(Date Published: 2012)

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BY LUVAHA C. LUVAGA,

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Editorial

Demanding an End to World Hunger

The events of 2011 may well go down in history as constituting the most significant turning point of modern times. Beginning with the Arab Spring, we have witnessed massive student rallies in Chile, a momentous protest movement in Israel, extensive mobilisations across Europe and the unprecedented ‘occupy’ camps that have sprung up in New York and around the world. The authorities may have done their best to prevent or forcibly suppress these unauthorised demonstrations, but scores of encampments remain across North America and Western Europe and continue to uphold a spirit of global collectiveness, non-violent resistance and direct democracy.

Many commentators have marvelled at the sudden shift in political discourse that has resulted from this unleashing of popular protest. Under the banner of the 99%, national conversations have focussed to an unusual degree on the unequal distribution of wealth between the top 1% and all remaining citizens, as well as the unjust government policies that are causing austerity measures for the majority whilst CEOs and the wealthiest citizens continue to dodge taxes, reap record profits and rake in huge bonuses. The heady days of ‘turbo-capitalism’ are at an end: as world leaders scramble to preserve the crumbling economic architecture, even many traditional economists now agree that a system based on endless growth and consumption is facing a terminal crisis.

The pressing global issues are perhaps clearer to the world’s people than they have ever been before. Public anger is unanimously directed at the financial and corporate elites who are largely responsible for causing the global economic turmoil; high-profile debates focus on the limitations of pursuing Gross Domestic Product in relation to human well-being and sustainability; and awareness of looming planetary boundaries is increasingly reflected in discussions surrounding climate change, biodiversity loss, peak oil production and other resource constraints. Countless people around the world are searching for a new vision of social progress that is no longer based on the empty creed of individualism, competition and blind material abundance.

Central to all these concerns is the rising call for economic sharing and global justice. As STWR’s founder Mohammed Mesbahi reasons in an article titled A Dialogue on Protest, Sharing and Justice, it is time for the awakening voice of world public opinion to focus on the issue of life-threatening deprivation as one of its foremost concerns. This will require a massive outpouring of public support in favour of an international emergency redistribution programme, initiated under the aegis of the United Nations, to prevent needless deaths arising from poverty-related causes in all countries.

Such a strategy may appear impractical or unrealistic in the context of a worsening economic crisis, but Mesbahi states that the power of peaceful mass protest recently demonstrated in the Middle East reveals the untapped potential of public opinion to influence government choices. Now that it is obvious that our social, economic and political systems need to be dramatically restructured, he argues that a major responsibility of governments is to redesign these systems specifically so that no-one dies of hunger.

The inspiring ‘occupy’ camps are loudly calling for wealth, resources and power to be shared more equally both within and between countries. Shortly in the New Year, STWR will publish a report detailing how there is more than enough money available for governments to immediately reduce poverty, provide essential public services and fund urgent climate change adaption and mitigation programs. These basic demands for national and global forms of redistribution will only begin to effect real change when they are backed up by the force of a united world public opinion – which is now a definite possibility as we approach 2012.

Our Top Picks of the Week Friday, December 16, 2011 | Volume II, Newsletter XXV

Africa’s Surging Population: Miracle or Malthus? Source: The Economist As Anniversary Looms, Johannesburg Rises Again Source: The Associated Press Congo President Kabila Denies Reports of Election Fraud Source: The New York Times

JSE to Open London-Based Trading Hub Source: Financial Times Nigerian Exports Hit $10 Billion a Year Source: Sun News Online (Nigeria) South Africa’s Big Four Banks are “Banking” on Mobile Source: Business Day (South Africa) Africa’s Sahel Region Braces for Oncoming Food Crisis Source: Voice of America On the Heels of Natural Gas Discovery, SA Forges Bond with Mozambique Source: Mail and Guardian (South Africa) China Executes South African Woman for Drug Trafficking Source: BBC Vivian Cheruiyot Voted Kenya’s Sports Personality of the Year Source: The Daily Nation (Kenya) FEATURED BLOG POSTS Hip-Hop and Africa: Baloji, the Congo, and Conflict Minerals The Jetsetters′ Holiday Fiesta: A Holiday Party for a Cause

Standard Bank still supports Zambian copperbelt

Brad Breetzke, head of mining, energy and infrastructure finance at Standard Bank said, “The funding to KCM is the single largest injection into the Zambian copperbelt ever by a bank. The investment made by Standard Bank is an illustration of our commitment to KCM and the broader copper region in Zambia. Standard Bank has full confidence in KCM management’s ability to drive the company’s growth towards becoming one of the world’s leading copper producers. We are proud to be KCM’s and its parent Vedanta’s financial partner in this process.”

Investments in infrastructure will see KCM produce in excess of 400 000 metric tonnes of copper per year. The production target, aimed to be achieved in 2014, will rank KCM as the largest copper producer in Zambia and one of the top ten globally. This transaction reflects our confidence in the future of the mining industry in Zambia as well as Zambia’s future growth prospects.

“In the last five years, real GDP in Zambia has expanded by an average of 6% per annum. Even during the global downturn in 2009 the economy managed to expand by 6.3%, and we expect this trend of robust growth to continue over the next five years. Copper mining is integral to the Zambian economy. Although more than 75% of the labour force works in agriculture, it is copper mining that drives growth. In 2009, 83% of exports were accounted for by copper and cobalt, equating to almost 30% of total GDP, an increase from 77% in 2006,” added Breetzke.

Standard Bank has been providing funding and investment support to the mining area of Central Africa for the past decade. Notable transactions in Zambia include acting as Lead Arranger for funding the development of the Kansanshi copper mine in 2003 as well as for the Lumwana copper mine in 2007.

Rajat Kohli, global head of mining and metals at Standard Bank, added, “This landmark financing event further demonstrates our commitment to natural resources and to Africa. With an outstanding track record of success, we are positioned to continue acting as the financial institution of choice to the sector on the continent.”

ACBNEWS Article

A Dialogue on Protest, Sharing and Justice
As the economic crisis worsens, the correct responsibility of governments is to redesign our political and economic systems so that no-one dies of hunger. But this will never happen without an unparalleled uprising of public support, says Mohammed Mesbahi. Edited from an interview by Adam Parsons.

Featured Articles

The Durban Platform: Failing People and Planet
After two weeks of negotiations in Durban, governments at the COP17 talks agreed to work towards a new legally binding treaty to enter into force by 2020. But with the window to act to contain catastrophic climate change closing, this outcome could prove devastating for the planet and its poorest inhabitants.

This Changes Everything
The Occupy movement and its predecessors in Europe and the Arab world represent a fundamental shift in public opinion. Around the world, people are waking up to the fact that the current system of free-market capitalism simply doesn’t work and are demanding systemic change.

What We Are For
For people who care about ecological integrity, a sustainable economy, and the health of nature and people, there is plenty to oppose. But the real power of the environmental movement lies in what we are for, writes Richard Heinberg.

The Solutions Generation
It is up to the next generation to bring about major transitions in order to build a more sustainable future. The central challenge is to create new political and economic systems that can create shared prosperity without growing demands on a finite environment, says Robert Costanza.

The 2050 Challenge to Our Global Food System
The challenge of feeding 9 billion people by 2050 has as much to do with how our global agricultural markets are constructed as it does with increasing production. Policymakers must recognise food not just as a tradable commodity but as a basic necessity for survival, says Jim Harkness

Calling the Corporations to Account
Since the 1990s, the power and economic might of multinational corporations has rapidly expanded and nothing effective has been done to limit their reach. Rio+20 offers a golden opportunity to broker an agreement to regulate corporate activity at international level, says Helena Paul.

Featured Reports

The Cost of Tax Abuse
Tax evasion costs countries around the world more than US$3.1 trillion annually. By tackling tax havens, governments can avoid painful austerity measures and invest in essential public goods like healthcare and education, says a new report by the Tax Justice Network.

America Is Not Broke
By taxing wealth and financial transactions and cutting spending on the military and harmful subsidies, the American government could raise an extra $824 billion in revenue. These reforms would not only address the deficit, they would create a more equitable, green, and secure nation, says a report by the Institute for Policy Studies.

Social Protection Floor for a Fair and Inclusive Globalization
Economic growth in recent years has not generated sufficient jobs and has significantly increased inequality. A social protection floor to ensure income security and universal access to essential services would provide the foundation for a healthier economy, says a report by the Social Protection Advisory Group.

Food Sovereignty: Reclaiming the Food System
The root cause of the global food crisis is to be found in a system designed to sustain corporate profits rather than meeting people’s needs. Governments should work to promote ‘food sovereignty’ through support for small-scale producers and local markets, says a report by War on Want. 

Campaigns

The World Is Revolting Against the US Economic and Business Model: A Call to Action
The study of business and economics remains largely disconnected from moral, social and spiritual considerations. Alongside leading thinkers from civil society, STWR has endorsed a statement calling for a new economy based on shared ethics and values.

KENYA ANNOUNCES 16% GROWTH IN TOURISM ARRIVALS

(Date Published: 29 Dec 2011)

The tourism sector is once again celebrating news of another increment in tourist’s arrivals for the period ending October 2011. Announcing the results of the 16% growth at Utalii House , tourism minister Najib Balala attributed the growth in the arrivals to the sector’s efforts of diversification of source markets and ventures into emerging economies. The new results indicate that for the period January- October 2011, arrivals closed at 1,039,852 compared to 896,228 for the same period in 2010 accounting for 16% growth.

“This growth is higher than the global and regional rate of 4.5% and 4% respectively and if this trend continues, we expect this year to close at about 1.3 million arrivals by air and sea compared to last year’s 1.1 million”. Said Hon Balala

Consequently, the estimated tourism receipts for the period ending October 2011 closed at Kshs. 81.96 Billion compared to Kshs 56.72 Billion in the similar period last year.This was an increase of 44.4% compared to the same period last year.

Minister Balala says if this trend is sustained and taking into account the depreciation of the Kenya Shilling that the country has been experiencing, it then means that the country can be able to hit the Kshs 100 billion by the end of the year in terms of tourism earnings.

The Minister noted that tourism performance in 2011 has shown positive growth from all source markets with growth from traditional markets experiencing less growth than expected. This, the minister attributed it to the Euro Zone crisis Coming at a time when the country is dealing with its boarder securities, the minister said emerging markets were the driver of the total growth with most of them recording above 40% growth: The markets he noted include UAE (46.8%), Poland (62.9%), Russia (46.6%), Czech Republic (51.6%) and Hungary (42.1%). This the minister observed was a clear indicator that the market diversification efforts were bearing fruit.

The regional markets have also shown tremendous growth, Uganda has maintained its lead in the arrivals from the African region, recording 36,030 inbound visitors, 36.5% growth compared to the same period in 2010. Following closely, is South Africa that recorded 31,355 arrivals a 13.5% growth compared to the same period in 2010. Tanzania came in third place, with 28,435 arrivals, a 11.3% growth from the same period in 2010.

Prospects for 2012

Despite 2012 being an election year, the minister expressed his optimism that he expects the positive tourism growth to continue buoyed by the arrival of new chartered and scheduled airlines especially from the new markets. The airlines he noted include Novair (Sweden) and Pegas Touristik (Russia) which have already operating regular flights to Mombasa. Others that have committed themselves to start flying into Kenya from early next year include Air Korea, Southern China Airlines, Jordanian Airlines and Etihad.

INSURANCE COMPANY OF EAST AFRICA LIMITED (ICEA) AND LION OF KENYA MERGE INTO ICEALION

INSURANCE COMPANY OF EAST AFRICA LIMITED (ICEA) AND LION OF KENYA INSURANCE COMPANY LIMITED MERGE INTO ICEA LION GROUPNairobi, 8th December 2011… Two well known leading insurance companies – Insurance Company of East Africa Limited (ICEA) and Lion of Kenya Insurance Company Limited are pleased to announce their merger effective 1stJanuary, 2012.The new name of the combined business is ICEA LION Group. The two companies are among the market leaders in insurance and financial services in Kenya and the wider East Africa region. The merger has resulted in the creation of one of the largest insurance groups in the region, with insurance operations in Kenya, Uganda and Tanzania as well as leading subsidiaries in fund management and corporate trusteeship.A key element of this consolidation has been the establishment of separate life and non-life insurance companies.  ICEA LION Life Assurance Company will be a dedicated life assurer while ICEA LION General Insurance Company will be a general insurance company, both operating as subsidiaries of ICEA LION Group.This separation will enable the two AA rated companies to have complete focus on their core business, for enhanced customer service, specialization, internal efficiency and competitiveness. The specialisation is consistent with the Government’s declared intention to encourage movement in this direction.The insurance subsidiaries in Uganda and Tanzania, previously controlled separately by ICEA and Lion of Kenya respectively, will also form part of the ICEA LION Group, as will ICEA’s asset management subsidiaries in Kenya and Uganda. All clients, intermediaries and business partners are assured that the ICEA LION Group is committed to continue building on the proud history, culture of innovation and excellence established over the years by ICEA and Lion of Kenya. Lion economies of Kenya, Uganda and Tanzania will grow fastest in the world Share Bookmark Print Email Email this article to a friendFriend’s Email Address Your Email Message Submit Cancel Rating Consumer goods manufacturing is big in the region and caters for all economic classes. Picture: File By Dimitri Stoelinga and Sachin Gathani  (email the author) Email this article to a friendFriend’s Email Address Your Email Message Submit Cancel Posted  Sunday, December 18  2011 at  00:00 According to a new and innovative approach to estimating the future growth potential of countries — designed by professors at Harvard and Massachusetts Institute of Technology (MIT) — East Africa could become the fastest growing region in the world between now and 2020. Uganda, at an estimated average annual gross domestic product growth rate of 6.41 per cent would have the highest growth potential in the world, followed closely by Kenya at 6.1 per cent, and Tanzania at 6.07 per cent. Other economies in the broader East African region also top the list: Madagascar is 5th at 5.85 per cent, Malawi 7th at 5.6 per cent, Zambia 10th at 5.25 per cent, Ethiopia 23rd at 4.52 per cent, and Mozambique 31st at 4.26 per cent. Rwanda unfortunately was not included in this study, due to the reliability of available data, but is already amongst the world’s 10 fastest growing economies since the early 2000s. Note that on a GDP per capita basis, China and India are still projected to be the fastest growing economies in the world; East Africa though tops the list in terms of GDP growth. Why is this the case? The reason East African economies could have such a high growth potential is because the current “complexity” of their economies is higher than what would be expected given their current level of income. The way complexity is measured is not easy to grasp, but it is essentially a function of how diverse and unique the capabilities of a country are. In other words, the more diverse a country’s capabilities (measured by the number of different products that it exports with a comparative advantage) and the more unique (ie measured by the number of different countries that export similar products with a comparative advantage), the higher a country’s complexity. As professors Hidalgo and Hausmann argue in their recent publication, “The Atlas of Economic Complexity: Mapping Paths to Prosperity,” countries tend to move to income levels that are compatible with the complexity of their economies. They also show that the difference between a country’s complexity and its expected complexity given its GDP per capita is predictive of future economic growth. According to the authors, this method has a 10 times greater predictive power than leading alternative indexes, such as the World Economic Forum’s Global Competitiveness Index. Surprising? Not really. For us living in the region, the idea that the complexity of East African economies is greater than expected could come as somewhat of a surprise, given perennial structural problems, in particular: (i) weak manufacturing sectors, which in a country like Kenya only accounts for about 11per cent of GDP; and (ii) large trade deficits. Yet when you take a minute and think about it, East African economies do produce a whole range of products: processed food products (brands that come to mind are Azam, Brown’s, Brookside, Pembe, Inyange, Madhvani Group, Masaka Farms, Mukwano Industries etc), beverages (EA Breweries, Bralirwa, Nile Breweries, Del Monte, Inyange, etc), consumer goods (Azam/Bakhresa Group, Bidco, Chemi&Cotex, Mukwano, Sulfo industries), batteries (Eveready East Africa), plastics (KenPoly, RotoMoulders), paper (PanAfrican Paper Mills, Kenya Paper Mills, Supa Paper Works, etc), cement (Bamburi Cement, East African Portland Cement Company), tobacco (British American Tobacco, etc), paints (DuraCoat, Robillac Paints), cables (EA Cables), steel (Uganda Baati, Devki Steel, Mabati Rolling Mills, etc) … and the list goes on. This diversity in the region’s production capabilities is what drives the complexity that Hausmann and Hidalgo capture in their index. Political uncertainty Moreover, Hidalgo and Hausmann’s growth predictions are not surprising in that they are very much in line with current trends. It is impossible to ascertain how precise these estimates of the region’s growth potential are; but early indications show that they might not be too far off. These are the average growth rates of countries in Eastern Africa between 2005-2010 according to World Bank estimates: Ethiopia (10.64 per cent), Rwanda (7.8 per cent), Uganda (7.8 per cent), Tanzania (6.95 per cent), Kenya (4.8 per cent), and Burundi (3.6 per cent). Share This Story 42Share What are the main risks to the region’s growth? According to our internal research at Laterite Ltd, the biggest domestic threat to this great growth potential in the region remains political uncertainty. We substantiate this claim based on an analysis of Kenya’s 2007 election crisis, which we show has cost the country at least 3.5per cent of GDP and an estimated $4 billion to date (or about $100 per Kenyan). If current World Bank/International Monetary Funds predictions of future growth in Kenya hold, we expect Kenya to only have recovered the lost ground due to the 2007 election in 2013 — in other words, only in 2013 will Kenya’s economy be back on track as if the election violence had never occurred. That is a full five years after the fact — basically, an entire election cycle. This means that the current administration’s main achievement, economically speaking, will have been to reverse the effects of the election that brought it into power in the first place. But how did we come up with these estimates? To estimate the cost of Kenya’s 2007 election, it is necessary to estimate what would have happened in Kenya had the election not occurred. We have developed a methodology called Proximity Controls which enables us to do just that. The idea is very simple: we find that countries with similar capabilities to a country of interest (in this case Kenya) are very good predictors of economic growth in that country over a long period of time. Additionally, we show that it is possible to create a linear combination of such countries that almost perfectly predicts economic growth in the country of interest. To summarise, Hausmann and Hidalgo’s research reveals that — just like China and Taiwan 25 years ago — East Africa’s productive structure has the potential to quickly diversify and increasingly move towards more sophisticated products, thereby stimulating growth. Also, just like China and Taiwan, East African countries are not really “poor” from a capabilities perspective. 25 years ago China and Taiwan already had the capabilities to develop the diverse range of products that they produce today; it is in large part these same capabilities that have led them to their current income levels. It’s just that 25 years ago, “the cheque was in the mail.” East African countries have a similar potential today, but as we have shown using Kenya’s 2007 election crisis, political uncertainty could still spoil the party and mean the cheque is never really cashed. As can be seen in the graph, using this approach we can perfectly predict Kenya’s economic performance during the 2002-2007 period. However, our predictions and Kenya’s actual performance diverge dramatically in 2007-2008, indicating that something major happened during that period that threw economic growth in Kenya off track. This event was the December 2007 election.