Wednesday, 1 August 2012

Business Round up

1. NAIROBI, Kenya: Kenya Shippers Council decry high transport costs in East Africa

By Ben Ochieng and David Musyoka
July 31 (Xinhua) -- High transport costs in the East African region pose serious challenges in the region's ability to effectively compete with the rest of the world in trade, the
Country’s shippers said on Tuesday.

Kenya Shippers Council (KSC) CEO Gilbert Langat said the cost of transporting export goods is 60-70 percent higher than the U.S. and Europe and 30 percent higher than
Southern Sudan. "This state of affairs is expected to reduce economic growth by 1 percent annually, especially in the landlocked Burundi, Rwanda and Uganda, whose
development depends on transit solutions in neighboring Kenya and Tanzania," Langat said in Nairobi during the launch of the council's Logistic Performance Index for East
Africa. "The ports of Dar es Salaam and Mombasa have cumulatively experienced an annual average growth in cargo throughput of 8.8 percent occasioned by growth in
regional trade. These ports have over the past decade experienced delays and congestion," he said.

Langat said a number of reforms are currently underway including 24/7 operations, construction of additional terminal facilities, automation of the container handling
processes, improvement in documentation and cargo clearance, cargo verification and scanning among others. He said the Northern Corridor, which links the Port of
Mombasa to landlocked Uganda, Rwanda and Burundi, with links to Northern Tanzania, the Democratic Republic of Congo, South Sudan, Ethiopia and Somalia accounts for
annual cargo volumes in excess 10 million tons and combined transit and trans-shipment traffic of more than 2 million tons.

Subsequently, the Central Transport Corridor, which connects the Port of Dar es Salaam with Burundi, Rwanda, Uganda and the DRC also accounts for the same cargo volumes
as its Northern counterpart.  "Trade along these corridors has a positive impact on the region and many initiatives have been undertaken to improve corridor efficiency," he
said. "However, performance is still hampered by high transport costs, inadequate physical infrastructure and national policies that are incompatible with the EAC goals of
regional integration,"he said.

In order to address key transport and logistics challenges in the region, Langat said both businesses and policy makers need to fully understand the bottlenecks that exist on
the transport and logistics chain in the region.  This, he outlined, can only be done through a major analysis of the logistics processes and links in the East African transport
system in the form of an annual logistics performance index.

In the East African region, about 75 percent of the value of exports is due to transport costs, where for example it takes up to 71 days to import goods to Burundi from any of
the other four East African member states where poor road infrastructure, unreliable railway transport, different axle load measurements and a myriad of unnecessary
roadblocks all add up to the burden of transporters. This is the first such Index for the region which compares the EAC performance in the trade logistics indicators of time,
cost and complexity with those of the world's leading trade hubs.

The LPI dataset can be used to identify key bottlenecks in EAC and help frame the needs and priorities in the trade facilitation and logistics reform.The indicators focus on time
spent clearing goods at ports, on inland transport and while crossing borders; the cost of freight across all modes of transport, terminal handling costs at ports of entry; and
the number of documents, agencies, signatures, physical and electronic inspections required per trade transaction. Additionally, the Index examines the perception of
shippers about freight and clearance times, and infrastructure adequacy. "The Council and other business associations will use the indicators to interpret the performance of
the logistics chain in East Africa and reveal to both policy makers and businesses the full extent of bottlenecks in the chain and propose appropriate redress measures," Langat

The Index, compiled following a study commissioned by KSC, revealed that while it takes 28 days to move a 40ft container from the port of Shanghai, China, to Mombasa at a
cost of 600 dollars, it takes 41 days for the same container to reach Bujumbura from Mombasa at a cost of 8,000 dollars. This represents double the time at 13 times the cost.
This does not include other costs of delays, corruption and in some cases, pilferage of cargo. These costs make EAC products very uncompetitive and require urgent action to
bring them down.  (Xinhua)

2. JOHANNESBURG, S. Africa:  AfDB outlook report indicates rise of African economy

By Thuso Khumalo
July 31 (Xinhua) -- Africa's economic growth is expected to put up an impressive increase from 3.4 percent in 2011 to 4.5 percent in 2012 and to 4.8 percent in 2013, an
African Development Bank official said on Tuesday.

Professor Mthuli Ncube, the chief economist and Vice President of the African Development Bank (AfDB), made the remark as he unveiled the African Economic Outlook
report for 2012 in Johannesburg.   "Sub-Saharan Africa's growth is expected to rise from 5.1 percent in 2011 to 5.3 percent in 2012 and 5.4 percent in 2013," the AfDB chief
economist said.  "When South Africa is excluded, the rest of Sub-Sahara Africa grew at 5.9 percent in 2011 and is expected to grow at 6.3 percent in both 2012 and 2013,"he

North Africa is also slowly returning to growth after falling to 0.5 percent in 2011 owing to political volatility in the region. However, its growth is expected to recover at 3.1
percent in 2012 before reaching 4.0 percent in 2013. The continued recession in Europe remains a major threat to recovery in North Africa in the medium term.The AfDB also
projected positive regional growth prospects. The bank's vice president said, "Southern Africa is set to grow from 3.5 percent in 2011 to 4.4 percent in 2012 before landing at
4.4 percent in 2013."

In West and Central Africa, the 2013 growth prospects will be slightly stifled. West Africa's growth prospects are expected to fall from 6.9 percent in 2012 to 6.4 percent in
2013. Central Africa will be down from 4.9 percent in 2012 to 4.8 percent in 2013. "The northern African country of Libya is expected to lead the top 10 fast-growing
economies in Africa at 14.8 percent in both 2012 and 2013," Ncube said.

Three Southern African countries are also in this list with the 2012 and 2013 growth prospects for Mozambique and Angola expected to reach 7.7 percent each while Zambia
follows them at 7.1 percent. However, Egypt, Sudan and Tunisia will lead the top 10 slow growing economies in North Africa. Egypt and Tunisia, which are still dented by the
effects of the Arab countries volatility, will grow at 1.8 percent and 3.1 respectively.  Sudan will do better than Egypt at 2.4 percent.

South Africa at 2.7 percent growth prospect in 2012 and Swaziland's 0.8 percent are the only two Southern African countries in the top ten slow growing economies."We
identified that domestic consumer demand, macroeconomic policies and growth in sectors like mining, agriculture, services, construction and manufacturing are the internal
drivers of growth in Africa," said the AfDB chief economist.  He said, "The external drivers of growth include commodity prices, export volumes, agricultural exports and
external financial inflows."

However, the professor said Africa's rising inflation and the increase in the world cereal prices remain big challenges stifling Africa's growth prospects.  The AfDB chief
economist also noted that the debt crisis in Europe was also negatively affecting Africa's growth. "Most countries in Europe no longer have much money to splash around
since the Euro zone financial crisis started. The impact of this to Africa is that it has resulted in lower earnings from tourism and exports as well as  lower financial inflows and
this has impacted negatively on African banks," he said.

The AfDB suggested a number of measures that can be implemented to deal with the persistent developmental challenges in Africa. "Some of the measures include reducing
infrastructure deficit, improving regional integration, promoting private sector and small and medium enterprises," said the professor.The African Economic Outlook report
was announced at a breakfast launch hosted by the Standard Bank of South Africa. "The African Economic Outlook demonstrates the economic rise of our continent. We now
have all the reasons to believe that Africa' s economic development is not just a  mere cyclical response to commodity demand in the rest of the world," said Sim Tshabalala,
Chief Executive Officer for the Standard Bank of South Africa. He praised Africa's impressive growth for more than a decade and its resilience to the global recession.    
"Africa's economic development has become increasingly self- sustaining," Tshabalala said. (Xinhua)

3. NAIROBI, Kenya: East African shippers unite to hasten trade

August 1 (Xinhua) -- The shipping industry in East Africa will launch a new regional body this montht to increase its capacity to influence policy relating to transportation and
clearance of goods in the region.

The shipping industries in the member countries of the East Africa Community (EAC) operate independently while some countries do not have people or organizations to
lobby on issues relating to movement of goods within the region.The Kenya Shipping Council is spearheading the integration, said the council's chief executive officer Gilbert
Langat in Nairobi on Tuesday. "The intention is to increase our capability to influence trade policy in the region and hasten the integration of the EAC," said Langat when he
launched a report, 2011. Logistics Performance Index (LPI) for East Africa, which compares the EAC's performance in the trade logistics indicators of time, cost and
complexity with those of the world's leading trade hubs.

Issues that often come up include the delays at the Port of Mombasa because of the many clearances that are required, high number of police road blocks and weigh bridges
and also security of the cargo when on transit. The LPI dataset is to be used to identify key bottlenecks in EAC and help frame the needs and priorities in the trade facilitation
and logistics reform. The shipping councils have been instrumental in lobbying for efficiency in facilitation of movement of goods within the east Africa especially those being

As the core transporters of imported goods and those being exported, the industry is most affected by bottlenecks that have seen EAC being one of the most expensive
regions to transport goods compared to other relatively well functioning economies. The LPI noted high transport costs in the east African region have posed a serious
challenge in the region's ability to effectively compete with the rest of the world. The cost of transporting export goods is 60 to 70 percent higher than the United States and
Europe and 30 percent higher than southern Africa.

This is estimated to reduce economic growth by 1 percent annually, especially in landlocked Burundi, Rwanda and Uganda, whose development depends on transit solutions
in neighboring Kenya and Tanzania.  "Currently the situation of logistics has major challenges in terms of inadequate and poor infrastructures of the ports, railways, roads and
pipelines. Other constraints affecting logistics in EAC include limited use of information technology to process trade documents by all trade facilitating agencies," the report
said.  "This leads to manual processing of documents negating the effect of ICT usage by one or two trade facilitating organizations mainly the ports and revenue authorities." 
The integration of the shipping industry in the EAC is part of the trend by the regional professional bodies to integrate in order to have a common strategy to tackle regional
issues that are becoming more common as the regional integration progresses. Recently, professional bodies in the region launched a code of conduct that will guide as part
of developing common ethical standards in the region.  (Xinhua)
4. NAIROBI, Kenya: Kenya's annual inflation falls drastically to 7.74 pct

July 31 (Xinhua) -- Kenya's overall inflation declined drastically to 7.74 percent in July from 10.05 percent in the previous month due to fall of several food products across the
east African nation, the national statistics bureau said on Tuesday.

Kenya National Bureau of Statistics (KNBS) said the Consumer Price Index (CPI), computed using the geometric mean approach, decreased by 0.85 percent from 133.06 in
June to 131.92 in July. "Food and Non-Alcoholic drinks' index fell by 1.88 percent between June and July. This was mainly due to continued falls in prices of several food
products such as sukuma wiki (kales), milk, potatoes, cabbages, onions, beans, green maize and spinach in July compared to June," the bureau said in a statement issued in

Many Kenyans are currently enjoying a drop in the cost of living as prices of various basic items come down, thanks to a stable shilling and lower fuel prices. Weaker currency
and higher fuel prices were blamed for increase in commodity prices and thus high inflation in the east African nation, which saw the cost of living get out of the hands of
many consumers. The Kenyan shilling, according to CBK, is currently exchanging at an average of 84 against the U.S. dollar, 130 against the sterling pound and 102 against the
euro. The shilling had previously traded against the dollar at 107.

The local unit has also appreciated against currencies of Kenya's trading partners in the east Africa region. It has increased against the Uganda shilling exchanging at an
average of 29, Tanzania Shilling 18 and Rwanda Franc 7.  The central bank has attributed the gains to a tighter monetary policy that saw it retain its benchmark lending rate at
18 percent for six months, before lowering to 16.5 percent this month. The latest inflation rate is below the Central Bank of Kenya (CBK)'s short-term target of 9 percent. The
Economic Survey released by the Kenya National Bureau of Statistics in May showed the economy remains resilient and registered an annual growth of 4. 4 percent in 2011.

However, the CBK monetary committee noted there were still potential threats and risks to both consumer prices and exchange rate stability that could increase inflationary
pressure. Market analysts said a weak local currency has the effect of inflating dollar, pound and euro-denominated salaries of expats such as employees of United Nations,
diplomatic missions and multinationals by the same margin. According to the bureau, housing, water, electricity, gas and other fuels' index decreased by 0.22 percent,
between June and July mainly on account of reduced costs of electricity, kerosene and cooking gas.

The average cost of consuming 50 units of electricity, for instance, declined from 7 U.S. dollars in June to 6.5 dollars in July. Over the same review period, the transport index
decreased by 1. 35 percent due to lower costs of petrol and diesel.  Food items whose prices have dropped in the east African nation include tomatoes, vegetables, potatoes,
fruits and onions. Prices have declined as supply steadies and cost of fuel, which is used in transportation of the items, comes down.  (Xinhua)

5. NAIROBI, Kenya: Mobile phones give Kenyans bring internet home to rural dwellers

By Bedah Mengo
July 31 (Xinhua) -- For several years, when he wanted to browse the internet, George Busoli would board a motorbike to a market center about 10 kilometers away from his
home where a cybercafe is located.

The journey would cost him about 2.3 U.S. dollars. This, therefore, meant he had to find another reason to visit the market center, besides browsing the internet.   
Sometimes, however, he would arrive at the center only to find that he could not be served at the cybercafe. "Something often came up," Busoli, who lives in Sisenye village in
Busia district of Kenya, recounted on Monday. "Sometimes I would find there was no power at the market center, other times internet connection would off or the operator
would not be there."

To avoid such inconveniences, Busoli would call the cybercafe operator to get assurance he would access the internet."Sometimes this also did not work since I would take
about an hour to reach the cybercafe and during this time, perhaps power would have gone off," narrated Busoli. Now, for Busoli, all these inconveniences belong to the past.
The 29-year-old bought about four months ago an internet-enabled mobile phone, which has ended his tribulations in the quest to use the internet.

The mobile phone has given Busoli, as thousands of other people in rural Kenya, internet access freedom.Many of them, who are acquiring internet-enabled handsets whose
prices have dropped, are finding internet access cheaper, convenient and reliable through the gadgets as compared to cybercafes."Buying an internet-enabled mobile phone is
the best thing to have happened to me," said the secondary school teacher. "It has given me freedom to access internet at my convenience."As in many other areas in rural
Kenya, Busoli found accessing internet in his village a nightmare because of various reasons, key among them poor infrastructure.

Most areas in rural Kenya do not have electricity connection, which means businesspersons cannot set up cybercafes close to people. Often, only the main market center is
connected with power, therefore, businesspersons have to host their businesses, especially those that rely on power like cybercafes, at the central point. This makes sense,
however, accessing the market center for many people in need of their services is always a struggle because of poor road network, which push up transport cost.

Such inconveniences, thus, make things like the internet become a luxury. "The money I used on transport while going to access the internet was quite substantial. What I also
paid at the cybercafe was a fortune," said Busoli.The teacher would be charged 0.04 dollar per minute to access the internet. This is incomparable to what Kenyans in urban
centers pay for internet access, which is between 0.005 dollar and 0.01 dollar per minute. "Each time I went to the cybercafe, I would pay at least 1.4 dollars. There is a time,
however, I paid 3.5 dollars because the internet connection was so slow and there was an important mail I had to send," he said,

With his internet-enabled mobile phone, Busoli feels he is a freeman when it comes to internet access. "I no longer need to call the operator before I leave home or think of
boarding a motorbike to the market center. What I do is to ensure that my phone has airtime, which is readily available," he narrated.Busoli said he uses his mobile phone to
check his emails and browse the internet for information. "This is cheap and convenient for me. If, for instance, I check only emails, this does not cost me even 0.05 dollar on
the phone. At the cybercafe, this would cost me at least 0.5 dollar, yet internet connection was unstable," he said.

Bernard Mudisi, a social worker with a community-based organization in Mt Elgon district, noted that internet-enabled mobile phones have made people in villages get in
touch with the world through the internet. "I can confirm to you there are no cybercafe in this district. For people like us who must access internet, mobile phones are our
only saviours," he said. Mudisi is active on social media, which makes many people believe he is based in an urban center. "Thanks to my mobile phone, people do not believe
that I am based in one of the remotest part of Kenya, with numerous infrastructural challenges," he said.

Like millions of other Kenyans, Mudiri and Busoli enjoy affordable internet access on their mobile phones through various offers from telecommunication companies.Most of
the telecom companies in the East African nation have come up with tariffs that allow users to access internet and make calls affordably.Data from Communication
Commission of Kenya (CCK) indicates that mobile internet subscriptions on GPRS/EDGE and 3G dominate the internet market. They represent 98.8 percent of the total internet
subscriptions in the East African nation.As at March 31, according to CCK, there were 6.49 million internet subscriptions in Kenya, up from 6.15 million in December 2011.
About 30 percent of Kenya's 40 million people have access to the internet. (Xinhua)
6. News Analysis: Nervous markets expected over crisis-hit Italy
By Marzia De Giuli
ROME, July 31 (Xinhua) -- As Italian Prime Minister Mario Monti started on Tuesday a three-day European tour to reassure markets on Italy's stability, concerns remained high
in the country struggling amid its stagnant economic and political landscape.

Speaking to state radio Rai ahead of his visit to France, Finland and Spain, Monti said on Tuesday that "Italy and Europe were close to come through the eurozone crisis."    
But fears that the crisis would force Italy to seek a bailout drove the yield spread between Italy's 10-year bonds and the German benchmark up to 482 points, after borrowing
costs went through a worrying non-stop increase over the past few weeks. Also on Tuesday, Monti's emergency cabinet of technocrats won a confidence vote in Senate on a
controversial spending review, the last step in a series of austerity measures aimed at reducing government expense in a country whose public debt has hit 123.3 percent of
gross domestic product (GDP).

At the last bond auction on Monday before the summer break, Italy sold 5.48 billion euros (6.72 billion U.S. dollars) worth of treasury bonds -- almost all of its maximum
target -- at a lower rate than the last equivalent sale. However, until now neither economic indicators nor political moves have helped the Mediterranean country regain the
confidence of markets, which are expected to add pressure on its bonds during an upcoming "hot" August, according to local observers.

A financial analyst at Milan-based Mazziero Research, Maurizio Mazziero, said it was very likely that volatility will increase in August. "During the holiday period, volumes will
reduce, and decisions at the EU level will be also taken in a moment of less attention, which may drive prices in one or another direction," he told Xinhua. "Many uncertainties
make financial markets nervous," he added, although European Central Bank (ECB) President Mario Draghi reassured last week that the ECB will to do everything necessary to
save the single currency.

More shadow on the recession-hit economy was cast by new negative figures released on Tuesday by the national statistic institute Istat, which said unemployment rate has
reached 10.8 percent, up 2.7 points on the year, the highest level since 2004.Industrial production also continued to perform negatively in July, down 0.4 percent from June,
with average daily production decreasing by 8.0 percent in annual terms, according to a report of Italy's largest industrial association Confindustria.

The figures were a further signal that there would be no recovery this year. But Italy's fundamentals -- solid banking system, large private saving and gold reserves -- will not
be enough to save the country from a dramatic perspective unless a mentality change is carried out, local analysts warned.Italians would only deceive themselves by thinking
that expense cuts and tax hikes will be sufficient to tackle the crisis, noted Francesco Giavazzi, a renowned economics professor at Milan Bocconi University.

Giavazzi urged a mentality "revolution" for the country starting from guaranteeing equal rights, investing on meritocracy, reducing privileges and waste, and fighting huge tax
evasion. As the 2013 political vote approaches, Italy's uncertain political landscape risks to be increasingly perceived by financial markets as an aggravating circumstance of
the stagnant economy.Earlier on Tuesday, Monti said that going to elections at their scheduled time next spring before agreeing on electoral reforms would be "the worst-case
scenario." A persisting climate of "partisan bickering" would feed the obvious "skepticism of international markets on Italy's future," he said.

The prospect of Italy's electoral system being changed has increased after main parties agreed it was necessary to modify the law that is believed to distance common citizens
from politicians as voters can choose a single list of candidates but not elect their own representatives directly.However, until now no agreements have been reached, and
parties have only "dragged on for weeks," said President Giorgio Napolitano in a statement on Monday. "A rapid convergence effort" was necessary to strengthen the
country's credibility, he said. (Xinhua)
7. MILAN, Italy: Italy's police seizes Barclays documents in rates probe
July 31 (Xinhua) -- Italian police seized documents from the Milan offices of London-based Barclays bank as part of a probe into the possible manipulation of Euribor lending

Local prosecutors have opened a criminal probe following complaints filed by consumer associations Adusbef and Federconsumatori that accused the bank for manipulating
the Euribor, or Libor's counterpart for euros. The consumer groups claimed several foreign banks including Barclays, the Royal Bank of Scotland, Deutsche Bank, HSBC and
Lloyds Banking Group to have caused an estimated 2.9 billion euros (3.5 billion U.S. dollars) in damages to millions of Italian families.Last June, Barclays was fined over 450
million U.S. dollars by the U.S. and British authorities for "attempted manipulation of and false reporting concerning Libor and Euribor benchmark interest rates."  (Xinhua)

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