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Magreb Bank launches to drive regional economic integration

19 January 2016 Comments (0) Featured, Middle East, Politics

Maghreb

The new Maghreb Bank for Investment and Foreign Trade is a significant step in efforts to create a regional economy.

The economic integration of five countries of the Maghreb region of Northern Africa took a step forward with the launch of the Maghreb Bank for Investment and Foreign Trade.

The bank will finance joint projects of the five member nations of the Arab Maghreb Union – Algeria, Libya, Mauritania, Morocco and Tunisia. It launched with $150 million in capital contributed by the member countries.

The bank will invest in projects including infrastructure, transportation, telecommunications and electrical power. It will also work to strengthen intra-Maghreb trade.

The bank, based in Tunis, was launched December 21. Nouerddine Zekri, former Tunisian Secretary of State for Development and International Cooperation, was named Senior General Manager of the bank.

A step towards integrating regional economies

The launch marks a significant step in the long-delayed effort to boost trade within the region by integrating the economies of the five countries, which together represent a market of about 100 million consumers.

Despite decades of regional political tensions, the economic appeal of the integration effort has remained strong.

Exports from and to countries within the region are extremely low and the integration promises to increase those. At the same time, most of the countries are highly dependent on trade with the European Union and more intra-region trade will reduce that vulnerability.

Integration promises to grow GDP

Economic integration would increase growth in GDP by an estimated 2-3 percent and increase job creation, according to one study, which called it a potential “game changer’’ for a region that is the least integrated in the world. On average, trade between the five countries represents only three percent of their global trade.

“The benefits would be significant. It could increase intra-regional commerce by 5-12% and stimulate job growth and help anchor stability,” the report from the Tunis Conference on Regional Economic Integration said.

Nouerddine Zekri

Nouerddine Zekri, the first General Manager of the new Maghreb Bank

Boosting trade within the region

The report said trade within the region could grow by 5 to 12 percent with integration.

“This growth could in turn translate to significant job creation particularly if enhanced trade encompasses both goods and services,” the report said, noting that a consumer market of about 100 million would attract greater foreign and local investment and offer smaller businesses opportunities to expand.

National economies struggle

The growth would help economies that have struggled.

Since 2011, growth of GDP in the region has averaged only 2 percent, compared to 5 percent during the six years prior to the financial crisis of 2008. Economic growth has failed to keep pace with population growth. Unemployment is high, averaging 12 percent in Algeria, Morocco and Tunisia, according to the European Commission.

At the same time, the Maghreb countries are highly dependent on trade with the European Union, which proved to be vulnerability during the euro crisis.

Algeria, Libya, Morocco and Tunisia export as much as 70 percent of their products to the EU and those exports represent 20 to 30 percent of their GDP. Morocco and Tunisia also depend heavily on European tourists, which make up about 40 percent of their arrivals.

While one goal is to reduce dependence on exports to Europe, an integrated regional economy might create a more effective bargaining bloc to negotiate in with the European Union.

Political tensions, unrest stall progress

The five countries first signed the Treaty of Marrakesh agreeing to integrate in 1989. The framework for forming a bank was signed in 1991 but the actual bank was not approved until 2006.

Political tensions stalled the economic integration effort for more than two decades. Initially, disagreements between Morocco and Algeria over territory in the Western Sahara contributed to delays. More recently, political disruption and war created uncertainty about economic stability in the region.

The differing economic structures of the countries have also posed a challenge to integration. Morocco and Tunisia have relatively liberal market economies while Algeria and Libya economies were more tightly controlled. Mauritania’s economy is largely based on subsistence agriculture.

Among the five countries, Algeria and Morocco have the largest economies with $552 billion and $250 billion GDP respectively. The GDP of Mauritania, totals an estimated $8 billion.

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Ivory Coast’s Guillaume Soro: From rebel leader to high government post

11 January 2016 Comments (0) Africa, Featured, Politics

Guillaume Soro

A passion for freedom has led Guillaume Soro from command of rebel forces in Ivory Coast’s brutal civil wars to the highest echelons of government in the West African nation. But Soro also faces accusations of inhumane treatment during the country’s civil war in 2011.

Soro, now President of the National Assembly, was briefly subject to an arrest warrant in Paris in December. His accuser is Michel Gbagbo, the son of Soro’s archrival, the former Ivory Coast president Laurent Gbagbo.

Michel Gbagbo has filed claims in a Paris court accusing Soro and other senior leaders in the rebellion of “kidnapping, false imprisonment, and inhumane and degrading treatment” before he was released in 2013. Soro denies the charges, saying Michel Gbagbo was arrested legally along with his father in 2011.

Michel Gbagbo

Michel Gbagbo

Former president faces charges in international court

Gbagbo’s father, the former president, meanwhile, stands accused of crimes against humanity by the International Criminal Court, charges Laurent Gbagbo has denied.

The younger Gbagbo sought to have Soro arrested and compelled to testify in December when Soro was in France attending the Paris Climate Conference. Gbagbo has dual French-Ivorian citizenship, which enabled him to bring the case to the French court in 2012. But a judge lifted the warrant after the government of Ivory Coast protested that Soro was in Paris on official business and thus had diplomatic immunity.

Soro, Gbagbo are key figures in civil war

The enmity between Soro and Laurent Gbagbo is woven into a tapestry of civil unrest in Ivory Coast that dates back nearly 15 years.

Soro, now 43, was a leader of student uprisings against Gbagbo’s predecessor from 1995 to 1998 and did six stints in prison. After studying law in France for a time, he lived in exile in neighboring Burkina Faso before civil war erupted at home in 2002.

Soro led the Patriotic Movement of Ivory Coast, an opposition group that rebelled against Gbagbo, who became president in 2000. The movement combined with two other rebel groups to form New Forces, which seized northern Ivory Coast and accused Gbagbo of discriminating against northerners and Muslims.

“I have taken up arms to (help) my country to find its true face: peace, freedom and prosperity,” Soro wrote of his decision in his 2005 book, “Why I Became a Rebel.” He said he feared the country was on the brink of genocide.

Peace agreement brings rebel leader to power

As part of a 2003 peace deal, Soro joined the Gbagbo government as Minister of Communications. But fighting continued until a 2007 power-sharing deal elevated Soro to the post of prime minister. Gbagbo and Soro participated in a disarmament ceremony, burning their weapons to symbolize the end of the conflict.

In a speech, Soro apologized “to everybody and on behalf of everybody” for the harm done by the war.

That didn’t end the violence. Rockets were fired at a plane carrying Soro in June 2007, just two months after he was named prime minister. Soro was not hurt but three other passengers were killed in the attack on the plane as it landed in Bouake. Several arrests were made and there was speculation at the time that the attackers might have been members of Soro’s own New Forces, unhappy that he had joined the government. Soro also survived five previous assassination attempts.

Dispute over 2010 election

Long-delayed elections in 2010 sparked further violence after Gbagbo refused to concede the election to Alassane Ouattara, who ultimately became president with the backing of the French and the United Nations. Soro resigned from the government and joined opposition forces in support of Ouattara, who won 54 percent of the vote.

The post-election conflict left about 3,000 people dead, displaced tens of thousands, and gave rise to accusations of war crimes on both sides.

Soro with President Alassane Ouattara

Soro with President Alassane Ouattara

Soro gains high post

Soro rejoined the Ouattara government as prime minister and then was elected in 2012 to his current post as President of the National Assembly, the second highest post in the government. Soro is also Ouattara’s designated successor.

While Soro had many supporters in Ivory Coast as well as in West Africa and Europe, some questioned how national reconciliation could go forward with a divisive figure in a top post.

“This cannot bring things forward because there are people who are still aggrieved. Moreover there are people who have complaints against him, they are talking about reconciliation. We end up having this reconciliation and they put someone at the head of state, the number two, whilst people are aggrieved by him,” says Omer Blet, a student.

Soro is one of only a few on the Ouattara side of the conflict who have been accused of crimes during the war while hundreds on the Gbagbo side have been investigated, prompting complaints of imbalance by human rights groups.

Meanwhile, Ouattara was re-elected by a landslide to a second five-year term as president in 2015, spurring hopes that the country has reached political stability. But echoes of the long conflict continue to reverberate in French and international courts.

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How have crises become endemic in Northern Nigeria?

8 January 2016 Comments (0) Africa, Politics

flood nigeria

“This is how the world ends. Not with a bang, but with a whimper.” The famous lines from T.S Elliot’s poem The Hollow Men was written concerning post-World War I Europe and the Treaty of Versailles five years after the Nazi Party became active in Germany. Elliot despised the Treaty of Versailles, and realized over a decade before World War II that the suffering and whimpers brought about by the Treaty of Versailles set the stage for a sequential buildup of events that would lead to disaster if unattended.

Setting the Stage for Disaster

In Northern Nigeria, this whimper has become endemic as vulnerability is worsened through each drought, food crisis, mass-displacement, and flooding. More often than not, local and international authorities only provide band-aid solutions: temporary measures that soothe the symptom without treating the infection. As a result, almost half of Africa’s most-populated nation has been trapped in a silent cycle of disaster, more vulnerability, and thus more disaster.

The link between disaster and vulnerability has been emphasized in recent decades as academics began to understand the significance of “the whimper.” In disaster literature, one of the most common analogies used to explain this link is that if there were no humans, it would not be a disaster: if a hurricane hit the South Pole no one would call it a crisis. And in terms of raw data, when disasters do occur the burden is disproportionately carried by the poorest. Since natural disasters lack the autonomy to pick their victims, vulnerability becomes the deciding factor in who gets hurt and who doesn’t. Critically, disasters are not a bang, or a freak accident. It takes years to form the necessary intervening conditions for disaster to occur.

Disasters depend on the social order, its everyday relations to the environment, and the larger historical matters that shape or frustrate these matters. In the north of Nigeria, power has historically been centralized in the Sokoto Caliphate, where political unity was designed to cleanse paganism from Islamic beliefs and discourage ethnic tensions. Kano was an economic hub even during Prophet Muhammad’s lifetime, and for centuries involved in slave trade, so in the 1600s when Europeans began arriving they partook in the pre-­existing West African slave trade by purchasing slaves from African merchants, eventually leading to the Atlantic slave trade. In 1850 it was estimated that 50% of the residents in Kano where slaves. Northern Nigeria was so invested in this trade that slavery was not made illegal in Nigeria until 1936. The grandchildren of these slaves now live in poverty in the North.

There are obvious trends moving south to north in Nigeria. The North has nearly double the poverty rate of the south, the judicial use of Sharia law, and a predominantly Muslim community. Life expectancy at 2001 was about 52 years with a total fertility rate of about 6.2 children per woman of childbearing age. A 2002 Core Welfare Indicator Questionnaire reveals that only 37% are literate, only 63% have access to quality drinking water, and about 40% have access to medical services. Within the demographics, we can see that the current residents are burdened with legacies of vulnerability in terms of access, income, education, and quality of life.

north nigeria

The Moment of Crisis

These whimpers of hazard, vulnerability, and intervening conditions set the stage for disaster since the 1600s, but also ultimately make up daily life for Nigerians. Before a crisis of extreme flooding in 2014, northern villages were in the grip of a food crisis, over 70% in poverty, many of whom were internally displaced due to 2013’s flooding. When the extreme event of moderate flooding is first superimposed, it acts as a catalytic agent, causing a chance encounter of all factors, and a failure of intervening conditions. This causes a deviation from the social norm, that moment of crisis that appears on televised news and captures the general public’s definition of “disaster.” And the carnage was dramatic: entire villages were literally washed away since houses of the poor were usually made of mud.

The International Red Cross was only able to offer short term relief (blankets, mosquito nets, water) to 3000 families and long term relief (gardening tools and seeds) to 800 families, which is helpful but on a small scale considering that over two million people in Nigeria alone were displaced from the flooding. The Nigerian government was unwilling to devote many of its resources towards recovery, citing the prioritization of other demanding issues.

Largely on their own, these rural communities rebuilt their houses out of the same mud, even poorer than before. Though the fluctuations in the natural/physical system are gone, their re­adaptation to nature is not buffered with intervening conditions to prevent a flood from happening again. The new norm that is established is even more vulnerable due to the failure of containment in the post­disaster response.

The Emergence of Disastrous Policy

There is an urgent need for a collaborative effort of both government and stakeholders to support town planning, engineering and other professional agencies to combat flooding in Nigeria to avoid its long ­range consequences. The tasks ahead are immense as these solutions must be implemented in the face of a multitude of problems, such as economic corruption, lack of infrastructure, and poverty.

But because these affected communities via disaster agents have become even more vulnerable, eventually the local and international authorities will grow impatient of always bailing out those who live at risk, thus their post-disaster response will become increasingly indifferent and ineffective, furthering the vulnerability conditions of the affected communities. Short-sighted solutions to whimpers are embroiled in good intent and disastrous consequences. Much like the Treaty of Versailles, there is a willing ignorance of how policies are paving a path to disaster: “this is how the world ends, not with a bang, but with a whimper.”

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Dubai’s Sheikh Mohammed connects on social media

4 January 2016 Comments (0) Featured, Middle East, Politics

sheikh mohammed twitter

The pioneering ruler of Dubai is conquering a new frontier – social media.

Sheikh Mohammed bin Rashid Al Maktoum has built a global social media following of millions of people and he is using social channels to connect with his citizenry and beyond.

He has 5.2 million Twitter followers and 3 million Facebook “likes” plus thousands of additional followers on LinkedIn, Instagram and other social media platforms. (By way of comparison, U.S. President Barak Obama has 5.5 million Twitter followers on his official POTUS account and 46 million “likes” on his Facebook page.)

Mohammed is @HHShkMohd on Twitter, HHSheikhMohammed on Facebook and HH Sheikh Mohammed Bin Rashid Al Maktoum on LinkedIn.

Known for being the force behind Dubai’s rapid development as a major global business and air transport hub as well as for his love of horse racing, Mohammed, 66, has been Emir of Dubai and Vice President and Prime Minister of the United Arab Emirates since 2006.

Connecting with young people

In recent years, the ruler has encouraged his countrymen to embrace social media as means to connect with young people and encourage innovation.

sheikh mohammed arab influencer summit“The significance of these (social media) channels lies in their ability to reach out easily to all members of the society through personal devices,” he said at a Social Media Influencer Summit, which he convened in 2015 to discuss legislation to insure the “best use of social media platforms.”

“It is our duty to help our young people and future generations by building a knowledge platform to protect them from any destructive and negative thoughts that affect their full potential and create constructive paths for Arab societies,” he said.

Discussing national and global issues

Mohammed has initiated a number of discussions on social media about issues facing the country and the world.

“We want every man, woman and child to join us in the biggest ever national brainstorming session to find new ideas for health and education,” he tweeted in 2013. “Education and health concern all of us, so I invite all of UAE society to think collectively of creative solutions.”

In 2015, during Ramadan, he used social media to launch a UAE Water Aid campaign to provide clean drinking water to people in poor countries. “Statistics show that 3.4 million people die every year because they lack clean drinking water,” Sheikh Mohammed said on Twitter. The campaign raised nearly $50 million in a month.

Emphasis on youth, Dubai development

Mohammed also posts frequent updates on both Twitter and Facebook describing his activities, which often focus on the need to develop the country and its young people.

One recent Tweet showed a photo of him meeting with students. “I had the pleasure today of meeting a group of students of the Mohammed bin Rashid school for communication. Positive and ambitious and persevering,” he tweeted.

“I told them constant communication with the people and listen to them … and the removal of barriers with them is the most important characteristic of a successful leader and media also successful,” he said in a follow up tweet.

Another has a photo of Mohammed in the cockpit of an airplane with the tweet: “UAE carriers have 530 aircraft worth $160 bn on their order books. UAE is a major growth driver for global aviation.”

Dubai transformation began in the 1970s

Air transport was a first major step in Dubai’s rapid development and transformation into a major global city starting in the 1970’s.

Mohammad as a young man oversaw expansion of the state-owned Dubai International Airport beginning in 1974. A decade later, he would oversee the launch of Emirates airline, which has become the largest airline in the Middle East and a strong competitor in the global airline industry.

Under Mohammed’s leadership, Dubai has become the air and financial hub of the Gulf. After he lifted a ban on foreign land ownership in 2002 and allowed the creation of special economic development zones, Dubai was able to attract significant development and multinational companies flocked to state.

Touting government efficiency

According to his LinkedIn profile, Mohammed’s “vision for the UAE has been proven successful through achieving unprecedented rankings on global indexes and has lately achieved number one worldwide for government efficiency, according to IMD data.”

More recently, it says, Dubai has developed as a humanitarian center.

“The UAE is not just a financial and economic nucleus, neither is it just a tourism hub: we are also a nerve centre of a global humanitarian work.” These words of Sheikh Mohammed physically manifest in the many charity and humanitarian foundations established by HH (Mohammed), which are major local and international players providing assistance and opportunities to the less fortunate around the globe.

Horse racing and poetry

Mohammed’s passion for horseracing is widely known. In 1992, he founded Godolphin, a family-owned enterprise that has become the largest thoroughbred racing stable in the world. The family-owned enterprise has farms in the United States, Ireland, England and Australia.

With an estimated net worth of $4 billion, he is also a well-regarded poet and has published books on leadership.

Social media for governance

On social media, however, his focus is on governance and using new technologies to improve Dubai and its people.

“The world is moving at a very fast pace and technology is evolving dramatically. We all remember how the traditional media emerged modestly but it quickly gained momentum driven by technology to become a force that impacted governments, changing the course of their work. It transformed the world into a small village.”

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Is Donald Trump alienating the Middle East?

22 December 2015 Comments (0) Business, Featured, Middle East, Politics

trump middle east

Taking a look at Donald Trump and his recent outbursts that might alienate him with the Muslim world.

Donald Trump is making a lot of headlines these days and while they haven’t all been flattering, the 69-year-old business mogul seems unfazed that his brass manners have created such media furor. He is not a repentant person and has shown that he thrives in the media’s spotlight. He is often seen using loud words and confrontational rhetoric that that has helped him create both more supporters and more opponents, effectively polarizing the public, and whether for better or worse, he has been getting lots of media attention during his election campaign.

In a recent interview with Joe Scarborough on MSNBC’s “Morning Joe”, multi billionaire and presidential candidate Donald Trump made it clear that he would not be adverse to more surveillance of mosques in the US or even looking into closing some of them down. He believes a lot of the radicalization takes place in these mosques and that hatred towards America emanates from these houses of Muslim worship.

While these actions might alienate him to Muslims in general, they are nevertheless measures aimed at US citizens on US soil and as such they are not targeting the Muslim world in general. However, when he wants to ban all Muslims from entering the US, he’s sending a clear message to the international community as well. Adding to that his recent comments about Saudi Arabia being on par with China and other countries which he deems are cheating the US and one can understand why he might seem confrontational from a more international perspective.

Media feud with Alwaleed bin Talal

In a recent media spat, which was born after Trump had the idea to ban Muslims entering the US, Saudi Prince Alwaleed bin Talal let the presidential hopeful know what he thought of him when he tweeted the following: “You are a disgrace not only to the GOP [the Republican Party] but to all America. Withdraw from the US presidential race as you will never win”.

Donald Trump responded with accusations that Alwaleed bin Talal wants to control the US government with his daddy’s money and also called him “dopey”, which will surely not serve to lessen the tension between the two.

While Alwaleed bin Talal does not represent a united Muslim world, he is a well-known business magnate and philanthropist, ranking 34th on Forbes List of the richest people in the world in 2015. He has an estimated net worth of 28 Billion USD, dwarfing Donald Trump’s net worth and recently made headlines when he let the world know he’s donating his fortune to charity.

For the average voter in the US though, Alwaleed bin Talal is not exactly a household name and banning Muslims is not a problem. Among the American public Trump has the majority backing his proposal among Republicans, with a large estimated one third minority among Democrats backing him as well.

trump middle eastTrump and the international business world

The big question for business mogul-come-presidential nominee is not just about winning or losing the presidency. As a business man and a professional he must also contend with the lost business and brand value he is suffering from his remarks in the parts of the world he has been seen as demeaning.

The evidence seems to suggest he is already losing business in the millions from former partners in the Middle East as the Landmark Group is cutting its ties with the Trump Organization and will no longer carry home decor products from the company that is headed by Donald Trump.

What he is losing in business and brand value in the Middle East, he is most likely making back in campaign funding however, which has increased as he rides the wave of fear of Muslims and terrorism that has enthralled certain American voters.

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Tehran takes tough line with VAT tax

18 December 2015 Comments (0) Featured, Middle East, Politics

iran tax

Implementation of 2008 VAT  tax at a time of economic stagnancy is causing confusion and anger in Iran’s merchant class.

Across Iran there is a growing anger at VAT bills received by merchants, many of them covering the years since the tax was first implemented in 2008, and some of the bills reaching $100,000 or more.

As Iran faces economic stagnancy, businesses claim that these VAT bills could in many cases render their businesses unsustainable. Falling oil prices have greatly affected the Iranian economy over the last few years. And with the groundbreaking deal with the West on slowing development of nuclear weapon capability meaning that many sanctions will be lifted in mid-2016, many consumers have vastly reduced their spending in the hope that the deal will bring both lower prices and a greater range of available goods.

Relaxed Taxation

Historically Iran has had a laid back approach to taxation; authorities were often willing to negotiate and bargain, there was a high level of smuggled – and thus tax free – goods available on the market, and dual accounting was and is still common practice to avoid some taxes. But with the global oil market seeing reduced prices over the last decade, the Iranian government brought in a 3% VAT level in 2008 on all but everyday goods such as bread and some other food products.

But since President Hassan Rouhani took office in 2013, tax collection has been stepped up, a move that is now worrying business owners across Iran. With oil prices forecast to continue falling in the year ahead, the lifting of sanctions still several months away, and with a deficit that could reach 550 trillion Iranian rials next year (18.3 billion USD), the government is keen to maximize tax collection. Given that the vice-president of the Iran Chamber of Commerce, Pedram Soltani, estimates that 40% of all government income in the year ending March 2016 will come from taxation – with VAT constituting half that figure – it is understandable why the authorities in Tehran are keen to pursue this.

Power of the Merchants

But President Rouhani has to tread carefully on this issue. Despite there being a ban on free trade unions, the merchant class – or bazaaris to give them their traditional name in Iran – remains a powerful force with a past history of confronting the government on this same issue. They played a key part in the revolution of 1979, combining with the clergy to oppose the Shah’s oppressive policy and implementing strikes which crippled the economy. And, when they see it as necessary, they have again wielded that power to oppose policies by the new regime. A 2008 strike in response to the original implementation of VAT saw clashes with security forces as many businesses closed. This led to a temporary suspension of the tax and an announcement of annual rises with an agreement on figures of 6 to 15%.

iran tax 2Then in 2010 the government stated that VAT on many goods would rise by 70%. Once again the bazaaris went on strike and once again the government backed down, agreeing to reduce the VAT rise to 15% instead of 70%. The government also offered a concession that businesses who could show they operated at a loss in previous years could apply for an exemption from increases.

An interesting factor of both these strikes was that it was not confined to merchants who were affected by the higher rates but was instead supported by traders across a wide range of goods, illustrating that the bazaaris had strong solidarity across their “membership.”

A rock and a hard place

How this current dispute plays out will be interesting to observe and hard to predict. On one hand, there is a determined government led by Rouhani who is trying to steer the country through uncertain economic waters. Even with the lifting of sanctions due in mid-2016, it will take some time for that to have any positive effects. On the other hand there is a united and powerful merchant class who are adamant that many businesses cannot survive these new increases or backdated bills. Given the outcomes of the two previous strikes and the resulting government climb-downs, it may well be the case that Rouhani has to consider some form of compromise, as strike action of any length would further damage the economy and could also lead to more instances of public disorder.

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South Africa’s rand, stocks gain after Gordhan named as finance minister

14 December 2015 Comments (0) Africa, Latest Updates from Reuters, Politics

JOHANNESBURG (Reuters) – South Africa’s rand strengthened more than 4 percent in early trade on Monday after President Jacob Zuma named widely-respected Pravin Gordhan as finance minister in a bid to draw a line under days of market turmoil.

Zuma gave Gordhan the job late on Sunday, in a dramatic U-turn that gave Africa’s most industrialised economy its third finance minister in a week.

Just four days earlier, the president had sacked Nhlanhla Nene as finance minister and given the job to David van Rooyen, a relatively unknown lawmaker and Zuma loyalist – a move that had triggered a wave of criticism and a sell-off on the markets.

Gordhan, who last held the post from 2009 to 2014, was due to address the media at 1pm local time (1100 GMT), a statement from the Treasury said.

South Africa is gearing up for local elections next year where the ruling African National Congress (ANC), is expected to face stiff competition from the opposition Democratic Alliance in urban areas, including the economic hub of Johannesburg. The countryside remains an ANC stronghold.

Even some supporters of the ANC, Nelson Mandela’s erstwhile liberation movement that has ruled since the end of apartheid in 1994, expressed dismay about Wednesday’s appointment of a Zuma loyalist to the crucial post. They also described his latest appointment as a sign Zuma was losing control.

“It may not be his death knell, but it’s certainly the turning of the tide,” a former senior anti-apartheid activist and ruling ANC legislator Ben Turok.

The currency fell nearly 9 percent last week following the removal of Nene, a civil servant veteran who was keen to rein in government spending.

“The markets will welcome back Gordhan to National Treasury,” Rand Merchant Bank’s currency strategist John Cairns said. “He is a known entity, is his own man and did well when in the post previously. But it is certainly unreasonable to expect all of last week’s losses to be reversed — a huge amount of uncertainty has been created in the past few days.”

By 0716 GMT, the rand had strengthened 4.53 percent against the dollar to 15.1700, recouping some losses suffered last week. The rand had traded at 14.4320 per dollar before Nene was fired.

Yields on government bonds recovered sharply in early trade, with the benchmark paper due in 2026 down 101 basis points at 9.37 percent.

 

MARKETS CHEER GORDHAN

The rally may also be limited if the Federal Reserve, the U.S. central bank, raises interest rates on Wednesday – a move set to put emerging markets like South Africa under strain.

“Markets should rally back very strongly but I would not expect a total retracement with a permanent loss of trust in leadership even if we are in a better place,” said Peter Attard Montalto of Nomura in London.

The removal of Nene also led to a selling frenzy in South African banking stocks, which dropped nearly 20 percent on investor worries that the country’s credit rating would slip into “junk” status.

On the bourse, the banking index shot up 12 percent, having dropped nearly 20 percent after Nene was removed.

The Johannesburg Security Exchange’s broad All-Share index was up 2 percent to 49,051 points by 0734 GMT.

Zuma said the about-face decision was prompted by many calls to rethink his decision.

South Africa’s Beeld newspaper, citing an informed person, said Gordhan’s appointment was preceded by a crisis meeting between Zuma, politicians and representatives of the private sector on Sunday afternoon.

 

(By Tiisetso Motsoeneng and Nqobile Dludla. Additional reporting by James Macharia and Zandi Shabalala; Writing by James Macharia)

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Stef Wertheimer: Manufacturing Peaceful Coexistence in Israel

12 December 2015 Comments (0) Business, Featured, Middle East, Politics

Stef Wertheimer

Israeli industrialist Stef Wertheimer, founder of Iscar and Blades Technology, is investing millions in industrial parks to diffuse Arab-Jewish conflict.

Born in Germany in 1926 a decade before his family was forced to flee the Nazis to what was then British-Mandate Palestine, Stef Wertheimer is an Israeli industrialist who believes that his country’s problems and solutions lie in economics. Over the last 30 years, the billionaire has invested millions of his own personal wealth in building industrial parks and training programs for Arabs across Israel, in the hope of using job creation and lowered economic disparity to foster peaceful coexistence between Arabs and Jews.

The International Metalworking Companies Group and Blades Technology

Now aged 89, Wertheimer’s early academic career was short lived. He was expelled from school aged 14, and instead started working in a camera-repair shop. Later, in the lead-up to Israel’s War of Independence in 1948, he made weapons for the Jewish underground. And after the war, in which he served as a pilot and a member of the Palmach strike force, he set up a small metal tool-cutting factory in a garage in his garden in Nahariya. The city, Israel’s northernmost, is in an underdeveloped, largely agricultural and Arab region, about which Wertheimer says: “There were no jobs, this area was agricultural, and I decided that I had to do something on my own”.

He named his small operation Iscar, and within five years, the company was exporting precision carbide cutting tools to Europe and the US. Today, it is one of the world’s top two companies in the field, and its automotive, aerospace, and electronics industry customers include General Motors and Ford. It is also now the largest of 15 companies that make up Wertheimer’s International Metalworking Companies (IMC), a Group valued at $10 billion, with 140 subsidiaries in 61 countries around the world, employing over 10,000 people.

Wertheimer further expanded his manufacturing holdings in 1968, when the Israeli government asked him to make blades for the Israeli Air Force following a French weapons embargo. In the years following, Iscar Blades (now Blades Technology Ltd.) has similarly become one of the world’s largest in its field. With a valuation of $1 billion, its customers include Rolls-Royce and General Electric.

Wertheimer solidified his position as one of Israel’s most respected businessmen in 2006, when Warren Buffett’s conglomerate holding company, Berkshire Hathaway, bought an 80% stake in IMC for $4 billion. It was Buffet’s first purchase outside of the US, and he went on to buy the remaining 20% of the company in 2013 for $2.05 billion. The Wertheimer family (Wertheimer’s son Eitan started running day-to-day operations at Iscar in 2004) also sold its 51% stake in Blades Technology in 2014. And the deals have made Wertheimer the head of the wealthiest family in Israel and the country’s third wealthiest man, with an estimated net worth of $5.6 billion.

Tefen Industrial Park

Tefen Industrial Park

The Tefen Industrial Park

In the late 1970s, Wertheimer also served a term in the Knesset, Israel’s parliament. It was during this time that he decided that there may be a different route to achieving peace and stability in Israel: one centered on industry and job creation. Acting on his idea, in 1982 he established a residential community near Nahariya, Kfar Vradim, and later the same year moved the Iscar plant to the nearby industrial zone, Tefen. In 1984, the Tefen Industrial Park was officially inaugurated, marking Wertheimer’s first park dedicated to helping Arab and Jewish Israeli entrepreneurs set up export-focused industrial initiatives. “I started looking for a way to influence the Arab population in Israel, Jordan and the Palestinian areas by developing industry,” says Wertheimer. “The idea of industrial parks in the Middle East and on the borders between Israel and its neighbors is that the parks will bring industry and provide jobs, which will keep people busy working, instead of engaging in terrorism”.

The Tefen Industrial Park now hosts 20 companies, and also offers a post service, a shared dining hall, landscaped gardens, a collection of vintage cars, a tennis court, and a school that educates students in industry and innovation. Wertheimer, whose own main office is on the site, has also created art and German-Jewish history museums.

Expanding Israel’s Industrial Export Output

His unique philosophy stems from the country’s problem of economic disparity. Israel’s 1.7 million Arab citizens make on average 58% of the income of their Jewish counterparts. Arab men make 69% of the income of Jewish men. And there are three times less Arab women in the labor force than Jewish women. The Arab population is also largely excluded from Israel’s current tech boom, which this year has seen $9 billion in tech mergers and acquisitions.

Based on the five principles of export, education, coexistence, community, and culture, Wertheimer has now established six further parks in typically Arab dominated regions – five in Israel (in Tel Hai, Omer, Dalton, Lavon, and Nazareth) and one in Turkey. The industrial parks, which Wertheimer calls “capitalistic kibbutz”, also run training programs before placing the workers in jobs, and recruit Arab and Jewish entrepreneurs for industrial entrepreneurship courses to create Arab-Jewish partnerships. Firms also receive benefits encouraging the employment of professionally educated Arabs. The parks have so far generated and supported 260 companies, which have seen an average yield of $200,000 in sales per employee, higher than Israel’s average. And Wertheimer also has plans to add another park aimed at the Bedouin, one of the region’s poorest communities.

Yitzhak Rabin, former Israeli prime minister and 1994 winner of the Nobel Peace Prize, said: “With 20 more industrial parks like these, it would be possible to double the industrial export output of Israel. This would completely change the economic, social and security situation.” Wertheimer has also been honored for his work. He was awarded Israel’s highest honor, the Israel Prize, in 1991. In 2010, he received the Oslo Business for Peace Award. And Germany has bestowed both the Federal Cross of Merit and the Buber-Rosenzweig medal for his work in advancing peace through entrepreneurship.

Not everyone agrees that an economic solution will solve Israel’s problems, but Wertheimer is fully committed to a future trying to do just that.

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African Nations See High Stakes, Opportunities in Paris Climate Talks

10 December 2015 Comments (0) Africa, Environment, Featured, Politics

Africa at Cop21

African nations brought a unified agenda to the Paris climate conference, making clear they are willing to take aggressive steps to fight global warming but need international support to make significant cuts in pollution.

Africa is highly motivated. Ironically, it is the least polluting of the world’s continents, but it has suffered some of the most severe effects so far – drought in some regions and severe flooding in others.

As the Paris conference drew to a close, key issues of vital interest to Africa were under debate, including the allocation of responsibility for reducing carbon emissions between rich and poor countries as well as how to finance clean-energy improvements and repair damage already done.

Aggressive emission cuts sought

“African countries have demonstrated greater ambition in cutting their emissions than the high-emitting nations,” Akinwumi Adesina, president of the African Development Bank, said. Forty-seven of 53 African countries had completed plans to cut emissions by an October deadline, he said.

Alassane Ouattara, President of Côte d’Ivoire, said his country has set a goal of reducing greenhouse emissions by 28 percent by 2030 by increasing renewable sources, reforestation and development of carbon neutral agriculture.

Morocco recently increased its goal to increase renewables from 42 percent in 2020 to 52 percent in 2030.

Seeking international support

At the same time, numerous African nations made clear that they would need international support to make good on their pledges.

Sudan, for example, pledged to “reach 20% renewable share in the power mix by 2030… Aims to raise forest area to 25% of Sudan by 2030… Pledge conditional on international support.”

Yemen pledged a 1 percent cut in emissions by 2030 without international support or by 14 percent cut if international support was forthcoming.

High cost of action

Adesina said Africa needs an international investment of $55 billion a year up to 2030 to create a more efficient energy sector that uses more renewable resources for power. He said the African Development Bank would contribute $5 billion in financing, which will represent 40 percent of its total investments.

The United Nations has estimated it will take more than $93 billion a year for the world’s 48 poorest, least developed countries, including 34 in Africa, to put their action plans into effect.

Of more than $60 billion that has been committed so far, less than a third goes to the poorest countries, according to a November 2015 report by the International Institute for Environment and Development.

Paying for climate damage

African leaders also stressed the need for financial help to confront losses climate change has already wrought in their countries.

The United Nation’s Adaptation Fund “must be reinforced to support the losses and damages suffered by developing countries,” Denis Sassou Nguesso, President of Congo, said, echoing comments of many African leaders.

Currently, the negative effects include drought in South African, Mozambique, Botswana and Zimbabwe as well as heavy rains, landslides and flooding in Burundi, Nigeria, and Somalia.

Great Green Wall

The Great Green Wall aims to cultivate more forested land in Africa to fight the effects of climate change.

Seeing opportunity in the challenge

Adesina and other African leaders also pointed to the opportunities – both economic and environmental – that significant climate change work could unleash.

For example, the continent has significant capacity to produce wind and solar power, as well as potential geothermal power.

African forests have the potential to absorb tons of carbon emissions and reforestation efforts are under way to grow forest stock.

Among the efforts unveiled at the Paris conference is the African Restoration Initiative, a coalition of African countries and donors who seek to restore 250 million acres of degraded or deforested land by 2030.

Economic opportunity

As their development accelerates, African nations also are poised to benefit from clean industrialization, tapping technologies that have emerged in the past decade rather than relying heavily on older, carbon-hungry machinery.

“Industrialized countries will have to retrofit older infrastructure to harness the sector’s vast potential. Africa, however, is not married to any technological platform and is ready to leapfrog to these new, efficient and more sophisticated technologies,” Carlos Lopes, executive secretary of the United Nations Economic Commission for Africa, said at the Paris conference.

Progress for Africa

As Africa looks ahead to the challenges and opportunities of climate change, Adesina of the African Development Bank contrasted its position today with that of the last climate conference.

“A decade ago, at COP 11 in Montreal in 2005, Africa had no common position and no common negotiators,” he said. “This year, at COP 21, it has a Conference of African Heads of State on Climate Change; it has an expert team of about 200 climate negotiators; it has a clearly outlined position on the negotiations; and it has a well-articulated collective work program to support low-carbon and climate-resilient development on the continent.”

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Nigeria to make $2.1 billion payment to cover fuel subsidy – finance ministry

10 December 2015 Comments (0) Africa, Latest Updates from Reuters, Politics

ABUJA (Reuters) – Nigeria’s government has agreed the immediate payment of 407 billion naira ($2.1 billion) owed to fuel importers under a subsidy scheme, the finance ministry said on Wednesday.

Africa’s biggest oil producer imports most of its gasoline requirement because of its dilapidated refining system, which President Muhammadu Buhari is keen to revive.

Firms bringing in subsidised imports have struggled to finance their purchases with low dollar availability and shrinking credit lines.

Finance Minister Kemi Adeosun has approved the payment of 407 billion naira for “subsidy claims to oil marketers”, said Marshall Gundu, a spokesman for her ministry.

“The president has directed that payments be made immediately in order to bring to a quick end the lingering fuel crisis,” said Gundu.

Fears of a fuel scarcity prompted Nigerians to resort to panic-buying in the last few weeks, forming long queues at petrol stations in major cities.

Some of the money to be paid to importers dates back to 2014 and this is the first significant payment since Buhari came to power in May.

A severe fuel crisis crippled the country in May because of a standoff between importers and the outgoing administration led by Buhari’s predecessor, Goodluck Jonathan, over whether their debts would be honoured.

Buhari, who kept the petroleum portfolio for himself, does not want to phase out the costly and fraud-ridden subsidy scheme just yet, putting him at variance with members of his own party, the All Progressives Congress, and his minister of state for oil.

($1 = 198.9700 naira)

 

(Reporting by Camillus Eboh; Writing by Alexis Akwagyiram; Editing by Gareth Jones)

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