Craig Eisele on …..

November 19, 2007

Capital is a Coward; So Lower Your Defences

Capital is a Coward; So Lower Your Defences

The East African (Nairobi)
OPINION
12 November 2007
Posted to the web 12 November 2007

By Baroness Lynda Chalker
Nairobi
With several African countries now maintaining economic growth of five per cent plus, the issue for these governments is how to sustain and improve upon this positive momentum. For that to happen, most agree that the development of a thriving private sector remains the real key to future growth.

In nearly 30 years of working on matters relating to Africa, I have never questioned the potential and good opportunities that the continent has to offer. Yet alongside this has been the frustration that Africa was not getting the investment it deserved, even when the returns on that investment were usually higher than in many other parts of the world.

Even today, despite the upsurge in FDI into Africa over the past five years, the percentage in world terms remains low. African countries are in competition with the rest of the world, and with each other, for investment. It is often said that “capital is a coward,” seeking those parts of the world with the highest returns and the lowest risk.

If this is the case, then Africa must respond to this challenge if it wishes to benefit from such investment. In turn, that means that African countries must make it easier to do business with them.

There are many studies and policy recommendations on how to attract trade and investment to Africa. The challenge of our time remains to see real change in governance structures and the investment climate in the countries.

That is why we worked so hard to set up the Investment Climate Facility for Africa (ICF), now based in Dar es Salaam and led by Omari Issa, the former head of Celtel.

THE PARAMETERS needed for trade and investment are not dissimilar whether one is in Asia, the Middle East, Africa, Europe or North America. At the national level, governments must provide regulatory systems that facilitate businesses to operate in a transparent and accountable way.

These include licensing, registration of property, employing workers, protecting investors, paying taxes and credit provision. The World Bank and International Finance Corporation use these indices in ranking countries on the ease of doing business.

In their latest report, “Doing Business 2008,” all five countries of the East African Community made progress in one form or another. Kenya was among the top 10 countries in Africa and was singled out for launching a licensing reform programme that eliminated 110 business licences. Tanzania was found to be one of the two cheapest places in Africa to register a business, while in Uganda the enactment of its Labour Law this year modernised labour legislation.

The reduced cost of Rwanda’s port and terminal handling through the liberalisation of warehouse services has been commendable, including the increase in the number of Customs declaration points. In Burundi, the cost of registering property was reduced through tax cuts. These key actions by governments in the region demonstrate the desire on their part to improve the investment climate.

BILLS ON anti-counterfeiting have been drafted in Uganda and Kenya and are now due for parliamentary enactment. Counterfeiting remains a challenge to business both in Africa and globally. Punitive penalties are required to combat this illicit trade, which benefits few and disadvantages millions of ordinary citizens.

A number of countries across Africa have created presidential investor councils as instruments to help bring about sustained economic growth. These councils, generally made up of a mix of national and international businessmen, work closely with a country’s investment promotion agency to ensure that ideas can be implemented. The East African region is no exception.

The public and private sectors can work well together to a common end. Good public-private partnerships are critical in raising the level of understanding on both sides and for resolving issues of common concern for the benefit of nation building, as well as increased economic activity.

Good policies and strong political commitment on the part of a country’s leadership help to open up opportunities for investment. There are however other forces at play that must be addressed. Market size is one; for many international investors, the size of some African countries does not make investment attractive. Regional markets, however, change the dynamics.

The establishment of the East African Common Market will create a market of over 120 million people. A large market without the requisite purchasing power, however, is in itself insufficient to be attractive. The growth of a professional middle class is critical to fuel market demand. Policies that increase the basic incomes help create the demand for goods and services necessary to stimulate investment. A skilled workforce, and the removal of skills shortages, also has a positive effect on investment decisions.

THE REGIONAL approach to tackling the obstacles to investment is, I believe, the right way forward. The East African Business Council is working towards improving dialogue with governments in the region to address some of the challenges that businesses face. A regional framework to address some of these challenges is at an advanced stage of development.

The regional projects of interest include the East African Road Network Project, East African Railways Master Plan, East African Power Master Plan and the Lake Victoria Development Programme.

The Investment Climate Facility for Africa, a private-public partnership, was set up to fund projects endorsed by governments to improve Africa’s investment climate. They have reached their funding target of over $100 million for the first three years.

The first major ICF project is the Rwanda Investment Climate Project. This will assist the Rwanda to modernise its laws, establish a commercial court and create a new Rwanda Commercial Registration Services Agency. The outcomes will help in resolving commercial disputes and improve the registration of land and business in the country. The ICF is now consulting on other potential projects to improve the investment climate both country by country and in future through regional activity.

The East African region will shortly be playing host to the Commonwealth Business Forum, which will be taking place from November 20-22 in Kampala. This will be an opportunity to showcase the potential that the region has to offer. With East Africa – and Africa in general – now open for business, all opportunities for partnership and development should be encouraged.

Baroness Lynda Chalker is chair of Africa Matters Ltd, board member of the Global Leadership Foundation and Trustee of the Investment Climate Facility for Africa

November 18, 2007

A Pessimist on Africa Draws African Ire.

Afro-Pessimist Sees No Urgency in Continent

The Monitor (Kampala)
OPINION
4 November 2007
Posted to the web 4 November 2007

By Elias Biryabarema
Kampala
Lately, as it appears, sub-Saharan countries seem to be on the rebound. Conflagrations have been doused in much of the sub-continent and as peace takes a firm hold, economic stability has followed, bringing opportunity and better welfare to millions across the region.

The International Monetary Fund’s (IMF) regional economic outlook for sub-Saharan Africa published on October 20 paid glowing tribute to a region in the middle of an energetic transformation. Economic growth for the region, said the IMF, will average six percent in 2007 and 6.75 percent in 2008, which will be a remarkable rise of nearly two percentage points from 2005’s five-and-a-half percent.

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“This would extend a period of very good performance,” said the IMF. “In recent years the region has seen its strongest growth and lowest inflation in more than three decades.”

Capital flows into Africa are at their highest levels since independence. Investment is flourishing–the World Investment Report said the continent attracted $36 billion in 2006, double 2004’s figure–creating jobs and boosting incomes. Export earnings for the region, too, have soared to unprecedented levels on the back of an explosive worldwide commodity boom, particularly oil.

Through the Multilateral Debt Relief Initiative (MDRI) engineered by multilateral donors (World Bank, IMF, African Development Bank, Paris Club) and the G8, most sub-Saharan African countries have had their crushing debts cancelled and more resources are now being funnelled into long-neglected economic infrastructure.

All this has reversed decades of a downward spiral and lifted Africa onto the first rung of the ladder to economic prosperity. Right?

Not quite. At least, according to Afro-pessimists.

Dr Jakob van der Veen, an Afro-pessimist par excellence, believes the worst is in fact yet to come. Dr Van der Veen, who has travelled extensively and worked in sub-Saharan Africa and Asia, sees all of the latest wave of seeming economic vitality as just one of those episodes when Africa has suddenly become luminous, showed convincing promise and appeared ready to climb out of poverty, only for it to extinguish hopes and reverse just as dramatically as it had brightened.

Powered by globalisation, information and communication technological breakthroughs and mass consumption, Dr Van der Veen observes in his book, What Went Wrong With Africa, that “it is clear that on average people’s lives have improved, all over the world, on every continent”.

Except Africa–to be more precise, sub-Saharan Africa. To be sure, Dr Van der Veen’s book, first published in Dutch in 2002 and translated into English in 2004, brings no new compelling ideas about the tragedy of Black Africa but it’s the extent of detail he lends to his diagnosis of the crisis and the shocking (almost provocative) candour of his views on the continent’s future that makes it a gripping and invigorating read.

“Even a confirmed optimist would hesitate to predict that life in Africa will get better in the years ahead,” he writes. His despair and doomsday arguments, which echo the familiar themes of Western reportage on Africa and scholarly work by several other Western authors, drew consternation and a hostile reception at a public debate in Kampala organised by Acode, a policy advocacy NGO, on October 24.

Dr Simba Kayunga and Mr Mwambutsya Ndebesa from Makerere University accused him of regurgitating old and discredited theories that suggested that there was something peculiarly African about sub-Saharan Africa’s economic stagnation and chaotic politics.

To their pique, Dr Van der Veen, instead of seeking to clear misconceptions that may arise from his gloomy assertions, pressed forward, declaring that there was “nothing to make him optimistic about sub-Saharan Africa, not even the robust economic growth rates trumpeted by the IMF and the oil bonanza that is stirring euphoria all across the region”.

However, a good measure of the economic dynamism that sub-Saharan Africa has picked up lately is so tenuous that even Dr Van der Veen’s critics may grudgingly admit that Africa’s perils may not be overcome as yet. Take exports, for instance. Prices for oil, metals, timber, coffee, sugar and several others are currently shooting through the roof; pouring prodigious amounts of money into the sub-Saharan African economies. But sometime, as it happens with booms, the prices will go burst, and when that happens, the same economies will start to sound distress signals, anew.

In many ways, Dr Van der Veen’s book easily stokes indignation in Africans, particularly coming from the West which many Africans generally tend to hold responsible for most of their predicaments.

The litany of accusations is endless. Europe colonised us, pillaged our resources and has since continued to stymie our economic progress through economic marginalisation in the global marketplace. The West often displays astonishing ignorance on the complexities of the African society. The West does not offer much aid and while it’s ever railing against the corruption of African leaders, it’s content to keep the loot stashed in their banks by the same leaders.

Participants in the discussion pointed all this out. And more. The thicket of hurdles that tamps down Black Africa and which form the core of Dr van der Veen’s narrative, too, are all familiar: state patronage, corruption, strong tribal loyalties, aid, decaying and ineffective institutions, violent conflict.

Many in the debate found it insulting–arguably for a good reason–that a great deal of these problems had receded in many of the sub-Saharan countries, apparently signalling better times for the region. And yet the “courageous” Dutchman was still insisting that this was not enough to warrant any optimism.

Asked after the debate what he made of the accusations of bias and ignorance, he suggested that it was in fact such attitudes that were the greatest hindrance to the region’s development.

“I have noticed, for instance, that Ugandans are complacent,” he said. “They seem to say, ‘Okay, we were so badly off but now we are somewhere and we are happy with that’ which is really shocking if you really know what it takes to transform a pre-modern nation like Uganda to a modern country.”

He is also not optimistic, he said, because he finds Ugandans and Africans generally to be too un-ambitious, complacent, slow-paced and obsessed with blaming others for their crises instead of seizing and shaping their own destiny.

“There’s no sense of urgency among Africans,” the Dutchman said. “I have seen that wherever I have gone in all of sub-Saharan Africa, and that will not take your countries anywhere.”

Mr Biryabarema is a journalist with Daily Monitor

Kenya & Ghana Top List of ‘Doing Business’ Reformers in Africa

Kenya, Ghana Top List of ‘Doing Business’ Reformers
The East African (Nairobi)

NEWS
6 November 2007
Posted to the web 6 November 2007

By Philip Ngunjiri
Nairobi
Kenya and Ghana are ranked among the top 10 business reformers worldwide, according to a report done by the World Bank and the International Finance Corporation.

According to the annual report, Doing Business 2008, Kenya implemented an ambitious licensing reform programme, which has eliminated 110 licenses and simplified eight others.

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For example, property registration is now faster, due to growing competition among land valuers and the country’s private credit bureau now collects a wider range of data.

Says the report, “These changes introduced by Kenya have streamlined business start-up and cut both the time and cost of getting building permits. The programme will eventually eliminate or simplify at least 900 or more of the country’s 1,300 licenses.”

The report systematically and objectively measured the time and cost involved in setting up, running, and closing a business in 178 countries around the world between April 2006 and June 2007.

The top 10 reformers globally are Egypt, Croatia, Ghana, FYR Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China, and Bulgaria. In the same period, 24 African countries implemented 49 reforms. However, in the regional rankings on the pace of reform, Africa fell from third to fifth place, after being overtaken by South Asia and the Middle East.

The reforms have made it easier to start a business, strengthened property rights, enhanced investor protection, increased access to credit, eased tax burdens, expedited trade and cut costs. Worldwide, 200 reforms in 98 economies were introduced between April 2006 and June 2007.

Mauritius, with six reforms, tops the rankings in Africa on the ease of doing business and is placed 27th worldwide; South Africa is 35, Namibia, 43, Botswana, 51 and Kenya, 72.

The rankings track the time and cost it takes to meet government requirements in business startup, operation, trade, taxation, and closure. They do not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions or crime rates. Since 2003, Doing Business has inspired or informed more than 113 reforms worldwide.

Mauritius, the region’s most business-friendly country, made it even easier to do business, in part by simplifying taxes. A three-year programme has been established to harmonise the tax system and will ultimately create a single corporate rate with few credits or tax holidays. Other reforms reduced the property registration fee to 5 per cent of the property value and simplified construction permits.

Burundi abolished property registration tax, so did Benin and Guinea-Bissau.

Tanzania cut the cost of starting a business when it lowered the rates to 47 per cent – among the lowest in Africa. Rwanda reduced the cost of port and terminal handling by liberalising the warehouse services sector. Competition has seen costs cut by 40 per cent, and new Customs declaration points have accelerated trade. Decentralisation has speed up the issuance of building permits. The privatisation of Electrogaz – the water and electricity company in Rwanda – has reduced delays in getting utility connections, thereby easing the acquisition of licenses.

Uganda, was however the only African country to reform its labour laws this year. The new laws make working hours more flexible, provide clarity on overtime, and require that employers notify the labour union’s representative and the commissioner of specific dismissal cases.

The report finds that good rankings on the ease of doing business are associated with higher percentages of women among entrepreneurs and employees.

“The benefits of regulatory reform are especially large for women,” said Sylvia Solf, one of the authors of the report. “Women often face regulations that may be designed to protect them but that instead force them into the informal sector. There, women have little job security and few social benefits,” she says.

In the Democratic Republic of Congo, where women need their husbands’ consent to start a business, they run only 18 per cent of the small businesses. It also takes 13 procedures and 155 days – and costs five times the annual income per capita.

The situation is even worse for single women whom a judge has to decide whether they can start businesses. In neighbouring Rwanda, which has no such regulations, women run more than 41 per cent of small businesses.

In general, doing business in Africa was once perceived as a difficult and complex undertaking. One of the reasons given was the numerous processes associated with conducting business, combined with a fragile investment climate and inadequate infrastructure.

However, with fewer conflicts, more democratic elections, and economic growth rates, Africa is proving itself a continent of positive change.

According to Simeon Djankov, the lead author of the report, it has had a powerful catalytic effect.

“For example, in the past two years, we have recorded 413 reforms in the countries we study. We have been able to confirm at least 113 instances where ‘Doing Business’ inspired or informed business regulatory reforms worldwide.”

Michael Klein, World Bank/IFC vice president for Financial and Private Sector Development said “Doing Business 2008” is analysing the benefits of reform and shows equity returns are highest in countries that are reforming the most.

“Investors are looking for upside potential, and they find it in economies that are reforming, regardless of their starting point,” he added.

October 1, 2007

Craig Eisele Creates Trans-African Development Strategies, Inc.

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.

 

September 9, 2007

IFC Launches Plan for Infrastructure Growth in Africa

IFC Launches Plan for Infrastructure Growth
East African Standard (Nairobi)

NEWS
8 September 2007
Posted to the web 7 September 2007

By Tom Mogusu
Nairobi
The International Finance Corporation (IFC) has launched a multi-million shilling project aimed at transforming African financial markets.

IFC will also ask African governments to use bond markets to raise infrastructure funds on a long-term basis.

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The Efficient Securities Markets for Institutional Development (ESMID), is already being rolled out in Kenya, Uganda, Tanzania, Rwanda and Nigeria.

It will cost the corporation an estimated $5.5 million and is aimed at deepening the bond market.

“This project will be implemented over the next three years,” Mr Evans Osano, a Regional Manager with IFC, said on Friday.

“Through this project, we want to see how the bond market can be used to fund housing and infrastructure projects in Africa.”

The project comes at a time when Kenya and other African countries are grappling with the needs of their growing economies and the need to improve infrastructure.

East African nations have been growing at an average rate of 5 per cent over the past four years, but poor infrastructure has had a negative impact on the growth.

While the growth has been fuelled by service industries, there is demand for governments and the private sector to play a bigger role in infrastructure development.

Osano said the project was introduced after a research by IFC found out that Africa would need an estimated $250 billion over the next decade to meet growing infrastructure needs.

Osano was speaking in Nairobi during a day seminar on emerging markets sponsored by Strathmore University.

Other speakers included the Central Bank of Kenya Governor, Prof Njuguna Ndungu, presented a paper on monetary policy and capital markets.

Others speakers included Mr Jimnah Mbaru, CEO, Dyer & Blair Investment Bank and Chairman of Nairobi Stock Exchange (NSE) and Dr James McFie, a lecturer at Strathmore University.

The project would also seek to improve operating financial environment in the five target nations.

“We shall be looking at doing a market diagnosis in Nigeria so that we understand that region.”

Ndungu said there was room for more financial reforms in the country.

“The financial markets follow economic performance in the initial stages, but over the last few years, we have seen the sector moving away from bank domination to well functioning securities market.

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