Archive for May 27, 2011
By Peter Heinlein
Meskel Square is empty
on the eve of the 20th anniversary of the bloodless coup that brought a band of Marxist Tigrayan rebels to power in Ethiopia. Only a few workers are here setting up the sound system and stage. In a few hours, throngs of government supporters will pour into the square to celebrate the day in 1991 when the 17-year rule of the dreaded Dergue regime came to an end, and pro-Soviet military dictator Mengistu Haile Mariam went into exile in Zimbabwe.
Spokesman Shimeles Kemal says the event will celebrate two decades of achievement under Prime Minister Meles Zenawi’s leadership. “Within these two decades Ethiopia has scored a number of achievements in terms of realizing the dreams and aspirations of its people,” said Kemal. “The livelihood of the people has been improved a lot in contrast with what happened 20 years back.”
Shimeles acknowledged that 20 years on, Ethiopia remains one of Africa’s poorest countries. He says, despite statistics showing double digit economic growth for seven straight years, there is still a long way to go. “It is not a rosy ground. Building a nation that had been pushed to the brink of disintegration is not a rosy bed, and despite this, the whole majority of the Ethiopian people do have a firm belief that Ethiopia is being led on the right track,” Kemal said.
Not all are satisfied
Not everyone in this nation of 90 million is satisfied with the government, however. A group of taxi drivers waiting for fares in Meskel Square said they would stay away Saturday in protest.
32-year old Zerihun Getiye says most Ethiopians have seen no improvement in their lives since Meles Zenawi came to power.
“I am not satisfied,” said Getiye. “This government is not good for me.”
A: “For some people, life is good. For some people, the majority, not good.”
Social media opposition
Activists using online social network sites are calling for a counter-demonstration Saturday. The so-called “Enough” protest is planned as the beginning of a North African-style popular uprising. But political analysts say the “Enough” protest has little chance against the expected crowd of a million people at the pro-government demonstration. Spokesman Shimeles Kemal describes the “Enough” supporters as mostly exiled Ethiopian dissidents. “These are also some desperate people who claim to have followers here, a local constituency,” said Kemal. “What we know for sure is that such exaggerated claims and calls for insurrection were made by a handful of exiled people, mostly fugitives.” An opposition activist sympathetic to the Beka (“Enough”) campaign, who asked not to be identified, said the movement has wide support. But the activist said tight government control would make it difficult, if not impossible, to organize an effective demonstration.
An opposition group calling itself the Tinsae Ethiopian Patriots Union said this week it had cut power cables in the western part of the country as part of a campaign of “peaceful civil resistance.” The group posted pictures of downed cables on its website, but it is impossible to verify the claim, which government officials say is “preposterous.” Tinsae says it consists of members of the now defunct Coalition for Unity and Democracy. The CUD led protests after the disputed 2005 elections, which resulted in the deaths of nearly 200 people. Many of its activists were sentenced to long prison terms but later released. Several have since moved abroad.
By Getachew Teklu
Starbucks confirmed Wednesday it will raise the prices for bagged coffee sold at its U.S stores by 17% and 6% at its Canadian locations, effective July 12. Its move comes a day after J.M. Smucker /quotes/comstock/13*!sjm/quotes/nls/sjm SJM +1.22% raised prices for the fourth time in the past year. Smucker, which sells Folgers, Dunkin Donuts and Millstone, is upping those prices by
11%. Since May 2010, Smucker has jacked up prices 34% to try to stay a step ahead of the commodities market.
Starbucks is raising prices for a 16-ounce bag of coffee at its U.S. stores to a range of $11.95 to $14.95. It is the first price increase since September 2009. The last time Starbucks rose prices for bagged coffee at its Canadian locations was in October 2007. The Seattle company last year raised prices for some of its drinks to counter rising costs for milk and unroasted beans. And on March 18, Starbucks upped the price of its bagged coffee sold at supermarkets.
Green Mountain said May 3 it’s raising prices by 10%. That comes after a hike last fall of 10% to 15% on K-Cup portion packs used in the company’s Keurig single-cup coffee brewer. Over the past 12 months, coffee contract prices for Arabica beans are up 99% on the Intercontinental Exchange. The July contract recently traded at $2.65 a pound. That has prompted Maxwell House coffee maker Kraft Foods /quotes/comstock/13*!kft/quotes/nls/kft KFT +0.38% to raise prices three times since August 2010, an increase amounting to 43%. A Kraft spokeswoman said Wednesday they had no immediate plan to raise prices. Last September, Peet’s Coffee & Tea /quotes/comstock/15*!peet/quotes/nls/peet PEET -0.44% raised prices on beans sold in its coffee shops by 8% on average. Peet’s couldn’t be reached to comment on whether they planned another price increase.
T.M. Ward Coffee Co., based in Newark, has raised the prices of its wholesale beans by 50 cents twice this year and may raise them again, said owner Robert Sommer. Ward’s buys green coffee beans primarily from South and Central America, and Africa. The company roasts the beans at a facility in Connecticut and delivers to restaurants, cafe and other clients throughout the region. Production
in Colombia will likely drop 10 percent in the second quarter because of storms that battered farms last year, Luis Munoz, CEO of the Colombian National Coffee Growers Federation, told Bloomberg News yesterday. And political upheaval in Ivory Coast is affecting coffee crops in the African nation. Shipments of cocoa, sugar and coffee have been disrupted during fighting after a disputed presidential election in November, and farmers cannot return to their fields until the turmoil subsides. Other major exporting countries, including Ethiopia, Kenya and Indonesia, are facing smaller crops this year because of drought, flooding and other inclement weather.
Once shunned by international investors outside of some core commodities, Africa is now high on the radar screens of many funds seeking good returns across the asset classes. But while money may be pouring in, how much is still pouring out? Capital flight has long been a scourge of the continent and one of the key reasons for its gut-wrenching poverty and lack of development. And there is plenty of
evidence that it remains a significant problem, exacerbated by global tax havens and the opaque nature of extractive industries, oil in particular.
A girl selling apples by the roadside outside the Angolan city of
Lubango. REUTERS/Finbarr O’Reilly
Take the case of oil and diamond-rich Angola, which rating agency Fitch on Tuesday upgraded to BB- from B+. We reported last month that $6 billion was spirited out of Angola in 2009, a
staggering sum worth nearly a sixth of its entire annual budget. The calculations, provided to Reuters by Washington-based anti-corruption advocacy group Global Financial Integrity (GFI),
suggested that the bulk of the flow was channelled abroad by a mechanism known as “trade mispricing”. In this case, the way it typically works is that Angolan importers pretend to pay foreigners more for imports than they actually spend. The difference provides cash that can be discreetly put into banks or other assets abroad.
Oil producers seem especially susceptible to this and other kinds of corruption and capital flight. Late last year, GFIestimated that in 2009 $27.5 billion flowed illicitly out of Nigeria, Africa’s largest oil producer and a country with eight times Angola’s 18.5 million population. Lubricating such flows are a network of tax havens whose secretive workings have been brought into the light by author Nicholas Shaxson in his book “Treasure Islands: Tax Havens and the Men who Stole the World” (A subject I blogged on here last month). And global efforts to curtail them, a subject we have written on before, have been largely ineffective. Still, there are promising signs on other fronts, including a U.S. drive to require oil and mining companies registered with the Securities and Exchange Comission to disclose their payments to foreign governments.
Those rules are still being finalised and could yet get watered down. And they might prove futile against things like trade mispricing. But they should still hopefully bring more transparency to the resource sector.Another promising sign is the fact that Africa is no longer just about resources, which was key a theme at the Reuters Africa Investment Summit in March. The expanding middle class on the continent for one is in turn sparking growth in areas such as banking and retail — one reason why U.S. goliath Wal-Mart is so keen to enter the region via its $2.4 billion bid for a majority stake in South African chain Massmart. And a diversified economy is not only more sustainable but may also escape the “resource curse” and the corruption linked to sectors such as oil. Still, these developments do not take away from the fact that there is strong evidence that some countries are losing billions of dollars a year. And things like capital formation and savings and investment will not get off the ground if
the continent continues to lose large sums of money illicitly.
What do you think? Can Africa end capital flight?
By Getachew Teklu
You cannot trust the balance that the ATM gives you. The banking system operates on a system of holds, while money is transferred from your account to other places. Even your debits are not automatically deducted from your checking account. For this reason it is important to keep a running balance of your account at all times. When you make a deposit the bank gives you credit for the deposit, but the check is set to a clearinghouse. The clearinghouse is regional, and if the check is from out-of-state it may need to be sent to another clearinghouse, before the bank actually receives the money for your check. When you deposit a large check from out-of-state the bank may put a hold on it until funds are collected. This protects you from spending the money before you actually get it. If you do this you will have to pay the bank back. Similarly checks do not clear your account the moment that you write them and send them off in the mail. Once the person or company receives your check, they must deposit in their bank and then wait for the money to be transferred from your account. Checks usually take the longest to clear, because it depends on how quickly they company takes the checks to your bank. Debits are not automatically deducted from your account. When you first use your debit card a hold is placed on your account. This hold lasts a few days, and then will drop off. The merchant that accepted your debit card has to send in its transactions in order for the debits to be transferred to them. Although most merchants do this on a daily basis, some small businesses may take longer. When this happens the hold may drop off before the amount is deducted from your account, and your balance would say that you have more than you do. Since you have all of these factors working against you, you should keep a running balance of your account. You cannot simply trust the ATM balance to be the correct one. Similarly just because a debit transaction goes through, it does not mean that you currently have the money to cover the transaction. To keep a running balance you simply record your transactions as you go, then you add and subtract them from your balance in order to get the amount that you really have.