Spotlight on Africa

Burundi’s economy is being squeezed by a multitude of factors stemming from the ongoing political crisis, violence and human rights abuses sparked by President Pierre Nkurunziza’s controversial third term in office. Cuts in foreign aid, falling tax revenues, a drop in key exports and delays to development projects are putting pressure on the government’s ability to pay public sector salaries and help lift its people out of poverty.

“Domestic taxation and foreign aid are on a downward trend at the moment,” Sebastien Marlier of the Economist Intelligence Unit told RFI. “The key factor behind the slowdown in Burundi is the decline in aid - foreign aid accounts for about 50 per cent of the state budget,” he adds.

The World Bank predicts that Burundi’s economy will contract by 2.3 per cent in 2015. In their latest outlook dated 15 October, the World Bank describes how the political crisis is “turning a decade of good economic performance to a macroeconomic collapse”.

Marlier, who previously worked in Burundi’s finance ministry, says the government has struggled to pay public salaries. He cites a sharp fall in revenue from taxation in April and May, adding that “the entire economy came to a standstill in the few months of crisis”.

Belgium has already suspended more than 60 million euros of development aid to Burundi. The European Union is reconsidering 432 million euros of development assistance earmarked for 2014 to 2020. An EU statement on 26th October demanded consultations with Burundi’s government over “failure to respect” human rights, democratic principles and the rule of law.

In a statement seen by RFI, the US Agency for International Development said it planned to spend 45 million dollars in Burundi during 2016, but “no funding will be provided directly to the government of Burundi”.

The Netherlands has also suspended all programmes with the authorities in Burundi, including support to the police and army, although its civil society-led projects continue. The Dutch budget for 2015 is more than 24 million euros, says Sietze Vermeulen, spokesperson for the Foreign Trade and Development Cooperation ministry.

The reduction in government revenue will initially hit development projects. “Most of these projects are financed with external funding so they will really have to focus on the priority spending, which is debt repayments and salaries,” says economist Marlier, pointing out that the government is likely to see salaries for the police and the army as a priority.

Eventually reduced income and cuts in aid could “have an impact on the president’s popularity” says Marlier, referring to improvements in healthcare and education. “This type of expenditure will probably take a hit,” he says, predicting that it could affect trust in Nkurunziza’s ability to provide public services.

Besides cuts in foreign aid, coffee, a key export, has faced difficulties since the onset of the crisis with the displacement of people in rural areas and disruption to transport.

“There is a declining trend in production of coffee and we could see a further hit this year,” Edward George, head of group research, pan-African bank Ecobank, told RFI. “We’ve seen almost a 50 per cent drop in the crop over the last 15 years, because of disruption this season it could be even lower as we go into the next season.”

“Back in 2010, the country exported around 70 million dollars worth, around 60 per cent of total exports,” says the Ecobank specialist. “If you look to last year, that had dropped to 50 million dollars, around a third of exports, so its share is falling and overall export revenue is falling as well.”

“The crisis the country has been going through for the last six months will have affected exports,” says commodities expert George, explaining that the political crisis in Burundi makes it difficult to obtain trade finance. “It may even be that there is coffee available for export, but it cannot get the financing to do it and that’s why we expect there’s probably a lot more smuggling of coffee going on from Burundi.”

Coffee smuggling into neighbouring countries exacerbates the problem for the government because it further reduces export revenues, with smuggled coffee being officially denoted as being produced by other countries.

Furthermore, exports from Burundi have taken a somewhat symbolic hit from the termination of the country’s status as a recipient of the US African Growth and Opportunity Act (AGOA). US President Barack Obama issued a statement on 30 October, saying that the “continuing crackdown on opposition members” would result in Burundi being removed from the US’s special preferential trade scheme.

Burundi exported some 3.3 million dollars of goods to the US in 2014, according to statistics compiled by the AGOA.info website. Despite only 4,000 dollars being eligible under the AGOA agreement, economist Peter Stein of Stein Brothers says that “it demonstrates that the economic and political situation in Burundi is not favourable to further trade with the US”.

A number of infrastructure and development projects face uncertainty due to the deteriorating situation in the country. The World Bank currently has 12 active projects in Burundi with three approved this year, according to their website.

In one progress report this year, the World Bank notes that “due to political uncertainties” they are unable to sign-off on an infrastructure project, the overall risk rating stands at “substantial”. In another project focused on government effectiveness, a recent report outlines progress as “satisfactory” but overall risk “substantial”.

According to a source RFI spoke to, Swedish company SwedeEnergy has “concerns about delays” to its power generation projects in Burundi due to the unrest. The source is keen to point out, however, that the company has yet to suffer any setbacks to their hydropower project using the Kagunuzi river.

A long-term crisis in Burundi could have the potential to disrupt the development of large-scale commercial mining in the country. Burundi Musongati Mining (BMM), which is 85 per cent owned by Kermas Group, plans to build a mine and facility to process 1 million tons of ore a year.

“According to our long term plan for the Burundi project, in 2015-2016 we’re constructing a pilot plant for the project, but in South Africa,” Kreso Raguz of the Kermas Group, told RFI. “Everything is going according to schedule and we’re not delayed”.

“Of course, if the situation stayed the same, during this year and during the next year, then we’d probably face some problems,” says Raguz.

Development of the Musongati nickel mine will require power and transport infrastructure, but Kermas does not currently have any workers at the Musongati site following the completion of the exploration phase. In the company’s seven years in Burundi, Kermas has spent almost 95 million dollars on development of the project, according to Raguz, with most of the money being spent outside of Burundi on contracting external services.

The cost of putting in energy infrastructure for BMM’s mining operations could be up to two billion dollars financed by partners and financial institutions, says Raguz, who adds that Burundi’s government will not receive any payments from his company this year.

Raguz does not rule out Kermas selling an interest in BMM, saying his company “believes in this project” and would not sell a majority of shares to anybody. “Of course, other investors can participate,” he says.

The International Monetary Fund paints a bleaker picture than the World Bank in their forecasts. They expect a contraction in Burundi’s economy of 7.2 per cent in their World Economic Outlook 2015.

“At the moment, it’s very gloomy. Burundi’s experiencing the worst economic and political crisis since the civil war,” says sub-Saharan Africa economic expert Stein. “Burundi has no fiscal space to counter this negative growth. Such figures translate into more people unemployed, more households will be deprived of their incomes and more people will remain in poverty.”

Burundi’s economy is being squeezed by a multitude of factors stemming from the ongoing political crisis, violence and human rights abuses sparked by President Pierre Nkurunziza’s controversial third term in office. Cuts in foreign aid, falling tax revenues, a drop in key exports and delays to development projects are putting pressure on the government’s ability to pay public sector salaries and help lift its people out of poverty.

In the Central African Republic, protests, clashes, reprisal attacks and armed conflict were sparked recently by the killing of a Muslim taxi driver in Bangui. The root causes of the crisis in the CAR can be traced back to events following the overthrow of President Francois Bozize in March 2013. Sectarian violence has continued despite the presence of UN peacekeepers and French troops. At least 60 were killed in the latest violence and tens of thousands displaced from their homes. Why does the CAR continue to be engulfed in an uncontrollable spiral of violence? And is there a way out? RFI spoke to Central African Republic researcher Evan Cinq-Mars, Global Centre for the Responsibility to Protect.

The "refugees welcome" movement is alive and well in Italy. In Rome, dozens of volunteers are running a transit camp known as the Baobab. Neighbours support the centre with donations. Even Pope Francis has sent lorryloads of food. RFI's Michel Arseneault reports from Rome.

African-made trainers arrived at the popular BHV department store in Paris this weekend. Sawa Shoes are fashionable sneakers 100 per cent sourced and manufactured in Ethiopia, representing the potential of the Made in Africa story and the impact manufacturing could have on African economies. RFI spoke to Mehdi Slimani, Sawa’s founder.

Could you describe your product? You describe yourself as an activist brand, could you elaborate on that for us?

Made in Africa is our statement. Sawa is an activist brand because we bet on Africa, we all know and we all say that Africa is the future, but nobody’s moving. So with Sawa we took the decision to buy African materials and to process them on site to make finished products.

Why did you choose Ethiopia as your manufacturing base?

To tell you the truth Sawa is not born in Ethiopia. Sawa was born in Cameroon, but unfortunately we failed in Cameroon because of lots of problems - corruption in Doula and we had a very difficult logistics. We used to buy from Morocco, Tunisia and Egypt. So we failed in Cameroon and we moved to Ethiopia. So far, so good, I would not say it’s that easy to work in Ethiopia, but it’s easier than in Cameroon. You can find everything on site, the leather, etc. Leather is 90 per cent of the value of the shoes, so everything is available in Ethiopia.

What happened in Cameroon?

The problem in Cameroon is the harbour. We used to buy leather, rubber and laces outside of Cameroon and then when it reached Cameroon you have to clear it through customs. The problems started here, you have to pay money under the table otherwise nothing will leave the harbour.

You’re talking about bribes?

Yes, bribes to the people working at the harbour, customs. Bribery is the only way to do business in Cameroon.

The government didn’t help you?

No, they didn’t care at all. I remember once I wanted to meet the head of the harbour, he gave me maybe 10 meetings and he didn’t come. They don’t care, they all know how it is in their country, but they don’t care.

In Ethiopia it’s better then? It’s easier to do business?

Yes, it’s paradise on earth! It’s really easy! I would not say it’s easy, but you have everything do be successful. You can rely on politics. You can rely on Ethiopian people to make it happen. There is really a will to make it happen and a will to go forward, it works. The country has a long way to go, but they’re going in the right direction.

There’s often criticism about the Ethiopian government – the lack of respect for human rights, the lack of a free press – does that concern you?

No, not at all. It’s not my point, you know I making shoes in Ethiopia, I have decided to go there, and nobody asked me to come. So when you go, why should I start criticising? I didn’t spend time researching. Me, I know what happens in my factory. I can look everybody in the eyes and say, ‘the shoes are clean, they are made in good conditions, they’re very good quality’.

Was it easy to find the skilled workers you needed in Ethiopia?

Yes, Ethiopia used to make shoes. Then you have to teach them our quality expectations, which are maybe a little bit different than the local market. But it was easy. Now, what is complicated is making sure the skilled people stay with us.

What are the advantages of manufacturing in Africa as opposed to Asia? Because many garments and shoes are made in Bangladesh, China or Indonesia.

When we started the project in 2009 I haven’t created a benchmark with China, Europe, etc. No, my point was to make things in Africa. I knew it was difficult and my project is not a reaction to ‘Made in China’ or ‘Made in Bangladesh’, its action for Africa. To tell you the truth, I didn’t even think about going to China, Italy or Portugal, my point was to go to Africa.

What difficulties do you face?

We don’t face any difficulties, it’s very easy. As long as you have good documents, in one day you can clear everything through customs. You just have to have the documentation and respect the law. You can even bring a cheque because you know in advance the amount you have to pay. There are no surprises, nobody who will ask you, ‘if you want to go faster, you have to pay’. It’s very smooth.

Is the company profitable?

We started being profitable last year. We are not super profitable, last year we broke even. And I hope that it will last.

How does manufacturing in Ethiopia benefit the local population?

You feed the country with orders, with money, with hard currency. You feed the country with new products or new quality standards. For instance, now I think our factory in Ethiopia is perhaps the best factory as far as sneakers are concerned. They add new products to their catalogue, new orders mean new jobs. And behind the factory there are some families, you know it’s a way to develop lots of things outside of the factory.

Why did you decide to base the headquarters in France and not Ethiopia?

Maybe it was for commercial development. We want to break into the fashion world, so you have to be in Paris. I don’t think the buyers would come to Ethiopia. It’s easier to reach the buyers in London, Milan, New York. It’s really easier.

How are Made in Africa products received in the fashion world?

If the product is valuable it makes a difference. When you go to buyers and you say, ‘I have Made in Africa products’, they say, ‘but I want to see the products’. The products come first, and then Made in Africa, the story around the product, comes second. It’s an asset, but your product has to be solid.

What challenges does Africa face with the move towards manufacturing?

They have to compete with Asian factories, Asia sets the level. They will attract investors if they can reach Chinese level of quality, of organisation, to make volume.

Are there any of your competitors who are looking to move to Ethiopia or Africa?

We were the first. I know that fast fashion is going there, they are looking for super profitability and today Africa, Ethiopia does not offer super profitability. It can offer profitability but not super profitability. That’s why a lot of people, they prefer to wait. Ethiopia is under the radar, but they say maybe we should wait a little bit and go there later.

What’s your goal five or 10 years down the line, where do you see Sawa shoes in the future?

I hope to see Sawa as a key player. I’m not saying I’m going to compete with Nike or Adidas. I would like to compete with the level under them. This is my objective and I would be, as an African, very happy to develop Sawa in Africa, in African markets.

African-made trainers arrived at the popular BHV department store in Paris this weekend. Sawa Shoes are fashionable sneakers 100 per cent sourced and manufactured in Ethiopia, representing the potential of the Made in Africa story and the impact manufacturing could have on African economies. RFI spoke to Mehdi Slimani, Sawa’s founder.

Throughout Bamako, Mali, internet office spaces sit idle. Customers can plug in their computers, make phone calls, and take advantage of the solar-powered electricity that’s not subject to blackouts, a common occurrence in the capital. The one thing they can’t do, however, is check their email.

Throughout Bamako, Mali, internet office spaces sit idle. Customers can plug in their computers, make phone calls, and take advantage of the solar-powered electricity that’s not subject to blackouts, a common occurrence in the capital. The one thing they can’t do, however, is check their email.

“We had to shut down this year because we’re not able to provide internet connection for our co-workers. Besides that, the lack of bandwidth, this poor connection is not even working any more,” says Renaud Gaudin, the head of Jokkolabs Bamako, one of the internet open spaces in Mali’s capital.

“We can’t even ask people to come and work in an environment when they know they can’t even read their mails,” he says.

While Bamako is fighting to get into the 21st century, the average user can’t even update their website.

“We’re a business, relying on the internet. Without the internet we cannot make a living. Those who start up businesses today, their activities are stifled because of the internet. Not only is the internet expensive, but if you want to upload a video on your website, and you don’t have a better connection, you cannot compete, especially at the regional level,” says Tidiane Ball, a fellow co-working space businessman in Bamako who owns Donilab.

He said that his Malisante.net website, which provided health news and information, is not functioning any more because it has become impossible to update it.

Gaudin says the problems are twofold—the price for the service hasn’t gone down, and the lack of competition in Mali means that the service hasn’t been upgraded.

State-backed operator Malitel offers fixed-line internet connectivity and has 4 per cent of the market. Mali Orange offers WiMAX, which could be described as long-range WiFi, and has 96 per cent of the market. But the bandwidth available for consumers leaves something to be desired.

 

As a workaround, these internet entrepreneurs are forced to daisy chain mobile phones together, gathering the data connection from several devices, enabling them to provide a semblance of internet.

Internet customers are paying for speeds that are incapable of downloading a youtube video, all for the price of 36,000 CFA (55 euros) per month. According to the US State Department, the average wage for a semi-skilled worker in Mali is 40,000 CFA (61 euros) per month.

“But our problem, as the regulator, is that we cannot force an operator to lower the price,” says Issa Camara, the manager of the Malian Telecommunications Regulation Authority (AMRTP), Mali's IT regulator. “What we can do is boost competition. I mean, open the market to others so they can make it better, boost competition, and give licenses to other operators. That’s what we can do.”

Camara says that there is a third operator who has been granted a license but the company, who he does not identify, hasn’t put the infrastructure in place yet. Gaudin predicts it will take at least another two years for the new operator to be up and running.

In a study put out last week by Washington DC-based TeleGeography, an international telecommunications market research and analysis firm, African internet leads the world in capacity growth. Growth worldwide is slowing down, but the continent growth-wise is ahead by 41%.

Growth in internet capacity has not been transferred to regular customers yet, says Patrick Christian, a senior analyst with TeleGeography.

“It’s natural that there may be a little delay between when it’s available on the wholesale side to the retail side, but we are seeing a lot of changes on the wholesale side. We’re seeing a whole lot more connectivity available, but where we’re seeing the slowdown right now is on the retail side,” he says.

“The prices haven’t dropped yet. It may be an issue of not enough competition if you only have two companies that are providing service,” he adds.

When making comparisons to other landlocked countries in West Africa, Mali still falls behind. On the Jokkolabs Bamako website, Bamako entrepreneur Gaudin makes the price comparison that shows it is only ahead of Niger and Guinea.

“The real problem in Africa, or the challenge, is getting all the bandwidth that is available in to the country. There are a lot of structural problems building out the network, etc, and there is a lot of cost involved in upgrading your network,” says analyst Christian.

The difference in service between landlocked countries and countries that line the coast of West Africa is disparate.

In 2010, two sea cables, Glow and Main One were constructed along the west coast, from Europe to Nigeria, says Christian. “This started to add some international balance to the area, but the more important cables were ACE, Africa Connect Europe, and WACS, West Africa Cable System.”

By 2013, a lot of international bandwidth was available, but it remained on the coast. “The difficult part is actually getting this bandwidth back, even within the coastal countries, but also into the centre of the landlocked countries,” he says.

Oddly enough, last November, the government announced that it wanted to make Bamako a sub-regional IT hub.

“It’s absolutely ridiculous. Because it’s impossible to even imagine that in five years that Bamako is going to attract anybody who wants to work in IT,” says Gaudin. “There is absolutely no capability for business, for an IT business to live and prosper in the Bamako environment,” he adds.

Burkina Faso is vying for the same thing. “Burkina Faso actually has a lot of onward connectivity from the various sub-cables—through Ghana, through Benin, through Cote d’Ivoire,” says Christian. Burkina Faso is already offering onward connectivity to Niger.

“They’re trying to become an IT hub to the land-locked countries in the area,” he says.

Mali has connectivity through Maroc Telecom’s fibre optic system, while the Mali Orange connection is through Senegal Orange through to ACE, the African Connect Europe cable, says Christian. He says the bandwidth is available, and has been since the beginning of 2013, but he points out that TeleGeography concentrates only on the wholesale side, not the retail side. “And things are happening on the wholesale side,” he says.

Gaudin, meanwhile, is not taking this sitting down, especially because he is losing money as his internet business was forced to close due to lack of connection. He gathered other like-minded cyber entrepreneurs to create the #Mali100mega hashtag and website to get out the word on the slow internet.

They decided to write to the Ministry of Digital Economy, the commission for water, for energy, industry, mines, artisans, tourism, technologies and the National Assembly. They got no response. From anyone.

RFI tried to repeatedly contact Choguel Kokala Maiga, the Minister of Digital Economy, but received no response.

“Everything regarding the internet, its prices, its regulation, everything is so bad, the information doesn’t get out. When you go to Orange, they say it’s the fault of the government, when you go to the government he says it’s the fault of Orange, and so on,” says Gaudin.

“We’re struggling to compete in the sub-region, let alone at international level,” says internet entrepreneur Ball.

Niger has now joined Chad and Cameroon in banning the burqa   the full veil worn by some devout Muslims   after a series of attacks across the countries in which Boko Haram suicide bombers used the religious garment to conceal their weapons. RFI's Nancy Fleming has this look at the new laws.

Niger has now joined Chad and Cameroon in banning the burqa — the full veil worn by some devout Muslims — after a series of attacks across the countries in which Boko Haram suicide bombers used the religious garment to conceal their weapons. RFI's Nancy Fleming has this look at the new laws.