World News‎ > ‎

A look back ot Africa's economic hits and misses in 2012

posted 28 Dec 2012, 03:46 by Mpelembe Admin   [ updated 28 Dec 2012, 03:46 ]

Africa's fortunes and economic ups and downs -- 2012 was a good year for infrastructure development while some old oil producers experienced trying financial situations.

TURKANA, KENYA (FILE) (REUTERS) -  This was a watershed year for east Africa's biggest economy Kenya with an oil find in the northern drought prone region of Turkana, where British Tullow Oil Plc has been conducting exploratory drilling.

Kenya and its neighbours in east Africa have become an international hot spot for oil and gas exploration after commercial oil deposits were found in Uganda and natural gas in Tanzania and Mozambique.

After the discovery, both the government and Tullow announced plans to fund education and health projects in Turkana. They also promised that everything would be done to avoid a resource curse that has plagued many other mineral rich nations like Congo and Nigeria.

"If you have short-term, mid-term and long-term goals of development of a community, short-term would be build the classroom, hospital, water, the basic things. Mid-term is how do you increase the skills? So you have training for, whether its scholarships to leave the country, whether its really investing in going to Russia for education of something, that's fine. Then the third way is it has to be an investment that goes beyond the immediate need where the community now has a stake, they can decide what they want to do with the money," said Ikal Angelei an activist from Turkana.

It could take years for profits from the oil to have an impact on Kenya's economy but experts say that the time to have a policy that protects the communities is now.

Construction of a multi-billion dollar port in Kenya's Indian Ocean Island Lamu is also underway.

Due to be completed by 2016, the port is part of a wider project to create a second transport corridor in the east African nation, linking Lamu at the north coast withEthiopia and newly independent South Sudan.

The Lamu Port South Sudan - Ethiopia (LAPSSET) project will unlock trade and investment opportunities across Africa.

However, locals fear the construction will have a huge impact on tourism and fishing, currently the main sources of income on the island. There is also a dispute over land rights.

A court case on the matter is still on going.

Managing some old fortunes, Liberia attempted to kick-start a legal timber industry by installing a tracking

system called Liberfor, using technology from the European firm SGS.

Before a 14-year civil war in Liberia, forestry accounted for around 60 percent of the country's GDP. Illegal trade of timber was used by former President Charles Taylor to fund the conflict and threatened much of the last expanse fof forest inWest Africa.

The premise is that every log that is exported can be traced back to its original concession area though a unique barcode in a "chain of custody" system equivalent to the Kimberly Process used to trace diamonds.

"We think that one key action of the government has been to implement the chain of custody. And by implementing the chain of custody, we have secured, hopefully, the revenue from stumpage to export. So once the sector is fully rehabilitated, we will begin to realize the impact, the full potential of the chain of custody agreement," said

Elfrieda Tamba, Deputy Minster of Revenue.

In the west, Gabon, which used to be one of Africa's top crude oil producers is seeking to diversify the oil-dependent economy and attract investments in its mining, timber and services sectors.

President Ali Ben Bongo plans to increase manganese production from the current 3-4 percent by developing the processing capabilities for Africa's second largest producer of manganese behind South Africa, and fourth worldwide.

There is also planned investment of 560 million US dollars to transform facilities at the main port of Owendo.

This will increase capacity and reduce the waiting time for clearing of cargo. Close to 90 percent of Gabon's trade is moved through maritime transport according to the director general of ports.

For Nigeria the year started with trouble in the oil sector. President Goodluck Jonathan's government abruptly removed

part of oil subsidies on January 1.

Strikes and protests followed, forcing him to reinstate some of the subsidy, although pump prices did not return to the lows that people in Africa's largest oil producer were accustomed to.

Then in April, chilling details of how subsidy payments were systematically stolen by officials and oil companies emerged in one of the biggest corruption scandals in Nigeria's history.

Investigations are ongoing.

"Nothing is working, our educational system is in rot, our infrastructure base are decaying, we don't have good road

networks, our rail system is in a state of comatose because of the atrocious activities of a few Nigerians who have been milking us, milking Nigerians resources at the expense of the 140 million Nigerians," said Human Rights Lawyer Eke Uche.

Oil was partly behind unrest in new neighbours and foes, Sudan and South Sudan in the east.

Sudan did not see the wave of popular unrest that unseated long-serving leaders in North Africa, but austerity measures launched to contain an economic crisis worsened by loss of oil revenue to South Sudan, set off anti-government protests rarely seen in that country.

Inflation hit 37.2 percent in June, more than double the level of a year ago, adding to the hardship of people who have endured years of crises, multiple conflicts and U.S. trade sanctions.

"Protests are widespread, although the civil expression of it has not reached its zenith... there is a military expression, an intellectual expression but the civil expression has not reached the level that it can," said former Sudanese prime minister Sadeq Mahdi at the heigh of the protests.

The demonstrations died down and South Sudan could soon restart oil exports through Sudan after talks between both countries on border security.

Malawi had to take drastic measure to save its economy from near collapse and to unblock frozen aid.

New president Joyce Banda scrapped the currency peg to the dollar, triggering a devaluation of around 50 percent in the kwacha.

The currency adjustment was meant to inject much needed cash into the economy. Former President Bingo wa Mutharika, who died this year in office, had refused the IMF's advice, making the financial institution suspend a 79 million US dollar aid programme, which caused a major shortage of foreign currency inMalawi.

"Nothing good comes completely without some kind of suffering. There is no gain without pain. So, what this

devaluation will bring us pain but ultimately it is going to bring us a growing economy, an economy that you see, will produce more jobs. That is the idea, it is not being done for fun, no. The economy has been stagnant for too long," said Dr.Desmond Dudwa Phiri, an economist.

A look at Africa's aviation industry, estimated to be worth about 56 billion US dollars found business was only likely to go up as as air transport demand was expected to double over the next 10 years.

The forecasts indicate that passenger numbers in Africa are expected to grow from 67.7 million in 2010 to more than 150.3 million in 2030.

But despite the projected growth, analysts say the numbers are unlikely to translate into huge profits for African airlines as the continental airspace is dominated by airlines from Europe, the US, Middle East and China.

Analysts said that African airlines needed to work together to be able to compete with these global players.

"The prospects of Africa over the next 20 years are very good, we are looking at doubling the demand for the air transport in the next ten years and tripling in the next 15 to 20 years, so that can only be good news. The challenge is or the question is; are we up to it, in terms of skills, in terms of equipment, capitalization and all those other things?" said aviation analyst, Linden Birns.

While liberalization of the African skies is improving, technical expertise need to be upgraded and qualifications in aviation fields made uniformly standardized across the continent, Birns said.