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In this week's edition of the Emerging Powers News Round-Up:
- Africa is painting a distorted picture of economic progress
- Chinese enterprises shoulder social responsibilities in Africa
- China on multi-billion dollar projects in Zimbabwe
- Rwanda reaches out to Indian businesses
- Indian Companies Push into Africa
- SA urged not to be ‘obsessed’ with Bric

Emerging Powers News Round-Up (29 October 2010)

Compiled by Sanusha Naidu (Research Director – Emerging Powers in Africa Programme) ([email protected])

1. General

Money Never Sleeps: Africa-The Final Frontier
In trying to understand Africa’s potential, it is necessary to ditch entrenched stereotypes of the continent. Ask a typical sample of South Africans what their impression is of Africa and most will probably mention poverty, disease and corruption. Asked on what African economies are based, most people would tend to respond with minerals and other resources. In fact, African governments have been working hard to end political conflicts as well as to improve general business conditions. And today, resources only account directly for around 24% of Africa’s total GDP. Wholesale and retail consumer facing industries are larger than resources, accounting for between 30% and 40% of total GDP. Africa’s population is something that should not be discounted either. Currently around 1 billion people, it is possible that the total African population will exceed that of China’s by 2030 thanks in part to the legacy of China’s one-child policy. McKinsey identifies four growth areas in Africa that should propel total GDP to $2.6 trillion by 2020; Consumer-facing industries (retail, telecoms and banking), infrastructure-related industries, agriculture and resources. But is all this a flash in the pan, a one-off? No. It is highly unlikely to be a repetition of what occurred in the 1970s, when most of the continent’s oil wealth was squandered and then the oil price collapsed.

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Africa is painting a distorted picture of economic progress
Listening to the wave of optimism sweeping through the African continent, one may think we have reached the end of the tunnel. And who would blame the general public for believing the optimism, adjusted inflation figures that distort real living standards, an expansionary monetary policy, upward corrections in all the major financial markets, and a booming property industry are all positive signals for a change in our fortunes. And who would blame the general public for believing the optimism, adjusted inflation figures that distort real living standards, an expansionary monetary policy, upward corrections in all the major financial markets, and a booming property industry are all positive signals for a change in our fortunes. But this veil, displaying a new chapter in our economic history only serves to hide a distortion that is perpetuated by ill informed institutional leaders. The economic gap that exists today between the rich world and Africa is alarming and has only been made more so to me, by the measures developed nations are taking to fix their deficits. The point here is our growth is not organic, it is a by product of China’s involvement in our economy.

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How the politics of polarity affects the African continent
What will the emergence of a new power with different political values mean to Africa? Are we going back to the days of the cold war when the Soviets and the Americans played out their interests on the continent resulting in civil wars and coup d’états that impoverished Africa and its people? We have already seen how bipolar politics in the world divided countries like Angola, Mozambique and Ethiopia. All have stabilized since the end of the cold war. The way forward for Africa and its people seems to lie in complete independence from the axis of power dominating the world at any given moment. The notion that similarities in traditional values for instance with Asia would mean more favourable bilateral dealings with emerging powers from that part of the world is incorrect. The cardinal feature of international politics is a never ending quest for power in order to advance self serving national interests. The paradigm of exploitation that defined Africa’s relations with the west will not be given a rest in a new world order where the continent’s developmental partners appear to be changing.

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G-20 to Avoid `Competitive Devaluation,' Prod China
Group of 20 finance chiefs vowed to avoid weakening currencies to lift exports and left it to a leaders’ meeting next month to flesh out how to further pressure member China to allow faster gains in the yuan.

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The Lekki Free Trade Zone
Building the "Dubai" of West Africa. The economics of free trade zone! This project in Lagos state, will definitely transform business in the region. It is definitely result to a positive injection into the economy.

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Guinea mining 'totally corrupt'
Multinational firms have fought for years to control Guinea's enormous mineral wealth, leaving the future president with a totally corrupt sector to clean up, according to critics in civil society. "We are the world's second largest bauxite producer, we have iron ore reserves envied by everybody, we have gold, diamonds, oil, etc. But we vegetate in misery. We lack even water and electricity," said Mamadou Taran Diallo, president of the Guinean coalition of Publish What You Pay, a global initiative.

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2. China in Africa

Chinese enterprises shoulder social responsibilities in Africa
A gradual transformation appears to be taking place among Chinese enterprises in Africa. Feng Zuoku, vice president of the Chinese People's Association for Friendship with Foreign Countries, spoke Friday at the launching ceremony of an online poll for the Top 10 Chinese Enterprises in Africa in Beijing. He said China now puts more emphasis on improving Africans' "living standards and quality of life."

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A Win-Win Forum
A decade later, the FOCAC has generated tangible benefits for both China and Africa. China, however, remains prudent about cooperation with Western countries in Africa. Unwilling to join the Western aid system, it insists that its African assistance fall within the framework of South-South cooperation. The SIIS' recent report states there is a need for China to engage with other parties, including the United States and the EU, through the FOCAC. It could collaborate with the West on specific projects aimed at promoting African economic development. The report also said that such joint projects will alleviate the concerns of African countries. [EMP Editor’s Note: We invite African readers to evaluate and comment on the 10th anniversary of FOCAC">

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China on multi-billion dollar projects in Zimbabwe
CHINA has pledged to assist Zimbabwe build two more schools, a mini-hydro power station and various other assistance as the two countries continue to strengthen ties. Chinese Ambassador to Zimbabwe Mr Xin Shunkang, said the assistance would be exten-ded under the China-Africa Co-operation. Mr Xin was addressing more than 30 journalists attending a two-day workshop on photography in Harare. He was speaking on China’s economic development and Sino-Africa relations. The multi-billion dollar projects, he said, would be implemented in the next three years as Zimbabwe and China celebrate 30 years of diplomatic relations.

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China and Botswana consumate media wedding
To mark 35 years of the existence of diplomatic relations between the People's Republic of China and Botswana, the two governments saw it fitting to promote media cooperation because the Fourth Estate plays a conducive role in building and developing relationships.

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INTERVIEW-Congo defends $6 bln China deal, awaits funds
The Democratic Republic of Congo and China have defended a $6 billion deal for copper mining and infrastructure projects which some say could leave the poor central African nation out of pocket.
The deal was reduced from $9 billion last year after the IMF raised concerns that it could plunge the poor central African nation deeper into debt and delayed a multi-billion dollar debt forgiveness deal pending its revision. Detractors still say the accord, one of a growing number signed between China and African states, lacks transparency and could ultimately be to Congo's detriment.
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3. India in Africa

Rwanda reaches out to Indian businesses
Even as China is making a beeline for Africa, investing in nearly every major country in the continent known for its rich deposits of mineral resources, Rwanda has invited Indian businesses to invest and provide resources to upgrade the technical and industrial skills in the country to help transform the country into a knowledge-based economy.

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MOROCCO Invities Indian Investments in Textiles, Renewable Energy and Automobile Sectors
Shri Jyotiraditya Scindia, Minister of state for Commerce and Industry during his bilateral meeting with Moroccan Minister for Commerce has called on the Indian companies to invest in areas such as apparel, automobiles amongst others and Indian competencies in areas such as Information technology and education that could be leveraged by Morocco. He is presently visiting Marrakech to participate in World Economic Forum on Middle East and North Africa- 2010.

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Indian Companies Push into Africa
Indian companies are investing billions of dollars in Africa to tap the potential of its growing market and increasing its footprint across the continent. From Kenya in the east, to Zimbabwe in the south and Nigeria in the west, India's $ 15 billion Essar group is investing in Africa in businesses ranging from power, steel and mining to telecommunications and construction.

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4. In other Emerging News

SA urged not to be ‘obsessed’ with Bric
SA’s bid to join one of the leading emerging market groups came under attack from trade policy experts. SA is campaigning to be admitted to the Brazil, Russia, India and China (Bric) bloc of countries, in the belief that joining Bric will open up new markets for exports. However, at a South African Institute of International Affairs trade forum , some trade policy experts disputed this belief . “I don’t think SA should be obsessed with becoming a member of Bric,” said Mills Soko , an associate professor of international political economy at the business school of the University of Cape Town. Dr Soko said Bric countries made it difficult for South African companies to penetrate their markets through various trade barriers . He cited retail chain group Shoprite, which was forced to pull out of the Indian market after local laws hindered its business .

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5. In other Corporate News

NTT takes foothold in Africa with Dimension Data
Japanese mobile operator NTT is finally moving to invest in Africa's lucrative telecom market, completing the buyout of South Africa's Dimension Data. Dimension Data has a presence in many African countries but with the buyout, the company is now poised to expand its services. NTT is buying the company for US$3. 24 billion and makes it the first Japanese telecom company to take a major stake in the African market.

Riversdale seeks partner for Mozambique coal project
RIVERSDALE Mining is inviting bids from global miners for up to 50 per cent of a major coking coal deposit in Mozambique. The miner is looking for the partner as it prepares to sign off on a binding $US800 million deal with a Chinese steelmaker for an adjacent project. It shows how miners are seeking to take advantage of a global demand boom for coking coal - a key ingredient in steelmaking - by attracting partners with mining expertise or the ability to build infrastructure such as ports to accelerate new mine developments.

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6. Opinions and Viewpoints

VIETNAM-AFRICA: Promoting research, consultancy links
As China builds on five decades of humanitarian projects in Africa, Vietnam is following suit by promoting new research and consulting partnerships with African allies. Before following China's lead, Vietnam should learn more about Africa than the Chinese did before investing there.

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Currency War Marks Beginning of Shift from Washington Consensus to Beijing Consensus
We sit amongst the vulnerable beneath the trampling of elephants as they fight it out. South Africa may be a big player in Africa, but is no match for the economic giants in the global arena. South Africa simply does not have the foreign currency reserves or trade power to fight a currency war. All South Africa can do is watch and hope for the best while attempting to stem the assault on the Rand to some degree -- but it won’t be enough. The currency war on everyone's lips marks a new front in geopolitical tussles between old and new powers. Emerging powers are slowly subverting the hierarchy of wealth in favour of themselves. This is really at the heart of matters, as they stand. Rebalancing is inevitable as nobody wins. But be sure that trade and currency rebalancing will not happen without the rebalancing of geopolitical power and influence. All of this will play itself out at the next G20 meeting and where the old powers will be forced to give up some of their own political power and influence for the greater role of the new. This is when the Beijing Consensus, as it has been coined, will truly begin to replace the Washington Consensus once and for all.

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China's great African hopes
Africa is usually conspicuous in its absence in the People's Republic of China's state media, but the past few weeks has seen a slew of articles aimed at boosting the image of the African continent in influential trade and investment circles. Judging from the proliferation of headlines and positive spin about African countries, in particular South Africa and Mauritius recently, the message has been sent out to punt Africa more aggressively to China's business community. The trouble for Africa is that the headlines to a large extent play on the old stereotypes: that Africa is a place you go to get natural resources and just generally take more than you give. "Out of Africa, ‘the land of golden opportunity'," ran one big story highlighting gold mining ventures in Zimbabwe.

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ALLISTER SPARKS: Let's look for solutions closer to home
While it has become fashionable to extol the virtues of the fast-growing BRIC countries -- Brazil, Russia, India and China -- and for our policy planners to enthuse particularly about the "developmental state," which they seem to regard as a blueprint for economic success yet have still to define it properly, I would like to suggest that we cast our gaze a little closer to home. To Africa, no less. Ten years after The Economist in its notorious cover story declared Africa to be "The Hopeless Continent," McKinsey and Company, the prestigious global management consultancy, has rated it as delivering the highest rate of return on foreign investment of all developing regions. Now I am not trying to decry the merits of the BRIC countries. Brazil in particular has long fascinated me. I have long believed that what is now recognised as the Lula formula offers developing countries the best prospect for success. What troubles me, though, is that our policy protagonists seem more fascinated by China than Brazil.

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Taming Africa’s dragon
PRESIDENT Jacob Zuma made a historical state visit to China recently. In retrospect, the pundits have asked a good question: what really came out of these visits? In the Chinese trip, the only evident outcome of a 13-cabinet minister and 370-strong business delegation was a raft of new MoUs — memoranda of understanding: in effect a “gentleman’s handshake”, a letter of intent without any promise or legal commitment. So in short, nothing much at all. I can’t help but think that as much as one’s dollar reserves can put the wind into the mercantilist sails, so too can the size of one’s delegation act as a haughty puff for recognition, pleading “take me seriously”.

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The fragile bit of Bric
In the longer-run future, it is not clear whether China will be a sustained source of demand for Latin American commodities. Even if China does maintain its appetite for Latin American commodities, the consequences may not all be beneficial. China could accentuate Latin America's (over)reliance on commodities exports and jeopardise the region's capabilities for diversifying its export basket toward manufactures and modern services. Not to mention that it could cause long-lasting social and environmental effects.

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After the Brics, the economies to watch will be the 'next 11'
Many investors when they hear the words emerging markets think of Brazil, Russia, India and China, the so-called Bric countries. But below these mammoth states, with their rapid growth and wealth of raw materials, is another burgeoning story, that of the progress of what are called the "next 11" countries. The next 11 may not have the profile or the populations of the Bric countries, but there are still compelling reasons for investors to consider getting a slice of the action.

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