NEIGHBOURLY TRADE WILL UPLIFT CONTINENT

This article first appeared in the Business Times section of The Sunday Times on 15 May 2016. The Sunday Times is the biggest weekly newspaper in South Africa.

THIS week I attended the World Economic Forum on Africa in Kigali, Rwanda, which continued the fourth industrial revolution theme from Davos earlier in the year, this time with a focus only on Africa.

What stood out was the high quality and frank nature of the deliberations, as well as the realisation that we agree more than we differ as a continent on both politics and business.

The conversations were deliberately set up to focus on solutions as opposed to regurgitating the challenges. That got two key issues firmly on the radar: inclusive growth and intra-Africa trade.

My favourite panellist, Winnie Byanyima, the executive director of Oxfam International, was scathing about economic growth that does not take along the very people it is meant to serve.

“I think we focus too much on the figure of growth,” she said. “Is it 10%? Is it 6%? I think the right question should be: Is this growth creating jobs? Is this growth raising the standard of living of all our people? It’s the quality of the growth that ’s key here. Growth has been delinked from inequality and poverty. We need to bring back that link.”

For example, between 2003 and 2009, Nigeria had positive growth, but the number of poor people increased. Apart from the top 10%, the rest of the population’s share of national consumption declined.

What is the point of economic growth if it’s not inclusive?

Intra-Africa trade is estimated at 11% of total trade while on other continents, like Europe, as much as 60% of trade is within the region. The key impediments to intra-Africa trade are a lack of transport and logistics infrastructure and curbs on the free movement of people and goods among the 54 African states.

There has been talk of one African visa being introduced by 2018. The idea is premised on the success of the East African Community’s visa, costing $100 (about R1 500) for a 90-day visa valid in three of the biggest countries in the region.

I don’t see this happening any time soon and my hopes are on African states implementing less stringent visa requirements for entrepreneurs and business travellers.

Nigerian entrepreneur and philanthropist Tony Elumelu made the point that Africa had reduced itself to a supplier of raw materials.

“I am an investor in Africa,” he said. 

“I have investments in 21 African countries. Despite all the concerns raised by many on the prospects of Africa, my investment appetite on the continent has not dwindled. However, in Africa we produce raw materials. We do not process these raw materials.”

He said the conversion of raw materials to finished goods was where value was added to economies. And that did not happen on our continent. 

“So Ghana grows cocoa, takes it out of the country, it gets processed and it comes back as chocolate . . . Same with cotton and I could go on and on. So let’s begin to challenge ourselves on how to move our economies into more productive economies. This will ensure that economic growth is indeed inclusive . . .We need the private sector and public sector and our development partners to work together.”

The New Partnership for Africa’s Development has launched the Move Africa initiative to improve transport infrastructure. 

Apparently, it is cheaper for Coca-Cola, as a manufacturer of soft drinks in Kenya, to buy passion fruit from China, move it to Kenya, bottle and sell it in Kenya, than it is to buy directly from next-door Uganda.

Ford has to charter Airbus 330s to fly vehicles from Johannesburg to Nairobi as it cannot rely on the roads between the two cities.

Clearly there are some tough policy decisions to be made by governments if Africa truly wants to lead the fourth industrial revolution.

The big opportunity and challenge before us is taking our people along in growing our economies by increasing intra-Africa trade

STRANGE ANIMUS FROM NIGERIA TO SA FIRMS

This article first appeared in the Business Times section of The Sunday Times on 31 January 2016 

IN his essay Detentions Without Trial during the Apartheid Era, Robert Vassen brilliantly contextualises the history of the 90-day act. He opens by asserting that throughout the English-speaking world, the writ of habeas corpus, which translates as “let us have the body”, was in the most part consistently adopted, respected and practised.

The legal principle requires any detaining authority to produce the detained person in court and show just cause for holding them in detention. If the authority believed it had just cause, a formal charge had to be laid and evidence brought to court to prove the case.

If the authority could not justify the detention, the person had to be set free. In South Africa, this writ was practised without exception until the end of the ’50s. In 1963, the infamous minister of justice, BJ Vorster, rushed the General Law Amendment Act through parliament to accommodate the capture and detention in solitary confinement of the most senior members of the ANC.

The Rivonia triallists were arrested, with no charges, in July 1963. They were charged in October 1963, 86 days later. It was this amendment that gave the security police the authority to arrest anyone they suspected of being engaged or involved in any act against the state and to hold them for 90 days at a time. Apparently, Vorster boasted at the time, probably with a smirk on his face, that this was repeatable “until this side of eternity”.

When I first read about the four Sun International employees — three South Africans and a Nigerian — who were detained for four days and four nights in Nigeria without charge, Vorster ’s sarcastic smirk was the first thing that came to mind.

Apparently, company officials had to request and were later granted limited access to the four employees to give them food, water and blankets while they were detained. This followed Nigeria’s Economic and Financial Crimes Commission launching a probe into the South African hotel and gaming group’s investment in the Tourist Company of Nigeria (TCN).

TCN is listed on the Nigerian Stock Exchange and Sun International acquired 49.3% of the company in 2006. According to Sun International’s Michael Farr, it has been on the receiving end of all sorts of allegations from the commission since 2012, which were sparked by a feud in the family that controls the balance of the shares in TCN.

“We ’ve been asked to provide the Economic and Financial Crimes Commission with the history of our investment into the Tourist Company of Nigeria. They would also like to see trading records of the company and we’re very happy to do that,” said Farr.

In addition, there are allegations of “aggressive and intimidatory action” from trade unions which spread “false claims and circulated unfounded allegations to Nigerian authorities” against the South African hotel group. It apparently took the intervention of a foreign minister and the South African high commissioner to secure the release of the employees.

Two weeks ago, Rwandan President Paul Kagame tweeted: “#Africa: It will be just fine! Hard work, value addition & a lot more trade & investment cooperation among African people.”

In the same tweet he shared a link to an article that went as far as saying we should “expect a few [African] countries to call on the International Monetary Fund for help this year”. Intra-African trade links remain pitifully weak.

According to research by Ecobank, the bulk of the region’s trade is with Europe and the US, with only 12% being with other African countries. By comparison, 60% of Europe’s trade is on that continent. The same is true in Asia. In North America the figure is 40%.

What we forget is that trade is not done by countries — not even by governments. Governments facilitate trade. Governments don’t make widgets. Governments don’t sell widgets. Companies do.

What, then, is behind the apparent friction between Nigerian authorities and South African companies operating there?

It started with MTN’s hefty fine. I don’t recall the South African mobile operator ever denying the charges against it. Yet there seems to be no consideration for this fact, in the Nigerian authorities’ absolute resolve to impose the record sanction, which remains at $3.9-billion (about R63-billion).

A few days ago, Standard Bank’s 53.25% subsidiary, Stanbic IBTC, secured injunctions preventing the Financial Reporting Council of Nigeria from taking action against it, including exacting a $5-million fine.

Now, it’s Sun International. I do not want to believe that there is a concerted effort to frustrate South African businesses out of Nigeria.

I cannot see how that will serve the long-term interests of Nigerians. Some commentators say it is the government of President Muhammadu Buhari looking for alternative income streams due to the plummeting oil price given that oil makes up the lion’s share of Nigeria’s revenues.

Others say Nigerians are waking up to the commercial opportunity that is their country and they resent South African companies for taking the gap sooner than their local business people.

I do not want to believe these theories.

However, the timing of this animosity cannot be a mere coincidence.