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South-South Co-operation especially for African states still to be harnessed, by Chofor Che


The twelve United Nations (UN) Day for South-South Co-operation was celebrated on the 12 of September 2014. The UN created a unit for South-South Cooperation to promote collaboration within its agencies as well as to promote South-South trade and investment. All the same, the idea of South–South cooperation only began to influence the field of development only in the late 1990s.This cooperation is now well known as South America-Africa (ASA) cooperation, mainly because of the geographical spectrum.

South America and Africa posses over one quarter of the world’s energy resources, which include the oil and natural gas reserves in Equatorial Guinea Nigeria, Bolivia, Brazil, Ecuador, Venezuela, Algeria, Angola, Libya, Chad and Gabon. This is a major reason why South-South cooperation needs to be harnessed between the two continents as well as between states in the two continents.
Two summits have been organized by the ASA cooperation. In 2006 the first summit took place in Abuja, Nigeria with 12 delegates from South America and 53 delegates from Africa in attendance. In September 2009, the most recent and second summit took place on the Margarita Island in Venezuela, where 12 heads of states from South America and 49 heads of states from Africa attended.

There is no gainsaying that South–South cooperation has to some extent been successful in decreasing dependence on financial aid from developed countries and in creating a shift in the international balance of power. Despite this allusion there is still need to harness South-South cooperation especially in Africa. A good way of harnessing South-South cooperation would therefore be to capitalize on success stories and see how this can be transposed to other developing countries and countries in transition.

One of the major goals of the cooperation is to improve economic ties and foster development. Among several regional trade agreements which were reached during the 2009 summit was South Africa signing an oil agreement with Venezuela. According to Wikipedia, Venezuela equally signed a memorandum of understanding with Sierra Leone to form a joint mining company. Another country in the South which has been very instrumental in South-South cooperation is Brazil. Brazil has been able to develop an increasingly successful model of assistance of over $1 billion annually, way ahead of many traditional donors, which capitalizes on the transfer of knowledge and expertise, rather than solely relying on financial aid. Brazil’s form of South–South development aid has been referred to as a ‘global model in waiting’.

Most recently, the South–South cooperation has acknowledged the importance of a successful and holistic financial policy as a way to better tackle poverty. Because of this holistic approach, financial policy makers from over 100 countries in transition and developing states now form a global knowledge-sharing network known as the Alliance for Financial Inclusion (AFI).

In an op-ed by Business in Cameroon, dated the 12 of September 2014, the Indian High Commissioner, A R Ghanashyam purports that, trade between India and Cameroon is currently estimated at 250 billion FCFA per annum. He revealed this in an interview in the Cameroon government’s daily publication, Cameroon Tribune. He added that although Cameroon is “the country with which trade with India has grown the most in the Central African region over the last few years, this trade relationship’s potential is immense” and still hardly harnessed.

To reverse this trend, the Indian diplomat wishes to bring the Small and Medium Size enterprises (SME) development model implemented in India to Cameroon, which made these structures the backbone of the Indian economy and created a bridge between Indian and Cameroonian SMEs.

Regardless of the continuing interest of many states in Africa and South America, cooperation is still faced with major challenges. Stringent taxation systems still exist in African states which pose as a serious impediment to South-South cooperation.

The Doing Business Reports of 2013 and 2014 expose African states as the worst states to do business in. This indeed is an impediment to South-South cooperation. In addition to this melee remains bad governance and corruption in both African states and South American states. Added to these ills is the precarious conflict situation in states like the Democratic Republic of Congo and the Central African Republic.

Areas that some of the leaders intend to see major developments are in the security and political arena. This is to say that cooperation will give the continents more political and financial power when it comes to the global arena. Some leaders hope that the cooperation will offer greater freedom in choosing a political system. The international community and the UN especially should thus continue to support the efforts of the developing countries to expand South-South cooperation. Developing countries and countries in transition need to thus copy success stories from Brazil, Venezuela and South Africa. Issues that need to be addressed for a fluid South-South cooperation are bad governance, corruption, over taxation, peace and security. Only such measures may truly harness South-South cooperation especially amongst African states.

This article is originally written in French and published at LibreAfrique.org as ‘Retard de la coopération sud-sud en Afrique’ http://libreafrique.org/ChoforChe-cooperation-sud-sud-170914 on the 17 of September 2014.

 
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Posted by on September 23, 2014 in Africa Development

 

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BRICS bank pillars could be ready next year: Brazil, by France 24, 30 JULY 2013 – 23H26


The statutes of the new development bank planned by the BRICS group of five emerging powers could be ready next year, Brazil’s foreign minister said here Tuesday.

“We made good progress during the last meeting in Durban and the expectation is that in the 2014 meeting in Brazil, enough progress has been made to conclude the statutes of the bank,” Antonio Patriota told reporters.

He made the remarks after discussing the issue here with his South African counterpart Maite Nkoana-Mashabane.

At their March summit in the South African city of Durban, leaders of the BRICS — Brazil, Russia, India, China and South Africa — failed to launch the much-anticipated bank.

Instead of a $50 billion fund, the leaders agreed only that the initial capital contribution would be “substantial and sufficient for the bank to be effective.”

“There was an agreement to establish such a bank. Our ministries of finance are busy with the final modalities because the viability has been checked, even economists from the World Bank have come out to say there is space for such a bank,” Nkoana-Mashabane said here.

The proposed bank is meant to rival Western-dominated institutions like the World Bank.

Key sticking points included how projects would be distributed and where the bank would be based.

 
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Posted by on August 1, 2013 in Africa Development

 

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How to access the e-commerce gold mine of Africa, By Peter Harvey, Buisness Day, 14 November 2012


AFRICA’s financial sector has tremendous potential. The continent is home to 1-billion people, half under 20, and has six out of 10 of the world’s fastest-growing economies. Yet a study last year by the African Development Bank, German International Co-operation and the World Bank found less than 20% of households have a formal bank account, and only 23% of enterprises have loans or lines of credit.

Informal financial arrangements, savings clubs (stokvels) and other independent moneylenders seem to meet the continent’s needs and are often defended as an “African solution to African problem”. However, these are largely imperfect substitutes — unreliable, unsecure and rarely private. These arrangements limit individuals, and hamper the economy as entrepreneurs and businesses are unable to take advantage of opportunities such as e-commerce, which requires a complex ecosystem for making and processing online payments.

Not one African country got into the top 30 on the Global Retail Development Index determining the most lucrative retail opportunities in the world, the top five being China, Brazil, Russia, Chile and Mexico. (China’s vast online retail market secured the top position — the value is estimated at R194bn, second only to the US.)

Even South Africa, despite having the most internet users in Africa, is underperforming with its online retail value sitting at just R2.5bn last year. Surprisingly, telecoms infrastructure is not the only cause. The first step in an online transaction is a person with a valid credit or debit card. Credit card penetration in South Africa is 0.2%, compared to Brazil’s 110%.

Debit card ownership is only slightly higher, with less than one card per South African.

We need our issuing banks to speed up the rate at which they roll out cards to their customers. Debit cards are likely to dominate as most Africans have little experience of handling credit and credit cards carry big risks for banks. The continent will also need a cadre of acquiring banks prepared to accept online payments for their merchant customers.

It remains difficult as an acquiring bank that wants to enter the e-commerce field has to buy the appropriate licences from card associations (such as Visa and MasterCard), install card processing systems, hire skilled staff to manage those systems while still having a firm grasp of the risk of fraud. It’s easier to find a bank that will issue cards than one that will acquire transactions. This has all led to a big imbalance between supply and demand. This may lead to businesses seeking greener pastures overseas.

As an alternative, smaller businesses often turn to “super-merchants” who make their own merchant facilities available to others but the costs are high and the payment cycles are notoriously bad. It can take as long as 30 days to get your money out, damaging the cash flow of a business.

Payment gateways (payment service providers) link customers, merchants, banks and the card associations and can greatly facilitate the growth of this market by educating merchants, sourcing acquiring banks for them and managing their relationships with those banks. In this regard, businesses and the government will have to step up to the plate, pressuring banks to modernise and create opportunities. After all, 1-billion potential consumers is a market too large to ignore.

• Harvey is founder and MD of PayGate

 
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Posted by on November 15, 2012 in Uncategorized

 

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