North Africa Unrest, High Prices Hamper Continent's Economic Recovery

Although Africa weathered the 2009 global economic crisis, the unrest in North Africa combined with rising fuel and food prices could slow growth this year, a new report from the African Development Bank warns.

Article first published as Unrest, High Prices Hamper Africa's Recovery on Technorati.

 Ghana community farmers (IMAGE – Trees ForTheFuture)

Africa's economies have weathered the global crisis relatively well and rebounded in 2010, according to the African Economic Outlook 2011, launched on 6 June 2011.

But recent political events in North Africa and high food and fuel prices are likely to slow the continent’s growth down to 3.7% in 2011, the report warns.

During this year, sub-Saharan Africa will grow faster than North Africa. The report predicts a rebound to 5.8% in 2012. Economic growth in Africa has averaged 5% in the past decade.

The new report was launched in Lisbon, which later this week will host the African Development Bank’s (AfDB) annual meeting, the first gathering of African finance ministers and other officials to be held in Europe for 10 years.

"Africa is growing but there are risks. Urgent attention is needed to foster inclusive growth, to improve political accountability, and address the youth bulge," said Mthuli Ncube, Chief Economist and Vice-President of the AfDB.

New trade with emerging economies

Co-authored by the African Development Bank (AfDB), the OECD Development Centre, the United Nations Development Programme (UNDP) and the United Nations Economic Commission for Africa (UNECA), the report covers 51 of the continent's 53 countries.

It urges African countries to develop closer cross-border ties in dealing with traditional and emerging partners so they can boost sustainable and inclusive growth.

Despite its large oil and mineral exports, Africa today still accounts for only about 1.5% of global trade. However, Africa is becoming more integrated in the world economy and its partnerships are diversifying, revealing unprecedented economic opportunities.

New routes opened between Africa and emerging countries are promising, the report states. "New partners bring new opportunities for African countries," said Mario Pezzini, Director at the OECD Development Centre.

Emerging economic powers like China and India are seeking to extend their influence in Africa, not only through trade and investment but also through diplomatic alliances.

China's $126 billion annual trade with Africa is worth almost three times that of India's $ 46 billion. But India is moving to shrink that gap, as witnessed at the second India-Africa Forum on 24-25 May 2011 in the Ethiopian capital, Addis Ababa. India's bilateral trade with Africa is forecast to exceed $50 billion this year.

China now Africa's main trading partner

In 2009, China surpassed the US and became Africa’s main trading partner, while the share conducted by Africa with emerging partners has grown from approximately 23% to 39% in the last 10 years.

Africa’s top five emerging trade partners are now China (38%), India (14%), Korea (7.2%), Brazil (7.1%) and Turkey (6.5%).

While traditional partners, as a whole, still account for the largest proportion of Africa’s trade (62%), investment (80%) and Official Development Assistance (90%), the report notes that emerging economies can provide additional know-how, technology and development experiences required to raise the standard of living for millions of people on the continent.

World Bank echoes warning on fuel, food prices

On 12 May 2011 the World Bank also warned that high food and fuel prices could slow Africa's rapid recovery from the global financial crisis. Sub-Saharan Africa's economy was likely to grow by 5.1% in 2011 and 5.4% in 2012, it said. An earlier forecast by the Bank had shown the region growing by 5.3% this year and 5.5% in 2012.

The sub-Saharan African economy grew by 4.7% in 2010, rebounding from 1.7% growth in the previous year, when the world economic crisis hit output.

"Having presented a fairly optimistic picture, I should add that there are some real risks to this growth forecast. Perhaps most importantly is this increase in food and fuel prices that we are seeing right now," Shantayanan Devarajan, World Bank chief economist for Africa, told Reuters in an interview.

"If food prices and particularly fuel prices continue to rise, there is some really serious risk to the growth forecast."

On a positive note, Devarajan said sub-Saharan Africa should also see higher foreign capital flows in 2011 - after rising 6% to $32 billion in 2010 - as perceptions about the continent improve.

Bribery Act's Impact on British Defence Industry

BAE's Tornado fighter/bomber, sold to Saudi Arabia as well as the RAF - Image: Andrew Parsons/PA

This article was first published in Defence Management Journal, Issue 53 - Summer 2011

The UK Bribery Act 2010 was due to come into force in April 2011, but has been put back until three months after the final official guidance on the Act is published.

The Act has attracted considerable negative media coverage, and anti-corruption groups allege there has been intensive last-minute lobbying against it, from unspecified corporate circles.

It comes at a time when the British defence industry is under increasing public scrutiny.

After the headlines created by the Strategic Defence and Spending Review and consequent job cuts, the uprisings in the Arab world since the end of 2010 focused attention on the weapons that British companies supplied to Bahrain, Libya and others, including teargas and crowd control ammunition, which have been used against protesters and insurgents.

In 2009, UK defence export orders were worth £7.2 billion, according to ADS. The UK was fifth in the global weapons suppliers league after the USA, Russia, Germany and France, although the volume of British arms exports actually fell by 11 per cent between the periods 2001–2005 and 2006–10, the Stockholm International Peace Research Institute (SIPRI) said in data published in March 2011.

With the domestic spending squeeze tightening, Britain's defence manufacturers must maintain if not strengthen their position in the international marketplace. Industry figures are not happy that government guidance on the Bribery Act has been delayed, but say the legislation should not stifle business because anti-corruption measures are already in place.

Penalties

The Bribery Act was enacted in response to growing worldwide pressure on the UK to address a perceived lack of commitment to anti-bribery law enforcement. With this extra-territorial legislation, UK-linked companies involved in bribing officials and executives anywhere can be fined and their assets recovered.

It creates four categories of offences: offering, promising or giving a bribe to another person; requesting, agreeing to receive or accepting a bribe from another person; bribing a foreign public official; and the corporate offence of failing to prevent bribery by individuals acting on its behalf.

Failing to prevent bribery introduces strict liability for corporate organizations and is the most significant departure from current law, legal experts say. Ignoring the Act could cost companies dearly, with the maximum penalty for individuals being 10 years imprisonment and/or a fine, and for the new corporate offence an unlimited fine.

The only defence available to commercial organizations charged with strict liability corporate offences will be to show that the organization had "adequate procedures" in place to prevent bribery being committed.

"The breadth of the act is already prompting complaints from British business abroad, concerned that the strictures will give undue advantage to competitors with no links to the UK, who are not covered by the legislation," the Financial Times commented on 24 February 2011.

Concerns

Tobias Bock, a project officer at the anti-corruption watchdog Transparency International, estimates that the global cost of corruption in the defence sector is at least 12.5 billion pounds a year.

But facilitation payments by UK firms are already illegal and will continue to be banned when the Act comes into force, though the government’s earlier draft guidance failed to make this explicit.

Transparency International UK spokesman Robert Barrington says honest companies "have nothing to fear from the Act, and should welcome it as an opportunity to create a level playing field." But he warns: "Defence is a notably high-risk sector for bribery. The Act should remind every company in every industry that bribery is unacceptable and there is now a greater likelihood of being caught and punished."

Barrington told DMJ in an interview: "If I have a concern about the defence industry, it's that smaller and medium-sized companies that are exporting to difficult markets might be less aware of their obligations and the legal implications."

Derek Marshall, MD of Policy and Public Affairs at ADS, said many of the UK's bigger companies, especially multinationals, "have adjusted for quite a while now to the notion that they will have to comply with legislation like the Bribery Act and the US Foreign Corrupt Practices Act (FCPA), so the impact on them will be very limited."

"The real issue for us is having proper guidance soon (from the Ministry of Justice) on how the Act will be interpreted… For the time being, we seem to be in uncharted waters," he told DMJ.

Further delay in publishing the guidance will not only prolong uncertainty for companies, but could also undermine how the government’s commitment to the Act is perceived.

A Shropshire Guide: Stepping Up To Bridgnorth

The photogenic market town of Bridgnorth in southeastern Shropshire is also home to a public transport oddity.

Bridgnorth Town Hall   -   (Image - Peter Feuilherade)

The ancient market town of Bridgnorth is actually two towns - the High Town, perched on a ridge above the River Severn and with a view that King Charles I called "the finest in all my kingdom", and the Low Town, spread along the river bank 120 feet below, which was formerly a thriving port. The two are connected by a steep lane called Cartway, seven stairways, and a modern road. Or you could take a ride on England's only remaining inland electric cliff railway.

Bridgnorth's many historic and photogenic sights include the ruins of a Norman castle, several timbered buildings from the 16^th century onwards, and St. Mary Magdalene parish church, built by Thomas Telford in the late 18^th century.

The town is also the northern terminus of the Severn Valley Railway (SVR), a steam-hauled passenger train service which carries tourists on a picturesque 16-mile cross-country route to Kidderminster in Worcestershire.

The Castle Ruins

The ruins of Bridgnorth Castle are in the High Town, on a cliff by the side of the River Severn. Little remains to see now, apart from the early 12th century Norman tower and other stonework added decades later during the reign of Henry II (1154-1189).

What is left of the tower leans at a perilous angle of 15 degrees, more than the Tower of Pisa, as locals are fond of telling visitors. The reason, as the Bridgnorth tourist website recalls, is that in 1646 "the building was blown up in the Civil War by the parliamentarians - who botched it, as parliamentarians are wont to do".

Churches

St. Mary Magdalene is the parish church of Bridgnorth. It was built by the eminent Scottish architect and civil engineer Thomas Telford in 1792 to a classical design, on the site of the original medieval chapel of the adjacent castle.

St Leonard's Church, also in the High Town, dates from the early 13^th century, although it was extensively rebuilt in the 1840s and 1860s.

Cliff Railway

 

(Image - Peter Feuilherade)

Bridgnorth boasts the steepest cliff railway, or "funicular", in the UK. It began operating in 1892, and was originally driven by a system of water balance. Now powered by an electric winding engine (added in 1943), the Castle Hill Railway connects the Low Town and the High Town in less than 60 seconds. At £1 a ride (return tickets only – for unexplained reasons, the company does not offer one-way tickets), it is a popular alternative to the scenic but tortuous walk uphill.

Historic Buildings and Other Sights

The town's oldest house is Bishop Percy's House, a gabled and timbered building which dates from 1580. It was the birthplace in 1729 of Thomas Percy, poet and antiquary, who later became Bishop of Dromore in County Down, Ireland.

The High Street is dominated by the 17th century Town Hall, a striking half-timbered building which stands on open arches. The street is lined with long-established family-run shops. On Market Days, local produce and antiques are in great demand.

For hard-to-find bottled ales and farm cider, as well as international beers, head for the Hop & Stagger, a specialist shop on West Castle Street.

A popular walk takes day-trippers half a mile south from Bridgnorth, a few hundred yards after the bypass bridge along the B4555 Highley road, to visit Daniel's Mill, owned by the same family for more than 250 years. This corn mill, with a stream running up to a viaduct of the SVR, boasts the largest waterwheel still in use in England.

More information:

Bridgnorth and District Tourist Association

Shropshire Tourism

Pakistan - Music instrument makers in Peshawar's Old City

The Pakistani newspaper Dawn has a beautiful photo-essay on musical instrument makers in the Old City district of Peshawar.

This report was published in Dawn on 12 May 2011



Eight Kings to Form Club of Arab Monarchs

Jordan and Morocco will join the six-member Gulf Cooperation Council in an extended union comprising all eight Arab monarchies.

The Saudi capital Riyadh


Article first published as Eight Kings To Form Club of Arab Monarchs on Technorati.

Leaders of the six Arab Gulf states have welcomed bids by Jordan and Morocco to join the Gulf Cooperation Council (GCC).

The GCC comprises Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the United Arab Emirates, which between them supply about 20% of the world’s oil. It was formed in 1981 to coordinate political and economic policies. More recently, this has extended to defence and security too. In April 2011 the GCC sent troops into Bahrain, where the monarchy faced protests calling for democratic reform.

The GCC leaders' decision will result in an extended alliance including Jordan and Morocco. Both these kingdoms have seen limited protests and calls for political reform and constitutional monarchy during the "Arab Spring". In the GCC itself, as well as the Bahrain unrest, there have been small-scale protests in Oman and Saudi Arabia.

Regional unrest

Expanding the GCC is aimed not only at countering unrest across the Arab world but also strengthening the oil-rich Arabian kingdoms against what they perceive as the regional threat from Iran, their powerful neighbour across the Persian Gulf. They have accused Iran of fomenting the insurrection in Bahrain and of seeking to destabilize Arab regimes.

Iran denies involvement in the protests, saying it only gives Bahrain protesters "moral support".

In the impoverished Republic of Yemen, the GCC has been mediating, to no avail so far, to persuade rival factions to sign a transition deal aimed at ending months of anti-government unrest.

Yemen, which stands in stark contrast to its wealthy neighbours in the Arabian Peninsula, has limited observer status in the GCC.

Arab kings must "stick together"

Although Jordan and Saudi Arabia share close ties through common tribal and family links, the links are less evident between the Gulf states and Morocco, at the other end of the Arab world.

But they do have at least two factors in common - the Arabic language, and the system of monarchy.

The Dubai-based Gulf News cited Shaikh Jaber Al Khalifa, a political analyst, as saying that putting the eight monarchies in the Arab world under a single umbrella would be a positive step. "When political systems with common visions and ideas work together, you should expect good results because they are not held back by divergent political ideologies."

In a separate commentary in Gulf News on 11 May, Sultan Sooud Al Qassemi, a non-resident fellow at the Dubai School of Government, said that after Tunisia and Egypt, the survival of the 12 remaining Arab republican regimes was not guaranteed. The Arab League was "floundering", and the remaining eight Arab monarchies recognized the need to enhance mutual collaboration.

"They have identified the GCC as the ideal body for them to make an immediate and exponential leap in political, military and economic relations," he said.

The London-based independent newspaper Al-Quds al-Arabi on 11 May quoted "observers of Gulf affairs", whom the paper did not name, as saying that "the spread of Arab revolutions in the region, which have reached some Gulf countries, has prompted the GCC members to search for new allies following the collapse of the old alliance of so-called 'moderate countries' after the revolution in the country which was the Gulf countries' strongest ally, Egypt…"

Comments on Gulf websites ranged between those welcomed expanding the GCC and those who opposed it, Al-Quds al-Arabi noted: "Some said the military expertise of Jordan and Morocco would benefit the GCC countries, while others complained of the economic conditions in these two countries which might affect 'Gulf prosperity'."

The expansion plan is the strongest assertion of the GCC's foreign policy role in its 30-year history.

"They are leading the counter-revolution and it makes more sense for them to join with other Arab autocracies," Shadi Hamid, director of the Brookings Doha Centre, told Reuters news agency on 10 May.

Some analysts caution that an expanded union could have economic disadvantages for the Gulf.

John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh, in remarks cited by Reuters, said: "Greater economic harmonisation and collaboration is needed on the economic front among the current GCC states before further expansion."

Paying the Price of Arab Revolt

Political unrest, growing unemployment and spiralling food prices add up to bad news for Arab economies, the IMF warns.

Article first published as Paying the Price of Arab Revolt on Technorati.

Will “revolution tourism” bring dollars to Egypt? (IMAGE – Tarek)

The continuing unrest in the Middle East and North Africa will lead to higher commodity prices and disruption to economic growth for many countries in the region, the IMF said in its April 2011 Regional Economic Outlook for the Middle East, North Africa, Afghanistan and Pakistan (MENAP), released on 27 April 2011.

While oil exporters will enjoy a windfall, a difficult economic year looms for oil-importing states, the IMF predicts.

The report comes in the wake of a joint call for urgent support for Middle East economies by the World Bank and the IMF, who warn that political upheavals in the region could throw the global economic recovery off track.

Eventual Growth After Initial Disruption?

In the short term, many Middle East and North Africa (MENA) countries face multiple pressures caused by growing unemployment, rising commodity prices and disrupted economic activity.

But in the long run, "the uprisings could give a boost to the economies in the region by setting a more inclusive growth agenda, improving governance, and providing greater and more equal opportunity for its young and growing population," Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department, said at a press conference in Dubai to launch the report.

"The immediate challenge facing oil-importing countries in the Middle East is to maintain social cohesion and macroeconomic stability in the face of multiple pressures," he added.

Oil, Food Prices Major Factors Affecting Growth

"Two major factors are driving the current scenario: the unrest in the region and ensuing uncertainty, and the surge in global fuel and food prices," says the IMF.

The IMF report projects overall growth in the MENAP region at 3.9%.

The economies of the oil-exporting countries - Algeria, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, Sudan, the United Arab Emirates and Yemen - are expected to expand by 4.9%, mostly through higher oil prices and oil production, although those projections exclude Libya.

The combined external current account balance for regional oil exporters is expected to more than double to $380 billion in 2011.

But the region’s oil exporters still need to increase diversification of their economies, create jobs for their populations (in a region where youth unemployment rates are well above 20% in a number of countries), and improve the management of public resources, the IMF says.

For oil importers - Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Syria, and Tunisia - the outlook is not rosy. With political turmoil hitting both tourism and investment, their projected growth has dropped to only 2.3%.

And worsening terms of trade resulting from higher food and fuel prices are expected to inflate their import bill by about $15 billion, or nearly 3% of GDP on average, according to the IMF. "This will, in turn, translate into either higher inflation or a worsened fiscal balance, depending on the extent of subsidies."

Egypt and Tunisia Worst Hit

On 11 April, the IMF's World Economic Outlook report revised its economic growth projection for the Middle East to 4.1% for 2011, from a 4.6% forecast in January 2011, French news agency AFP reported.

In Egypt, which has the Arab world's biggest population, the IMF predicted economic growth to be only 1% in 2011, down from 5.1% in 2010. However, “disruptions to tourism, capital flows, and financial markets are expected to be temporary," it added.

In Tunisia, which enjoyed 3.7% growth in 2010, the IMF's 2011 prediction was down to 1.3%, from 4.8% in October 2010. If political and social turmoil in the North African country continues, the drop in tourism and foreign direct investment will exacerbate damage to the economy, the IMF warned.

But it raised its economic growth projection for natural gas producer Qatar to 20% in 2011, up from 16.3% in 2010.

The IMF also forecast that Saudi Arabia, the largest Arab economy, would enjoy 7.5% growth in 2011, compared with 4.5% projected in October 2010.

The IMF said that among other Arab oil exporters, the economy of Iraq would grow by 9.6% in 2011, Kuwait by 5.3%, Sudan by 4.7%, Algeria by 3.6%, and the United Arab Emirates by 3.3%.

OECD Sees "Moderate" Economic Recovery in France

France's economy is recovering from the recession and exports are up, but public finances and unemployment continue to pose problems, says the OECD thinktank.

Paris Metro station (IMAGE - Jackie Sneade)

 

Although a "moderate" recovery is under way in France, the recession will leave lasting traces and unemployment is unlikely to fall quickly, the Paris-based Organization for Economic Cooperation and Development (OECD) said on 11 April 2011.

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