NEWSLETTER 12 – 25 AUGUST 2013

The AGOA Forum: Promoting Sustainable Growth in Africa through Trade and Technology

This week in Addis Ababa, Ethiopia, U.S. Trade Representative Mike Froman and senior members of the President’s economic team joined trade ministers, civil society, and business leaders from across sub-Saharan Africa to focus on “Sustainable Growth through Trade and Technology” at the African Growth and Opportunity Act Forum. The Forum also kicked off the process leading to AGOA’s renewal in 2015.

As the President highlighted on his trip to Senegal, South Africa, and Tanzania this summer, Africa is experiencing historic growth. Six of the ten fastest growing economies in the world are in Africa. The continent has enormous economic potential, and it’s in our interest to help African countries expand trade and investment to fuel their development.

AGOA has transformed the way the United States and Africa interact on trade and economic issues. Since 2001 – the first full year of AGOA trade -- U.S. total trade with sub-Saharan Africa has more than doubled, from $28.2 billion to $72.3 billion in 2012. AGOA enabled U.S. exports to the region to more than triple from $6.9 billion in 2001 to $22.6 billion in 2012. At the same time, AGOA imports (including GSP) to the United States have climbed to $34.9 billion in 2012, more than four times the amount in 2001. That increase in trade has created thousands of new jobs in Africa.

By providing new market opportunities for African exports, especially for non-traditional and value-added products, AGOA has helped African firms become more competitive both in the United States and internationally. Many African businesses that had never previously considered the U.S. market are attending trade shows and getting orders - for Ugandan organic cotton T-shirts, Mauritian seafood, Ghanaian cocoa powder, Ethiopian shoes, and a whole range of products.

AGOA has also been good for the United States. U.S. exports to sub-Saharan Africa have more than tripled as Africa’s growing middle class is increasingly able to buy high-quality products Made in America. African businesses have sought more U.S. inputs, expertise, and joint partnerships, and U.S. investment in Africa is creating good jobs and higher incomes for workers on both sides of the Atlantic.

The challenge now is to expand AGOA’s impact even further. At this week’s Forum, our team focused on further expanding our economic engagement with Africa, paving the way for AGOA’s renewal in 2015, and building a stepladder that furthers Africa’s growth, development and global economic integration. This is the vision we and our partners share, and this week’s discussions at the AGOA Forum will help chart our way forward. Source: The White House Blog www.whitehouse.gov

 

Emerging markets in turmoil

While the U.S. Federal Reserve is preparing to tighten its loose monetary policy, long-term funds are flowing out of emerging markets and market indices are experiencing their biggest drop since the beginning of the 2008 financial crisis.

in order to help the United States get out of the crisis, the U.S. Federal Reserve (FED) has established a particularly accommodating monetary policy, known as quantitative

easing. This policy, which actually consists of buying back USD 85 billion of treasury bills each month and keep interest rates low, contributed to the fall in value of the U.S. currency. Long-term funds seeking returns have therefore moved towards emerging markets, thereby allowing many of the latter to issue international bonds with unprecedented success. In May, Rwanda raised USD 400 million at a slightly lower rate of 7%, an issue which attracted USD 3 billion subscriptions, Tanzania USD 600 million for USD 2.5 billion of promises. A few months earlier, Zambia reaped USD 750 million, with more success. Similarly, financial centers in emerging countries have benefited from an influx of Western capital.

But the improved economic outlook in the United States should sign the end of quantitative easing, which is not without consequences for emerging countries, Africa included. Since the beginning of August, speculation about the phasing, announced in June, of FED’s monetary policy, which may start in September, caused a reverse movement to what was observed from the onset of the financial crisis: funds are coming back in Western countries, especially the United States.

Sign of this change, indices are surging in developed countries while they are plummeting in the Brics countries (Brazil, Russia, India, China and South Africa). The announcement of the phasing out of this so-called non-conventional policy had an almost immediate effect on stock prices. Between January 1 and August 21 2013, the CAC 40, the benchmark of the Paris stock market, showed an increase of over 10%, while the Dow Jones rose by 13% in New York and the Japan's Nikkei rose by nearly 30%, according to data from Boursorama. Meanwhile, the Bovespa, the brésillien index fell by 17%, the Moscow RTS fell by 15% and the BSE index, in India, by 8%.

Emerging currencies under pressure The turmoil in emerging markets also affects their currencies. In India, the rupee has still lost 2.5% this week and reached its ever lowest level, while the deficit of the current account does not suggest recovery. It is expected to exceed 3.8% of GDP in the second quarter, well above the threshold of 2.5% deemed tolerable by the Reserve Bank of India. The Indonesian rupiah and the Russian ruble are at their lowest level over four years.

In addition, Brazil's growth, as the country has experienced significant political and social tensions, only reached 0.9% in the second quarter against 7.5% in 2010. China has meanwhile announced a GDP growth of 7.5% in the second quarter, a respectable performance, but well below the 9.3% for the full year 2011.

Emerging economies on the long-term progress pathway

However, the situation is far from catastrophic. First, capital outflow is not the same as the one that marked the Asian financial crisis in the late 1990s. The composition of capital flows is more "healthy": on average more than half of the flows to emerging markets are direct capital investments. Many of these emerging countries now have sizeable foreign exchange reserves and have reduced their debt since 1997. According to Alain Bokobza, head of asset allocation at Societe Generale, told the French business daily Les Echos, "the nature of the imbalances is not the same: today investors are worried by the current account imbalance - which was formed during a high growth period"

Although emerging economies should continue to reform their system to catch up with Northern countries, the efforts made so far show that they are on the path of the long term economic progress, beyond the current setbacks encountered. As noted in the Financial Times in an editorial dated August 20, the core strengths of these economies, which have made decades of substantial growth, will not be permanently affected by the short-term consequences of a change in the U.S. monetary policy.

Source: translated from the article “Les marchés émergents dans la tourmente”, Jeune Afrique Economie economie.jeuneafrique.com

CEMAC Gets Business Climate Investment Observatory

Countries of the Central African Economic and Monetary Community (CEMAC) are bracing up to put in place an investment observatory through which viable and updated data on the business climate in the sub-region could be accessed.

With the data and other workings of the observatory, conceivers say, countries could know where they are lagging behind and improve to attract sustainable investors, especially direct foreign investment, capable of enhancing their emergence drive.

A three-day international workshop to endorse a report on business climate in the sub-region, stakes and challenges in view of putting in place the investment observatory began in Yaounde yesterday August 12 under the auspices of the Minister of the Economy, Planning and Regional Development (MINEPAT), Emmanuel Nganou Djoumessi. Opening the deliberations, the Minister said the micro-economic performance of the sub-region is not at optimum owing to the weak capacity of the private sector to generate sufficient jobs and wealth. “Analysts say the business climate in Sub-Saharan countries is more favourable than in the CEMAC countries. The 2012-2013 World Economic Forum as well as the 2013 Doing Business Report put CEMAC among the last 25 countries out of the 185 surveyed,” Mr Nganou Djoumessi regretted.

Like the Minister, the Commissioner in charge of Monetary and Financial Policies at the CEMAC Commission, Cameroon’s Paul Tasong, said the poor business environment in the sub-region is further exacerbated by the non-availability of a structure to produce and publish periodical data on the investment climate. Reason why the six CEMAC countries committed themselves during the March 2009 sub-regional concertation in Douala on the aftermath of the 2008 world economic meltdown to reinforce their regulatory tools and boost economic activities through an Investment Climate Observatory (OCI-CEMAC). “We have lots of indicators around the world today measuring the facilities of doing business and we thought that in order to enable the CEMAC sub-region to carry out the necessary steps in improving its business climate, we need this observatory which will help us to collect and analyse data and make it available to the various actors in terms of doing business,” Mr Tasong said. “We need to create our own indicators that will be friendly to our environment and closer to our reality,” he added. A view corroborated by Jean Christian Obame, Adviser of the Minister of the Economy, Employment and Sustainable Development of Gabon. “We need to reduce all the impediments on the production and export of our products from one country to another and a structure to coordinate business among small and medium-size enterprises in the sub-region.” Source: Cameroon Tribune www.cameroontribune.cm

 

A New Business Cartel Called la Camerounaise des PME launched in Cameroon

A new business cartel called "La Camerounaise des PME ", CPME, has just been launched in Cameroon, with the core trade being the promotion of Small and Medium-size Enterprises (SMEs) in Cameroon, Ecofin agency was told.

The initiative is from Anselm Kemva, the owner of three SMEs in Douala (Poulet du Bonheur, Palace le Bonheur, et Imprimerie le Bonheur), which has been enriched by Marius Baha Wognou, management consultant, CEO of Gestionis Consulting, a firm specialized in strategy.

CPME targets SMEs which, according to Law No. 2010/001 of 13 April 2010 on their promotion in Cameroon, include micro enterprises (MEs), small-size enterprises (SSE), and medium-size enterprises (MSEs)

The new business cartel has five primary objectives. Among other things, defining and communicating the promoters’ view of SMEs on topics related directly or indirectly to their businesses, promoting entrepreneurship in every part of the society, expressing the will of promoters SMEs to develop and beliefs derived from their national and international experience in terms of economic and social progress, and contribute to a constructive social dialogue in SMEs and their professional organizations, between government and SME members.

CPME is the fourth business cartel to emerge in Cameroon, after the “Groupement inter-patronal du Cameroun” (GICAM), “Mouvement des entrepreneurs du Cameroun” (MECAM) and “Entreprises du Cameroun” (ECAM), respectively.

Just like ECAM business cartel, which came up from a schism within GICAM, the CPME has been created as a result of MECAM bursting in February. Kemva Anselme, who was vice president and spokesperson of the cartel headed for over four years by Claude Daniel Abate, slammed the door along with the Permanent Secretary, Toussaint Mboka Tongo. Then, he came back five months later, with a new cartel.

 

Source: translated from the article “Un nouveau patronat appelé La Camerounaise des PME voit le jour au Cameroun ”, Investir au Cameroun www.investiraucameroun.com

Cameroon Wants To Sign an EPA with the European Union

An informal ministerial meeting was held on 18 July 2013 at the Presidency of the Republic. Started at 3pm, the meeting chaired by the Deputy Secretary General at the Presidency of the Republic, Seraphin Magloire Fouda, the Ministers of Economy, Emmanuel Nganou Djoumessi, Agriculture, Essimi Menye, Trade, Luc Magloire Mbarga Atangana, SME, Etoundi Ngoa and External Relations, Pierre Monkoko Mbonjo, the French Language Weekly, Repères said on Wednesday .

Here, the government ministers, with some of their close collaborators were invited at the Presidency to be informed of the President’s decision to sign in the near future an Economic Partnership Agreement (EPA), which means opening 80% of the country’s market to the EU duty free for a period of 15 years.

According to the unnamed source of the newspaper, the Minister of Agriculture, Essimi Menye is the only one who questioned the choice. “We must tell the Head of State the truth. It is a bad decision. If we sign the EPA

without the other countries of Central Africa, it is the end of the CEMAC,” he said. The other five countries (Central African Republic, Congo, Gabon, Equatorial Guinea and Chad) are not willing to sign any accord whatsoever with the EU.

However, sharing borders with the Cameroon, they will be exposed to European products entering Cameroon duty-free. A perspective that will challenge the sub-regional integration progress arrived at in the Libreville summit of June 2013, where the free movement of persons was accepted after decades of resistance from Gabon and Equatorial Guinea.

In addition, officials in the Ministry of Economy said Cameroon “cannot adapt to the European Union as if it is our unique business partners." Moreover, they said, our trade with Europe is declining; meanwhile there is progress with Nigeria and China.

To Bernard Njonga, President ACDIC one of associations that are opposed to the EPA, believes that “all things considered, if Cameroon signs we will lose.”

Source: Business in Cameroon www.businessincameroon.com

 

Markets as at August 25, 2013

Against XAF (Indicative only)

XAF

USD 490.05

EUR 655.83

Source: Bloomberg