BRICS- SA's Role

Interesting analysis below from the business day. Should note that SA's BRICS membership also adds another dimension to the tripartite  FTA consisting of COMESA-EAC-SADC Member States.

------------------------------------------------

There is wide consensus that SA’s place in the emerging-market bloc that groups Brazil, Russia, India and China together, is only justified by SA’s strategic importance on the continent.

That means the country needs to tread a careful path between touting its own interests and facilitating links to the rest of Africa.

"It would be in SA’s interest to see this as a bargaining opportunity for the continent rather than just being expedient," said Standard Bank ’s group chief economist, Goolam Ballim. "Otherwise this could be harmful in the longer term for inter- African relationships."

It is a delicate task as SA does not have a mandate at this point to speak for any other African country. Jim O’Neill, the banker from Goldman Sachs who invented the acronym for the first four Bric countries, has said that Nigeria is in a better position to join the grouping.

SA’s economy is only a quarter the size of Russia’s, the next-smallest Brics member, and its share of world trade has been stagnant at 0,5% over the past decade. Its pace of growth also lags well behind the bloc’s other members.

But SA has a lot to offer the group, which analysts say could evolve into a political force rivalling the Group of Seven developed nations, campaigning for the interests of emerging economies. SA has one of the strongest financial sectors in the world, and receives about 95% of Africa’s portfolio inflows — foreign buying of local shares and bonds.

It could provide capital for companies looking to expand into the continent and is rated as the easiest place to open a business among all the other BRICS countries.

That would make it the logical choice for firms to establish their headquarters in SA.

The country is already the services hub for the continent and has significant corporate clout in the global arena.

Where it falls short is on transport infrastructure, both within the country and linked to its African neighbours.

Nonetheless, SA’s place on the continent is seen as key to its debut in the Brics club this week at the meeting at a Chinese resort.

"We are not individually important enough but if we can fill the role of an entry point to Africa, it will be an enormous opportunity," says Absa Capital economist Jeff Gable.

Sub-Saharan Africa has become the second-fastest growing region in the world after Asia and has been more resilient to the global financial crisis then Asia, Latin America and Eastern Europe. It offers an untapped market of hundreds of millions of people.

Standard Chartered’s regional research head for Africa, Razia Khan, thinks that the summit is unlikely to come up with concrete measures that will immediately affect the Brics economies.

But some analysts are expecting preferential trade agreements and developmental finance deals, given the participation of state-owned financial institutions.

Iraj Abedian, chief economist for Pan African Capital Holdings, hopes that the Brics summit will establish a "credible institution" to underpin its political clout. If that does not happen, it will remain a political multilateral rather than an economic leadership forum, he says.

For another piece on BRICS see here.

Tripartite FTA COMESA-EAC-SADC

The Second Tripartite Summit of Heads of State and Government (COMESA-EAC-SADC) took place on 12 June, 2011, in Johannesburg, South Africa. A major achievement of the summit includes the official launch of negotiations on the Tripartite Free Trade Area (FTA). Agreement was reached on the negotiating principles, processes, scope and institutional framework. A roadmap and timelines for establishing the FTA were also agreed.

Negotiations will be open to all the 26 countries of the COMESA-EAC-SADC Tripartite. It was agreed that the first phase of negotiations will address tariff liberalisation, rules of origin, customs cooperation and customs related matters, non-tariff barriers, sanitary and phytosanitary measures, technical barriers to tade and dispute settlement. The second phase will focus on negotiation trade in services and trade related issues, including intellectual property rights competition policy and trade development and competitiveness, . Facilitating movement of business persons within the region will be negotiated in parallel with the first phase as a separate track..

A timeline of 36 months has been set for completion of negotiations for the first phase and the movement of business person which will run concurrently. No timeframe has, however, been indicted for the second and final phase of FTA negotiations. .

Once in place, the Tripartite FTA will establish a larger market for Eastern and Southern Africa - leading to improved trade performance and competitiveness for the region.

Resource materials can be accessed here.

The negotiations were concluded, see related materials here.

Manufacturing share of African GDP falling

Interesting piece.  In fact, Africa's agricultural and manufacturing GDP is falling. These realities should also be considered in light of the long standing WTO negotiations on agriculture and  non agricultural products. 
---------

Africa is uncompetitive, insufficiently export-driven, and situated too far from the world's main markets, argues economist Tony Hawkins.

"Africa has not been industrializing; it has de-industrialised. Since the 1990s, the GDP share of the continent's manufacturing sector has declined and now accounts for about 10% of the continent's GDP," said Tony Hawkins, economist and professor at the graduate school of management at the University of Zimbabwe.

"Over 60% of the industrial output from the whole of sub-Saharan Africa is generated in one country - SA."

"Asia's manufacturing industry, on the other hand, is growing fast. One of the reasons is that the industry in this part of the world is export-driven. In Asia, manufacturing accounts for 70% of the continent's total annual exports. In Africa, this is 20%," he said.

One of the reasons why Africa would not able to compete with China lay in the market it produced for. "Africa is manufacturing goods for their own, local markets," he added.

Africa is a small and poor market, with a low demand for high-tech products and a high demand for cheap goods. The problem is that the market for cheap goods is growing much slower than the high-tech markets the Asian manufacturing industries are producing for.

Let's not forget that Asia also produces cheap products for the export market and these are much more inexpensive compared with the goods made in Africa. They are often of a better quality. This hampers Africa's competitiveness.

Another major disadvantage was Africa's geographical location, Hawkins noted. Many African countries, especially in sub-Saharan Africa, are situated far away from the world's major markets such as Europe, Asia and Latin America. Exporting goods to these parts of the world requires high transport costs.

"Asia in this respect has taught us that having a competitive advantage globally no longer depends on natural resources and cheap labour," Hawkins continued. "It is about knowledge, strategic locations, and skills - among other things."

The situation in Africa could change for the better, he noted: "But only if African governments invest in their manufacturing industries and make them more competitive while upgrading the continent's export structures to overseas markets."

Predictions: The Next BRICs and EAGLEs

There is much debate about the economic or political merits of South Africa's invitation to join the BRIC group of countries. The term BRIC (Brazil, Russia, India and China) was invented in 2001 by Economist Jim O’Neill, now the chairman of Goldman Sachs Asset Management. While path-breaking when coined, the concept of BRIC seems outdated today given increased growth differential among the four countries and given that the grouping is also not considered a structural concept since it depends on a country’s growth projections. 

Which countries were predicted to be the next BRICs? Goldman Sachs identified the Next 11 (N-11) countries that could rival the G7 over time, in the context of several important BRICs themes: energy, infrastructure, urbanisation, human capital and technology. The N-11 include Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam. 

Meanwhile, a new group of countries have been coined EAGLESs by BBVA. The EAGLEs, which stands for Emerging and Growth-Leading Economies include the four giant economies (China, India, Brazil and Russia) but also six more countries, namely Korea, Indonesia, Mexico, Turkey, Egypt and Taiwan. 

BBVA has also identified the Next 11 Eagles which which have common characteristics with the EAGLEs and could be included if their growth prospects (already very positive generally) improved in coming years. The 11 countries in the Nest are: Nigeria, Poland, South Africa, Thailand, Colombia, Vietnam, Bangladesh, Malaysia, Argentina, Peru and Philippines.

Some facts about the EAGLEs:

In terms of the criterion for inclusion, each of these ten countries are expected to contribute more to global GDP growth than the average of the countries which have long been considered the most relevant ones worldwide, namely the G7.

In other words, EAGLE countries are chosen because they will be the most relevant in terms of new generated business. The EAGLEs are expected to be responsible for 50% of all global growth in the next 10 years. That compares with 14% for the G7.

This is not only about China or the BRICS. The EAGLEs countries outside the BRICS will grow by almost 4 trillion the next decade, equivalent to 10% of world growth. That compares with 2.4 trillions for the aggregate of Japan, Germany, UK, France, Canada and Italy (six percent of world growth).

From an African perspective, Egypt appears to have made both lists (Next BRIC and EAGLE) while Nigeria was identified as a Next BRIC and potential EAGLE. Meanwhile South Africa was identified as a potential EAGLE but may now be the newest Member of the BRIC group.

US and India on Partnering with Africa

Recent discussion by the Carnegie Endowment for International Peace on how India and the US could partner with Africa to foster its development. This is relevant because foreign investors interested in Africa are facing similar risks and opportunities to those they faced when investing in India. African countries could therefore learn from India’s successful economic reforms in service and industrial sectors which helped it achieve an impressive growth rate for several years. 

Some useful ideas from this discussion include:

India can contribute to Africa’s development by sharing its experiences in mobilizing human capital and social policy innovation, such as the ongoing large-scale rural employment program launched in India in 2006. In fiscal year 2009/10 alone, it provided employment to 52.5 million rural households. India can help Africa produce high tech yet low cost goods that are within the purchasing power of the African people.

India’s Green Revolution transformed the country from a food deficit nation into a food self-sufficient country. The introduction of high-yielding varieties of seeds, increased use of fertilizers, and improved irrigation helped to increase agricultural productivity in India, leading to self-sufficiency in food grains. It also helped India to effectively address famines. This revolution is similar to what happened in China.

Foreign investors need to diversify from energy investment in Africa and investment needs be increased in non-energy sectors as well.

The US government and the private sector could consider public-private partnerships in order to reduce investment risks while making investments in Africa. This could also be done by developing tax incentives and credits for US investors in Africa (see previous post on this here).

On financing, U.S. banks are risk-averse and less willing to finance businesses in Africa, which creates a financing problem for U.S. businesses interested in doing business in Africa. However, European banks have been more forthcoming in financing investment in Africa. A possible proposed solution in this regard could be increased support from the Overseas Private Investment  Corporation (OPIC) in the US.

South-South trade risks reinforcing Africa's commodity dependence

This is Africa By Peter Guest | Published: 18 June, 2010

The United Nations Conference on Trade and Development has warned that trade flows between Africa and industrialising players in the “Global South” are currently reinforcing the longstanding trend that sees Africa export unprocessed commodities and import manufactured goods.

In its annual 2010 Economic Development in Africa Report, UNCTAD says that this trend needs to be reversed while the South-South relationship remains in its early stages. Companies and sovereign investors from China, India and Brazil are all investing heavily into Africa across a variety of sectors, but minerals, hydrocarbons and agricultural products continue to attract the most interest. These relationships need to be managed in order that they result in economic diversification in African countries, the report recommends.

Africa’s total merchandise trade with non-African developing countries rose from $97bn in 2004 to $283bn in 2008, the report says. For the first time, trade with this group of countries outstripped trade with the European Union. The number of greenfield foreign investment projects by investors from non-African developing countries was 184 in 2008, compared to 52 in 2004.

Chinese total merchandise trade with Africa increased from $25bn in 2004 to $93bn in 2008, according to the report. Over the same period, the continent’s trade with India increased from $9bn to $31bn and with Brazil from $8bm to $23bn.Aside from the BRIC countries – Brazil, Russia, India and China – relationships between other emerging nations, including South Korea and Turkey, and Africa, look likely to take on greater prominence.

While trade is taking on traditional patterns, foreign direct investment from the rest of the developing world into Africa is, to some extent, having a more positive effect on diversification, according to the report’s author, Charles Gore.

“What you see from the trade flows is that that is reinforcing commodity dependence. What you see from the FDI is a more mixed picture. Some of it is going into extractive industries, but a lot of the new Chinese investment, small and medium enterprises, is actually market-seeking,” Mr Gore says. “That’s tended to have a pattern where they first go in as traders but then they start producing there locally, and now they’re starting to cluster to get the benefits of being located closer to each other.”

Official finance is also following new patterns. The majority of developing world official development assistance is directed to infrastructure, with some, notably that of Brazil, also being used for technology transfer.

China is also becoming the most significant bilateral source of support to African infrastructure and production, rising from $470m in 2001 to $4.5bn in 2007. With a slowdown in growth in the developed world prompting concerns of reductions in Western ODA, these relationships are likely to increase in importance.

The report recommends that African governments play a more active role in managing the support and investment that they are receiving from the Global South. This means that their focus should not be on simply attracting FDI from other developing countries, but on directing investment into sectors which will promote development. “What we emphasise is developmental leadership. I think the approach of the new Southern partners is encouraging this more developmental approach to governance.”

China Reduces Tariffs on Imports from Kenya and Other States

According to the Africa Report, Kenya has now been included in the list of 41 countries enjoying reduced tariffs into China.  Other recipients are largely LDCs as agreed in the 4th Ministerial Conference of the Forum on China-Africa Cooperation- Sharm El Sheikh Action Plan (2010-2012).

BEIJING (Reuters) - China is adding 33 states to the list of developing countries whose goods are largely exempt from import tariffs, the Ministry of Finance said on Wednesday. It said that from July 1 it would scrap tariffs on about 60 percent of imports from countries on the list, which include Ethiopia, Kenya, Liberia, Mali, Madagascar, the Comoros and the Democratic Republic of Congo. Burundi, Malawi, Mozambique, Benin, Togo, Uganda, Zambia, Central African Republic are also on the list. In Asia-Pacific, beneficiaries include Afghanistan, Bangladesh, Nepal, Samoa and Vanuatu. Since 2001, China has had 41 countries on the zero-tariff list.

This is especially interesting especially because Kenya is not an LDC.

Further reports show that China would grant zero tariffs status to 4,762 categories of commodities.  China imports scrap metal, fruits, nuts sisal fibre, row hides and skins, fish, black tea, coffee, and leather wares from Kenya and scrapping tariffs on these produce means their cost will fall in China by between three to 30 per cent — the current range of the Asian country’s external tariffs.

According to other sources, the balance of trade between Kenya and China has worsened over the last five years in favour of the Asian countries. Official statistics indicate that while Kenya’s exports to China only grew at a snail pace from Sh1.2 billion in 2005 to Sh2.5 billion in 2009, imports have risen phenomenally to Sh74.5 billion from Sh19.4 billion in 2005.

The Global Structural Realignment of Historic Significance

"The traditional split between North and South makes little sense in an increasingly multi-polar world where the largest and most dynamic economies may no longer be the richest, nor the world’s technological leaders”.

The OECD Shifting Wealth 2010 Report raises an interesting point above regarding the traditional north south divide which seems to have outlived its relevance. In fact, the Report finds that OECD non-member economies have markedly increased their share of global output since the 2000s, and  as shown below,  projections predict that this trend will continue. This realignment of the world economy is not a transitory phenomenon, but instead is described as a structural change of historical significance.Other interesting facts...

"In 2007, just before the global financial crisis hit, no fewer than 84 developing countries grew their per capita income at a rate more than twice the OECD average. Among them were more than 20 countries in sub-Saharan Africa. The five-year growth performance of Latin America was its best since the 1960s.

In 2009 China became the leading trade partner of Brazil, India and South Africa. The Indian multinational Tata is now the second most active investor in sub-Saharan Africa. Over 40% of the world’s researchers are now in Asia. As of 2008, developing countries were holding USD 4.2 trillion in foreign currency reserves, more than one and a half times the amount held by rich countries.

This structural realignment in the trade context can be considered in light of the fact that Africa trades predominantly with the rest of the world and Asia is the fastest growing trading partner and major source of imports with the US, EU the largest export destinations.  


On Africa-EU trade, the EPAs are deep policy instruments that open Africa's markets to Europe yet Asia is the largest source of imports. One can wonder if EPAs will accelerate or hinder Africa's integration with other developing countries especially with their restrictive rules of origin.

In the WTO Doha Round, traditionally the focus has been on developed and major developing countries with LDCs, (predominantly in Africa) exempt from multilateral liberalization. Hence Africa's south-south engagement would need to be concluded outside of the WTO for developing countries. 

What does this new economic geography mean for global governance, the G20, BRIC economies and is Africa adequately represented in this new world order?

Genesis of the EC's MFN Clause in the EPAs

There has been much discontent regarding the Most Favoured Nation (MFN) Clause found in the Africa-EU Economic Partnership Agreements (EPAs), and the effect the clause would have on south-south trade and the standing of the Enabling Clause.

The genesis of the MFN clause can be understood in the context of OECD's recent 2010 publication: Shifting Wealth, which finds that between 1990 and 2008, world trade expanded almost four-fold, but South-South trade multiplied more than ten times. Hence developing countries now account for around 37% of global trade, with South-South flows making up about half of that total. This trade could be one of the main engines of growth over the coming decade, especially if the right policies are pursued.

It would seem that the EU would like a slice of this rapidly expanding south south pie.  In fact as shown above, the contribution to world GDP and PPP growth by developing countries has risen sharply since the nineties and has outpaced the contribution of advanced economies, and has doubled it.  Hence, the MFN clause could be intended to accelerate the EC’s ability to benefit from south south market-opening especially with fast growing economic giants that the EU has not concluded an FTA with.  These include the BRIC countries (Brazil, Russia, India and China).  

As an example, Africa's south-south trade with non African countries, has increased from a low of 8% of Africa's total trade to almost 30% and this increase is largely trade with Asia. Trade between Africa and China was estimated at US$6.5billion in 1999 but in 2008 was valued at US$107 billion, making China, Africa's second largest single country trading partner following the United States (see previous posts on Asia China Trade). Meanwhile, in the last 30 years, Africa's trade with the EU has continued to decline, from a high of 55% in the mid eighties to about 35% share of total Africa trade in 2008.

In light of the above, it is necessary for African countries to take caution with regard to forward-looking concessions between Africa and fast growing economies and concessions between Africa and shrinking economies.  In addition, it should be noted that the EU is undertaking numerous FTA negotiations with developing and BRIC economies. Therefore, the future standing of the MFN clause in the EPAs should also be considered in light of the EU's rapidly expanding list of future FTAs. 

Other legal and systemic concerns regarding the EPAs can be found here. 

Shifting Wealth: Recommendations for the Future

According to the 2010 Perspectives on Global Development: Shifting Wealth, by the OECD Development Centre, the economic and financial crisis is accelerating a longer-term structural transformation in the global economy. In fact, longer-term forecasts in the Report suggest that today’s developing and emerging countries are likely to account for nearly 60% of world GDP by 2030.  

These findings should indeed transform the way we configure ourselves in Africa especially with the key economic engines of the world; China and India. 
To this end, the Report makes useful recommendations below with regard to development strategies in developing countries, which need to be adapted to harness the opportunities of shifting wealth. 

National development policies should:

● promote South-South foreign direct investment and learning the lessons from successful examples of clusters and Export Processing Zones. They should harness investment links to achieve technological upgrading through national innovation systems;

● ensure appropriate revenue management policies in resource-rich economies and consider using sovereign wealth funds to smooth consumption and channel resources to promote growth and investment in the domestic economy;

● respond to the growing demand for agricultural exports and increasing pressure on arable land by strategies to improve agricultural productivity, through greater support to R&D and extension services, and through South-South technological transfer;

● implement pro-poor growth policies, focusing on providing more and better jobs and improving social protection through further development and replication of institutional innovations such as conditional cash transfers;

● expand South-South peer learning to help design policy based on successful experiences in the South.

A shift from predominantly North-South cooperation to predominantly South South (African and non African) cooperation especially with india and china may require a shift in foreign policy for some African countries. However, that shift is not only necessary but crucial. 

Scoring for Africa: An Alternative Guide to the 2010 World Cup

This is clever.


Chair of the Africa Progress Panel, Kofi Annan and United Nations Development Programme Goodwill Ambassador and football star Didier Drogba have published ‘Scoring for Africa – An Alternative Guide to the World Cup’. The publication compares the ‘vital statistics’ of each African country in the games against their competitors in terms of development – examining key indicators such as trade, investment, economic growth, CO2 emissions and human development.

For example, on trade and investment in Africa the report shows that in:

• GROUP A South Africa-France: While France is still one of the largest wine producers in the world, South Africa is catching up fast. In 2010, South African wines outsold their French competitors in several markets, including the UK. Since 1994, wine exports from South Africa have increased from 50 million litres to nearly 400 million litres, making the country the world’s 9th largest wine producer.

• GROUP B Nigeria-South Korea: Trade between Nigeria and South Korea has been on a steady rise, totaling $2.65 billion in 2008. As a result, Nigeria has emerged as South Korea’s third largest trading partner in Africa. South Korea is Nigeria’s fourth largest trading partner.

• GROUP C Algeria-UK: The UK is the largest foreign investor in Algeria and is particularly interested in the country’s oil and gas sectors.

• GROUP D Ghana-Germany: Having a long history of trade relations, both countries are aiming to increase the total trade volume to €500 million this year. Germany is Ghana’s fifth largest supplier and seventh most important export destination. Ghana’s exports to Germany are dominated by three traditional export goods:cocoa, gold, and timber.

• GROUP E Cameroon-Netherlands: While negotiations on an EPA continue, interim agreements have been signed by Cameroon, which has allowed for duty free access to the EU for all cocoa and chocolate products. This has meant an improvement in comparison to the taxes the country was subject to previously. However, under the EPA agreement, some of the cocoa products are not covered by the duty free access and are subject to a higher tariffs

• GROUP G Brazil Cote D' Ivoire:  In line with Brazil’s renewed focus on South-South relations, the government has expanded and prioritized trade ties with African countries. As a result, Brazil’s annual trade with Africa has jumped from $3.1 billion in 2000 to $26.3 billion last year. While trade between Brazil and Côte d’Ivoire is still relatively small, both countries are major cocoa producers and founding members of the Cocoa Producers’ Alliance (COPAL).

East and West Africa World's Apart on Trade

East and West Africa may be on the same continent, just five hours flight from each other, and with complementary economies that would make it natural enough for a high level of interaction.

But, in reality, they are virtually cut off from one another.

With a combined population of two-fifths of a billion, and well-matched resources, East and West Africa have some of the lowest trade between them of any regions in the world, according to a UN report, with just one carrier running costly and often half-empty flights between the regions, no road route, and negligible traffic between the two continental hubs.

To fly to West Africa from East Africa costs twice or thrice as much as flying from Africa to Europe, including to London, which is eight and half hours away.

As example, flying to Dakar on economy and business costs $1,281 and $4,076 on Kenya Airways and is possible on three flights a week.

Read the full article here.

Trade Between Africa and Trading Partners 1980-2008

Interesting illustration from the Africa Progress Report regarding percent (%) share of trade between Africa and her trading partners from the period 1980-2008.

In the almost 30 years illustrated in the chart; Africa's trade with the EU has continued to decline, from a high of 55% in the mid eighties to about 35% share of total Africa trade in 2008.

South-south trade with non African countries, has increased from a low of 8% of Africa's total trade to almost 30%. This increase is largely trade with Asia. See previous posts on Africa Asia trade.

US Africa trade has declined compared to pre 1980 at 18% of total Africa trade. However since then, US Africa trade has been at a similar level at slightly over 10% since the mid 80's. See previous post on US Africa trade.

Intra Africa Trade has risen from a low 3% to slightly over 10% of Africa's trade, however this has been hovering at a similar level since in the mid nineties.

It will indeed be a historic moment when Africa's trade with other developing countries outperforms colonial trade flows.

African Competition Program

UNCTAD last year launched the Africa Competition Programme (AFRICOMP), a capacity-building and technical assistance programme on competition law and policy for the African countries.

The objective of the Programme is to:

• Assist African countries in formulating and enforcing competition law and policy.
• Encourage partnerships between international organizations and agencies; and interaction with regional organizations and civil society

AFRICOMP emphasizes ownership by beneficiary countries and demand-driven technical cooperation and it seeks to establish closer links with the private sector and more especially with NGOs and local learning institutions.

Competitive markets drive an economy’s resources towards their fullest and most efficient uses, thereby providing a fundamental basis for economic development. In Africa, effective enforcement of a competition policy system is expected to facilitate the process by which innovative, cutting-edge technologies replace the usually less efficient productive capacities now in use in parts of the continent. The market forces are expected to continuously prod the local enterprises to innovate – that is, to develop new products, services, methods of doing business, and technologies – that will enable them to compete more successfully on national, regional and international markets.

UNCTAD provides competition authorities from developing countries and economies in transition with a comprehensive development-focused intergovernmental forum for addressing practical competition law and policy issues 

Competition resources can be accessed here.

The Africa-China Engagement

There has been considerable debate about the merits of China’s engagement in Africa, often with divergent views.  However the practical benefits for Africa are often welcome. 

For instance, according to the Africa Progress Report, recently presented by the Chair of the Africa Progress Panel, Mr Kofi Annan, China’s investment in Africa has doubled in the last decade (see chart) from about US$2billion in 2003 to over US$4billion in 2008. In addition Africa-China trade was estimated at US$6.5billion in 1999 but in 2008 was valued at US$107 billion, making China the second largest single country trading partner following the US. 
However China remains the regions largest source of imports and reportedly over 1600 Chinese companies are in operation in Africa, with the Chinese Government also investing in low cost industrial zones (e,g, Egypt) and in the agricultural sector (e.g. Ethiopia). 


Additionally, China also has targeted practical areas in which to focus its aid to Africa.  At 4th Ministerial Conference of the Forum on China-Africa Cooperation, Chinese Premier Wen Jiabao, announced eight (8) new measures to promote practical cooperation with Africa. The selected economic measures include:  Support to strengthen agricultural exchanges and cooperation in order to help Africa to increase food production capacity and increase the number of agricultural technology demonstration centers built by China in Africa to 20, and send 50 agricultural technology teams to Africa.

China has also pledged support to strengthen cooperation in education and human resources development; to build 50 China-Africa friendship schools; to train 20,000 personnel for Africa, including 1,500 school headmasters and teachers, 2,000 agricultural technology personnel, 3,000 doctors and nurses and to provide 1.5 million U.S. dollars in support of human resources training under New Partnership for Africa's Development (NEPAD).

Additionally, there will be support to strengthen cooperation in clean energy development and utilization, in clean drinking water technologies and to help Africa enhance capacity to adapt to climate change.

China will further advance the sound development of China-Africa trade by phasing in zero-tariff treatment for 95 percent of the products from the Least Developed African countries (LDCs) having diplomatic relations with China. This will starting with 60 percent of the products within 2010. China has also pledged to set up African commodities trade center in China and adopt preferential policies such as fees reduction for participating African enterprises to promote export of African commodities to China. China will also establish three to five logistic centers in Africa and improve business facilities in African countries.

To address the financial crisis, China will provide Africa with 10 billion U.S. dollars in concessional loans, mainly for infrastructure and social development projects.  The government will also support Chinese financial institutions in setting up a 1 billion U.S. dollar special loan to grow African small and medium enterprises.

China will also continue to support poverty reduction efforts and cancel due debts of interest-free government loans that matured by the end of 2009 owed by all heavily-indebted poor countries and the LDCs in Africa having diplomatic relations with China.

Finally, China has promised to further fulfill the pledges made at the Beijing Summit and to increase the size of China-Africa Development Fund to 3 billion U.S. dollars and support Chinese enterprises to expand investment in Africa.

My view is that there is a lot we can learn from China.  For instance on average, China's economy grew 10 percent per year between 1980 and 2008, compared with only three percent in sub-Saharan Africa during the same period. These divergences in economic growth in general, and in agricultural development in particular, have led to noticeably different patterns in poverty reduction in both regions.

According to a study by the International Food Policy Research Institute (IFPRI), between 1980 and 2005, the number of poor people decreased in China by more than four times, from 835 million to 208 million. The researchers found that China's strong initial emphasis on agricultural growth was essential in reducing poverty in that country. Growth in agriculture in China is estimated to have contributed to poverty reduction four times more than growth in manufacturing and services. Meanwhile according to World Bank figures, the role of agriculture in Sub-Saharan Africa has fallen from 19 percent of the gross domestic product (GDP) in 1980 to 14 percent in 2008.