Memorandum 224

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MEMORANDUM Nº 224/2012 05/12/2012

The EBCAM’s Memoranda are issued with the sole purpose of provide daily basic business and economic information on Africa, to the 4,000 European Companies affiliated with our Members, as well as their business parties in Africa.

Should a reader require a copy of the Memoranda, please address the request to the respective National Member. See list of National Members at www.ebcam.org.

SUMMARY: ONE) – UGANDA RANKS EIGHTH AMONG AFRICAN NATIONS WITH HIGH CONSUMPTION GROWTH POTENTIAL – Page 2 TWO) – HUAWEI - CHINA TO CAPITALISE ON AFRICAN GROWTH – Page 2 THREE) – NORFUND OPENED OFFICE IN MAPUTO MOZAMBIQUE – Page 3 FOUR) - SOUTH SUDAN'S CHINESE OIL PUZZLE – Page 3 FIVE) – GROWING TIES BETWEEN EGYPT, TURKEY MAY SIGNAL NEW REGIONAL ORDER – Page 8 SIX) – EGYPT'S PRIME MINISTER PRESENTS ECONOMIC PROGRAM, AIMING FOR 3.5 PER CENT GROWTH – Page 9 SEVEN) – ALGERIA PLANS TO SET UP A BANKING RATING AGENCY – Page 10 EIGHT) – CHINESE ACQUIRERS FIND A ROUTE TO AFRICA VIA AUSTRALIA – Page 11 NINE) – IRELAND ON TRACK TO DOUBLE TRADE WITH SOUTH AFRICA AS EXPORTS RISE TO €944M – Page 12 TEN) – AFRICA: ELECTRICITY BY 2030 UNLESS… - Page 13 ELEVEN) – EATON SECURES $60 MILLION DEBT FOR UGANDA – Page 14 TWELVE) – SHELL SELLS NIGERIA LEASE STAKE – Page14 THIRTEEN) – AFRICAN DEVELOPMENT BANK BOOSTS GHANA’S PRIVATE SECTOR – Page 15 FOURTEEN) – COVE EXECUTIVES SAID TO START OIL EXPLORER FOR AFRICA – Page 15 FIFTEEN) – AFRICA: CANADA EYES AFRICAN RESOURCES AMID SHRINKING FOREIGN AID – Page 16 EBCAM NEWS - EBCAM CELEBRATES NEXT YEAR ITS 40TH ANNIVERSARY – Page 17 European Business Council for Africa and the Mediterranean The European Private Sector Organisation for Africa’s Development

2 ONE) – UGANDA RANKS EIGHTH AMONG AFRICAN NATIONS WITH HIGH CONSUMPTION GROWTH POTENTIAL A recent report by Rand Merchant Bank (RMB), a South African investment bank has ranked Uganda eighth among the best ten African nations with high consumption potential.

The report entitled, "Where to Invest in Africa," says when consumer-facing multinational companies such as super market chains and mobile phone operators are looking at factors when deciding where their goods should go, they should consider population size, forecast population growth rates, forecast per capita GDP rates as well as urbanization growth rates.

By combining these variables into a single measure, RMB has created a ranking index of the countries with the best outlook for consumer goods.

The index has Nigeria at the top, followed by Ethiopia, the DR Congo, Kenya, Tanzania. The list is completed by Egypt, Sudan, Uganda, Burkina Faso and Mozambique.

However, the report notes that although Africa is an important market for consumer goods from a macroeconomic perspective, companies need to remember that each country is different.

"Ethiopia, for instance has a large population and a decent market size, but it would probably not offer a concentration of high-income earners for high-end retailers," says the report.

RMB says there are many other aspects to consider when assessing where the most attractive consumer environment are in Africa.

RMB named these to include strong local partners, good local management teams, alternative distribution methods, competition, population densities, infrastructure, acquisition opportunities, market saturation and branding. (Independent)

TWO) – HUAWEI - CHINA TO CAPITALISE ON AFRICAN GROWTH Huawei Technologies’ revenue in southern and east Africa might climb as much as 30 percent in the next three years as growth on the continent outpaced most regions, the company said yesterday.

The Chinese phone equipment manufacturer planned to capitalise on low cellular-broadband penetration rates and increasing demand for smartphones in Africa, said Li Dafeng, the president for east and southern Africa.

Huawei, based in Shenzhen, would also focus on developing its enterprise business that supplied equipment to governments and companies, he said.

Africa has less than five cellular-broadband subscriptions per 100 inhabitants, compared with more than 10 percent in the rest of the world, according to the Geneva-based industry group International Telecommunications Union.

Over the next five years, the continent was expected to be the fastest-growing region in terms of cellphone connections, the Chicago-based consultancy AT Kearney said.

“There is still much room to grow, so we can see that in the next three years network availability will be improved greatly,” Huawei chief technology officer for east and southern Africa Radoslaw Kedzia said.

“This is why we can grow 20 percent to 30 percent.”

Economic growth in sub-Saharan Africa is expected to accelerate to 5.7 percent next year from 5 percent this year, outpacing every other region except developing Asia, the International Monetary Fund (IMF) said last month.

Huawei’s southern and east African business comprises 25 countries including South Africa, Angola and Kenya.

The company posted revenue for the entire African region of $3.42 billion (R30.1bn) last year, up 15 percent from 2010, Li said.

Total sales accounted for 13 percent of global sales, the company said in a statement.

3 “If you look at the penetration of cellular broadband compared to European countries or compared with China, there is a lot of potential,” Li said.

“In my region, the penetration of smartphones is 10 percent. In China, cellular broadband penetration is 30 percent, in Europe it is more than 50 percent and it is 16 percent in Kenya. So there is still a lot of potential.”

Nigeria, Africa’s most populous nation, was Huawei’s biggest market for its carrier division on the continent, which supplied equipment to cellphone companies, Kedzia added.

In South Africa, the continent’s largest economy, which contributes 30 percent of the company’s African revenue, Huawei was planning to grow market share as the country was seeking to achieve 100 percent broadband penetration by 2020, Li said.

Huawei sold 20 million smartphones globally last year and estimates it will sell another 60 million units this year, earning revenue of $9bn.

“Huawei’s Ideos, the first under-$100 smartphone, has become popular in the region, gaining a market share of 45 percent in Kenya,” Li said. “We have sold 250 000 pieces since its launch last year.”

The US Congress last month said Huawei and ZTE, China’s second-biggest telephone equipment manufacturer, provided opportunities for Chinese intelligence services to tamper with US telecoms networks for spying.

A report by the House intelligence committee report said the companies failed to explain their relationship with the Chinese government. Li rejected the criticism.

“Huawei is just a telecommunications manufacturer, we have no link with government,” Li said. “The only relationship between Huawei and the government is the business. We provide some solutions, some products, this is the only relationship.”

Huawei’s customers in east and southern Africa include South Africa’s five cellular operators, including Vodacom and MTN. Other clients are Angola’s Unitel and Movicel Telecomunicações and Safaricom of Kenya, east Africa’s biggest cellular operator.

The company has a research and development centre in South Africa and seven training facilities in the region, including the Democratic Republic of the Congo, Egypt and Morocco.

Huawei has helped 18 African governments to build networks in countries such as Nigeria, Kenya, Uganda, Senegal, Angola, Guinea, and Djibouti. (Bloomberg)

THREE) – NORFUND OPENED OFFICE IN MAPUTO MOZAMBIQUE Norfund opened its office in Maputo during the visit of the Norwegian Minister for International Development Heikki Holmas.

Norfund revenues are coming from a special allocation approved by the Norwegian Parliament, and its objective is to assist the creation of profitable enterprises in developing countries, through markets not normally accessible to conventional enterprises.

At the occasion the Director General of Norfund said it will mostly concentrate in agriculture and processing agricultural production.

FOUR) - SOUTH SUDAN'S CHINESE OIL PUZZLE The world's newest nation struggles to decide whether Beijing is friend or foe. Scores of delegates from the Chinese, Malaysian and Indian firms that pumped Sudan's oil had flown in to see the southern capital and

4 shake hands with the government officials who were about to inherit billions of dollars of petroleum from Khartoum in the north.

As head of the southern parliament's energy committee, Odwar thought it was time to clear the air with the companies. Many southerners blame them for providing money and infrastructure that Khartoum used to crush southern rebels and wipe out entire villages during a civil war which killed more than 2 million people.

"There is a new thinking in South Sudan that we are open for business, but we will never forget our history," Odwar recalled telling the men. "And, you, the oil companies, if you have polluted before, you will not pollute again. If you have displaced people before, you will have to pay."

Such frank speech had grown rare in the six years since a 2005 peace deal gave Sudan's south autonomy, a share of petroleum revenues and the chance to vote for independence. Many former guerrilla fighters had grown used to working with the companies they once considered enemies.

With independence just months away, Odwar thought it important to set boundaries, especially with China.

Oil would be crucial to the new state, and China would be pivotal to South Sudan's oil industry. The relationship between Juba and Beijing could shape the world's youngest country for decades.

A couple of months later, the China National Petroleum Company (CNPC), the biggest investor in South Sudan's oilfields, brought Odwar and nine other officials to Beijing. They were flown business class and put up in the Kunlun, a five-star hotel with a cigar bar and a revolving restaurant. They toured the state-owned firm's facilities, where they saw "supercomputers and young PhDs all in their mid-20s doing the research," Odwar said. "It was amazing." They met senior executives and, at Odwar's request, the People's Congress member in charge of economic affairs.

Now the Chinese wanted to set their own boundaries. They refused to discuss allegations they had looked the other way when Sudan's army forced southerners from their homes in the oil regions, Odwar recalled.

And when the delegation brought up new pollution laws, they told them not to set their sights so high. "I thought that was very offensive," Odwar said.

As South Sudan's leaders shift from waging war to running a state, the country's oil is proving one of the trickiest puzzles. It has 7 billion barrels in proven reserves, small compared with African oil giants such as Nigeria but enough, if it was all extracted, to meet the oil needs of the United States for a year. How South Sudan uses its oil, which accounts for almost all of the country's income, will largely determine whether or not it prospers.

As in other parts of Africa and the Middle East, petroleum has so far brought both treasure and peril to the new country, which Reuters is examining in a series of stories this year. Quick, abundant cash helped southern leaders unite the fractious militias left by the war into a national army and start building institutions. At the same time it shrunk their incentive to nurture sectors like farming and manufacturing.

With little oversight, the money has also been easy to steal.

Oil has also continued to divide South Sudan and its old rulers. A dispute with Khartoum led the government in Juba to shut down its wells in January, driving both countries' economies into crisis and testing the support of foreign governments and investors.

A new agreement should soon have oil flowing again. But a lot of questions remain unresolved. South Sudan has yet to settle how it will manage its oil and what that will mean for ties with its biggest investor, China. In more than 20 interviews, officials, diplomats, analysts and oil executives highlighted China's sometimes uneasy but always central role in South Sudan's most important industry.

"The fact is," Odwar said, "oil belongs to South Sudan and China needs oil."

Bad divorce Looking at a map of the once-united Sudan's oil reserves, it's almost as if nature designed them to inspire conflict. Many straddle the internal boundary drawn by departing British colonial rulers in 1956 to reflect the divide between the country's overwhelmingly Muslim, largely Arab north and the south, where most people follow Christianity or traditional beliefs and tend to identify as ethnically African.

Many of the civil war's most violent episodes played out along this line, which is criss-crossed by the migration routes of semi-nomadic pastoralists and now marks most of the border between the two autonomous states. Some contested areas also produce crude.

After secession, talks about oil centred on how much landlocked South Sudan should pay to use northern infrastructure, including pipelines and an export terminal on the Red Sea. Oil is vital to both governments, contributing most of the money they use to pay state wages, import food and fight rebellions. Western backers of southern independence hoped petroleum would connect Juba and

5 Khartoum in a kind of economic symbiosis - the South needs Sudan's infrastructure to export oil, while Sudan needs transit fees and other payments to make up for the income it lost when the countries split.

But the countries' reliance on oil also gave both a powerful incentive to hold out for the best deal they could get. When South Sudan raised its flag in July last year, the two were poised for a spectacular collision.

Khartoum wanted Juba to pay about $36 a barrel for a bundle of fees to pipe the oil to port; Juba countered with an offer of under $1 and said it would pay the rest directly to the international firms who produce the oil. While they haggled, South Sudan kept exporting crude on the understanding it would pay Khartoum back once a deal was struck. But as South Sudan collected over $3 billion in oil revenue, Sudan's economy cratered. The Sudanese pound halved in value, driving up the cost of imports like wheat and sugar.

Last November, Sudanese officials, faced with mounting anger over rising food prices, accused the South of delaying a deal and said Sudan would take some oil as "payment in-kind". Southern officials said Khartoum was stealing and threatened to cut off exports entirely. The two exchanged increasingly caustic accusations as Western and Chinese mediators tried to get them to negotiate.

On January 20, South Sudan's ministers gathered in the cabinet office in Juba. Petroleum minister Stephen Dhieu Dau outlined the situation: Khartoum had blocked, confiscated or diverted essentially all the country's oil exports, and there was no deal in sight. The vote to shut down the wells was unanimous.

"People were emotionally charged," said Commerce Minister Garang Diing Akuong, who ran the energy ministry before independence. "There was a debate, but a debate where people were speaking one language. It was not a debate between two ideas."

No one in the meeting cautioned against the financial brunt of the move, which erased 98 percent of the government's revenues and the source of nearly all its foreign currency almost overnight. "In the atmosphere of anger, I don't think anybody would have listened to them," Higher Education Minister Peter Nyaba said.

The shutdown happened within 10 days. One CNPC executive said southern officials pushed the oil firms to close the wells so quickly they risked congealing the heavy, sticky crude from their eastern fields and damaging the pipelines.

Officials did not consult the American, Norwegian or British governments who advise Juba on the oil sector and are among the country's biggest aid donors, diplomats said.

Nor did they ask the Chinese, who stood to lose from the shutdown. Zhang Zhisheng, counsellor at China's embassy in Juba, said he was headed home for vacation when he heard about the decision. "If they told us before, I would never have left the embassy," he said, laughing.

A bloody history Ever since kerosene replaced whale blubber as a source of cheap lighting over a century ago, petroleum has brought immense wealth and influence to those who extract and sell it. At the same time, the rush to capture its value has devastated environments and distorted politics from the Russian Caucasus to the Ecuadorian rainforest and the Niger Delta.

South Sudan's northern oil regions have little to show for their petroleum wealth. The one tarmac road in Bentiu, capital of Unity State, is flanked by dirt paths and broken streetlights. Boys push wheelbarrows and women tote sacks of grain past straw-roofed huts and shops of stick and corrugated iron. Government and U.N. officials in Landcruisers zoom past. Young, jobless men sit in fly-ridden teahouses for hours, staring into space.

Instead of prosperity, oil has brought war. Soldiers with Kalashnikov rifles pace through Bentiu's market, likenesses of petroleum derricks on their shoulder patches identifying them as members of the local army unit. Shopkeepers talk of the Sudanese Antonov planes that sometimes soar overhead. "In the evening you can see them, they are just moving," Gatmai Chuol, a 35-year-old store owner, said. "What do they want?

We don't know."

U.S. giant Chevron's 1978 discovery of oil in the area almost immediately kindled strife between Khartoum and southern nationalists. Southerners protested President Jafaar Nimeiri's plans to channel the oil through a new pipeline and refinery in the north.

In 1984, a few months after insurgents took up arms they attacked a Chevron camp near Bentiu and killed three workers. Chevron shut down operations, selling their concession to a Sudanese firm in 1992. The concession changed hands several times over the next few years; China's CNPC and Malaysia's state oil firm Petronas bought shares in 1996, and Canada's Talisman entered two years later. Sweden's Lundin bought into a nearby oil block in 1997.

6 As those companies laid pipelines and dug wells, government troops, helicopter gunships and allied militias sacked villages and killed thousands of people, sometimes using airstrips and roads the firms had built.

Human Rights Watch, the International Crisis Group and other pressure groups published long reports on the violence. The furore pushed Talisman to sell its stake to India's national oil company ONGC Videsh, and Lundin to sell out to Petronas in 2003.

At the time, the firms said they tried to make sure Khartoum did not use their facilities for its war effort and that they believed developing Sudan's economy could help the country prosper, thereby speeding the end of the war.

This means little in Bentiu. When Odwar, parliament's energy chief, confronted the oil firms last year, he was articulating what many people in the area think.

The oil companies helped the northern army, Unity state's deputy governor Michael Chiangjiek said. "They facilitated them. They built roads for them."

Many South Sudanese officials say they have put such grievances behind them, but the upheaval that followed independence shows that suspicion still runs deep.

A senior Western diplomat notes that the south fought for decades and will not be pushed around. "The South Sudanese are as tough as old boots," he said.

Sovereignty at stake A few weeks after January's shutdown, South Sudan's oil ministry announced it had expelled Liu Yingcai, head of the Chinese-led Petrodar consortium that pumped most of the country's petroleum.

Officials accused Petrodar of helping Khartoum confiscate southern crude, under-reporting the number of wells in southern fields, and other offences, all of which the company denied in a detailed public rebuttal.

"We take pride in our ethical conduct and for being transparent to our stakeholders and we will continue to do so in the future," it said in a statement. China's CNPC and Malaysia's Petronas own most of the group, which has since been renamed Dar Petroleum.

Liu was "shocked" by the order, a CNPC executive who worked in the country before secession said. Along with the shutdown, the expulsion made some in the Chinese firm wonder whether they should review their strategy in South Sudan. "The incidents were like a wake-up call," the executive said.

The order - and the confused reaction that followed - also exposed divisions among South Sudanese leaders about how best to deal with Beijing and, more broadly, how to manage a resource many former rebel fighters see as too important to fully trust to firms who once worked with Khartoum.

Plenty of southern officials still defend Juba's decision, even as others continue to deal with the fallout.

"Whatever we have done was not even equivalent to what they had done to us. He should have been taken to court, actually," one ministry official said, referring to Liu. Many argued the expulsion was part of a costly but necessary battle for primacy over oil, which accounts for 98 percent of South Sudan's income and much of its leverage with Khartoum in disputes over territory, the Nile and other issues.

"After the shutdown everybody in this country began to understand that we are not going to be taken for a ride," said Paul Adong Bith Deng, managing director at South Sudan's state oil firm, Nilepet. "I think the Chinese got that one very well."

But some bureaucrats were clearly unnerved by Liu's expulsion, which diplomats and officials said the oil minister ordered without consulting the cabinet or the president.

Information Minister Barnaba Marial Benjamin acknowledged Dau may have "overreacted" and said the foreign minister and cabinet should have been involved in the decision.

Attempts to reach Dau and Liu - who was replaced by another Chinese national after the expulsion - were unsuccessful.

Zhang, the Chinese embassy counsellor, said southern officials told him the order had been made emotionally and did not represent the government as a whole. He did not want to talk about the expulsion in detail. "If we solve the problem, it's left behind," he said.

From foes to partners The South's efforts to mend ties with China after the shutdown and expulsion - and Beijing's response show how the two have built an ever more practical relationship since the 2005 peace deal.

Early on, Beijing more or less ignored the former rebels. But in 2007 President Salva Kiir, then leader of the autonomous south and first vice president of Sudan, went to Beijing and laid out a map showing that most of Sudan's oil was in the south.

7 "Khartoum was telling them it was in the north, which was not true," said Benjamin, who was on the trip. Kiir also pointed out a clause in the peace deal that allowed South Sudan to vote for independence in 2011.

Beijing understood the implications. Over the next several years, China opened a consulate in Juba and the CNPC funded projects like a computer lab for the capital's university. South Sudan sent finance, infrastructure and other officials to Beijing. A Chinese company made the stage from which Kiir declared independence.

A few months after the oil shutdown this year, the sudden loss of income forced Juba to soften their stance towards China. Inflation was close to 80 percent and the South Sudanese pound had lost a third of its value. Plans to build schools, power lines and other projects had been put on hold.

Diplomats and analysts say southern officials may have been naive about how much money Western governments would lend them after the shutdown. Southern officials may also have expected more support for plans to build a pipeline through Kenya, an idea southern nationalists have pushed for years but which will be hard to build because of declining oil reserves, rough terrain and unrest. The International Monetary Fund says South Sudan's oil output will halve within a decade without new discoveries.

With no extra Western help, Juba turned to China. In April this year, Kiir visited Beijing to seek loans.

At least publicly, Chinese leaders have remained pragmatic about the turmoil in South Sudan's first year.

China's special envoy to Africa, Zhong Jianhua, has visited South Sudan three times since he was appointed this year. He said South Sudan's decision to shut down its oil wells was born both of an urge to flex its newfound sovereignty and of inexperience.

"I can only guess, but when you are young and newly established and suddenly discover unlimited power in your hands, it's hard to resist using it," Zhong said.

"They have now dealt with the drawbacks of the decision and paid the price. Through this process they will mature."

"We say 'hard luck'" The question for Odwar, head of parliament's energy committee, is what maturity will mean - what sort of state will the new nation becomes? Oil sits at the heart of that issue.

One path could see South Sudan come to resemble its northern neighbour, a one-party state with highly centralised authority, dependent on a single resource and willing to tolerate a huge gap between rich and poor. Another could see it follow countries like Ghana and Kenya where governance and civil society has grown in fits and starts, despite corruption.

So far, powerful forces have pushed it in the first direction. In June, Kiir said southern officials had stolen $4 billion of public money - roughly a third of the south's petroleum revenue between the peace deal and independence.

As the patronage networks sustained by this corruption calcify, the theft will be harder to stop. And some South Sudanese politicians, warning of northern espionage, have resisted the kind of transparency it would take to quash it.

The country's rulers are also struggling to crush several militias that have taken up arms in remote regions, and may be grateful to China for keeping out of domestic politics as they wrangle to maintain their dominance.

Odwar said companies in South Sudan tended to go straight to top officials with plans, often bypassing the law, an arrangement many politicians and businessmen seemed comfortable with. "That is exactly what has been happening in Khartoum, and this is what people want to adapt here," he said.

Pressure from Western donors and from the country's nascent civil society could reverse this trend. Many of South Sudan's roughly 8 million people are aware oil makes their country one of the region's wealthiest per person on paper but that few have the income to show for it.

A host of southern technocrats have returned from Sudan to work in the new country's oil industry, many versed in global standards and inclined to publish figures like oil output and revenue, which some politicians consider too important to reveal.

A law passed in July on how to manage the industry has won praise from diplomats and industry experts, but for now it is unclear how zealously officials will carry it out - particularly clauses that could trigger disputes with oil companies.

One article calls for an "environmental and social" audit of the oil firms' activities that would let officials demand compensation if the firms are found to have done wrong.

Companies complained about the line, Odwar said, but parliament left it in. "We say, 'hard luck'. I think as a new nation we have a right to chart our path forward." (Reuters)

8 FIVE) – GROWING TIES BETWEEN EGYPT, TURKEY MAY SIGNAL NEW REGIONAL ORDER Egypt and Turkey are forging an alliance that showcases two Islamist leaders maneuvering to reshape a Middle East gripped by political upheaval and passionate battles over how deeply the Koran should penetrate public life.

The relationship may foreshadow an emerging regional order in which the sway of the United States gradually fades against Islamist voices no longer contained by militaries and pro-Western autocrats.

Each country has a distinct vision of political Islam, but Turkey, which straddles Europe and Asia, and Egypt, the traditional heart of the Arab world, complement each other for now. Turkey's strong economy may help rescue Egypt from financial crisis, while Cairo may further Ankara's ambition to rise as a force among Islamic-backed governments.

What bonds and rivalries may ensue is unclear, but they are likely to affect what rises from the bloodshed in Syria, the influence of oil nations in the Persian Gulf, future policies toward Israel and the volatile divide between moderate and ultraconservative Islamists. The nations offer competing story lines playing out between the traditional and the contemporary.

"Turkey has done a good job so far of balancing the relationship between the religion and state. It is secular," said Ahmed Abou Hussein, a Middle East affairs analyst in Cairo. "This is not the case in Egypt.

We haven't found the balance between religion and state yet. We're all confused, not only the Islamists."

The two countries recently conducted naval exercises in the Mediterranean Sea. Egyptian President Mohamed Morsi visited Ankara in September and Turkish Prime Minister Recep Tayyip Erdogan is expected to arrive in Cairo this month with promises of closer cooperation and a financial aid package that may reach $2 billion.

"Our history, hopes and goals bind us together to achieve the freedom and justice that all nations are struggling for," Morsi said on his trip.

The nations' deepening ties come amid international and domestic pressure emanating from revolutions that are recasting political rhythms in the Middle East and North Africa.

Erdogan is moving to fashion Turkey's democracy into a model for Arab governments even as he has been criticized by human rights groups for the arrest of thousands of Kurdish activists. Morsi is seeking to restore Egypt's global stature after years of diminishment under deposed leader Hosni Mubarak.

Turkey's diplomatic finesse and economic allure have allowed it to deftly exert its regional influence. But the civil war in Syria has shredded relations between Ankara and Damascus and left Erdogan, who has threatened Syrian President Bashar Assad with wider military action, searching for a plan to end the conflict on his border.

Turkey has also drawn the ire of Iran, a Syrian ally, for signing on to a U.S.-backed missile shield. And Iraqi Prime Minister Nouri Maliki this year called Turkey a "hostile state" and accused it of agitating sectarian tension in his country.

Erdogan, who learned his wiles as a boy selling sesame buns on the streets of Istanbul, is more flamboyant than Morsi, the son of a peasant farmer. But Morsi has proved a canny politician: In a visit to Tehran in August, he signaled a thaw in Egyptian-Iranian relations while at the same time angering Iran by condemning Assad's crackdown on dissent.

Egypt's deeper problems bristle on the home front, including unemployment, poverty, crime and decrepit state institutions that became more glaring after last year's overthrow of Mubarak. Both Morsi and Erdogan, who rose to power nearly a decade ago, curtailed the political influence of their nations' generals, but each has been accused by secularists as having authoritarian streaks tinged with Islam. The countries have a tendency to harass and arrest dissidents and journalists.

A closer fusion of Cairo and Ankara stems in part from the influence Egypt's Muslim Brotherhood had on Islamist organizations across the region, including Erdogan's Justice and Development Party. While the Brotherhood was being persecuted by Mubarak, a brash Erdogan riveted the "Arab street" with his populism and chiding of leaders, such as Mubarak, for their compliance toward the West.

The question is, how will Erdogan and Morsi maneuver the politics of a Middle East that both want to influence, and which Egypt regards as its historic and strategic territory?

"I don't think Egypt even under the Muslim Brotherhood would appreciate a Turkey that would nose around on Egypt's political turf," said Kemal Kirisci, a professor of political science and international relations at Bogazici University in Istanbul.

But Turkey offers Egypt a pragmatic — some analysts suggest modern — approach to the West, the global economy and stability. A member of NATO, Turkey is aspiring to join the European Union. Its talks with the

9 EU have been strained, but the process forced economic and social reforms that have benefited Erdogan as he increasingly looks to the Middle East and North Africa to expand commercial interests. Arab news media have reported that Turkey's trade with the Arab world is targeted at $100 billion over next five years.

"What is interesting about Turkey's success is its commitment to practical visions and plans," said Seif Allah el Khawanky, a political analyst. "Morsi's administration doesn't have this."

Both countries are working toward new constitutions. Turkey's politics spring from a secular democracy and a history of defined political parties that have tempered the influence of Islam. Turkish women who wear hijabs are banned from political office. Egypt's Islamist-dominated government, however, is pushing for a constitution firmly rooted in sharia, or Islamic law, and there is little inclination among conservatives to import the Turkish model.

That difference is partly defining the immediate aftermath of the Arab Spring. Islamist groups long suppressed by Mubarak and other autocrats are imposing their political and religious visions on nations with underdeveloped or divided secular parties.

"The Islamist parties in Turkey are past implementing religious ideologies. They're working more on economic policies and reform," Hussein said. "The Muslim Brotherhood and Salafis will have to change their rhetoric to fit the needs of Egypt and the world.... The Turks refer to their example as the Turkish experience. They are brilliantly trying to sell this so-called experience in Syria, Egypt and other Arab countries." (Los Angeles Times)

SIX) – EGYPT'S PRIME MINISTER PRESENTS ECONOMIC PROGRAM, AIMING FOR 3.5 PER CENT GROWTH Egypt's prime minister laid out his government's economic program, aiming to increase a sagging growth rate, restructure an expensive subsidy system and deal with a crippling budget deficit as the country negotiates a $4.8 billion loan from the International Monetary Fund.

Egypt's economy plummeted following last year's uprising that toppled former President Hosni Mubarak.

Growth rates dropped and foreign reserves, currently at just under $15.5 billion, a drop of nearly half over the past 18 months, as tourism revenues and foreign investment shrank.

Egypt's government sees the IMF loan as a way to raise investor confidence, reduce its budget deficit currently at 11 per cent of GDP, and open other avenues for financing from international donors. A deal is expected before the end of the year. An IMF team is in Egypt to discuss the government's economic program and negotiate a deal.

The proposed loan has drawn criticism from some groups in Egypt who said the negotiations with the IMF lacked transparency and raised concerns that it would lead to an economic crunch and inflation that would further harm the poor. Some 40 per cent of Egypt's 83 million people live on less than $2 a day.

Hesham Kandil, the prime minister, unveiled some details of his government's plan, including the explosive issue of restructuring of the expensive subsidy program.

Kandil said his government aims to increase GDP growth rate to 3.5 per cent in the current fiscal year, up from 2.2 per cent. He said he hoped the growth rate can reach 4.5 per cent in the next fiscal year.

Kandil, who was appointed prime minister in late July, said his government plans to restructure its subsidy program to better benefit needy groups.

"The subsidies as they currently are leaving the poor," Kandil said according to comments published in the state news agency MENA. He said subsidies on high octane fuel will be removed, but added that they amount to only a small fraction of the energy subsidies. He said subsidies on other grades of fuel and diesel will be rationed, by limiting subsidies according to consumption. He also said a system to distribute subsidized diesel and fuel through smart cards is expected within six months.

He also said natural gas prices will be increased for energy-intensive industries.

Energy subsidies, which account for nearly half of state subsidies, are currently at nearly $20 billion, according to the government statement published on MENA. Kandil said the government hopes to create 700,000 new jobs and reduce a government deficit that reached $28 billion in June. The government plan also includes a plan to spend $16.6 billion in Sinai, which has been hit by lawlessness that has threatened the central government's control over the strategic peninsula, bordering Israel and Gaza Strip.

10 Financial and tax reform are also part of the program, but the published parts of it provided few specifics.

Initial talks with the IMF stalled earlier this year because of differences between the then-ruling military and Egypt's political leaders, including the Muslim Brotherhood party, from which Morsi hails. (The Province)

SEVEN) – ALGERIA PLANS TO SET UP A BANKING RATING AGENCY Algeria will be hoping that the launch of the new ratings system for its banks will boost confidence in the sector, while paving the way for increased lending, in line with the country’s bid to diversify its economy.

Efforts to introduce a ratings system for the banking sector have been slow to get off the ground, with the Bank of Algeria (BoA) taking time to decide how the process will be implemented. The launch has already been put back from a scheduled date at the end of 2011, while Central Bank Governor Mohamed Laksaci said last year that bank ratings should be in place from 2013.

A representative from the Association des Banques et des Établissements Financiers (Association of Banks and Financial Institutions, ABEF) told the Algeria Press Service (APS) in August that work on the pilot project had now reached a “technical elaboration” stage.

ABEF general delegate Abderezak Trabelsi also highlighted the importance of having a ratings system in place for the financial services industry. “There must be a bank rating tool, agency or company, regardless of the name, since there is a need for creating a scoring tool for companies and insurance companies because the information is crucial in a market economy,” he said.

The governor of the Central Bank, Mohamed Laksaci, added that the rating system would help in the early detection of banks’ vulnerabilities, while playing a part in maintaining stability in the sector and protecting depositors.

The BoA has yet to decide what mechanism it will adopt for the monitoring process, according to Trabelsi.

However, it is understood that three options are being considered; a local ratings mechanism using locally qualified staff, a joint venture with a foreign ratings agency, and a system that would see several separate ratings agencies operating in Algeria.

Reports have suggested that a foreign partner is likely to be brought in to implement the system and train staff employed by the new organisation.

The BoA has already set up a ratings system in partnership with the IMF and the US Treasury that is currently being piloted in two banks. However, the new ratings system is expected to monitor all banks and financial institutions in Algeria on a range of criteria, such as liquidity, risk management and solvency ratios, while assessing them on a scoring system and establishing rules for intervention. The system should increase detection of money laundering and other illegal activities in the banking sector, while creating a more practical and transparent means of monitoring banks’ resilience.

Nour Nahawi, the director general of ABC Bank, an Algerian subsidiary of Manama-based ABC Bahrain, told OBG that the new rating system should produce a positive outcome for the country’s banks. “With a new ratings system forthcoming and efforts to increase lending opportunities under way, the government is taking a pro-active stance in maintaining the banking sector’s stability, which should lead to even stronger and healthier banks,” he said.

The Algerian banking system has remained stable through the global financial crisis. However, levels of lending to the private sector remain low. The country’s six state-owned banks, which account for around 85% of all assets, are known for adopting a highly cautious stance towards lending, after incurring losses on loans to inefficient public companies. As a result, the banking system retains a large quantity of liquidity that could be driving growth in the private sector, where capital is much in need.

With most state banks also lacking the sophisticated risk-management technology used by the private sector, the government will be hoping that the introduction of an independent ratings agency encourages strong-performing banks to lend more freely.

Aymeric de Reynies, the senior country manager at Calyon Bank, part of France’s Crédit Agricole Group, told OBG that a strong private sector was a prerequisite for development. “The future of the banking sector

11 will be small and medium-sized enterprises, and a proper strategy should be put in place to bring sufficient support to their activities and development,” he said.

In the longer term, the development of the Algerian banking system is likely to be characterised by greater participation from private-sector lenders, following a trend that emerged a few years ago.

Andre Dieu, the head of division at the Algerian branch of French bank Natixis, believes international interest in the North African country is well founded. “Algeria is a growing market in terms of potential, the market is not yet fragmented and there is still a relatively low rate of use of the banking system compared to some neighbouring countries,” he told OBG. “This offers great potential for any international banks interested to invest.” (OBG)

EIGHT) – CHINESE ACQUIRERS FIND A ROUTE TO AFRICA VIA AUSTRALIA With more than $500 billion at their disposal, Chinese sovereign wealth funds can flex financial muscle with ease. But their strength is usually cloaked in cloying words of warmth and friendship. That's what made the hostile bid last month for an Australian-owned, African copper mining concern so jarring.

"For a Chinese sovereign to partner with a strategic interest and go hostile, it's a first," says Jinshu Zhang, a Los Angeles-based partner with Reed Smith LLP, and the senior director of the firm's Asia-Pacific practice.

As shareholders of embattled Discovery Metals Ltd. descend on Brisbane, Australia, Friday, Nov. 16, for the annual general meeting, they must ponder the intent, strategy and financial firepower of China-Africa Investment Fund and its private equity firm partner Cathay Fortune Corp. The pair bid A$830 million ($855 million) for Discovery, an offer the mining concern's board rejected as inadequate.

Most attention has been focused on Cathay Fortune and its rich and politically well-connected chairman, Yu Yong. Under its proposal, Cathay Fortune would own 75% of Discovery, which is listed on Australian stock exchanges, but whose assets are in Africa: A copper field in Botswana.

Especially intriguing, though, is the role of China-Africa Investment Fund. After all, the vehicle was set up five years back as a specialist sovereign wealth fund to foster African development.

China-Africa Investment "is not totally, financially driven," says Zhang, who has advised Chinese sovereign wealth funds in the past, although not China-Africa Investment. The lawyer describes what he calls the fund's "distinct mandate": First, to help African countries; second, to secure for China supplies of natural resources; and only third, "to make money."

That Cathay Fortune and China-Africa Investment have gone hostile is a calculated bet that some observers believe will most likely be resolved by a sweetened bid. But it also reflects a growing awareness

by Chinese interests of how the takeover game is played and a budding confidence to play the game hard.

"It marks the maturity of Chinese investment managers," Zhang believes, although he is quick to add that Chinese sovereign wealth managers remain "extremely risk adverse."

China-Africa Investment's willingness to mount a hostile bid of Discovery Metals raises broader questions as well not only about Chinese sovereign wealth funds, but about other Chinese-government allied investors in general. The Discovery Metals bid comes as several Chinese interests mount high-profile takeovers of other natural resources concerns.

Canada is one big focus. China National Offshore Oil Corp., or Cnooc, in July offered to acquire Nexen Inc. for $15.1 billion in cash. The Canadian government is reviewing the proposed acquisition of Canada's sixthlargest oil producer and said it will make a decision by the middle of next month. While the offer is friendly, political opposition to the acquisition is mounting and there's growing belief that the government will reject the bid, citing national security interests.

Australia is also very much on Chinese radar. Late last month, for example, a joint venture led by a subsidiary of China Yima Coal Group made a friendly A$71 million cash offer for publicly traded coal exploration company Endocoal Ltd. China's single biggest investment came in 2009, when Yanzhou Coal Mining Co. paid A$3.5 billion for Australian coal company Felix Resources. That deal was conditional on Yancoal Australia listing in Australia, which it did in June 2012.

African governments have enthusiastically welcomed Chinese investments, even if the money barely conceals China's avaricious appetite for natural resources. China is the biggest benefactor, for example, of

12 a new $3.2 billion Ethiopian rail line being built to link the northern part of the country with Djibouti's Port Tadjourah, a line necessary to move potash.

Using Australian-listed companies as a backdoor entry into Africa is becoming a more common vehicle for Chinese interests as of late. Most notably, Sichuan Hanlong Group has offered A$1.2 billion for the 81.4% stake it doesn't already own in Sundance Resources Ltd., a Perth-based company that owns an iron ore mining and development company in West Africa. That offer is pending.

But there's resistance to this increasingly aggressive strategy, and one that also can result in a popular backlash. On Nov. 7, shareholders in the Australian gold mining company Noble Mineral Resources Ltd. narrowly rejected an A$84.7 million offer from Zhongrun Resources Investment Corp., which would have resulted in the Chinese mining concern holding a controlling 41.5% share. As part of the deal, Zhongrun was to acquire options for another 10% stake in the company developing a gold field in Ghana.

(After the defeat, Noble immediately accepted a rival $A85 million finance packaging from another publicly traded Australian company, Resolute Mining Ltd. Resolute owns a gold field in nearby Mali.)

Despite the setback, Chinese officials are likely to remain committed to the strategy. The Africa-focused wealth fund can be traced to a 2006 summit in China with various African leaders. China Development Bank established China-Africa Investment a year later with a modest $1 billion initial investment and a promise of $4 billion more to come. According to the Discovery takeover offer document, China-Africa now has $3 billion in paid-up capital.

That's a pittance compared with the country's largest sovereign wealth fund, China Investment Corp., with capital now approaching $500 billion.

China-Africa Investment offers little insight into its investments and hard numbers are difficult to come by.

According to its website, the fund invests in debt as well as equity.

Original pronouncements aside, the vehicle offers no evidence of altruistic investments designed to boost local companies and indigenous talent. Publicly disclosed investments so far have been minority stakes in ventures partnered by other Chinese entities with specific operating expertise. For example, China-Africa Investment owns 13.7% of Zimasco (Pty) Ltd., a ferrochrome producer in Zimbabwe. Sinosteel Corp. acquired a controlling stake in Zimasco in late 2007.

Cathay Fortune falls into that category, even if it is a private equity concern. Its biggest holding to date is a 35.5% stake -- currently valued at $1.9 billion -- in China Molybdenum Co. Ltd. The company is one of the world's largest producers of molybdenum, used primarily in steel alloys. Cathay Fortune already owns 13.78% of Discovery Metals. (The Deal Pipeline)

NINE) – IRELAND ON TRACK TO DOUBLE TRADE WITH SOUTH AFRICA AS EXPORTS RISE TO €944M Bilateral trade between South Africa and Ireland rose to €1.2-billion in 2011, with exports from Ireland to South Africa, which has been earmarked as a priority market for the recovering European Union (EU) member State, surging to €944-million – a 29% increase on the previous year.

Trade and Development Minister Joe Costello, who is leading Ireland’s largest-ever trade mission of 35 companies to South Africa this week, reported on Tuesday that the double-digit growth momentum had been sustained into 2012. Ireland was, therefore, on track to double its trade with South Africa over the coming three years.

South Africa's exports also rose to €302-million in 2011, but the trade balance remained strongly in favour of Ireland, which views export growth and diversification as central to its economic revival.

The Irish economy was particularly affected by the global financial crisis of 2007, when its construction and banking sectors collapsed and the economy entered a deep recession in 2008, culminating in the 2010 EU bail-out package.

Overall Ireland’s exports, which comprise about 85% of the trade-oriented economy, expanded by around 4% in 2011 to €92.9-billion, up from €89.2-billion in the previous year, and were expected to climb further this year.

13 Nevertheless, the International Monetary Fund still expected modest gross domestic product (GDP) growth of 0.4% for 2012 and recently cut its 2013 GDP forecast to 1.1% from 1.4% projected previously, owing to a slowing demand for Irish exports.

In a bid to sustain export growth and mitigate the slowdown, Ireland was prioritising emerging markets and had finalised an Africa strategy in 2011, which would seek to transition the country’s relationship with the continent from one premised on aid to one increasingly oriented towards trade and investment.

Trade and investment promotion agency Enterprise Ireland opened a bureau in Johannesburg in February and Costello stressed that the office would serve as a hub for its sub-Saharan African trade aspirations.

Following the five-day mission to Johannesburg and Cape Town, Costello would lead Ireland’s first-ever trade missions to Nigeria and Ghana.

Enterprise Ireland international sales and partnering manager Kevin Sherry said the mission, which was a follow-on from the inaugural yearly mission in 2011, underlined the strategic importance of the South African market for Irish companies, which saw South Africa as a “gateway” economy.

Over 180 Enterprise Ireland clients were currently exporting to South Africa and 30 Irish companies had local subsidiaries employing over 13 000 people.

The sectors represented during the trade mission included telecommunications, financial software and services, construction and engineering, e-learning and training, beverages, plastics, waste water management, traffic management, publishing and pharmaceutica (Creamer Media Reporter)

.

TEN) – AFRICA: ELECTRICITY BY 2030 UNLESS… As Africa’s population grows, demand for energy is on the increase and the continent must find ways to meet the demand, Abdalla Hamdok, the Deputy Executive Secretary of the UN Economic Commission for Africa (ECA) has said.

Speaking at the opening of the African Energy Ministers and Pan African Investment Forum in Addis Ababa November 12, 2012, the senior UN official warns that unless bold and effective measures were taken now, half the African population would continue to live without electricity by 2030, according to a statement issued by the ECA. Mr Hamdok believes that as Africa continues to register remarkable economic growth with an average of 5% GDP rate per annum, and with six out of the ten fastest growing countries in the world today, the growing demand for energy on the continent needs urgent and alternative solutions.

Mr Hamdok told the meeting that 25% of the African population has access to modern electricity as compared to 50% in South Asia and more than 80% in Latin America.

The continent’s efforts, Hamdok has observed, are still geared towards investing in fossil and hydro-based electric generation and as a result, “other alternative sources of energy such as wind, solar and bio mass resources have been overlooked”.

According to the ECA statement, Hamdok who made a case for investment in renewable energy sources noted they [renewable energy] are well suited to rural areas, particularly where the national grids are less accessible. “In such areas, abundantly available energy sources such as off-grid and stand-alone solar and wind power could meet the needs of localized areas,” he said.

He further stated that renewable energy is a domestic resource and as such, provides alternatives to uncertain and increasingly expensive imports of fossil fuels which according to him, “often puts African economies at the mercy of foreign and volatile supply chains.”

He told the forum that renewable energies open a new export opportunity by generating revenues in much needed hard currency through carbon crediting on the international carbon market.

14 He suggested that increase in domestic public investment is needed as “no external sources can ever address all the continent’s power needs.”

He recommended improving utilities’ corporate standing and creditworthiness as it would earn companies the advantage of accessing resources directly from the various capital markets. (GBN)

ELEVEN) – EATON SECURES $60 MILLION DEBT FOR UGANDA Eaton Towers, the African tower ownership and Management Company, has secured $60m in debt financing from Standard bank group, acting through Stanbic Uganda, and the International Finance Corporation (IFC), to build and develop new and existing telecom towers across Uganda. According to a report dated October 30, the $60m financing includes a $30m tranche with an eight-and-half year maturity from IFC, the investment arm of the World Bank. The eight-and-half year term is a record for telecom infrastructure providers in the region, a press statement from Eaton noted.

This is Eaton’s second round of bank debt funding in 2012, following a $30m debt facility from Standard bank group, acting through Stanbic bank Ghana and the Standard bank of South Africa, earlier in the year.

“This latest round of debt funding is a further validation of the Eaton Towers business model and management team, and a clear demonstration of our ability to efficiently leverage our assets across Africa…this funding facility will allow us to further consolidate our position there,” said Peter Lewis, Chief Financial Officer of Eaton Towers, through a statement.

The capital raised will be put towards funding Eaton’s acquisition of nearly 400 towers from Warid Telecom, and to upgrade existing towers and build up to 80 new towers in the country. Eaton Towers also acquired 300 towers from Orange Uganda in January, to give a total of 700 towers and national coverage in Uganda.

(The Observer)

TWELVE) – SHELL SELLS NIGERIA LEASE STAKE Royal Dutch Shell plc (RDS.A ) recently announced that its subsidiary - The Shell Petroleum Development Company of Nigeria Limited (SPDC) - has completed the divestiture of its 30% stake in Oil Mining Lease 30 (OML30) in the Niger Delta.

The interest was sold to local joint venture company Shoreline Natural Resources Limited for $567 million.

OML30 includes Kokori, Afiesere, Oweh, Olomore, Eriemu, Evwreni, Oroni and Isioka fields and extends over an area of about 1097 square kilometers. The fields that were divested produced 35,000 barrels per day of oil and include a crude oil pipeline from OML30 to the Forcados River.

This divestiture is in tandem with SPDC's onshore portfolio restructuring initiative. It also serves to meet the Federal Government of Nigeria' target to expand the presence of Nigerian companies in the country's upstream oil and gas business.

Total E&P Nigeria Limited - a subsidiary of Total SA ( TOT ) and Nigerian Agip Oil Company Limited will also give their respective 10% & 5% interest in the lease to Shoreline.

Shell has been conducting operations in Nigeria for more than 50 years and is engaged in the production of oil and gas with SPDC and other local companies there, thereby accelerating economic growth.

Royal Dutch Shell plc owns one of the largest integrated oil and gas businesses in the world. The group has operations all over the world and is involved in various activities related to oil and natural gas, chemicals, power generation, renewable energy resources, and other energy related businesses. Royal Dutch Shell divides its operations into three major segments: Upstream, Downstream, and Corporate.

We believe that Shell's strong and diversified portfolio of development projects offer lucrative long-term opportunities to the company and will continue to boost revenue and earnings growth over the next few quarters.

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However, the company is particularly susceptible to its high exposure to the downstream business, its major natural gas focus, as well as lofty capital spending, which may result in reduced returns going forward.

THIRTEEN) – AFRICAN DEVELOPMENT BANK BOOSTS GHANA’S PRIVATE SECTOR African Development Bank (AfDB) and government have entered into two financing agreements that will enhance the capacity of private sector institutions and promote technical skills development in the country.

Of the $135 million earmarked for the project, about $120 million is expected to be used for technical based skills training while $14.5 million will go into institutional support projects.

Dr. Kwabena Duffuor, Minister of Finance & Economic Planning, signed for Ghana while Marie-Laure Akin-Olugbade, Resident Representative of the AfDB in Ghana initialed on behalf of her organisation.

According to Dr Duffuor, government sees the development of technical skills as an avenue to improve Ghana’s productivity and competitiveness.

This would contribute to human capital development through increasing the capacity of the country to produce high-calibre technical and vocational skills to facilitate technological change and meet the demands of industry.

Particularly, the project focuses on expanding equitable access to public institutions, targeting females and the rural poor, improving the relevance and quality of technical and vocational education training (TVET) delivery and improving management of TVET at the coordination and school based institutional levels.

Dr Duffuor noted that the project would help strengthen the non-tax revenue mobilization framework, enhance the capacity of the Private Enterprise Foundation, National Board of Small Scale Industries and the Ghana Stock Exchange to support small and medium enterprise and enhance capacity in financial sector policy formulation.

It is also expected that the project will help in the development of an online aid management information system to provide an automated platform to monitor and report on donor assisted activities by helping planners and policy makers to easily collect data on partners. (Daily Guide)

FOURTEEN) – COVE EXECUTIVES SAID TO START OIL EXPLORER FOR AFRICA Former executives from Cove Energy Plc are starting a new oil and gas exploration firm focused on Africa after selling the London-based company for $1.9 billion to Thailand’s PTT Exploration and Production Pcl earlier this year, people familiar with the group’s plans said.

The ex-Cove executives including Chairman Michael Blaha, Chief Executive Officer John Craven, and Finance Director Michael may be involved with the new firm, to be called Discover, the people said, asking not to be identified ahead of an official announcement. Discover has secured some private financing and may pursue an eventual initial public offering in London, the people said.

East Africa, where Cove owned 8.5 percent of the Rovuma-1 exploration block in Mozambique, is attracting interest from global energy companies looking to meet surging demand for energy from fast-growing Asian economies. Anadarko Petroleum Corp. (APC) and Eni SpA (ENI) are among companies looking to tap Mozambique, home to the biggest gas find in a decade, while firms including Statoil and Tullow Oil Plc seek oil off Kenya.

“East Africa is one of the biggest positive surprises in terms of exploration in the last few years,” said Laura Loppacher, a London-based oil and gas analyst at Jefferies International. “Investors in companies doing exploration in East Africa have been very well rewarded and that naturally makes people want to take another look.”

16 Cove’s acquisition demonstrated the potential value of energy finds in the region. Bangkok-based PTT agreed to buy Cove in July after a five-month takeover battle with Royal Dutch Shell Plc (RDSA) that more than doubled the company’s share price.

Shell has since begun discussions with Anadarko about purchasing part of its 36.5 percent stake in the same fields. The more than 100 trillion cubic feet of gas discovered so far off Tanzania and Mozambique could meet global consumption for a year. (Bloomberg)

FIFTEEN) – AFRICA: CANADA EYES AFRICAN RESOURCES AMID SHRINKING FOREIGN AID With an initial focus on oil-producing Nigeria and mineral-rich Ghana, Ottawa is bolstering its trade strategy in Africa, but some within the international development and economic communities have expressed concerns about Canada's approach.

The Canadian government was criticised for cutting foreign aid a few years ago, and in particular when Africa amassed some of the greatest hits.

The Canadian International Development Agency ended bilateral programming in countries where aid efforts are hindered by high operating costs, including Rwanda, Zambia, Zimbabwe, Malawi and Niger. The agency also decided to reduce and concentrate its bilateral programming in five states, including Mozambique, Ethiopia and Tanzania.

Yet last month, after years of viewing the continent as mainly a foreign aid recipient, the Conservative government announced a trade mission slated for next January encompassing the extractive resource industries and the infrastructure sectors related to energy, power generation and mining.

Between 1995 and 2010, Africa's annual average GDP growth was 4.3 percent a year, making the continent one of the fastest-growing regions of the world, Rudy Husny, press secretary to Ed Fast, the Canadian minister of international trade, wrote in an email to IPS. Solid economic growth is expected to continue this year and in 2013, he noted.

Roughly 100 Canadian companies operate in Ghana, which offers a politically stable business climate and respect for the rule of law, according to the trade ministry. The two countries reported 321 million dollars in bilateral merchandise trade in 2011, a 61-percent increase over 2010, Husny said.

In 2011, bilateral merchandise trade between Canada and Nigeria, Canada's largest trading partner in subSaharan Africa and the continent's most-populous state, equaled more than 2.7 billion dollars, a rise of 44 percent since 2010, the ministry states.

The fledgling Nigerian Canadian Business Association aims to assist Canadian and Nigerian companies in doubling trade to six billion dollars by 2015.

Is trade, not aid, the answer in Africa?

Without a doubt, there is growing attention on "the very interesting economic growth rates in Africa and also the wealth of natural resources that is very attractive for Canadian companies," acknowledged Sylvie Perras, the Africa-Canada Forum coordinator at the Canadian Council for International Cooperation in Ottawa.

The government of Prime Minister Stephen Harper is shifting from aid toward trade, Perras told IPS, conceding that Canadian private sector development strategies for Africa are important but must be consistent with poverty reduction and the development goals of African countries themselves.

On the whole, she said, a developing country is constrained from enhancing the potential social, economic and environmental benefits of outside investment and trade and from minimizing the potential damage that this funding may bring.

This is why, she said, her organisation is pushing for the inclusion of a human rights impact assessment in all trade and investment agreements Ottawa strikes with foreign governments.

Last month, Canada concluded an investment promotion deal with Tanzania, a country which will see increased Canadian investment in several sectors including mining, oil and gas and transportation. Ottawa has also forged trade and investment initiatives with Benin, Burkina Faso, Cameroon, Côte d'Ivoire, Ghana, Tunisia, Zambia and Senegal.

As the Canadian trade minister and his delegation head to West Africa early next year to unearth opportunities in the extractive resource industry and infrastructure sector, the CCIC, Perras' group, is also

17 continuing to seek the strengthening of Canadian companies' corporate social responsibility policies, especially in relation to African mining activities.

"This has very rarely been beneficial for African countries," Perras argued. "We say that it creates jobs, or it creates revenue, but when we look at it more closely, it's not necessarily the case."

Mineral-heavy countries have not spurred economic development for their local populations, according to a CCIC backgrounder, as high unemployment rates, debt and poverty are widespread in mining communities.

According to a report by the Organisation for Economic Co-operation and Development issued earlier this year, the drop in Canada's overseas development assistance since 2011, as well as a decision to zero in on fewer countries that are predominantly middle income, "may undermine the support (Canada) has given in recent years to poor countries with weak capacity, especially in sub-Saharan Africa."

In 2011, Canada's net overseas development assistance fell to 5.3 billion dollars, a decrease of 5.3 percent from 2010, states the peer review published by the OECD's Development Assistance Committee.

In the report, the OECD advised that Canada and other nations must ensure that development objectives and partner country ownership are key to the programmes it supports, and that there is "no confusion" between development aims and the promotion of commercial interests.

Moreover, Canada's Official Development Assistance Accountability Act, which was enacted in 2008, directs that aid money should consider the perspective of the poor, human rights obligations and environmental standards, Perras added.

Although Canadian foreign aid is still extremely important to Africa's funding of health, governance, education and NGO development, conceded Lucien Bradet, president and CEO of the Ottawa-based Canadian Council on Africa, "what we have neglected in the past is being part of the economic development of Africa in a sizeable manner".

"We are not doing a good job," Bradet told IPS. Canada's bilateral trade with Africa jumped from an annual two billion dollars at the beginning of the 21st century to 13 billion dollars, but it would be feasible to increase these numbers by 15 percent to 20 percent a year, he said.

In comparison, China, India, Turkey and Brazil are boosting by 25 percent to 40 percent a year their trade and technology relationships with Africa, he noted, with China's trade growth dramatically leaping from 10 billion dollars a decade ago to 160 billion dollars.

Economic development offers an improved standard of living to developing-country populations through investment and trade, and allows locals to manufacture, export and establish their own enterprises, Bradet said.

The more Canada facilitates these activities, the more it will be perceived as a "significant partner in Africa, not only in aid but in economic development", he added. (IPS)

EBCAM NEWS

EBCAM CELEBRATES NEXT YEAR ITS 40TH ANNIVERSARY A series of commemorating events will be announced early next year, celebrating one of the oldest European Organisation for Africa’s development. Visit regularly www.ebcam.org

Fernando Matos Rosa Brussels

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European Business Council for Africa and the Mediterranean The European Private Sector Organisation for Africa’s Development Rue Montoyer – 24 – Bte 5 1000 Brussels (Belgium) www.ebcam.org

Contact: info@ebcam.org