All Articles Tagged "african economy"
(Wall Street Journal) — Rocky You is determined to see his company’s $100 Chinese-made smartphone catch on in Nigeria, so he visits crowded Lagos shopping malls every few days to make his case directly to the sales clerks at cellphone shops and electronics stores. ”People making $2,000 or less a month,” says Mr. You, a 28-year-old senior account manager for Huawei Technologies Co., “those are the people we want to reach.” While Huawei is one of the world’s biggest makers of telecommunications gear for service providers, the company only recently started selling consumer products such as smartphones and computer tablets. That has put the Chinese company at a disadvantage against big-name rivals, especially in established markets.
(Wall Street Journal) — From her Gorgeous Look embroidery shop, Monica Adeola has a front-row seat on a new Nigerian consumer ready to dress up. Her customers—stay-at-home moms, young professionals and laborers with newfound spending money—barter over the latest embroidered dresses, blouses and shirts, which are known here as “lace.” No longer reserved for the rich, lace today is on the backs of motorcycle-taxi passengers and nightclub goers, part of Africa’s growing middle class. The African Development Bank estimates that the continent has around 300 million people with incomes in excess of their basic needs, up more than 60% from a decade ago. ”We’re trying to rebrand lace,” says Folake Folarin-Coker, a Nigerian fashion designer who helped stage a lace-themed fashion show here last month. “There is a huge middle-income market in Nigeria.” The Nigerian lace industry also opens a window on broader change in Africa as a whole: As the consumer class expands, so, too, has the underground, informal economy.
By Steven Barboza
While Washington is preoccupied with war in Afghanistan and Arab liberation movements, Beijing is feeding its insatiable “Made in China” machine by cranking out mega-deals to develop Africa’s infrastructure in return for rights to grab resources, such as minerals and oil.
Some African leaders compare these resource-for-infrastructure swaps to Marshall Plans — deals big enough to jumpstart economies. But critics in the West say the swaps amount to a “Great Chinese Takeout” or a series of sweetheart deals for the Asian colossus.
China’s biggest bet on the continent is a $6 billion accord with Congo, a country buried in debt but rich in virtually every known mineral, from gold and diamonds to coltan, a key element in cell phones, computer chips, nuclear reactors, and PlayStations. Congo has 80% of the world’s coltan reserves.
In return for rights to extract more than 11 million tons of copper and 620,000 tons of cobalt from Congo mines over 25 years, China has agreed to build 2,000 miles of roads and 1,800 miles of railway tracks, hundreds of schools and health clinics, and two airports.
Though the U.S. already operates huge mining projects in the Congo, Westerners gripe about the so-called “bonanza” from which China stands to profit $42 billion on its initial investment.
“I don’t see the Congress of the United States allocating money for building the Democratic Republic of Congo,” Faida Mitifu, Congo’s ambassador to the U.S., told the Atlanta Post. “So the Congolese have decided for the first time to rightfully trade their mineral resources in exchange for developing infrastructure in different areas. I don’t see anything negative about a country wanting to improve its infrastructure.”
By global business standards, this deal may not be the biggest. Still, it is roughly the equivalent of Congo’s annual national budget: a mere $5.69 billion for one of Africa’s most populous countries, with 68 million people.
Joseph Kabila, Congo’s president, said his ministers identified several infrastructure needs, then he shopped around for help. Now Chinese-led crews are filling potholes, laying asphalt over dirt roads and generally helping to bring the nation one step closer to the 21st century so Congolese farmers and merchants can deliver their goods to market.
“We are still at the very beginning, but it’s opening jobs for Congolese. We hope [the deal] will open up greater opportunities in terms of jobs and infrastructure. That will eventually change greatly the lives of the Congolese,” said Mitifu. “Little by little we are eliminating our dependency on imported food.”
She estimated that 70% of workers in new projects will be Congolese, and 30% will be Chinese.
(Businessweek) — Business just doesn’t seem to be a priority in Africa. Or does it? While most of us have trained our eyes in recent years on the rapidly developing economies and companies of China, India, Eastern Europe, and Latin America, parts of Africa also have surged.
Some African economies, thanks to economic and political reforms, are growing impressively, bringing new wealth to the region and making local companies attractive merger-and-acquisition targets. During the July-September quarter of 2010, for example, Japan’s NTT (NTT) announced plans to purchase Dimension Data, a South African-based IT powerhouse with operations in 47 countries, and Wal-Mart (WMT) made known its intention to buy a controlling share of Massmart (MMRTY), the South African operator of nine wholesale and retail chains in 14 sub-Saharan countries and the third-largest distributor of consumer goods on the continent. (Massmart shareholders approved the Wal-Mart takeover in mid-January.)
by Alexander Cain
While many foreign investors see Africa as the next emerging economy filled with opportunity, the political unrest and turmoil plaguing many African nations has slowed down the continent’s growth as a world power. Although the Ivory Coast stands as an example of an emerging African country with the necessary raw materials to produce growth within the country’s economy, due to the political clash between two presidential candidates, the nation’s economy is deteriorating as many foreign companies suspend or even relocate facilities in fear of the situation becoming worse.
The Ivory Coast has been experiencing political turmoil since 2002 when a civil war broke out between the Rebel-held north and the government controlled south. In September 2002, rebel forces launched a full-scale rebellion, angry because of the discrimination Northern Muslims felt in Ivory Coast politics. It wasn’t until 2007, when a peace agreement instituted multiparty elections, that the nation began to settle down and the nation’s economy started experiencing growth.
Most recently, two major political figures, incumbent Laurent Gbagbo and opposition candidate Alassane Ouattara, have declared victory in the country’s recent multiparty elections. Neither “president” is willing to concede. This political uncertainty is certainly hurting the emerging market.
The Ivory Coast is the world’s largest cocoa producer and a growing gold exporter. Since the 2007 peace treaty, the Ivory Coast has experienced significant growth improving around 4% last year compared to 1.7% in 2007 according to a Wall Street Journal report. In part due to the political treaty and the economic growth, the World Bank forgave $4 billion in debt for the Ivory Coast. Because of the recent controversy, there is a global slowdown in cocoa exports and its having several ripple effects. Neighboring Ghana is smartly capitalizing on the disruption as its own cocoa producers seek to meet the world demand which is not being met by the Ivory Coast.
In the Ivory Coast, foreign investors are scaling back their investment in the country and cocoa production/exports are on the decline. As Mohamed Moussa, a truck driver who transports cocoa beans in rural Ivory Coast described in a recent WSJ report, “I’ve got nothing in the house. I’m desperate for them to send us back into the bush. We haven’t been buying cocoa for two weeks now.”
Many foreign owned mining and cocoa production businesses are also suspending production or reducing staff as a safety measure. For example, Australia-based Newcrest Mining suspended operations at its northern Bokiro mine on Sunday as a precaution according to a company statement issued Monday. Bonikro produces roughly 120,000 ounces of gold per year, according to the company.
The biggest impact is in the commodities market as cocoa experiences new highs due to decreased production. Volatility in the price of cocoa is expected until the Ivory Coast government reaches a conclusion. The weaker production has driven the price of cocoa up to $3,140 a metric, the highest level since Aug. 6, after surging 5 percent last week, the most since the week endeding July 16 according to Bloomberg. While the surge in price isn’t expected to be seen in consumer goods just yet, the likelihood increases with each day of political impasse.
While both candidates remain adamant about their presidency, the Ivory Coast is at a standstill anxiously waiting to recognize their next president. Foreign investors are also remaining cautious. Because of the uncertainty, cocoa prices will remain volatile as everyone seeks an immediate end to this political situation.
(Wall Street Journal) — After spending two decades introducing fried chicken and pizza to Chinese consumers, Yum Brands Inc. now sees Africa as its next international jewel. By 2014, the Louisville, Ky., restaurant-holding company expects to double its number of KFC outlets in Africa to 1,200. In the next four years, it aims to more than double its revenue on the continent to $2 billion. “Africa wasn’t even on our radar screen 10 years ago, but now we see it exploding with opportunity,” says David Novak, Yum’s chairman and chief executive officer. The improved political stability of various African governments, the region’s vast population and a growing middle class in Africa—where chicken is a dietary staple—led Yum to set its sights on the continent.