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Developing World’s Share of Global Investment to Triple by 2030, Says New World Bank Report

Posted on 18 May 2013 by Africa Business

Seventeen years from now, half the global stock of capital, totaling $158 trillion (in 2010 dollars), will reside in the developing world, compared to less than one-third today, with countries in East Asia and Latin America accounting for the largest shares of this stock, says the latest edition of the World Bank’s Global Development Horizons (GDH) report, which explores patterns of investment, saving and capital flows as they are likely to evolve over the next two decades.

Developing countries’ share in global investment is projected to triple by 2030 to three-fifths, from one-fifth in 2000, says the report, titled ‘Capital for the Future: Saving and Investment in an Interdependent World’. With world population set to rise from 7 billion in 2010 to 8.5 billion 2030 and rapid aging in the advanced countries, demographic changes will profoundly influence these structural shifts.

“GDH is one of the finest efforts at peering into the distant future. It does this by marshaling an amazing amount of statistical information,” said Kaushik Basu, the World Bank’s Senior Vice President and Chief Economist. “We know from the experience of countries as diverse as South Korea, Indonesia, Brazil, Turkey and South Africa the pivotal role investment plays in driving long-term growth. In less than a generation, global investment will be dominated by the developing countries. And among the developing countries, China and India are expected to be the largest investors, with the two countries together accounting for 38 percent of the global gross investment in 2030. All this will change the landscape of the global economy, and GDH analyzes how.”

Productivity catch-up, increasing integration into global markets, sound macroeconomic policies, and improved education and health are helping speed growth and create massive investment opportunities, which, in turn, are spurring a shift in global economic weight to developing countries. A further boost is being provided by the youth bulge. With developing countries on course to add more than 1.4 billion people to their combined population between now and 2030, the full benefit of the demographic dividend has yet to be reaped, particularly in the relatively younger regions of Sub-Saharan Africa and South Asia.

The good news is that, unlike in the past, developing countries will likely have the resources needed to finance these massive future investments for infrastructure and services, including in education and health care. Strong saving rates in developing countries are expected to peak at 34 percent of national income in 2014 and will average 32 percent annually until 2030. In aggregate terms, the developing world will account for 62-64 percent of global saving of $25-27 trillion by 2030, up from 45 percent in 2010.

“Despite strong saving levels to finance their massive investment needs in the future, developing countries will need to significantly improve their currently limited participation in international financial markets if they are to reap the benefits of the tectonic shifts taking place,” said Hans Timmer, Director of the Bank’s Development Prospects Group.

GDH paints two scenarios, based on the speed of convergence between the developed and developing worlds in per capita income levels, and the pace of structural transformations (such as financial development and improvements in institutional quality) in the two groups. Scenario one entails a gradual convergence between the developed and developing world while a much more rapid scenario is envisioned in the second.

The gradual and rapid scenarios predict average world economic growth of 2.6 percent and 3 percent per year, respectively, during the next two decades; the developing world’s growth will average an annual rate of 4.8 percent in the gradual convergence scenario and 5.5 percent in the rapid one.

In both scenarios, developing countries’ employment in services will account for more than 60 percent of their total employment by 2030 and they will account for more than 50 percent of global trade. This shift will occur alongside demographic changes that will increase demand for infrastructural services. Indeed, the report estimates the developing world’s infrastructure financing needs at $14.6 trillion between now and 2030.

The report also points to aging populations in East Asia, Eastern Europe and Central Asia, which will see the largest reductions in saving rates. Demographic change will test the sustainability of public finances and complex policy challenges will arise from efforts to reduce the burden of health care and pensions without imposing severe hardships on the old. In contrast, Sub-Saharan Africa, with its relatively young and rapidly growing population as well as robust economic growth, will be the only region not experiencing a decline in its saving rate.

In absolute terms, however, saving will continue to be dominated by Asia and the Middle East. In the gradual convergence scenario, in 2030, China will save far more than any other developing country — $9 trillion in 2010 dollars — with India a distant second with $1.7 trillion, surpassing the levels of Japan and the United States in the 2020s.

As a result, under the gradual convergence scenario, China will account for 30 percent of global investment in 2030, with Brazil, India and Russia together accounting for another 13 percent. In terms of volumes, investment in the developing world will reach $15 trillion (in 2010 dollars), versus $10 trillion in high-income economies. China and India will account for almost half of all global manufacturing investment.

“GDH clearly highlights the increasing role developing countries will play in the global economy. This is undoubtedly a significant achievement. However, even if wealth will be more evenly distributed across countries, this does not mean that, within countries, everyone will equally benefit,” said Maurizio Bussolo, Lead Economist and lead author of the report.

The report finds that the least educated groups in a country have low or no saving, suggesting an inability to improve their earning capacity and, for the poorest, to escape a poverty trap.

“Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor,” concluded Bussolo.

Regional Highlights:

East Asia and the Pacific will see its saving rate fall and its investment rate will drop by even more, though they will still be high by international standards. Despite these lower rates, the region’s shares of global investment and saving will rise through 2030 due to robust economic growth. The region is experiencing a big demographic dividend, with fewer than 4 non-working age people for every 10 working age people, the lowest dependency ratio in the world. This dividend will end after reaching its peak in 2015. Labor force growth will slow, and by 2040 the region may have one of the highest dependency ratios of all developing regions (with more than 5.5 non-working age people for every 10 working age people). China, a big regional driver, is expected to continue to run substantial current account surpluses, due to large declines in its investment rate as it transitions to a lower level of public involvement in investment.

Eastern Europe and Central Asia is the furthest along in its demographic transition, and will be the only developing region to reach zero population growth by 2030. Aging is expected to moderate economic growth in the region, and also has the potential to bring down the saving rate more than any developing region, apart from East Asia. The region’s saving rate may decline more than its investment rate, in which case countries in the region will have to finance investment by attracting more capital flows. The region will also face significant fiscal pressure from aging. Turkey, for example, would see its public pension spending increase by more than 50 percent by 2030 under the current pension scheme. Several other countries in the region will also face large increases in pension and health care expenditures.

Latin America and the Caribbean, a historically low-saving region, may become the lowest-saving region by 2030. Although demographics will play a positive role, as dependency ratios are projected to fall through 2025, financial market development (which reduces precautionary saving) and a moderation in economic growth will play a counterbalancing role. Similarly, the rising and then falling impact of demography on labor force growth means that the investment rate is expected to rise in the short run, and then gradually fall. However, the relationship between inequality and saving in the region suggests an alternative scenario. As in other regions, poorer households tend to save much less; thus, improvements in earning capacity, rising incomes, and reduced inequality have the potential not only to boost national saving but, more importantly, to break poverty traps perpetuated by low saving by poor households.

The Middle East and North Africa has significant scope for financial market development, which has the potential to sustain investment but also, along with aging, to reduce saving. Thus, current account surpluses may also decline moderately up to 2030, depending on the pace of financial market development. The region is in a relatively early phase of its demographic transition: characterized by a still fast growing population and labor force, but also a rising share of elderly. Changes in household structure may also impact saving patterns, with a transition from intergenerational households and family-based old age support to smaller households and greater reliance on asset income in old age. The region has the lowest use of formal financial institutions for saving by low-income households, and scope for financial markets to play a significantly greater role in household saving.

South Asia will remain one of the highest saving and highest investing regions until 2030. However, with the scope for rapid economic growth and financial development, results for saving, investment, and capital flows will vary significantly: in a scenario of more rapid economic growth and financial market development, high investment rates will be sustained while saving falls significantly, implying large current account deficits. South Asia is a young region, and by about 2035 is likely to have the highest ratio of working- to nonworking-age people of any region in the world. The general shift in investment away from agriculture towards manufacturing and service sectors is likely to be especially pronounced in South Asia, with the region’s share of total investment in manufacturing expected to nearly double, and investment in the service sector to increase by more than 8 percentage points, to over two-thirds of total investment.

Sub-Saharan Africa’s investment rate will be steady due to robust labor force growth. It will be the only region to not see a decrease in its saving rate in a scenario of moderate financial market development, since aging will not be a significant factor. In a scenario of faster growth, poorer African countries will experience deeper financial market development, and foreign investors will become increasingly willing to finance investment in the region. Sub-Saharan Africa is currently the youngest of all regions, with the highest dependency ratio. This ratio will steadily decrease throughout the time horizon of this report and beyond, bringing a long lasting demographic dividend. The region will have the greatest infrastructure investment needs over the next two decades (relative to GDP). At the same time, there will likely be a shift in infrastructure investment financing toward greater participation by the private sector, and substantial increases in private capital inflows, particularly from other developing regions.

Source: WorldBank.org

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Developing countries to dominate global saving and investment, but the poor will not necessarily share the benefits, says report

Posted on 18 May 2013 by Africa Business

STORY HIGHLIGHTS
  • Developing world’s share of global investment to triple by 2030
  • China, India will be developing world’s largest investors
  • Boost to education needed so poor can improve their well-being

In less than a generation, global saving and investment will be dominated by the developing world, says the just-released Global Development Horizons (GDH) report.

By 2030, half the global stock of capital, totaling $158 trillion (in 2010 dollars), will reside in the developing world, compared to less than one-third today, with countries in East Asia and Latin America accounting for the largest shares of this stock, says the report, which explores patterns of investment, saving and capital flows as they are likely to evolve over the next two decades.

Titled ‘Capital for the Future: Saving and Investment in an Interdependent World’, GDH projects developing countries’ share in global investment to triple by 2030 to three-fifths, from one-fifth in 2000.

Productivity catch-up, increasing integration into global markets, sound macroeconomic policies, and improved education and health are helping speed growth and create massive investment opportunities, which, in turn, are spurring a shift in global economic weight to developing countries.

A further boost is being provided by the youth bulge. By 2020, less than 7 years from now, growth in world’s working-age population will be exclusively determined by developing countries. With developing countries on course to add more than 1.4 billion people to their combined population between now and 2030, the full benefit of the demographic dividend has yet to be reaped, particularly in the relatively younger regions of Sub-Saharan Africa and South Asia.

GDH paints two scenarios, based on the speed of convergence between the developed and developing worlds in per capita income levels, and the pace of structural transformations (such as financial development and improvements in institutional quality) in the two groups. Scenario one entails a gradual convergence between the developed and developing world while a much more rapid one is envisioned in the second.

In both scenarios, developing countries’ employment in services will account for more than 60 percent of their total employment by 2030 and they will account for more than 50 percent of global trade. This shift will occur alongside demographic changes that will increase demand for infrastructural services. Indeed, the report estimates the developing world’s infrastructure financing needs at $14.6 trillion between now and 2030.

The report also points to aging populations in East Asia, Eastern Europe and Central Asia, which will see the largest reductions in private saving rates. Demographic change will test the sustainability of public finances and complex policy challenges will arise from efforts to reduce the burden of health care and pensions without imposing severe hardships on the old. In contrast, Sub-Saharan Africa, with its relatively young and rapidly growing population as well as robust economic growth, will be the only region not experiencing a decline in its saving rate.

Open Quotes

Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor. Close Quotes

Maurizio Bussolo
Lead Author, Global Development Horizons 2013

In absolute terms, however, saving will continue to be dominated by Asia and the Middle East. In the gradual convergence scenario, in 2030, China will save far more than any other developing country — $9 trillion in 2010 dollars — with India a distant second with $1.7 trillion, surpassing the levels of Japan and the United States in the 2020s.

As a result, under the gradual convergence scenario, China will account for 30 percent of global investment in 2030, with Brazil, India and Russia together accounting for another 13 percent. In terms of volumes, investment in the developing world will reach $15 trillion (in 2010 dollars), versus $10 trillion in high-income economies. Again, China and India will be the largest investors among developing countries, with the two countries combined representing 38 percent of the global gross investment in 2030, and they will account for almost half of all global manufacturing investment.

“GDH clearly highlights the increasing role developing countries will play in the global economy. This is undoubtedly a significant achievement. However, even if wealth will be more evenly distributed across countries, this does not mean that, within countries, everyone will equally benefit,” said Maurizio Bussolo, Lead Economist and lead author of the report.

The report finds that the least educated groups in a country have low or no saving, suggesting an inability to improve their earning capacity and, for the poorest, to escape a poverty trap.

“Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor,” concluded Bussolo.

Regional Highlights:

East Asia and the Pacific will see its saving rate fall and its investment rate will drop by even more, though they will still be high by international standards. Despite these lower rates, the region’s shares of global investment and saving will rise through 2030 due to robust economic growth. The region is experiencing a big demographic dividend, with fewer than 4 non-working age people for every 10 working age people, the lowest dependency ratio in the world. This dividend will end after reaching its peak in 2015. Labor force growth will slow, and by 2040 the region may have one of the highest dependency ratios of all developing regions (with more than 5.5 non-working age people for every 10 working age people). China, a big regional driver, is expected to continue to run substantial current account surpluses, due to large declines in its investment rate as it transitions to a lower level of public involvement in investment.

Eastern Europe and Central Asia is the furthest along in its demographic transition, and will be the only developing region to reach zero population growth by 2030. Aging is expected to moderate economic growth in the region, and also has the potential to bring down the saving rate more than any developing region, apart from East Asia. The region’s saving rate may decline more than its investment rate, in which case countries in the region will have to finance investment by attracting more capital flows. The region will also face significant fiscal pressure from aging. Turkey, for example, would see its public pension spending increase by more than 50 percent by 2030 under the current pension scheme. Several other countries in the region will also face large increases in pension and health care expenditures.

Latin America and the Caribbean, a historically low-saving region, may become the lowest-saving region by 2030. Although demographics will play a positive role, as dependency ratios are projected to fall through 2025, financial market development (which reduces precautionary saving) and a moderation in economic growth will play a counterbalancing role. Similarly, the rising and then falling impact of demography on labor force growth means that the investment rate is expected to rise in the short run, and then gradually fall. However, the relationship between inequality and saving in the region suggests an alternative scenario. As in other regions, poorer households tend to save much less; thus, improvements in earning capacity, rising incomes, and reduced inequality have the potential not only to boost national saving but, more importantly, to break poverty traps perpetuated by low saving by poor households.

The Middle East and North Africa has significant scope for financial market development, which has the potential to sustain investment but also, along with aging, to reduce saving. Thus, current account surpluses may also decline moderately up to 2030, depending on the pace of financial market development. The region is in a relatively early phase of its demographic transition: characterized by a still fast growing population and labor force, but also a rising share of elderly. Changes in household structure may also impact saving patterns, with a transition from intergenerational households and family-based old age support to smaller households and greater reliance on asset income in old age. The region has the lowest use of formal financial institutions for saving by low-income households, and scope for financial markets to play a significantly greater role in household saving.

South Asia will remain one of the highest saving and highest investing regions until 2030. However, with the scope for rapid economic growth and financial development, results for saving, investment, and capital flows will vary significantly: in a scenario of more rapid economic growth and financial market development, high investment rates will be sustained while saving falls significantly, implying large current account deficits. South Asia is a young region, and by about 2035 is likely to have the highest ratio of working- to nonworking-age people of any region in the world. The general shift in investment away from agriculture towards manufacturing and service sectors is likely to be especially pronounced in South Asia, with the region’s share of total investment in manufacturing expected to nearly double, and investment in the service sector to increase by more than 8 percentage points, to over two-thirds of total investment.

Sub-Saharan Africa’s investment rate will be steady due to robust labor force growth. It will be the only region to not see a decrease in its saving rate in a scenario of moderate financial market development, since aging will not be a significant factor. In a scenario of faster growth, poorer African countries will experience deeper financial market development, and foreign investors will become increasingly willing to finance investment in the region. Sub-Saharan Africa is currently the youngest of all regions, with the highest dependency ratio. This ratio will steadily decrease throughout the time horizon of this report and beyond, bringing a long lasting demographic dividend. The region will have the greatest infrastructure investment needs over the next two decades (relative to GDP). At the same time, there will likely be a shift in infrastructure investment financing toward greater participation by the private sector, and substantial increases in private capital inflows, particularly from other developing regions.

 

Source: WorldBank.org

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2013 Pick n Pay Knysna Oyster Festival Programme full of New Highlights

Posted on 18 May 2013 by Africa Business

The programme for the 2013 Pick n Pay Knysna Oyster Festival is growing, with new and exciting events joining the stable of old favourites. “Last year’s programme sported more than 100 events,” said Festival Manager Nicci Rousseau-Schmidt. “And it is already clear that we’ll top that number this year.”

The Pick n Pay Women’s Walk will take place on Sunday 7 July. The Women’s Walk is a popular event that takes place across South Africa. Bronwen Rohland Marketing Director Pick n Pay said, “This 5km event raises funds for PinkDrive, an organisation that provides free breast cancer screening and health education for women who cannot afford it.”

The Young Oyster Festival is gaining in popularity each year, providing an environment for kids to have a blast. Aside from the regular events such as cooking lessons, arts and crafts, movie screenings, sport clinics, and exciting competitions, this year will see a dedicated Kids Zone complete with popcorn, candy floss and all things necessary for exciting and entertaining kids.

“Older kids will enjoy an all-new fun fair as well as obstacle courses and exciting events and competitions at The Yard, our local skate park,” Rousseau-Schmidt said. “This age group and their parents will also enjoy an all new 10-day local food and craft market at the main venue on Waterfront Drive and details of how to enter the Miss Knysna Oyster Festival will be available soon.”

“Of course we wouldn’t have a festival if it weren’t for our oysters. This year’s Pick n Pay Flavours of Knysna will truly showcase Knysna’s restaurants as they once again prepare oysters according to their own, unique recipes, with other delectable treats prepared by Pick n Pay also available on the evening.

“The oyster shucking and oyster eating competitions are always very entertaining and well attended, and this year we will combine these two fun events to both take place at the main venue on Waterfront Drive,” Rousseau-Schmidt said.

The festival has a longstanding relationship with the South African Navy, especially the local Sea Cadet unit from the Training Ship Knysna. “The Admiral’s Ball is a firm favourite on the festival’s calendar with music provided by the incredibly talented SA Navy Dance Band. Presented in co-operation with the Knysna Featherbed Company, the 2013 ball promises to be an event not to be missed,” said Rousseau-Schmidt “We are hoping to welcome two naval ships through the Knysna Heads this year – weather permitting,” she said. “The Navy also presents other fantastic events on the festival calendar, including the Right of Entry Parade which incorporates precision drilling and music from the marching band, displays by the Knysna Sea Cadets and the ever popular concert by the SA Navy Band which unofficially closes the festival.”

“This year the Knysna Forest Marathon and Half Marathon have already sold out, and we anticipate that Knysna will be buzzing with excitement,” said Rohland, “the festival is a great opportunity for us to meet our customers and be part of an event that showcases the best the region has to offer.”

“We are looking forward to old favourites such the Pick n Pay Weekend Argus Rotary Knysna Cycle Tour and the Pick n Pay Cape Times Knysna Forest Marathon and Half Marathon, but we have many exciting developments on the programme to look forward to,” Rousseau-Schmidt concluded. “And what you’ve read about here is only a taste of what the 2013 Pick n Pay Knysna Oyster Festival has on offer. Knysna is truly the place to be during the school holidays. So come along – I can guarantee that you’ll have the best ten days of your winter.”

Keep an eye on www.pnpoysterfestival.co.za for regular updates to the programme, or contact Knysna Tourism on 044 382 5510 for more information.

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SA ECONOMIC GROWTH HIT BY MINING SECTOR

Posted on 14 May 2013 by Africa Business

Will the Chinese purchase divested mining interests?

South Africa’s economic growth is lagging somewhat behind that of its peers in the developing world. IMF forecasts for 2013 indicate that emerging and developing economies will grow by 5,5% while SA’s GDP is expected to grow between 2,5% and 3%.

Global ranking

Country Name

GDP in Millions of US dollars (2011)

27

South Africa

408,237

39

Nigeria

243,986

60

Angola

104,332

88

Kenya

33,621

105

Zambia

19,206

One of the key reasons for slower growth is SA’s foreign trade structure and reliance on Europe. President Zuma used the opportunity at the World Economic Forum in Davos earlier this year to ensure foreign investors that South Africa is on the right track.

2012 will be remembered for the negative impact of labour unrest and resultant production stoppages in the mining sector. Mining reduced GDP by 0,5% in the first three quarters of the year. This excludes the biggest slump in the sector during the fourth quarter 2012.

Other significant features of the growth slowdown in 2012 were the slowdown in household consumption spending, poor growth in private fixed investment spending and a slump in real export growth.

South African’s inflation rate slowed to a five-month low in January 2013 after the statistics office adjusted the consumer price basket while food and fuel prices eased. In December, the inflation rate fell to 5,4% from 5,7% Statistics South Africa stated.

Government cut the price of fuel by 1,2% in January 2013, as a stronger rand in the previous month helped to curb import costs. Since then, the currency has plunged 4,8% against the dollar and fuel prices are on the rise, with prices increasing in March by a further 8%, adding to pressure on inflation.

South Africa’s strengths

· South Africa is the economic powerhouse of Africa, leading the continent in industrial output and mineral production, generating a large portion of the continent’s electricity.

· The economy of South Africa is the largest in Africa, accounting for 24% of the continent’s GDP in terms of PPP, and is ranked as an upper-middle income economy by the world bank.

· The country has abundant natural resources, well developed financial, legal and transport sectors, a stock exchange ranked amongst the top 20 in the world, as well as a modern infrastructure supporting efficient distribution of goods throughout the Southern African region.

South Africa’s weaknesses

· South Africa suffers from a relatively heavy regulation burden when compared to most developed countries.

· Increasing costs for corporates with rising wages.

· Poverty, inequalities sources of social risk mixed with high unemployment and shortage of qualified labour.

Mining

Output in the mining sector remained weak in December with total mining production down by 7,5% y-o-y after falling by a revised 3,8% (previously -4,5%) in November. On a monthly basis production rose by a seasonally adjusted 1,2% compared with 12,0% in November. Non-gold output was down by 5,0% y-o-y, while gold production slumped by 21,2% in December. For the fourth quarter, total mining production fell by a seasonally-adjusted and annualised 4,6% q-o-q as output of most minerals dropped.

For 2012 as a whole, mining volumes fell by 3,1% after contracting by 0,9% in 2011. Mineral sales were down by 15,6% y-o-y in November after falling 13,7% in October. On a monthly basis sales rose by a seasonally-adjusted 2,3% in November, but sales were down by a seasonally-adjusted 10,2% in the three months to November after declining by 6,8% in the same period to October. These figures indicate that the mining sector is still reeling from the devastating effects of widespread labour strikes in the third and early fourth quarters.

Prospects for the mining sector remain dim as the industry faces headwinds both on the global and domestic fronts. Globally, commodity prices are not likely to make significant gains as demand conditions remain relatively unfavourable. Locally, tough operating conditions persist. Rapidly rising production costs, mainly energy and labour costs, are likely to compel mining companies to scale back operations or even halt them in some cases.

This will have a negative impact on production, with any improvements coming mainly from a normalisation of output should strike activity ease. These numbers, together with other recent releases, suggest that GDP growth for the fourth quarter was around 2,0%, with overall growth of 2,5% for the year as a whole. Overall economic activity in the sector therefore remains generally sluggish while upside risks to inflation have increased due to the weaker rand.

Retail

Annual growth in retail sales slowed to 2,3% in December from 3,6% in the previous month. Over the month, sales rose by a seasonally-adjusted 1,0%, causing sales for the last quarter of 2012 to decline by 0,2% following 2,1% growth in the third quarter.

As a whole, 2012 retail sales rose by 4,3%, slightly down from 5,9% in 2011. Consumer spending is likely to moderate during 2013 as weak consumer confidence, heightened worries about job security and high debt, make consumers more cautious about spending on non-essential items. The overall economic outlook remains weak and fragile, while inflation may increase due to the weaker rand.

Manufacturing

Annual growth in manufacturing production slowed to 2,0% in December 2012 from 3,7% in the previous month, versus the consensus forecast of 2,9%. The increase in output was recorded in seven of the ten major categories. Significant contributions came from petroleum, chemical products, rubber and plastic products. Over the month, total production fell by 2,2% on a seasonally adjusted basis following a 2,6% rise in November.

On a quarterly basis, however, production improved by 1,6% in the final quarter of 2012 following two quarters of weaker growth. Both local and international economic conditions are expected to improve only moderately during 2013. A weak Eurozone will continue to hurt the large export-orientated industries.

The recent recovery in infrastructure spending by the public sector will probably support the industries producing capital goods and other inputs for local projects. But the growth rate will be contained by slower capital expenditure by the private sector in response to the bleaker economic environment both locally and internationally.

Therefore, while a moderate recovery in manufacturing production will continue in 2013, no impressive upward momentum is expected. Overall economic activity remains generally sluggish while upside risks to inflation have increased due to a weaker rand.

Infrastructure

A new economic plan, the National Development Plan (NDP), is likely to be adopted in 2013 promoting low taxation for businesses and imposing less stringent employment requirements. This a measure that the ANC is pursuing ahead of the 2014 national elections. The NDP will encourage partnerships between government and the private sector, creating opportunities in petrochemical industries, metal-working and refining, as well as development of power stations.

Construction companies are especially likely to benefit from government plans to invest $112-billion from 2013 in the expansion of infrastructure as part of the NDP. Some 18 strategic projects will be launched to expand transport, power and water, medical and educational infrastructure in some of the country’s least developed areas.

Energy companies will also benefit, following the lifting of a moratorium on licences for shale gas development. Meanwhile, there will be significant opportunities, especially for Chinese state-owned enterprises that have recently made high-profile visits to South Africa, to acquire divested assets in the platinum and gold mining sector as large mining houses withdraw from South Africa.

According to government reports, the South African government will have spent R860-billion on new infrastructure projects in South Africa between 2009 and March 2013. In the energy sector, Eskom had put in place 675 kilometers of electricity transmission lines in 2012, to connect fast-growing economic centers and also to bring power to rural areas. More than 200 000 new households were connected to the national electricity grid in 2012. Construction work is also taking place in five cities including Cape Town, Port Elizabeth, Rustenburg, Durban and Pretoria to integrate different modes of transport.

Business Climate

Due to South Africa’s well-developed and world-class business infrastructure, the country is ranked 35th out of 183 countries in the World Bank and International Finance Corporation’s Doing Business 2012 report, an annual survey that measures the time, cost and hassle for businesses to comply with legal and administrative requirements. South Africa was ranked above developed countries such as Spain (44) and Luxembourg (50), as well as major developing economies such as Mexico (53), China (91), Russia (120), India (132) and Brazil (126).

The report found South Africa ranked first for ease of obtaining credit. This was based on depth of information and a reliable legal system.

Foreign trade

SA’s trade deficit narrowed to R 2,7-billion in December from R7,9-billion in November on account of seasonal factors. The trade balance usually records a surplus in December due to a large decline in imports. Exports declined 9,8% over the month. The decrease was mainly driven by declines in the exports of base metals. Vehicles, aircraft and vessels (down R1,1-billion), machinery and electrical appliances (down R0,9-billion) and prepared foodstuffs, beverages and tobacco (down 0,8-billion). Imports dropped 15,8% m-o-m.

Declines in the imports of machinery and electrical appliances (down R3,3-billion), original equipment components; (R1,8-billion), products of the chemicals or allied industries (R1,5-billion) and base metals and articles thereof (R1,2-billion) were the main drivers of the drop.

The large trade deficit for 2012 is one of the major reasons for the deterioration in the 2012 current account deficit forecast to 6,2% of GDP from 3,3% in 2011. South Africa’s trade performance will remain weak in the coming months on the back of unfavourable global conditions and domestic supply disruptions. Weak global economic conditions will continue to influence exports and growth domestically.

Skills and education

The need to transform South Africa’s education system has become ever more urgent, especially given the service delivery issues that have plagued the system. While government continues to allocate a significant amount of its budget to education (approximately 20%), it has not been enough to transform the schooling system. Coface expects the government to continue to support this critical sector, but that an opportunistic private sector will take advantage of government inefficiencies.

South Africa’s education levels are quite low compared to other developed and developing nations. South Africa began restructuring its higher education system in 2003 to widen access to tertiary education and reset the priorities of the old apartheid-based system. Smaller universities and technikons (polytechnics) were incorporated into larger institutions to form comprehensive universities.

Debt

The total number of civil judgments recorded for debt in South Africa fell by 9,8% year on year in November 2012 to 35 268, according to data released by Statistics South Africa. The total number of civil judgments recorded for debt decreased by 15,2% in three months ended November 2012 compared with the three months ended November 2011.

The number of civil summonses issued for debt fell 23,9% year-on-year to 70 537. During November, the 35 268 civil judgments for debt amounted to R414,1-million, with the largest contributors being money lent, with R142,5-million. There was a 21,9% decrease in the total number of civil summonses issued for debt in the three months ended November last year compared with the same period in 2011. A 23,9% y-o-y decrease was recorded in November.

South Africa maintains respectable debt-to-GDP ratios, although these grew to 39% of GDP by end-2012, substantially higher than the 34% for emerging and developing economies as a whole. When Fitch downgraded SA earlier this year, it specifically mentioned concerns about SA’s rising debt-to-GDP ratio, given that the ratio is higher than the country’s peers.

South Africa is uniquely exposed to foreign investor sentiment through the deficit on the current account combined with liquid and deep fixed interest markets. SA’s widening deficit on the current account is a specific factor that concerns the rating agencies and is one of the metrics the agencies will use to assess SA’s sovereign risk in the near future. Further downgrades are the risk – potentially driven by foreign investor sentiment about political risks.

Political landscape

Persistent unemployment, inequality and the mixed results of BEE (Black Economic Empowerment) intended to favour access to economic power by the historically disadvantaged populations have led to disappointment and resentment.

Social unrest is increasing. Recent events weakened the ruling coalition which came under fire for its management of these events. Tensions could intensify in the run up to the 2014 presidential elections. South Africa has a well-developed legal system, but government inefficiency, a shortage of skilled labour, criminality and corruption are crippling the business environment. South Africa also has a high and growing youth unemployment, high levels of visible inequality and government corruption so we would keep an eye on the escalating service delivery protest trends.

Labour force

The unemployment rate fell to 24,9% in the fourth quarter of 2012 from 25,5% in the third quarter, mainly reflecting an increase in the number of discouraged work seekers. Over the quarter, a total of 68 000 jobs were lost while the number discouraged work seekers rose by 87 000. The formal non-agricultural sector lost 52 000 jobs over the quarter, while the informal sector, in contrast, employed 8 000 more people. The breakdown shows that the highest number of jobs were lost in the private households category (48 000), followed by the trade and transport sectors, which shed 41 000 and 18 000 jobs respectively.

The agricultural sector led employment creation over the quarter, adding 24 000 jobs. Both local and international economic conditions are expected to improve only moderately during 2013.

Weak confidence and high wage settlement will make firms more cautious to expand capacity and employ more people this year. Government is likely to be the main driver of employment as it rolls out its infrastructure and job creation plans. The unemployment rate will therefore remain high in the short term.

Although the reduction in the unemployment rate is good news, it mainly reflects the large number of discouraged work seekers. Overall economic activity remains generally sluggish while upside risks to inflation have increased due to a weaker rand. Coface believes that this will persuade the Monetary Policy Committee to keep policy neutral over an extended period, with interest rates remaining unchanged for most of 2013. A reversal in policy easing is likely only late in the year or even in 2014.


 


Issued by:                                                                              Sha-Izwe/CharlesSmithAssoc

ON BEHALF OF:                                                   Coface

FURTHER INFORMATION:                                  Charles Smith

Tel:          (011) 781-6190

Email: charles@csa.co.za

Web:       www.csa.co.za

Media Contact:

Michele FERREIRA /
SENIOR MANAGER: MARKETING AND COMMUNICATION
TEL. : +27 (11) 208 2551  F.: +27 (11) 208 2651   M.: +27 (83) 326 2268
michele_ferreira@cofaceza.com

 

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About Coface

The Coface Group, a worldwide leader in credit insurance, offers companies around the globe solutions to protect them against the risk of financial default of their clients, both on the domestic market and for export. In 2012, the Group posted a consolidated turnover of €1.6 billion. 4,400 staff in 66 countries provide a local service worldwide. Each quarter, Coface publishes its assessments of country risk for 158 countries, based on its unique knowledge of companies’ payment behaviour and on the expertise of its 350 underwriters located close to clients and their debtors. In France, Coface manages export public guarantees on behalf of the French state.

Coface is a subsidiary of Natixis. corporate, investment management and specialized financial services arm of Groupe BPCE.. In South Africa, Coface provides credit protection to clients. Coface South Africa is rated AA+ by Global Ratings.

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CAR: Food crisis looms

Posted on 13 May 2013 by Africa Business

NEW YORK, May 13, 2013/African Press Organization (APO)/ Food assistance is emerging as an urgent humanitarian priority in the Central African Republic (CAR). Assessments carried out earlier this year show that many people cannot afford the little food that is available in markets, and that farmers have begun to eat the seeds that were meant for planting this season.

Humanitarian agencies are now warning of critical food needs in both rural and urban areas as the country enters the traditional lean season between April and August/September. Food reserves are already low with many people forced to borrow or trade for food, or resort to fishing and hunting.

Women and children are particularly vulnerable. Irene, a 35-year old mother of two, lives in Bangui.

“I do not remember the last time my children and I had a balanced meal. If you visit the markets, you will see that virtually nothing is being sold there,” she says. “I often put an empty pot on the fire half an hour before the children’s bedtime to make them believe they will have dinner.”

Irene’s husband left in late March when the Seleka rebels took control of Bangui, fearing reprisals as he was associated with the former regime. Irene hasn’t seen him since.

“We have a small garden behind the house which provides us with vegetables, but we rely on the kindness of other women to provide us with cassava. When we eat, our meals consist of ngoundja (cassava leaves) cooked in salty water and cassava dumplings,” she says. “I see my children losing weight, but there is nothing I can do about it.” Her only income is around 100 Central African francs per day, about a quarter of a US dollar, from selling garden vegetables.

The crisis in CAR, which started in December 2012 when rebels launched an offensive against the government, has affected all of the country’s 4.6 million inhabitants. More than 173,000 have been displaced inside the country. A further 49,000 people have fled into neighbouring countries.

Even before this crisis, the World Food Programme (WFP) estimated that 80,000 people would be at risk of severe food insecurity during the 2013 lean season. This number is now expected to increase. WFP also projects that 13,500 children under the age of five will become severely malnourished.

“Over two million people are in need of critical health, nutrition and food assistance,” says Kaarina Immonen, the Humanitarian Coordinator for CAR. “But without access and security, our programmes cannot reach these people in need.”

In April, WFP identified 42,000 people in need of food assistance in Bangui, in the northern city of Kabo and in the central town of Bambari. Food distributions started on 25 April at Bangui’s community hospital and within a week nearly 3,000 people, most of them women, had received food rations. The agency is now focusing on reaching 7,500 particularly vulnerable people, including those living with HIV, malnourished children, and pregnant and lactating women.

WFP plans to assist some 400,000 severely food insecure people across the country by the end of this year. However insecurity continues to hamper access and to complicate efforts to supply humanitarian aid to Central Africans in desperate need.

 

SOURCE

UNITED NATIONS

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PLATINUM SPONSOR INTERVIEW: “Symbion and many other companies from the United States are ready to invest in Africa.”

Posted on 07 May 2013 by Africa Business

Exclusive interview with Paul Hinks, CEO of Symbion Power, platinum sponsors at the upcoming African Utility Week (http://www.african-utility-week.com).

1) Why the recent decision to acquire the stake in the South African company EJP Power?
We wanted a foothold in South Africa and we wanted to strengthen the management of our organization on the Africa continent.  EJ Power has good, experienced management who live in Africa.  We can’t manage day to day business with a whole day of time difference and between 9,000 and 13,000 kms of distance, depending which of our current operations you measure it against.

2) Is this a vote of confidence in South Africa’s economy and future?
It’s a vote of confidence in Africa.  South Africa’s economy is mature compared to many of the emerging economies in Africa but it’s a hub for African business so a good location to have people.  But we don’t consider South Africa as the only hub in Africa these days.  There are others in West Africa and East Africa where the economies are thriving.

3) You already have a good track record in Tanzania.  Can you tell us how your project is progressing there?  How important has your relationship with the government been?
Tanzania is the first country in Africa that we have worked in. Until then we were heavily focused on Iraq and Afghanistan so it has been a pleasure to return to Africa.  We now own 3 power plants in Tanzania generating 217 Megawatts and we have recently signed an agreement with the utility there, TANESCO, to jointly develop a 400MW power plant and a 650km transmission line in the south at Mtwara.  This plant will have the potential to provide natural gas fired power to neighboring countries such as Mozambique and Malawi and eventually it can feed the Southern African Power Pool. It’s an important Public Private Partnership due to the large gas deposits that have been discovered, in addition to the existing gas field at Mnazi Bay.

4) How excited are you about entering the Nigerian market?
Very excited. Nigeria is the most vibrant market in the energy sector in Africa and it’s so very, very different than the Nigeria we used to hear about decades ago.  I tell everyone who is skeptical to just go there and see what’s happening and not rely on old information, or the words of people who haven’t been in recent years.   We will soon open a new office in Lagos that will become the headquarters of our African independent power business.  South Africa will be the headquarters for our construction and engineering business but we intend to pursue IPP opportunities in South Africa too.

5) What is your vision for Symbion in Africa?
I’d like to see Symbion become one of the leading independent power companies on the continent who can also build our own infrastructure at economic costs.  I’d also like us to leverage our origin in the United States to bring other US interests into our developments such as the various government agencies that provide debt funding and credit support as well as other US and African private sector companies.  The name Symbion comes from the word Symbiotic, which means a relationship of mutual benefit between two or more entities.  That’s what we strive to achieve. We have many different partnerships in Africa and elsewhere.

6)  What surprises you about this industry?
What most surprises me is that electricity, a commodity that people all over the world see as being essential for daily life and critical to growth, is so insufficient in Africa.  However, right now I see great efforts being made throughout the continent to change this although some places are still woefully behind the curve.

7)  What has been the secret of Symbion’s success so far?
Symbiotic partnerships with local companies.  Not being greedy and trusting and sharing with our local partners.  Symbion’s men and women are committed and they are courageous.  They aren’t intimidated by adverse news reports about security issues and we make our own judgments about the risks we will take.  Eight years of Iraq and Afghanistan built a very strong team who look out for each other.

8 )  What will be your message at African Utility Week?
My message to everyone at African Utility Week is that Symbion and many other companies from the United States are ready to invest in Africa.  These firms are ethical, they have integrity and they need partners in both the public and private sectors.  The US government wants to support both the US and the African private sector as this is the route to development on the continent.  President Obama’s strategy for Sub Saharan Africa was set out in June 2012 and I am sure that everyone will soon see that he is committed to it.

9)  Anything to add?
Yes,  as well as my duties as the Chief Executive Officer of Symbion Power I am also the Chairman of the Corporate Council on Africa which is the largest (not for profit) organization in the United States that promotes trade and investment between the United States and Africa.  Until this year it was exclusively American but now we have opened the doors to companies from Africa too.  I’d encourage private sector players who have interests in partnering with US companies to join the CCA www.africacncl.org because this is where you can get the introductions and the information you need to build new relationships with some of the major players in the US.  I’d also encourage public utilities to attend our CCA US Africa Summit in Chicago in October this year.  Details on membership and the Summit can be found on the website.

 

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ICG’s Conjectures on Eritrea: Realistic and Probable or Wishful and Imaginary?

Posted on 27 April 2013 by Africa Business

Eritrean Center for Strategic Studies, ECSS

On 28 March last month, the ICG released a report entitled: “Eritrea: Scenarios for Future Transition”. Unfortunately, as we illustrate below[1], ICG’s primary sources are mostly the same circle of personalities and entities that harbor a hostile agenda against Eritrea while its basic presumptions are predicated on a superfluous predilection to project a calamitous trend of imminent “doom and gloom”.   As it happened, these skewed approaches have rendered its scenario analysis extremely flawed, and, rather wishful and imaginary.

Political forecasting is not, admittedly, an exact science; it is a messy business indeed.   Still, it’s critical usefulness cannot be glossed over.   The architectures of conflict prevention and management depend on perceptive and sufficiently reliable early warning systems for a timely prognosis of fault lines and trends in order to avoid or mitigate crisis conditions.   But this task requires, in the first place, the existence of a potential crisis-situation as well as objective, neutral and dispassionate appraisal of political realities and trends on the basis of full and accurate information.  The ICG report is found wanting on all these critical parameters.

The ICG’s current report is a follow-up of its last report on Eritrea released on 21 September 2010 with the title “ERITREA: A SIEGE STATE”.   It was claimed then that the report was compiled in ten years of thorough field research that the think tank conducted inside and outside Eritrea.[2] ICG experts visited Eritrea for extensive interviews with senior government officials and canvassed the opinion of various internal sources of their choice.  But even then, there was a lingering impression among most knowledgeable observers of the Eritrean reality that the ICG was more inclined in corroborating a certain pre-conceived narrative rather than honestly and fairly depicting a balanced and nuanced picture.

This time around, the gloves are off and the ICG appears to have discarded all pretentions of objectivity and neutrality.  The ICG claims that it was denied entry to Eritrea although this remains contested by officials in Eritrea’s Foreign Ministry.[3] Whatever the case, and although the ECSS understands that the ICG did maintain some perfunctory communication with the Eritrean Mission to the UN5, the current report is conspicuous for its failure to cite official and neutral and credible sources for countervailing opinion and/or the validation of the facts and events that are described with authority.

Furthermore, and as we highlight below, the welter of information that the ICG cobbled together essentially emanate from rumorsand innuendos6 that are attributed to undisclosed sources.  This is rationalized by considerations of confidentiality.[4] Nonetheless, it casts deeper doubt on the validity of its postulates and conjectures since these “confidential interlocutors” that provided the baseline data may well be affiliated to fringe groups that espouse certain political agendas.   A cursory analysis of the 156 footnotes attached to the report illustrates that 71 % fall in that category. This is unduly large.  And, as we intimated above, the remaining references are virtually recycled data provided by the usual, Eritrea-bashing, hostile elements and groups. These glaring shortcomings of data collection and validation can only dent the reputation of the ICG besides carving out a gaping puncture on the reliability, coherence and probability of the “scenarios of transition” that it envisages.

For purposes of illustration, we cite below some of the outlandish rumors that the ICG blindly replicates in its report without questioning their validity.

· Isaias’s disappearance from public view for several weeks in April 2012 amid rumours of his illness and death made evident the lack of a succession plan;[5]

· During the latter half of 2012, more rumors circulated about disagreements inside the regime on the direction of the country, as well as Isaias’s leadership;[6]

· In November 2012 there were rumors of a round of arrests and “freezing” of senior military leaders including the defense minister, Sebhat Ephrem;[7]

· There are rumors the skeptics have asked the President to step aside and support a smooth, internal transition, so as to avoid the country’s collapse….[8]

· The military …appears to have maintained a certain degree of autonomy, such that it has reportedly (sic) questioned Isaias’s capacity to retain control and asked him to consider a transition at various points in the recent past;[9]

· The posters created for the celebration of the twentieth anniversary of liberation… portray Isaias in the image of Jesus Christ, the shepherd of the people, leading elders of both low and highlands;[10]

· Isaias has been grooming his son for succession;[11]

· The incident of 21 January 2013 is described as an event that was “not unprecedented” but as “the most recent in a number of unreported events”.[12] The report further states “the government reportedly negotiated with the soldiers, and in the end, the Ministry’s employees were released”.[13]

All these assertions are at variance with the true facts and represent gullible regurgitation of wild stories that normally thrive in the grape vine. In a nutshell, the litany of rumor-inspired, unsubstantiated, facts; the blunders of methodological omission and commission, are too many for ICG’s prognosis and “scenarios of transition” to be taken seriously.  After all, if the diagnosis of a presumed illness is wrong in the first place, the prescribed antidote will not only be useless but it may turn out to be toxic.

We now revert to examine in some detail the ICG’s substantive conjectures.

1. Aggravated Ethnic and Religious fault lines

The ICG report paints a curiously explosive picture in regard to potential ethnic and religious conflicts and strife in Eritrea.   To drive the point home, it opines:  “Eritrean diversity, especially the Christian–Muslim divide”,[14] may usher in social upheavals.  The ICG waxes alarmist particularly in other sections of the report when it warns: “existing ethnic and religious divisions may come into play in a confrontation between military factions…leading to a disastrous civil war”,[15] (emphasis ours).

This sudden, doomsday, prognosis is not only utterly wrong, but it contradicts the ICG’s own report as spelled out in its previous report, which was the result, by its own admissions, of ten years meticulous research in Eritrea.  This is what the ICG had to say on the same subject in its September 2010 report:

Despite occasional conflict (sic) and the marked diversity, Eritrea has by and large avoided the kind of serious interethnic and religious strife associated with the region. Economic lifestyles, cultures, faiths and ethnicities have mostly coexisted peacefully. Church and mosque have stood side by side, occasional clashes notwithstanding.[16]

National cohesiveness and identity in Eritrea is, indeed, robust by all accounts; transcending parochial sentiments and allegiances to exclusive ethnic and/or religious sectarianism.  Whatever it’s other problems, the Eritrean polity has been blessed with ethnic and religious harmony that has further been reinforced in the past twenty two years of independence. The periodic communal/tribal infightings that erupt in virtually all the neighbouring countries and, the deep sentiments of religious/ethnic marginalization that characterize diverse communities in our region are literally inexistent in Eritrea.  These have come about as a result of history, the long years of armed struggle as well as judicious government policies anchored on equality of rights and opportunities for all its constituent parts.  The ICG’s new narrative of a volatile, worrisome, trend towards “ethnic/religious civil war” is thus a malevolent chimera that exists only in the minds of Eritrea’s detractors.

2. Forceful nation building

The ICG describes, in a rather deprecating manner, Eritrea’s normative trajectory of nation building as a failed, “forceful process”.[17]

This statement provokes a host of questions both in terms of abstract political theory as well as underlying motive.  In the ICG’s inexplicable view, nation building in the Eritrean case is found to be “forceful” because the “PFDJ has been seeking to further entrench the notion of a single national identity as defined during the struggle”[18]?  In the first place, Eritrean national identity was not forged or invented during the 30 years of liberation war.  Present-day Eritrea was shaped by European colonialism as is the case in the rest of Africa.  And in any case, the post-liberation political process could not have occurred on an artificial and centrifugal setting of polarizing a cohesive national society along ethnic and religious identities if that is what the ICG is alluding to.  The politics of ethnic institutionalization pursued by some countries in the region and that have been enshrined in their Constitutions is certainly not a positive example that must be emulated by Eritrea.  These political precepts are not only dangerous and a recipe for perpetual strife but they are not also warranted by the Eritrean reality.  In as far as ethnic/religious harmony during the armed liberation struggle is concerned; Eritrea’s positive experience had attracted almost universal accolades from all historians and political pundits associated with those times.[19] ICG’s concerns for that period are thus difficult to comprehend.

3. Peace with Ethiopia

The ICG’s position on this cardinal issue is difficult to decipher.  The imperative for Ethiopia to abide by its treaty obligations and to respect international law; the enhancement of regional peace and security that this would entail is not examined from its legal and political perspectives and is curiously absent from its lengthy discourse.  It is totally ignored in the Executive Summary where the ICG suggests various “recommendations” purportedly to address all the critical problems that require urgent solution.

In the sections where it broaches the subject, its point of departure is a presumptive acknowledgement that there are no indications “for unprecedented opening or softening of the previous policy”[20]on the part of Ethiopia.  The ICG then concludes, even if not in so many words, that the compromise must emanate from Eritrea.  What follows next is simply absurd.   The ICG quotes an anonymous “Eritrean analyst” to state:

“… In the event of a regime change, the Generals cannot last long without making peace with Ethiopia… Eritreans would propose negotiations on the status of Badme; a decision the population would not contest….there is no way for the Eritrean nation to survive as it is, if it does not make peace with Ethiopia.  It will, simply, collapse.[21]

The ICG then proceeds to outline steps that a “transitional government” could be expected to take … to open negotiations with Ethiopia in the eventuality/scenario of a Peaceful Transition to Multiparty Democracy.[22]

This analysis is too crass and simplistic to merit serious exposition.   Obviously, the ICG has no clue and is out of sync with mainstream Eritrean political opinion. Even the inconsequential Eritrean armed groups that Ethiopia supports for subversive reasons would not contemplate making concessions on Badme or any other sovereign Eritrean territories.  Apparently, the ICG also suffers from an acute lapse of institutional memory.  Because this is what it had to say in its previous report:

The international community, in particular donors and the Security Council, repeatedly failed to pressure Ethiopia to comply.  Eritrea’s sense of outrage heightened, notwithstanding that the Claims Commission ruled that it violated international law during its military operation in may 1998, in effect, had started the war.[23]

The key point is that the Eritreans felt Ethiopia was once again being appeased by an international community that was tacitly or explicitly hostile to Eritrea. The already deep-rooted sense of isolation and betrayal was reinforced.[24]

The international community erred seriously in 2002 in not putting greater pressure on Ethiopia to fully implement the Boundary Commission’s findings.[25]

4. The Vulnerabilities of the Eritrean State:

Perhaps because of its sources or for reasons better known to it, the ICG’s overarching intention seems to prove not only the “extreme vulnerability of the Eritrean Government” but even the “non-viability of the nation itself”.  The “inevitable collapse of the State and the threat this poses to regional security”, as well as the “weakness and fragmentation of the opposition… and the difficulty of reconciling the political cultures of PFDJ members and Diaspora leaders” are invoked for greater dramatization.

And, to cap it all, the ICG quotes again, an anonymous but “long time observer of the Eritrean reality”, who states:

“Is the system reformable from within…even after Isaias’ removal? …Is Isaias’s absence from the Eritrean political system the answer to all the problems of the nation? Ultimately will Eritrea ever be viable as a nation?”[26]

With all these hyperbole in the background, the ICG considers “six scenarios of transition” which are all permutations of, and predicated on, the sequel after the “prior removal of the President”, by whatever means.  Indeed, in almost all the sections that follow, the ICG emphatically envisions and calls for “the President’s exit”, which it describes as “if not the sole one”, but “still as the absolute sine qua non for transition”.  Isaias’s exit … “is about surely a precondition for anything much to change”,[27] we are reminded time and again!

What is pushing the ICG to dwell on and forecast cataclysmic developments in Eritrea in the times ahead?  Surely, this cannot be a logical extrapolation from the isolated incident that transpired on January 21st early this year.  As we emphasized in the first part of this article, ICG’s almost singular reliance on hostile sources may partially explain this muddled output.   But one would have expected the ICG to consult more objective diplomatic and other sources as well as published materials.  Although we do not subscribe to the underlying concept and analytic methods employed, the annual Index of Failed States,[28] for instance, ranks Eritrea in the upper middle rung, i.e. less prone to potential turmoil than Ethiopia and other countries in the region.  ICG’s obsession with its conjecture is thus difficult to comprehend.

The other intriguing element in the whole report is the obvious disconnect between the recommendations in the Executive Summary and the rest of the report including the “six transition scenarios”.  In the Executive Summary, the recommendations have two parts: the first option dwells on proposals for coordinated action by regional and international players in order to “promote talks with President Isaias Afwerki and the current leadership with a view to avert chaos and further displacement of populations”.[29] The second option focuses on residual measures that must be taken by the “US, EU and countries with special relations with Eritrea” in the event of “transition”.[30] But, as explained above, the entire report then swerves into a different discourse anchored on the agenda of imminent, inevitable and necessary “regime change”.   One is led to believe that the two parts of the article were written by two groups of researchers with disparate views and conclusions.  And these were not reconciled when the end product was published.  The report thus fails even to meet minimum editorial standards.

5. External intervention

The ICG does not conceal its overriding aim of establishing a case for external intervention. The scenarios it envisages for such an eventuality are however puzzling.  This is what it has to say in its scenario of External Mediation or Domination.[31]

Dragged for various reasons, Addis Ababa and Khartoum could play at their intervention in two ways: either a political agreement on how to establish peace (perhaps through IGAD) and setting a closely mentored government or by splitting the country in effect into zones of influence as has happened in south-central Somalia. Alternatively, should a regional agreement over Eritrea not be reached, they could offer direct or material support to competing Eritrean factions in order to satisfy their national and regional security interests.[32]

In the last scenario of Regime Change with Ethiopian intervention, the ICG envisages a positive role being played by the new post-Meles leadership in which the latter offers a transitional leadership in Asmara a fresh diplomatic start, reopening economic ties and providing support for a non-partisan, inclusive, political initiative.[33]

We have never come across such a brazen and horrid apology or advocacy of colonialism under the disguise of academic research work.  In the first place, what would be the contents of a “fresh diplomatic start” by Ethiopia and what are the dividends to Eritrea?  If the ICG is privy to any “concessions” that Ethiopia is prepared make to respect the border rulings of the Eritrea-Ethiopia Border Commission in the event of a “transition”, it does not spell them out in the report.  And in any case, the ICG had categorically asserted in previous sections of the same report that there will not be any “new opening on the border problem on the part of the new Ethiopian government” thus throwing the gauntlet to Eritrea for any progress on that front.  So what is this fresh diplomatic start?  The re-opening of economic ties is another riddle that begs more nuanced answers.  Although mutual benefits that may accrue from bilateral trade may not be discounted, the asymmetric advantages to Eritrea are not clear particularly as the report does not at all discuss economic issues and development strategies and policies in Eritrea, Ethiopia or the region as a whole.  Ethiopia’s potential support for a “non-partisan, inclusive, political initiative” only underscores the authors’ utter ignorance of the political dynamics in the region.  In the first place, Ethiopia – the old regime as well as its successor – is enmeshed in the political quagmire of ethnic and highly partisan politics in its own country.   In Eritrea, Ethiopia’s futile policy of regime change has been pursued in the last ten years by mainly propping up what it calls the “Kunama and Afar Liberation Fronts”.   And, in a report where incoherent and mutually contradictory conclusions appear in successive paragraphs, the ICG also states:

Any Ethiopian intervention would likely have a security rather than a democratic agenda.  Hawkish responses are conceivable; Ethiopia could seal the border or seize the opportunity to support one faction in Asmara.  It might even take advantage of instability to achieve one of the longstanding goals of hard-liners, control of the port of Assab in order to end the country’s land-locked status.[34]

The positive role that the ICG assigns to other regional actors similarly provokes more questions than answers.  The ICG professes to be keenly aware of grave fault lines that obtain in the region’s countries in its multiple publications. It has written extensively on the dangers posed by the precarious leadership transition in Ethiopia (though without dwelling on the challenges this poses, as well as the internal dynamics of instability in the country).   It has also written, in its recent reports, on what it has termed as the “embattled situation of the ruling National Congress Party in Sudan”, as well as the “electoral unrest in Djibouti”.[35] Yet despite its gloomy predictions on the potential consequences of these fault lines, it argues for entrusting Eritrea’s troubled neighboring States with the responsibility of “managing change in Eritrea”.  This haphazard and ill-advised advice is indeed  confusing and difficult to fathom.    The ICG advocates, on the one hand, for an “urgent need for transition in Eritrea to ensure its stability” and for the “benefit of the entire region”.[36] At the same time, it envisages this change to come about through the intervention of Eritrea’s neighbors when each of them is embroiled in perhaps deeper political quagmire.

From the foregoing, it is clear that the ICG did not set out to appraise the reality in Eritrea in good faith.  It must have started its research work from a pre-conceived conclusion.  The end result is not really a professional and objective work of situation analysis but a catalogue of biases and suggestive conjectures.


[1] In both the current report and its predecessor, the ICG makes repeated reference to individuals and entities that espouse hostile attitudes towards Eritrea, being at the same time ardent champions of regime change. The list includes Bereket Habteselassie, Berouk Mesfin (a senior researcher at the Institute for Security Studies who finds it difficult to divorce  from the version of the Ethiopian government when writing on Eritrea)  Dan Connell, Gaim Kibreab, Kjetel Tronvor, Leonard Vincent (author of Les Erytheens and cofounder of a Paris-based anti-Eritrean radio station), Martin Plaut, Tekeste Negash who is opposed to Eritrean independence, and Yosief Ghebrehiwet a permanent contributor of anti-regime articles in the Gedab News, a website devoted to Eritrean division and referred to repeatedly in ICG reports. Other entities of similar category referred to in the ICG reports are the TPLF website aigaform.com, Amnesty International, Human Rights Watch, Reporters Without Borders.

[2] International Crisis Group, Eritrea the Siege State Africa Report No.136 31 September 2010 p.1

[3] ECSS interview with Dr. Fessehatzion Petros, Foreign Office, Asmara,

[4] International Crisis Group, Eritrea: Scenarios for Future Transition African report No.200 28March 2013, p.2, see fn. 6.

[5] Ibid, p.7

[6] Ibid, p.8

[7] Ibid, see fn.41

[8] Ibid, p.16

[9] Ibid, p.10

[10] Ibid, see fn. 62

[11] Ibid,  p.22

[12] Ibid,  p.6

[13] Ibid,  p.4

[14] Ibid, see fn. 2.

[15] Ibid, p.24

[16] ICG, Report No.136, p.17

[17] ICG Report 200 see Executive Summary.

[18] Ibid, p. 12

[19] Reference to witnesses made by several close observers which among others included: Basil Davidson and Dan Connell.

[20] ICG Report No.200, p.24.

[21] Ibid, see fn.140.

[22] Ibid, p.26

[23] Ibid, p.21

[24] ibid

[25] Ibid, p.25

[26] Ibid, see fn.118

[27] Ibid, p.21

[28] Failed States Index , 2010,2011,2012

[29] ICG Report No. 200; see Executive Summary.

[30] Ibid.

[31] Ibid, p.25

[32] Ibid.

[33] Ibid p.27

[34] Ibid, p.27

[35] Ibid p.28

[36] Ibid.

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Carlson Rezidor announces the Radisson Blu Hotel, Port Harcourt, Nigeria

Posted on 22 April 2013 by Africa Business

The Carlson Rezidor Hotel Group – born in early 2012 – is one of the world’s largest and most dynamic hotel groups. The portfolio of the Carlson Rezidor Hotel Group includes more than 1,300 hotels, a global footprint spanning 80 countries, a powerful set of global brands (Radisson Blu, Radisson®, Country Inns & Suites by CarlsonSM, Park Inn by Radisson, Hotel Missoni and Park Plaza®). In most of the group’s hotels, guests can benefit from the loyalty program Club Carlson, one of the most rewarding loyalty programs in the world. The Carlson Rezidor Hotel Group and its brands employ more than 80,000 people. The Carlson Rezidor Hotel Group is headquartered in Minneapolis, USA, and Brussels, Belgium. http://www.carlsonrezidor.com; http://www.rezidor.com

 

The Carlson Rezidor Hotel Group, one of the fastest growing hotel companies worldwide, announces their 49th hotel deal in Africa: The Radisson Blu Hotel, Port Harcourt Olympia in Nigeria is scheduled to open in 2016 and will add a further 206 rooms to Rezidor’s portfolio of 11,000 rooms on the continent.

“This announcement brings the total number to eight hotels which the Carlson Rezidor Hotel Group operates and has under development in Nigeria. The success of the Radisson Blu Lagos illustrates the increasingly high demand for world class hospitality in Africa’s second largest economy,” comments Andrew McLachlan, Vice President Business Development Africa & Indian Ocean Islands.

The new Radisson Blu Hotel, Port Harcourt Olympia complements the existing Radisson Blu Anchorage Hotel in Lagos; the up and coming Radisson Blu Hotel in Abuja, and the Park Inn properties by Radisson in Lagos, Apapa, Ikeja, Abeoukuta and Abuja. Nigeria is a key development market for Rezidor – the group will be the first international operator to provide world-class hotel standards in the three major financial hubs of Lagos, Abuja and Port Harcourt”, McLachlan adds.

Opposite the Port Harcourt Club 1928 Golf course and offering spectacular views over the fairways and greens, the Radisson Blu hotel site is located in the southern part of the city in the less congested old Government Reserve Area. Besides 206 guest rooms all featuring Radisson Blu signature services such as free high speed internet access, the hotel will also offer an all-day dining restaurant, a specialty restaurant & bar, and the largest conference facilities within the Niger Delta, with 2,100 square metres of conference and meeting space. Additionally there will be a gym, spa, outdoor swimming pool, business centre and rooftop bar & terrace.


Port Harcourt is the economic hub of the Niger Delta and the capital of Rivers State, one of Nigeria’s richest states due its large crude oil and natural gas deposits. It is home to major oil companies, banking institutions and government agencies. Hotel room supply in the city has not grown for several years, and the Radisson Blu business and conference hotel will benefit from being the most modern internationally branded property in the city.

With no significant increase in hotel room supply in Port Harcourt since 2006, we feel the time is ripe to establish a Radisson Blu in Port Harcourt for the business traveler,” remarks McLachlan, “Carlson Rezidor has the largest pipeline of rooms under development in sub-Saharan Africa. This signing further strengthens our leading position and underlines the importance Nigeria has for our group”.

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“Africa is the second largest continent in the world, yet it is the least computerised.”

Posted on 13 April 2013 by Africa Business

Exclusive interview with Gideon van Niekerk, MaraMedia CEO.  MaraMedia is a gold sponsor at the upcoming African Education Week.

1)  What would you say the main challenges are to creating a more e-friendly learning environment in South African/African schools?
“Education in our country is suffering as the lack of suitable learning material seems to be that elephant in the room that everyone tries not to notice.” Africa is the second largest continent in the world, yet it is the least computerised.

South African / African Schools face a number of obstacles in their quest for quality education in a digital format. Certain prerequisites, such as reliable power supply to operate the computers, a well functioning telephone network to transmit data, financial ability to import the technology, and computer literate personnel, are necessary for successful use of IT remain inadequate in many African countries.

The last century has seen tremendous revolutions in all industries, except education. Learners need to be prepared for the demands that a future with new problems, opportunities and challenges will hold.

Knowledge is everywhere, available at the click of a button with Google as many educators’ first port of call. Content experts and great teachers set aside mandated learner manuals every day in favour of their own materials and those they have culled from the best resources available. Textbooks as we know them are an anachronism. However, the choosing, culling, and creation of appropriate course material is an arduous task – one that MaraMedia has taken on gladly.

2)  How will technology change the way learners are taught, do you think?
Learners are destined to evolve from passive recipients of knowledge to active participants in a life-long learning process. By taking charge of his/her own learning through a digital platform, any child can be the master of his/her learning. Exploring the global classroom is made possible through the marriage of great educational material with an intuitive technology interface in the form of mobile tablets. A migration to a more digital workspace must be effected at a pace that teachers and learners are comfortable with.  Using mobile learning devices like tablets enables learners to store assets, homework and other documents and facilitates collaborative learning through enhanced communication by forum. Using tablet computers, learners have easy access to knowledge. They use their devices as supportive educational tools. By using the MaraMedia IDMs, they now have access to embedded videos, photo galleries, diagrams, articles, essays and relevant academic information written for the South African market with reference to actual news events that can vastly improve their performance in the classroom.

Until now, most people relegated “education” to a finite time in their lives: entering school at around five years old and attending school institutions all the way to university. Education is getting increasingly interspersed with our daily activities. This necessitates an innovative new merging of e- and m-learning, and will most probably be one of the ways in which Information Communication. Not only do learners have access to their entire school curriculum on their mobile learning devices, but they now have access to industry experts too. Learners can read reviews and blogs by field experts. They can follow conferences and “webinars” and even have a chance to interact with professionals from their homes or classrooms.

3)  What is your vision for education?
High quality digital and mobile education in Africa may appear presumptive: in areas of drought or malnutrition it is hard to persuade some people that education is a venture that necessitates monetary investment. But education is about information, and information is needed to help cure illness and bring food, bolster production and build stable societies. Information is needed to allow Africa to find its own ways forward. Our vision is that digital education can put South Africa at the forefront of the African Renaissance in education. In order to create true 21st century learning environments, today’s schools will need to evolve beyond traditional methods of instruction. Digital learning allows for exactly that to happen. Using mobile tablet device technology to enhance the learning experience and to break down the school walls, paves the way for a gigantic shift of the traditional learning paradigm. In opposition to the rather rigid, culturally ‘neutral’ learning material MaraMedia’s educational solution has the flexibility to adapt to the pupil’s cultural environment and to his/her personal learning style.

Technology is to develop even further in the future. Mobile information and communication technologies are important enablers of the new social structure. One only needs to look at the growth of the social media industry (and I think here particularly of Facebook) to realise that today’s youth more often than not deal with real-time as well as virtual personas on a continuous basis.

It is therefore imperative that learners are reached through the same portals when we enter the sphere of education. Interactive activities support large-scale learning and allow learners to develop critical thinking and problem solving skills. Most educators note that each learner requires different pedagogies or strategies for learning. Through using mobile learning devices with proper relevant and comprehensive content learners are able to learn in their own way. They can now personalise and enjoy learning.

The digital age has created a new relationship between teachers and learners. Research conducted by the London School of Economics found that children are typically the Internet experts in the family, and described this situation as a “lasting reversal of the generation gap”. This also leads to a “flip classroom” scenario whereby learners can research topics related to the curriculum themselves. The always-available nature of mobile learning empowers learners to take the initiative and direct their own learning activities, while teachers can guide this process, instill proper research methodologies and help learners to gauge the relevance and accuracy of e-content. The ability of teachers to understand and respond to digital learning opportunities is vital. Maragon Private Schools’ teachers are interested and able to provide Maragon learners with excellent learning content, learning management and support. To support Maragon Private Schools’ teachers, MaraMedia has arranged for a series of training sessions and workshops to assist teachers in what would otherwise be a very daunting task.

The MaraMedia IDMs fits many diverse learning styles: reading text and graphics, video, animation, working through decision trees, listening to audio tracks, contributing to discussions, researching on the internet, choosing the correct answer, interacting with the screen through swiping, tapping, panning, zooming or rating skills on a diagnostic… are all processes for offering learning on mobile learning devices. This enables differentiation between the different types of learners, engaging auditory-, visual- and tactile learners alike.  MaraMedia demonstrates the need for and the availability of technology capable of supporting the evolution towards the e-learning world of tomorrow while taking into account the richness of the past by following a blended approach to learning.

4)  What surprises you about this sector?
The last true educational revolution was with the invention of the blackboard by James Pillans in the 1800′s – mankind invests billions into countless sectors, but the educational sector that serves as the driving force for all of these has hardly seen any innovation in more than two hundred years.

The idea of tackling the same educational problems with the same ineffective solutions and expecting a different (better) outcome is the very definition of insanity.

5)  What will be your message at African Education Week?
Africa’s richest resource is not its gold, silver, diamonds or platinum, but its human resources – its children. As one of the few continents with an overall population growth, it is imperative that Africa stands up and be noticed in the educational sphere – we owe it to our children and to their future. The distinguishing feature of our society at the beginning of the 21st Century is the rapid rate of technological and social change.  Smartphones and tablet computers have become commonplace in most households. These devices are fundamentally altering how we approach our shared knowledge sources by keeping us continually connected to near-infinite volumes of raw data, knowledge resources and communication.

6)  Why did you decide to become a gold sponsor at this event?
MaraMedia is passionate about education, about our great nation and the powerful impact that education has on our youth. We emulate the meaning of ex-president Nelson Mandela’s statement: “Education is the most powerful weapon that can be used to shape our future”

7)  Anything you would like to add?
Without the help of imaginative, appreciative learners and teachers, textbooks are reduced to a jumble of words. There is no guarantee that a learner will interact with the subject content, moulding it into internalised knowledge. MaraMedia digital books provide the necessary resource to assist teachers in enlivening the content being taught.

Considering that the textbook is to the teacher what the hammer is to a carpenter or a knife to a chef, it is quite evident that the implementation of the latest possible technology as a fundamental classroom tool is essential.

The digital books allow for educators to ensure the maintenance of appropriate standards. Photo galleries, interactive mind-maps, high resolution colour images, embedded video footage, animations and sound clips take teaching and learning to a whole new level.
Content is enriched, augmented and enlivened by the integration of different media, bringing the world into the classroom.

Using a tablet device opens a legion of different teaching and learning opportunities. A scientific calculator, science lab, textbooks, workbooks and study notes for all subjects are all carried in a single device, smaller and lighter than a diary!

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Ethiopia: Minority Regime’s Fiefdom Syndrome

Posted on 13 April 2013 by Africa Business

Sophia Tesfamariam

Ethiopia- Minority Regime’s Fiefdom Syndrome (Acrobat Reader .pdf)

In the past, I have written about the regime in Ethiopia, its incurable inferiority complex and crab mentality, its refusal to abide by international and bilateral Agreements it has signed, and from respecting international law, UN Security Council resolutions and most of all, from respecting the sovereignty and territorial integrity of states. Successive Ethiopian regimes have presented themselves as being more “diplomatic”, “more sophisticated”, “peace loving” etc. etc. than others in the region and beyond. This delusional self assessment has prevented them from seeing themselves as they really are- weak, frightened and myopic.

The minority regime attempts to present itself as a law abiding member of the international community, and it abuses and undermines the very institutions that it hails in public. It does that, not because it has the diplomatic, economic or political prowess to do so, but because it relies on its handlers to cover up its crimes, and has employed and perfected certain ploys that it believes have served it well in the last 21 years. For brevity’s sake, I will list the regime’s favorite gimmicks used in both its international and domestic affairs. It will help readers understand its mental schema. In business, the term “Fiefdom Syndrome”[1] explains how certain toxic cliques have detrimental effects on a company’s health. Let us see the toxic TPLF cliques “Fiefdom Syndrome” and how it affects its handling of domestic and international issues.

1. Seeks Powerful Alliances

Ethiopia is a poor country that relies on donors for 60% of its national budget. Ethiopias handlers have been touting “11% economic growth” in Ethiopia, but sadly, despite the billions funneled into the country from various donors, Ethiopia remains one of the countries that will not be meeting the Millennium Development Goals in 2015, will not achieve food security or make any progress in the standard of living of its people. The recent World Bank Report found corruption ripe in Ethiopia’s economic, health, education, telecommunication, land and other sectors. 17 billion dollars have disappeared from the countries coffers. Gold reserves have mysteriously vanished from its bank vaults etc. etc.

Lacking economic and political power, the regime’s cadres are seen wheedling “their way into powerful circles”, ingratiating themselves to western powers and using it as a “weapon of choice”. The minority regime in Ethiopia, lacking confidence in its own abilities, lacking legitimacy in its own country, chooses to advance its domestic and international agendas by latching onto powerful nations such as France, the United States and the United Kingdom. From feeding its people, to managing its political affairs, to managing its economy, these nations and their tentacled subsidiaries, “advisors’, “consultants”, run the country and its government. For a nation that prides itself as being the only one not colonized in the past, it is today, practically the most colonized state in Africa.

There are many examples of how Ethiopia reaches out to its handlers in order to effectuate its political agendas. For example, when Ethiopia wanted to break the close and neighborly relations between Djibouti and Eritrea, it relied on the United States to use its leverage in Djibouti. Let us take a look at a US Embassy cable that best illustrates this. September 2006 cable “ETHIOPIA: DEPUTY MINISTER TEKEDA TALKS SOMALIA, REGIONAL ISSUES WITH DAS YAMAMOTO”, details the conversation between the then Deputy Minister Tekeda Alemu and US Ambassador Donald Yamamoto. The cable says:

“…The Government of Djibouti’s opposition to IGAD actions in Somalia are the result of its fear of Eritrean President Isaias, Tekeda said, as well as President Guelleh’s personal business interests with Eritrea. The Deputy Foreign Minister speculated that the Djiboutian leadership was worried that Eritrea would support Afari separatist movements, as Isaias had done successfully in Sudan, if Djibouti did not follow Eritrea’s lead in Somalia. Tekeda also told Yamamoto that Aweys and other CIC leaders had stopped in Djibouti to meet with President Guelleh on their way back from Libya the week before. Tekeda maintained that the GOD was “on the wrong path,” and added that Djibouti was not strong enough to take Ethiopia’s continued friendship and forbearance for granted…”

But that was not all. Here is the rest of it:

“…Tekeda urged that the USG speak frankly with Djibouti about its role in the region. He said that President Guelleh would pay attention to U.S. concerns given the importance to him of the U.S. military base in Djibouti. “He must be told to choose” whose side he wanted to take…”

I don’t know what Donald Yamamoto’s response was to Tekeda Alemu’s request to break up Djibouti-Eritrea relations, or what the US did, but in less than a year, Djibouti-Eritrea relations had soured and the two countries were on the brink of war.  US Ambassadors in the Horn and the US Ambassador at the United Nations were instrumental in getting sanctions regime against the State of Eritrea and the Djibouti-Eritrea issue was orchestrated in order to get “stand alone sanctions” against Eritrea.

2. Camouflage

If there is one gimmick that the regime in Ethiopia has perfected to date is the one of creating distractions, to divert attention away from itself, its domestic crimes against humanity,  and its lawlessness. These tactics involve, “emphasizing the inconsequential”, “sending someone off on a wild goose chase” or “deliberately triggering someone’s anxiety buttons”. The Djibouti-Eritrea is a perfect example. While the regime’s forces have violated international law, the Algiers Agreements, over two dozen Security Council resolutions on the Eritrea-Ethiopia border and have been occupying sovereign Eritrean territories for the last 12 years, with the help of their handlers, they exaggerated and escalated the non-existent Djibouti Eritrea border issue.

Instead of taking responsibility for the security of its citizens and others in its territories, the minority regime blames Eritrea for everything that happens in Ethiopia and beyond. Presenting itself as a peace loving regime, its cadres have scoped the globe tarnishing Eritrea’s image and that of its leadership, whilst committing untold crimes against its own people, committing genocides in the Gambela, Ogaden and Oromia regions of Ethiopia, advancing it ethnic cleansing policies against the Amhara under the cover of the “villagization” program etc. Its crimes and human rights violations are hidden from the world because it has “friends” in high places.

3. Invisible Walls

Actively instigating actions or creating counterproductive perceptions so that an argued directive will be, if not impossible, extremely difficult to implement. The minority regime in Ethiopia has come up with several gimmicks to advance its anti-Eritrea agendas and has no problem creating new ones when others fail. The call for dialogue with Eritrea while refusing to vacate from sovereign Eritrean territories, the acceptance “in principle” the final and binding decisions of the Eritrea Ethiopia Boundary Commission, the off again, on again 5 Point Peace Plan etc. are just a few examples of the “mazes and false pathways” that it has established in order to frustrate the peace process.

4. Strategic Noncompliance:

This tactic is the minority regime’s favorite. It agrees upfront to take action while having no intention of taking that action, or cooperating in order to buy time to find a way of avoiding taking action. For example, Seyoum Mesfin, the most frightened member of the Tigrayan clique ruling Ethiopia today came out swinging in the wee hours of 13 April 2002. He called a Press Conference and announced to the world that the decision of the Boundary Commission was fair and that it was final and binding. He also said that “ Badme and its environs” had been awarded to Ethiopia and that the international community should urge Eritrea to accept the ruling and allow for the speedy demarcation of the Eritrea Ethiopia border.

A few days later, when the ignominious cadre and his team read the documents and found out that Badme, the casus bellie for the Eritrea- Ethiopia border conflict had been awarded to Eritrea.  In this case, since it cannot easily refuse to accept the decision, in order to have the moral high ground, it ran to accept the decision before Eritrea, only to turn around and delay compliance. The regime has done everything to get out of its treaty obligations and has collaborated with internal and external forces to undermine the EEBC decision. That began the 11 year long attempts to amend, revisit and even reverse the EEBC’s final and binding delimitation decision began.

It employed the support of Eritrean mercenaries to undermine the EEBC’s decisions, and to confuse the matter. These self serving emasculated individuals  came up with stuff like “Transitional Justice”, “making Badme a no-man’s zone”, “making Badme a park to be enjoyed by both sides” etc. etc. Instead of standing up for the people of Eritrea and the sovereignty of Eritrea, these quislings worked with Meles Zenawi to weaken Eritrea’s legal position for a few stipends-they failed miserably.

The regime “sought powerful alliances” in its ongoing pressure on Eritrea. In order to force Eritrean into relinquishing rights to Badme, the minority also turned to its friends at the UN and at the US State Department. Meles Zenawi sought the help of Kofi Annan, the former UN Secretary General, to create an “alternative mechanism”, because he wanted to get rid of the EEBC. Kofi Annan obliged by creating all types of obstacles and preventing the EEBC from carrying out its sole mandate of demarcating the Eritrea Ethiopia border. John Bolton, the then US Ambassador to the United Nations said that Jendayi Frazer, the incompetent former Assistant Secretary of State for African Affairs, told him  that she wanted to  “reopen the 2002 decision” which “she had concluded was wrong” and wanted it to “award a major piece of disputed territory to Ethiopia”. Bolton said that he “was at a loss how to explain that to the Security Council”, so he didn’t.

Frazer wanted to adjust the line and she brought General George Fulford, who she figured could serve as a “technical facilitator” to the EEBC. He was one of the people who had accompanied her on her ill-advised and illegal trip to Badme, an occupied sovereign Eritrean territory. Frazer and Fulford introduced the “satellite technology” map at an EEBC meeting in the spring of 2006. General Fulford also “rather unwisely, wrote to Eritrea’s Legal Counsel that he was seeking operational latitude to shift the boundary by about 1Km”.

After waiting for over five years to demarcate the Eritrea-Ethiopia border in accordance with the EEBC’s final and binding decisions, the Boundary Commission decided to demarcate the border using coordinates on maps, “virtual demarcation”, closed its offices and left the area. Ethiopia continues to flout international law, the UN and African Union Charters and the EEBC’s delimitation and demarcation decisions. It has refused to accept the demarcation and continues to occupy sovereign Eritrean territories, including Badme.

5. Information Manipulation.

This is another favorite ploy used by the regime in its domestic and foreign policies. It has perfected the art of withholding, putting a spin on information, and covering up or giving false information. When the Eritrea Ethiopia Boundary Commission delivered its final and binding delimitation decision on 13 April 2002, the ignominies Seyoum Mesfin, then Foreign Minister of Ethiopia told Ethiopians that Badme and its environs had been awarded to Ethiopia. It was bold lie.

When the regime could not get the EEBC to change the decision, it sought to undermine the Commission and Meles Zenawi claimed, through a letter to Kofi Annan that the Commission’s work was in “terminal crisis”.  The EEBC responded to that the letter was “misconceived and misleading”. In its 7 October 2003 letter to Kofi Annan, the Commission wrote the following:

“…there is no “crisis”, terminal or otherwise, which cannot be cured by Ethiopia’s compliance with its obligations under the Algiers Agreement, in particular its obligations to treat the Commission’s delimitation determination as “final and binding” (article 4.15) and “to cooperate with the Commission, its experts and other staff in all respects during the process of … demarcation” (article 4.14)…

Needless to say, Ethiopia continued with its belligerence and the US led international community looked the other way.

Having the African Union headquarters in Addis Ababa, the Ethiopian capital as well as the UN’s many tentacle organizations at its disposal, successive Ethiopian regimes, and most especially the current minority regime, have emasculated these organizations and prevented them from calling a spade a spade.  The wiki leak cables are replete with the lies and deceptions of the regime and its cadres, too many to mention in one sitting. For example, the regime keeps telling the world that the “root causes” for the Eritrea Ethiopia border conflict must be addressed in order for Ethiopia to comply with its treaty obligations and the Algiers Agreements. Yet, it has prevented the African Union and the United Nations from establishing the Commission in accordance with the Algiers Agreements. Article 3 of the Algiers Agreements says:

“…In order to determine the origins of the conflict, an investigation will be carried out on the incidents of 6 May 1998 and on any other incident prior to that date which could have contributed to a misunderstanding between the parties regarding their common border, including the incidents of July and August 1997…The investigation will be carried out by an independent, impartial body appointed by the Secretary General of the OAU, in consultation with the Secretary General of the United Nations and the two parties…The independent body will endeavor to submit its report to the Secretary General of the OAU in a timely fashion…The parties shall cooperate fully with the independent body…The Secretary General of the OAU will communicate a copy of the report to each of the two parties, which shall consider it in accordance with the letter and spirit of the Framework Agreement and the Modalities…”

The Eritrea Ethiopia Boundary Commission delivered its final and binding delimitation and demarcation decisions on 13 April 2002 and 30 November 2007 respectively. 13 years since the signing of the Algiers Agreements and the Commission that is supposed to determine the origins of the conflict” has yet to be established. Why?

According to a 1 December 2005 Wikileak cable from Ethiopia which details a 25 November 2005 meeting between US’ Donald Yamamoto and African Union officials. The African Union seems to have made a unilateral decision to delay the formation of the Commission. The cable said:

“…Peace and Security Commissioner Djinnit said that the AU favors prioritization of Algiers Accord requirements and indicated that the AU does not believe the time is right for a study on the causes of war between the two countries, as provided for under Article 3…”

Judging from Ethiopia’s interference with the work of the Intergovernmental Authority on Development and the African Union to get the latest US-Ethiopia engineered sanctions resolutions against the State of Eritrea and its people, there is no doubt that the AU was acting at the behest of the US and Ethiopia. Furthermore, there is nothing in the Algiers Agreement that allows the AU or the two parties to cherry pick parts to implement or delay. In addition, as one of the witnesses and guarantors of the Algiers Agreements, the African Union is morally and legally required to fulfill its obligations under the Agreements.

6. Discrediting opponents.

From its domestic opponents to all others, the regime in Ethiopia has used “personal attacks or irrelevant criticisms to create doubt about another person’s competence or credibility”. The frightened regime believes it can drain away the power of others by discrediting them. It seeks to find “dark secrets” and even create them with seductive traps, then expose them – it’s called ‘entrapment’. The regime has labeled opposition members, journalists and Ethiopian activists as being “terrorists” and has accused Eritrea of committing “terrorist acts”.

In its quest to dismember and weaken Somalia, the regime invaded and occupied Somalia in 2006. While it publicly accused Eritrea of not supporting the Transitional National Government (TNG) in Somalia, it undermined all the TNG leaders, used them in its agenda to sever Somalia and then dumped them. Here are some examples of Ethiopian consistent undermining of all of Somalia’s leadership:

§ “…Meles said that Transitional Federal Government (TFG) Prime Minister Gedi has “outlived his purpose” and is not the right person for the primary job now of ensuring an inclusive political process. The removal of Gedi would best be an outcome of the National Reconciliation Congress. Meles, Belliard said, agreed that there needs to be more Hawiye in the government, including in the security services…”-(Meles Zenawi 2007)

§ “…Tekeda said that Ethiopia’s objective for the upcoming October 27-29 IGAD Summit in Nairobi was “to soften Yusuf up…and put him in a cage.” He said that “either Yusuf will come out of the summit as a ceremonial president or he will be jettisoned.” Tekeda hoped that the summit would convince Yusuf that he cannot continue conducting business as usual with Yusuf only serving his Majerteen clan interests. Tekeda stated that there was now absolute consensus within the Ethiopian government that President Yusuf can no longer continue to be an obstacle to political progress in Somalia…Tekeda said that Yusuf was “an old man with no capacity,” and that he was a liability. The only question that remains is what can be done to limit the damage he can do. Tekeda said Yusuf could continue as President if he agreed to become a figure head, but if Yusuf does not listen, then he must leave… Tekeda revealed that in the previous weeks he had met secretly with ARS/Djibouti head Sheikh Sharif to discuss the integration of the ARS into the TFG”-( Tekeda Alemu on Abdulahi Yusuf -2008)

§ “…Tekeda suggested that the presidency was too high for ARS/Djibouti head Sheikh Sharif, but that Sharif as prime minister was possible. He added that Sharif should have some role in the government because he had some level of acceptance and credibility among Somalis. Tekeda noted that he had just gotten off the phone with Sharif, and that their discussions over the formation of a unity government were continuing. He also said that Sharif and the opposition would go to Nairobi to participate in the summit. Tekeda declined to name possible replacements for Yusuf…”- (Tekeda Alemu on Sheikh Sharif 2008)

 

§ “…Asked by Special Envoy for Somalia John Yates if Prime Minister Nur Hassan Hussein “Nur Adde” was capable of governing, Meles said only “no.” Deputy Prime Minister Ahmed Abdisalan Aden had the right clan credentials (Habr Gedr/Ayer) but no power base of his own. Meles acknowledged, however, that “you can talk to him” and “he’s very useful.” Meles agreed with A/S Frazer that ARS Chairman Sheikh Sharif might be a Trojan horse for more radical Islamists…”- (Meles Zenawi on Sheikh Sharif 2008)

 

§ “…Questioned about CIC leaders, Meles observed that with its defeat, the CIC had now lost its “aura of continued victory.” Whereas the Ayr sub-clan had been the CIC’s primary backer, CIC Executive Committee Chairman Sheikh Sharif Ahmed was Abgaal and now wielded little influence…”- (Meles Zenawi, Prime Minister of Ethiopia-2007)

 

With Ethiopian officials serving as US advisors in the region, it is no wonder then that US policy for the Horn of Africa remains bloody, callous and incoherent.

The minority regime and its handlers have spent millions in targeted vilification and defamation campaigns against the State of Eritrea, its leadership and its people-especially the tight knit Diaspora population. The distortions and lies propagated by some Eritrean quislings in its employ have only strengthened the unity and resolve of the people. Today, members fo the Eritrean Quislings League and their sponsors are found resorting to criminal activities. For example, one of the regime’s mercenaries was caught vandalizing and destroying the Eritrean Community Center in Oakland, CA. Three Eritrean Community Centers in Stockholm, Sweden were burnt to the ground in February 2013. Its mercenaries have “occupied” and “vandalized” Eritrean Embassies and several individuals are now facing criminal charges. These acts of desperation continue and unless the United States and European governments conduct serious investigations into the regime’s activities, these crimes will escalate.

7. Occupation.

The regime wrongly believes that by marking territory and maintaining a physical presence, it can force its opponents to “dialogue” and “negotiations”. By occupying Somalia and imposing its will on the leaders, it seeks to project its rule on the people of Somalia. For over a decade now it has occupied sovereign Eritrean territories and has employed various gimmicks, including the 5-Point Plan (as advised by its friends in the UK) and “agreeing in principle” to accept the Boundary Commission’s decisions, to buy time and find ways to reverse the final and binding decision. There can be no dialogue with a regime that has occupied sovereign Eritrean territories, including Badme, in violation of international law, the African Union and United Nation’s Charters. Ethiopia’s occupation must end.

So far the international community has not taken any punitive actions against you and that has emboldened you to act irrationally and erratically, making you more dangerous to peace in the region.  The Security Council has an obligation to enforce the Algiers Agreement and the EEBC’s final and binding decision and so far it has failed to do so. Under international law, the UN Security Council does not have the option of non-action; it cannot shirk off its responsibilities to UN member states like Eritrea forever. Sooner or later they will have to act. I say they should act now to avert another humanitarian disaster.

The international community in general, and the witnesses and guarantors in particular, do not have the option to just wash their hands off like a bunch of Pontius Pilates, they too have legal obligations to fulfill. Moreover, their inaction will undermine the integrity and efficacy of the UN System, not to mention the effect their inaction will have on the confidence of member states in its ability to resolve conflicts and ensure international peace in the future, which today is very low.

Furthermore, they cannot expect Eritreans to do nothing; remain perpetually patient and magnanimous while Eritrea’s security is at risk and Eritrea’s sovereignty and territorial integrity is being violated by Ethiopia. Article 51 of the UN Charter recognizes Eritrea’s inherent right of self-defense.  Article 51 of the UN Charter clearly states the following:

“…Nothing in the present Charter shall impair the inherent right of individual or collective self-defense if an armed attack occurs against a member of the United Nations, until the Security Council has taken measures necessary to maintain international peace and security…”

Eritrea’s inherent right to self defense is justified under international law and the UN Charter:

  1. There is an armed attack/occupation. Ethiopia’s army is occupying sovereign Eritrean territories, including Badme for the last 13 years since the EEBC delivered its final and binding delimitation decision.
  1. There is no practicable alternative or it is demonstrably unavailable. The authority, the UN Security Council, which has the legal powers to stop or prevent the infringement, has so far refused to take any deterrent actions against your regime.  The UNSC has instead chosen to appease the minority regime by allowing its open defiance of international law and over two-dozen Security Council resolutions on the Eritrea Ethiopia border.
  1. There is urgent necessity. There are Eritreans who have been forced to live outside their villages. The Eritrea Ethiopia border has been delimited and demarcated and today, the only issue is the Ethiopian occupation of sovereign Eritrean territories, which cannot go on forever.

For the 3 reasons mentioned above and more, Eritrea has the right to liberate her sovereign territories and will not seek permission or approval from those who did not fulfill their legal obligations.

8. Shunning.

This is a tactic used by the regime to isolate Eritrea diplomatically and politically. By labeling Eritrea as the “spoiler” and refusing to allow Eritrea’s participation in international forums, by throwing tantrums at the UN and at the US State Department, the frightened regime has sought various ways to isolate Eritrea and muffle her voice. For some reason, despite its repeated calls for dialogue with Eritrea, the regime refuses to allow Eritrea’s participation at the Intergovernmental Authority on Development (IGAD)…go figure!

There are other ugly traits of the TPLF regime in Ethiopia that could have been mentioned, but these will suffice for today. For those who are wondering why the regime chooses to employ gimmicks and tactics, the answer is quite simple. The minority regime in Ethiopia is illegitimate and lacks the support of its own people. It is “propped up” by western governments who have decided that it fulfills their agendas in the region. The mercenary regime does not have the financial or other resources to play the appointed Viceroy in the region, so it relies completely on its western sponsors to maintain its brutal grip on the Ethiopian people- and now the Somali people too. It is a regime driven by anger, fear and frustration. Its inferiority complex adds to its inability to achieve its domestic and international goals on its own-always at the mercy of its handlers.

There are three tactics in dealing with those suffering from the “Fiefdom Syndrome”:

· Refuse to play the game: It takes two to tango, and if you (and others) won’t play they may have to give up.

· Name the game: Exposure, so everyone knows the game, is a great way of neutralizing tricksters.

· Change the game: Taking control yourself allows you to reframe and redirect the energy of the situation

Know thy enemy…

Ethiopia must withdraw and the occupation of sovereign Eritrean territories must end now!

The rule of law must reign over the law of the jungle!

 


[1] Phrase coined by Robert J. Herbold, COO of Microsoft, senior executive who has held several positions during a 26-year career at Proctor & Gamble. He is now president of the Herbold Group LLC.

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