Egypt to host 1st Union for the Mediterranean Business Forum on June 18
Official: Tunisia elected as non-permanent member of Security Council with 191 votes
International Relations and Cooperation Minister's plan to give SA youth int'l exposure
PM Discusses Peace with Sudan’s TMC, Forces for Freedom and Change
Seychelles: Norway Honours Seychelles' Honorary Consul for Work on Marine Security, Relations
Uganda: Climate Change to Top CPA Summit – Kadaga
Kenya: Youths See Green Future in Collecting Garbage
Zimbabwe: Govt Seeks Private Sector Funding
The Herald – Zimbabwe
Zimbabwe and the European Union (EU) on Wednesday launched formal dialogue opening a new chapter of relations after two decades of acrimony.
Suffice to say, the EU should have started with dialogue, before meting out the treatment of the last decade to Zimbabwe which — as history will surely demonstrate — had to do with group identification with Britain during its fallout with Zimbabwe over the historical issue of land.
Dialogue could have made a difference. Many things — from hope, opportunities, businesses to goodwill and little everything else — in these two decades could not have been lost. A lot would have been achieved had it not been for this hiatus.
However, what happened, indeed happened and it is never too late to dialogue.
All the same, it is prudent that the European bloc has finally seen reason to officially engage and dialogue with Zimbabwe, as a way of finding each other and solutions on critical matters, instead of keeping Zimbabwe at arms-length.
Dialogue is the way to go. The more you talk to each other the more you understand each other and indeed the more you quickly find common ground. Dialogue is therapeutic. Of critical importance is that the dialogue process is based on Article 8 of the Cotonou Partnership Agreement which governs relations between member states of the African-Carribean-Pacific regions and the EU. This article gives credence, depth and legitimacy to the dialogue process. In short, this is not back door dialogue, but very, very, very official.
It goes without saying that the decision by EU to dialogue with Zimbabwe comes from the realisation that President Mnangagwa has done extremely well to create space for fruitful local and international engagement.
There is no doubt that President Mnangagwa’s re-engagement policy which seeks to reintegrate Zimbabwe into the global family of nations is the main factor in triggering dialogue. Let credit go to where it belongs.
There is no doubt that the dialogue opens a fresh page with major geopolitical implications and benefits for Zimbabwe, whose international relations soured domestic prospects for growth economically and socially.
So inclusive is the dialogue that it is co-chaired by Foreign Affairs and International Trade Secretary Ambassador James Manzou and the Head of the EU Delegation to Zimbabwe, Ambassador Timo Olkkonen. May God and the ancestors give them the much-needed wisdom and strength to effectively direct the deliberations.
Many people might not know that the launch of the dialogue was a culmination of three years of informal dialogue between the two parties.
One other critical factor is that the official launch of this dialogue laid the groundwork for a frank constructive engagement on all issues aimed at strengthening our relations.
The fact that the dialogue comes at a time Zimbabwe is implementing its Transitional Stabilisation Programme, aimed at creating an Upper Middle-Class Economy by 2030, means the improvement of relations will feed into the vision and its implementation.
Ambassador Manzou said through Vision 2030, the Government under the guidance of His Excellency President Mnangagwa has committed to transform the country into an upper middle-income economy by 2030.
Again, the improvement of relations between Zimbabwe and EU will also nourish the Government political and economic reforms that are key in creating a conducive environment for business and, more importantly, for improving the life of ordinary citizens.
It cannot be denied that the formal political dialogue between EU and Zimbabwe will from now on become an integral part of the relations between the two.
The dialogue whose next official meeting is in November, is a useful platform to exchange views on topics that are of common interest and identifying areas where relations can be improved.
We all hope that there is room for a frank exchange of views on contentious issues, without big brother mentality. Agreements and disagreements are part of dialogue matrix, but what is critical is that commitment to reaching common understanding.
It therefore, calls for soberness, mutual respect, a shared vision and shared values on the issues central to national peace and development. A sound relationship between Zimbabwe and EU is a harbinger of big business, big investment and big opportunities.
This becomes more critical considering that issues under discussion range from economic development, trade and investment, climate change and its humanitarian impact, human rights, democracy, rule of law and good governance, as well as development cooperation, migration and regional and international cooperation.
But most importantly these values should not be seen only from the European perspective. All is well that is mutual.
The New Times – Rwanda
By: Inhee Chung
Air pollution is a chronic disease and a silent killer. We need to anticipate it and proactively address it head on before it overtakes us.
In April 2019 it was time for me to relocate to Kigali from Seoul, I was happy to move away from Seoul’s deteriorating air quality.
While living in Korea, a day would start by checking the local air pollution levels to see whether I can open the window in the morning, and whether my preschooler son should wear a mask to kindergarten or not.
The city’s bad air quality would also influence how weekends were spent – outside or at home with windows tightly shut. It generally affected the overall quality of life, let alone slowly harming the health and well-being of family and loved ones.
I was therefore excited at the prospect of moving to the “Land of a Thousand Hills” to be finally breathing fresh and pollution-free air.
Having lived in Kigali for a couple of months, however, I find myself still concerned about being exposed to air pollution, especially for my young son and my elderly parents as they are in the age groups that are most negatively affected.
Although air quality is bad mainly along the roads and appears to be more localised compared to Seoul, it’s not difficult to feel myself inhaling particulate matters, nitrogen oxides and volatile organic compounds while walking down the main streets of Kigali.
According to a recent study commissioned by the Ministry of Environment, motor vehicle emissions as well as domestic biomass cookstoves using wood and charcoal as fuels are the primary contributors to poor air quality in Rwanda.
So what are we doing about this problem?
Rwanda is undergoing rapid urbanisation as a pathway to economic transformation, and GGGI Rwanda is excited to be part of this journey by supporting an inclusive and green urbanisation process.
However, it is important to recognise the complexity of urban opportunities and challenges.
There are different and at times conflicting components of urbanisation that need to be addressed holistically and in an integrated fashion to achieve sustainability, inclusion and resilience.
A well thought out urbanisation process can be a powerful ammunition for fighting off air pollution as well as other economic, environmental and social challenges.
While considered as one of the cleanest countries in Africa, I feel that more proactive measures may be needed to clean up the dirty air in our midst, especially by tackling the transport sector more aggressively.
We need more stringent policy measures that are effectively enforced to get pollution-emitting and inefficient vehicles off the streets.
We need better incentives to mainstream cleaner cars, motorcycles and buses to roam around the streets of Kigali and around Rwanda.
But more importantly, we need to have a public transport system that is pollution-free and fit for the terrains of Rwanda. Making cities like Kigali cycle and pedestrian friendly as well as having more car-free zones can also be included in the mix of measures that reduce air pollution.
June 5 (Wednesday) was World Environment Day of 2019 with the focus on “Air Pollution”, I cannot help but feel that air pollution has begun to take hold of Rwanda as it has already taken hold of many urbanized countries around the world.
But it’s not late to shift gears to a cleaner and pollution-free path. We need to be more proactive and aggressive to beat air pollution before it beats us.
Zimbabwe Independent (Harare)
By Geoffrey Makina
The following is an overview of foreign direct investment (FDI) as understood and commonly practiced by the international business community. Most Zimbabweans have a very limited understanding of what it is. The subject of foreign investment has many facets and structures.
One must make a distinction between FDI and foreign indirect investments (FIIs). FIIs involve corporations, financial institutions and private investors buying stakes or positions in foreign companies that trade on a foreign stock exchange. In general, this form of foreign investment is less favourable, as the domestic company can easily sell off their investment very quickly, sometimes within days of the purchase. This type of investment is also sometimes referred to as a foreign portfolio investment (FPI). Indirect investments include not only equity instruments such as stocks, but also debt instruments such as bonds.
One must be cognisant of the fact that it is corporate entities not governments that engage in FDI activities and as such, the primary business of a foreign investor is to make money or realise return on investment. As a rule, FDI does not create an economy, but augments a host nation’s economy.
Some of the key features an investor looks for in a host country include strategic location, access to rapidly expanding markets, highly developed physical infrastructure, stable and reliable regulatory infrastructure, skilled man power, low labour costs, low tax rates, political stability, a high level of if not unrestricted financial autonomy and access to capital, open economy, etc.
The reader would do well to have read the previous article titled Government, the People and the Economy.
FDI is a key component in global economic integration. It is an investment made by a resident enterprise or direct investor into the enterprise that resides in another country. This often involves establishing operations or acquiring tangible assets including stakes in other businesses. This is not just a transfer of ownership as it usually involves the transfer of factors complimentary to capital, including management, technology and organisational skills.
The main objective of FDI is to establish lasting interest. This implies the existence of a long-term rapport between the direct investor and the direct investment enterprise along with a significant degree of influence over the management of the enterprise.
FDIs are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies.
According to the Organisation of Economic Co-operation and Development (OECD), an ownership of 10% of voting power by a foreign investor is evidence of such a relationship.
There are two types of FDI:
Greenfield investment: This is a form of FDI where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. In addition to building new facilities, most parent companies also create long-term jobs in the foreign country by hiring new employees.
Brownfield investment: Also known as cross-border merger and acquisition. The purchasing of an existing production or business facility by companies or enterprises for the purpose of starting a new product or service. This type of investment does not involve the new construction of plant operation facilities.
From a strategic view point, there are loosely four types of FDIs:
1) Horizontal FDI: This occurs when a company carries out the same activities abroad as at home;
2a) Vertical FDI: This occurs when different stages of the production chain are added abroad;
2b) Forward Vertical FDI: This is when the FDI takes the firm nearer to the market;
3) Backward Vertical FDI; This occurs when international integration moves back towards raw materials; and
4) Conglomerate FDI: A conglomerate type of foreign direct investment is one where a company or individual makes a foreign investment in a business that is unrelated to its existing business in its home country. Since this type of investment involves entering an industry the investor has no previous experience in, it often takes the form of a joint venture with a foreign company already operating in the industry.
Once a firm undertakes FDI, it becomes a multi-national enterprise (MNE) or corporation.
We shall now focus on the specific benefits of FDI inflows into a country and the policies a country can pursue to maximise the benefits of FDI.
In practice, many countries take a pragmatic stance towards FDI through specific policies. These policies vary from nation to nation, often with mixed results.
The Pragmatic approach to FDI
Nations often pursue policies designed to maximise national benefit and minimise costs for the host country, the receiver of FDI.
The main benefits of inward FDI include:
- a) Resource-transfer effects: FDI can contribute positively to the host economy by supplying the capital, technology and management resources that would either wise not be available thereby boosting the country’s economic growth rate;
- b) Employment effects: The positive effects can be both direct and indirect;
Direct effects occur when an MNE employs a number of the host country’s citizens.
Indirect benefits occur when the employees of the MNE start spending money locally. Additionally, jobs are created among local suppliers as a result of the MNE’s operations;
- c) Balance of payment effects: There are two ways in which FDI can help a country run a current account surplus.
First, if the FDI is a substitute for imports of goods and services, and secondly, the host country becomes a foreign subsidiary to export goods and services to other countries; and
- d) Effects on competition and economic growth: When FDIs take the form of a greenfield investment, (i.e. to establish a new operation in a foreign country), the number of competitors in the market increases, thereby giving consumers more choice and increasing the level of competition.
The theory is that the increasing level of competition within the national market would help spur innovation and drive down prices, thus creating the conditions for greater economic growth.
Making FDIs work
Host countries often adopt policies that are crafted to both restrict and encourage inward FDI.
Governments may offer incentives to foreign firms to invest in their countries.
Such incentives may include tax breaks, low interest loans, grants, subsidies or state spending on infrastructure.
Furthermore, host counties can often employ a variety of controls to restrict FDI in order to maximise its potential benefits while limiting its costs.
The two most common policies include ownership restraints and performance requirements.
One of the main reasons behind ownership restraints is the idea that local owners can help to maximise the resources transfer and employment benefits of FDI for the host country. This can be in the form of prohibiting most FDIs but making allowance for joint ventures between local companies and foreign MNEs if the latter have valuable technologies.
Performance requirements are constraints placed upon the local subsidiaries of the MNE to control its behaviour.
Many countries often implement performance requirement policies to suit the country’s needs. Common performance requirement policies include a requirement on product content, technology transfer and local participation in top management.
The employment benefits that MNEs provide may not last forever. There is no guarantee that the MNE will remain for a prolonged period in a country they invested in;
If thing were to go south the investors may choose to pull out causing harm to the local economy;
Furthermore, being over dependent on MNEs may lead to a loss of sovereignty;
The MNE may gain the upper hand when it comes to making deals with the host country’s government, leading to an exploitative relationship that may not be apparent in the early stages; and
Harms include environmental damage and human rights violations.
Other types of foreign investment
There are two additional types of foreign investments to be considered: commercial loans and official flows. Commercial loans are typically in the form of bank loans that are issued by a domestic bank to businesses in foreign countries or the governments of those countries.
An official flow is a general term that refers to different forms of developmental assistance that developed or developing nations are given by a domestic country.
Commercial loans, up until the 1980s, were the largest source of foreign investment throughout developing countries and emerging markets. Following this period, commercial loan investments plateaued, and direct investments and portfolio investments increased significantly around the globe.
In an increasingly interconnected world, the process of globalisation has presented an economic challenge for developing countries. It is in this context that FDIs have been accorded great importance as a driver of economic growth. Although some countries have benefited from FDIs, many other nations have yet to see its fruits.
The Zimbabwean government should tread lightly and pursue pragmatic policies in order to maximise the benefits of FDIs. Zimbabwe like many African countries has an abundance of natural resources which remain largely untapped. It may be more prudent for African countries to adopt a ‘grow the business’ type approach to economic prosperity.
Start small, achieve competence, secure markets and recapitalise the industry to achieve growth. It goes without say that we cannot do “business as usual”, i.e. allow corruption, graft, obscene executive pay packages, mismanagement, government interference, party politics, tribalism, etc to be the order of the day.
In the wake of the global financial crisis, many MNEs have and are continuing to contract, re-structure and retrench.
As a follow up to my article on Sanctions: Real or Imaginary, consider the following.
European countries have problems enough of their own and are in no position to “bail out” Zimbabwe, let alone lend us money. Here are the figures:
Greece owes US$367 billion, largely to the other European economies;
Ireland owes US$865 billion, largely to the other European economies; and
Spain and Italy owe US$1 trillion each, mainly to France, Britain and Germany;
As a result, France, Britain and Germany are struggling because they have lent all these finances to countries that cannot possibly pay them back. Spain owes Italy US$41 billion and Italy owes Spain US$27 billion, etc.
Are these really the people Africa should be looking to for financial advice? Are there no Africans, black, brown or white, full of wisdom and integrity who understand the times and know what Africa ought to do?
People are selling the European currency and buying the US dollar because the US economy is stronger than the European economy, but the US economy is largely owned by China! It is worth noting that China has very limited outward FDI/MNE activities but has been the beneficiary of tremendous inward FDI/MNE activities. Chinese government external projects are not be confused for FDI.
As I mentioned in a previous article, a change in presidency or ruling party is not Zimbabwe’s economic salvation. A paradigm shift in our world view; how we conduct our financial and economic affairs; change in our moral ethics and our attitude to nation building and export-oriented productivity are our only viable hope.
Greed, near-sightedness, bureaucracy and indolence are some of our greatest enemies. Twenty-four hours (up a mountain) of prayer and fasting will produce diddly-squat unless we apply ourselves to self-sacrifice, honest and hard but smart work. After all, God only promised to bless the work of our hands … not our crooked works or prayers.
A wise man said: “Prayer is in the revelation equation, not the success equation.”