African-Japanese Trade Deals Expected From Summit

Japan's Prime Minister Shinzo Abe inspects a military honor guard in Nairobi, Kenya, where he's visiting as part of an international development conference, Aug. 26, 2016.
Japan’s Prime Minister Shinzo Abe inspects a military honor guard in Nairobi, Kenya, where he’s visiting as part of an international development conference, Aug. 26, 2016.

African heads of state and VIPs from around the world have converged in this Kenyan capital for the sixth Tokyo International Conference on African Development, expected to foster a host of new trade and investment deals.

For the first time since its 1993 inception, the summit — now held every three years — is being held in Africa. It’s an historic occasion, Japanese Prime Minister Shinzo Abe told reporters here Friday.

He said Japan would work hand in hand with Africa to realize the goals set out by the continent’s people, whom he said were strongly promoting themselves.

Japan’s government, along with the World Bank, the United Nations and the African Union, host the TICAD summit. It’s billed as a platform for high-level dialogue on policy.

The list of attendees is full of VIPs, including 37 African heads of state and the leaders of the World Bank and the African Development Bank, to name a few. The two-day conference, which concludes Saturday, has drawn approximately 10,000 delegates.

Focus on industrialization

Lagging industrialization in Africa is on the agenda.

“We know that most nations which escape the grip of poverty do so by industrializing,” Kenya’s President Uhuru Kenyatta said Friday. “Africa has not still lived up to its potential. We need to put our heads together to see how we can hasten the industrialization of the continent and how we can avoid the missteps of those who have previously walked this path.”

The Japanese prime minister said his country would unveil new technology and training opportunities at the conference to encourage growth.

At the last TICAD in 2013, Japan pledged $32 billion in development aid to Africa. Some of it was earmarked for infrastructure development to encourage foreign investment.

Japan is currently undertaking an expansion of the Kenyan port of Mombasa, to the tune of $250 million.

“The Japanese have been heavily involved … here in our ports in Mombasa, in Mozambique,” Kenyan economic analyst Aly Khan Satchu told VOA. “They are doing a lot of the roads. They seem to meet a strategy basically around logistics and opening up the continent, and I think that’s going to work well for them.”

Satchu, who works for Rich Managent, continued: “What we have is a situation where the Indian Ocean is very much an appendage to the South China Sea. And I think Japan is looking to counter China’s influence not only in the South China Sea but also in the Indian Ocean.”

Duncan Onduu, a Nairobi-based sustainable development analyst, said he expected hot topics to include climate change and agriculture investment. He anticipates “greater commitment on issues of climate change, issues of food security” and helping Africans become more self-reliant “so that we don’t have instances where there are pockets of hunger.”

Africa will be the secret victim of Brexit

Britain’s economy may bear the brunt of the fallout from the UK’s decision to leave the European Union, but another part of the world — Africa — is set to be an unexpected victim.

Much of the economic spotlight since Britain voted to leave the EU has understandably been trained on how the so-called Brexit vote will affect the British economy as well as those of countries within the eurozone and the wider European Union.

In the UK one word — recession — dominates, with banks, economic research houses, and supranational institutions all predicting that growth in Britain will shrink this year or next.

Barclays thinks the UK is on the “cusp of recession,” Credit Suisse predicts that a recession will cost Britain 500,000 jobs, and Morgan Stanley says a recession is coming, though it was unsure of the specific details.

It isn’t just predictions that are dire. Economic surveys, like Friday’s disastrous Markit flash PMI data, are also pointing to recession.

Europe is a slightly different story. Before the referendum it was generally accepted that a vote to leave would drag massively on growth and crush confidence, but so far the impact looks to be negligible, if surveys from the German think tank Ifo Institute and Markit are to be believed.

But according to new research from Barclays, Brexit’s economic impact on Africa, and particularly sub-Saharan Africa, or SSA, could be profound and incredibly damaging to the continent’s burgeoning development. In a note by analysts led by Peter Worthington, Barclays argues that the referendum will materially affect growth on the continent, saying:

“Post-Brexit, we see growth in sub-Saharan Africa halving to just 1.4% in 2016, the slowest pace in decades, due principally to sharply weaker growth outlooks in sub-Saharan Africa’s three biggest economies: Angola, Nigeria, and South Africa, which together account for nearly three fifths of SSA GDP.”

Barclays identifies seven key reasons SSA growth is at risk from Brexit. Take a look below:

  1. Brexit could harm global demand for goods, particularly hitting African economies that are focused on the export of raw materials. This would lead to “slower growth and wider current account deficits,” Barclays argues.
  2. Weaker global demand could also, Barclays says, cause key commodity prices to fall, further undermining the African economy, which relies heavily on exporting minerals, ores, and other commodities. The possible exception would most likely be gold, which has been boosted by market uncertainty since the referendum. Two of the world’s 10 biggest gold-producing nations are in sub-Saharan Africa.
  3. Tourism will dwindle. A key area of economic prosperity for African nations is tourism, particularly through safaris and other nature tours. The basic argument here is simple — if Brits and other Europeans are suffering through economic hardship, an African holiday will be far less affordable.
  4. Fewer African workers will be able to work in developed nations, which will reduce the amount of money sent back to SSA countries. As Barclays puts it, there will be fewer “economic opportunities for African migrants to the UK and Europe, and hence less workers’ remittances to home countries.”
  5. If things get really bad, aid from UK and European governments could start to dry up, robbing SSA countries of vital funding for infrastructure projects and other economically beneficial plans.
  6. Brexit is causing heightened uncertainty and, in some respects, increased risk aversion. These factors are likely to increase financing costs and shrink capital inflows into sub-Saharan Africa.
  7. Earnings on sub-Saharan investments into Europe and the UK will be lower. That is likely to have the biggest impact on sub-Saharan Africa’s most developed nation, South Africa, which has substantial investments in Europe.

Barclays said it was impossible to quantify exactly how big the impact would be (emphasis ours):

“Quantifying the aggregate impact of all these factors is challenging, especially because of the many feedback loops between financial markets and the real economy, and the interlinking second order, multiplier, and lagged effects as the Brexit shock reverberates across borders around the global economy. Moreover, even once the UK triggers Article 50 (the procedure to formally initiate divorce proceedings) it is likely to take at least two years to negotiate the terms of the UK’s exit from the EU. Until these terms are clear, the ultimate effect of Brexit will be obscured by much uncertainty.”

The child bride who still haunts me

Balki Souley, 14, in the village of Kwassaw, Niger, on June 17, 2012. Two days earlier, doctors said at the time,  she lost her baby because of her age and the fact that she had eaten very little during her pregnancy because of Niger's hunger crisis.  (Sudarsan Raghavan/The Washington Post)
Balki Souley, 14, in the village of Kwassaw, Niger, on June 17, 2012. Two days earlier, doctors said at the time, she lost her baby because of her age and the fact that she had eaten very little during her pregnancy because of Niger’s hunger crisis. (Sudarsan Raghavan/The Washington Post)

I met Fayrouz Ahmed Haider  in a grim refugee camp in Yemen. Just 11 years old, she was already married. She reminded me of someone else: a girl I had met thousands of miles away in the West African nation of Niger.

Her name was Balki Souley. Like Fayrouz, she had also been married off as a child.

I met Balki in the summer of 2012. She had just lost her son during childbirth, and her body was frail, so weakened by hunger, that she nearly died herself. Balki was 14 then. She was married at 12.

At the time, Balki’s father was struggling to scrape together enough money to take care of his 15-member family. There wasn’t nearly enough to feed them.

“Sometimes we had food, sometimes we didn’t eat,” he said. “Whenever we had leftovers, we gave them to Balki. If her hunger wasn’t satisfied, there’s nothing we could do.”

Then, as it is the case now, Niger has the world’s highest rate of child marriage. Back then, a hunger crisis was affecting millions of people across the Sahel region. Humanitarian agencies were concerned that more and more desperate parents would marry off their daughters for the dowries they fetch to ensure their family’s survival.

In Yemen, the civil war is doing just that.

11-year-old Fayrouz Ahmed Haider. Her father married her to a 25-year-old man to help pay for her mother's hospital bills. (Sudarsan Raghavan/The Washington Post)
11-year-old Fayrouz Ahmed Haider. Her father married her to a 25-year-old man to help pay for her mother’s hospital bills.
(Sudarsan Raghavan/The Washington Post)

In Balki, I saw Fayrouz’s potential future. Fayrouz was married off to a 25-year-old man, and his dowry was used for medical treatment for her mother and to pay off debts. But when the man tried to have sex with her, Fayrouz ran away. But she intends to go back to her husband, not least because her struggling family needs the rest of the dowry, which will be paid only when she returns.

“He calls me every day,” Fayrouz told me, referring to her husband. “He asks me when I’ll come back.”

“I tell him I won’t come back until I am old enough,” she continued.

When I asked when that will be, Fayrouz replied:

“After a year of two, I will go back to him.”

That would make her around the same age when Balki became pregnant and subsequently lost her child.

Uganda: 30 held over ‘coup plot’ against Museveni

An army spokesman said the detainees were 'linked to a rebel group' that he declined to name [Edward Echwalu/Reuters]
An army spokesman said the detainees were ‘linked to a rebel group’ that he declined to name [Edward Echwalu/Reuters]
At least 30 people, including serving soldiers and an opposition MP, have been arrested on suspicion of plotting to overthrow Uganda’s government, the country’s army has said.

Army spokesman Colonel Paddy Ankunda told the AFP news agency on Friday that the group was suspected of planning an armed uprising against President Yoweri Museveni, himself a former rebel who seized power 30 years ago.

“We and the police are investigating the matter,” Ankunda said.

The detainees were “linked to a rebel group”, Ankunda added, declining, however, to give any further details.

He said most of those arrested were soldiers, adding that at least one member of parliament and one opposition politician had also been arrested.

The only detainee named by the spokesman was Michael Kabaziguruka, an MP from the main opposition Forum for Democratic Change (FDC) party, whose leader Kizza Besigye is in custody on treason charges.

Besigye, who cried foul after coming second to Museveni in February’s presidential election, was arrested last month for holding a mock swearing-in ceremony.

He was previously charged with treason in 2005 but the case was eventually abandoned.

FDC spokesman Ssemujju Nganda went to visit Kabaziguruka after his arrest.

“He told me he was questioned on rebel links, which he didn’t know about,” said Nganda, adding that other party supporters “are under detention on the same claim”.

A long-standing opponent of Museveni, Besigye has been frequently jailed, placed under house arrest, accused of both treason and rape, tear-gassed, beaten and hospitalised over the years.

In a separate development, Ankunda said Uganda plans to withdraw its troops from a mission in Central African Republic whose goal is to hunt down members of the Lord’s Resistance Army (LRA) rebel group.

Ankunda told AP news agency that the rebel group no longer poses a threat to Uganda

About 2,500 Ugandan soldiers are operating in the jungles of Central African Republic under the AU mission. They are supported by US special forces.

Joseph Kony, the LRA leader, is wanted by the International Criminal Court for crimes against humanity. The group is infamous for recruiting boys to fight and taking girls as sex slaves.

The Paradox Of Congo: See How The World’s Wealthiest Country Became Home To The World’s Poorest People

In this photo taken Aug. 16, 2012, a Congolese miner sifts through ground rocks to separate out the cassiterite, in the town of Nyabibwe, eastern Congo, a once bustling outpost fueled by artisanal cassiterite mining. Gold is now the primary source of income for armed groups in eastern Congo, and is ending up in jewelry stores across the world, according to a report published Thursday, Oct. 25, 2012, by the Enough Project.
In this photo taken Aug. 16, 2012, a Congolese miner sifts through ground rocks to separate out the cassiterite, in the town of Nyabibwe, eastern Congo, a once bustling outpost fueled by artisanal cassiterite mining. Gold is now the primary source of income for armed groups in eastern Congo, and is ending up in jewelry stores across the world, according to a report published Thursday, Oct. 25, 2012, by the Enough Project.

In the Democratic Republic of Congo (DRC), the vast majority of people live in extreme poverty, earning only around $400 a year. The country is reeling from instability, hunger, and disease. One in seven children dies before they turn 5 years old. And more than 5.4 million people have died since 1993 because of armed conflict. But the issues plaguing Congolese citizens are in sharp contrast to the country’s wealth. The DRC sits on untapped, raw mineral ores worth $24 trillion — money that isn’t directly benefiting the people who live there.

“Why are we living through hell in paradise?” Vital Kamerhe, a Congolese politician and leader of the Union for the Congolese Nation, asks in the film When Elephants Fight, which details how foreign interests have ravaged the Congo region. “That is the paradox of Congo.”

Foreign companies have made large investments in eastern Congo’s mines, buying from suppliers funding armed groups within the country. This type of foreign investment in the Congo’s extraction industry has led to a loss of at least $1 billion in resource revenue that could otherwise be used to reform the country’s security, health, and education sectors.

Now, two well-known activists have begun a campaign to pressure mining companies, the DRC government, and Western governments to disclose exactly what they’re doing in the region. Alongside House of Cards television star Robin Wright, JD Stier, the president of the social activism organization Stier Forward, created the #StandWithCongo campaign to get mining entities to disclose the beneficial owners of offshore companies that are profiting from these mining deals.

“The #StandWithCongo campaign is addressing shady billion-dollar mining contracts — mostly relating to mining concessions in the south of the country,” Stier told ThinkProgress. “Transparency from technology companies to mining multinationals can ensure that the human rights of Congolese are respected and that more revenue can support development for Congolese people.”

In this photo taken Aug. 17, 2012, one of the few remaining miners digs out soil which will later be filtered for traces of cassiterite, the major ore of tin, at Nyabibwe mine, in eastern Congo. Gold is now the primary source of income for armed groups in eastern Congo, and is ending up in jewelry stores across the world, according to a report published Thursday, Oct. 25, 2012, by the Enough Project.
In this photo taken Aug. 17, 2012, one of the few remaining miners digs out soil which will later be filtered for traces of cassiterite, the major ore of tin, at Nyabibwe mine, in eastern Congo. Gold is now the primary source of income for armed groups in eastern Congo, and is ending up in jewelry stores across the world, according to a report published Thursday, Oct. 25, 2012, by the Enough Project.

The affected mines, mainly in Congo’s Katanga and Kivu provinces, contain some of the world’s largest reserves of cobalt, gold, copper, and diamonds, as well as tin, tungsten, and tantalum.

These raw minerals have fueled one of the world’s bloodiest conflicts globally since World War II to an obscene degree: 48 women are raped every hour in the Congo while 10,000 civilians are estimated to die every month. Militia groups made an estimated $185 million from conflict minerals in 2008, while gold remains a steady source of funding for them and for Congo’s army.

And, because the minerals mined in the Congo are used to make everyday objects like smartphones, lightbulbs, computers, and jewelry, nearly everyone reading this article is complicit in the ongoing conflict.

At least some of the mines purportedly belong to Israeli billionaire Dan Gertler, named more than 200 times in the Panama Papers. An ally to Congo President Joseph Kabila, Gertler allegedly had a hand in the mining deals in 2011 “that robbed the Congolese people of more than $1bn,” The Guardian reported.

The Africa Progress Panel, a panel that promotes the equitable and sustainable development for Africa, estimated that the sale of mining contracts to five anonymous British Virgin Island companies deprived Congolese citizens of $1.35 billion, or about twice their health and education budgets combined. And while assets were sold at one-sixth their commercial value, these offshore companies bankrolled 500 percent in profits.

“The DRC government should commit to immediate full disclosure of state-owned companies’ revenues and spending, to the publication of all mining contracts, and to ensuring company compliance with Organization for Economic Co-operation and Development (OECD) standards on conflict minerals,” Stier said. The OECD, an international economic organization, has helped to issue due-dilligence guidance for companies to move away from the use of such minerals.

Conflict in the Congolese region may only accelerate as the country’s term-limited president, Joseph Kabila, appears poised to extend his incumbency into a third term. Though he is bound by the DRC’s constitution to step down after two consecutive terms, Kaliba — under whom many abuses in the region, particularly those against women, have gone unpunished — has not categorically said that he will not seek a third term. In order to stay in power, Kabila could delay the November 2016 elections or change the constitution.

Kabila’s cling to power has so far resulted in the arrest and detention of opposition supporters. As many as 40 people were killed last year during protests opposing a draft law that would have extended his term. And on Thursday, peaceful protesters who took to the streets in Goma, an eastern city in the DRC, were met by armed security personnel who used tear gas to disperse the protests. As many as six people were shot, including a 12-year-old boy and 6-year-old child, according to a Human Rights Watch researcher.

Although the use of conflict minerals is unlikely to completely halt, Stier is hopeful that the DRC and Western governments may be able to follow other countries’ example to implement sustainable, peaceful trade “that fosters human rights.”

“In recent years, activist efforts have led to significant reforms in the technology sector,” Stier said. “Tech giants Apple and Intel acknowledged their products contain minerals linked to the financing of rape and war in eastern Congo, and have since invested significant resources in tracking their supply chains — moving in the direction of a closed loop, traceable minerals supply chain.”

Apple Inc. announced in March that it would now audit 100 percent of its suppliers sourcing minerals from the DRC. Intel Corp., the world’s largest chip maker, said in 2014 that the company was “committed to using only conflict-free mineral resources” and would track raw materials, though it appears to be a work in progress as evidence of fraud, smuggling, and a lack of oversight has plagued the current audit system.

There’s also been some legislative movement here in the United States. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, companies using gold, tin, tungsten, and tantalum are required to make efforts to determine whether those minerals came from the DRC and whether those mineral purchases are funding armed groups in eastern DRC.

According to the policy organization Enough Project, “216 out of approximately 324 smelters and refiners worldwide (67 percent) have passed conflict-free audits and an additional 50 smelters/refiners are in the process of being audited, for a total of 266 participating companies (82 percent).” A 2014 International Peace Information Service study also found that “70 percent of tin, tungsten, and tantalum mines surveyed in eastern Congo were no longer controlled by armed groups, and 204 mines in Congo are now officially certified as conflict-free.”

“We may not have serious strategic interests in this region, but that doesn’t mean we don’t care,” U.S. Special Envoy to the Great Lakes Region of Africa Thomas Perriello told ThinkProgress. “One of the biggest myths about the DRC is that it is hopeless. While that’s a convenient excuse for inaction, we have seen major progress from constitutionalism to conflict-free mineral programs.”

And Stier believes the momentum will only continue.

“Many people in the West feel detached from Congo and the conflicts there,” he said. “However, Millennials get it. They are Skyping with people around the world… and have the pragmatic idealism to act when they see some of the greatest unaddressed injustices on the planet. Further, they recognize that Congolese will ultimately create peace in their country but that we can help support these efforts.”

Girl’s African-Themed Dress Called ‘Tacky for Prom’ by Teacher

Mayalaya Zanders in her custom gown. (Photo: @_blazemoney/Instagram)
Mayalaya Zanders in her custom gown. (Photo: @_blazemoney/Instagram)

Thanks to Kyemah McEntyre, the teenager who designed her own prom dress last year, high school students across the country are wearing African-themed gowns. Yet despite the popularity of Ankara print gowns, Mayalaya Zanders was shamed for choosing one.

When the 17-year-old, who attends Garfield Heights High School in Cleveland, Ohio, told a teacher about her custom look, the Caucasian administrator reportedly called it “tacky for prom.”

Determined to prove her critic wrong, Mayalaya collaborated with local designer DeAndre’ Crenshaw of IndelibleDC to customize a royal blue java Ankara print gown with a front slit and dramatic mermaid bottom. She accessorized it with a structural belt, a bicep bracelet, and layers of gold necklaces.prom

Aside from the one bad review, the response to Mayalaya’s outfit has been overwhelmingly positive. “Beautifully done and awesome message,” one person wrote in the comments. Another shared, “I still can’t get over how beautiful you looked. You definitely made this outfit work and it looks absolutely perfect on you.” Multiple others called her “stunning,” “beautiful,” and said that she “slayed.”

“Thank you to everyone who gave me kind words on my prom dress,” Mayalaya shared. “My dress was to make a point. That African style is beautiful. That I am comfortable with my Melanin and roots. And finally that there’s nothing like Black girl Magic.” 

A New Map For Business In Africa

Africas market

by Jorge Camarate, Peter Hoijtink, and  Miles Puttergill

Only a few years ago, Africa was being dubbed “the next Asia,” and multinationals watched with mounting interest as local economies boomed across the continent. Although a decline in global commodity demand has since ushered in a slowdown, Africa remains a promising long-term growth market. Its GDP grew about 3.4 percent in 2015, a full percentage point above the global growth rate, and is expected to increase to 4.2 percent in 2016, according to World Bank forecasts (pdf). The African Development Bank (pdf) estimates that consumer spending will reach US$2.2 trillion by 2030 (up more than twofold from $680 billion in 2008). As home to seven of the world’s megacities, and with 29 million youths entering the labor force each year, Africa is fertile ground for investment in such areas as infrastructure and manufacturing.

These figures paint an optimistic picture of the continent as a whole. But Africa is made up of 54 fully recognized sovereign states that cover a vast range of natural ecosystems and an even vaster range of cultures, with some 2,000 languages spoken. Unfortunately, we’ve seen too many multinational corporations (MNCs) take their businesses into Africa without a deep understanding of local market dynamics, skills, and conditions. They assume that success is a sure thing, and, as a result, their strategies turn out to be too broad. They revolve around growth projections rather than what individual markets actually need.

Understanding distinctions is critical. But it is equally important to know where your own strengths lie and to match these capabilities to the circumstances of each local market, or to know what capabilities you need to succeed and find partners that possess them. Either way, you’ll also need to develop a network of local experts to execute your strategy on the ground. This is what companies that have established thriving businesses in Africa have done. Many are Africa-based companies that have expanded throughout the continent. MNCs based elsewhere should learn from their experience.

Market Matchmaking

The companies that perform best in Africa tend to target countries in similar stages of economic development. The expertise that benefits their operations in South Africa would also do so in Botswana or Namibia, but wouldn’t get them far in Mali or the Democratic Republic of the Congo (DRC). It can therefore help to think about groupings of countries with comparable wealth (measured by GDP per capita) and institutional quality (measured by the World Bank Doing Business Index)(pdf). Based on these criteria, African countries fall into six basic categories (see map). The first three described below offer the most opportunity; the others tend to be more challenging environments in which to operate.

Countries with high income and strong institutions have reliable ports, roads, legal systems, police, and educational resources. They typically have a sizable middle class, along with a skilled workforce. Companies with distinct capabilities that include world-class product, service, and technological innovation; quality management; and branding and marketing management can thrive in these markets. For example, South Africa–based First National Bank has delivered impressive profits in Botswana, Namibia, and Swaziland, based largely on its innovations in such areas as mobile applications and online banking. Such features are popular in these countries, where income is higher, infrastructure is more robust, and penetration of banking and mobile phone services is greater than in many other African countries.

Countries with high income and weak institutions have pockets of wealth, and therefore purchasing power. But their lack of institutions places greater demands on companies. They will need strong capabilities in managing relationships with government and other stakeholders, planning for and managing security challenges and crises, and creating supply chain resilience to ensure consistent service. Nigeria-based Dangote Group, one of the largest conglomerates in Africa, has built deep relationships across the country that enable its divisions to set up productive partnerships and agreements. Its cement division has benefited from this capability, while ensuring the resilience of its supply chain through vertical integration from raw material sourcing to production and distribution.

Countries with middle income and strong institutions have aspirational customers that demand premium products and services, but need them to be delivered at lower price points. Cost leadership capabilities are thus critical, along with cost management and low-cost service and product provision. Companies can also succeed in these markets if they offer innovative technology, especially at the distribution level, to help keep prices low. The widely publicized success of Kenya’s Safaricom provides a powerful example. Safaricom pioneered the M-Pesa mobile money system, which uses a low-cost distribution network to enable subscribers to set up modest accounts with prepaid sums, then make payments out of the accounts via mobile phone. No traditional bank account is needed.

In countries in the other three categories — the middle-income markets with weak institutions and the low-income markets with strong or weak institutions — companies face more acute challenges. They need to be able to operate with limited infrastructure, less efficient and less transparent regulation, and less-skilled employees. A company going into any of these markets has to excel at crisis management, as well as end-to-end operations management that ensures self-sufficiency and operational resilience.

For the most part, companies enter these countries to extract resources, and mitigate risk as much as possible through agreements and contracts with the government, often supplemented by guarantees from multilateral organizations such as the World Bank. Other types of companies that have expanded in these countries are those highly skilled at building and operating every component of their business independent of external support. When the South Africa–based retail chain Shoprite built shopping centers in Uganda, for example, it essentially created its own infrastructure for its stores.

Think Global, Operate Local

Once a company has identified its target markets, it will need the right people on the ground to execute the strategy. In many of Africa’s labor markets, companies will have to develop talent with the skills needed to run their local operations.

They should start by embedding a core team of home-country experts to oversee the new business. The 170-year-old South African financial-services firm Old Mutual, for example, has subsidiaries in the southern, western, and eastern parts of Africa. In many of these regions, the company relies on a pool of expats with relevant qualifications and experience for such functions as actuary work, an area in which local talent is generally limited. These expats are selected as much for their cultural agility as for their technical skills, to ensure that they can connect with local employees.It is important to invest heavily in skills transfer. This often includes both conducting on-the-ground training and bringing local employees to the home office to understand the firm’s culture and ways of working. After that, the challenge for many successful companies is how to prevent competitors from poaching their talent. They should develop compelling value propositions for local staff, including compensation above the market average, additional benefits such as pensions or housing, career development opportunities, and a sense of community.

Aside from developing a local talent pool, companies can seek out local businesses to partner with, through mergers, joint ventures, or simple supply arrangements. They’ll need to clearly define what they want from a potential partner, and then evaluate candidates carefully against these requirements. RCL Foods, the leading South African poultry producer, takes stakes in local product manufacturers and distribution networks that will benefit from its cold-chain distribution capability. But the company has strict requirements regarding any partner’s ethical reputation and track record of teaming with international players. Its stringent criteria mean that RCL, which currently has joint ventures in several countries, among them Zambia and Botswana, has to be patient. According to Pierre Rossouw, RCL’s Group Africa development manager, the company turns down 95 percent of the deals it is pitched.

Sanlam Emerging Markets, a South African financial-services group founded in 1918, avoids competitive bids. The company prefers to invest 18 to 36 months in establishing a trusted relationship with a new partner and demonstrating the unique benefits it can bring to develop the partner’s business — including inviting management to visit Sanlam’s operations in South Africa. According to Heinie Werth, CEO of Sanlam, the company’s 2005 acquisition of African Life Assurance Company was critical to enabling its expansion. African Life provided access to Botswana, Ghana, Kenya, Tanzania, and Zambia, and focused on the low-cost product offerings and mass-market distribution that were missing at Sanlam but essential to success in these markets. Sanlam has since built a direct interest in 11 countries in the southern, western, and eastern regions of Africa (as well as in India and Malaysia).

Finally, local subsidiaries won’t function well if policies and processes are ill-suited to their culture. But as you loosen the reins, you must ensure that you won’t be exposed to major failings of local judgment or to ethics violations. Greg Davis, CFO of Standard Bank, a leading African bank with operations in 20 countries, attributes much of the bank’s success in Africa to its ability to strike a balance between regional compliance and risk oversight, and its local empowerment of decision makers. For instance, although the bank establishes a consistent corporate and investment banking capability globally, it grants country teams the autonomy to develop and execute strategies tailored to their own market.

Risk and Reward

As in all less-developed markets, companies will face challenges as they enter Africa. These might include local insurrections, underestimated costs, or overestimated consumer purchasing power. African economies are highly volatile and unpredictable, vulnerable to both commodity price swings and political instability. GDP per capita in Ghana has grown 106 percent during the last 25 years, whereas in the DRC, it has fallen 39 percent over that same period.

In the end, if you incorporate your company’s expertise with the economic, institutional, social, and infrastructural realities in local contexts, you can give yourself a competitive edge. It’s a worthwhile risk, because if you succeed you will find yourself in an enviable position: You could be an architect of one of the early pan-African powerhouses.

Why US diplomats walked out of Uganda president’s inauguration

Uganda's long-time president was sworn in Thursday for a fifth term, taking him into his fourth decade in power amid arrests of opposition politicians and a shutdown of social media.
Uganda’s long-time president was sworn in Thursday for a fifth term, taking him into his fourth decade in power amid arrests of opposition politicians and a shutdown of social media.

WASHINGTON (AP) — The U.S. delegation to Ugandan President Yoweri Museveni’s inauguration walked out of Thursday’s ceremony in protest against his disparaging comments about an international war crimes tribunal and the presence of Sudan’s leader, whom the court has indicted, the State Department said.

Department spokeswoman Elizabeth Trudeau said U.S. Ambassador to Uganda Deborah Malac and a visiting Washington-based official, along with several European and Canadian diplomats, abruptly left the inauguration after Museveni made negative remarks about the International Criminal Court in his inaugural address. She added that the U.S. also objected to Sudanese President Omar al-Bashir’s participation in the inauguration. Al-Bashir has been charged by the court for atrocities in Sudan’s western Darfur region.

Trudeau did not identify the European or Canadian diplomats involved. She said Museveni’s comments were “insulting” to both the court and to victims of war crimes and genocide.

“We believe that walking out in protest is an appropriate reaction to a head of state mocking efforts to ensure accountability for victims of genocide, war crimes and crimes against humanity, particularly when his country has committed to accountability as a state party to the Rome Statute” that established the court, she said.

President Yoweri Museveni, 71, was inaugurated in the capital, Kampala, in a ceremony attended by dignitaries from across Africa, including Zimbabwean President Robert Mugabe, South African President Jacob Zuma and President Omar al-Bashir of Sudan. Tribal dancers entertained the crowd and Ugandan military aircraft, including Russian-made fighter jets, performed an air show over the venue.
President Yoweri Museveni, 71, was inaugurated in the capital, Kampala, in a ceremony attended by dignitaries from across Africa, including Zimbabwean President Robert Mugabe, South African President Jacob Zuma and President Omar al-Bashir of Sudan. Tribal dancers entertained the crowd and Ugandan military aircraft, including Russian-made fighter jets, performed an air show over the venue.

In his address, Museveni called the court “a bunch of useless people” and said he no longer supports it. Uganda is a member of The Hague-based International Criminal Court and as such is obligated to detain and turn over suspects wanted by the tribunal. The United States is not a member of the court, but supports it and has called on other countries to live up to their commitments under the treaty that created it.

The walkout was preceded by expressions of concern about al-Bashir’s presence from the U.S. delegation to Uganda’s prime minister and foreign minister, Trudeau said. She added that the delegation decided to attend the inauguration despite al-Bashir’s attendance out of respect for U.S.-Ugandan bilateral relations, but made the decision to leave after Museveni’s remarks.

Al-Bashir faces two ICC indictments for atrocities linked to the conflict in Darfur, where an estimated 300,000 people have died and 2 million have been displaced since 2003, according to U.N. figures. He rejects the ICC’s authority and had been able to travel relatively freely in Africa and the Middle East — even to countries like Uganda and South Africa that are parties to the Rome Statute and are required to carry out ICC arrest warrants. Al-Bashir also recently attended the inauguration of Djibouti’s president, an event attended by U.S. officials.

Why Senegal is a Fitting Partner for the U.S. in Defending West Africa

Soldiers parade during the closing ceremony of a joint military exercise between African, U.S. and European troops in Saint Louis, Senegal, February 29. The U.S. has signed an agreement increasing access to facilities in the West African country.
Soldiers parade during the closing ceremony of a joint military exercise between African, U.S. and European troops in Saint Louis, Senegal, February 29. The U.S. has signed an agreement increasing access to facilities in the West African country.

By John Campbell/Newsweek

Emblematic of the growing U.S. defense presence in West Africa is a new defense cooperation agreement signed on May 2 with Senegal. According to the low-key report carried by Associated Press (AP), the agreement improves access for the U.S. military to Senegal should they need to deploy in the event of a security or humanitarian crisis. In Dakar, U.S. Ambassador James Zumwalt said, “With this agreement, the United States military and the Senegalese military can plan better together, accomplish more with joint training, and better prepare to respond in concert to risks to our shared interests.”

According to AP, this new agreement updates another that dates from 2001. It provides U.S. access to certain facilities in Senegal and authorizes U.S. forces to make certain physical improvements, as necessary.

There has long been low-key military cooperation between Senegal and the U.S. With respect to democracy, Senegal is an African success story, with credible elections through which the opposition came to power. An overwhelmingly Muslim nation, Senegal is known for its religious tolerance; its first president, one of the 20thcentury’s most celebrated intellectuals, Leopold Senghor, was a Christian. Senegal also is a center for a network of Muslim Sufi brotherhoods that stretch from Dakar to Khartoum. West African Sufi Islam is known for its mysticism, its cult of the saints and its religious tolerance. It is anathema to the radical, jihadist groups such as Boko Haram in Nigeria. Dakar has shown concern about possible penetration by jihadist Islam. Senegal is one of the majority-Muslim West African countries considering the banning of the burqa, the veiling that hides the face of a Muslim woman, that has been used by suicide bombers to hide in crowds. It has already been banned in Chad and according to London’s Daily Telegraph, there is little opposition to its banning in Senegal.

Defense cooperation agreements between the United States and West African countries are not rare; there are more than 60. In terms of political and social developments, Senegal would appear to be a particularly appropriate partner for Washington in the region.

John Campbell is the Ralph Bunche Senior Fellow for Africa Policy Studies at the Council on Foreign Relations in New York.

How to steal from Africa, all perfectly legally

The City of London, arguably the heart and headquarters of a international network of tax havens.
The City of London, arguably the heart and headquarters of a international network of tax havens.

By Alex de Waal | Africa loses at least $50 billion a year — and probably much, much more than that — perfectly lawfully. About 60% of this loss is from aggressive tax avoidance by multinational corporations, which organise their accounts so that they make their profits in tax havens, where they pay little or no tax. Much of the remainder is from organised crime with a smaller amount from corruption. This was the headline finding of the High Level Panel on Illicit Financial Flows from Africa, headed by former South African President Thabo Mbeki, a year ago.

This amount is the same or smaller than international development assistance ($52 billion per year) or remittances ($62 billion). If we take the accumulated stock of these illicit financial flows since 1970 and factor in the returns on this capital, Africa has provided the rest of the world with $1.7 trillion, at a conservative estimate. Africa is a capital exporter.

The rest of the world didn’t take much notice of the Mbeki Panel’s findings until the Panama Papers revealed the extent to which this is just part of a global phenomenon. The rich aren’t being taxed. The rest of us pay for everything.

The OECD calls the phenomenon ‘base erosion’ (referring to the emasculation of the tax base of the affected countries) and ‘profit shifting’. The beneficiaries are a small fraction of the world’s wealthiest 1%, and the secrecy jurisdictions (aka tax havens) where they sequester their money. These locations include the City of London, numerous British overseas territories, Switzerland, and new entrants to the global business of looking after the monies of the hyper-wealthy and ordinarily wealthy, who would prefer not to pay tax. Countries including Mauritius, the Seychelles, Botswana and Ghana are seeking to enter this competition.

And the vast majority of this is perfectly legal.

Accountants’ alchemy

Two hundred years ago, the slave trade was legal. One hundred years ago, colonial occupation and exploitation were legal. This time the legal immiseration is done by accountants.

This dimension of unethical financial activity isn’t captured by Transparency International (TI) and its Corruption Perceptions Index. That index is, as it says, a measurement of perceptions. But of what andby whom? As the UN Economic Commission for Africa recently observed, it relies on asking key power players in a nation’s economy what they think of the level of corruption. Many of those are foreign investors. Using this approach a country like Zambia will unsurprisingly tend to rank high on corruption – 76 worst out of 168. Meanwhile, Switzerland will rank low – 7th.

But the perfectly legal transfer of the wealth of Africa to Europe isn’t captured by this index. As TI notes, “Many ‘clean’ countries have dodgy overseas records”. Consider this: the number one destination for Zambian copper exports is Switzerland, which in 2014 accounted for 59.5% of the country’s copper exports. Yet Switzerland’s own imports that year scarcely contained any mention of copper at all. Had the African country’s main exports just vanished into thin air? The 2015 figures suggest that in fact much of these exports were destined for China (31%), though Switzerland remained the number one destination (34%).

The answer to where the money goes lies in accountants’ alchemy. International corporations present their books in such a way that they pay as little tax as possible in either Zambia or China. And they don’t pay much in Switzerland either – because the Swiss don’t demand it.

Suddenly the ranking of Switzerland, 69 places ahead of Zambia in the honesty league, looks a bit suspect. But of course it’s all perfectly legal.

From Zambia’s point of view, what counts as corruption is defined by the rich and powerful. When their country is robbed blind by clever accounting tricks, against which their government and people have no recourse, it is just the operation of a free market controlled – as free markets so often are – by corporations that have enough power to set the rules.

Political money in a political marketplace

Another little noticed but significant feature of illicit financial flows from Africa is that there are occasional reverse flows. The movements back into African countries aren’t as big as the outflows, but they are important. What is happening here is “round-tripping”: spiriting funds away to a safe place so they can be brought back, with their origins unexplained, and no questions needing to be asked.

The same multinational corporation that is defrauding an African country can pay money into the offshore account of one of its political leaders. Or that leader can whisk funds away by other means. Our main concern here isn’t the money invested in real estate in France, yachts, fast cars, or foreign business ventures. These are personal insurance policies in case things go wrong at home, or tickets to the global elite club. Rather, our concern is the cash kept liquid, to be brought back home when needed – the money brought back to fix elections, buy loyalties and, in sundry other ways, secure leaders in power. These are political budgets par excellence: the funds used for discretionary political purposes by political business operators.

In the United States, almost any kind of political funding you can think of can be done in a perfectly legal manner, given a smart enough accountant and lawyer. Political Action Committees can spend as much money as they like in support of a candidate. Campaign finance is essentially without a ceiling.

In Africa, political finance laws range from lax to non-existent. Spending vast amounts of money on winning political office – or staying in office – offends no law. The monetisation of politics is one of the biggest transformations in African political life of the last 30 years. It is generating vast inequalities, consolidating a political-commercial elite which has a near-monopoly on government office, fusing corporate business with state authority, and making public life subject to the laws of supply and demand. Political markets are putting state-building into reverse gear, transforming peace-making into a continual struggle against a tide of mercenarised violence, and – most perniciously – turning elections into an auction of loyalties.

Political money is discrediting democracy. Some of the transactions that constitute Africa’s political markets are blatantly corrupt, but many are simply the routine functioning of political systems based on the exchange of political services for material reward.

Yes, there is corruption in Africa, just as there is corruption in international trade and finance. But when Prime Minister David Cameron opens the Anti-Corruption Summit next week on 12 May, we should be aware that the greatest fraud perpetrated on the majority of the world’s citizens – notably those living in Africa – is all perfectly legal.

Alex de Waal is the Director of the World Peace Foundation. 

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