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MEMORANDUM Nº 229/2012 12/12/2012



European Business Council for Africa and the Mediterranean The European Private Sector Organisation for Africa’s Development

2 ONE) – ZAMBIAN SUSTAINABLE ENERGY INFRASTRUCTURE GETS EUR50M EIB SUPPORT Energy users across Zambia and Southern Africa will benefit from a new 120 MW hydropower plant and long-distance transmission line to be financed with support from Europe’s long-term lending institution. The European Investment Bank will provide EUR 50m for the project that includes the construction of a hydropower plant at the existing Itezhi-Tezhi Dam and 291km transmission line to Lusaka that will connect the power station to the national grid and the Southern African Power Pool The funding agreement finalising European Investment Bank support for the ZESCO project was formally signed in Lusaka by Zambian Minister of Finance, Alexander Chikwanda, Managing Director of ZESCO Cyprian Chitundu and representatives of the European Investment Bank. “Increased production of green energy will lower the cost of importing electricity to Zambia and reduce reliance on coal-generated power. The European Investment Bank recognises the detrimental economic impact of power shortages in the region and is committed to supporting long-term investment in key energy infrastructure across Africa. The impressive Itezhi-Tezhi project complements the European Investment Bank’s support for upgrading the Kafue Livingstone transmission line provided earlier this year.” said Pim van Ballekom, European Investment Bank Vice President responsible for lending in sub-Saharan Africa. “The Itezhi-Tezhi Hydropower Project will enhance the generation capacity of electricity on the national grid, as well as increasing the reliability and quality of supply of electricity in Zambia. The 120 Megawatt Project is being developed by Itezhi-Tezhi Power Corporation, with ZESCO and TATA each having a 50% share. Power from the Itezhi-Tezhi Power Station will be transmitted through the Itezhi Tezhi –MumbwaLusaka West transmission line to the national grid. Evacuation of power through this line will significantly reduce the challenges facing ZESCO and help to meeting enormous demand for power arising from expansion of the customer base and growth in mining, agriculture, commercial and domestic sectors”. said Cyprian Chitundu, Managing Director of ZESCO. “Support for energy is a key focus of European engagement in Zambia. Investment to improve energy infrastructure and increase supply is essential for economic growth, job creation and reducing poverty. The EU Delegation in Lusaka is committed to increasing its contribution to improving energy access as outlined by the next European Development Fund EDF and working closely with the European Investment Bank to ensure effective support for the sector” said Gilles Hervio, Ambassador of the European Union to Zambia. The Itezhi-Tezhi hydropower project uses an existing dam on the Kafue River, which will minimize the cost of the project and limit environmental impacts. This was constructed in the early 1970s to regulate water flow for the Kafue Gorge Power Station further downstream. This is one of a number of projects intended to increase hydropower generation for the regional electricity network, the Southern African Power Pool, improve energy connections between countries in the region, reduce Zambia’s power deficit and reliance on imported electricity from coal-based power stations. Electricity generation by ZESCO in Zambia is almost entirely based on hydropower plants on the Zambezi and Kafue rivers. Additional financing for the USD 375m project will also be provided by the French Development Agency (AFD), African Development Bank, FMO, PROPARCO, Development Bank of Southern Africa, Republic of Zambia, TATA and the Government of India. An interest rate subsidy and technical assistance grant will also be provided by the EU-Africa Infrastructure Trust Fund. The project is expected to be completed by 2015, provide significant employment during construction and create 60 permanent jobs when complete. ZESCO: Grace Moonze, +260 977, +260 968 926918





Website: -- +260 211 362575, +260 211 362341

TWO) - POST-CONFLICT WEST AFRICAN POWER NETWORKS GET EUR 75M EUROPEAN SUPPORT Separate power networks in West Africa are set to be joined following a new regional electricity project backed by the European Investment Bank. Work to link power systems of Ivory Coast, Liberia, Sierra Leone and Guinea will progress following formal approval of EUR 75m support from the European

3 Investment Bank to the government of Sierra Leone for a regional power line interconnecting these four countries. This is the first project financed by the European Investment Bank in Sierra Leone since 2003. The EIB is a key lender supporting infrastructure and private sector development in Africa. The European Investment Bank support was signed in Freetown by senior representatives of the European Investment Bank, Sierra Leone and the West African Power Pool. "Ensuring access to electricity is essential for economic activity and growth. The European Investment Bank recognises specific acute challenges in post-conflict West Africa and is confident that this crucial energy infrastructure initiative will transform opportunities in the region. We are pleased to continue our close engagement with the West African Power Pool and contribute to enhanced regional cooperation. This investment will allow trade in electricity between Ivory Coast, Liberia, Sierra Leone and Guinea for the first time." said Pim van Ballekom, European Investment Bank Vice-President responsible for sub-Saharan Africa. The EUR 370m scheme includes a new 1350km high-voltage transmission back-bone linking four states with a combined population of 40 million to improve reliable access to cost-effective electricity, and connect them to the West African Power Pool (WAPP). The transmission link will significantly reduce power costs in Liberia and Sierra Leone. When completed, the transmission line will enable power exports from Côte d’Ivoire to the other three countries, and the line will later support development of the large hydropower potential in Guinea. The landmark project will contribute to economic development in Guinea, Liberia and Sierra Leone by increasing availability of electricity in rural and urban areas of these countries. The initiative complements long-standing technical support provided to the West African Power Pool by the European Investment Bank and the EU-Africa Infrastructure Trust Fund. The project will make a significant contribution to rural electrification, and reducing poverty in the region, as twelve substations included in the project will act as hubs for the electrification of key cities in the region. The scheme will greatly reduce dependency on expensive diesel generators to produce electricity. This scheme is a key project for the Government of Sierra Leone and a priority for the West African Power Pool. Through the implementation of priority infrastructure such as this regional power interconnection, the WAPP aims at the creation of a regional electricity market in West Africa to foster power exchanges among the ECOWAS countries and permit access to affordable energy resources. The project is co-financed by the AfDB, KfW and the World Bank, and receives significant grant support from the EU-Africa Infrastructure Trust Fund (ITF), a European initiative for blending loan and grant financing of African infrastructure projects. Support will be provided by the EU-Africa Infrastructure Trust Fund through a EUR 12.5m grant subsidising the EIB loan as well as through technical assistance of up to EUR 4.7m. A third EUR 10m grant from the EU-Africa Infrastructure Trust Fund will be made available to the African Development Bank for the financing of rural electrification in Sierra Leone.

THREE) – CHINA’S TOPS IN SOUTH AFRICAN TRADE South Africa has experienced a significant shift in trade with a new emphasis on links with developing nations, at the expense of traditional partners in the developed world, according to a leading South African economist. Mike Schussler, CEO of, a Johannesburg-based economics consultancy, has looked at the evolution of South African trade since 1998. “Two important changes have happened since then,” he told IPS. “China has become the manufacturing capital of the world, and a lot of South Africa’s mineral products go to China, and India is becoming a manufacturing and service centre.” Schussler said that in 1998, the five major destinations for South African exports were the United Kingdom, the United States, Germany, Japan and the Netherlands, with China in eighth place. In 2008, the top five were Japan, the U.S., Germany, the U.K., and China in fifth place – while India was in seventh place, according to data from the South African Department of Trade and Industry.

4 Figures for the first nine months of this year show that China is now the number one destination for South Africa’s exports, followed by the U.S., Japan and Germany, with India now in fifth place. “Two of the top five are now South-South players, with China and India both members of the BRICS alliance,” said Schussler, referring to the association of Brazil, Russia, India, China and South Africa. “I predict that by 2015, India will be in the top three export destinations, overtaking Japan and Germany.” He also noted that while the scale of inter-regional trade remains more modest, there has been growth in South African exports to the rest of Africa. Meanwhile, Schussler stressed that just as exports are being increasingly sent to other developing nations, South African imports are also increasingly coming from the nations of the South. “The top six currently consist of China, Germany, Saudi Arabia (which is mainly oil), the U.S., Japan and India,” he said. He cautioned that imports from emerging markets into South Africa have not seen as dramatic a shift as that of South Africa’s exports because of the components of the import basket. “Apart from oil, we mainly import consumer goods and capital goods, and that’s why China is doing so well. “We don’t make cell phones here, and yet there are more cell phones in the country than there are people.” Schussler suggested that South Africa could widen the range of its exports beyond the current dependence on commodities if the government were to boost support to certain targeted industries. “We manufacture cars for export, but maybe our advantage lies with agriculture,” he argued. “If we gave our farmers a bit of protection and subsidised our agriculture, our farmers would do very well – as the food sector is an area we should be concentrating on.” He recalled that South Africa has had to stop exporting raw ostrich meat, after a strain of bird flu was detected. “But that shouldn’t be the end of the matter,” he suggested. “If there are health problems with raw ostrich meat, why not cook it and then export it, adding value.” He said that exports of cooked ostrich meat would not face the same restrictions as exports of raw meat. Schussler also suggested that more emphasis could be put on boosting South Africa’s trade with its neighbours. “The rest of Africa is growing at twice the pace of South Africa, and we could really boost our exports if we could provide more consumer goods, in particular, to the region,” he claimed. “In addition, we could provide more services to the region, such as the transport of goods, and tourism.” South Africa joined the BRIC group of leading emerging markets at a summit meeting in China in April 2011, and President Jacob Zuma will host the next BRICS summit in Durban in 2013. There has been much criticism of South Africa’s inclusion in the club, as all the other members have far larger economies. However, Schussler noted that South African membership is already reflected in changing trade patterns, with less emphasis on business with developed nations, and more on cultivating closer economic ties with developing partners. And he pointed out that while South Africa alone may not have the same economic weight as fellow BRICS nations Brazil, Russia, India and China, it has a political and strategic importance as an African member. “South Africa is not a member of the BRICS in its own right,” he admitted. “But it does have a place in the BRICS as a representative of Africa.” Pretoria-based international relations consultant John Maré said that the new focus of South African trade need not be at the expense of its historic ties with the developed world. “I hope that we can strengthen our well-established trade ties with the West while developing those with Sub-Saharan Africa and the broader global community – where the BRICS context is especially notable but not the only one,” he told IPS. “South Africa could be able to help create varying partnerships, often alongside other African players. “If we handle this well, South Africa can indeed become a switchboard or a crossroads of global trade, especially when an Africa dimension is needed.” One way in which trade ties between nations are cultivated is by ensuring that business delegations accompany government leaders on official visits. It is therefore likely that South Africa will want to see not just teams of government officials and politicians at the next BRICS summit, but also businessmen and women from the four partner nations. As Schussler explained, the evolution of South African trade in recent decades has to some extent been determined by the wider changes in the global economy, with the ascendancy of China and India.

5 However, this change is in line with the South African government’s own wish to boost commercial links with other leading developing nations, and there is every reason to believe that the South African trade spotlight will continue to shine strongly on the BRICS nations and the rest of the developing world. (Ips)

FOUR) - AFRICA: KOREA PLEDGES U.S. $590 MILLION SUPPORT TO AFRICA The South Korean government has pledged more support to African countries by extending $590 million in aid and loans over the next two years.. The pledge was announced last week by the Korean government during the first ever 'Korea-Africa Cooperation Week' held in Seoul, South Korea. The 'Cooperation Week' took place from October 15 to18 with the three major forums on Korea-Africa cooperation being held simultaneously for the first time. Building infrastructure, developing natural and human resources, and supporting agriculture and green growth in the African continent will be among the major areas of cooperation. The detailed "action plan" for cooperation was reached during the Korea Africa Economic Cooperation Conference in Seoul that was attended by dozens of finance ministers and heads of African nations and main international organizations. Korea is the only country that has graduated from being a major aid recipient to being a major donor over the last 50 or 60 years, according to media reports. "South Korea looks forward to strengthening its ties with African countries and expand its diplomatic horizons. Korea-Africa cooperation will contribute to enhancing partnership and sharing Korea's development experience to Africa," reads part of the statement from Korean Ministry of Finance. At the end of a four-day Korea-Africa forum, the Seoul Declaration 2012 and reaction Plans 2013-2015 in the area of development cooperation, trade and investment, peace and security was adopted. In the 1950s, after the end of the Korean War, South Korea had a weaker economy than many newly independent sub-Saharan African countries. Now, it is one of the world's 15 biggest economies and has an estimated GDP per capita of $23,000. However as the Korean government pursues its development agenda in Africa; the Asian country has a strong bilateral relations with Rwanda. The economic relationship between Rwanda and Korea is mostly in the areas of ICT, infrastructure, education and agriculture among others. "Rwanda is one of our priority countries in Africa that we will promote capacity building in various sectors and increase business and cultural exchanges," said Hwang Soon-Taik, Korean Ambassador to Rwanda. President Paul Kagame last year visited South Korea where he met Korean business men and senior government officials. During his tour to the Asian country, Kagame delivered his keynote address at the fourth High Level Meeting on Aid effectiveness in Busan. As part of his official activities in the country, President Kagame was hosted to a business breakfast by the Far East Broadcasting Companies. The breakfast was attended by a number of high profile political, business and opinion leaders, among them Kim Young-Sam, former President of the Republic of Korea. Kagame also toured Samsung Electronics- Hyundai Heavy Industries and Automobile Plant and Korea Internet and Security Agency (KISA) among other prominent companies. Korea International Cooperation Agency (KOICA), has signed a number of cooperation agreements with Rwanda's education sector to promote Technical and Vocational Education and Training (TVET) Programme in the country. South Korea's telecom giant, Korea Telecom (KT) developed Kigali Wireless broadband (Wibro) that provides high quality, affordable and reliable broadband services to homes and businesses alike to stimulate the private sector. KT also supported the government to develop 2,500-kilometre national fibre optic cable expected to enhance access to various broadband services in the country. KISA is set to extend its expertise in information protection technology and a Memorandum of Understanding was signed with the government mid this year to strengthen cooperation in the protection of information.

6 Next year in March will be the 50th Anniversary of Korea-Rwanda diplomatic relations and greater economic engagements. (The New Times)

FIVE) – AFRICA’S WEALTH FLOODS OFFSHORE AS LEADERS, CORPORATIONS USE BANKS TO HIDE FORTUNES Bonny Island off the west coast of Africa was the last place many slaves saw before being hauled to the New World. Centuries ago, corrupt African leaders and Western traders became business partners. A few Africans made fortunes; Western interests found cheap labor. And 12 million people lost their freedom. Today the slave trade is gone from Bonny Island in Nigeria, replaced by gas liquefaction plants and pipelines stretching from a great reserve of fossil fuels. But the story has not changed much: Some African leaders are selling off what is most valuable — this time oil, not people — while pocketing huge bribes and leaving their citizens destitute, the Department of Justice says. Bonny Island’s symbolism strikes at the heart of how modern banking has lost its way, according to many who follow the developing world. With the help of multinational banks, money in this modern rip-off disappears into a black hole of tax havens, secret accounts and shell companies, while Western aid groups gather dimes and quarters to try to repair the damage that’s left behind, a Tribune-Review investigations has found. An estimated $1 trillion gets stolen from developing countries in a typical year, according to Global Financial Integrity, a Washington-based nonprofit that trace illicit money. That’s compared with $134 billion a year in aid that developing countries receive, according to the Organization for Economic Cooperation and Development, a Paris-based nongovernmental group that tracks global economics. The difference saddles these countries with crumbling infrastructure, inadequate food supplies and scant health care. Africa, the OECD says, has most of the least-developed countries. “The comparison between today and the trans-Atlantic slave trade is apt and arresting,” said Stanford University slavery historian James Campbell. Places such as Nigeria represent “the ugliest chapter in global affairs since slavery,” said Raymond Baker, director of Global Financial Integrity. He said the number of people who have died because of the illegal transfer of wealth “considerably exceeds the number of people who died in the movement of slaves.” Pervasive bribery It is not clear whether Albert Jackson “Jack” Stanley knew anything about Bonny Island’s slavery roots when he bribed Nigerian officials into letting his company build a $6 billion natural gas plant there between 1995 and 2004. According to sentencing documents, Stanley and his partners offered $180 million in bribes in return for letting Halliburton, its subsidiary Kellogg, Brown & Root and three other companies build a plant. Stanley headed KBR. Bribes would be funneled through U.K. con man Jeffrey Tesler with a company in Gibraltar. Stanley used Tesler to secure personal kickbacks for projects in Yemen, Malaysia, Egypt and Indonesia. Money would flow from a Portuguese shell company account in the Netherlands to New York, Monaco and Switzerland. A secret British Virgin Islands offshore account also was involved. Though the natural gas plant was built, the outcome for the conspirators has been mixed. French authorities uncovered the scheme before all the bribe money was paid, court records show. In the United States, the government secured more than $1.6 billion in civil and criminal fines against Halliburton and its partners. Stanley was sentenced to 30 months in federal prison, and Tesler received 21 months.

7 In a statement, Halliburton said it was not responsible for the bribery, only its former subsidiary. However, Halliburton reported to the Securities and Exchange Commission that it was paying $382 million to resolve the matter. KBR was to pay $20 million. Halliburton and KBR also agreed to forfeit $177 million in profits. In Nigeria, where even some of the most senior leaders have histories of ruthless corruption, no one was prosecuted. Instead, the government sued to have any as-yet unpaid bribes transferred to the nation. Lamenting the Bonny Island situation, the Nigeria World wrote: “Looting and collecting bribes is a legitimate endeavor in Nigeria, particularly if you are one of the big boys and you belong to the looters’ club. Membership (in) the club provides free access to the treasury, oil and gas contracts and plenty of opportunities for looting but, above all, it provides immunity and freedom from prosecution.” Consider for example, the case of Nigerian-born James Ibori, who was a petty thief in London. In the early 1990s, he was convicted of shoplifting and using a stolen credit card. Ibori returned to Nigeria, where he became governor of the oil-rich Delta State, according to the Financial Action Task Force, a Paris-based anti-money-laundering organization with 36 member countries. As governor of an impoverished state, Ibori made an official wage of just $124 a week, according to the task force. Yet he was able to set up a myriad of dummy offshore companies and launder $250 million from unknown sources. He purchased homes and mansions around the world, as well as a private jet and a Bentley, the task force reported. The disparity between Ibori’s pay and his possessions did not dissuade banks from welcoming his business. He used accounts in Gibraltar, Guernsey, Switzerland and Texas to handle his affairs, the task force reported. Some accounts were in the name of his wife; others in the name of his mistress. After an investigation in London that allegedly uncovered a plethora of money laundering transactions by Ibori through cooperative Western banks, Nigeria took action. In 2007, Ibori was charged with 170 criminal counts in Nigeria, but he was acquitted of each. A new government refiled some charges in 2010, and Ibori fled to Dubai, where he was arrested and extradited to the United Kingdom. He pleaded guilty this year to money laundering. Start change from within The consequences of so much money leaving the developing world are serious. Without it, developing countries cannot spend on public services. The lost dollars undermine the unending efforts by Western countries and nonprofits to make the countries self-sustaining. “We’re talking about a massive transfer of wealth from poor to rich,” said Baker, the Global Financial director. Despite their excesses, corrupt political leaders represent the smallest fraction of illegal money transfers from developing countries. Multinational corporations, shifting profits to subsidiaries in countries with no or low taxes and few regulations, make the largest transfers. “It’s corporations all over the world that take advantage of the porosity in the movement of money, and shift resources across borders at will,” Baker said. If developing countries collected the taxes due them, they could greatly reduce — if not eventually eliminate — their reliance on foreign aid, said Joseph Stead, senior adviser for economic justice at Christian Aid, a London-based nonprofit. The amount of money illicitly ferreted out of some developing countries dwarfs the donations from foreign governments and nonprofits. “Countries shouldn’t have to be dependent on overseas aid,” he said. “They should be sustainable and resilient themselves. The only way that’s going to happen is if you have countries generating the levels of revenue themselves to pay for essential public services.” Rather than sending aid money for food and shelter, Western governments should help developing countries establish taxing authorities and increase enforcement, British Parliament’s International Development Committee said in a July report. Poor countries, it said, collect a significantly smaller portion of their gross domestic product in taxes than developed ones: 13 percent in the poorest countries versus 35.4 percent in the wealthiest.

8 “How do you build these economies to the point where you’re raising the income of people so that they’re less poor and therefore better fed, better housed, more healthy, and where the state has the capacity to fund its own health, infrastructure, education — all the basic services that we take for granted in developed countries?” asked Sir Malcolm Bruce, a member of Parliament and the committee’s chairman. If the political and economic elite pay little or nothing in taxes, other residents and foreign corporations don’t see why they should pay them either, Bruce said. Personal income tax accounts for a small proportion of the taxes in developing countries, the report found. “Where the leadership of the country is exceedingly corrupt, it’s the norm rather than the exception that we know of Swiss bank accounts and others full of ill-gotten gains by senior political people who simply diverted the money,” Bruce said. (Triblive) . SIX) –TANZANIA: TRANSIT OIL TANKERS ACCUSED OF INTERFERENCE AT PORT There is growing concern among oil marketing companies over what they believe is deliberate disruption of bulk procurement system (BPS) oil tankers by transit fuel ships. A source told the 'Sunday News' that five ships, including three transit tankers, a molasses and heavy furnace oil (HFO) for electricity generation at Independent Power Tanzania Limited (IPTL) had been allowed to jump the queue of oil tankers awaiting offloading at the Dar es Salaam Port. Observers say if the disruption would continue, it might result in a fuel shortage. However, Augusta Energy SA Managing Director, Giussepe Nestola has allayed fears of fuel shortage, but was not comfortable either with the regular disruption of the BPS process and the priority given to transit fuel tankers. "We have written to Petroleum Importation Coordinator (PIC) and Ewura several times on this problem. It delays the smooth discharging of fuel and adds delay surcharge costs," Mr Nestola noted, saying major oil marketing companies which dominate the PIC board are regular violators of the BPS process. Mr Nestola said much of the transit fuel is diverted into the local market, adding that major oil marketing companies exploit some clauses in the 2004 East African Customs Administration Act, which allow transit goods to pay local taxes after 30 days they are at the port and thereafter, they can be sold locally. "It's frustrating the BPS process and the big oil companies do it deliberately," Mr Nestola said. Augusta Energy SA won the first, second and third BPS tender to supply the country with petroleum products since last January. Swiss based conglomerate, Addax Oryx Group (AOG) won the latest tender to supply the country 350,000 metric tonnes of petroleum products for the months of September and October. Reacting, PIC General Manager Michael Mjinja said they wrote a letter to Energy and Water Utilities Regulatory Authority (EWURA) last month, with copies served to Permanent Secretary, Ministry of Energy and Minerals, Eliakim Maswi and Tanzania Revenue Authority (TRA) Commissioner General, Harry Kitillya, requesting smooth offloading of petroleum products. "We had several disruptions of BPS ships discharging petroleum products last month. We were afraid we might run out of supplies, but now the process is smooth," Mr Mjinja told the 'Sunday News.' He said so far three tankers have already discharged over 71,000 metric tonnes of petroleum products. "At the moment, Pacific Jewel is discharging 21,850 metric tonnes of diesel, 13,200MT of jet A1 and 3,800MT of kerosene," the PIC chief noted. Mr Maswi himself said the situation was under control and that although permits have been issued with respect to Zambian transit fuel at HFO for IPTL, there was no cause for panic. "I can assure you no crisis is looming because we have enough fuel," Mr Maswi said. According to Ewura, the country consumes an estimated six million litres of petroleum products a day which includes diesel, petrol and kerosene. (Tanzania Daily News)

9 SEVEN) – ZUMA PROPOSES $97 BILLION BUILDING PROGRAM IN SOUTH AFRICA In an effort to rescue his nation’s crumbling economy, South African President Jacob Zuma yesterday announced a massive building program that would spend $97 billion over the next three years to upgrade roads, ports and access to utilities, and to exploit deposits of coal and other minerals. In addition, other critical infrastructure projects will take 15 years and $462 billion to complete, including significant investments in the private sector. It is a bold and ambitious plan at a time when South Africa desperately needs it, as widespread wildcat strikes have devastated the country’s mining sector, which is one of the biggest areas of the South African economy. The rand has fallen 5 percent against the dollar since August and because of fallen mine production and lessened demand from Europe, South Africa’s biggest trading partner, economic growth is expected to reach just 2.6 percent this year, according to the central bank, too low to imapct an official unemployment rate of nearly 25 percent. Significantly, all the labor unrest has hammered South Africa’s carefully cultivated image as the best place for foreigners to invest in Africa. But Zuma hopes this focus on infrastructure will prove reassuring to foreign investors and create local jobs. “As a job creator the infrastructure program is a clear win. Construction and maintenance alone will employ tens of thousands of people,” he said. Zuma also lashed out at the media for focusing on the negative aspects of the unrest and his handling of the economy since he took office in 2009. “We urge those who have access to the media from all sectors, including opposition politicians, to stop talking our country and economy down,” Zuma said. “No country should be made to withstand such negativity and total disregard of progress made.” Zuma forcefully inserted himself in the labor disputes between the miners and business leaders this week, after weeks of criticism that he wasn’t closely enough involved. “We can no longer allow the government to fiddle while the economy suffers,” Lindiwe Mazibuko, parliamentary leader for the opposition Democratic Alliance, said this week. “We need bold leadership and a clear, growth-orientated plan to ensure that this downturn is reversed.” Zuma called on the mine workers to return to work and asked their bosses to agree to year-long salary freezes in a show of good faith. His intervention came as the Gold Fields gold mine threatened to fire up to 25,000 employees if they didn’t return to work—two weeks after Anglo American Platinum fired 12,000 striking workers. Zuma met at the same time with the business leaders from the mines and the union leaders representing the striking workers. “We are agreed that violence and intimidation must come to an end. These have no role in our system and simply have a negative effect,” Zuma said. He asked the executives to freeze salaries and bonuses for the next year as a “strong commitment to build an equitable economy” and to address income inequality. “The parties make a call on CEOs and executive directors in the private sector and senior executives in the public sector to agree to a freeze in increases in salary and bonuses over the next 12 months, as a strong signal of a commitment to build an equitable economy,” Zuma said. “They call for an informed national conversation on income inequalities and how best to address them.” His appeal seems to have worked, as Lonmin said that its employees had returned to work on Friday at its platinum mine in Marikana, where the turmoil started in August after police shot and killed 34 protesters. Some workers had walked off the job on Thursday to protest the arrest of four colleagues on murder charges related to recent mine violence. Gold Fields Ltd. also said most of its employees at the KDC West mine had resumed work Friday, following the ultimatum to return to work or lose their jobs. About 1,500 miners there were fired Thursday after they didn’t show up for their shifts. Approximately 8,500 workers remain on a wildcat strike at its KDC East mine. The company issued an ultimatum to return by the Monday night and Tuesday shifts or face immediate dismissal. (Atlanta Blackstar)

EIGHT) – THE SAD TRUTH: SOUTH AFRICANS ARE NOT BIG SAVERS In the latest Quarterly Bulletin published by the South African Reserve Bank, the national saving ratio as percentage of gross domestic product declined from 15, 2%in Q1 2012 to 14,1% in Q2.

10 While household saving did not actually decline (it remained at 1.7%), household debt as percentage of household disposable income increased from 75,6% to 76,3% over the same period. This means that the rate of increase in consumer debt has surpassed the rate of increase in household disposable income. Household income affected by weak economy The decline in household disposable income is in line with the weakness of the economy and high unemployment levels. With the August inflation rate at just 5%, nominal1 wage increases are much lower than they were in 2011. Debt driven by unsecured lending The increase in household debt can partly be explained by a surge in unsecured lending over the past few months. While interest rates are at historically low levels, making borrowing seem attractive, there remains the danger that most consumers will be unable to service their debt when the interest rate cycle turns and rates rise. High debt repayment leaves less for consumption Even when interest rates are low the debt repayment burden remains challenging for highly indebted consumers. Debt repayment almost becomes a non-discretionary item that has to be paid before spending on other retail items. Therein lies the problem; the consumer demand which has to remain strong in order to support economic growth; is being undercut by debt repayment. Consumer related data that came out in the past few weeks confirms that consumers are under increasing pressure when it relates to their spending ability. Growth on household consumption expenditure by the household sector slowed from 3,1% (Q1 2012) to 2,9% (Q2 2012). For 2011 as a whole the growth rate was 5%, so clearly the trend is downward. Retail trade sales for July also slowed sharply compared to the June figures. Why is it difficult for SA consumers to save? This is complex question but these are some of the economic reasons: The official level of unemployment is high; if we look at the numbers of discouraged workers; this increases even further. Added to that, the rate at which the economy absorbs new entrants in the formal sector of the economy is low. With a large number of economically active people without jobs, anecdotal evidence suggests that it falls to a few individuals who are employed to support the extended family. This leaves very little available for saving. There is also no way of saving when one is unemployed; in South Africa too many potential savers do not have jobs. Inflation is comfortably within the target range but some items within the basket still take a lot of consumers’ discretionary income. A lot has been said in the past about administered prices but the point on petrol prices bears repeating because it has both direct and indirect impact on income. The cumulative impact of the increase in petrol prices and other necessities means that the bulk of most people’s income is spent on consumption with little left to save. Consumer debt is high and a substantial part of income is spent on servicing debt. It is important to pay off expensive short-term debt like store cards and credit card debt. Paying off short-term debt while interest rates are at historic lows is the best start towards ‘saving’.(Money Web) 1 Actual wage increase without inflation affect

NINE) – BUMPY ROAD AHEAD FOR MOROCCO Morocco's stock market will be in focus this week, with investors eyeing diplomatic talks between the king and Arabian Gulf member states ahead of a planned US$1 billion (Dh3.67bn) debt issue. The CFG 25 Index has lost 17.5 per cent this year as institutional funds have reduced their holdings. Several companies have warned that their second-half earnings may underperform expectations as Europe's financial crisis continues to deepen.

11 Liquid stocks such as Auto Nejma, based in Casablanca, and computer technology firm IB Maroc fell 5.9 per cent and 11.6 per cent respectively on Wednesday. "The market is in a free fall mode," said Sebastien Henin, a portfolio manager at The National Investor, an investment company in Abu Dhabi. "I think we could have bad sessions in coming days. When you move from positive growth in terms of net earnings to negative income, it's a very poor signal to the financial community and people just want to reduce exposure to the equity market." Morocco will face a budget deficit of about 5 per cent of GDP this year, according to estimates by the IMF. "The picture is not appealing due to the fact that they are suffering from many angles due to what is happening from Europe," Mr Henin added. "It's difficult to export products, at the same time they rely a lot on European tourists who are currently under pressure, all the while receiving less remittances due to the fact that the overwhelming majority of Moroccans abroad live in Europe." King Mohamed VI began his tour around the Arabian Gulf ahead of a $1bn dollar-denominated bond set to float next month. He is also expected to lobby for direct foreign investments in the country. The official tour comes after Gulf member states signed an agreement to provide $5bn in funding for development projects last year. Saudi Arabia's stock market has started to recover after pricing in weak earnings from petrochemical producers and banks. And since many of these shares remain recommended by analysts, they may drive the market higher in coming sessions. The past month has been a poor one for Saudi stock investors, with the main index losing about 7 per cent. Disappointing third-quarter bank earnings were one blow. Al Rajhi Bank, Saudi Arabia's largest listed bank, reported last week that quarterly net profit fell 3.5 per cent from a year earlier to 1.87bn riyals ($498 million). That was below 2.11bn riyals (Dh2.06bn) predicted by a Reuters analyst poll. Riyad Bank, Saudi British Bank and Banque Saudi Fransi, the kingdom's third, fourth and fifth largest lenders, also missed expectations. Petrochemical firms, heavily weighted in the index, suffered weak earnings. Saudi Basic Industries Corp (Sabic), the world's biggest petrochemicals group by market value, posted a 23 per cent slump in third-quarter net profit on Wednesday. But analysts said the gloom was not complete in either sector. Sabic, hit by soft prices for its products because of the struggling global economy, managed to beat analysts' forecasts slightly. And the banks, which said higher expenses weighed on their profits, appear to have been hit primarily by loan-loss provisions. One banking industry source said Saudi regulators had encouraged banks to take sizeable provisions as a precaution with the year-end approaching. Since the Saudi economy remains strong, with growth running at about 4 or 5 per cent, some of these provisions may prove unnecessary and the fourth quarter is unlikely to be as expensive, analysts said. "If you take away the provisions, the numbers are strong. Q4 for banks is expected to be better, especially since their stock prices have hit lows," said Asim Bukhtiar, the head of research at Riyad Capital.

TEN) – JAPAN AGREES TO GRANT TUNISIA $600M LOAN GUARANTEE Japan will provide a $600 million of loan guarantee to support Tunisia's democratic transition and economic recovery, the Tunisian central bank governor said on Friday. Chedli Ayari said that Tunisia got approval after his visit to Japan during the meetings of the International Monetary Fund this month. "The Japanese government granted Tunisia his approval to enable them to issue a loan on the international financial market worth $600 million before the end of the year 2102," Chadli Ayari said without giving more details. Tunisia also expects the U.S. government to guarantee around a fifth of the $2.2 billion to $2.5 billion the north African state will need to borrow next year, the investment and international cooperation minister told Reuters last month. The government plans to borrow 4.3 billion dinars in 2012. It forecasts economic growth of 3.5 percent.

12 The economy shrank 1.8 percent in 2011 when the popular revolution which ousted President Zine El Abidine Ben Ali closed factories and deterred tourists and investors. The Tunisian economy is gradually recovering from last year's political turmoil but faces problems as a result of the crisis in the euro zone, the main market for its exports and the source of a majority of tourist visitors. The International Monetary Fund said at the start of August that Tunisia's medium-term growth prospects are favourable but maintaining economic stability is essential as the country tries to emerge from last year's political upheaval. Tunisia's budget deficit should narrow to 6 percent next year from 6.6 percent of GDP expected in 2012, the central bank governor said last month, indicating economic recovery in the cradle of Arab Spring revolts may take longer than anticipated. A moderate Islamist party won elections held soon after the revolution and now leads a coalition government. The party's leaders have sought to reassure investors and tourists but successive protests and strikes organized by left-wing secular opponents have undermined efforts to boost the economy. (Business Day)

ELEVEN) – MAURITIUS TO BUY $100M IN FOREIGN CURRENCY Mauritius’ finance ministry has said it will buy $100 million (Dh367 million) in foreign currency to try to contain the appreciation of the rupee, which has hurt economic growth. The daily Le Mauricien newspaper cited banking sources on Friday as saying the Accountant General had this week written to local banks to inform them of the decision. Rundheersingh Bheenick, the governor of Bank of Mauritius, confirmed the decision to Reuters. Finance Minister Xavier Duval said earlier this week that an overly strong rupee had lopped a percentage point off the Indian Ocean Island’s economic growth this year. (Gulf News)

TWELVE) – PIRATES CONTINUE DISRUPTION OF NIGER DELTA OIL TRADE The Niger Delta is the heart of Africa’s oil industry, yet the Gulf of Guinea, the area in which the delta is situated, is a hot spot for piracy. Only in the waters off Somalia are pirate attacks more common. Pirates generally target ships in order to steal the goods being transported, and oil trade in the region is being affected as pirate activity grows. (Related Article: Is a Larger Middle East War Inevitable?) On Monday the French shipping company Bourbon, which supplies vessels to the offshore oil industry in the Niger Delta, announced that one of its ships had been taken by pirates and that seven people kidnapped; six Russians and an Estonian. Luckily the other nine crew members had managed to make their way to the safety of the Nigerian port of Onne. (Related Article: Piracy: Skulls, Cross-Bones and Letterhead) Back in August pirates attacked a Greek oil tanker off the coast of Togo. They released the tanker and crew of 20 just a few days later, having unloaded 3,000 tonnes of fuel. Then just earlier this month pirates released another gasoline tanker that they had commandeered near to the Ivory Coast. Most of the gangs operating around the Niger Delta have formed from the remains of the militant groups that plagued the area until an amnesty was agreed in 2009. (Christian Science Monitor) THIRTEEN) – ESKOM STRUGGLING TO RESTORE POWER IN RAINY E. CAPE Heavy rainfall is disrupting the restoring of power to many parts of the Eastern Cape. Eskom spokesperson Ntombekhaya Mafumbatha says currently, more than 11 000 people are without power in the province. The worst affected areas include Mthatha, Butterworth and some parts of the Nelson Mandela Bay.

13 "Yesterday, we did have power supply interruptions that affected around 15 000 people in the whole province. Most areas that are without power include Butterworth and Mthatha," says Mafumbatha. She says that they have seen a significant decline in those areas this morning, in terms of those incidents. Mafumbatha says that their technicians have been working overnight. "However, the fact that it is still raining is still giving us a little bit of challenge accessing some areas," she added. Meanwhile, motorists have been urged to be extra careful on the roads as the wet weather persists in many areas across the Eastern Cape. This, after a spate of mostly minor vehicle accidents, resulting from the wet and slippery conditions. The persistent rains have also caused a number of road closures. "We have just been informed that the N2 between Peddie and King William's Town is closed due to flooding, as well as the R67 between Bathurst and Grahamstown," says Eastern Cape Arrive Alive spokesperson Tsepo Machae. Machea says other roads are also affected as some lanes are closed due to the stagnant water. (SABC)

FOURTEEN) – SOUTH AFRICA: INFRASTRUCTURE NEEDS INVESTORS - ZUMA The government will require the support of investors to realise the speedy implementation of South Africa's proposed mega infrastructure programme, President Jacob Zuma said on Friday. Zuma was speaking at the Presidential Infrastructure Investment Conference in Johannesburg, where a memorandum of understanding to take the infrastructure roll-out plan forward was signed between different ministers and potential investors. Zuma told the gathering that infrastructure development was a catalyst to sustainable economic development, job creation and poverty alleviation. The infrastructure plan, announced by the government in February, is expected to guide the construction of new infrastructure while speeding up current projects that support economic growth. 18 strategic integrated projects It proposes 18 strategic integrated projects (SIPs) covering more than 150 specific infrastructure interventions, ranging across rail, road, ports, dams, irrigation systems, sanitation and energy. Some of the projects are already commissioned. They include the Dube Trade Port in Durban as well as the expansion of the Port of Ngqura in the Eastern Cape. Zuma said the summit was about the crucial role of partnerships on infrastructure development in the present and future South Africa. He urged investors to take advantage of and support the plan. The costs of the 18 strategic projects are estimated at about R4-trillion over the next 15 years. Private sector support needed Deputy President Kgalema Motlanthe, also addressing the conference, said the government, with the support of the private sector, wanted to make the plans a reality. "We need their support for the projects included in the plan to be a success. The projects cannot be financed solely through domestic savings ... we need the support of other development institutions, banks as well as other partners," Motlanthe said. The country's New Growth Path sets a target of five-million new jobs by 2020, and the government believes that infrastructure development will be a crucial jobs driver. Zuma said the parties had been identified to be part of the conference because they were "crucial stakeholders with whom government can forge a partnership to enhance the implementation of the country's long-term infrastructure plan". Zuma said the government had paid special attention to the lessons learnt from building infrastructure for the 2010 Fifa World Cup. That experience should be used to build new infrastructure crucial to the economic development of the country.

14 "We all have proud recollections of how we managed to build stadiums, roads and refurbished airports ahead of the World Cup. We must use that project management experience to change our country's landscape and improve living conditions while growing the economy." This would include prioritising skills development, public and private investment as well as creating the right environment for economic growth. (

FIFTEEN) – EU MOVES CLOSER TO MALI MISSION The EU has moved a step closer to committing troops to Mali to train the country's armed forces to take on extreme Islamist groups, according to the Wall Street Journal. However, the paper says, the ministers confirmed that the mission, likely to be some time next year, would not be engaged in combat. The EU also offered funding for a proposed United Nations-backed mission from the economic community of west African states. EU foreign policy chief Catherine Ashton said, "We are determined to fully mobilise all the tools we have, in cooperation with our regional and international partners, to help Malians restore the rule of law and reestablish a fully sovereign democratic government."


ELO – Associação Portuguesa para o Desenvolvimento e a Cooperação ELO is a non profit private sector association. Signifying “Link” in Portuguese, ELO was registered as a public utility organization in September 1993. What are ELO’s Objectives? ELO promotes commercial, social, scientific and cultural exchanges between Portugal and developing countries and aims to strengthen economic and business ties in particular with member states of the CPLP, the Community of Portuguese Speaking Countries. ELO achieves these objectives through Portugal’s Vice Presidency of the CPLP Business Confederation, by working bilaterally or within multilateral organizations, with special reference to the Cotonou Convention (European Union/ African, Caribbean and Pacific States) through our membership on the board of the European Business Council for Africa and the Mediterranean, based in Brussels. What do we do? We extend our objectives through a range of activities that allow us to establish and maintain a close and constant contact with the authorities in developing countries; to identify issues that our associates consider to be important and to raise awareness of these issues both within and outside the organization, with governments, public and private sector agencies and with public opinion in general; we work together with national and international organizations in any actions or programs that help to further our objectives and we monitor economic problems that affect the relationships of these countries with Portugal, with the European Union and with other countries in general. In the European Union, ELO represents Portugal in the European Business Council for Africa and the Mediterranean (EBCAM), which comprises about 4,000 European companies that have activities and interests throughout the African continent, from the Maghreb to South Africa, who believe in the principle that the private sector plays a crucial role in the development of African countries and therefore consider that it is vital to promote

15 trade and investment in Africa. These companies employ approximately 3 million people in every sector: trade, industry, agriculture, transports, banking and other services. EBCAM seeks to develop partnerships among European investors and other market agents in Africa and to establish closer ties between the European private sector and African countries, particularly with the private sectors. It is the only organization that comprehensively embraces every kind of business operations carried out in Africa by European firms. In the Community of Portuguese Speaking Countries (CPLP), ELO carries out the mandate it was given at the July 2002 Council of Ministers Meeting in Brasilia (External Relations and Foreign Affairs). After setting up the Conselho Empresarial da CPLP, the CPLP Business Council whose statutes were signed at the CPLP headquarters on 4th July 2004, ELO immediately took up Portugal’s representation on its board. ELO’s Executive President, Dr. Francisco Mantero was also appointed by the board on 4th June 2004, to be Secretary General of the CPLP Business Council. The statutes of the CPLP Business Council were altered on 22nd March 2010 and the name changed to Confederação Empresarial da CPLP (CPLP Business Confederation), and ELO’s President was elected Vice-President for Portugal of this multilateral association. WHAT ELO DOES FOR THEIR MEMBERSS 

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Because of our relationships with international financial institutions we are able to assess the constraints that hinder access to available funding from multilateral institutions (European Investment Bank, World Bank and African Development Bank). ELO can help to overcome obstacles caused by lack of adequate information and bureaucratic bottlenecks and propose solutions to unlock these funds, for instance by channelling them into sectors and activities that benefit our members; We seek innovative solutions for financing trade, through guarantees or other risk sharing mechanisms, for projects in emerging markets that are of interest to our members; We organize seminars and hold meetings for members to share experiences and debate their opinions about trade and investment issues in general and about relations between Portugal and other CPLP member countries in particular; We monitor and assess the performance of national development agencies; Similarly, we monitor and assess the performance of bilateral and multilateral international development agencies; We hold workshops and organize meetings by invitation with guests from Portugal and overseas; We promote lunch meetings for our members with guest speakers who are key figures in ELO’s areas of activity; We provide information about project finance mechanisms in developing countries, particularly Portuguese speaking on

Fernando Matos Rosa Brussels

European Business Council for Africa and the Mediterranean The European Private Sector Organisation for Africa’s Development Rue Montoyer – 24 – Bte 5 1000 Brussels (Belgium)


memorandum 229  

december 12

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