Friday, 31 May 2013 12:34

Newsletter 32

In this newsletter:

  • Ethiopia to sign mobile network deals with ZTE, Huawei
  • Chinese minibus starts local production
  • Ethiopia Invites More Chinese Investors
  • Japan Seeks African Trade Inroads at Summit as China Dominates

Ethiopia to sign mobile network deals with ZTE, Huawei

ADDIS ABABA (Reuters) - Ethiopia will sign agreements with China's ZTE Corp and Huawei Technologies Co Ltd in a "few weeks" to expand its mobile phone infrastructure and double subscribers to 40 million, a senior Ethiopian official said on Thursday.

ZTE Corp, China's second-largest telecoms equipment maker, has already been involved in developing phone and internet services in the Horn of Africa nation for several years.

Africa's rapidly expanding telecoms industry has come to symbolize the continent's economic growth, with subscribers across the continent totalling almost 650 million last year, up from just 25 million in 2001, according to the World Bank.

"We are now poised to start the expansion. We are almost on the final stage on dealing with ... ZTE and Huawei," said Debretsion Gebremichael, Ethiopia's deputy prime minister and minister of communications and technology.

"In a few weeks we will conclude the agreement and we will start the expansion," he told Reuters.

State-owned Ethio Telecom is the only mobile operator in the country of over 80 million people, one of the last remaining nations on the continent to maintain a state monopoly in telecoms.

Debretsion declined to say how much the new deals with the Chinese equipment suppliers are worth, but said the two firms would finance the project.


Though lacking much of a telecoms industry, the government approved a directive late last year allowing private companies to provide value-added services - essentially all services other than standard voice calls.

Ethiopia's ministry of communications and information technology has received applications from 218 firms to provide such services, Debretsion said, while South Africa's MTN Group - Africa's largest mobile phone company - has already been granted a licence.

Debretsion said preparations are also underway to launch mobile banking services. Ethiopia and Zimbabwe are the only countries on the continent who have yet to provide such a service.

"It's a matter of preparation with application providers because the banking system is within the government and we have to agree and we have to comply as well with the directives we have," he said.

"It has nothing to do with infrastructure now, it's about application. Any time we can start."

Mobile banking is expected to grow into a $22 billion (14.4 billion pounds) industry across Africa by 2015 on the back of the soaring use of cell phones and growing demand for financial services, according to consultancy Juniper Research.


Chinese minibus starts local production

Competition is set to intensify in South Africa’s taxi industry with the launch of a locally produced Chinese minibus into the market.

Beijing Automotive Works (BAW) South Africa, which invested R196 million in a new semi-knocked down facility in Springs, has introduced its Sasuka 16-seater minibus taxi into the local market.

Local production of the Sasuka, which means “we are departing” in Zulu, began in the middle of January.

The BAW SA plant is scheduled to transition to a completely knocked-down plant by about 2015 at a cost of between R2 billion and R3bn. It will have a capacity of between 40 000 and 50 000 units a year.

John Jessup, the head of sales, marketing and after-sales, said BAW SA had a new factory and a new product. It was not yet scheduling huge volumes but was scaling up towards 10 units a day – which amounted to between 200 and 250 a month.

“That is the level of orders our dealers are indicating but it’s early days and we need to feel our way into the market. The initial demand is excellent,” he said.

Jessup said the workers’ headcount at the plant had increased to about 200 at this stage, and this number could be doubled for its dealer network and supply chain.

He said it had 35 dealers but was in negotiations with another six to 10 and would probably have about 45 dealers by the middle of this year.

Jessup said the Sasuka would be priced 15 percent below its main competitor at a recommended retail price of R275 990. It had two-year/200 000km service plan, which covered maintenance of the entire braking system.

He said BAW had all the necessary homologation certificates from the SA Bureau of Standards and would be audited by Independent Transport Advisory Services (Itas).

Itas was established in 2010 and produces a scorecard of “fit for purpose” vehicles for the taxi industry.

BAW SA is 51 percent owned by Beijing Automobile Industry Holding Company in China, with the balance held equally by the Industrial Development Corporation and China Africa Motors (CAM), the previous importer and distributor of BAW taxi vehicles into South Africa under the CAM brand.

Two other Chinese vehicle manufacturers have launched new models into the South African market.

First Automobile Works (FAW) began construction on a R600m vehicle and truck assembly plant towards the end of last year in the Coega industrial development zone.

It launched its first range of FAW passenger cars and light commercial vehicles in the South African market earlier this year. The range is called Sirius.

Pedro Pereira, the general manager for FAW South Africa’s light commercial vehicle and passenger car ranges, said these models were regarded as strong competitors to Toyota’s Avanza models and were well received by its new dealer network and customers.

Pereira said value-for-money pricing and the versatility of these vehicles were the big drawcards with buyers.

The panel van is priced at R149 995 and the Sirius people carrier sells for R159 995.

Pereira said construction on the building phase of FAW’s new manufacturing facility in Coega was scheduled to be completed by December.

Private Chinese motor manufacturer Geely Automotive this month launched its luxury brand, Emgrand EC7, into the local market.

Henri Meistre, the managing director of Geely South Africa, said the days of cheap Chinese cars offering “very little spec and low quality” were over.


Ethiopia Invites More Chinese Investors

Deputy Prime Minister of Ethiopia, Demeke Mekonnen invited more Chinese investment in Ethiopia while meeting with Chinese business persons in Beijing.

The Deputy PM was in Beijing representing African Union (AU) Chairperson Prime Minister Hailemariam Desalegn to be part of the 50th Anniversary of the Organization of African Unity/African Union,held in Beijing, China.

Chinese business person who attended the meeting has also expressed their desire to engage in various investment activities in Ethiopia, particularly in commercial farming, mining, hotel business and setting up industrial parks.

Demeke said his government welcomes interested Chinese investors in all the sectors , adding that the country has a sound investment policy.

More than 400 Chinese Companies are currently operating different sectors in Ethiopia.


Japan Seeks African Trade Inroads at Summit as China Dominates

Japanese Prime Minister Shinzo Abe will meet one-on-one with 40 African leaders this weekend as his government looks to catch up with China in pursuing resources, markets and influence on the continent.

Abe is set to lay out his Africa policy in a speech at the June 1-3 Tokyo International Conference on African Development, attended by officials from about 50 nations. The meeting, held every five years, has been the biggest African development event outside the continent itself since it began in 1993.

Tanzania's president Jakaya Kikwete, left, is welcomed by Japan's prime minister Shinzo Abe during a meeting at Abe's official residence in Tokyo on May 30, 2013.

May 31 (Bloomberg) -- Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, talks about the nation's economic outlook and the need for structural reforms. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move." (Source: Bloomberg)

Africa’s economic growth is luring Japanese exporters, while the government wants to tap the natural gas and oil there after the 2011 Fukushima disaster led to the closing of Japan’s nuclear plants. Chinese firms fueled $138.6 billion in China-Africa trade in 2011, nearly five times Japan’s commerce with the continent, according to the Ministry of Foreign Affairs, citing International Monetary Fund data.

“China has become a far greater presence than Japan in Africa -- it’s overwhelming,” said Kazuyoshi Aoki, a professor at Nihon University in Tokyo who specializes in African matters. “The difference lies in the level of determination. There’s a different perception of Africa’s importance.”

Abe hasn’t visited Africa since taking office in December, in contrast with Chinese President Xi Jinping, who stopped in Tanzania, the Congo Republic and South Africa in March as part of his first trip abroad less than a month into office.

While in Africa, Xi reiterated a pledge for $20 billion in loans over the next two years. China also paid for and built the African Union’s $200 million headquarters in Addis Ababa, Ethiopia that opened last year.

Current Purchases

Most of Japan’s current purchases from Africa consist of metals and fuels, including 10 percent of last year’s liquefied natural gas imports, according to Ministry of Finance data compiled by Bloomberg. Japan exports mostly vehicles and machinery, according to the Japan External Trade Organization.

Japan is now also seeking rare earth minerals, and agreed with South Africa this month to extend joint exploration for the elements used in high-tech manufacturing as Japan seeks to escape its reliance on imports from China.

The conference renews focus on Africa as a business partner and not just an aid recipient. For the first time, corporations will be invited to an official session, Masaji Matsuyama, a parliamentary senior vice-minister for foreign affairs who holds responsibility for Africa, said in an interview yesterday.

Abe will hold individual meetings with 40 African leaders, the Ministry of Foreign Affairs said. President Jacob Zuma of South Africa is attending, alongside the presidents of Uganda and Zambia.

Private Sector

“The number one request from African nations is promotion of trade and investment,” Matsuyama said. He said the government’s role will be to smooth the way by investing in infrastructure and sealing accords to protect private investments from the risk of sudden nationalization.

Japan reached an investment agreement with Mozambique that will be announced soon, he added. Abe will pledge Y1 trillion ($9.9 billion) in aid over 5 years for African states, Kyodo News reported today, citing his remarks to be made to the conference.

Abe stresses the role of the private sector in building ties with Africa. The conference will emphasize “public-private partnerships and enlisting private-sector support to ensure that African countries and communities have efficient markets on a nationwide, region-wide and continent-wide scale,” Abe wrote in an opinion piece in the Wall Street Journal.

’Invisible’ Japan

Japan has missed opportunities for overseas investment while China became more aggressive abroad, Singaporean Prime Minister Lee Hsien Loong told a conference in Tokyo this month. He said leaders turned their attention inward amid the economic downturn.

“You have not been able to develop an overall national Japanese perspective of what is in Japan’s interests and make a decision,” Lee said. “The Chinese were able to do that.”

As an example, he said Japan is yet to sign an investment accord with the Association of Southeast Asian Nations, 13 years after announcing a plan to do so.
Asked about a rivalry between China and Japan in Africa, South Africa’s Ambassador to Tokyo said more top-level visits were needed to build relationships. Mohau Pheko told a press conference in Tokyo on May 21 that her suggestions about such trips had met with a negative response from the Japanese government.

“China does service the relationship,” Mohau Pheko said on May 21. “Many top level visits. Japan is invisible,” she added. “But you want my minerals at the same time. Terrible thing.”


Last modified on Friday, 31 May 2013 13:23