While global markets would hail a U.S.-China trade deal, fears are growing that the European Union could be the fall guy in any breakthrough, which would allow Donald Trump to turn his attention to German cars or French luxury wines. 



Investors thinking of chasing a rally on a trade accord through European trade proxies, such as Germany’s export-heavy DAX index or the continent’s luxury names, should probably think twice, analysts believe.



For trouble could come in a lot of different forms.



Alicia García-Herrero, Chief Economist at Natixis for Asia Pacific, and a researcher at the Bruegel think-tank, is among those who have warned that a deal “could cost Europe dearly” if China substitutes a large part of its European imports for U.S. goods in a bid to appease the Trump administration.



There is a lot at stake. European-listed firms expect 456 billion euros ($521 billion) in total revenue from China in 2019, with luxury brands and automakers the most exposed sectors, a Refinitiv analysis of company data shows.



Vincent Deluard, global macro strategist at INTL FCStone, said that in the case China and the United States fail to clinch a deal, Europe could be flooded with cheap Chinese goods.



“Europe stands to lose the most when the truce expires on March 1st as China would surely dump billions of discounted goods on the old continent,” Deluard wrote.



In 2017, China exported goods worth 374 billion euros to the EU and 505 billion dollars to the United States.



Another dire scenario sketched out by Deluard would be a bitter lose-lose for Europe and arguable win-win for Trump: “Imposing tariffs on European cars and reaching a deal with China could allow the Trump administration to claim two victories at the same time”.



Many investors fear the immediate relief of a China-U.S. deal could be swiftly followed by a bitter confrontation between the EU and its closest ally.



<h5 class="wp-block-heading">“WE ARE NEXT”</h5>



While Germany takes the lion’s share of the EU’s trade surplus with the United States, over 63 billion dollars in 2017, other European countries such as Ireland, Italy or France have a lot to lose if tariffs are imposed on European goods.



<figure class="wp-block-image"><a href="https://tmsnrt.rs/2SdAeeO" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://tmsnrt.rs/2SdAeeO" alt="Reuters Graphic"/></a></figure>



The diversity of their exports highlights how wide the impact would be.



A graphic from the Atlas of Economic Complexity, Center for International Development at Harvard University, shows how French exports in 2016 ranged from wines (3.80 percent) to gas turbines (10.95 percent) and medicines (6.08 percent).



<figure class="wp-block-image"><a href="https://tmsnrt.rs/2Sht7C0" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://tmsnrt.rs/2Sht7C0" alt="Reuters Graphic"/></a></figure>



&nbsp;Analysts trying to decipher the U.S. president’s strategy believe that a confrontation with the EU is a probable next step following the revamping of the North American Free Trade Agreement and his current efforts to slash the U.S. trade deficit with China from a record 375 billion dollars in 2017.



“We are next in the queue,” warns BNP Paribas’ chief economist William De Vijlder, adding that “the subject of the EU-U.S. trade negotiations has been under the radar up to recently but could resurface soon.”



Lombard Odier strategist Charles St-Arnaud believes a period of prolonged EU-U.S. tension, with daily incendiary headlines making European markets jittery, is a distinct possibility.



“What Trump tweeted about French wine, I can see the parallel with Canadian milk,” he said recalling the tense U.S. NAFTA negotiations with Canada.



On Nov. 13th, Trump complained that while France could easily export wines to the United States, U.S. winemakers’ access to the French market was restricted.



“Not fair, must change”, he said on Twitter.



World markets slip on China worries; dollar steady ahead of trade talks



<figure class="wp-block-image"><a href="https://tmsnrt.rs/2B75aUk" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://tmsnrt.rs/2B75aUk" alt="Reuters Graphic"/></a></figure>



St-Arnaud argues that the threat of a trade war with the United States could mean another grim year for European stocks, which have already suffered collateral damage from the trade spat between the world’s two biggest economies.



“A European underperformance is possible in 2019,” he believes.



If the Chinese negotiating team currently in Washington was to achieve significant progress, European stocks would get a boost, at least in the short-term.



“It is crucial for the world economy that this man-made uncertainty ceases,” said De Vijlder. An escalation would meanwhile sharpen the global growth downturn and hit bourses worldwide, according to a big Reuters poll of economists.



But while both emerging and European stock markets underperformed Wall Street during 2018 due to the trade stress endured by exporters, European shares remain very much less loved by global investors than their EM peers.



According to data provider EPFR, while emerging markets equity funds have recorded 15 straight weeks of inflows, European funds saw outflows for 45 of the past 46 weeks.



<h4 class="wp-block-heading">“TAKE THE WIND OUT TRUMP’S SAIL”</h4>



With a concerns about Brexit, unrest in France, Italy’s populist government and May’s EU elections, the big European benchmarks are seen by many foreign investors as “uninvestable”, especially as growth slows.



“It’s pretty clear that during the course of conversation with any client, political risk premium, political uncertainty will come into the conversation,” said Andrew Milligan, head of strategy at Aberdeen Investments.



Joerg Kraemer, Commerzbank’s chief economist, said a confrontation with Washington could be very damaging, notably for the German car industry and that the European Commission would be wise to make a pre-emptive move.



“Europe needs to take the wind out Trump’s sails and move first,” he told Reuters, calling for the EU to scrap its 10 percent tariff on U.S. cars to defuse tensions. -Reuters



-Julien Ponthus and Ritvik Carvalho

Fears Of Trade War With China Goes As Trump Continues Aggressive Rhetoric

Trade Wars: We’re Next, European Investors Fear

Traders will be glad to see the back of 2018. Nearly $7 trillion has been wiped off world stocks, emerging markets have been trampled flat by a charging dollar and even gold and U.S. government bonds have lost money. 



A grisly combination of U.S.-China trade tensions, central banks turning off the money taps and cooling growth in former hot spots has wiped 10 percent off MSCI’s 47-country world stocks index .MIWD00000PUS — its first double-digit loss in any year since the 2008 global financial crisis.



Many places have fared far worse. Top Chinese shares&nbsp;<a href="https://www.reuters.com/finance/markets/index?symbol=.CSI300">.CSI300</a>&nbsp;have fallen 25 percent into &#8216;bear&#8217; territory, export bellwether Germany&nbsp;<a href="https://www.reuters.com/finance/markets/index?symbol=.GDAXI">.GDAXI</a>&nbsp;has shed 16 percent, and Turkey and Argentina have led emerging markets losses, down 45 and 50 percent respectively.



Add in a wild 35 percent plunge in oil prices LCOc1 since September, rises in Italian, Greek and now French borrowing costs that show euro zone worries remain alive, and a full scale cryptocurrency collapse, and it has been unequivocally brutal.



“After 10 years of low interest rates and quantitative easing I think we have to understand how some of this leverage in the market can unwind,” said Allianz Global Investors fund manager and global strategist Neil Dwane.



“What was a virtuous circle on the way up can become a vicious one on the way down.”



A fair bit of the year’s pain has stemmed from swift move up in U.S. interest rates and a pumped-up dollar .DXY, which has had its best year in three years.



As a result, the euro&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=EUR&amp;destCurr=USD">EUR=</a>, pound&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=GBP&amp;destCurr=USD">GBP=</a>, Canadian and Aussie dollars&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=CAD&amp;destCurr=USD">CAD=</a><a href="https://www.reuters.com/finance/currencies/quote?srcCurr=AUD&amp;destCurr=USD">AUD=</a>&nbsp;and Swedish crown&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=SEK&amp;destCurr=USD">SEK=</a>&nbsp;have all lost between 5 and 10 percent and though the Japanese yen&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=JPY&amp;destCurr=USD">JPY=</a>&nbsp;comes out largely unscathed, emerging markets certainly haven&#8217;t.



Argentina&#8217;s peso&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=ARS&amp;destCurr=USD">ARS=</a>&nbsp;and Turkey&#8217;s lira&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=TRY&amp;destCurr=USD">TRY=</a>&nbsp;have slumped 50 and 30 percent, while India&#8217;s rupee&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=IDR&amp;destCurr=USD">IDR=</a>, South Africa&#8217;s rand&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=ZAR&amp;destCurr=USD">ZAR=</a>, Brazil&#8217;s real&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=BRL&amp;destCurr=USD">BRL=</a>&nbsp;and Russia&#8217;s rouble&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=RUB&amp;destCurr=USD">RUB=</a>&nbsp;are all down between 10 to 15 percent. China&#8217;s yuan CNYUSD=R is in the red for a fourth year in five.



Emerging market shares meanwhile have hemorrhaged almost 17 percent .MSCIEF and JP Morgan&#8217;s EM local currency bond index has lost nearly 8 percent.&nbsp;<a href="http://tmsnrt.rs/2egbfVh">tmsnrt.rs/2egbfVh</a>



Dalton Investments emerging market portfolio manager Pedro Zevallos said the big falls meant many markets, including China were now cheap. “But right now it honestly feels like catching a falling knife.”



“And my concern going into next year is that the dollar will continue to strengthen.”



<h5 class="wp-block-heading">TECH PROBLEMS</h5>



As well as the escalation in global trade tensions this year there has been the realization among investors that the big central banks aren’t thinking about stimulating the economy anymore — they’re trying to rebuild their arsenals in case of recession.



But the year hasn’t been a complete write-off everywhere.



While the S&amp;P 500 and Dow Wall Street bellwethers are down the most since 2008, at around 5 percent their losses aren’t too bad, while the tech-heavy Nasdaq .NDX is clinging on for its 10th consecutive year of gains.



The FAANGs (Facebook, Amazon, Apple, Netflix and Google) have had rollercoaster year. As a group, they are ending 2018 worth roughly $2.8 trillion — more or less where they started it, but down some $800 billion or 24 percent from their late August peak.



There has been a big parting of the ways too. While Amazon (<a href="https://www.reuters.com/finance/stocks/overview?symbol=AMZN.O">AMZN.O</a>) and Netflix (<a href="https://www.reuters.com/finance/stocks/overview?symbol=NFLX.O">NFLX.O</a>) have surged 33 and 45 percent, repeated scandals over data misuse and fake news propagation have slashed 19 percent off Facebook (<a href="https://www.reuters.com/finance/stocks/overview?symbol=FB.O">FB.O</a>) shares.



Asia, Europe stocks slide after Fed rate hike



Asia’s equivalent BAT group, made up of Badia (<a href="https://www.reuters.com/finance/stocks/overview?symbol=600865.SS">600865.SS</a>), Alibaba (<a href="https://www.reuters.com/finance/stocks/overview?symbol=BABA.K">BABA.K</a>) and Tencent (<a href="https://www.reuters.com/finance/stocks/overview?symbol=0700.HK">0700.HK</a>), have all down somewhere between 18 and 25 percent.



<h5 class="wp-block-heading">CRYPTOCOLLAPSE</h5>



With China also the biggest consumer of industrial commodities, its misfiring economy has contributed to the respective 17 and 23 percent declines in the price of copper CMCU3 and zinc CMZN3, used in things like pipes and galvanized steel.



The big cryptocollapse has seen Bitcoin&nbsp;<a href="https://www.reuters.com/finance/currencies/quote?srcCurr=BTC&amp;destCurr=USD">BTC=BTSP</a>&nbsp;crash 72 percent. There are now over 2,000 other digital currencies in circulation but their value has plummeted to $128 billion from over $800 billion in January.



But even traditional safe-havens have failed to provide much in the way of protection.



Another four U.S. interest hikes have cost Treasury bond holders US10YT=RR nearly 2 percent despite a better last few months and the euro’s fall puts German Bunds down 2.3 percent in dollar terms. Gold is 4 percent less precious.



Italy’s government bonds meanwhile have plunged 9 percent after an anti-establishment government took charge in Rome and the European Central Bank confirmed its huge bond-buying program will end this year.



“The question as we look into 2019 and 2020 is how much worse the trade/tech cold war and Brexit get,” Allianz’s Dwayne said. “That could tells us that maybe we are not going to see a traditional downturn but a significant one.” -Reuters



&#8211; Marc Jones

gettyimages-645015088-170667a

Markets suffer worst year since global financial crisis

A man called out numbers against the murky darkness of the Libyan night: “400, 500, 600, 650.” These were bids in Libyan dinars during a slave auction. <a href="http://edition.cnn.com/2017/11/14/africa/libya-migrant-auctions/index.html" target="_blank" rel="noopener">Video footage</a> of these scenes, aired in mid-November by CNN, thrust concerns about the conditions facing migrants at Europe’s borders back into the spotlight.
In response, the EU <a href="https://eeas.europa.eu/headquarters/headquarters-Homepage/35895/joint-press-release-high-representative-vice-president-federica-mogherini-and-president_en" target="_blank" rel="noopener">called for</a> “swift action”, and the French president, Emmanuel Macron, <a href="http://www.telegraph.co.uk/news/2017/11/29/europe-promises-44bn-marshall-plan-africa-migrant-slavery-libya/" target="_blank" rel="noopener">announced a plan</a> to launch “concrete military action” against the perpetrators. The Nigerian government also said it had begun to <a href="https://www.reuters.com/article/us-europe-migrants-libya-nigeria/nigeria-flies-migrants-home-from-libya-after-slavery-scare-idUSKBN1DT2VV" target="_blank" rel="noopener">bring home</a> some of its citizens stranded in Libya.
Efforts to enable people to escape from situations of slavery, violence and exploitation in Libya are certainly welcome. But they will need to go beyond the short-term perspective that so often accompanies responses to proclamations of crisis. And these new efforts will reek of hypocrisy if they do not also recognise the relationship between existing migration control policies and the vulnerability of migrants using routes into and through Libya.
The story of young men sold as slaves in Libya was the focus of debates at the <a href="http://www.aljazeera.com/news/2017/11/unsc-condemns-reported-slave-trading-libya-171129065445791.html" target="_blank" rel="noopener">UN Security Council</a> and topped the agenda at a <a href="http://www.consilium.europa.eu/en/meetings/international-summit/2017/11/29-30/" target="_blank" rel="noopener">major summit of European and African leaders</a>. Slavery and other abuses are an “abomination” that “can no longer be ignored”, <a href="https://www.un.org/press/en/2017/sc13094.doc.htm" target="_blank" rel="noopener">stated Filippo Grandi</a>, the UN’s high commissioner for refugees.
&#8220;I was arrested and imprisoned in southern Libya… I was sold to a slave trader, along with other Eritreans, Somalis and Nigerians. This person took us to a farm, where we could not leave except to go to work at a construction site and return. We were always guarded by armed people.&#8221;
But stories of forced labour, exploitation and the buying and selling of migrants are not particularly new. I heard them myself in 2015 when I was part of <a href="https://policypress.co.uk/unravelling-europes-migration-crisis" target="_blank" rel="noopener">a research team</a> which carried out interviews with nearly 200 people who had departed from Libya by boat, towards Italy and Malta.I was arrested and imprisoned in southern Libya … I was sold to a slave trader, along with other Eritreans, Somalis and Nigerians. This person took us to a farm, where we could not leave except to go to work at a construction site and return. We were always guarded by armed people.
These words, from a young Malian man, were mirrored by many others who spoke of being held captive, put into forced work or bought and sold. Some were set free once they had gathered enough ransom money, wired over to them by family and friends. Others might be released when their labour was no longer required or if they managed, somehow, to escape. But it was also not unusual to hear people being beaten and even see others die at the hands of their “owners”.
Our project has not been the only one to report such findings. In 2016, the International Organisation for Migration (IOM) <a href="http://unitedkingdom.iom.int/abuse-exploitation-and-trafficking-iom-reveals-data-scale-danger-and-risks-migrants-face" target="_blank" rel="noopener">found that</a> 71% of migrants who crossed the central Mediterranean route from North Africa to Europe had experienced exploitation, particularly kidnapping, forced labour, carrying out work without being paid and being kept at locations against their will. In February 2017, <a href="https://www.sky.com/watch/title/programme/ca063fef-330c-4245-b948-1ea2c8a56570" target="_blank" rel="noopener">a Sky documentary</a> described Libya as “hell” for migrants and a <a href="https://www.google.co.uk/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=11&amp;ved=0ahUKEwj8svTR7erXAhVBLMAKHc3JABoQFghYMAo&amp;url=http%3A%2F%2Fglobalinitiative.net%2Fwp-content%2Fuploads%2F2017%2F03%2Fglobal-initiative-human-conveyor-belt-human-smuggling-in-libya-march-2017.pdf&amp;usg=AOvVaw05u6HKwEmxNFbm4kHJhYde" target="_blank" rel="noopener">study of trafficking and smuggling there</a> referred to “the extortion economy and new slave trade”.
<h2>European complicity</h2>
Public figures are right to condemn people being sold as slaves in Libya. But their concern has an air of insincerity when they have known about it for years. The EU’s high representative for foreign affairs, Federica Mogherini, <a href="https://eeas.europa.eu/headquarters/headquarters-Homepage/35895/joint-press-release-high-representative-vice-president-federica-mogherini-and-president_en" target="_blank" rel="noopener">expressed her</a> “total condemnation of these despicable acts” but also <a href="http://www.lastampa.it/2017/11/29/esteri/summit-ueafrica-mogherini-i-paesi-africani-facciano-la-loro-parte-riprendendosi-i-migranti-QFifnZX3DQzQcR64Fu5daL/pagina.html" target="_blank" rel="noopener">stated</a> that “this is not something that began one month ago. Everybody has known about it for years”.
For officials to say now that violence, exploitation and slavery can “no longer be ignored” belies the fact that these issues were downplayed and pushed aside as the EU pursued collaboration with the Libyan authorities to control migration.
The primary objective of European approaches has instead been to stem the flow of people departing Libya by boat. Since the declaration of a migrant crisis back in 2015, the EU has given increasing amounts of <a href="http://europa.eu/rapid/press-release_IP-17-2187_en.htm" target="_blank" rel="noopener">funding</a> and <a href="https://www.theguardian.com/world/2017/aug/11/number-of-migrants-arriving-in-italy-from-libya-falls-by-half-in-july" target="_blank" rel="noopener">training</a> to the Libyan coastguard and to detention centres to keep migrants on Libyan soil.
In the summer of 2017, an emboldened Libyan coastguard then made <a href="https://www.theguardian.com/world/2017/aug/12/medical-rescue-ship-suspends-work-after-alleged-threats-by-libyan-coastguard" target="_blank" rel="noopener">threats of violence</a> to international non-governmental organisations (NGOs) engaged in search and rescue missions at sea. Soon after, <a href="https://www.thetimes.co.uk/article/libyan-militia-chief-admits-deal-with-tripoli-to-stem-migrant-flow-ahmed-dabbashi-brigade-migrant-crisis-italy-538lwtgf5" target="_blank" rel="noopener">an armed militia west of Tripoli</a> with backing from the Libyan authorities – who are themselves supported by Italian and EU authorities – stepped in to intercept boats and prevent people leaving towards Italy.
These policies to stop boats arriving on European shores have had significant implications for the conditions of migrants in Libya. Many of the people we interviewed told us that they saw boats to Europe as the only way to flee. Now, once they are pushed back to Libya, they are held in detention centres, many of which have been <a href="http://www.msf.org/en/article/libya-arbitrary-detention-refugees-asylum-seekers-and-migrants-must-stop" target="_blank" rel="noopener">criticised by international observers</a> as overcrowded, unsanitary places where migrants are exploited.
Research reports <a href="https://www.google.co.uk/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;uact=8&amp;ved=0ahUKEwix-NuzgOvXAhVoCcAKHSygDxQQFggpMAA&amp;url=http%3A%2F%2Fglobalinitiative.net%2Freport-the-human-conveyor-belt-trends-in-human-trafficking-and-smuggling-in-post-revolution-libya%2F&amp;usg=AOvVaw0csii2EpwQhapmsT-Le4WW" target="_blank" rel="noopener">point to</a> “abundant evidence” which shows that “detention facilities in Libya are the site of sustained criminal activity, as recruitment grounds for smuggling activity but also processing centres for ransom extraction and slavery.” Another report by the NGO Refugees International <a href="https://www.refugeesinternational.org/reports/2017/libya" target="_blank" rel="noopener">noted</a> how often “in Libya the policeman is a smuggler, and the smuggler is a policeman”. Despite this, just a few months ago <a href="http://www.bbc.co.uk/news/world-europe-41071796" target="_blank" rel="noopener">Macron claimed</a> that Libya could be an appropriate place to process asylum requests.
The containment of migrants in Libya is therefore likely to be reinforcing the very situation that Europe’s leaders appear to be so angry about now. Médecins Sans Frontières <a href="http://www.msf.org/en/article/libya-open-letter-european-governments-are-feeding-business-suffering" target="_blank" rel="noopener">described it</a> as “feeding the business of suffering”.
<h2>Moving beyond a crisis</h2>
European approaches to migration across the Mediterranean have repeatedly been shaped by urgent attempts to address <a href="https://theconversation.com/humanitarian-emergency-is-being-used-to-justify-dangerous-measures-to-stop-migration-40734" target="_blank" rel="noopener">sudden crises</a>. But the situation in Libya cannot easily be addressed by such a short-term response. People smuggling has been a <a href="http://www.ecfr.eu/publications/summary/libyas_migrant_smuggling_highway_lessons_for_europe5002" target="_blank" rel="noopener">thriving economic sector for years</a>. The profits from smuggling, exploitation and now slavery provide important funds for different groups around the country. <a href="http://globalinitiative.net/report-the-human-conveyor-belt-trends-in-human-trafficking-and-smuggling-in-post-revolution-libya/" target="_blank" rel="noopener">One report describes</a> migrants as “simply another commodity to be exploited” by the various armed groups vying to control parts of Libyan territory.
An important contribution to finding a longer term solution could come from a newly announced “<a href="http://www.unhcr.org/uk/news/press/2017/11/5a1edc7c4/unhcr-welcomes-libyas-transit-facility-expedite-third-country-solutions.html" target="_blank" rel="noopener">transit and departure facility</a>” in Tripoli providing opportunities for people to escape from Libya. They would be resettled elsewhere, transferred to UNHCR facilities in other countries or returned to their country of origin. But so far there are only 10,500 places available – far below the number of places required – and this is little more than the nearly 9,000 returns <a href="https://www.iom.int/sitreps/libya-voluntary-humanitarian-return-vhr-assistance-reintegration-support-stranded-migrants-4" target="_blank" rel="noopener">already carried out</a> by the IOM in 2017.
<img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/88589/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" />After a decade of repeatedly declaring migrant crises and emergencies at their borders, it is time the EU took a broader, longer-term approach. This has to recognise the structural relationship between policies of border control, dynamics of migration and patterns of migrant vulnerability and exploitation. Intensifying border controls without addressing the reasons why people move or providing alternatives is likely to reinforce the dangers that they face.
&#8211; Written by <a href="https://theconversation.com/profiles/simon-mcmahon-161290" target="_blank" rel="noopener">Simon McMahon</a>, Research Fellow, <a href="http://theconversation.com/institutions/coventry-university-1346" target="_blank" rel="noopener">Coventry</a><a href="http://theconversation.com/institutions/coventry-university-1346" target="_blank" rel="noopener"> Un</a><a href="http://theconversation.com/institutions/coventry-university-1346" target="_blank" rel="noopener">iversity</a>
This article was originally published on <a href="http://theconversation.com" target="_blank" rel="noopener">The Conversation</a>. Read the <a href="https://theconversation.com/slave-auctions-in-libya-are-the-latest-evidence-of-a-reality-for-migrants-the-eu-prefers-to-ignore-88589" target="_blank" rel="noopener">original article</a>.

Slave auctions in Libya are the latest evidence of a reality for migrants the EU prefers to ignore

Africa is charting a new path towards a single continental market – and it’s going to be an economic revolution.
Nigeria’s President Muhammadu Buhari recently drew the world’s attention to the anticipated single market during a visit to Ankara where he said, “In Africa, we are on the threshold of finalizing negotiations to establish the first ever single market for trade in goods and services on our continent, in the Continental Free Trade Area for Africa.”
What is the Continental Free Trade Area (CFTA) for Africa and how will a single market unleash Africa’s economic might?
According to the African Union, the CFTA will create a single market, which enables the free movement of goods and services, businesspersons and investments within 54 African countries with 1.2 billion people and a combined GDP of over $3.5 trillion. The agenda is extended to broaden intra-African trade, and accelerate regional and continental integration processes.
Africa has the least percentage (18%) of intraregional trade, lagging far behind the 70% in Europe, 55% in North America, 45% in Asia, and 35% in Latin America. The implications are nothing short of jeopardy. However, analysts state that Africa is marching forward, citing the CFTA, among other developments, as a remarkable indication.
An <a href="https://www.uneca.org/sites/default/files/PublicationFiles/era2015_eng_fin.pdf" target="_blank" rel="noopener">estimate</a> by the United Nations Economic Commission for Africa notes, “The CFTA could increase trade between African countries by as much as $35 billion, an increase of more than 50% from current levels.”
The CFTA will also make Africa the <a href="https://www.cnbcafrica.com/zdnl-mc/2017/08/14/africa-soon-largest-free-trade-area-world/" target="_blank" rel="noopener">world’s largest free-trade area</a>.
Economic development is impossible without trade. It is a missed opportunity that African states do not trade enough with themselves.
As much as the CFTA will disrupt demand and supply barriers, a single market will help align trade policies, regulations and institutions of all African countries to promote continental trade that will benefit businesses, consumers and governments. This will lead to structural transformation, industrial development, diversification, productivity boost, and new wealth that will give Africa a competitive edge.
<a href="http://www.forbesafrica.com/investment-guide/2017/10/30/west-africa-less-attractive-investors/" target="_blank" rel="noopener">READ MORE: Why Is West Africa Less Attractive To Investors?</a>
“The single market for Africa policy can push regional trade levels from up from 15% to 25% within a decade and this will in turn significantly increase and strengthen the continent’s annual economic growth, create wealth more inclusively and reduce poverty,” says Oby Ezekwesili, the former Vice President of Africa at the World Bank.
Africa’s aviation sector contributes around $72.5 billion in GDP and creates more than 6.8 million jobs. This is despite the challenges that abound in Africa’s 54 countries, dealing with 54 different civil aviation authorities and 54 sets of rules relating to travel, trade and tourism.
Never mind the ease of doing business, it can be a nightmare trying to travel to another African country with all the red tape. Imagine the massive gains if all 54 sets of rules were collapsed into one, dealing with only one regulatory framework and being able to move goods and services in one market.
“Regulation, or more accurately, de-regulation, has the opportunity to turbo-charge African aviation, through improved market access across the continent,” says Segun Demuren, Managing Director and CEO of EAN Aviation.
“The immediate impact in just 12 out of 54 key markets across Africa would provide a potential 5 million extra passengers a year with the opportunity to travel and trade and create an additional 155,000 jobs and potentially increase the GDP of those 12 countries by an additional $1.3 billion. That’s just a quarter of the countries; imagine the impact across the continent,” adds Demuren.
<a href="http://www.forbesafrica.com/homepage/2017/09/06/china-really-helping-africa/" target="_blank" rel="noopener">READ MORE: Is China Really Helping Africa?</a>
One of the key problems hindering intra-African trade is the tariff barrier. It makes trade extremely difficult and raises the price of imported goods as well as transaction costs.
To jump-start Africa’s economic potential, a tariff reduction or total elimination of custom duties levied on imported goods from within the continent is required.
“The CFTA will create a more stable trade regime, continental market access, huge increase in investment rate, and trade liberalization – all which are strong catalysts for economic prosperity and sustainable development,” says Benedict Peters, Founder and CEO of Aiteo Group.
With a single market African economies will be on the move. &#8211; Written by <a href="https://twitter.com/akorive001" target="_blank" rel="noopener">Shakir Akorede</a>, writer, agenda contributor to the World Economic Forum, and founder of <a href="http://501words.net/" target="_blank" rel="noopener">501Words</a>

Business In Africa Is An Art Not Science

Single Market A Windfall For Africa’s Economy

As Nigeria continues to grapple with its worst recession, two pressing concerns revolve around its struggle to diversify – the state of the local manufacturing industry and the level of government’s commitment towards industrialization.
Nigeria is sub-Saharan Africa’s largest economy which boggles my mind when I consider the abject decline in the real GDP, income, employment, manufacturing, and retail sales.
The Nigerian economy is chiefly governed by oil and natural gas. While the oil sector provides almost 30% of the GDP and accounts for 90% of the total export capacity, the manufacturing sector provides around just 4%.
The sector is undergoing industrial collapse. The Manufacturers Association of Nigeria (MAN) reported that 272 companies shut down in 2016, 50 of those were manufacturing companies. Other reports claim that more than 1,500 of the 2,500 registered manufacturing companies folded up while millions of employees have lost their jobs.
At the forefront of this decline is Nigeria’s reliance on oil and the failure to make hay while the sun was shining. This focus on oil derailed Nigeria’s progress to becoming an industrialized nation. The government’s recklessness is to blame for the industrial failure, such as power problems, infrastructural deficit, economic mismanagement, taxation discrepancies, policy uncertainty, weak investor confidence, restriction of foreign capital inflows, affixation to irrational importation, and, notably, the low income of consumers.
As commodity prices plummeted, the manufacturing sector has impressively emerged. Despite challenges, the huge demography and being the largest African market makes Nigeria ripe for investment. The United Nations had projected that Nigeria’s population will rise to 240 million by 2050. Also, Renaissance Capital and Frontier Advisory forecast that the country’s economy will grow to $1 trillion by 2025. These are signals of the potential of industrialization.
All that is needed to harness this potential is the willingness of the government to act. A robust manufacturing sector and a willful program for industrialization are equally crucial for the dream to be realized.
It is, therefore, unsurprising that the present government is jumping on the industrial horse to achieve economic reform that will replace the oil and gas with manufacturing and agriculture.
“My engagements with the organized and informal sectors has been mutually affirmative that we should work harder in partnership and disagree less, grow confidence with greater transparency by government, and accelerate actions rather than words, to build our capacities and secure development,” said Nigeria’s Minister of Industry, Trade and Investment, Okechukwu Enelamah, at the Nigeria &amp; Entrepreneurship Summit &amp; Honors in December.
Since then, however, not much has changed. Private businesses are still hindered by unfavorable laws. To this end, the National Assembly is working on legislative economic reform – with 30 bills, including the Petroleum Industrial Bill, Infrastructure Investment Protection and Regulation Bill, Railway Sector Reform Bill, and Tax and Revenue Law/Bill. If successful, such a revolution would be a shot in the arm for industrialization.
The hopes of entrepreneurs and local manufacturers are also bolstered by the Made in Nigeria campaign, which is receiving encouraging support from top to bottom. President Muhammadu Buhari has reassured Nigerians that his administration is working on enhancing the support of locally made goods as well as improving access to finance for small and medium-sized enterprises across the country.
Despite enduring hardship at the moment, Nigeria can be reassured that greater opportunities lie ahead.

Nigeria Needs Industrialization now

The long delayed signing of a new trade agreement with the European Union further exposes the chaotic state of integration within the East African Community (EAC) bloc.
The pact, known as the Economic Partnership Agreement (EPA), was originally set for ratification on October 1, 2016, but, five months later, that is still to happen.
The impasse has split the EAC bloc. While Kenya and Rwanda signed the agreement in September last year, Tanzania, Uganda and Burundi are yet to do so, citing the need for more time to analyse the deal.
The stance taken by Tanzania, Uganda and Burundi means that the pacts signed by Kenya and Rwanda are inconsequential – a new agreement with the EU must be endorsed as a bloc.
Tanzania’s President John Magufuli and his Uganda counterpart l have remained vocal against a rushed deal with EU, even as Kenya’s frustrations deepened given the risks of not concluding a deal with Europe.
“It is better if the signing of the deal is shelved until further consultations are made,” Museveni told a media briefing while on a state visit in Tanzania at the end of February.
Kenya stands to lose the most if the deal falls through. The other EAC member states – Tanzania, Burundi, Uganda and Rwanda – would continue to get duty- and quota-free access under the EU’s Everything But Arms (EBA) initiative, since they are classified as the least developed countries.
This whole quandary shows how shallow the EAC integration has been, despite the bloc attaining the critical customs union status way back in 2005 and a common market in 2011. Integration goes beyond just having such structures; other aspects, such as trust and solidarity, are critical to moving things forward.
A review of recent key events in East Africa reveals massive levels of negative rivalry and mistrust which doesn’t augur well for the bloc. Things have not been well since 2013 when Tanzania fell out with Kenya, Rwanda and Uganda following the formation of their short-lived ‘coalition of the willing’, ostensibly to push for faster integration.
The now collapsed initiative was a terrible diplomatic mistake by Uganda, Rwanda and Kenya because it weakened the spirit of consensus and teamwork in the bloc. Since then, the chaos and mistrust triggered by this wild experiment has been evident in key issues involving the bloc. For instance, a new infrastructure and energy partnership between Tanzania and Uganda has left Kenya frothing at the mouth, especially after Kampala pulled out of an initial deal to build a joint crude pipeline with Kenya in favor of a route through Tanzania.
Kenya clearly feels slighted by the latest dalliance between Dar es Salaam and Kampala as was shown during the recently held election of a new chairperson of the African Union Commission. When Kenya’s candidate in the elections, Amina Mohamed, was defeated, Nairobi promptly pointed accusing fingers at Tanzania and Uganda for allegedly sabotaging its efforts to clinch the position it had highly campaigned for. Both Tanzania and Uganda denied the claims.
“Uganda wishes to state categorically that our support to the candidature of Amina before and during elections was unequivocal. Uganda wishes to reassure the government and the people of Kenya, and Amina in particular, that we remain a reliable ally and partner given our warm and close relations and our commitment to the EAC integration,” Uganda’s Foreign Affairs ministry said in response to Kenya.
Tackling the mistrust and clandestine power rivalry will be critical in putting the EAC back on a clear path to full integration which would help address challenges such as those being experienced in the elusive EPA deal. The big brother syndrome has no place in regional integration and all partners must inculcate a spirit of comradeship to excel.
Kenya and Rwanda must not been seen to be bulldozing the rest to sign a pact with Europe. Their decision to sign the deal ahead of the rest sent the wrong signal to other EAC partners who read mischief in the whole process.
Concluding the deal with Europe is critical for the EAC as it would help settle anxiety among investors. Business loathes a vacuum and efforts must be made to clear all hurdles to find a deal that would be favorable to all.

The Elusive Trade Deal  that split east africa

It was not narcissism that saw Papa Kwesi Nduom name his company after himself. It was that desire to put his reputation on the line when it came to business; that strong belief, born of a brass neck and a steel backbone, to be accountable for his work.
Today, Groupe Nduom sits atop of a business made up of tourism, investment advisory and management, financial services, technology, media, management consulting, cross border trade and sports.
It is a modus operandi born in Nduom 47 years ago, when the first opportunity knocked.
“There are certain stages in life that you get to know things. I had the privilege of getting a scholarship and spending one year in the United States in 1970. Prior to that, I wanted to be a medical doctor. I went to the United States and was introduced to other things. Through that I got to know that you could also be in business. In just that one year I took so many different classes outside medicine which broadened my view in life and all sorts of opportunities became possible,” he says.
His uncanny ability to spot opportunities led to the formation of a business empire, based in Ghana, with 60 companies in its portfolio. When we meet at the Coconut Grove Hotel, on a warm Saturday afternoon in Accra, Nduom has a spring in his step, a broad smile and an energetic “good afternoon” for everyone as he ushers us into his inner office in the sprawling resort.
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<h5 id="eow-description">The final episode of the first season of My Worst Day with Peace Hyde features Ghanaian serial entrepreneur Dr. Papa Kwesi Nduom &#8211; who shares his memories of the day he lost $2 million worth of business that threatened to end his consultancy business.</h5>
At 64, Nduom’s attention to detail is slightly intimidating; his demeanor is composed and authoritative. His gaze is attentive as he reminds us politely he is flying out later that evening to the United States to complete the acquisition of a new bank. Nduom’s intuitive timing has served him well over the years. That skill was born of the transition from medicine to business. 
“I ended up at the University of Wisconsin and that is where I did the Bachelor of Economics and PhD in service delivery systems. It is there that I actually went off course. I wanted to be a medical doctor and I took all the admission tests and everything and got to a point where I needed a lot of money to continue if I wanted to get into a high-quality medical school. But I found out that I could take some different courses and take a degree in economics and get to work quickly, so I took that path so I could finish and get to work and make some money.”
“I had to fend for myself. Some of the things I do to make a living today, like finding opportunities, comes from the fact that I had to do those things myself and scrape along to survive. I had to pay my own fees, pay for my rent and go to school at the same time,” says Nduom.
In those lean days, he packed canned beans in a factory; toiled for two weeks on a construction site, in the cold winter; and spent long hours as a parking lot attendant.
“I would do the third shift at work which was at midnight and when you come back there would just be enough time to take a shower and go to school. If they said a semester was 15 credits, I wanted to take 20 because I calculated how many credits I needed to take to get out of school early because it was money I had to pay.”
The search for new opportunities to make money taught Nduom two key business principles: the first was how to negotiate.
“One job I really liked was working second shift at a meat factory. It paid well per hour and you learned how to cut meat, and you were also able to take some of the off cuts home. So you had food. So the people I shared my apartment with at that time were two Somalis who loved meat, so I used the meat to trade for other necessities which I couldn’t afford myself.”
Second lesson: the power of perseverance.
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“Right after university, my first job was with Northwestern Mutual Life Insurance in Milwaukee. I went there and applied with my Ghanaian name and the lady looked at the name Papa Kwesi Nduom and started asking all sorts of other questions. I got to a point where I couldn’t answer all the questions so I failed the interview.”
“I went back to the university and I carried a different identification because my passport had two names in it. So I went and changed my clothes and came back as Joseph Hubster Yorke Junior, which was my other name. The lady didn’t notice that it was the same person. So now, with my new name, she asked me completely different questions, which I answered and she gave me the job and I became a life insurance underwriter,” says Nduom.
Then, Nduom worked at the Blue Cross Blue Shield of Wisconsin, a health insurance company, and then the Milwaukee Metropolitan Sewage District, a county government institution. Here a rare life-changing experience, in an unlikely place, unfolded through a chance meeting.
“You never know where and when opportunity will make itself available so you should always be ready. I was on the fourth floor of my work building but on the seventh floor was a nice men’s room, which was big and had marble floors, which was really nice. So I would go and use the men’s room on that floor instead of going to the one on the fourth floor,” says Nduom.
“One day I was washing my hands and a guy comes also washing his hands and we strike a conversation. He asked if I would be interested in a job opportunity. He happened to be a recruiter who worked in the building and was looking for people that Touche Ross might be interested in. So we spoke and he set up the interview for me with the partner at Touche Ross and that is how I got the job. It was just an accidental meeting in the men’s room.”
Touche Ross later became Deloitte Touche, one of the ‘Big Four’ accounting firms with revenues of $36.8 billion, according to research company, Gartner. Nduom worked his way up to become a partner in the firm where he would learn his most important business skill, the art of selling.
“Every year they had a book that had all the partners in the US and in that book every partner’s production was there. In it were also the points that you earn as a bonus, so you see the entire top performing partners. So you knew where you were and what your business was supposed to do. So it is important for you to deliver. So you learn how to sell, you learn how to provide service and you learn how to satisfy the need of your customer.”
Nduom became a partner at Deloitte in 1986; with that the pressure to deliver increased. Ronald Reagan was president, Wall Street was booming and business was opening up around the world. Deloitte was in the thick of it.
“When you become a partner in the firm, you are a shareholder in the firm and basically you work for your own account. What you earn is strictly based on the business you bring in. The minimum amount you had to bring in terms of consulting fees was $1 million a year.”
Nduom moved to Washington when the firm merged the Milwaukee and Chicago offices. That put him in contact with the international division at Deloitte; another opportunity Nduom quickly took advantage of.
<img loading="lazy" decoding="async" class="size-large wp-image-28154 aligncenter" src="https://www.forbesafrica.com/wp-content/uploads/2017/05/FORBES-AFRICA-Papa-Kwesi-1159-1024x683.jpg" alt="" width="1024" height="683" srcset="https://cms.forbesafrica.com/wp-content/uploads/2017/05/FORBES-AFRICA-Papa-Kwesi-1159-1024x683.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/FORBES-AFRICA-Papa-Kwesi-1159-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/FORBES-AFRICA-Papa-Kwesi-1159-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/FORBES-AFRICA-Papa-Kwesi-1159-768x512.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/FORBES-AFRICA-Papa-Kwesi-1159.jpg 1023w" sizes="(max-width: 1024px) 100vw, 1024px" />
“One day, over Thanksgiving dinner I told my wife that I wanted to go to Ghana to see what it was like to work there because I had never worked in Ghana before. So I bought a ticket, came to Ghana and I wanted to spend about a month or so to look around,” he says.
It was this conviction to understand the Ghanaian market that lent Nduom his next big entrepreneurial break. Initially, he sought to offer his services for free to get a feel for the consulting market in Ghana. At the time, Deloitte had representation, with Haskins &amp; Sells, in Accra as well as an association with Akintola Williams in Nigeria. Nduom looked for another opportunity and his instinct paid off, yet again.
“One of the partners said Ashanti Goldfields was their client and it was time to go do an audit, so maybe I should go with them to do an information systems audit. I traveled with them to Obuasi and spent a week, did the analysis of their systems, wrote a report and spoke to the man in charge of the whole area. He said he liked what I was suggesting which was something they might like to do but I should go talk to the managing director of Ashanti Goldfields, which was Sam Jonah, but then he was based at Diamond House in Accra.”
This principle of perseverance, which Nduom had learned a lifetime ago, when he secured his first job as a life insurance underwriter, was to serve him well – just as well, as a frustrating time was ahead.
“So I tried to talk to Sam Jonah several times in Accra and it didn’t work. I went back to Obuasi and somehow somebody there accused me of messing up with their computer systems so they ordered me off the mine. So I left the mine but sat by the supervisor’s door all day and convinced them to let me in because I wanted to talk to him about what can be done to improve their systems. He let me in and I left with an agreement to come back and organize their information systems,” says Nduom.
The contract was for a complete systems overhaul of the gold mine, involving the change of computers, accounting systems as well as payroll. Nduom enlisted the help of Deloitte to deliver the projects. After this, Nduom delivered more projects, including overseeing the merger of Touche Ross and Deloitte Haskins &amp; Sells, forming Deloitte &amp; Touche.
“When they merged they didn’t have a management consulting section and that is what gave me the opportunity to set up Deloitte and Touche Consulting West Africa and brought some other people from the US and hired them to join the team,” says Nduom.
The team had nearly 100 people in Liberia, Nigeria, Ghana, Côte d’Ivoire and Zimbabwe. Ever the opportunist, Nduom spotted yet another gap in the market.
“While we were here, we realized that nobody was doing consulting work. So I took my own money because the firm said you are a partner in the US and not a partner in Ghana or Africa. They had no interest in setting up a branch of Deloitte USA in Ghana. Deloitte is set up as member firms. So they said we will give you two years after which you will get Africa out of your system and come back to the US.”
The two years taught him resilience. The new West African consulting business was inundated with work. Nduom secured major contracts with Texaco and Elf Oil in Nigeria, the African Development Bank and Malawi Oil. He was also responsible for setting up the computer software for Zimbabwe’s social security system.
“Eventually I became the coordinator for consulting for the African region for Deloitte and the time came for me to go back and I said there was enough work to do here so we set it up as a member firm of Deloitte. So when senior partners will get together every year to have their annual meeting, I would go as the senior partner for the West African consulting practise,” says Nduom.
Nduom became the chairman for the African region for Deloitte and held that position until the end of 2000. His says his success is down to focusing on long-term objectives, while staying flexible enough to solve day-to-day problems.
“We would look for a place to relax or do some work, we couldn’t find anything and so we set up Coconut Grove. We were looking for people to do some software work for us and we couldn’t find anyone, so we took a bus to Kwame Nkrumah University of Science and Technology and recruited some students, gave them computers, gave them software to tear apart and build again and then we started a software company. Out of that we set up a software company called TSS, then a hardware company called IBS, and out of that came corporate finance which became Gold Coast,” says Nduom.
The slogan of Groupe Nduom grew beyond expectation and owns a string of companies, from hospitality to entertainment. It has hotels, a football club and an artist management business. In media, it has newspapers, television, radio and advertising; it also owns primary and secondary schools and a university.
Nduom’s intuitive timing helped elbow out competition across his empire; a shrewd strategy that led to his worst day in business.
“I try to forget the date. It was 1995. It is the day I traveled from Ghana to Wharton to speak to graduate business school students about investments in Africa. I was one of the keynote speakers so I traveled from Ghana to Washington and my brother met me with faxes from Ghana, which said number one, I was on the Ghana Airways board at the time and I have been sacked from the board. I had consulting business with Ghana Telecom and it had been canceled. I was doing some consulting business with State Enterprise Commission and it said I was under investigation and in one day I lost over $2 million worth of consulting business,” says Nduom.
He believes this was an attempt by the government of the day to block his businesses for reasons he never found out. The event prompted a passion to be a part of the political system to prevent this injustice from happening to anyone else.
“I didn’t want anybody in Ghana to go through that experience where a government will just get up and, for whatever reason, decide that somebody should not be in business and that they should cancel their contract and just try to move him off the earth. There was a plan to do away with my businesses and everything I was doing in Ghana. They said they would smoke me out and get me to go back to where I came from. This was elevated to an extent that it became a row between the government of Ghana and the US,” says Nduom.
Nduom turned lemons into lemonade and expanded across Africa, leaving trading in Ghana until the impasse was resolved. It was, and 40 years on the business is riding high on its acquisition of Illinois Service Federal (ISF) Bank in Chicago, US. Nduom is older, wiser, with a clear eye for new horizons.
“Working here is like working in our own republic. We are governed by our own rules. You have to send a daily report, monthly report, quarterly report, a mid-year report and a yearly report. The idea is if something was to happen to you, anybody is supposed to look at your business and pick up where you left,” says Richmond Keelson, General Manager of Groupe Nduom Corporate Affairs.
What a journey – from packing canned beans in the United States to owning a bank there – a first for Ghana. The next couple of years will be spent trying to help the bank – the newest entrant into the group – find its feet in the business of its faraway owners.
Nduom is driven by the passion to have a business set up, thrive and succeed beyond Ghana.
That is the legacy Nduom is building; one opportunity at a time.

From Canned Beans To The African Dream Of Owning A Slice Of The States

They keep their heads low, always looking forward. Shying away from the sun, they pull a load larger than the cars that aggressively race past them. Sweat pours over their worn out shoulders as they struggle for breath. It’s tough work, but they need to eat, they need to live.
This is the daily struggle of informal waste collectors in Johannesburg. They are part of the city; but the city doesn’t appreciate them. They’re called walkers of the street, or the cockroaches of the suburbs.
The waste collectors, however, don’t have any other option. They do this work to survive.
“I had no choice. After [the Marikana massacre] I was retrenched. My mother died and I had no food. I heard here in Joburg that people were making money, maybe R100 to R150 per day. So I thought this is what I need to do to make sure my family and I have something to eat,” says Lebogang Rapoo.
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He smiles when he talks about his five children, but his work means he hasn’t seen them in years.
“I haven’t seen my family in two years, but what can I do?”
Rapoo had no money to go home for Christmas last year.
“I would rather be dead at Christmas time than to suffer the way I did. There was no food, nothing at all. The dustbins were empty and there was nothing I could gather to exchange for food. I was so hungry I did not know what to do. I walked from door to door, the people chased me away thinking I am a criminal.”
Rapoo lives on less than R300 ($22) a week. The bulk of that money is sent home, the rest he uses for food. It is a daily challenge to find recyclable goods they can trade. Finding white paper is considered a treasure for them as one kilogram can pay about R5 (around $0.40). To make an amount worth their while, they need to find at least 10 cardboard boxes a day to earn about R1.20, depending on the sizes of the boxes. Twenty plastic bottles will get them about R5 ($0.40) and cans trade for up to R1 ($0.10) per kilogram.
They are slaves to their own survival.
“Welcome to my home,” says Rapoo, pointing towards a space next to a wall of an abandoned building where Corlett drive meets Oxford street, near the plush suburbs of Melrose and Illovo. He dusts off an empty bucket and spreads a dry washcloth over it, making a seat for me. Rapoo and his eight street-dwelling friends are all sitting on buckets around a small fire made of twigs and dried grass. He stirs a pot of rice and empties a packet of soup powder into a burned coffee tin. His bed is a couple of cardboard boxes stacked on a torn piece of industrial plastic. At night, he covers himself in the plastic to keep dry and warm.
The waste collectors are breaking by-laws by trading on the streets and by using the roads to transport their goods.
“Last week the police came; they chased us away. They burned our beds and all our blankets, telling us to go find another place to sleep. They say the residents don’t want us here. But what must we do? We have nowhere to go,” says Rapoo.
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The unregulated informal industry works on a first come, first served basis. The collectors get up at 3AM every morning. They have to get to the dustbins before the municipalities take away their treasures. They walk without counting the steps; on Mondays they walk to Linden; Tuesdays to Rosebank, Melrose, Parkhurst and Killarney; Thursdays to Northcliff and Fridays to Blairgowrie. The routes they take to collect trash range between five  and 20 kilometers. On Thursdays, Rapoo sometimes sleeps on sidewalks between Northcliff and Rosebank because his ‘house’ is too far for a day’s walk. For this, he earns less than R300 a week.
“I made my trolley into a double decker, so I can carry more waste to recycle. Sometimes I pull 180kg, and then I get more money. Sometimes I only collect 90kg. Every three days, when my trolley is full, I walk to the recycling depot in Alexandra. Then I get money; I can eat again,” he says.
According to Plastic SA, the umbrella organization for the local plastics industry, the informal waste collectors’ treasures make up more than 80% of all recycled material in the province of Gauteng. Without the informal waste collectors, companies like Plastic SA would be out of business.
John Xakaxa, a 50-year-old man from Soweto, has been relying on his eight friends for three months after his recycling trolley was stolen during the night. He says members of a rival group, who wear balaclavas, steal from them. When the men from the other group get to a dustbin and find Rapoo and his friends there, they fight them and take all the ‘goods’.
Supermarkets sell trolleys to the collectors at R150 ($11) each, but Xakaxa has not yet raised enough to buy one. His friend, Gerard Moloi, from Daggakraal in Mpumalanga, has been sharing his food with Xakaxa every night since his trolley was stolen. The eight men living at this very busy intersection also look after their friend Petrus Mpbunda who is wheelchair bound after he lost his leg in a shootout between drug lords in Diepsloot, one of Johannesburg’s largest townships. Mpbunda accompanies his friends on their daily walks from dustbin to dustbin in the leafy northern suburbs of the city.
Despite attracting the ire of many in Johannesburg, some residents and NGOs are reaching out to the waste collectors. WastePreneurs, an NGO in Parkhurst, a trendy suburb in the north, was set up less than a year ago to assist the waste collectors. The NGO provides custom-made trolleys to collectors and pays them R250 ($18.80) if they fill a trolley bin. The collectors deposit the waste at the plant next to the office that was established next to Pikitup, the governmental waste collection company. Godfrey Phakedi, manager of the WastePreneur plant, says the collectors bring the waste to the plant where it is sorted and packed by various employees, creating more jobs for street dwellers. The waste sorters are mostly female. From the 81 collectors, only two are female. The waste is then transported and sold to various recycling companies.
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Sfiso Ngobese, a young entrepreneur from Germiston, has also started an initiative to help the collectors. Ngobese noticed a lady walking past his house every day to search for recyclable goods and decided to build her a reliable and safe trolley. The trolley is bigger and more stable than those from supermarkets and it even has brakes. Ngobese became so inspired that he started a business, called Abomakgereza, to specialize in building these trolleys. His trolleys can be used by waste collectors and be used by companies as mobile billboards. He also buys and sells the waste collected by the trolleys he hands out, thereby managing his own team of collectors. This might be a form of regulation that is much needed for the wellbeing and safety of the waste collectors.
For Rapoo, the journey to a stable life is long and arduous, but it is a walk that he has become accustomed to.

Slaves To Survival

The respected Kenyan scholar Ali Al’amin Mazrui would have had interesting things to say about Africa’s current dalliance with Asia, especially the rise of Chinese business interests and influence across the continent.
Increasingly, companies from Japan, Singapore, Malaysia and South Korea have also been boosting their national GDPs with Africa-based projects. According to Linklaters, a commercial law firm, Asian-sponsored project finance funds in Africa grew by over 160% during the last decade, with Nigeria, South Africa, Mozambique, Egypt and the Democratic Republic of Congo the leading destinations for these commitments, which were in excess of $12 billion.
Mazrui would have advanced a quaint thesis for re-balancing Africa’s trade, cultural and diplomatic ties with Asia’s power blocs. He would have been especially aggrieved by the current state of inertia in the political economy of Africa’s most populous nation. A pan-Africanist and student of Nigerian affairs (his wife Pauline Uti, mother of two of his five sons, is Nigerian), the late professor is credited with stating way back in the 1970s that, “Africa produces what it does not consume and consumes what it does not produce.” And those were the early days of continental profligacy.
Nigeria could be Africa’s biggest culprit in this regard. The country is consequently experiencing its first recession in 30 years. Tired of waiting for the promised hope of a better nation, Nigerians now, rightly or not, accuse their current leader of bringing Africa’s largest economy by GDP to its knees.
President Muhammadu Buhari has been blamed for not ‘radicalizing governance’ fast enough, which was one of the reasons Nigerians voted for his All Progressives Congress (APC) party in 2015. Nigeria is engulfed in a torrent of crises never before seen in the history of the nation.
Clearing the cobwebs of the past is proving to be a delicate dilemma for the taciturn president and his team. Grappling with sluggish growth, dwindling external revenues, double-digit inflation and a prolonged currency constipation, he is leading the ethical campaign to wrestle with the seen and unseen forces of corruption and ineptitude. His seeming preference for advisers from his northern base is also being openly examined by civil society.
For Nigeria’s sake, Buhari needs to win the war against graft and impunity. His victory will begin to recreate a new nation, sealing his place in history and in the soft spot of a large-hearted nation.
But, can he do what is required to transform the ethos of governance, business and society? Will “the Nigerian system” allow him?
Will confirmed and well connected crooks go to jail? Will reportedly recovered looted funds be reinjected into the treasury? Will massive recovery of this commonwealth mean less recourse to external loans? Will the judiciary invoke its constitutional principles on its own stables? Will the Economic and Financial Crimes Commission (EFCC) ever successfully convict any person of influence?
Will federal and state legislatures reduce their allowances and salaries in tandem with the austere times? Do we need a referendum on their astronomical salaries? Will the Nigerian state significantly increase investment in education, healthcare and the police, using advanced technology tools and techniques to revamp these ecosystems? And when will politics with principles become the order of the day?
These are the sort of questions Nigerians are asking themselves. But they also realize their quest for jobs, stability and development is hobbled by a subculture of guile and graft.
Teaching at Uganda’s Makerere University between 1963 and 1973, the late Mazrui was known for poking fun at the megalomania of Africa’s fat-cat leaders and speaking truth to power. Naturally, Idi Amin disliked him a lot. He was also not able to get a job in any Kenyan university during the regimes of Jomo Kenyatta and Daniel Arap Moi. Were Mazrui alive today, he would have also queried the absence of truth and the dearth of altruism in the politics of modern Nigeria.
Mazrui would have encouraged Nigeria’s business, political and military intelligentsia to openly discourse their festering sores. He would have prayed for peace, unity of purpose and nation-wide reflection. He would have said hope should never be allowed to get into a cul-de-sac.
So will 2017 be the year Nigeria begins to recalibrate its moral compass? Nigeria desperately needs to lead Africa out of the nadir of homegrown frustrations.

Quest For A New Nation

It’s a 542-kilometer drive from Johannesburg to Beitbridge. As we arrive the sun is shining its warm golden light over the bridge connecting South Africa and Zimbabwe. There are no birds chirping over the Limpopo River. It seems like a peaceful morning, until you get closer.
There is pandemonium as hundreds of cars line up to be stripped and searched before proceeding into Zimbabwe. A journey to Harare is delayed by at least three hours. President Robert Mugabe’s government has banned the importation of basic goods from South Africa. All banned goods are confiscated.
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Priscilla Ngwenya is a woman in the autumn of her life. She has brown wrinkly skin, dull brown eyes and a jutting jawline that makes her look tired of suffering. On this day, she says she has endured pain and penury working for her grandchildren at home in Zimbabwe. She is not about to let anyone else gain from her sweat, nor her liters of cooking oil that she is trying to import.
“I will not work for the police. I work too hard for you to take food I bought for my family for yourselves. If I can’t get this to my hungry grandchildren, then no one else will have it,” she says as she pours 20 liters of cooking oil onto the street that she carried 2,000 kilometers from her job as a domestic worker in Cape Town.
Zimbabwe’s Ministry of Industry and Commerce banned basic imports of goods, such as cooking oil, coffee creamers, hair extensions, body creams, building material, furniture, baked beans, cereals, peanut butter, jams and mayonnaise. It is all part of a “Buy Zimbabwe” campaign that government hopes will see factories built in its land.
With millions worth of goods going into Zimbabwe, South Africa is the largest importer to the country and the biggest trading partner.
“[The ban] is a desperate move by Zimbabwe, to try and preserve their currency and to stimulate internal trade, however [it is] not viable as no local company can provide the basic consumer goods that South Africa offers,” says Ian Cruickshanks, Chief Economist at the Institute of Race Relations.
“This government is very stupid. We buy from South Africa because it is cheaper and it’s the only way for us to survive. Buying anything made in Zimbabwe is very expensive. The rands I earn can’t support my family,” Ngwenya screams throwing the empty bucket on the ground at Beitbridge.
The ban on imports has irked many like Ngwenya. Next to her is a man breaking the plastic electrical conduits he isn’t allowed to take across the border.
Just days before, traders burned a warehouse, where the confiscated goods were held, and barricaded the roads with rocks and burning tyres, forcing the closure of the border, believed to be the first time in history.
“I buy goods in South Africa and sell them here in a small shop in Bulawayo. That’s the way I have been surviving and keeping my family afloat. I used to be a teacher but I couldn’t deal with the lack of payments by government and I decided to get into business,” says Prudence Dube.
Tuleka Ngci, of GoAfrica, who has been transporting goods from South Africa to Malawi since December, says business has been slow after traders blocked the Beitbridge border. Ngci transports goods such as groceries, fruit and vegetables from South Africa through the Zimbabwean border to Malawi every week.
“If we can’t pass through the border to buy goods then that means there’s no business for us. Customers blame us for what is happening in Zimbabwe and as a result we find ourselves in the middle of a crossfire we don’t even understand,” says Ngci.
“The restriction against imported goods is threatening the livelihood of people and when people are hungry they get angry. And in this case who knows who they’ll take out their anger on.”
According to Dube, many Zimbabweans turn to smuggling.
“My business is registered, I pay duty for the goods I buy, and I employ six people. If this ban is not lifted, I will have to go the smuggling route like most informal traders in the country. That will be a disadvantage to government. I don’t think they thought this through and looked at how we would be affected,” she says.
Smuggling goods in open sight seems easy enough to do. At the border, some authorities are not shy to take bribes. We carried a two-liter cooking oil bottle to test the system. The man doing the checks told us cooking oil could no longer be imported into the country before asking for a bribe to let us through.
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“I have a lot of friends who never pay anything. The officials are also hungry so they just pocket whatever they can get from people,” says Dube.
Most small businesses smuggle goods with the help of transporters like Bongani Sibanda.
“Because of the economic situation in Zimbabwe, smuggling is an everyday thing and we see ourselves as business people providing a service. I carry groceries, and whatever else people send from South Africa to Zimbabwe, twice a week. As long as it is not drugs or any illegal goods I see myself as helping people,” he says.
Sibanda says the ban will affect his “business”. More bribes mean higher fees.
“It will also bring in more business to us because those who cross the border to stock up themselves may be afraid to smuggle things so they will commission us,” he says.
Sibanda worked at a shoe factory in Bulawayo for 15 years before being thrown out by the factory closure. He now makes around $2,500 a month, enough to send his daughter to university in South Africa.
Sibanda may be making a buck, but the Zimbabwean economy isn’t.
According to media, the Chief Executive Officer of the Zimbabwe National Chamber of Commerce, Christopher Mugaga, estimates Zimbabwe could be losing $1.5 billion every year through smuggling of goods. The figure is more than one third of the country’s $4 billion national budget. Local industries have closed shop as their products fail to compete with the cheap smuggled products, cutting 100,000 jobs over the last five years. The government is said to make $60 million per month from duties charged at Beitbridge.
At the Beitbridge border post, Zimbabwe Revenue Authority (ZIMRA) Acting Commissioner General, Happias Kuzvinzwa, in a statement, has urged members of staff to desist from corruption.
“It is time to wipe away corruption! We must all know that we are accountable to the nation and seriously consider our duty as custodians of revenue laws in this country,” he says.
He says ZIMRA will intensify lifestyle audits to decrease numbers of goods smuggled into the country.
As we drive off, it seems trouble and smuggling at the border will not go away anytime soon.

The Border On A Slow Road To Nowhere

Many educated Zimbabweans are scattered around the world in search of greener pastures. Walk by factories in Bulawayo, a city once known as &#8216;KoNtuthu ziyathunqa&#8217; (the place that exudes smoke), you will see deserted sites. According to Godfrey Kanyenze, an economist, 4,610 companies closed down in Zimbabwe between 2011 and 2014, and 55,000 jobs were lost.
But, according to the Zimbabwean government, look closer and you will see investment opportunities.
At the Zimbabwe Trade and Investment Forum at the Hyatt Regency in Johannesburg, in July, ministers campaigned for foreign direct investment (FDI), which they believe is on its way.
“Zimbabwe urgently needs a significant amount of FDI to create employment, enhance technology, improve productivity, add value and beneficiate raw materials,” says Zimbabwe’s Minister of Industry and Commerce, Michael Bimha.
According to Bimha, Zimbabwe will review its legal framework to attract foreign investment. Government has a Bilateral Investment Promotion Protection Agreement (BIPA) which protects future investors from expropriation. He cites power generation, water and sewerage, transport, dam construction and ICT as areas of need.
One good sign is that huge African investor, PPC Cement, is ploughing in money.
“PPC Zimbabwe is a key player in all the big projects underway, and we are working hard to be involved in those still at the planning stage,” says Njombo Lekula, Managing Director of PPC Zimbabwe.
He says the country’s future growth will be centered on Harare and Northern Zimbabwe through housing driven by urbanization.
“It’s an expression of our confidence that the economy is on the up, and also in the growing amount of intra-regional trade, with South Africa, Mozambique, Malawi and Zambia particularly. Our total investment is $200 million in the country over the coming years,” he says.
On the flip side, the Zimbabwean government will soon be exporting skilled labor as the ruling party, Zanu-PF, lags on its 2013 election promise to create 2.2 million jobs in five years, with its economic blueprint; the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset).
Zimbabwe has signed job agreements with South Sudan, Namibia, Angola and Botswana. The government will be paid for recruiting. Zimbabwe’s Higher and Tertiary Education, Science and Technology Development Minister, Godfrey Gandawa, says a database of graduates is being set up.
“We are coming up with a policy as a ministry to help our skilled manpower to get jobs because there are countries with vacancies in various fields, but our people do not have access to those vacancies out there,” Gandawa told the state-controlled Herald.
Obert Gutu, the opposition MDC-T spokesperson, says the policy was an open admission that Zim Asset has failed.
“When a country begins to actively encourage its qualified personnel to get jobs in other countries, you can then appreciate that the wheels are surely coming off. Instead of creating jobs under the much talked about Zim Asset policy framework, the Zanu-PF regime has actually become an employment agent; eagerly recruiting young and highly qualified Zimbabweans to go and work in other countries. Under normal circumstances, this government would simply resign. They have totally failed the people of Zimbabwe,” says Gutu.
Maxwell Saungweme, an independent development economist, says it is unfortunate that Zimbabweans educated with state coffers will be working for the coffers of another state.
“Policies on education and human capital development should be demand driven and not just to supply labor and investing in education and skills you don&#8217;t need,” he says.
Political analyst, Rashweat Mukundu, claims this is a policy of desperation.
“If Zimbabweans have to move, it must be voluntary, but right now labor or economic migration is a desperate move by many who see no hope in Zimbabwe.”
The last word at the investment forum comes from a South African rail entrepreneur, Thabo Molamu.
“Investors should strongly consider investing in Zimbabwe, regardless of a wrongfully portrayed political situation in Zimbabwe, especially by some sections of the media,” he says.
“The policies put in place by the government of Zimbabwe, like the indigenization policy, will be understood by the targeted beneficiaries very late. The truth is, people want answers now; they want poverty eradicated now, and they don&#8217;t understand why redressing the past is central to the plan of African leaders. They misinterpret this to be meaning being self-centred when in reality it means putting Africa and the people of Africa first.”
So, where there is a will, there is always an investor and entrepreneur.

Money In, Skills Out

From the famous words in Shakespeare’s The Merchant of Venice: “All that glitters is not gold; often have you heard that told: many a man his life hath sold.”
Put simply, things that often appear precious may not always turn out to be so. This month, however, I will explore a commodity that proves the opposite to be true. A seemingly unglamorous, not particularly attractive commodity, which has sparked the interest of many: crude oil. It is a topic that is luring huge investment opportunities on our continent.
Even though alternative energy sources abound, crude oil is likely to remain a vital source of energy across the world for many decades to come. Life without oil would be virtually impossible. It is the most important raw material; generating heat, driving machinery and fueling vehicles and airplanes. Its components are used to manufacture most chemical products, including plastics, detergents, paints and even medicines.
Most countries are significantly affected by developments in the oil market, either as producers or consumers, or both. Oil catered for about 34% of the world’s energy needs in 2008. It is expected to continue being a leading component of the world’s energy mix – 30% in 2030, according to the International Energy Agency (IEA).
About two-thirds of oil is used for transportation in the United States and Canada. In the rest of the world it is more commonly used for heating and power generation.
Brent crude oil is derived from the ‘Brent blend’. It is a combination of crude oil from 15 different oil fields in the North Sea, off the coast of the UK and Norway. This blend is used to price two-thirds of the world’s internationally traded crude oil supplies, making it an obvious choice as the benchmark of crude oil.
Brent crude oil is excellent for making gasoline, and is highly sought after, particularly in industrialized nations. It is a ‘light’ or ‘sweet’ crude oil because it contains less sulphur.
This type of ‘sweet’ crude oil is also produced in a few countries in Africa, with Nigeria being our leading exporter. In fact, Nigeria is the largest producer of sweet oil in the Organization of Petroleum Exporting Countries (Opec). Known as ‘Bonny light’, it is similar in composition to the petroleum extracted from the North Sea.
There are two widely used Brent crude oil futures: the West Texas Intermediate (WTI) and the Opec price basket.
Opec is an organization of 12 oil-producing countries that effectively controls the world’s oil. Opec members pump out 42% of the world’s annual supply, thereby controlling 61% of exports. These 12 countries hold 80% of the world’s proven oil reserves, to last for 113 years. Opec’s decisions, therefore, are critical to countries that depend on oil imports.
Opec has stated quite adamantly that its goal is “to manage the world’s supply of oil”, which it does “to make sure its members get what they consider a good price for their oil”.
Opec’s second goal is to reduce oil price volatility. Oil and energy minis-ters from Opec members meet at least twice a year to coordinate their oil production policies. Each member country must abide by an honor system, where it agrees to produce only a certain amount. But countries that produce more suffer no sanctions or penalties.
The Opec members are: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Vene-zuela. Saudi Arabia alone produces enough oil to materially impact the world’s supply.
Opec has a basket price – an average of the prices of oil from Algeria, Indonesia, Nigeria, Saudi Arabia, Dubai, Venezuela and Mexico – which is used to monitor world oil market conditions.
The WTI is a blend of several US domestic streams of light sweet crude oil. It is also considered a key driver of growing global crude oil supply because of its unique immediacy, breadth and depth of pricing. In times of uncertainty, of massive political unrest or financial crisis, the market tends to flock to the WTI instead of the Opec price basket.
Brent crude originally traded on the open outcry International Petroleum Exchange in London. But after 2005, it traded on the Electronic Intercontinental Exchange, known more commonly as ICE. Brent crude financial futures are also traded on the New York Mercantile Exchange. One contract equals 1,000 barrels, quoted in US dollars.
From the mid-1980s until 2003 Brent crude oil averaged $25/barrel.
My technical analysis shows that Brent crude oil (listed on the ICE) is consolidating within a symmetrical triangle on the monthly chart. This triangle is a horizontal cone-shaped pattern, which could break out in
either direction. It often forms after a rally or a decline. In this case, it has formed within the major bull trend.
A positive breakout of this pattern would be signaled above $120/barrel, with the long-term objective situated at $162/barrel – through the 2008 all-time high of $147/barrel. Alternatively, Brent crude oil could breach the lower slope of the pattern, which would be signaled below $96/barrel, in which case the downside objective would be at $54/barrel. I foresee an upward break through $120/barrel, and a 34% appreciation in price in one to five years – a very brave call. However, this surge won’t happen in a straight line. Brent crude may or may not fulfill that objective, but historically, the longer it takes a pattern to form, the bigger the breakout. And as my leading indicators are bul-lish, a positive breakout seems more probable.
However, the question is twofold: how will a positive breakout in the Brent crude oil price affect African economies, and how will such a breakout benefit our oil companies?
Oil is one of the most powerful tools of trade in the world, and after the Middle East, Africa is one of the world’s largest oil producers. Further analysis sees great potential in Africa, but a lot of challenges have hindered this prospect.
Sixteen African countries are oil exporters, with 500 oil companies participating in African hydrocarbon exploration. According to the EIA, Africa’s proven oil reserves have grown by nearly 120% in the past 30 years, from 57 billion barrels in 1980 to 124 billion barrels in 2012.
In 2012, the BP Statistical Energy Survey reported that the continent produced an average of 8.8 million barrels of crude oil per day in 2011, which is just over 10% of the global output.
In November 2012, Chatham House research found that only 500 wells have been drilled in East Africa to date, compared to the 15,000 wells that exist in West Africa. In 2010, Africa’s oil production represented 12.4% of the world’s total crude oil output, with exporters achieving a higher share, at nearly 20% of the world’s total exports of crude.
Africa remains largely untapped for oil, and at present, many of the oil-producing countries with great promise are finding ways to create a safer haven for investors.
The abundant oil reserves in Africa are undoubtedly the glitter that is attracting many overseas investors. It comes at a time when minerals such as iron ore and copper, which were once economic mainstays, have reached a gradual decline.
But will a higher oil price affect the African economy negatively or positively?
Bear in mind that oil prices are still lower than they were in the late 1970s and early 1980s in real terms, if inflation is adjusted. High oil prices will affect certain African economies differently, depending on whether they are net exporters or net importers.
Oil-exporting economies have a greater advantage because an increase in oil revenues improves their balance of payments. These countries will stand to benefit from the influx of foreign revenue. It can accelerate the implementation of poverty-reduction strategies and develop infrastructure, which ultimately increases employment levels.
However, the biggest challenge of the coming boom will be to ensure that these benefits filter down to ordinary Africans.
There are only 16 net oil-exporting countries in Africa, with 38 countries being net oil importers. High oil prices in these nations will have an adverse impact on businesses, consumers and government budgets in particular. Their terms of trade could deteriorate, thereby affecting their balance of payments, which could lead to lower economic growth.
For oil-importing economies, high prices could increase import bills with adverse effects on inflation, production and employment.
In July 2009, the African Development Bank found that the real impact of high oil prices on African economies is relative. African economies are changing and significant improvements in terms of macroeconomic management are being reported, especially a reduction in inflation. Governments have passed on price increases to consumers, moderated them with subsidies and tax reductions, or have placed pressure on oil companies to keep prices down.
Revenues of the big oil companies in Africa will obviously surge. The world’s population is increasing, becoming more middle class and prosperous, buying more cars and using more oil. For example, the UK reported about 30 million cars with a population of 70 million. It is evident that Brent crude oil will be in demand in the long term, which ultimately advocates my call of a positive breakout of the long-term symmetrical triangle.

All that glitters is  not gold…

Everybody remembers Nick Leeson, the young trader who broke Barings Bank—where the Queen was a customer—but few recall the African connection.
It was the last couple of pages of a report written by the board of banking supervision issued on behalf of the Bank of England, alleged that Leeson had a number of assets in South Africa.
This document was issued six months after the collapse of Barings Bank in 1995, when Leeson lost it GBP 862 million pounds ($1.4 billion) through unauthorized trading.
“I’d never been to South Africa at that stage. The only connection I can draw is that we did have a couple of South African clients that we transacted futures for…but that’s the only South African connection,” says Leeson.
The 46-year-old was in Johannesburg for a few days speaking about risk management, compliance and corporate responsibility laced with his remarkable story.
Barings Bank was the oldest merchant bank in London and had funded the Napoleonic wars. Leeson, the son of a plasterer from Watford, was seen as the whizzkid in the Singapore office.
He made huge profits for the bank and was very successful in speculative trades, but lost his midas touch when he tried to hide losses from bad trades in an error account called 88888. It had been set up to cover up a mistake made by an inexperienced trader. Instead of taking a loss, Leeson played the odds in an attempt to recover money.
It all fell apart when Leeson placed a short straddle—a risky strategy an investor uses when he or she believes that a stock&#8217;s price will not move up or down significantly—on the Nikkei, banking on the exchange remaining stable overnight. Leeson should have been safe in such a position, but the Japanese earthquake on January 17, 1995, in Kobe caused the Nikkei to go into free-fall.
Facing huge losses with Asian markets in panic, he tried to recover the losses with short-term gambles based on the recovery of the Nikkei. Unfortunately, the earthquake dashed these hopes.
Back in London, the Bank of England rejected a bailout days before Barings declared bankruptcy. The Bank almost went bust in the 1890s over investments on Latin American bonds, this time there was no reprieve.
Feeling helpless, Leeson fled the country leaving a scribbled note saying “I’m sorry”. He was arrested in Germany, and nine months later was extradited to Singapore where he was sentenced to more than six years in prison.
Leeson was the only Englishman in a prison full of triad gangs. He was locked up in a tiny cell with two others for 23 three hours a day.
In prison, Leeson was diagnosed with colon cancer and lost weight and most of his hair from chemotherapy. The Singapore authorities were determined not to allow their high profile prisoner to die behind bars and assigned him the doctor of former Singapore president, Lee Kuan Yew. In prison, Leeson wrote his autobiography, while back in London Sir David Frost was producing a film about his life.
“The film came out before I did,” he chuckled.
Writer and director of the film, James Dearden, pretending to be Leeson’s uncle, flew to Singapore to discuss the plans with him, but little passed between the two.
“That’s the only input I had in the movie. It was a standard 15-minute visit. The questions he was asking weren’t specifically about what was going on. It was more like how are you, have you seen your aunt? He only asked a few questions concerning the movie,” says Leeson.
Then Leeson was released after four and a half years on the grounds of his health and good behaviour. He has now recovered fully from cancer and lives in Galway, Ireland with his second wife and three children.
In 2006, he became CEO of Galway United, a professional football club. He resigned in 2011, but remains a shareholder. While working at the football club Leeson published his second book, Back from the Brink, Coping with Stress.
Leeson has tried his hand at online poker and is now a speaker for conferences and dinner’s around the world, getting paid to talk about risk and corporate responsibility—even though he’s the face of catastrophic failure in both fields.
Thirteen years after his release from prison, Leeson was appointed as an alternative insolvency practitioner at GDP Partnership, a financial firm, in Ireland, in April. He is assisting over-indebted borrowers negotiate deals with their banks. Whatever he does in life, he will be labelled with two words—rogue trader.
“When stuff was written in the paper it was always painful to read. Sometimes it still is now. My name is always prefaced with ‘rogue trader’ which is okay, the book is called that. Sometimes you get ‘disgraced banker’ or ‘fraudster’, a couple of those words still anger me, but you kind of have to take it on the chin.”
Leeson took the losses that took him to prison on the chin and maintains that he never profited from his unauthorised trading.

Tag: Trade

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