India Turns to Africa for Cash and Influence
Millions of mobile phone subscribers in Africa saw the icon on their phone screens change from Bahrain company Zain to Indian company Airtel recently. The change means little to the average customer, but, for the continent, it is another sign that India is moving in. The expansion by Bharti Airtel into 16 African countries underscores the rise of India in Africa, at a time when much of the focus on foreign investment here has been on China.
The Indian government is raising its diplomatic profile in Africa, with Prime Minister Manmohan Singh and his Cabinet members leading several business delegations in recent years. And, Indian companies are striving to keep up with China’s business profile in Africa, taking advantage of historical ties with the continent
Kenyans Count Losses as Ethiopia Controls Prices
Kenyan exporters are facing thin margins as Ethiopia implements price controls to tame inflation. Ethiopia, Kenya’s key export market, recently imposed price controls on about 20 essential commodities, pushing costs of goods down five to 45 percent and those who violate the rules are liable for up to 15 years imprisonment.
Kenyan exporters told the prices demanded by the Ethiopian government are lower than production costs, forcing them to stop further deliveries and search for new markets. Kenya’s top ten exports to Ethiopia include petroleum re-exports, cooking oils, iron and steel sheets, cosmetic, plastic and pharmaceutical products
New Barriers Hinder Cross-border Trade
East African countries have introduced fresh administrative barriers to retain control of cross-border affairs after eliminating all the tariffs on goods produced within the region, government officials said. Such barriers threaten the free trade regime envisaged when the region’s custom union matured in January 2010, paving way for the launch of a common market in July, said EAC Affairs Permanent Secretary, David Nalo. “Practically every country is now complaining about these barriers. Rwanda is complaining about insecurity along the Northern Corridor
Kenya as New Hub for Regional Trade
Multi-national companies operating in Kenya have stepped up expansion plans, lured by the country’s attractiveness, as more African nations embrace borderless trade. The expansion looks set to shore up the contribution of the manufacturing sector to Kenya’s gross domestic product and the share of new jobs in Kenya’s recovering economy in line with the goal to make the country a middle income economy by 2030.
The rising interest in Kenya is linked to the formation of the common market in East Africa, which is expected to create a market of about 126 million people and allow free movement of factors of production, goods and services among the five member states..
Alarm Over Rising Trade Deficit
Rwanda’s increasing trade deficit is causing concern to both the government and the private sector, with fears that the country might be headed for economic difficulties. The country’s external current account deficit, including grants, worsened from US$378mn in 2009 to US$407mn in 2010, mainly due to trade imbalance and service deficits, according to statistics from the National Bank of Rwanda.
In 2011, the deficit is projected to widen further to US$536mn as a result of increased demand for imports in critical sectors and the changing lifestyle of the citizens. The Finance and Economic Planning Minister, John Rwangombwa, says, despite ongoing efforts to boost exports, the countries huge investment needs will still widen the trade gap.