President Jacob Zuma Urges Pay-Freeze Among South African Leaders

President Jacob Zuma calls for South African miners to return to work, and urges top paid executives to take a pay-freeze in the upcoming year.

South Africa’s mining industry has been in a state of unrest for the past several months. Over 80,000 miners have left their posts since the strike began, and they are oftentimes met with violent retaliation from the government. This past Thursday when the Gold Fields’ miners returned to work, it seemed like a step in the right direction until a recent uproar at the Lonmin’s Marikana goldmine, the same plant where some 34 workers were murdered in August during a fatal encounter with the South African police force. Overall, South African industry has not seen such turmoil since the Apartheid era, which officially ended nearly two decades ago.

In light of the fragile state of affairs in South Africa right now, President Jacob Zuma has made his first official response to the strikes and the consequent violence. Last Thursday, President Zuma said, “We are agreed that violence and intimidation must come to an end; these have no role in our system and simply have a negative effect.” He went on to say that the CEOs, executive directors and top leaders in the private sector should agree to a pay freeze in the upcoming year to help ease the country’s economic crisis. Though the president was certainly well intentioned his critics chastise Zuma, saying he should lead by example and be the first among the wealthy to take a pay-cut himself. This would be in the fashion of Malawi President Joyce Banda, who recently took a huge 30% executive pay cut in order to help her country’s economy. Gold Fields’ employees returning to work is a positive turn in the South African mining crisis, but the fact remains that Standard and Poor’s has just reduced South Africa’s credit rating in light of the mining industry’s current crisis. Hopefully, the nation will continue to find reasonable and beneficial ways to deal with their present condition.

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Mauritius Eyes African Investment Push

As the economy of Mauritius grows, the country continually searches for ways to improve its economic relations with its close neighbors on the African continent.

According to the nation’s secretary for Foreign Affairs, Anund Neewoor, “The African continent is now regarded as the last and new frontier for business opportunities in the world. It has proven that it can deliver with a growth rate exceeding that of many countries including those in Europe and Asia. Therefore opportunities are boundless to invest on the continent”.

With this belief, Mauritius has been looking into deepening its ties with Mozambique by increasing its “cross border investments” as a result of Mozambique’s “unique investment opportunities”. Transportation, construction and agriculture are included in a list of Mozambique’s potential investment sectors. Existing close relations between the two countries, along with their participation in the South African Development Community, will make an easier “path for the Mauritian business community to take advantage of opportunities in Mozambique”.

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IMF Upgrades Botswana’s Growth Forecast

The IMF’s World Economic Outlook (WEO), released on 9 October 2012, projects that Botswana’s real GDP will grow by 3.8 per cent this year; this is an increase from April’s WEO, which predicted 3.3 per cent growth. The October WEO expects inflation in the range of 7.5 per cent and the 2012 current account balance to be a positive 3.9 per cent of GDP, reflecting strong exports of goods and services.

However, the WEO also reported several threats to Botswana’s continued economic growth. Through trade, the economy is strongly linked to South Africa, which provides over 70 per cent of the country’s goods. This is problematic for Botswana due to South Africa’s close ties with the crisis-ridden Euro area.

Furthermore, the IMF reported that the risk of higher food prices to net food importers like Botswana would erode savings the national and local levels. Finally, the IMF warned that a prolonged slowdown in China   – a major market for Botswana’s copper, nickel and coal – could adversely affect GDP and employment figures.

To avoid unnecessary damage to the domestic economy the IMF recommends that Botswana continue strengthening policy buffers and preparing contingency plans to deal with any economic downturn.

On a positive note the Pula Fund, one of the country’s key sources of protection from external market shocks, has made strong gains following its precipitous decline during the global recession, recovering from P43.5 billion at the end of 2009 to P55.6 billion in July 2012.


President of Cape Verde Welcomed to the State House

The President of the Republic of Cape Verde Jorge Carlos Fonseca was welcomed by Governor Deval Patrick to the Massachusetts State House on October 2nd 2012. The purpose of President Fonseca’s visit was to help raise awareness of civic engagement within the Cape Verdean community. Massachusetts is one of three stops on President’s Fonseca’s United States itinerary. He also plans on stopping in Providence, Rhode Island and Newark, New Jersey.

In 2011, more than approximately $570,800 goods and services were imported from Cape Verde and Massachusetts exported roughly $1.2 million in goods and services to Cape Verde. This growing economic relationship between Cape Verde and Massachusetts is part of the visit. Not only is there an economic relationship, but Massachusetts is also home to the largest population of Cape Verdeans in the United States; with approximately 45,000 Cape Verdeans living in Massachusetts.

This visit made it possible for both President Fonseca and Governor Patrick to stimulate further collaboration between Cape Verde and Massachusetts especially in innovation sectors and higher education institutions.


Malawi: President Joyce Banda Cuts Own Salary to Balance Budget

It has been reported that President Joyce Banda of Malawi has taken a voluntary pay cut of 30%, in order to align herself with the government’s austerity measures.

She has also confirmed that her government will sell the controversial presidential jet that was purchased by former President Mutharika, which she called “wasteful”.

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In addition to this budget cut, the government will also be cutting its forecast for economic growth of 4.3%, due to “contraction in some major sectors”. The projected 4.3% growth rate has been put aside after several major industries, such as agriculture, manufacturing, forestry, and fishing, experienced negative growth.

The country is still recovering from the disastrous policies of Mutharika, who alienated most of the nation’s international donors—an aid that previously comprised 40% of the national budget.

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The Link Between Food Shortage and Political Unrest

The former UN Secretary General has announced that food shortage was one of the triggers of the protests leading to the Arab Spring. He was speaking at the African Green Revolution Forum held during September 26 to 28 in Tanzania, at which, leaders developed concrete plans for the development of African agriculture to promote food security. At the forum leaders discussed the importance of food security as a top priority for governments in order to preserve order and stabilize the African economy. Since most of African farmland is underutilized, if African governments can focus on agriculture, they could feed a greater amount of people, create opportunities for employment, and create global food security. But it is important to understand that it is not only food shortage that leads to uprisings, but that combined with political unrest. Political stability and economic growth go hand in hand and it is for this reason that members of the East African Community are using this discussion as an opportunity to stress further integration. They see political environments as an existing trade barrier and believe that it would be much easier to attract investment if there was a common currency between the nations if the East African Community. They believe that people need to be able to invest without problems and that further integration would create stronger political trust between nations. By linking them economically, states would have greater interest in stabilizing the political environments in their partner countries. But I think what was most important about these discussions, was the realization by African leaders that they need to listen to the will of the people and support democratic rotations. Many acknowledged that democracy must work in Africa because if it does not, the cycle of economic hardship and political instability will only continue. These are all developments that we should watch for as Africa comes to age.


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Kenyan Forces Capture Last Major Shabab Stronghold in Somalia

On September 28, 2012 Kenyan military forces captures Kismayu, the last major stronghold of the Shabab militant group in Somalia. Kenyan military officials said that their troops staged a midnight amphibious assault to storm the beaches of Kismayu, a vital port for the Shabab.  After the attack, African Union peacekeepers urged all Kismayu militants to lay down their weapons and surrender.

The city of Kismayu has been key to the success of the Shabab because it has allowed the militants to bring in weapons and raise money for operations by imposing fees on all sorts of goods.  Kenya’s invasion of Somalia has been its most aggressive step towards protecting national security. The relentless chaos in Somalia has hindered Kenya’s fast-growing economy. The invasion on the 28th was a key step in the objective to secure a multibillion-dollar port on the Indian Ocean, not far from the Somali border.

The capture of the Shabab stronghold in Kismayu will benefit Kenya by reducing the threat to Kenya’s national security on the borders. The take down of this crucial city will also improve international security because it will weaken the Shabab’s ability to aid Al Qaeda.

Kenyan troops preparing for the Kismayu invasion