Business
EDITORIAL COMMENT : Africa must move together, industrialise – The Herald
WHILE Africa is industrialising, that is creating and expanding manufacturing industries, this process needs to be speeded up and not just to fill local demands, but also to feed global export markets, especially when Africa dominates the production of the needed raw materials.
Much of that industrialisation will require raw materials from several countries coming to a factory, as few African countries have everything that is required, even a country like Zimbabwe which has a broader spectrum of raw materials and minerals than most and a wider range of agricultural products.
In agriculture, most African countries have been pushing food self-sufficiency with varying degrees of success, and while Africa does export reasonable quantities of tropical and sub-tropical produce, a lot of those products are exported in raw form rather than finished products, and the continent as a whole possibly imports more food than it exports.
These factors on the ground seem to be one of the reasons why the African Export and Import Bank, set up to support trade, is also interested in seeing a lot more processing and industrialisation in Africa.
Trade means having the products to trade, and ever more valuable trade requires ever more finished products, or at least high-end beneficiation before trade starts.
Afreximbank chairman and president Professor Benedict Okey Oramah this week in Cairo, where he is attending the Inter-Africa Trade Fair, was very strong on this point, that trade needs to drive product upgrades and industrialisation, and very importantly far more collaborative efforts between African countries to both create the markets for African products and to actually be able to assemble the raw materials for products.
One good example would be lithium batteries for electric vehicles, remembering that all new vehicles in around 12 years time are supposed to be electric, with no more internal combustion engines made.
Zimbabwe is obviously well-placed to be a major manufacturing centre, having very large reserves of accessible lithium, having nickel, probably the second most important raw material, and some of the other requirements.
But it does not have all, the largest lack being cobalt, a critical raw material even with present research for lower cobalt batteries.
Yet Zambia and Democratic Republic of Congo are major cobalt producers, and both are “next door”, so buying the needed cobalt and having it delivered should not be a problem, let alone a serious problem.
We will need to pay the full price, but we win with the shorter trade routes and costs.
There may well be some chemical industry input that we will need to create, or will need to tie ourselves into South African manufacturers.
The actual point is that almost everything in the battery box that is fitted to a car anywhere in the world can be produced not just in Africa but in southern Africa.
We need to be talking about other products. That same electric vehicle revolution will require a lot of electric motors. Again it seems we in Africa, and even southern Africa, could put together the industrial bits.
Zambia and DRC export copper, to be precise high-purity copper bars. They need to be producing high-quality copper wire and be able to wind motor arms.
Zimbabwe is building up a steel industry and could supply the arms and the casings. Other African factories could make the bearings and so it goes.
This sort of industry is going beyond the stage we are all pressing towards, converting say our mineral exports to bars of pure metal or bags of pure lithium salts, and starting to look at actual products made from those materials, first perhaps for use within Africa and then shipped around the world as manufactured goods.
Anyone who wants to doubt those possibilities should examine Chinese trade. Half a century ago China managed to make a lot of what it needed internally, but was not considered a major exporting country.
Chinese products were not readily available around the world. That would be difficult for younger people to imagine these days, when China is the “workshop of the world” if any one country could have that title.
That shows just how quickly the bits can be put together if the required materials and skills are already present.
China leapt forward when the then Government put together those materials and skills in a way that worked.
This sort of industrialisation needs to work its way right down the chains.
We have countries like Egypt and South Africa that do produce a lot of their own market requirements for sophisticated consumer goods, vehicles and domestic appliances for example, but which have not been establishing those manufacturing networks across the continent.
This is where the African Continental Free Trade Area has to work, and has to combine the already significant progress made in the regional trade areas, such as Comesa, where Afreximbank is significantly upgrading the financial services to make sure products can move a lot more freely across Comesa.
When we talk about major industrial global giants such as China and the United States, we need to remember that these started off with very large free trade areas.
There are no trade barriers between different parts of those countries, just huge single markets. That is why the Europeans were so keen on pushing their own single market, and currency union, as hard as possible over the last few decades, even though they were already one of the most industrialised continents.
As Prof Oramah kept stressing this week, one of the critical pieces of the African industrial leap forward is the need for collaboration between countries and their industrialists, miners and farmers so that all the bits can come together, easily, and we can all move forward together.
The political leaders already recognise that Africa has to move forward together, and our business leaders need to be able to do the same.
Business
Charting the global economy: Growth is slowing around the world – ETCFO.com
The world’s advanced economies are heading into a deepening slowdown as markedly higher interest rates take a hefty toll on activity that could still become more acute, the OECD warned.
Growth is losing momentum in many countries and won’t edge up until 2025, when real incomes recover from the inflation shock and central banks will have begun cutting borrowing costs, according to the organization.
Inflation eased in Europe, Brazil and Australia in recent readings but remains too high for central bankers’ comfort. Meantime, price pressures accelerated in Japan’s service sector, as well as in Zimbabwe, where officials recently adopted a new inflation metric.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
World
The Organization for Economic Cooperation and Development forecasts global gross domestic product to expand only 2.7% next year after an already weak 2.9% in 2023. The pace will only pick up to 3% in 2025, according to the assessment.
Europe
Euro-zone inflation cooled more than expected, putting the 2% target in sight as investors step up bets that the European Central Bank will cut interest rates sooner than officials suggest. ECB officials are adamant, however, that monetary policy must remain tight to ensure inflation makes it all the way back to 2%.
Sweden’s economy fell into a recession in the third quarter as inventories declined and households cut back spending amid increasing borrowing costs and rising prices. Most forecasters now expect the largest Nordic country to see its output contract for two consecutive years, and the European Commission forecasts that Sweden will be the only member state that will see its output decline next year.
Asia
Japan’s business service prices increased by the most in over three decades when ignoring sales tax hikes over the years, throwing some doubt over the Bank of Japan’s assertions that inflation will decelerate in the short term. Such gains in prices put the central bank in a difficult position, as the country is still struggling to speed up wage growth.
Soft Inflation Makes Bond Traders Doubt RBA Will Hike | Three-year yields drop to well below the cash rate
Australia’s monthly inflation gauge snapped two months of acceleration in October, bolstering the case for the Reserve Bank to resume pausing interest rates next week.Emerging Markets
Brazil Mid-Month Inflation Decelerates Toward Target | IPCA-15 CPI hits 4.84%, above central bank’s 3.25% target
Brazil’s annual inflation slowed roughly in line with expectations in early November, approaching the target range as central bankers forge ahead with plans for more monetary easing.
Zimbabwe’s annual inflation rate climbed for the first time since the recent adoption of a new price measure that reflects the widespread use of US dollars for transactions in the economy. A 2 US cents per kilowatt hour increase in power tariffs likely contributed.
World Relies on West Africa for Much of Its Cocoa | Ivory Coast and Ghana are responsible for about 60% of output
There’s a climate crisis playing out across Ivory Coast and Ghana, the heavyweights of cocoa, with consequences for global food inflation and the cost-of-living squeeze. Too much rain is lowering output and delaying harvests, with the resulting shortfall catapulting wholesale prices in New York to their highest in 46 years.
US
US consumer spending, inflation and the labor market all cooled in recent weeks, adding to evidence that the economy is slowing. The figures are consistent with expectations that the economy will moderate in the fourth quarter following the strongest growth pace in nearly two years.
Business
Charting the global economy: Growth is slowing around the world – ETCFO.com
The world’s advanced economies are heading into a deepening slowdown as markedly higher interest rates take a hefty toll on activity that could still become more acute, the OECD warned.
Growth is losing momentum in many countries and won’t edge up until 2025, when real incomes recover from the inflation shock and central banks will have begun cutting borrowing costs, according to the organization.
Inflation eased in Europe, Brazil and Australia in recent readings but remains too high for central bankers’ comfort. Meantime, price pressures accelerated in Japan’s service sector, as well as in Zimbabwe, where officials recently adopted a new inflation metric.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
World
The Organization for Economic Cooperation and Development forecasts global gross domestic product to expand only 2.7% next year after an already weak 2.9% in 2023. The pace will only pick up to 3% in 2025, according to the assessment.
Europe
Euro-zone inflation cooled more than expected, putting the 2% target in sight as investors step up bets that the European Central Bank will cut interest rates sooner than officials suggest. ECB officials are adamant, however, that monetary policy must remain tight to ensure inflation makes it all the way back to 2%.
Sweden’s economy fell into a recession in the third quarter as inventories declined and households cut back spending amid increasing borrowing costs and rising prices. Most forecasters now expect the largest Nordic country to see its output contract for two consecutive years, and the European Commission forecasts that Sweden will be the only member state that will see its output decline next year.
Asia
Japan’s business service prices increased by the most in over three decades when ignoring sales tax hikes over the years, throwing some doubt over the Bank of Japan’s assertions that inflation will decelerate in the short term. Such gains in prices put the central bank in a difficult position, as the country is still struggling to speed up wage growth.
Soft Inflation Makes Bond Traders Doubt RBA Will Hike | Three-year yields drop to well below the cash rate
Australia’s monthly inflation gauge snapped two months of acceleration in October, bolstering the case for the Reserve Bank to resume pausing interest rates next week.Emerging Markets
Brazil Mid-Month Inflation Decelerates Toward Target | IPCA-15 CPI hits 4.84%, above central bank’s 3.25% target
Brazil’s annual inflation slowed roughly in line with expectations in early November, approaching the target range as central bankers forge ahead with plans for more monetary easing.
Zimbabwe’s annual inflation rate climbed for the first time since the recent adoption of a new price measure that reflects the widespread use of US dollars for transactions in the economy. A 2 US cents per kilowatt hour increase in power tariffs likely contributed.
World Relies on West Africa for Much of Its Cocoa | Ivory Coast and Ghana are responsible for about 60% of output
There’s a climate crisis playing out across Ivory Coast and Ghana, the heavyweights of cocoa, with consequences for global food inflation and the cost-of-living squeeze. Too much rain is lowering output and delaying harvests, with the resulting shortfall catapulting wholesale prices in New York to their highest in 46 years.
US
US consumer spending, inflation and the labor market all cooled in recent weeks, adding to evidence that the economy is slowing. The figures are consistent with expectations that the economy will moderate in the fourth quarter following the strongest growth pace in nearly two years.
Business
Zimbabwe’s billion-dollar petroleum pipeline project on course – The Zimbabwe Mail
PROCUREMENT of equipment that will be used in the construction of Zimbabwe’s second petroleum pipeline project valued at over US$1 billion is on course, the deal maker of the lucrative project told the Zimbabwe Independent.
Over the past 13 years, the implementation of the strategic project, which is expected to put Zimbabwe into the region’s petroleum hub, hung in the balance as the government worked on modalities to tie up the deal with a suitable suitor.
Eddie Cross, President Emmerson Mnangagwa’s former adviser, shared with this publication that orders for equipment that will be used to construct the second fuel pipeline had already been placed with manufacturers.
Cross, who wrote Mnangagwa’s biography titled A Lifetime of Struggle in 2021, said Mozambican authorities were supportive of the project.
This week, Zimbabwe and Mozambique jointly commissioned the US$200 million Beira-Machipanda railway line, that is expected to boost trade flows between the neighbouring countries.
The second fuel pipeline project will be implemented under a joint venture by the state-run National Oil Company (Noic) and South African-based firm Coven Energy.
The two parties will each control 50% shareholding of the pipeline.
“The joint venture between Noic and Coven Energy has been agreed by the cabinet on a 50-50 ownership basis. We are at the stage now where we are entering discussions with the Mozambican authorities on expanding the capacity of Beira port,” Cross said.
“We have already ordered some of the equipment required to implement the project, which is now being manufactured and assembled. Once we conclude our agreement with Mozambique to proceed, our consultant will start work. The Mozambican authorities are fully supportive of this project.”
Cross said Coven Energy will foot the cost of the project. “Coven Energy will finance the whole project pegged at over US$1 billion. It will be implemented in phases. Phase 1 is US$1,3 billion,” he said.
“Coven Energy will put up 30% liquidity, which is their own money and 70% will be borrowed during the project. There is no problem with financing.”
Noic corporate services director had not responded to questions posed by the Independent at the time of going to print.
Broadly, this publication wanted to gain an understanding of the projected carrying capacity, how Coven Energy would recoup its capital investment, and the profit-sharing ratio between the involved parties.
The only existing pipeline is wholly owned and managed by Pipeline Zimbabwe, a subsidiary of Noic.
Noic assumed total control over the Feruka-Harare pipeline when it snapped 50% equity then held by Lonmin, formerly known as Lonrho.
Mozambique owns the length of the pipeline that runs from Beira to Feruka. Private fuel trading firms pay Noic to use the infrastructure.
In 2021, Noic was charging US$0,07 to move a litre of fuel through the Feruka pipeline. Construction of the Coven Energy-Noic pipeline is expected to utilise Zimbabwe’s underutilised storage capacity, which stands at 500 million litres.
Source – newsday
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