forces take firmer root, prices will be driven lower owing to increasing competition among ISPs, the privatisation of state-owned telecommunications corporations, and the liberalization of domestic telephone markets.
3.2.3 Bottlenecks
Internet use in Africa is limited. The basic obstacles in the path of rapid Internet growth are the lack of telecommunication infrastructure, and the relatively high hardware and transmission costs. Although many countries have taken major steps to improve their infrastructure, great variation still remains between regions and countries; rural areas, where 70-80 per cent of the population resides, are largely uncovered by telephone service.
International internet bandwidth is lacking because international leased lines are costly and crowded, and peering between ISPs is limited. Proposals, such as the Africa One and SAFE- undersea fibre-optic cables, or wireless technologies including WLL, VSAT, HF radio and GMPCS systems, or stratospheric Helium supported balloons promise to extend internet services to both urban and rural areas. Hardware is much more expensive in Africa relative to many other parts of the world due to high import tariffs and little price competition.
An increasing number of countries are allowing internet service provider (ISP) competition, even though more than ten countries still hold monopoly control. PTOs have
assumed a monopoly position especially in countries where the Public Telecommunications Operator (PTO) established the international internet backbone with some exceptions, such
as South Africa, Mozambique and Zambia. Foreign internet service providers are increasingly entering into Africa and are expected to gain market share from the local companies. Open entry for ISPs, however, is not enough to ensure rapid Internet growth. An appropriate, “Internet-friendly” regulatory framework is also important to achieve effective
entry, survival and growth of ISPs. High license fees, for example, can limit the entry of ISPs.
3.3 Transport
Transport constitutes an important sector for the enhancement of economic growth and the socio-economic integration of the African region, particularly the promotion of intra- and extra-African trade. However, despite the efforts made in the past five decades to develop the transport sector in Africa, it has remained inadequate and ineffective. The general lack of repairs and maintenance in infrastructure has led to further deterioration in the sector in recent years, and has, as well, increased the magnitude of its operational problems and costs. The environmental implications of transport policies and projects also received low priority.
However, despite the difficult environment of high operating costs and low capacity utilization, the various sub-sectors of transport have shown some remarkable resilience.
3.3.1 Roads
In Africa, road transport is the most widely used means of transportation. The fragmentary
nature of the railway system and the limitations imposed on the scope of inland water
transport by geographical factors are such that the transport of people and goods by rail and
inland waterways has to be supplemented usually by road transport over long distances.
3.3.1.1 Road Network
An accurate assessment of the development of the road networks in African countries is made difficult by the lack of reliable statistical information and the compelling necessity to employ, for analytical purposes, surrogate indicators, such as aggregate lengths, classified according to operating conditions, instead of such standard indices as ton-kilometre or passenger/ kilometre.
Africa had approximately 311,184 kilometers of paved roads in 1991 (see Table A2), with half of them in poor conditions. Chart 4 indicates that only 24.2 percent of total road network in Africa were paved in 1996 albeit with considerable regional diversity. 57.4 percent of the roads in North Africa were paved compared to 25 percent in South Africa and 10.2 percent in Central Africa. Road densities per km2 are generally much lower than those of Asia and Latin America. Road construction and maintenance standards vary greatly in
Africa: few countries are able to construct and maintain trunk-road systems to stipulated requirements and standards according to volume and weight of traffic. Road building has
traditionally been given more priority than road maintenance in most African countries, with scant attention to the imperatives of recurrent costs and road management once a road has been constructed. Besides, as the road networks expands, the institutional and financial burden has tended to increase much more rapidly than the national budget could cater for, especially in times of socio-economic crisis.
Another important dimension to the quality of infrastructure is maintenance and renewal. Lack of maintenance has left over 50 per cent of the paved roads in poor conditions. Over 80 per cent of the unpaved main roads in Africa would be considered just fair. The case of rural feeder roads is even worse; up to 85 per cent are estimated to be currently in poor conditions.
The constructing of international road networks on a sub-regional basis in Africa has received much greater attention. However, a real regional African road system does not as yet exist; what exists, instead, is a large number of separate national road networks that are ineffectively coordinated, and are at best a series of ad hoc inter-country road links and connection.
3.3.1.2 Demand and Supply Pattern
National road networks in Africa have not kept pace with the growing demand: kilometre lengths are limited and their standards of construction often low. The existence of
inadequate and poorly maintained rural and feeder roads connecting villages and farming areas with each other, and to market centres is a major gap in rural transport in most
countries. And few cities have been able to keep pace with road network needs. As agriculture and industry expand, and as national and subregional economies develop, existing road networks will require tremendous extensions and improvements in quality. In particular, road links between nations will have to be strengthened to meet large scale
demand for intra-and inter-subregional goods traffic; all of this require heavy capital investment and expenditure on roads in many African countries.
3.3.2 Rail
Railways in Africa are fragmented, and can hardly be described as a system since the railways run from the interior to sea ports, a reflection of their antecedent as a transport
system designed for external trade purposes.
3.3.2.1 Available Network
The aggregate network of African railways is estimated at 73,000 route kilometres, of which South Africa alone accounts for some 22,500 km. Eleven countries namely; Burundi,
Central Africa Republic, Chad, Cape Verde, Comoros, Djibouti, Mauritius, Seychelles, Somalia, the Gambia, Guinea Bissau and Libya have no railway system. With the exception of North Africa, railways in Africa generally have a low level of traffic. Most of the lines are of light rail, and are unsuited for fast and heavy traffic. Moreover, there is general deterioration due to maintenance problems.
The national railway networks in Africa are mostly independent of each other and, with the exception of Eastern and Southern African railways, unconnected among themselves. All the networks in Africa were built at the end of the nineteenth century or the beginning of the twentieth century, with different technical characters, gauges, couplings, brake systems, buffers, etc. The only exceptions are, Tazara, the Trans-Gabonese, the Trans-Cameroonian and the mining lines. The 1.067 m gauge predominates, especially in sub-
Saharan Africa, whereas the 1.435 m gauge accounts for 76.1 per cent of the total kilometrage in North Africa.. Upgrading existing railway lines would involve major investments in track realignment, resignalling, safety systems and rolling stock..
3.3.2.2 Demand and Supply pattern
Almost all the railways in Africa enjoyed monopoly or near-monopoly status at inception, especially for long- and medium- distance transport of goods and peoples. With the spectacular development of road transport and to a lesser extent, air transport, in the 1970s, railways have, however, faced increased competition in the transport market, to
which they have not always been able to positively respond and adapt.
3.3.2.3 Tariffs
Railway tariff has stagnated or declined in recent years, and measures of operational efficiency have shown little improvement. For example, locomotive availability remained
generally low at around 50 percent, although both Uganda and Zimbabwe have improved performance in response to restructuring plans. Most railway authorities in Africa have not pursued sustainable tariff policies. Being public or semi-public enterprises, they were not always profit-oriented or cost- conscious in their operation, limiting their ability to maintain the existing networks, let alone upgrade or expand them. Whenever they made profits, they were required to pass them to the users in the form of reduced tariff rates. The tariff basis was the same throughout the network, varying only with distance.
Freight rates by rail in Africa are on average about twice as high as those in Asia and one and half times those in Latin America. But, at the same time, rail operations run at a
deficit. A number of reform programs are under way. These include increased managerial autonomy and sub-contracting more services to the private sector. Some have sub-contracted part, or all, track maintenance to the private sector (Cameroon, Gabon, Nigeria and Senegal) and Senegal has also sub-contracted cleaning of rolling stick, maintenance of wagons, catering and parcels traffic. The broadest private sector initiative involves re-unifying the railways of Cote d’ Ivoire and Burkina Faso, with a view to operating them
under a concession agreement with the private sector.
3.3.3 Airports
Air transport network in Africa is still relatively underdeveloped. All countries in the region have at least one international airport as well as several smaller ones. Few of them are capable of handling large amount of traffic. Less than 50 per cent of the 5,304 potential air links among the countries in the region are actually operational or being actively exploited at present. The countries with the highest number of airports are Egypt (17 airports) and Nigeria (15 Airports). Most of the airports lack modern equipment and infrastructure. They are characterized by deteriorating runways, and obsolete traffic control equipment. Much of
the infrastructure required for ancillary activities, such as customs and immigration, air cargo, catering, baggage handing and connecting surface transportation, is lacking compared
with market needs. For example, operational and safety shortcoming that plague Nigeria’s international airports have given them the reputation of being among the worst in the World.
Almost every African country own at least one airline although some of them are being privatized in recent times. However, Air Afrique is a regional airline, jointly owned
by ten countries. The privatized airlines include Kenya Airways incidentally the first airline to be privatized in Africa, Royal Air Maroc and Air Tunisia both of which are
partially privatized. Nigeria, however, adopted the liberalisation of the domestic aviation industry resulting in the licencing of 22 private carriers, of which 14 offer scheduled
passenger service, 7 carry cargo and the balance provide charter fights.
Only Cote d’ Ivoire is currently actively reforming its airports with the ceding of the management of Abidjan’s international airport to a French international consortium, Aeria, which has pledged to spend CFA 14 billion upgrading the airport.
3.3.3.1 Tariffs
The airlines in Africa suffer from high operational costs compared with their counterparts world-wide, including other developing regions; they lack proper maintenance facilities
locally and their tariffs are generally uncompetitive in the absence of subsidies. With the growth of mega-airlines in many regions of the world, the African airlines, being mostly
small and poorly equipped, are unable to compete in the international market. And the only hope for survival for most of them lies in mergers with bigger and more competitive
carriers.
.3.3.3 Demand and Supply Pattern
Air services are restricted by low demand in several countries. Apart from Air Mauritius which accounted for about 50 per cent of total persenger traffic in 1997, the share of African
airlines in international traffic is very low, owing in part to a reputation of poor services and reliability. For example, the share of Air Egypt in international traffic is only 25 per cent at
most, despite fare reductions in recent times.
3.3.4 Sea Ports
Maritime transport is extremely important to African countries due to the nature of its operations, and the high proportion of traded goods transported by sea. However, the poor quality of port services and infrastructure in Africa, and the low level of trade volumes are some of the major limitations on the growth of this sub-sector. Port productivity is, on average, about a third of international norm due to poor management, excessive bureaucracy, and inadequate as well as unreliable of equipment. Delays in clearing goods are frequently a problem. Most ports are in need of modern, better managed facilities to serve traffic for which sea transport has a significant cost advantage over surface transport, such as dry and liquid bulk cargoes or containerized cargo. The port of Mombassa, for instance, has only two cranes one of which is frequently out of order. The main port of Ghana was recently rehabilitated and expanded but suffers from mostly human inefficiencies. Manufacturers habitually post employees in the port for several days on end to make sure that the goods move in and out of the port on time. There is generally a need for upgrading of existing ports in Africa.
Less than two per cent of the African merchant fleet capacity are container ships; the majority being conventional cargo ships. The shipping lines that principally service long-
distance sea routes consider most of Africa’s coastal traffic as mere subsidiary to their traditional overseas activities.
3.3.4.2 Tariff
Ocean freight charges in Africa are competitive. The impression that ocean freight charges from Africa are prohibitively high is not supported by the facts. Empirical evidence provided by Biggs, et al. (1994) and presented in Table 7 on freight and port charges from five African countries to the port of New York/Newark and a comparison with similar charges from Sri Lanka and Bangladesh, two countries in East Asia, indicate that freight charges generally reflect their relative distances to the port of destination and appear to give West African countries a slight competitive advantage. However, port charges in the principal ports in Africa are higher than the comparable charges in the two Asian ports.
Consequently, when freight and port charges are added up, the costs of transportation from some ports in Africa may actually be higher than from those ports in East Asia. Interviews with a number of large shipping agents indicate that the frequency of sailing from the principal African ports to New York/Newark is also not a constraining element.
3.4 Electricity
3.4.1 Available Network
Total electricity generation in 1994 was 350,000 Gigawatt-hours. The generation mix is dominated by fossil fuel generating plants which account for 81 percent of total
electricity generation, with hydro accounting for just 15 per cent. A small fraction of available hydro resources is utilized in Africa, with 64.4 percent of the exploitable hydro capacity located in East and Southern Africa, 34.2 percent in West Africa and 1.2 percent in North Africa. This is mainly due to shortfalls in water-flow associated with climate change in some countries, low demand in countries endowed with immense hydro resources, and potential transmission losses associated with long distance transmission from countries endowed with immense hydro resources to energy deficient
countries and regions. Oil-based generation is more uniformly distributed in Africa while coal-based generation feature prominently in the southern African countries of South
Africa, Zimbabwe, Botswana, and Mozambique; and in Morocco in North Africa and Niger in West Africa. Gas fuelled plants are of increasing importance in Algeria, Nigeria
Tunisia. Nuclear and geothermal plants are relatively unimportant at 2.7 and 0.1 per cent respectively. Kenya remains the only country exploiting its geothermal resources, though progress in this direction remains lack-lustre.
In terms of regional distribution, North Africa accounts for about one third of Africa’s electricity production based largely on burning oil supported by coal and natural gas. West Africa’s share of 9 per cent is based on a mixture of hydro, oil and gas. Central Africa’s share of 4 per cent is dominated by hydro and East Africa’s share of 3 per cent consists of s mixture of oil and hydro. Southern Africa produces the largest share of Africa’s electricity production-about-55 per cent which is dominated by hydro and coal-burning generating plants.
The region’s generation, transmission and distribution systems tend to be old and inefficient, resulting in often substantial losses of generated energy, as much as 40
percent in the case of Uganda. These system losses have further limited the amount of energy available for production and consumption. Furthermore, in many countries consumers have experienced frequent power outages as well as voltage fluctuations, which damage electronic equipment and motors. This unreliability has forced many enterprises in the region to buy and install their own generators, thus raising their
overhead costs.
Self-provision of electricity is common across the region. In Uganda, most large customers maintain stand-by diesel generators.5 In Guinea, between 1983-1992 the private sector installed for its own use some 70 MW of power generation, and in 1993 produced some 109 GWH of electricity, almost as much as the national electric utility6
3.4.2 Demand and Supply Pattern
Africa’s state-owned energy sector in the early 1990s typifies some of the worst failings of the African public monopoly model. While deficiencies in the public enterprises model are
hardly unique to Africa, its weak administrative capacity and legacy of political instability exacerbate the problem.
Countries in the region have one state-owned company performing the four separable activities of generation, transmission, distribution and supply. Only a few countries, such asGhana, have separate companies responsible for generation and transmission, and distribution. Private sector participation in the power sector, although not legally
prohibited, is negligible in most countries in the region. Available data on the structures of power sectors in the region and the policies of different governments suggest that the
pattern of vertically integrated monopoly enterprises with little or no autonomy from government to operate in a commercial manner is typical of Africa. For example, the utility SONEL in Cameroon is approximately 93 percent state-owned, with a board of directors appointed by the government’ UEB in Uganda handles generation, transmission and distribution, and also regulates itself; and NEPA in Nigeria is a state monopoly, and government controls all procurements and foreign exchange transactions. Almost all
countries in the region have opted for an electric utility industry that is an arm of government and generally vertically integrated.
Table 8 presents two performance indicators for selected countries in the region: transmission and distribution losses and rate of return on net fixed asset. Countries perform
differently according to these indicators. Uganda has, for instance, transmission and distribution losses of 38 percent and zero rate of return on net fixed asset, while Ghana has
lower transmission and distribution losses (17.8 percent) and a higher rate of return on net fixed asset (6 per cent) than Uganda. Such differences are also observed when countries in
the region are compared with some countries in other regions of the world (Table 8).
Comparing the performance of the power sectors in most of these SSA countries with that of Chile, a developing country which has reformed its power sector, the latter outperforms
most of the former (at least according to the two indicators that we cite in Table 8). (The only exception is South Africa1).
Most of these countries have rates of return on net fixed asset and debt service coverage that are very low. For instance Nigeria, Sierra Leone and Guinea obtained negative returns in the range of minus 6.2 to 16 percent (Gutierrez 1996). On the issue of reliability, data for power systems in Africa are extremely limited; moreover, supply is widely considered to be low in several African countries. Alternatively, electric utility industry reforms in Chile and Argentina, which led to significant increases in plant availability factors, have reduced the number, length and frequency of outages as compared to their previous experiences (Gutierrez 1996).
3.4.3 Electricity Tariffs
Prices of electricity have typically been between 3 and 4 cents per KWH, compared to 8 and 9 cents or higher in developed economies. Prices have thus been insufficient to generate revenue to cover long run marginal cost, taking into account asset depreciation. These problems are further exacerbated by difficulties in billing and billing decision. Traditionally, state-owned enterprises have played a dual role in electric utility services, acting both as providers of services and regulators. The regulatory structure is not transparent, often characterized by undesired distortive effects. Tariffs, for example, are set by cabinet decision or by the line ministry responsible for the power sector. Most countries have had relatively high inflation (i.e., double-digit) during the past twenty years. As a consequence, there has been a definite tendency to use the cabinet’s or the line ministry’s
ability to manipulate electricity prices as part of broader anti-inflationary programmes. This suggest that real electricity prices have actually fallen drastically n those countries in the region with high inflation.
3.5 Water and Waste Management
Africa made some progress during the International Drinking Water Supply and Sanitation Decade (1980-90). The number of persons served in urban and rural areas rose from 110
million in 1980 to 230 million in 1990 (114 million of the later being in urban areas). But this was overshadowed by rapid population growth, resulting in more urban residents being
without adequate water supplies in 1990 that in 1980. Water supply and treatment are also deficient in the region. In 1995, only 60.1 and 40.24 percent of the region’s urban and rural
population respectively had access to safe water, albeit with substantial variation in different countries the range was 18 and 18 percent in Central African Republic and 95 and
100 percent for urban and rural areas respectively in Mauritius. Chart 5 presents a comparative analysis of the percentage of population with access to safe water for Africa
and other regions. Most of the water pipe networks are old and urgently require repair and replacement.
UrbanRural
Africa’s performance in terms of access to sanitation is equally deplorable. In 1995, only 36.6 per cent of the population had access to sanitation compare to 51 per cent in South East Asia, 64.1 percent in Latin America and 96.7 OECD countries (see Table A1).
However, why Mauritius attained 100 per cent access, the comparative figures for Zambia, Congo Republic and Lesotho are 23, 9 and 6 per cent respectively. A few urban water utilities have been restructured (Conakry, Abidjan, Banjul, for instance). They have moved from being government departments operating with little commercial autonomy and no accountability to commercially run public agencies or to fully or partially privatized firms. Experience has shown that delivery of water to the poorest segments of the population becomes both cheaper and more reliable through such reforms but this transition is still in its early stages.
3.5.2 Tariffs
Except in very few countries, water and waste-water sectors rely on governments for a substantial part of funding requirements, especially for capital investment. Charges are thus kept low to convey benefits to households. Table 9 presents the median price of water for several African countries in 1993. The figures compare favourably with the median price of $0.54 in Asia Pacific but low compared to $2.24 in industralized economies. As with other infrastructure sectors, the balance between household and industrial water tariffs tends to fall more heavily on industry. Currently, the price of water does not reflect its scarcity, resulting in wasteful use of water.
3.6. War Affected Countries
Many devastating conflicts have persisted in several African countries ( Ethiopia, Namibia, Uganda, Angola and Mozambique) while pernicious internal struggle continue to plague others (Liberia, Somalia, Sudan and Sierra Leone). The damage inflicted on the social capital and economic potential of these countries have been horrific. The impact of warfare on physical infrastructure has been enormous, exercebating the already precarious situation. While war ravaged, infrastructure stocks including roads and bridges were often the primary targets. Existing infrastructure stocks were often severely depleted. For example, in Uganda, the transport infrastructure suffered greatly from neglect during the troubled period between 1971 and 1986. The international airport at Entebbe was extensively damaged during the conflict with Tanzania in 1979-80. The railway system was not left out as many sectors of tract, apart from the rolling stock, were in serious need of remedial work by 1986. This has been the trend in many war ravaged economies.
.7. Landlocked Countries and Infrastructure
Africa has a considerable number of landlocked countries, incidentally among the poorest countries in the world. The current state of infrastructure provision in these countries is demonstrably poor relative to other African countries, thus constituting impediments to the growth potentials of these economies. Countries like Malawi, Uganda, Zimbabwe and Zambia rely on neigbouring countries to ensure reliable delivery. Transportation problems are compounded for landlocked countries by problems in intermodal transportation. In many cases, railway system differ among countries, schedules are not coordinated, and even in transport by road, goods tend to be delayed by customs control. It takes a typical Ugandan business man, three and half months from the time of shipment departure from Europe until arrival Kampala, three times what will be needed under comparable conditions elsewhere in the world (Donaldson, et. al. 1997).
3.8 Infrastructure and the Environment
Infrastructure development in Africa has largely proceeded with minimal consideration for environmental standards and quality. This has been a major factor in the severe degradation of the environment in the form of industrial pollution. In any case, environmental issues have not been given serious policy considerations in Africa’s development agenda. Environmental awareness has only become perceptible in recent years since the Earth Summit in Rio de Janeiro in Brazil in June 1992. The concept of sustainable infrastructure development has become relevant in Africa.
Creating a sustainable infrastructure economy based on efficient resource use should be given greater consideration. The environmental problems within urban areas often termed the ‘brown agenda’ is more immediate in Africa. The issues involve include the lack of safe water supply and sanitation, inadequate solid and harzadious waste management, emissions from cars etc. The need arises to introduce environmental sound practices in the management of existing infrastructure in Africa.
Causal Factors in the Inadequate Provision and Delivery of Infrastructure Services in Africa.
A pertinent question is what led to the present unsatisfactory outcomes? In spite of the recognition that each infrastructure sector has its own peculiar problems, there are common weaknesses in most African countries. An extensive inquiry is beyond the scope of this paper, but it suffices to focus on several general reasons affecting infrastructure delivery in Africa.
While political and economic instability, low per capita incomes and often challenging geographic conditions have significantly constrained the development of Africa’s infrastructure, there is abundant evidence that the protracted crisis in the sector is due mainly to past and current policy choices. A major explanatory factor is the prevalence of a regime of price controls that for a long time had little consideration for commercial objectives including cost recovery. Prices amount, on average, to just above a third of supply costs and are half as much as those in industrial countries. The pricing regime is characterized by administered prices that are in many cases appreciably below what is required to operate, maintain and rehabilitate facilities, and consequently entail large efficiency losses and social costs. Too often, controlled prices often imposed on state infrastructure monopolies, prices that are unresponsive to changing market conditions, encourage uneconomic investment of resources targeted at meeting the inefficient and unsustainable growth in the demand for infrastructure services. It is evident that prices that are below economic costs and what is needed to finance infrastructure development and maintenance expenditure in the face of escalating cost conditions in the industry are unlikely to restrain excessive demand and minimize uneconomic investment of resources. With negative or at best low positive financial and social rates of return to infrastructure investment associated with low product prices, it is not surprising that supply shortages persisted in the sector. In response to these shortages, many businesses and households have resorted to self-provision, often at high cost. For example, according to a 1988 study of 179 Nigerian manufacturers, 92 percent of forms surveyed owned electricity generators, and 44 percent had boreholes to assure their own private water supply. In the face of chronically unreliable public services, many also had acquired radio equipment for communications (37 percent of firms) and vehicles to transport personnel (37 percent) and freight (63 percent).
For firms with 50 or more employees that could practice economies of scale, the extra costs of private power generator amounted to some 10 percent of the total machinery and equipment budget; for smaller firms, the burden was as high as 25 percent.7 Substantial self-provision of infrastructure is also the norm for low income consumers, relief from the failure of public providers often comes through the informal sector. The best known examples are private water vendors who use trucks or smaller receptacles to haul water either for distribution at central locations or to individual dwellings. In some places, private vendors served 90 percent of households, and in several places purchases of private water amounted to more than 30 percent of household income.
A fairly robust analysis of incremental reserves that would arise from moderate and achievable increase in financial returns through pricing reforms in Africa’s infrastructure, albeit dated, indicates that the net benefit on resource mobilized would amount to about one fifth and one third of public revenues as shown in Table 11 (Anderson,1989). Furthermore, such reforms apart from being easy to administer would entail negligible ‘deadweight’ or efficiency losses.
Sector Current contribution Potential Contribution as Percentage to Public Revenue of Public Revenue
Overall Incremental Effect
Electricity small or negative 5 – 10 per cent 5 – 10 per cent
Water small or negative 2 – 5 per cent 2 – 5 per cent
Telecoms varies but marginal 5 – 10 per cent 5 – 10 per cent
Roads 10 – 15 per cent 10 – 25 per cent 5 – 10 per cent
Source: Anderson (1987).
Apart from administered prices, several demand and supply-related factors, some of them interwined, have had a profound negative impact on infrastructure development in Africa. As in most other developing countries, governments in the region have assumed responsibility for almost all of these infrastructure services through state owned enterprises created precisely in order to make socially productive investments so as to eliminate impediments to the overall economic development. Almost without exception, the provision of infrastructure in Africa is the exclusive responsibility of the government.
Government own, operate and finance nearly all infrastructure. Thus, the record of success and failure in infrastructure is largely a story of government’s performance. However, these enterprises have established a poor reputation across Africa. Besides trying to provide a particular service to an acceptable quality, they are also expected to pursue a variety of social” goals, including the creation of employment and the subsidization of prices to consumers, ostensibly with the view to providing broad and affordable access to the poorer parts of society. These objectives have in reality imposed a variety of costs on the enterprises as a major employment mechanism has resulted in significantly bloated workforces. Similarly, the prevalence of widespread input and output subsidies creates significant wedges between product prices and costs and in the process confront these enterprises with soft budget constraints and dysfunctional government interference in sector activities and enterprise management functions that encourage gross inefficiency in production, distorted demand patterns and investment choices, induced endemic and expensive delays and cost overruns that encouraged widespread corruption in infrastructure construction and equipment and material purchases and minimized the market responsiveness of the sector to changing demand and supply conditions through excessive regulations. The subsidization of services in reality often allows the more affluent citizens to benefit disproportionately from artificially low prices by providing them with better access to these services. In Lusaka, Zambia, for instance, only 28% of the households in the poorest fifth of the population have access to electricity, compared to 70% in the richest segment. Similarly, it has been estimated that the poorest fifth of the population in Tanzania receives only about 10 per cent of the government subsidy for water, whereas the richest fifth receives about 40 percent. At the same time, these subsidization polices have invariably translated into smaller revenues. Public utilities have thus often found themselves in the difficult financial position of not being able to cover their operating expenses. It has not been possible in many cases to maintain existing facilities adequately, and new investments have consistently had to be postponed. At the same time, most governments have suffered from chronic budget deficits, which have kept them from filling the financial gap. In the end, countries have been left with inadequate infrastructural facilities, while the responsible enterprises, not motivated by commercial objectives, have had little incentive to improve their performance significantly. The Nigerian experience provides considerable support for the distortionary effects and the disincentives associated with excessive political interference in investment decision, pricing policy, plant location, equipment choice and employment structure resulting in higher costs and low earning ability of public infrastructure.
Economic theory justifies an important role for government intervention in efficient and equitable infrastructure use and provision. The arguments rest on several “traditional” notions of market failure, such as: externalities in consumption and production; scale economies; non-excludability; information problems about benefits alleviation. But infrastructure services are diverse and each exhibits these characteristics to varying degrees. Policies often fail when they do not make such distinctions within infrastructure.
There are several reasons why public provision of infrastructure services have not had the desirable impact in Africa.
First, under a public sector dominated regime, investments in infrastructure are often misallocate for various reasons. For example, most of the selected projects are not based on the articulated needs of the society. Hence, there is no informed prioritisation of project selection or implementation. Hence, projects of lowest priority could be preferred to those of topmost priority in terms of the real needs of the society at a given point in time. Another dimension relates to the obsession with new projects. In this regard, there is usually excessive concentration of resources on new structures and little or no allocation to maintenance of infrastructural facilities. Interestingly, however, infrastructure is the easiest prey for speeding cuts during periods of fiscal crisis, while priority is given to consumption-promoting expenditure and projects of short term benefit to the economy. Many on-going infrastructural projects are usually abandoned, only to be revived, if at all, at very exorbitant costs later on. Another major source of disenchantment with this policy stance relates to the quality of services. The delivery of high quality services is usually hampered by technical inefficiency and outright waste.
Inadequate maintenance leads to erratic service supply and distribution, while the low productivity of such facilities results in very high unit operating costs which are often times passed on to the consumers. The useful life of affected facilities are also shortened.
The World Bank (1994b), observed that low-income communities are not offered suitable transport and sanitation options that provide services they value and can afford. Rather, premature investments in capacity especially in water supply, railways, power and irrigation have often absorbed resources that could otherwise have been devoted to maintenance, modernisation or improvements in service quality. More significantly, because infrastructure investments are immobile and serve local markets, excess capacity cannot serve other markets and it remains under-used. And in some cases, large public projects have been overambitious, placing a costly burden on the economy. Also important is the twin problem of waste and inefficiency, that seems to claim a large share of resources that could be used for infrastructural services delivery.
The nature of public decision process with multiple, nebulously defined and often conflicting objectives which place less emphasis on nor provide adequate incentives for efficiency of operations is at the root of this problem. Arising therefrom, investment decisions and tariff policies are often driven primarily by political considerations. Many infrastructure projects in Africa should never have been embarked upon. Decisions to proceed with new projects are sometimes taken at the political level. It is not uncommon for the political element, for reason of prestige or with unjustified claims insist on an overdesigned capacity. Even within the state-owned enterprises, management is often appointed more on the basis of political loyalty than competence, and staffing profiles are more often dictated by political demands rather than felt needs. Costing and pricing decisions are also guided less by economic but more by political considerations. It is against this background that agitation have mounted for private sector involvement in the provision of infrastructure. This, it is hoped, would enhance the preference for economic considerations and demand-driven decisions process. Greater emphasis will be placed upon efficiency with its attendant positive effects on economic growth, enhance standard of living and poverty alleviation. The reduced pressure on government revenue will also facilitate internal and external equilibria and stimulate foreign investment. Overall, permission for private provision of infrastructure will suggest to international and national investors, or development institutions government’s commitment to sound fiscal management, efficiency and substantial role for the private sector (Kerf and Smith,
1996).
Redefining public-private sector interface in the provision of infrastructure services has become an important though controversial policy issue in the search for a more viable infrastructure sector in Africa. This is particularly vital since the efficiency, productivity and reliability of infrastructure provision impacts on the efficiency of domestic production and investment as well as the international competitiveness of the economy. A crucial variable is also the role of foreign capital. Foreign private involvement in Africa’s infrastructure has been quite limited as shown in Table 11 which presents private infrastructure projects word-wide between 1985 and 1995. A cursory examination of the table indicates that only sixty-four projects were recorded for Africa in the ten year period, compared to 223 for East Asia/Pacific and 252 for OECD countries. The project sum at $1.2 billion (less than 1 per cent) is equally deplorable and the reasons are not farfetched.
The region is yet to broaden its investment base beyond energy and mining which remain the prime attractions. Africa has the unenviable reputation of having uncompetitive product markets, thin capital markets, perceived high risks as well as legal, procedural and regulatory impediments. Public enterprises in infrastructure have a lower net worth and are
less attractive to foreign buyers, except perhaps in telecommunications. African governments until recently resist selling to foreigners. Investors are reluctant to take an equity position in infrastructure because governments have established consistent pricing
and other macroeconomic policies which continue to undermine infrastructure. Even in
countries where the sector is open to private participation, there is often the problem of
the inability of regulatory and legal institutions to provide credible commitments to create
opportunities for potential investors to cover their investment costs and make profit
including the risk-adjusted opportunity cost of capital. Macroeconomic and political instability as well as legal restrictions on foreign capital discourage the flow of direct
investment to this sector. Investors are wary of internal political volatility and the uncertainty of obtaining the enforcement of contracts.
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Trans-African Development Company (Not-For-Profit) continues on its path towards raising 45 Billion Dollars to rehabilitate the 108,000 KM of trade related roads in Sub-Saharan Africa. As previously disclosed this is a result of a Study done for the World Bank by David Wheeler et al. The cost benefit analysis is quantified very well showing the impact on each country and the individual routes that need attention and prioritized them as well as classified each route as to the current condition they are in. TAD/TADCO is attempting to raise this money from “donor” countries as a way of giving appropriate aid to Africa and at the same time being able to access suitable and marketable natural resources within Africa and creating job growth and opportunity while allowing other NGO and Aid Organizations to effectively get the necessary aid to their targeted markets more efficiently.
Trans-African Development Strategies (TADS) has continued on its quest to build MAJOR Infrastructure projects throughout Africa. The most significant is the Planned 4-lane Pan-African Highway that will first run from North to South. The final route from the Mediterranean to the Indian and Atlantic Ocean Convergence has her to be finalized but the Highway project will include a path that will bring Electric Transmission Lines, a Railroad and a Fiber Optic Cable as well as pipelines for Water and Oil and Gas (both Crude and refined) products. Working conjointly with TAD/TADCO it is envisioned that the road rehabilitation project will have multiple interconnections to the 4-lane highway (as well as the railroad) allowing for access to sea ports around Africa for global trade opportunities
In keeping with TADS visions it has also noticed the Democratic republic of its interest in building a major Hydro Electric Plant with intentions to connect it to the Grid being formed along the Highway Project.
All TADS projects have independent outside source financing independent of any participation or debt structure to any African Country. No TADS Project is being financed by the African Development Bank (ADB or AfDB) for undisclosed reasons by TADS. HOWEVER, while there are Private Enterprise Projects they do not have any pre-arranged interconnections to any countries infrastructure which are the subject of future negotiations. Further, the ownership of these projects by TADS is not mandated to be exclusive to TADS and its partners and is subject to each Individual Counties choice in how of if they wish to participate. BOT (aka BOOT) as well as public listing on diversified international stock exchanges are also possibilities to be discussed with the various Countries involved.
This post has been made to further explain the Differences between TAD/TADCO and TADS as well as to expound on the various projects that are in progress for both companies throughout Africa.
Craig Eisele
Trans-African Development Strategies is pleased to announce that it has forwarded through it’s intermediary in Brussels, to the officials of the Democratic Republic of Congo (DRC) its intentions and interest in building Africa’s largest Hydro Electric Power Plant Facility.
Trans-African Development Strategies has indicated it is open to various forms of completing this deal and is close to formalizing an agreement with an International Consortium to fund this project in its entirety pending satisfactory agreements with the Government of the Democratic Republic of Congo. It is envisioned that this Power Plant will supply most or all of DRC’s electric needs as well as those of several neighboring countries when completed.
It is also anticipated to request discussions sometime after the New Year or early 2008, with ESKOM concerning potential interconnections from this Power Plant to facilitate the full electrification of Sub Saharan Africa.
It is hoped that this project along with the Trans-African Development Company project for Road “rehabilitation” and the Trans-African Development Strategies 4-lane toll highway (to run from Central African Republic to Zambia and beyond along with other projects proposed) will be discussed with President Joseph Kabila on his upcoming trip to the USA October 26, 2007.
Study Seeks to Promote Networking and Good Practices in Infrastructure Development
African Development Bank (Tunis)
INTERVIEW
16 September 2007
Posted to the web 16 September 2007
Tunis
The African Development Bank has supported the preparation of more than 15 regional projects as part of its assistance in upgrading infrastructure in Africa, Dr. Ini Urua, NEPAD division manager at the African Development Bank, says in this interview, in which he discusses the Medium to Long Term Strategic Framework for Infrastructure development in Africa (MLTSF).
What is the MLTSF study and how was it conceived?
This is the Medium to Long Term Strategic Framework for infrastructure development on the continent. It seeks to institute a coherent strategic framework to serve as the basis for defining, implementing and monitoring infrastructure development on the continent as well as establishing partnerships that can best promote economic integration and support the development of trade on the continent.
The development of infrastructure on the continent has often been piecemeal in nature, with little or no coordination amongst agencies that support the development of infrastructure on the continent thus leading to a situation of low progress even when reasonable resources are being committed and tangible progress are being recorded. In this regard, the MLTSF will institute a well coordinated response to the development of infrastructure on the continent including measures to mobilize local and foreign private sector in the development of infrastructure on the continent.
The availability of adequate and functional infrastructure is key to accelerating the socio-economic development of any country or region. Africa, in general, lacks the basic infrastructure to facilitate its sustainable development and trade between its countries and with the external world. Given the critical nature of infrastructure for ensuring competitiveness of any sub-region, Africa with fifty three countries of which a large number are tiny in size, that is, in physical and economic terms, and a significant number are landlocked, with poor infrastructure, especially those that connect the countries of the continent and provide access to markets for land locked countries, is unable to compete effectively in the global market place as well as sustain its socio-economic development.
In this regard, the infrastructure development program under NEPAD seeks to facilitate an accelerated development and delivery of regional and continental infrastructure on the continent to foster the integration of the countries of the continent, intra-Africa trade, and trade between Africa and the rest of the world. The Medium to Long Term Strategic Framework for Infrastructure development on the continent, MLTSF, is the second part of the two pronged strategy adopted by AU/NEPAD in infrastructure development. This strategy consisted of the development and institution of a Short Term Action Plan (STAP) to kick start the process that was to be complemented with a Medium to Long Term Strategy (MLTSF) for sustainable infrastructure development on the continent. The STAP formed the foundation for a coherent and structured approach to the development of a regional infrastructure. It placed emphasis on projects and initiatives with a strong facilitation element in order to create an enabling environment for accelerated development and sustenance of infrastructure assets on the continent and, therefore, emphasized policy, regulatory, and institutional measures necessary to ensure the efficiency of existing and planned regional infrastructure assets on the continent.
Representatives of Regional Economic Communities including CEMAC, ECCAS, UMA, EAC, COMESA, SADC, IGAD, ECOWAS, UEMOA, CEN-SAD, the Economic Commission for Africa, NEPAD Secretariat, Members of the Infrastructure Consortium for Africa (ICA), Basin Organisations (RBOs), Regional Sector Organisations (RSOs), and other bilateral and multilateral development partners and agencies have been invited to MLTSF workshops. Why is there so much interest from the southern, eastern, central and western regions of the continent in the first phase of the study?
These organisations are embodiments of the wider African stakeholders in the development of infrastructure on the continent. The need for effective development of regional infrastructure on the continent in a well coordinated manner has been widely accepted. These organisations, as pillars of the integration agenda of the AU, are devoting their time and resources to facilitate the development of regional infrastructure on the continent, hence their interest and devotion to the study.
According to existing documents, the key objective of the study is to define a strategic framework for the continuous and effective development of infrastructure on the African continent based on coherent strategic goals and clear achievable targets. The framework will seek to foster networking and dissemination of good practices in infrastructure development among countries, Regional Economic Communities, sub-regional and continental sector organisations, and infrastructure development partners, as well as establish a common vision among all stakeholders on the development of Africa’s infrastructure, to support social and economic development and trade in the continent. How feasible is this objective, given the complex political set up in some countries, the incapacity for some countries to support funding of infrastructure projects and the imbalance in existing infrastructures among the regions?
The objective is realisable. The MLTSF seeks to set the guidance and steps for achieving this objective. There has been demonstrated political will between countries of the continent to work together and drive the integration agenda of the continent. The perennial problem of country versus sub-region is beginning to fade away and the emergence of the global world is adding impetus for the integration of the various countries and economies of the continent. Furthermore, in developing the MLTSF, institutional and technical capacities in the various infrastructure sub-sectors have to be developed and sustained. The MLTSF will also elaborate on these issues and set a template to guide future activities in this regard.
Sector stakeholder workshops are addressing STAP issues and the infrastructure gaps related to the African continent. At the regional workshop in Addis Ababa in July, experts reviewed the findings and recommendations of the first part of the MLTSF Study to the four subject sectors (water, ICT, energy and transport). Discussions are also underway to identify measures to accelerate implementation of the STAP. For example, in the transport sector, it is recommended that more concrete Action Plans should be prepared for implementation of the Transport Sector Flagship Projects–Road Transport Facilitation, Yamoussoukro Decision –Air transport liberalization. What constraints do you foresee in the implementation?
One of the biggest constraints is the commitment of countries to implement regional integration programmes and the regional integration agenda. Countries cannot give meaningful commitment if they are in conflict or are facing eminent internal or external conflict. In this regard, sustained peace and security are pre-conditions for accelerated development. Over the past few years, excluding two or three hotspots, we have started to witness lasting peace and stability in most of the sub-regions of the continent, thanks to the concerted effort of our leaders to resolve some of these conflicts.
On the implementation of the NEPAD program on infrastructure development, we have noticed that where there has been strong support by countries, programs are implemented quickly and these programs always achieve their stated objectives. A further constraint is the local capacity in countries and regions to support project development, implementation and maintenance of existing assets. Another important constraint is the availability of resources to do early stage project development work. Generally, most people do not fully appreciate the fact that for projects to be brought to a stage of financing and implementation, much ground work has to be done to prepare them. Where the pre-conditions stated earlier are there, including strong commitment from countries, this preparatory stage can be accelerated. Given that early stage project development is the most risky part of any project, most project development agencies are usually very cautious and generally shy away from committing funds for early stage project development activities. This situation becomes exacerbated for projects that involve more than one country – which by its nature has a level of complexity very different from an in-country project. For this reason, the African Development Bank with the support of Canada and Denmark established the NEPAD-Infrastructure Project Preparation Facility Special Fund (NEPAD-IPPF) to bridge this gap and provide the necessary risk capital for early stage project development and packaging. However, there is a need for adequate funding of the NEPAD-IPPF to be able to properly fill in this gap.
On the specific programs highlighted, a key issue that needs to be addressed is the continued commitment of countries of a given region or sub-region to implement key actions emanating from the recommendations of the STAP.
The MLTSF workshops have been organised under the tutelage of the African Union and the NEPAD Initiative with support from the African Development Bank and the Nigeria Technical Cooperation Fund of the Government of Nigeria. Given the melange of political and development institutions in these activities, to what extent will final decisions be directed by political interests of the countries in which projects will be carried out?
The MLTSF and other related activities are undertaken as part of the AU/NEPAD agenda for the integration of the continent. As such, the outputs of the study will be presented for endorsement by the NEPAD Heads of State and Government Implementation Committee (HSGIC) and subsequently by the African Union next year. Once this process has been undertaken, I do not foresee complications arising from political interests. For example, with the development of the Short Term Action Plan (STAP), prior to moving into implementation, it was endorsed by the HSGIC and the AU. It formed the basis for soliciting increased partnership and support from all stakeholders after it was formally endorsed and approved by those policy organs. Nonetheless, given that we live in a real and dynamic world, political interests of countries and sub-regions of the continent cannot be completely eclipsed. Often, they are important in informing the prioritisation of key actions to encourage and ensure broad and effective participation of all in the achievement of the goal of integration of the economies and countries of the continent.
The NEPAD that initiated the STAP and its follow up, the MLTSF has been heavily criticised for not having a goal or results. Some development experts and even political leaders have publicly challenged the NEPAD. In a widely publicised interview, Senegalese President, Abdoulaye Wade, said t he New Partnership for Africa’s Development (NEPAD), set up to commit African leaders to promote democracy and good governance in return for increased Western investment, trade and debt relief, had proved not delivered on its promise. “Expenses adding up to hundreds of millions of dollars have been spent on trips, on hotels. But not a single classroom has been built, not a single health centre completed. NEPAD has not done what it was set up for,” Wade said June 12, 2007, during an interview on Africable, a West African TV channel. As Manager of the NEPAD Division of the African Development Bank, which the NEPAD Heads of State and Government Implementation Committee (HSGIC) mandated to provide technical assistance and advisory services in support of the implementation of the AU/NEPAD initiative in infrastructure development, how to respond do you this challenge?
The majority of Africans as well as our partners want to see accelerated socio-economic development. For this to happen, there is a need to ensure the availability of reliable, efficient, and sustainable economic and social infrastructure. In this respect, we are all anxious to see acceleration in the implementation of infrastructure projects and programs on the continent.
Given this level of interest, it is proper and useful for interested persons to be critical of the pace of implementation and delivery of projects. Further, it is healthy for all stakeholders to interrogate the different programs and probe various activities and initiatives being put in place to respond to the various challenges of driving the NEPAD agenda. Overall, this is a good thing and demonstrates the interest of all stakeholders on the NEPAD program and its relevance to the socio-economic development of the continent. We welcome criticisms, especially those that come with alternative view points and ideas.
As you are well aware, NEPAD agenda on infrastructure development is about regional infrastructure to bolster the integration of the continent, thus, it is not helpful to expect NEPAD to have country specific interventions. This is what governments of the various countries of the continent are there for. As I had highlighted earlier, regional infrastructure development be it in electricity interconnection, telecommunications broadband systems and interconnections, transboundary water resource management, or in trans-border transport networks (road, rail, maritime, and air transport/aviation) is a very complex activity that transcends all phases of project development, from early stage project development through achievement of financing, delivery of the infrastructure asset, putting in place the right institutional framework to management the infrastructure asset, to highlight a few.
On the preparation of regional infrastructure projects, using the NEPAD-IPPF in conjunction with other facilities, the African Development Bank has supported the preparation of more than fifteen regional projects. Examples are the Benin-Togo Ghana Electricity interconnection which has been financed and is entering the implementation stage, the Kenya-Uganda Oil Pipeline which has secured a strategic investor and has entered the physical implementation stage, the Zambia-Tanzania-Kenya Electricity Inter-connection which is in the final stages of achieving financing for physical implementation, the East African Submarine Cable System (EASSy) project, which despite additional complexity of encompassing more than twenty countries is about to achieve financial closure. Other projects whose preparation is supported by the NEPAD-IPPF include the Gambia River Basin Organization (OMVG) Power Transmission Project, Botswana-Zambia (Kazanlunga) Bridge project , the Senegal-Gambia Bridge, the Senegal-Mauritania (Rosso) Bridge, Cross Border Electrification project in Central Africa, the Kenya-Ethiopia Electricity Inter-connection project, Ghana-Burkina Faso Electricity Inter-connection project, SATA Telecommunications back-haul project, just to name a few. We have in the pipeline more than fifty regional infrastructure projects that require funding for their preparation prior to being packaged for financing and implementation.
On the financing of physical projects, I am pleased to note that through the STAP, a significant number of regional infrastructure projects have been successfully brought to financial closure and entered the implementation stage. The African development Bank has contributed significantly to this success. Over the period 2002-2006, the ADB financed thirty-three (33) projects/programs consisting of eighteen (18) physical projects, including one private sector project, twelve (12) studies, and three (3) capacity building project for a total Bank Group financing of more than one billion dollars, and mobilized about US$1.6 billion in co-financing of some of these projects.
A number of these projects are at an advanced stage of implementation and some have been completed. Examples of the success stories include the Mozambique-South Africa Gas Pipeline project which has been completed and entered into service, the Morocco–Algeria-Spain Electricity Interconnection project and the West Africa Gas Pipeline project.
Other Development Partners such as the World Bank, the European Union, France, BADEA and the Development Bank of Southern Africa (DBSA) have also financed STAP projects. Between 2002-2006, the World Bank approved, in credit, equity and guarantees, a total of about US$1 billion for STAP projects. During that period, financing of regional infrastructure projects by the ADB and other developing partners stood at approximately US$3.6billion representing about 45% of the original total estimated cost of the STAP.
Notwithstanding these, it is important to put into perspective the nature of infrastructure development. Infrastructure, no matter how small in nature cannot be put in place in a flash. Typically, one needs a gestation time of 3-5 years before seeing the actual results. For regional countries, especially those involving more than two countries and where participating countries do not have the same level of commitment, the frame can be much larger. As such, I am optimistic that in the next few years, these projects which have achieved financing will begin to yield the right fruits for all to see.
You have served the African Development Bank for 10 years in different capacities. As an engineer by profession, how do you assess Bank’s contribution to the development of infrastructure on the continent?
The African Development Bank has always been at the fore front of infrastructure development on the continent both at the national and regional level. Given limitations on concessional financing window of the Bank, the Bank has done well in supporting the design, development and implementation of key infrastructure projects. Very often development institutions that support the development and delivery of infrastructure are usually faced with the issue of implementation capacity at the country level. This is sometimes as a result of the commitment of recipient countries to the project and sometimes due to acute shortage of local personnel. Incorporation of capacity building elements in project design is often used to ameliorate this. Nevertheless, the commitment of countries and agencies to the active building and retention of technical capacity is important and should never be relegated in the hierarchy of priorities. With continued sound macro-economic management in our countries coupled with sustenance of peace and security, I foresee in the long term a reversal of this capacity deficit and drain.
This interview was prepared and conducted by Emmanuel Ngwainmbi, NEPAD, Regional Integration and Trade Department, African Development Bank.
TADS is for the “Trans-African Development Strategies” Company which is a FOR-PROFIT Company that acts as a Strategic Planner and New Business Development adviser. It will be used to interface with Governments and Businesses and Investors primarily for Projects in Africa.
TADCO or TAD is for the “Trans-Africa Development Company” which is the NOT-FOR-PROFIT Organization used for the operations of acquiring funds and distributing those funds to build Infrastructure throughout the African Continent focusing on NO Cost to any African Country, Government, Business, NGO or any other entity.
I apologise for any confusion.
Craig Eisele
Craig Eisele Creates:
Trans-African Development Strategies, Inc.
Trans-African Development Strategies, Inc or “TADS” is a New “Private” NGO focused on Infrastructure Development in Africa.
The purpose of TADS is as follows:
1. To provide Infrastructure development throughout Africa, whereas the Countries of Africa incur NO DEBT.
2. To rehabilitate the 108,000 km of roads in Sub-Saharan Africa as identified in a study for the World Bank in 2006 (co-authored by David Wheeler) to facilitate development of trade throughout the Continent of Africa.
3. To establish a modern limited access 4-lane “Highway” extending from the Mediterranean Cost of Africa and ending in South Africa (hopefully Cape Town, and 1 to 2 kilometers wide the full length of approximately 10,000 km.
4. To encourage investment in the major portions of Infrastructure in the areas of Communications, Transportation and Power along the path of the “highway listed above in Item #3 and itemized below.
5. To facilitate the development of a Trans-African Railroad
6. To facilitate the development of a series of Pipelines to include Oil and Gas (refined and crude products) and Transportation of Water resources to areas in need.
7. To bring a Fiber Optic Cable through the CENTER of Africa allowing Communication, Video and Internet into areas beyond the coastlines of Africa.
8. To erect an Electric Transmission line from North to South through the Center of Africa.
9. To develop electric Generation facilities including Hydro, Solar, Wind, Nuclear and Natural Gas along this same route.
10. 10 To assist in the development of Manufacturing Facilities and secondary and tertiary processing facilities for Natural resources to maximize value added services within Africa and to substantially add and foster job creation.
11. To Assist in the building of Schools and Hospitals along this same pathway.
12. Assist in the development of large scale commercial farming and ranching operations.
13. To repeat Items 3 through 12 on at least one possibly 2 East to West Trans Continental Paths in Africa intersecting with the Primary Route of North to South and tying the Continent of Africa together with World Class Facilities.
We are certain that this will allow Africa to not only be self sufficient, but also Increases Wages to alleviate Poverty, reduce human suffering increase health care availability, and foster educational benefits throughout Africa and allow other NGO’s to better server those people who are in need but are not getting the aid they now desperately need because of the lack of infrastructure.
We also believe that the increase in GNP and GDP will spawn an increase in Tax Revenues and the ability for the countries to be able to access international financing for other projects that each individual country deems appropriate for its population.
TADS expects to raise 100 Billion Dollars of “AID” for the Roads and Highway Projects paid over the next 7 years. With Direct Spending on African Labor and materials to exceed 40 Billion Dollars up to 70 Billion dollars over the 7 year period. A Strategy to obtain these funds has been developed and refined over the last 2 years. While meet with skepticism by many the project is real and attainable despite the nay-sayers and those who would detract form the ultimate goal of a “New and Brighter Future for Africa.”
This estimate does not include anything except the road and highway projects.
TADS has a REAL Vision for Africa and invites anyone wishing to see this vision realized to participate in anyway they feel is appropriate.
While this is the first in a series of Announcements, more information will be provided over the near future.
Craig Eisele
Managing Director
Trans African Development Strategies, Inc.
Yes, The headline is correct. Companies in the USA are losing out on major business opportunities in Africa… as are European Companies… and they are losing to China!!
But do not take my word for it, google “China Africa” and you will see for yourself. China is not only winning in Africa they are moving at an ever increasing pace and will dominate African trade and be the primary “investor” in Africa because of the “west’s” inability to effectively coordinate investment strategies.
What do I mean by coordinated investment strategy…. it is not a complicated idea…. it is the working with other companies in a form of horizontal integration to assure the success of the investment.
For example: If the US Company is interested in Mining. then transportation becomes an important issue… yet the availability of efficient roads or rail transport is limited at best.
The coordination becomes searching for partners who wish to build a Trans-African Railroad or who are interested in highway/road development such as Trans-African Development Company.
Telecommunications and Internet is similarly available by numerous companies wishing to justify their investment and looking for “customers” to make their network affordable.
Electricity or other power sources also lend themselves to partnering with such companies.
Simply: Since no “company” has the ability or resources of a COUNTRY… like China…. then Companies interested in investing in Africa MUST find a way to compete NOW…. by affiliating with other Companies, Groups or Organizations that can facilitate their Investment into Africa.
This Article is somewhat self serving… yet it should also help Companies interested in investing in Africa, a Strategy for making such investments.
Self-serving because Trans African Development is looking to rehabilitate the road infrastructure that could make their investment economic model look better and increase the feasibility of such investments. HOWEVER, Trans African Development is NOT looking for investors to rehabilitate the existing road infrastructure in Africa… Yes, we are looking to raise the 50 million Euro to jump start our efforts in Africa… BUT, the real money to rehabilitate MUST come from those Governments of the Industrialized world to rehabilitate the basic road infrastructure in Africa.
DRC (Democratic Republic of Congo) has but 300 miles of PAVED roads… yet it’s land mass is that of ALL of Western Europe. It is not enough to get a concession for the development of Natural resources in DRC… it must be transported to global markets.
Trans African Development is looking for sponsors to implement a strategy of marketing and promotions and PR to raise the funds for this Road rehabilitation that will not only bring African gratitude to those countries (and therefore those countries Companies) but will help hundreds of millions of Africans as well as give these “traditional” Western Companies access to those resources and be able to effectively compete with China for those resources and markets.
Sadly I believe that the “traditional” Western Companies may be too late already as their existing strategists have lacked the ability to think beyond their industry and their standard business models. But I welcome feedback form those “Companies” who wish to find alternatives to their current models and who are willing to seek markets outside the black box of traditional thinking that will only cause them to lose out to China in the long run especially in Africa.
Tomorrow’s Crises Today – the Humanitarian Impact of Urbanisation
UN Integrated Regional Information Networks
NEWS
21 September 2007
Posted to the web 21 September 2007
Nairobi
Somewhere, some time this year, a baby will be born on the 25th floor of a city hospital or the dirt floor of a dark slum shack; a first-year college graduate will rent a cramped apartment in lower Manhattan or a family of five will finally concede their plot of farm land to an encroaching desert – or sea – and turn towards Jakarta or La Paz or Lagos in search of a new livelihood and a new home. The arrival of this family or graduate or baby will tip the world’s demographic scale and, for the first time in history, more than half the human population will live in cities.
At present, 3.3 billion people live in urban centres across the globe. By 2030 this number is predicted to reach five billion, with 95 percent of this growth in developing countries. Over the next three decades, Asia’s urban population will double from 1.36 billion to 2.64 billion, Africa’s city dwellers will more than double from 294 million to 742 million, while Latin America and the Caribbean will see a slower rise from about 400 million to 600 million, according to the UN Population Fund (UNFPA).
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While megacities appear more frequently in headlines and on development agendas, overall growth in urban centres of 10 million or more inhabitants is expected to level out. Instead, over the next 10 years, cities of less than 500,000 will account for half of all urban growth.
Two sides of the urban coin
All this growth is not necessarily a bad thing. As David Satterthwaite of the International Institute for Environment and Development (IIED) points out, the speed at which a city grows – if it is responding to economic opportunities – is a benefit, not a problem. “A very large part of the economic value in any country is being generated in the urban areas,” Satterthwaite says. “Even in [developing] nations, where 60 to 70 percent of the population is in rural areas, you still have more than half the economy – and often more than that – generated in urban areas.”
The problem is not growth, but unplanned growth. In 2001, 924 million people, or about 31 percent of the world’s urban population, were living in informal settlements or slums, 90 percent of which were located in the developing world. By 2030, the number of worldwide slum dwellers is projected to reach two billion. In the Bangladeshi capital of Dhaka, 3.4 million of the city’s 13 million residents live in 5,000 slum and squatter settlements. Sixty percent of Nairobi’s city dwellers are packed into more than 130 informal settlements occupying only 5 percent of the city’s total land area, while the squatter settlements of Mumbai are growing 11 times faster than the city itself, with 300 people arriving from the countryside each day.
What this translates to is abject poverty, disease, and appalling conditions. Take Dhaka: every time the river level rises, it floods the illegal clusters of tiny stilted huts built on the flood plain with smelly water full of factory effluence. In Delhi, the water problem is one of scarcity as slum dwellers fight each other to gain access to the one working standpipe in their area and often go without for days at a time. Malnutrition is often highest in slums, as unemployment means people are too poor to purchase produce that could be grown on the land.
Defining a ‘slum’ and the ‘urban poor’ invariably focuses on what people lack – access to education, social services, employment, safe and affordable water, sanitation and housing, and residential status. In many cases, they live in sub-standard housing, in public spaces, or in squatter settlements near major urban areas.
It is generally assumed that urban poverty levels are lower than rural poverty levels, but the absolute number of poor and undernourished in urban areas is increasing. “In general, the locus of poverty is moving to cities … a process now recognised as the ‘urbanisation of poverty’,” the UN Human Settlements Program (UN-Habitat) noted in 2003.
If the locus of poverty is moving to cities, development aid has been reluctant to move with it. CARE USA chief Helene Gayle makes a blunt assessment of urban development capacity: “The NGO community is dependent on outside donor funding [and] its priorities often depend on where donors have put their focus,” with the result that “neither the NGO community nor the donor community has co-evolved in the direction of facing urban poverty as rapidly as urban poverty has occurred”.
‘More threatening than the village’
Throughout the 20th century, city growth was largely fuelled by rural to urban migration. Today, however, cities are mostly growing from within – more people are born than are dying in urban centres. This process of urbanisation – what demographers call ‘natural increase’ – is partly an indicator of medical advances across the developing world and of better access to healthcare in urban areas specifically.
But the fact that mortality rates are generally lower in cities masks a health crisis in slums. Worse, those most affected by this urban healthcare divide are children. A 2006 analysis in the International Journal for Equity in Health found that in 15 sub-Saharan African countries the difference in child malnutrition within cities was greater than the urban-rural divide.
As the UN’s 2006/2007 State of the World’s Cities report notes: in Ethiopia, child malnutrition in slums and rural areas is 47 percent and 49 percent respectively, compared with 27 percent in non-slum urban areas; in Niger, child malnutrition in slums and rural areas is 50 and 52 percent, against 35 percent in non-slum urban areas; and in the slums of Khartoum, the prevalence of diarrhoea among children is 40 percent, compared with 29 percent in rural areas. “Living in an overcrowded and unsanitary slum,” the report concludes, “is more life-threatening than living in a poor rural village.”
Access to water
Access to water and sanitation in urban areas, like access to healthcare, is generally better than in rural areas. But again, comparing aggregate urban and rural numbers hides the fact that – for example – in the Mbare neighbourhood of Harare, Zimbabwe, 1,300 people share one communal toilet with six squatting holes.
As urban populations increase, the number of people without access to improved water sources is also rising, doubling from 108 million in 1990 to 215 million by 2010. In dense city environments – and in even more dense slum environments – communicable diseases can quickly become epidemics, making the consequence of unsafe water and poor sanitation much more severe than in rural areas. And more people are affected due to city concentrations.
In addition to the outwardly identifiable impacts of poor access to water, sanitation, and health services (pneumonia, malaria, diarrhoea, tuberculosis, HIV/AIDS), a dearth of services also perpetuates poverty. The urban poor spend a higher percentage of their income on treating illness, and are more vulnerable to lost wages and have less job security when they are forced to miss work – all of which erodes their coping capacity, and can keep potentially mobile families trapped within a cycle of poverty.
Unnatural disasters
In the last quarter-century alone, 98 percent of the people injured or affected by natural disasters were living in 112 countries classified as low income or low-middle income, according to the World Watch Institute’s 2007 State of the World Report.
And while tsunamis and earthquakes continue to grab the headlines, flooding and landslides affect a much larger number of the urban poor. While the 2004 Boxing Day tsunami accounted for about 90 percent of that year’s natural disaster death toll, the 2.4 million people affected was a relatively small number compared with the 110 million people hit by flooding in Bangladesh, India and China the same year, according to the International Federation of the Red Cross (IFRC) 2005 World Disasters report.
With little available land in urban areas, the poor, by necessity, live on floodplains, unstable cliff sides and in the shadow of industrial facilities. In the developing world an earthquake or a hurricane is not a disaster, but a catalyst for disaster – exposing poor infrastructure, substandard housing, haphazard city planning, and often nonexistent response measures – all of which constitute the true disaster for the urban poor.
Urban warfare
Poverty has long been considered a key driver of violent crime. In recent years, however, this relationship has been challenged as too simplistic. A 2004 article on urban violence and insecurity in the journal Environment and Urbanization identifies inequality as a primary driver, noting that “interpretations based on statistical modelling have demonstrated that with regard to national-level data on murder rates, inequality is more influential than poverty, with income inequalities being generally more marked in urban than in rural areas”.
A World Bank study on violence in Latin American urban areas showed that homicide rates ranged from 6.4 per year per 100,000 in Buenos Aires to 248 in Medellin, Colombia. Rio de Janeiro, São Paulo, Mexico City, Lima and Caracas account for more than half their countries’ national homicides.
More difficult than measuring crime within urban areas has been differentiating between underlying structural causes (like unequal power relations), and trigger risk factors (such as alcohol and drug abuse), which can often precipitate gender-based violence.
The danger in mapping and measuring urban violence is that perceptions of violence are then reinforced; because statistically-speaking, urban centres (and especially slums) are subject to more crime, violence can become institutionalised, and more dangerously, a stereotype of slum dwellers as criminals is perpetuated.
From shanty to State House
In 1990, the UN Development Programme (UNDP) released its first Human Development Report. The fifth chapter dealt exclusively with the humanitarian effect of urbanisation in the developing world. Addressing the role of local and national governments in service provision for the urban poor, the report’s authors recommended that governments “shift from directly providing services to enabling others to provide them – be they formal and informal producers, community-based and non-governmental organisations or the urban residents themselves”.
By 2007, this outsourcing paradigm had come full circle. As author Rasna Warah noted in her assessment of the Kenyan government’s role in urban development, “The answer to Nairobi’s slum problem lies in stronger and more integrated intervention by government ministries and agencies.”
The promotion of healthcare, education, access to water and sanitation, together with the prevention of violence and the response to natural disasters, depends on active and accountable local and national governments. Indeed, underneath almost all aspects of urban development and poverty reduction are issues of governance.
At the most basic level, good governance involves recognising slum and squatter residents’ legal right to exist, and formalising this right through land tenure, ownership, city zoning regulations, etc. The realisation that government was missing from urban planning coincided with the realisation that the urban poor had been, at best, passive recipients and at worst, completely absent from the planning and implementing of slum upgrading projects; and that the urban poor were in the best position to advocate for their rights vis à vis local governments, and design and implement slum-upgrading schemes.
At present, urban development actors are struggling to define their roles, and to establish a more cohesive, active approach to urbanisation. CARE chief Gayle sees her NGO as a link between governments and communities: “We are not saying that we are marching on the halls of power within countries necessarily, but instead really looking at how we help at the grassroots level to give people a sense of their own ability to engage and make their government accountable to them.”
Cities of half-light
The UNFPA 2007 World Population Report states: “Cities concentrate poverty, but they also represent the best hope of escaping it … The challenge is learning how to exploit [a city's] concentrated population.”
Over the next months IRIN will produce in-depth articles and interviews examining how this challenge is being met. The interviews will include conversations with leaders in the urban development field – from the heads of international NGOs to academics – and slum-dwellers themselves. The in-depth articles will explore issues of urban healthcare, resource scarcity, violence, disasters and the role of governance.
Is the rural model of top-down donor funding workable in urban areas? Is Millennium Development Goal 11 to improve the lives of 100 million slum-dwellers attainable? Does the fact that more than half the world’s population will now be living in cities represent a turning-point around which development practitioners and governments can begin to narrow the already wide gap between urbanites, or is it just a number?
For the urban poor the stakes are high. As the IIED’s Satterthwaite warns, “What we have now is a perfect example of what the future scenario is if we continue failing to change governments’ and international organisations’ response to urbanisation. Half of urban populations have infant and child mortality rates 20 times what they should be, with at least half of the urban populations housed in squatter settlements. We would obviously begin to see strong resistance movements creating civil unrest and possibly civil war.”
[ This report does not necessarily reflect the views of the United Nations ]
World Bank Hopes to Light Continent
NEWS
7 September 2007
Posted to the web 7 September 2007
By Elizabeth Guthrie
Washington, D.C.
The World Bank hopes to bring affordable and environmentally-friendly lighting products to up to 250 million Africans by the year 2030.
The “Lighting Africa” program was officially launched as part of the World Bank’s Development Marketplace grant program this week.
More than 350 international and local companies have declared interest as possible partners in connecting more Africans to the power grid. The World Bank will support lighting companies’ efforts to replace kerosene lighting, a polluting and poor-quality light source, with the most cutting-edge compact fluorescent light (CFL) and light-emitting diodes technologies.
Although “Lighting Africa” promises to make energy costs lower, the lighting alternatives proposed also present a host of new concerns.
Not least among these are environmental issues. CFL light bulbs, when broken or improperly disposed of, emit mercury into the atmosphere and pollute the water supply.
World Bank leading energy specialist Anil Cabraal told allAfrica in an interview that companies are working to decrease mercury levels and improve the lifetime of CFLs.
Cabraal also said that as LED technology, commonly found in stop lights and cell phones, continues to improve, this technology “will likely become the main focus of the ‘Lighting Africa’ initiative.”
“We do not do the development [of products],” Cabraal said. “That is up to the industry. But what we can do is tell the industry what we are looking for and help condition the market.”
In the meantime, the World Bank aims to educate local lighting companies and communities on how to dispose of CFLs safely.
Cabraal explains that this initiative is not concerned with “incremental changes.” Rather, the bank wants to use new technologies to help entrepreneurs “leap forward.” Although there have been smaller solar lantern projects in countries such as China, the lighting initiative is “new territory” for the bank.
Sub-Saharan Africa’s “limited infrastructure capacity” presents challenges, says Cabraal. But early consultations with the private sector and government met with a “strong and positive response.”
The World Bank says connecting new areas of Africa to power will serve consumers, support local commerce, create new jobs, enhance air quality, and improve health, safety, and quality of life.
Fuel for outdated lighting technology typically comprises up to 15 percent of a person’s annual income in Africa, the bank adds. Estimates show that only two percent of rural Sub-Saharan Africans have access to “modern energy” and electricity. That means at least 500 million people do not.
World Bank in Bid to Light Off-Grid Areas
Inter Press Service (Johannesburg)
NEWS
7 September 2007
Posted to the web 8 September 2007
By Abid Aslam
Washington
The World Bank hopes to bring modern lighting to one-fourth of Africa’s people by developing markets for products not hostage to fossil fuels or the continent’s lamentable electricity grid.
The bank and its private investment arm, the International Finance Corporation (IFC), say their “Lighting Africa” programme aims to bring light to 250 million sub-Saharan Africans cut off from existing power infrastructure by 2030.
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“Modern lighting will mean improved air quality and safety for millions of people in Africa,” S. Vijay Iyer, the bank’s energy sector manager for Africa, said in a statement. “It will mean longer reading hours for students and longer business hours for small shops.”
Results remain to be seen but Iyer’s comments echoed the dreams, stated or reported at least since the 1970s, of countless people in remote regions of Africa and other parts of the world where power shortages are lamented as holding back development.
“Energy poor” Africans spend about 17 billion dollars a year on fuel-based lighting such as kerosene lamps, according to the bank. These are “costly, inefficient, and provide poor quality light while polluting and posing fire hazards.”
Lighting often proves these consumers’ largest energy expense and typically accounts for 10-15 percent of household income.
Thus, there exists “a potentially huge market for modern lighting products that are safe and reliable, that provide higher-quality light, and that are cost-competitive with fuel-based lamps, and powered by renewable energy or mechanical sources,” the bank added in its statement.
With backing from a number of donors, the new programme seeks to draw the international lighting industry to that market and thereby circumvent the mess of crumbling infrastructure, outdated technology, and corrupt entities that define the continent’s power grid.
Some 350 companies have expressed interest in Lighting Africa, the bank said.
Blackouts are common throughout Africa, where much of the power-generation and transmission infrastructure was built in the 1950s and 1960s. By the 1970s, a lack of investment in maintenance began to take its toll and many countries have suffered permanent setbacks as a result. Nigeria, sub-Saharan Africa’s most populous country, operates at about one-third of its installed capacity because of equipment problems, according to the United Nations.
Since the 1980s, numerous ambitious efforts to boost the quantity and reliability of the continent’s power supply — including major infrastructure projects backed by the bank and IFC and executed by international and domestic firms — appear to have had little effect: Africa is home to about one in six humans but generates about four percent of the world’s electricity.
Financial, political, and environmental disputes have plagued past efforts and have snarled undertakings such as Uganda’s Bujagali hydropower project.
In consequence, many governments have begun to look at smaller-scale alternatives, including wind- and water-mills, solar panels, and energy extracted from biomass — chiefly, agricultural and forestry waste.
The first phase of the new programme, launched Wednesday, features a competition for the design and delivery of innovative lighting products — those using fluorescent bulbs or light-emitting diodes (LEDs), among others — for low-income African consumers.
Research on consumer demand, behaviour, and preferences also is to be conducted in Kenya, Ghana, Tanzania, and Zambia.
IFC’s role will be to help develop business models to deliver the new products and services, said chief executive Lars Thunell.
Ten to 20 winners of the design competition will receive grant finance of up to 200,000 dollars, the bank said. The contest is open to private businesses, non-governmental organisations, universities, government entities, and individuals from any country. Proposals must be submitted by 23:00 GMT on Oct. 31, the bank said. It provided application information on the Web site http://www.lightingafrica.org.
Emerging Markets
Business Day (Johannesburg)
COLUMN
4 September 2007
Posted to the web 4 September 2007
By Simon Freemantle
Johannesburg
“WELCOME to Ghana,” I was told, with just a hint of sarcasm, as the lights tripped during my meeting at a government office in Accra a few months ago. Naïvely, I asked whether the lights would come on again so that we could resume our meeting, but was told this was unlikely for another eight hours due to the country’s crippling energy crisis and the need for “load shedding” every second day.
It was 11am, which essentially meant that all industry not able to afford expensive generators would have to shut down for the day, losing significant potential revenue and stifling the development of one of Africa’s most promising economies.
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Ghana’s problems are by no means mysterious as the country continues to depend heavily on hydropower from the Volta River, a project that was initiated in 1966 by Kwame Nkrumah and has yet to be significantly upgraded to incorporate the increase in demand flowing from the country’s industrial growth. Exacerbating this has been the recent drought, which has lowered the output from the Volta River, crippled gold and aluminium production and set off blackouts in Togo and Benin, which buy power from Ghana.
Ghana is most certainly not alone in its energy woes. Its West African neighbour, Nigeria, has a similar problem, albeit on a much larger scale. Nigeria is estimated to produce only 2500 megawatts of electricity a year, compared to the 20000 megawatts experts say is needed for the country to enjoy stable power supply.
Nigeria’s newly inaugurated president, Umar Yar’Adua, recently admitted that only 19 of the country’s 79 power plants work, with blackouts costing the economy about $1bn a year.
Zimbabwe has a power deficit of more than 700 megawatts and is therefore forced to import up to 35% of its power from its neighbours. Blackouts are also common in Uganda as the country desperately attempts to keep up with increased energy demands by leasing generators. The same is true in Zambia, which is battling to keep up with the strain exerted on its electricity grid by increased mining activity in the copper belt, spurred on by the global commodities boom.
Even SA, for years an exporter of electricity to its needy neighbours, reached capacity last year, a situation Eskom has admitted it will not be able to fully address for the next seven years, a period that includes the 2010 world cup.
To sum up the crisis: 25 of sub-Saharan Africa’s 44 countries face severe power shortages, with the region, excluding SA, producing the same amount of electricity as Poland, a country of 38-million. At present, energy concerns are driving up the cost of living and drastically lowering Africa’s manufacturing competitiveness on a global scale, especially when one considers the strength of the competition emerging out of China and India.
That looming problem is avoidable if governments and international funding agencies begin to see the fundamental importance of boosting energy capacities in order to stimulate further growth in Africa’s economy. There has been minimal capital injection into the power sector in Africa over the past decade of economic development, despite the obvious correlation between energy and growth.
However, capital injections alone will not solve the problem as the World Bank has estimated that to ensure 100% access to electricity in Africa, an annual investment of
$8,27bn is required. And this, as we well know, will not happen. The key therefore is to strategically place funds in operations aimed at unlocking the obvious potential that exists in Africa for harnessing alternative energy sources, a particularly important pursuit given the global challenge of climate change, while simultaneously improving national electricity grids and ensuring that the continent’s vast oil and gas reserves are used efficiently.
On the alternative energy side, the scope is endless. The Congo River, for example, flows with such power that with sophisticated hydroelectric machinery in place it could power up the entire continent. There are also massive known reserves of coalbed methane in Zimbabwe, which, if realised, could provide the answer to much of sub-Saharan Africa’s energy concerns. Little is known about coalbed methane, but it is a resource that is valued in the US at over $5-trillion and provides the US and Canada with a vital source of energy. With such a large and often arid land mass and thousands of kilometres of untapped coastline, Africa also has vast potential for solar and wind power generation.
Many of Africa’s largest states have reached capacity regarding their power generation capabilities and therefore cannot continue to grow without innovative, proactive solutions and significant funding. Energy stability lies at the core of global production and Africa, which is enjoying a period of unprecedented peace and prosperity, can only maintain its impressive momentum by taking steps to ensure that it is not left out in the dark.
Simon Freemantle is a senior business analyst at Emerging Market Focus.
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Continent From Regression to Progression
Daily Monitor (Addis Ababa)
COLUMN
23 August 2007
Posted to the web 23 August 2007
By Mekashaw Yimer
Addis Abeba
As history attests Africa is home of mankind and ancient civilization. The African social system has been much communal and socialistic that gives wider space for humanity. The ancient civilization of western Africa, northern Africa, eastern and central Africa as well as southern Africa depicts the fact that African civilization was the real concept of humanistic development that has value for humanity. And the materialistic civilization of the continent in the past was so high. It’s verifications can be observed today through the pyramid of Egypt, Lalibela of Ethiopia and so forth. Besides Africa is mind setup was proactive, confident and progressive.
But as colonizers come to the land of Africa what they did first was destructing the prototype. Social fabrics of the continent. In doing so, the culture, way of thinking and the traditional knowledge of Africa were victimized and at some places totally extinguished, giving space for tribal conflicts, civil war, Corruption and so forth. This perceptional and cultural demise brought about retardation on the humanistic and materialistic development of Africa, and it has impacts on the actions of African which become more of reversion than being progressive. Hence, Money was budgeted rather to adding fuel to the above mentioned evils. This also created desperation and luck of confidence in the mind of many Africans even to challenge colonial suppression and exploitation.
Where as on the other hand, thanks to African forefathers they deeply explained and propagated the impacts of colonization and budgeted their life to the causes of African people. However in the time of the war of independence, Africa lost its patriots as it was true in the time of occupation. The idea of independence surpassing the sole sovereignty of states, it progressive went over to the unity of Africa so that came up with the organization of African Unity (OAU).
From its inception OAU served as a nucleus body to articulate the interest of the continent through out history. Scrutning the performance of OAU, there might be much more left undone but from the view of the young age of African states from independence, the creation of OAU by itself was a big achievement and a long run particularly for realizing the dreams of visionary Africans. And the evolutionary growth of OAU that gave birth to AU is a dramatic and progressive move. Nowadays, AU is becoming more powerful and sensation in the minds of many Africans.
African Union’s Organizational structure including the African parliament also indicates a blooming future in the path of African societies to democracy and development. On top of this, the African head of states meeting in Accra-Ghana, two months before now, was the most amazing and silence breaker to realize the goals of progressive African independent leaders: The meeting is a big leap and historical to the African future. The concept of the meeting impressed the hearts of almost all Africans and no one of the head of states refused the idea of unity, but the bone of contention was the time and the methodology. This implies the formation of the United States of Africa/USA/ is beyond doubt and inevitable. Besides, the debates over unity are indicative to the progressive elements in the minds of Africans as compared to the dark age of the colonial era where Africa was in a regression trend even from the pre-colonial aboriginal standard.
To conclude, Africa was /is one of the cradles of antique civilization. In addition to the materialistic civilizations, the humanistic civilization in Africa was at encouraging stage before Africa was conquered. The action of Africa was also proactive and progressive. But the whole process was doomed away by the colonial system in which the action of Africans was lamed by the colonial powers to the extend that Africa’s development inclined to regression. It is after independence that the renaissance of Africa came in to existence. Now Africa has become pro-active, and its progressive development has started to flourish.
New SADC Chair to Prioritise Infrastructure
BuaNews (Tshwane)
NEWS
16 August 2007
Posted to the web 16 August 2007
By David Masango
Lusaka
The new chairperson of the SADC, President of Zambia Levy Patrick Mwanawasa is to prioritise a number of focus areas during his term, including regional infrastructure development.
He takes over the chairmanship of the Southern African Development Community (SADC) from the Prime Minister of Lesotho Pakalitha Mosisili.
President Mwanawasa, will focus on among others, developing regional infrastructure, the SADC Fund and establishing a Free Trade Area (FTA).
“In order to achieve this goal [of infrastructure development in support of regional integration], road, rail air transport, telecommunications and energy development are going to be the main catalysts of our integration process,” he explained.
In his acceptance speech during the 27th SADC Ordinary Heads of State and Government Summit, which officially kicked off in Zambia Thursday, Mr Mwanawasa said he was aware of the enormous challenges of guiding the overall implementation of the SADC common agenda.
President Mwanawasa said the SADC Regional Indicative Strategic Development Plan entails amongst others, strong infrastructure development.
He explained that SADC had registered “remarkable” successes since its inception because all member states mobilised their resources and cooperated closely to shape a common destiny.
“Together we must ensure that all SADC institutions fully exploit existing opportunities and explore new ones in order to promote and accelerate regional integration in a dynamic manner,” he emphasised.
Regarding the SADC Infrastructure Development Fund, Mr Mwanawasa explained that it drew its strength and support from the New Partnership for Africa’s Development initiative.
“We therefore have to focus on those infrastructure programmes and projects that facilitate quick and efficient linkages in our communication systems.
“This requires prioritising the development of the regional trunk road network, strategic air transport facilities and the most effective telecommunication network that will enhance intra-regional travel and communication,” he explained.
The consolidation of the FTA, he said remained elusive partly due to the inherent production structures, which he said had remained by and large unfavourable, and the continued existence of intra-regional trade barriers between member states.
This situation is compounded by the existence of a number of overlapping and sometimes conflicting regional integration programmes in the region and Africa at large.
He praised the work being done by the SADC Joint Ministerial Task Force of Ministers of Trade and Finance to come up with recommendations to move forward, in regional developments and relations with other regions.
He cited the negotiations with the European Union on Economic Partnership Agreements as an example of this.
He promised to work tirelessly with members and other partners, where necessary, during his tenure in office to ensure that SADC finds a solution to those challenges.
“In particular, my priorities will include ensuring the full operationalisation of a Free Trade Area in which SADC members fully implement commitments with respect to the tariff liberalisation schedules as well as addressing the elimination of non-tariff barriers,” he said.
The chairperson also acknowledged the improvement in peace and security in the region and congratulated Lesotho, Madagascar, Tanzania and Zambia for holding successful elections.
“These elections will further entrench the tenets of democracy and good governance in our region,” said Mr Mwanawasa.
Other challenges that the chairperson is faced during his term in office include food security, the environment and natural resources.
He called on member states to implement the Dar-es-Salaam Declaration on Food Security, which entails that governments allocate 10 percent of their national budgets to agriculture and increasing the use of organic fertiliser, amongst others.
The chairperson pointed out that climate change was a threat to food security and development as it amongst others negatively affected food production; caused floods that damaged crop and infrastructure and caused droughts.
Mr Mwanawasa said the abundant natural resources and wildlife found in Africa, if fully exploited, could contribute considerably to the region’s socio-economic well-being.
He also pledged to fight HIV and AIDS, and to improve gender equality.
Development Through Trade
Business Day (Johannesburg)
OPINION
6 August 2007
Posted to the web 6 August 2007
By Nkululeko Khumalo
Johannesburg
HIGH-ranking officials, including US Trade Representative Susan Schwab, and representatives from African countries that are beneficiaries of the Africa Growth and Opportunity Act (Agoa), descended on the Ghanaian capital Accra to attend the Sixth Agoa Forum on July 18-19.
Agoa is a non-reciprocal preferential trade scheme whereby the US offers the 38 eligible countries (including all Southern Africa Customs Union member states) duty and quota-free access to its market. The scheme covers more than 6000 products.
The forum is meant to celebrate Agoa’s achievements and seek to help the beneficiaries maximise existing market access opportunities, and involves Africa’s business community as well as the civil society organisations. While Agoa has had a very positive effect since it came into force in 2001, it is high time African countries started thinking about the future of their trade relationship with the US beyond 2015, when the current arrangement expires.
This is imperative, particularly for Sacu countries that are among the biggest Agoa beneficiaries. Though Sacu is the US’s second largest trading partner in Africa (Nigeria, whose exports are mainly petroleum products, occupies the first spot), there is no contractual agreement to guarantee and extend the market access opportunities they currently enjoy.
Further, the current relationship does not include the fastest growing area of trade, namely trade in services. Nor are there legally binding pacts to regulate important issues in bilateral economic relations, especially investment and intellectual property rights.
The US-Sacu free trade agreement (FTA) negotiations that began in June 2003 aimed to address this situation. Through the FTA, Sacu sought to achieve Agoa-plus liberalisation (by locking in and possibly extending current market access); address non-tariff barriers affecting their US-bound exports; spur regional integration in Sacu; and strengthen relations with the US, possibly as an insurance against potential failure of the Doha Round.
The US, on the other hand, aimed to use the FTA to eliminate barriers to its goods and services exports in the Sacu market, strengthen intellectual rights, build alliances for the WTO negotiations, and level the playing field vis-€-vis the European Union, which benefits from the Trade, Development, and Cooperation Agreement they signed with SA.
However, owing to differences between the parties on a range of issues, including the scope and anticipated depth of commitments, the parties finally decided in April 2006 to abandon the FTA in favour of a less contentious and politically palatable piecemeal approach (which they hope will lead to a fully-fledged FTA in future).
In terms of this plan, Sacu and the US will sign a Trade, Investment and Development Cooperation Agreement (Tidca) that would enable them to consult one another with a view to facilitating two-way trade and investment, conclude mutually beneficial agreements , and work towards reaching an FTA. The parties are reportedly making headway and were expected to sign the Tidca on the margins of the Agoa Sixth Forum.
While the Tidca idea seems workable, there is a danger that it may end up replacing the original ambition to have an FTA instead of being a necessary building block towards it. There are concerns that it might simply provide an excuse for failure to resume negotiations when the US Trade promotion Authority is renewed in future.
To be meaningful, the Tidca should have a clear agenda on how the parties envisage the resumption of actual FTA talks. Sacu countries, in particular, should ask themselves whether they intend to wait for Agoa to expire — in which case they will have less bargaining power — before they consider the FTA or not.
In my view, it would be in Sacu’s interest to actually drive the Tidca process to ensure that they lay a solid foundation for an FTA whose terms are favourable to them. The argument that services and trade related issues should be excluded from the FTA because the region does not enjoy harmonised policies is beginning to ring hollow in light of the SADC-EU Economic Partnership Agreement negotiations. All Sacu countries have no objections to negotiating on these issues, barring SA and Namibia. Tellingly, even Lesotho, a least developing country that is not required to make any commitments on services and regulatory issues in terms of WTO rules, is apparently not threatened by them.
Clearly, the Agoa Sixth Forum was a good opportunity for both celebration and deep reflection, especially for Sacu. African countries do not have much luxury to procrastinate — the Doha Round remains semi-paralysed and Agoa and even the Generalised System of Preferences (another preference scheme catering for developing countries in general, not just Africans) are not permanent. Therefore Agoa should not be seen as a viable alternative to a contractual agreement, which typically should have a development component.
Finally, it is not clear which course Agoa beneficiaries will take post-2015, but what is certain is that unilateral preference schemes have an expiry date.
Nkululeko Khumalo is senior researcher: trade policy at the South African Institute of International Affairs.
Three Hard Truths About the World’s Energy Crisis
East African Standard (Nairobi)
OPINION
7 August 2007
Posted to the web 6 August 2007
By Jeroen Van Der Veer
Nairobi
When it comes to the future of energy, the world needs a reality check.
Contrary to public perception, renewable energy is not the silver bullet that will solve all our problems. Indeed, in the decades ahead, three hard truths will generate turbulence in the global energy system.
We all know that global demand for energy is growing, but the reality of how fast has not really sunk in. The first hard truth is that demand is accelerating. Energy use in 2050 may be twice as high as it is today or higher still. The main causes are population growth, from six to more than nine billion, and higher levels of prosperity.
China and India are entering the energy-intensive phase of their development. This is the point when people buy their first television set or car, board a plane for the first time and start to consume much more transport fuel and electricity.
And most people in China and India have never boarded a plane! The pace of change is startling. Last year, China enlarged its electricity capacity by roughly the equivalent of Great Britain’s entire stock of power stations.
The second hard truth is that the growth rate of supplies of ‘easy oil’, conventional oil and natural gas that are relatively easy to extract, will struggle to keep up with demand.
Just when energy demand is surging, many of the world’s conventional oilfields are going into decline. The problem is not the availability of resources as such. Overall, the International Energy Agency believes that there could be roughly 20 trillion barrels oil equivalent of oil and natural gas in place.
This includes conventional and unconventional resources, such as oil shale and sands. In theory, this is enough to keep us going for about 400 years at the current rate of consumption.
Carbon emissions unacceptable
In practice, though, less than half can be recovered with existing technology. The world now produces 135 million barrels oil equivalent a day of oil and natural gas. We could still raise that number with new technologies, but only gradually and certainly not indefinitely.
The third hard truth is that increased use of coal will cause higher carbon dioxide emissions possibly to levels we deem unacceptable. The IEA believes that coal use could grow by around 60 per cent in the next 20 years.
The main reason that countries turn to coal is energy security. China and India will continue to exploit their domestic coal reserves to be less dependent on oil and gas imports. So will the US, which now generates more than half its electricity with coal.
But burning coal for electricity generates twice as much carbon dioxide as burning natural gas. Gasifying coal, instead of burning it, reduces emissions, but still this is not enough to solve the problem.
In our battle against greenhouse gas emissions, taking the carbon dioxide out of fossil fuels, especially coal, is crucial. It will be a huge challenge: To keep greenhouse gases in the atmosphere well below 550 parts a million, the upper most bound of where science tells us we should be.
Shell works with models that assume carbon capture and storage is installed at 90 per cent of all the coal and gas-fired power plants in the rich countries by the year 2050, and at 50 per cent in non-OECD countries.
Time is short: It will take a decade to test the technology in pilot projects before we can move to larger-scale projects. So what about renewables such as wind and solar energy?
The share of renewables in the global energy mix could go up from its low base of about one per cent to about 30 per cent by the middle of the century. The number of wind turbines, for instance, may grow from about 30,000 today to one million and their capacity will be significantly larger than the ones we have built.
This assumes that the hunt for technological breakthroughs to make renewables cheaper will be successful. But even then, fossil energy will still make up most of the remaining 70 per cent.
However, this is out of sync with what opinion polls show that most Americans and Europeans believe that renewable energy will have replaced most fossil energy by 2050. As the hard truths make clear, this simply is not going to happen.
That is why energy efficiency is important. More than half the energy we generate every day is wasted. In an average car, about 20 per cent of every unit of petrol goes into moving a car forward, the rest is lost as heat.
For an aircraft during take-off, the figure is eight per cent. Only 35 per cent of burnt coal in a power plant becomes electricity, the rest is lost as heat. What is the point of producing more energy if we continue to waste most of it?
Instead, we should aim to become twice as efficient in our use of energy by the middle of the century. That is entirely feasible, provided that the will is there.
The world’s energy system is entering a turbulent phase, and the only question is: How turbulent? A unified world could respond more effectively than a fragmented one.
The writer is the Royal Dutch Shell Plc CEO
45 Years On, Leaders Failed Test of Unity
East African Standard (Nairobi)
NEWS
1 August 2007
Posted to the web 31 July 2007
By Kisemei Mutisya
Nairobi
The search for African unity is not only an emotional issue, but also a divisive subject.
While some zealously support the formation of the United States of Africa, others vehemently oppose it. Divisions at the ninth African Union summit in Ghana are a replay of the war of nerves between the Nkurumahists and gradualists in the 1960s during the days of the Organisation of African Unity, the predecessor of the African Union.
From its Diaspora roots, Pan-Africanism was a revolutionary, anti-imperial and anti-capitalist movement that proclaimed social democracy. Its proponents welcomed economic democracy as the only empowering philosophy since the 1945 Manchester conference.
No sooner had Pan-Africanism left its Diaspora roots to its organic soil in Africa than sharp differences begin to manifest themselves at the top leadership of the newly decolonised and decolonising States. Ghana’s founding President Kwame Nkrumah passionately argued that artificial divisions and territorial boundaries the imperialists created were deliberate steps to obstruct political unity and would expose Africa to neo-colonial manipulation.
Nkrumah cautioned that sovereignty, State power and flags would be too sweet to surrender. But the gradualists warned that Africa was not ready for political union and cited regional integration as the best way of realising African unity. To be sure, the Nigerian delegation in the 1960s argued that their country would never surrender her sovereignty for the sake of African unity.
The differences between Nkrumah’s position and those who counselled caution became chronic at every OAU summit, culminating in a compromise that saw gradualism institutionalised and inscribed in the OAU Charter. But this was not before Nkrumah earned himself several enemies among fellow Heads of State. History repeated itself in Accra last month when African Heads of State refused to learn from history.
Libya’s Muammar Gadaffi and Senegal’s Abdoulaye Wade’s position is similar to Nkrumah’s and Sekoh Toure’s in the 1960s. Toure and Nkrumah had argued that regional groups would make it even harder or impossible to realise continental unity. From his experience in West Africa, he knew that regional blocs retard rather than promote unification.
Deliberate political will is needed to transcend neo-colonial trappings and class interests. Nkrumah’s observation and Tanzania’s founding President Julius Nyerere’s admission during Ghana’s 50th independence celebration in 1997 that African Heads of States failed to realise the objectives of African unity. While noting partial success in liberating the continent, African leaders had failed to unite the continent.
Nkrumah argued that colonial economies competed with one another and were not compatible – just like post-colonial economies exhibit uneven development. Furthermore, each State seeks to associate with metropolitan economies on terms and conditions that favour and advance national interests. This has led to perpetual acrimony and irreconcilable contradictions prevalent in regional institutions such as South African Development Community, East African Community (EAC) and Ecowas.
The continent should learn from EAC. Its golden age was when the region had a single political entity, the colonial State, which integrated the economies of East Africa. The post-colonial State, while seeking to maximise advantage of the EAC, led to disintegration in 1977.
The African Union summit in Ghana met when Nkrumah had been proved right beyond reasonable doubt. State nationalism and neo-colonial manipulation have led to Africa’s first world war in the Great Lakes region, Ethiopia-Eritrea conflict, war in Somalia, civil war in Darfur, low-intensity conflict in Lesotho, grand corruption in East Africa, pillage of national resources and rise of regional hegemonies.
The post-colonial State is experiencing the hand of neo-colonial institutions: The IMF, World Bank and World Trade Organisation have a grip on African economies. In the 1980s, Africa lost self-determination after it abandoned the Lagos Plan of Action in favour of World Bank recommendations.
More recently, the post-colonial State has combined Structural Adjustment Programmes with the neo-liberal poverty reduction strategy papers. Conservative African leaders who wine and dine with G8 leaders have betrayed the Pan-African dream even as they fail to construct a single kiosk.
Globalisation has opened another battlefront. It has undermined the welfare of African people through privatisation, liberalisation and delinking of the State from the economy. Through this, it has abandoned its role in favour of the markets.
The rise of regional hegemonies and lack of initiative have brought this sorry state. In Ghana, South African President Thabo Mbeki and Uganda’s Yoweri Museveni were united in opposing Gadaffi and Wade’s ideas on flimsy grounds of gradualism. The status quo works for Mbeki’s comprador interests in Africa and South Africa’s national interest to keep the captive market it enjoys.
The same is true for Nigeria and Kenya. Pan-Africanism should regain the lost initiative through citizens, scholars and institutions. The most important lesson from Accra is that gradualism is an imperial thinking that has brought Africa to its knees.
Mbeki, Museveni and others should know Africa is more important than their national interests.
The writer is a lecturer at Catholic University of Eastern Africa
New Trade Deals – Continent to Lose Out As EU Gains
East African (Nairobi)
ANALYSIS
24 July 2007
Posted to the web 24 July 2007
By Gichinga Ndirangu
Nairobi
As Africa’s leaders met in Accra, Ghana, last week to consider ways of consolidating continental unity through increased trade, pertinent questions were being raised over the impact that a new trade arrangement between the European Union and the 75-member ACP trading bloc will have on regional integration.
At least four regional trading blocs in Africa – Comesa, Ecowas, EAC and SADC – are working towards establishing Customs Unions to reduce their dependence on the EU market and take advantage of regional economies of scale.
But as the clock ticks towards the end of 2007, the deadline for concluding negotiations between the ACP and EU, uncertainty looms on what will happen if the deadline is not met and the impact that a deal will have on the trade fortunes of individual countries within the regional blocs.
A deal between the ACP and EU will usher in a new trade framework based on reciprocity that will require agreement on uniform tariffs on at least 80 per cent of goods traded. This will effectively end years of preferential access enjoyed by the ACP countries, under which their goods entered the EU market duty-free even as EU exports to ACP markets attracted tariffs.
The current negotiations have been necessitated by the imminent expiry of the waiver granted by the WTO, which allowed the EU-ACP preferential trade arrangement to continue until the end of 2007. This has been viewed as discriminating against non-ACP members and in violation of WTO trade rules; it is also implicit that the EU wants a share of the pie by increasing exports to the ACP markets on more favourable terms.
But the entry of EU goods on more favourable terms has raised concerns that more efficient EU firms and subsidised agricultural goods will out-compete local enterprises involved in value-added production and farmers, thus limiting the benefits of regional integration to individual countries.
THE EU believes that the economic partnership agreement (EPA) negotiations will strengthen regional integration through more predictable trade policies, but the limited time left to conclude negotiations and the serious capacity constraints facing many ACP countries have raised concern that they actually risk slowing down regional integration.
A major concern is the isolation of members of the same regional trading blocs forced to negotiate under different EPA configurations, which now creates the risk of members of one regional bloc committing to different tariffs and trade liberalisation measures from those agreed upon under regional blocs.
For instance, Tanzania, though a member of the East African Community, is negotiating under the Southern African Development Community (SADC) while Kenya and Uganda negotiate under the Eastern and Southern Africa (ESA) configuration.
Yet, even as EPA negotiations raise mounting concern over their potential impact on the African trade blocs, the reality is that integration efforts in most regions have been slow due to cumbersome border controls, inefficient Customs administrations and poor transport infrastructure, which have limited intra-regional trade to an average 10 per cent for individual countries.
BUT DESPITE these difficulties, regional trade for some countries, like Kenya, has grown. A total of 49 per cent of Kenya’s exports are now destined for other African countries, dominated by the Comesa region, while the EU takes up 25 per cent of the country’s exports.
However, the EU still remains an important market destination for many ACP countries as a result of limited intra-regional trade. For instance, whereas the EU absorbs 49 per cent of Ghana’s exports, the country exports an insignificant 2.6 per cent to neighbouring Benin – a situation replicated in many other African countries.
Even as the EU market remains a prime destination, it is ridden by uncertainties over constantly changing criteria of eligibility, especially from EU consumers and the private sector. Strict sanitary and phyto-sanitary measures, pesticide traceability criteria and other health certification standards are among the most challenging non-tariff barriers to trade facing exports into the EU.
Under EPAs, the different regional configurations will be expected to liberalise at least 80 per cent of their trade over an average 12-year period, even though many African countries favour a time frame pegged on the achievement of specified development indicators rather than arbitrary timelines. This approach is intended to allow local enterprises prepare adequately for competition from EU firms.
The Economic Commission for Africa (ECA) has warned that the EU stands to benefit the most from a reciprocal trade arrangement with the ACP countries. In particular, the EU would benefit from improved access to regional markets, while African countries are likely to lose out on intra-regional trade.
FOR INSTANCE, intra-regional trade in the Comesa region is expected to decline by 5.8 per cent, which translates into a loss of $242 million. On its part, the EU stands to increase exports to Comesa to the tune of $1,152 million under a new trade arrangement based on reciprocity.
The situation is replicated in West Africa, where the ECA estimates that Ecowas countries could lose trade worth $365 million to EU competitors, who are expected to increase their exports by an estimated $1.87 billion into this regional market.
These trends emphasise the relative efficiency of EU firms over local enterprises, which will result in increased presence of EU products in their markets, hence eating into the share of individual country exports within these markets.
Indeed, with an anticipated elimination of existing tariffs on at least 80 per cent of the ACP’s trade with the EU, it is estimated that regional trade in ACP countries will decline by about 22 per cent, which will translate into a loss of jobs and investment in different regions.
Rwanda is, for instance, expected to increase its imports from the EU from the current 27.4 per cent to 32.2 per cent, even though a large number of these imports could be sourced locally and hence help augment trade in industrial goods. The ECA warns that, “This threatens to weaken regional integration efforts as Comesa countries could significantly lose out to the benefit of the EU countries, especially Belgium, France, Germany and Netherlands.”
KENYA’S DEVELOPMENT strategy, which is increasingly shifting emphasis to regional markets, is also expected to experience the effects of the EU’s foray into key regional markets like Comesa, which accounted for an estimated 67 per cent of the country’s manufactured exports (excluding agro-processed products) in 2003 compared with 9 per cent to the EU market.
Currently, Kenya’s trade with Comesa stands at nearly Ksh80 billion ($1.2 billion), an increase of Ksh19.3 billion ($288 million) over the 2005 earnings totaling Ksh60.7 billion ($906 million). This has made the region Kenya’s most significant trading partner.
However, as the main destination for Kenya’s agricultural exports, the EU remains a significant market, accounting for 25 per cent of total exports, while Africa takes up 49 per cent. A full 37 per cent of Kenya’s total exports to Africa go to the Comesa region.
THE KENYA Institute of Public Policy Research and Analysis (Kippra) estimates that Kenya stands to lose 15 per cent of its regional trade under an EPA. It adds that Kenya will lose out to the EU, especially in exports of manufactured products to the EAC and Comesa.
“This will undermine the country’s trade in value-added goods and increase dependence on primary exports, narrow the range of products that Kenya currently trades in as well as the diversity of its trading partners,” observes Kippra.
Given the fears that a broad liberalisation of trade with the EU could adversely impact on intra-regional trade, negotiators must try for a less ambitious liberalisation, excluding higher-value products traded among individual African countries, even as the EU seeks a more ambitious regime encompassing broad tariff reduction.
Gichinga Ndirangu is a lawyer and trade policy analyst based in Nairobi
A “REAL” Vision for African Development!
A proposal by Craig Eisele and the Trans-African Development Company.
First and foremost I must say that “most” of the “Aid” to Africa is needed and serves a good purpose. HOWEVER… I believe, that the most important “aid” to African Development is not being given in the manner in which it is most needed.
Given the Statement released at the Last AU Meeting in Accra this month (July) and the focus on Regional Integration and the Ultimate Goal of African Integration and Unity I feel that this proposal, I put forth today, is in keeping with these stated Goals and Ideals. I hope the leaders and governments of those Countries read this and believe in it half as much as I do and commit to making this “Vision” a reality… for the future of Africa is at stake.
It is no secret that the “Keys to Investment” (as well as economic prosperity) are Power, Communications and Transportation. No society can develop without these three key components… and the lack of these components also hinders (actually cripples) the ability to have an effective (let alone vibrant) “manufacturing” sector of the economy. Manufacturing brings most jobs to the most people. Without these Components poverty, and despair become the norm. Nowhere is this more prevalent than in Africa today… yet that can change dramatically and substantially within 10 years IF we can do what I propose.
So what can be done for Africa that is “really” in Africa’s Best interest… and even in the best interest of the world at large. If you believe my introductory statements above, then I will hope you agree that what Africa needs, more than anything, is a MAJOR COMPREHENSIVE Development of its Infrastructure. A form of Governmental/Private development needs to be initiated. A Developmental Project that will NOT create any Debt to any Country. A project that will have a portion of it as private (but publicly traded components) as well as a segment or portion under “Governmental Ownership and Control” …. specifically, the Highway Portion of the project.
I envision this Comprehensive Infrastructure Development Project as follows:
It is through the building of a “Highway” and “rehabilitation” of the major trade roads in conjunction with the establishment of a “uniform” railroad; Development of the Power Generation and Transmission sector and the Ability to Communicate with the outside markets and the world for Technology, education, ideas and innovation that matters the most. If this is done, then I believe, that not only will the economic benefits proliferate throughout the ENTIRE Continent of Africa, but that the overall health education and welfare of the vast Majority of Africans can be established quickly and effectively.
The world has tried to “fix” or otherwise address problems throughout Africa without the basic means of delivering their “aid” to Africans. Kofie Annan, in his recent quest for better Agricultural production, has indicated in a footnote that transportation is necessary for the Agricultural Sector to flourish. It is evident that Africa can not only grow sufficient food for every person in Africa and have more than enough for a productive export market for basic food products, but there is no effective way to get that food to markets before it decays throughout its own Country or to even a neighboring Country …. let alone the rest of the Continent or the world.
OK… sorry I am impassioned on this subject and sometimes I get carried away in what I want to say… so here is MY Vision for the Future of Africa that I firmly believe will not only be able to create a 100 plus million strong “Middle Class” of Consumers within Africa, but will exceed the Millennium Development Goals that CANNOT be met without the program that I will articulate below. ANY person who believes that the MDG’s can be met without this and believes Africa can be self-sufficient within 20 years without this project is at the least incredibly nieve’ or worse delusional.
Africa today is in a unique position of building infrastructure from the ground up using 21st century technology that can be effective for the next 50 years with minimal maintenance and upkeep before major upgrades will be required… by that time the “tax base” and revenues generated by the individual countries will be sufficient to upgrade that Infrastructure the same as all industrialized countries currently can do today and without international “aid”.
My Vision on How to best accomplish the MDG’s (and so much more) and actually give Africa an opportunity to be something more than a depository for international aid, is listed below in three phases that are to be implemented simultaneously:
I have already received expressed interest from 3 of the first nine countries that this first segment will go through.
ALL of this Construction MUST be done by a Private Company with focus on costs and efficiency and completion and MUST be done at NO COST to any country. The Highway Component of this Infrastructure along this “right of way”, will be transferred to COMPLETE Ownership by the AU (African Union) and the individual Countries for the revenue generated to be used for routine Maintenance, security and general governing purposes.
It is hoped that each country will take advantage of this “highway” to create planned communities, cities and Industrial parks along this path. Planning for Potable water, Electricity and sewage and trash and looking for synergies between industries and natural resources along the way is imperative to maximize economic benefit and the quality of life for the citizens. I suggest a 50-kilometer “zone”or buffer on either side of this project for the planning to be professionally engineered and developed for maximum effectiveness.
I would like to see a fleet of NEW Trucks and tractor-trailers built by someone like Peterbuilt ON THE CONTINENT of Africa. Given that Peterbuilt has a factory that produces 5000 trucks a year in a single factory today in the USA, it is obviously more cost effective to build a NEW plant in Africa for the Construction of these trucks… AND, I would be willing to not only help them build such a plant but to BUY the first 5,000 trucks for exclusive use on this highway. The Domestic Market in Africa and the export potential is worth this type of investment IF we build such a “highway”. Just look at South Africa now who is building cars for export to Europe!
Simply the creation of such a Highway by itself gives access to huge economic benefits that those countries involved are not able to see without this “highway”.
Now the scary news for some… the cost for this 4-lane highway is estimated at 45 to 50 Billion dollars (35 to 40 Billion Euros). Given the 60 billion to be spent on Aids in Africa the next 5 years by the US Government… I DO NOT expect the US Government to pay the entire cost for this highway… but I do expect them to substantially contribute to this highway. And yes, I do expect them to mandate that a certain amount of this money be spent with US Companies as I expect any other country “donating” to this project will also expect benefit from their “donation”. But, the majority of labor MUST be African and local subcontractors within Africa MUST be incorporated into this project to maximize the benefit within Africa and create an economic benefit far greater than the highway itself in the short run. Further… wages must be at least 2 times the current local wages.
I consider this “Highway” a bargain at twice the price. But again the key is to let a “PRIVATE” company under the auspicious of a “Not-for-profit” subsidiary to build it to keep cost LOW and assure that the monies spent are mostly on the “Highway” and then transfer ownership as indicated above. Using the Non Profit Company forces greater transparency in the process and assures a corruption free development.
I consider this HIGHWAY a moral imperative for aid by countries claiming they want to help Africa. This Highway however should be incorporated into “Phase 2” of this project as listed next… making the total cost over 7 to 10 years close to 100 Billion Dollars or 75 Billion Euros. But Combined, the benefits as indicated by David Wheeler would be many times that amount on a regular and recurring basis… and that was a study just on Trade… if you factor in the self-imposed mandate I am offering that 80 percent of labor and available raw materials be purchased in Africa… the economic benefit on a local level is staggering. I also proposed to make pay for workers 2 to 3 times the current wages being paid locally for the greatest benefit to the local economy.
Phase 3: Components to be added along the “right-of way”. The right of way does not mean that these components can link into any country or their infrastructure… only that the Skeletal Structure of this build can be available and ultimately subject to “Interconnect Agreements” with each country. It is obvious that those agreements will need to be worked out on an individual basis and that those will involve complicated negotiations… but the idea that these “Components” of the Infrastructure are available ultimately makes the interconnects a matter of reality for all parties. The Components I am hoping to build along this “right-of-way” are as follows:
Railroad: What is the sense of having an abundance of natural resources that can create jobs not just in the mining of such resources but in the processing of ores and ultimately the production of finished goods throughout Africa…. but that is the case now in Africa. Highways alone cannot handle all the requirements of economic development… a railroad is necessary to move huge quantities of goods to ports and markets around Africa and the globe and currently there is no standard rail system in place to do that… but that can change by use of a double track rail system capable of carrying rail cars set to various widths (gauges) but with the main gauge of standard gauge and a secondary gauge in many areas of “cape gauge”.
The initial Cost of a MODERN Rail System with RF readers and GPS (which can also be utilized on the “highway” for truck locations etc.) with a Modern State of the Art “Central Operations Center” electronically controlling all operations of the system I have been able to estimate at 35 to 40 billion dollars… again as with the Power Project Component, I plan on this to be financed by Equity issuance in a Publicly listed Company on international stock exchanges.
Fiber Optic Cable: So much as has been done to bring Fiber to the coast of Africa that it is like saying that only the coastal areas of Africa are worthwhile… I propose a Fiber Optic Program through the interior of Africa with FREE access to the WWW for Schools established along the corridor that this project will go through… the estimated cost (high actually) for 10,000 kilometers (6,000 miles) of Fiber Optic Cable is under 500 million dollars. And Yes, I have a plan for that financing as well but it is NOT via Public Offerings.
Pipelines: As with the section I wrote on Railroad there is extensive wealth of Oil and Gas that is locked within the Continent of Africa… not easily accessible without the “highway” and even if it was accessible the transport is next to impossible without this being a major component of the right of way I am proposing. This pipeline should be used for “Crude” as well as “Refined” as the “Power” Component listed above will make it realistic and economical for Oil Companies to develop their field, refine a portion of their products IN AFRICA and sell those products in Africa as well as export to the world. Remember that Major Oil Companies have already said that existing Oil Production is not sufficient for the demand expected in 2030… so 200 a dollar a barrel prices are realistic generation will allow for refineries within Africa. This is also a case for the development of the Wind Power generation listed above as the revenue from Oil will be more important and better used from sale then for domestic consumption… a fact most industrialized nations are facing now and are rushing to use renewable energy to sustain their economies in the future. Cost: I have no Idea…. nor do I care… as the price of Oil and Gas makes this component economically feasible and a necessity for Oil and Gas Companies. So simply… they will have to pay for this.
But I also want to add the most precious commodity… a Water pipeline… this commodity is required by every country… and its availability… or unavailability is of extreme importance to every country on the continent. As Natural and renewable energy becomes the norm and oil and gas is in short supply the need for water will only continue to grow around the globe. Currently it is not economical to ship water around the globe… but agriculture and populations within Africa will need this in ever greater numbers and quantities… so the addition of this component is looking forward to the basic future of the Continent of Africa.
Well this is my Vision for Africa. One that I see creating 75 million jobs on the continent within 20 years. One that will bring development, the creation of wealth The Industrialization of Agriculture and reduction of hunger, one that will bring new opportunities in improving the human condition in Africa in areas such as education, health and the reduction of poverty to levels comparable to industrialized nations… but honestly it requires a commitment by the industrialized nations to actually want to improve Africa for the people of Africa… it requires a commitment of 100 billion dollars over the next 7 to 10 year to build the Phase 1 and 2 components of this project… to build the road structure necessary for the delivery of goods and services necessary for an economy that can be vibrant and not a welfare state … A Commitment that will allow Africa to grow itself into an Industrialized Continent capable of taking care of itself. Where the aid that may still be necessary in Medical and Education can be delivered to those that need it and done so in an expeditions fashion and minimal delays… A Continent that can feed itself, getting food to the people who need it will take days, and not months…. But again the Industrialized nations around the world MUST DONATE this to the Continent so as not to saddle the continent with excessive debt and where dribbling of aid that currently takes place is supplanted but a surge in aid with the objective of significantly reducing that aid as Africa grows and prospers from this project.
I have more than this… but I feel this is sufficient… the “Highway” will need to be expanded to run through at least 43 countries. While the rehabilitation will be a temporary substitute for that, it will be necessary to grow such a “highway” of 4 lanes or more of high speed from the benefits that the first 2 phases of this project I am proposing will be able to generate.
While this is my “Vision” for Africa… it is also a Moral Imperative that this take place for the benefit salvation of 800 million Africans.
This article is not a “puff” piece article… it is my drive in life to make this a reality… and so far I am extremely encouraged by the response I have gotten. Yes. There are the Naysayers. Those that say Africa will never develop. Those people and organizations that only see Africa as a giant war zone… Those that have no real comprehension of the real Africa, its people or its potential…. And those that say the project is simply too big to be accomplished… and yet I say to them “Pashaw!” ok… maybe that is too nice… but it is a nice way of saying that this project CAN AND MUST be done… and I expect to work on this for the rest of my natural life to assure that it is done and done right…. That being NO DEBT to already impoverished Countries!!!
If you have read this and are in a position to help make this a reality then I encourage you to write to me at the address listed on “About Craig Eisele” section of this blog. If you are not able to help and support this idea or concept… then please leave a message to let others know that this project has broad support.
I am willing to meet and discuss this with ANY Governmental or NGO group or organization that truly wants to help Africa and wants to see them flourish. Anyplace, Anywhere, Anytime… I will always try to be available to make this project succeed… heck I have even established a methodology to that 92.5 percent of ALL funds donated to this project are used for the Construction with complete transparency to the world… not how is that for a capitalist….
In Defence of Yar’Adua’s Speech – Unity And Integration in Africa
Vanguard (Lagos)
DOCUMENT
17 July 2007
Posted to the web 17 July 2007
By Thabo Mbeki
A LECTURE DELIVERED BY THE PRESIDENT OF SOUTH AFRICA, THABO MBEKI, AT THE UNIVERSITY OF CAPE COAST, GHANA, 4TH JULY 2007:
Guy Arnold observes in is book: Africa – A Modern History, that: “At the beginning of the 1960′s, Africa was the world’s most precarious region, its vast geographic centre was ‘empty’ of power, its northern and southern extremities (Algeria and South Africa) in the grip of forces that appeared irreconcilable to the rest of the continent. Its newly independent States with their fragile infrastructure and miniscule economies desperately required help, but help that would not be accompanied by political demands and ‘strings’. Political power depends upon economic strength, and economic strength was what Africa lacked. There were also complex psychological problems associated with independence: African nationalist leaders had to demand and take independence, they could never appear just to receive it. Moreover, the scars of colonialism ran deep for, as Nigeria’s Dr. Azikiwe had said back in 1948: ‘My country groans under a system which makes it impossible for us to develop our personalities to the full.’ And, as another young nationalist said to a European at this time: ‘You have never known what it is to live under colonialism. It’s humiliating’.” (P55, ibid)
Indeed, the former colonial powers were not prepared to let Africa find a development path on her own. In the midst of the Cold War, the western countries, unashamedly and unapologeti-cally, interfered and intervened directly in the internal affairs of independent African countries, resorting, in some instances, to violence and assassinations of those deemed to be against their interests.
Thus, neo-colonialism was not merely a descriptive political term but an actual lived experience of many Africans who had to content with this new insidious, but, still deadly phenomenon.
The fragile infrastructure and miniscule economies that Arnold talks about meant that many African countries were forced to agree to economic aid measures which were, however, accompanied by political demands and manipulations as well as both political and economic strings, which, in some instances, had invariably defined the destinies of some of our countries. Those African leaders bold enough to refuse these forms of neo-colonialism became the targets of the powerful nations of the North and their collaborators on the continent. It would, indeed, be disingenuous to suggest that the same phenomenon is non-existent today.
By the end of the 1970′s, a number of African States had tried, with less success, to take full control of their economies. At this period, many African countries were faced with adverse terms of trade, rising debt, poor and deteriorating infrastructure as well as declining economies. As a result, these countries sought more aid, got into more debt and found themselves increasingly at the mercy of former colonial powers.
Undoubtedly, the western powers liked what they saw because there were limited possibilities for African countries to escape their economic stranglehold.
Clearly, the problems experienced by African States, between the 1960′s and the 1980′s, stem from a number of factors, which include:
The emergence of neo-colonialism which meant few African countries could independently embark on any political and economic development route outside those designed, approved and managed by the erstwhile colonial powers;
The Western powers never envisaged independent African countries to decide their own development paths, rather, they sought to create dependent client States which could be manipulated according to the strategic and economic requirements of these western countries;
Through a number of measures, both political and economic, former colonial powers maintained their ‘spheres of influence’ consistent with old colonial divisions, hence, the zoning and entrenchment, thereof, of our continent as Anglo-phone Africa, Franco-phone Africa and Luso-phone Africa.
The weak and fragile economies of the newly independent countries left them vulnerable to the variety of political mechanisations of imperial powers;
The coincidence in the 1960′s, of the advent of African independence, with African States still being weak, and, the height of the Cold War, made it possible for new actors to enter the African scene in the form of the USA and the USSR. These two powerful players used the continent as one of their sites for their global confrontations at the time when the continent was trying to shake-off the shackles of colonialism. Today, the lives of many Africans attests to the fact that the wounds of those Cold War confrontations are yet to heal;
The colonially-imposed boundaries became fetters in the processes of nation-building, serving as flashpoints of internal conflicts and instability as well as fuelling inter-states conflicts;Debt, aid, manipulations by aid donors and unfavourable trade terms, especially for exports, falling agricultural outputs, natural disasters and others, became an albatross on many African countries;
Conflicts, wars, military interventions and autocracy became widespread, supplanting democracy.
World recession in the 1980′s had a negative impact on the continent’s weak economies;
Economies became either stagnant or declined during this period.
Clearly, for three decades, the combination of these negative factors conspired to deny our countries, individually and collectively, the possibilities of development and economic growth and, thereby, postponing the attainment of a better life for millions of Africans. Unity and integration, as envisaged by Nkrumah, could not happen under these conditions.
It is clear, then, that there are a number of conditions necessary for the attainment of the higher level of unity and integration of Africa. One of these conditions is that all of Africa had to be free. However, with many parts of the continent not free, even in the1970′s, especially most of southern Africa, the matter of integration became practically feasible only in the last decade of the twentieth century.
Chairperson,
In 1991, 51 independent African states gathered in Abuja, Nigeria, to establish the African Economic Community (AEC) as an integral part of the OAU. The following are the objectives of the Community:
To promote economic, social and cultural development and the integration of African economies in order to increase economic self-reliance and promote an endogenous and self-sustained development;
To establish, on a continental scale, a framework for the development, mobilisation and utilisation of the human and material resources of Africa in order to achieve a self-reliant development;
To promote cooperation in all fields of human endeavour in order to raise the standard of living of African peoples, and maintain and enhance economic stability, foster close and peaceful relations among Member States and contribute to the progress, development and economic integration of the Continent; and
To coordinate and harmonise policies among existing and future economic communities in order to foster the gradual establishment of the Community.
To realise these objectives it was agreed that, among others, the existing economic communities will be strengthened and new ones established; agreements would be finalised with the aim of harmonising and coordinating policies among existing and future sub-regional and regional economic communities.
Further, there would be the liberalisation of trade through the abolition, among Member States of Customs Duties and Non-Tariff Barriers so as to establish free trade areas in each regional economic community.
The countries also agreed to adopt a common trade policy, ensure a common external tariff and establish a common market. Of importance, there was to be a gradual removal, among Member States, of obstacles to the free movement of persons, goods, services and capital and the right of residence and establishment.
The 51 African countries then agreed to implement these and other decisions in six stages over a transitional period of 34 years.
The First Stage of a period of five years, for instance, was for the strengthening and establishment of regional economic communities. The Second Stage of eight years was to deal among other things, with the gradual removal of tariff barriers and non-tariff barriers and gradual harmonisation of customs duties.
Then, the Third Stage of ten years had to deal with the establishment of Free Trade Areas while the Fourth Stage of two years would address the harmonisation of tariff and non-tariff systems among the various regional economic communities with a view to establishing a continental Customs Union by means of adopting a common external tariff.
The Fifth Stage would establish an African Common Market for a period of four years and also include the harmonisation of monetary, financial and fiscal policies as well as ensuring the free movement of persons.
The Sixth Stage of five years would be used for the consolidation and strengthening of the structures of the African Common Market, the integration of all sectors, namely economic, political, social and cultural; the establishment of a single domestic market and a Pan-African Economic and Monetary Union, the establishment of a single African Central Bank and the creation of a single African Currency. This Stage would also see setting-up of the structure of the Pan-African Parliament and election of its members by continental universal suffrage.
Of course, as we have seen with the matter of the establishment of the Pan-African Parliament, some of these processes may in fact come earlier than envisaged. But a review of the various regional economic communities (REC’s), which are the building blocks of our integration, will reveal that some of our regions have not advanced beyond the first stages identified by the prescriptions of the African Economic Community (AEC) as outlined in the Abuja Treaty.
For instance, there is uneven development of the REC’s, resulting in some of these bodies being unable to implement the prescriptions of the Abuja Treaty. Accordingly, it would be difficult to argue successfully that we have strengthened all the REC’s.
The Economic Community of West African States (ECOWAS) has made remarkable progress on many of the prescriptions of the African Economic Community. The region has signed a protocol on free movement of persons including the abolishment of visas for citizens of ECOWAS; has approved the free movement of goods, established an ECOWAS common external tariff, removal of all non-tariff barriers of a monetary nature and introduced the ECOWAS travellers cheque. So clearly, this is great achievement in the direction of integration.
My own region, the Southern African Development Community (SADC), which has not achieved as much as ECOWAS, has adopted an overall strategy so as to realise the lofty vision of the African Economic Community as contained in the Abuja Treaty. SADC has adopted the Regional Indicative Strategic Development Plan as well as Strategic Indicative Plan for the Organ on Politics. These two strategic plans are consistent with the vision of continental integration and focus on policy harmonisation as directed by the Abuja Treaty and help with the acceleration of SADC integration agenda.
There are views that, because we have difficulties in implementing the Abuja Treaty, we should abandon our attempts to strengthen the building blocks of our integration and go straight to integrating at continental level. I must say, I have never heard of a builder who abandons the foundation and start with the roof of a house because the building site is full of rocks.
Further, it is clear that the African countries that met in Abuja, Nigeria in 1991, understood very well that integration should happen hand in hand with development. Hence, the emphasis on drawing programmes aimed at the facilitation of better economic activities and the removal of barriers to economic growth and development.
Accordingly, integration is a means through which all Africans should and must collaborate to harness diffused energies and competencies, utilise our vast natural resources and internal economic strengths so as to give our continent a comparative and competitive advantage in the world market.
Because our individual economies are small, our hope for a better market share in the global economy lies in our combined efforts. That is why the Abuja Treaty is such an important benchmark which we should use as we address the many prescriptions it contains among which is the urgent challenge of strengthening regional economic communities.
Clearly, the integration of Africa will be easier and faster when we have, among others, dealt with the many challenges identified by the Abuja Treaty because this is a Treaty drafted from the practical experience of the African people and expressed by a leadership that is undoubtedly committed to the integration of Africa.
If we are to look at the experience of European integration we will realise that part of the challenge faced in this process of integration was to address underdevelopment. Accordingly, the European Union (EU) set up what they called Structural Funds to give financial support to under-developed and economically weak EU regions and countries.
These Structural Funds comprised of the European Regional Development Fund (ERDF), European Social Fund (ESF), European Agricultural Guidance and Guarantee Fund, Pre-Accession Aid and the Cohesion Fund. Between them, they now make-up a major part of the EU budget.
Through these Funds, the EU has managed to help with the further development of the economies of countries such as Spain, Portugal, Ireland and Greece as well as the poorer regions of countries such as Sweden and England.
Clearly, Africa is different from Europe in many respects, especially with regard to their respective economic development.
Today, the annual budgets of many African countries are made-up mainly of foreign aid money. Usually, as we know, the donor countries exert pressure on the recipient countries to pursue particular policies.
In this regard, the question that Africans should ask is: what impact will the donor-recipient unequal relationship impact on our process of integration. Will we achieve an integration that benefits the ordinary people of Africa, or would this process ensure easy control of Africa by powerful nations since these outsiders had an influence on the integration path of the continent.
However, these are challenges, which we cannot avoid but should be examined fully and honestly by all of us. Whatever difficulties we encounter we should not lose sight of our main objective of unity and integration. Accordingly, at all times we should consistently and faithfully pursue the prescriptions of the Abuja Treaty and the objectives of Constitutive Act of the AU, develop our economies and ensure that integration and development proceed side by side.
Chairperson,
Some observers talk about the coincidence of historical processes represented by the adoption of the Abuja Treaty with the evolving of a very important era in modern African politics, represented by an unprecedented democratisation process and the deepening of that democracy by measures taken by Africans themselves with the participation of the masses of our people.
Although in the 1990′s our continent still experienced a number of wars and conflicts, the decade was characterised more by the return of democracy to many countries such that by the end of the decade, multi-party elections and democratic governments were more a norm than an exception. At this period, with the exception of the Western Sahara, all of Africa was free.
The economies of many of our countries were beginning a process of recovery, registering better rates of growth than had been the case for almost three decades. The masses of our people were themselves, in the midst of socio-political changes, redefining their role in society, away from the docile and pliant citizens to being active agents of change.
Emboldened by these developments, we made bold to declare the 21st century an African Century where our collective energies, the processes and programmes that we have adopted would defeat the wretched conditions of the African people as they confidently march towards a prosperous future.
We entered the new century having transformed the OAU into the African Union and adopted its development programme, the New Partnership for Africa’s Development. Many of the NEPAD programmes are being implemented and because we are dealing with a century-old colonial legacy, it will obviously take years for some of these projects to begin making a visible impact on the lives of our people. But the indisputable fact is that: we are on the march!
On Sunday, in Accra, we launched the Pan-African Infrastructure Development Fund – part of the NEPAD initiative – with the governments of South Africa and Ghana, as well we African Development Bank playing a central role together with private sector financial institutions from our continent.
We are indeed happy that the launch of this Fund, starting with an initial amount of US$625 million took place when Africa is celebrating Ghana’s 50th anniversary of independence.
The Fund, which will invest mainly in four key areas of Energy; Transport – including rail, roads, ports and airports; Telecommunication; and Water and Sanitation will clearly have a positive impact on the lives of many people.
We are happy that the initial investors are from Africa because they have demonstrated, in a practical way, that we as Africans have both the determination and the ability to meet the challenges facing our continent. As we embark on the projects identified by this Fund, we will need the skills of people such as these that have gathered at this university because we obviously need a lot of expertise to build infrastructure on our continent.
We will also need our brothers and sisters who are in the Diaspora to be part of this initiative as well as the hundreds of thousands of the skilled Africans who left the continent during the difficult years of the past.
In this regard, we have a duty to strengthen our universities, ensure that they have requisite resources to produce graduates with high kills and attract back into the continent, thousands of those skilled Africans who left for the developed countries. This is part of the building blocks that we must use to attain the important steps identified in the Abuja Treaty for our integration. We may not have the billions the EU has in its Structural Funds, but African initiatives such as the Infrastructure Fund affords us the space, among others, to ensure that Africans own their assets and we are able to determine our own loan terms that will help develop our countries rather than put debt albatross in the necks of succeeding generations of Africans.
Dear friends,
In one of the epic dialogues of his latest masterpiece, Wizard of the Crow, the Kenyan writer and thinker, Ngugi wa Thiong’o, has this line of thought:
“Why did Africa let Europe cart away millions of Africa’s souls from the continent to the four corners of the wind? How could Europe lord it over a continent ten times its size? Why does needy Africa continue to let its wealth meet the needs of those outside its borders and then follow behind with hands outstretched for a loan of the very wealth it let go? (p681 wa Thiong’o, Ngugi, Wizard of the Crow, 2006, Harvill Secker, London).
The pathos embedded in our history as captured in this moving dialogue invokes the need for Africans to look hard at the mirror of history and at the challenges entrenched in the womb of the present.
We have already started this irreversible process to redress the failures of history. We dare not fail!
Chairperson,
The AU Ordinary Session to which I referred at the beginning and which was ably chaired by President Kufour, adopted the important Accra Declaration. We agreed to accelerate the economic and political integration of Africa and move towards the formation of a Union Government with a view to ultimately realise the objective of the United States of Africa as envisaged by the founding fathers of the Organisation of African Unity, and in particular, the visionary leader, Dr. Kwame Nkrumah of Ghana.
The meeting recognised the need for common responses to the major challenges of globalisation facing Africa and boosting regional integration processes through an effective continental mechanism. We also agreed to open-up narrow domestic markets to greater trade and investment through freer movement of persons, goods, services and capital so as to accelerate growth an reduce weaknesses of many of our Member States.
Further, the meeting also recognised that the Union Government should be built on common values that need to be identified and agreed upon.
In all these processes, it is agreed that the African peoples should be involved in order to ensure that the African Union becomes, in reality a Union of peoples and not just a ‘Union of states and governments’. Both these masses of our people as well as the African Diaspora should be involved in the processes of economic and political integration of our continent.
Chairperson, if we implement fully all these decisions that will clearly advance our processes of integration and development then we will have the right to say to Ayi Kwei Armah that indeed the beautiful ones are now being born!
NOTE BY CRAIG EISELE:
I hope that President Mbeki has been apprised of the Trans African Development Company project plan for Africa… it seems we share some of the same visions.
Investors to Sink $8 Billion into New Power Projects
Vanguard (Lagos)
NEWS
17 July 2007
Posted to the web 17 July 2007
By Hector Igbikiowubo
INVESTORS are working out financing arrangements to sink $8 billion into new power projects capable of generating some 8000 Megawatts (Mw) of electricity – part of a wider plan to address perennial supply.
The National Electricity Regulatory Commission (NERC) has also disclosed it is working on fresh incentives to attract investment in the development and construction of independent power plants.
Dr. Ransome Owan, Chairman of the NERC made the disclosure while briefing newsmen in Lagos recently, explaining that based on the number of licenses issued to investors, 8000 Mw is expected to be generated.
“Based on the number of licenses issued so far, the quantum of electricity to be generated is about 8,000MW of power. By our standards, every 1,000MW costs a billion dollars. So the 8,000MW is equivalent to $8bn worth of investment.
“If you use the exchange rate of N130 to $1, it would amount to over N1.04trn. so that is the investments that Nigerian companies are willing to put up to help us solve the power problems.”
He pointed out that the Commission is currently reviewing new applications which relate to alternative sources of power supply such as coal, wind and solar energy.
“On Friday; an application came in for a coal power plant in Enugu. So we are having expression of interests in alternative power, which includes wind power and solar energy. Although the latter have not formally come to us but we believe in the near future, our energy mix will be improved.
“I believe we need to improve on our energy need other than hydro and gas to coal power, wind power and other renewable such as solar to improve our energy mix and energy security.”
Dr. Owan, an American trained technocrat of no mean repute also disclosed that in line with plans to attract more investment into the sector, the Commission is considering tax holiday of sort as well as floating a utility bond on the stock market which investors could have access to at very low interest rates.
“We are doing a number of things to support our IPPs. One of them is, we are coming up with a package of incentives, which includes tax holidays, customs, importation of spare parts, even intellectual property that they would need, techniques, which would help them reduce their tax burden and give them some tax breaks.
“The second area that we are working on is to try and come up with a power utility bond, that we can introduce into the capital market that would allow the Nigerian population and institutional investors such as PENCOM and estate managers and other hedge funds managers and use them as utility bonds and help us provide more money for the sector.”
Dr. Owan noted that power was a capital-intensive industry and that investors were finding it difficult accessing funds from financial institutions to execute power projects, adding however, that with such utility bonds, which would be backed by the Federal Government, it would be easier to attract more investments and attain set national power goals.
“If power has debt equity involved, there is plenty of debts, but there is lack of equity, and if we trade the power utility bond and it is backed by the Federal Government, we can use that as an instrument to leverage and get private investors and PENCOM to buy these bonds and give us the money in naira, and our IPPs can access that money at a lower interest rate that is currently possible, and that would help to reduce transaction cost,” he said.
Dr. Owan disclosed that the Commission has opened discussions with sister government agencies including the Security and Exchange Commission (SEC), the Central Bank of Nigeria (CBN), the Ministry of Finance, the Federal Inland Revenue Services (FIRS) and the National Assembly.
He said these are stakeholders which have to support the plans of the Commission if it was to succeed in attracting investment to the power sector within the shortest possible time.
The Chairman explained that no percentage of tax relief has been determined yet, noting that this has to be done through negotiations.
“We do not have a percentage amount yet because it is subject to negotiation. Any tax holiday that is less money to the treasury, so those who have the responsibility like the Finance Ministry and FIRS must have to agree to make it into a law. But we are going to use a benchmark of what other industry people are enjoying, and ask for similar treatment.”
ICT Africa Investment Summit
Accra Mail (Accra)
NEWS
12 July 2007
Posted to the web 12 July 2007
Accra
African stakeholders in the ICT sector are gathering in Accra today, Thursday 12-14 July 2007 for the annual ICT Africa Investment Summit where issues of investment and service delivery in the broadcasting and telecommunications industry will fall under the spotlight.
Telkom’s Senior Executive for Business Development, Wayne Song, will chair the topic Broadband infrastructure projects and applications in Africa.
This topic will examine some of the broadband infrastructure projects and applications through the following sub-topics: broadband via satellite, satellite system, the Nepad infrastructure projects, challenges of implementing infrastructure projects in Africa: experience from SAT-3 operations.
The summit is an annual forum where Africa stakeholders in the ICT sector come together to address issues that are critical to securing increased investment in the broadcasting and telecommunications infrastructure and service delivery in the continent.
“It makes perfect sense for Telkom to be involved in such conversations as they are aligned to our growth strategy which seeks increased footprint into the continent,” said Song.
The summit also highlights the investment opportunities in the sector and identifies options for accelerated development of the ICT infrastructure in Africa. The summit brings together diverse stakeholders in the sector ranging from policy makers, regulators, operators, service providers, potential investors, financial institutions and consumers.
As a leading telecommunications service provider, Telkom has previously attended the summit. In this regard, Telkom has, in the past two years consecutively, won The Kemilinks International ICT Award for the Best National Fixed Line.
Kemilinks International is the coordinator for the ICT Africa Investment Summit. The awards were established to promote the use of ICT in Africa and to encourage best practice. They have been designed to recognise and reward those organisations and individuals that have demonstrated excellence in promoting the use of ICT for the overall development of the African continent.
Other topics for discussion will include rising to the challenge of the broadband gap in Africa, convergence and digitalisation: issues arising for Africa, spectrum planning and allocation: what are the stakes in Africa, country strategies in deployment of broadband networks in Africa, investing in broadband infrastructures: funding sources and strategies, ICT infrastructure development in Africa: issues arising.
“Telkom’s expansion strategy commits Telkom to increasing its broadband footprint in the African continent. Our latest acquisitions of both Multi-Links and Africa Online are a case in point,” stated Song.
Continent Leaders, Rich Nations Hold Key to Africa’s Success
New Vision (Kampala)
COLUMN
11 July 2007
Posted to the web 12 July 2007
By Dr. Tajudeen
Kampala
SATURDAY July 7, 2007 marked the halfway point in a journey whose destination and time of arrival was set by 189 heads of state and governments from most countries of the world, including all the 53 member states of the African Union (AU).
It also included the only African country that is not a member of the AU, Morocco.
It was a large bus of hope that the leaders invited the peoples of the world but especially the poor, the marginalised, the sick, the weakest to join with promises that come 2015, the bus will deliver them to a better life and give them more concrete reasons to have faith in leaders, states and society.
The Millennium declaration was transformed into concrete, achievable, measurable; time- bound commitments known as Millennium Development Goals (MDGs). A journey of 15 years should have reached its midway point by July. So are we halfway to all the targets set in the eight goals?
If we are on target there will be no cause for alarm even though the driver and even some of the passengers may demand more effort to save more time. There is no harm in arriving early as long as we arrive safely. If we are not in the midway town, questions have to be asked why. Did the vehicle have a puncture? Or even worse was it involved in a headon collision or did it crash? Is the driver ok? Or did any of the passengers fall off or felt seriously sick needing emergency attention?
If the bus is still on the road but travelling slowly, we have to ask what can be done to make the journey smoother and safer, to catch up for lost time. The MDGs bus is happily not involved in any serious accident. It is still running across different regions of the world but the road-blocks are more in some places than in others.
Even within the same region there are varying speeds because in some parts the drivers seem to dose off whereas in others they are on full alert.
It is in Africa that the bus has been facing many road-blocks. Some of these were deliberately constructed by armed robbers of development (such as inept political leadership, corrupt elite and insensitive government and docile population) while others were artificially created by uncooperative users of the road (such as rich countries that continue to rob poorer countries through unfair trade) while some of the obstacles could be the result of what in Hausa is termed ‘gudu ba gyara’ – reckless driving.
The general global picture from the UN General-Secretary’s MID-term Report shows that Africa is the only continent where the MDGs risk not being met. Unfortunately, Africa is the region that needs the MDGs and really more than the MDGs than any other region of the world. But the general picture hides the growing success stories that show that it is not all bad news.
There are countries that are doing quite well on a number of the goals even if they may not meet all of them. Across the continent in education, most of the countries have seen huge rises in enrolment in primary schools as a result of debt relief and new prioritisation of the education of our children by many governments. Uganda, for instance, has raised the gear from universal primary education to the secondary level; Kenya is considering the same. Malawi has proven that where there is a will there is a way and even Africa’s sleeping giant, Nigeria has reintroduced compulsory universal basic education.
On maternal death in childbirth, infant mortality and education, Mozambique(returning to peace just in a decade) and Rwanda (that ended genocide only 12 years ago) are making steady progress. Uganda’s pioneering leadership in HIV/Aids awareness, advocacy, prevention and treatment are catching on in many countries that are actually beginning to do better than Uganda.
All this is good news and shows that it can be done and more can be achieved. South Africa is the only African country to have made a promise to achieve the MDGs not in 2015 but by 2014. Given the enormous resources of the country, it cannot be a congratulatory effort but it will be welcome.
Resource-rich African countries and those with big economies like Nigeria, South Africa, Kenya, Angola, DRC, Egypt, Libya, should really be judged by the MDGs because they and should do much better than that. Even the poorer countries like Ethiopia can do better if they set their priority right. If Ethiopia has resources to occupy another country it can certainly do better at home.
The main internal and external obstacles to not achieving the MDGs remain the political will of our leaders and the insincerity of the political leaders of the rich world. The covenant on the MDGs was a very simple one.
If poor countries deliver on goal 1-7, i.e. hunger, poverty, health , education, governance and rights issues and livelihood the richer countries will also deliver on Goal No 8: improved quality and quantity of aid, debt relief and reform of the unjust global trading system that penalises the poor. We need to hold our governments accountable for our side of the bargain.
But even as we are succeeding in that respect, our gains will not translate into sustainable development and social progress if the West and other rich countries of the world do not deliver on their own promise.
Mutual accountability of the political leaders of the world to their citizens (who are the passengers on the bus) is what will grease the rusty bits, service the engine and refuel the MDGs bus at mid-term so that it can coast home successfully by 2015.
Continent’s Energy Crisis to Take Centre Stage At Lisbon
Ghanaian Chronicle (Accra)
NEWS
11 July 2007
Posted to the web 11 July 2007
By Joseph Coomson
AFRICA’S WORSENING energy situation would take centre stage at the revived (European Union (EU)-Africa Summit in December this year in Lisbon.
As one of the policy initiatives to be discussed, the EU-Africa Partnership on Energy is expected to help solve the energy problems of Africa.
On both continents, energy security, access to secure, sustainable and affordable energy services, and the sustainable and efficient management of energy resources are prerequisites for development and prosperity.
Even though Africa has abundant energy resources, it currently has the world’s lowest rate of access to modern energy. Africa has been having serious energy shortages than Europe. Countries such as Zimbabwe, Ghana, Nigeria, and Togo among others are in dire need of energy.
It is estimated that 600 million Africans do not have access to electricity, and use wood for cooking and heating. 400,000 Africans, mainly women and children also die every year of respiratory diseases related to the indoor air pollution from using wood and other traditional fuels.
According to Commission of the European Communities statement which was released last month in Brussels, the investment needs are huge – according to the World Bank, ensuring 100% access to electricity in Sub-Sahara Africa by 2030 would require an annual investment of – 8.27 billion.
“Already now Europe and Africa are closely interlinked in the energy sector: Europe benefits from African energy exports, and Africa benefits from European technical and financial support in the energy sector,” the report said.
It stressed that the increasing global concerns on energy security, energy access and climate change have clearly reinforced the links between the energy future of the two continents, and created the need for joint approaches.
Against this background, the envisaged Africa-EU Energy Partnership will be an innovative platform for an enhanced political energy dialogue between Africa and the EU.
“Via the Energy Partnership, Africa and Europe will share knowledge and experience, develop common policy responses and stimulate specific action that addresses the energy challenges of the 21st century,” the statement stressed.
The Partnership will address security and diversification of energy supply, both for Africa and Europe, promote access to affordable, clean and efficient energy services, stimulate energy markets and aim to increase financial and human resources in support of Africa’s sustainable energy development, while promoting enabling frameworks for investments as well as market transparency and stability.
It would involve key players, such as the private sector and International Financing Institutions, and find ways to include emerging donors’ in the dialogue on energy sector development in Africa.
The summit would work towards the achievement of concrete objectives to strengthen the existing Africa-EU dialogue on access to energy and energy security, to scale up investment in energy infrastructure, including promotion of renewable energy solutions and energy efficiency, to amplify the development-oriented use of oil and gas revenues, to promote transparency and enabling frameworks as well as to mainstream climate change into development cooperation.
The Partnership would also build on existing instruments, such as the overall framework of the EU-Africa Infrastructure Partnership and its Trust Fund, the European Union Energy Initiative (EUEI) and its ACP Energy Facility (currently -220 million), the national and regional indicative programmes under the 10th EDF and the thematic programme on environment, management of natural resources including energy.
Other initiatives to be deliberated upon are the EU-Africa Partnership on Climate Change, EU-Africa Partnership on Migration, Mobility and Employment, EU-Africa Partnership on Democratic Governance and creation of a Joint EU-Africa political and institutional architecture.
The postponement of the EU-Africa Summit in 2003 was seen as a major political disappointment and Commission on European Communities welcomed the EU-Africa partnership is now back at the highest political level – where it belongs, the Commission of the European Communities statement had said.
The summit which was revived by the AU chairman, President John Agyekum Kufuor is an opportunity for the political leaders of the two continents to make strong action-oriented political commitments on current key international issues, notably climate change, migration, sustainable energy, governance and security, and to set the political course for the EU-Africa strategic partnership.
African and EU Heads of State and Government, representing 80 countries and almost 1.5 billion people will then sign a Lisbon Declaration – an EU-African consensus on values, common interest and strategic objectives.
http://craigeisele.wordpress.com/2011/05/24/update-on-corporate-cperations/
Information requests for the Trans African Development project can be made at the following E-mail Address:
CraigEisele@yahoo.com
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