Month: October 2012

“I am right back to square one,” he said.

Jamal Basala once employed 20 people on his fishing trawler. Today, his access to the sea restricted by Israel, he employs four. He used to earn $5,000 a month. Today, he accepts assistance from aid agencies and can’t afford his son’s university fees. “I suffer depression,” he said.

Mahmoud al-Hindi, a civil engineering graduate, once hoped for a career in a respected field. Today, more than a year since he graduated, Gaza’s decaying economy has yet to provide him with his first job. “You find all the roads closed in your face,” he said. “We have lost hope.”

The late Palestinian leader Yasser Arafat pledged to turn Gaza into Singapore on the Mediterranean. Today, four years of sanctions have turned it into something quite different.

The blockade, tightened as Hamas Islamists hostile to Israel rose to power, has devastated the economy and with it hopes for a better future for Gaza’s 1.5 million residents.

Israeli restrictions on Gaza’s crossings were tightened when Hamas won parliamentary elections in 2006, again a few months later when Gaza militants captured an Israeli soldier and further still when the Islamist group took full control in 2007.

Palestinian businessmen and economists count the costs in tens of thousands of lost jobs and the destruction of Gaza’s industry. Harder to quantify is the shattered hopes of young Palestinians who would leave if only they could get out.

Businessmen who saw profit and prosperity in peace with Israel now question the concept. They believe Israel’s policy has targeted them, not the Hamas group whose rule has grown only stronger as Gaza has decayed.

“Economic warfare”
Hamas is as uncompromising as ever. Classified as a terrorist group by the US and the EU, it will not yield to Western demands that it recognise Israel and renounce violence.

To Israel, Gaza is an “enemy entity”.

Yet even states sympathetic to Israel’s security concerns have criticised the embargo – pressure that contributed to a decision in June to ease some aspects of the policy.

Previously banned consumer goods and raw materials have started crossing into Gaza recently. Israel says it will let in everything other than weapons or materials that could be used to make them.

Critics point at manifold flaws in the new policy.

The quantities Israel has pledged to let in fall far short of Gaza’s ordinary needs, before taking into account the additional requirements of an economy yet to rebuild from the military offensive Israel launched against Hamas 18 months ago with the declared aim of curbing cross-border rocket attacks.

Equally important, there is no mention of exports.

“Our concern is that Gaza residents have a right not just to consume, but also to produce, export and travel,” said Sari Bashi, director of Gisha, an Israeli human rights group. “The policy of economic warfare continues.”

The quantities entering Gaza have risen. In the week ending July 24, 979 truckloads went in – a 40 percent increase on the figure a month before, Bashi said. But that is still only 40 percent of what used to enter Gaza before Hamas took control.

“Gaza needs a Marshall Plan,” said Palestinian economist Omar Shaban, referring to the US aid plan that jumpstarted Europe’s economy after World War Two. “The term ‘economy’ no longer applies here.”

Unemployment has soared. The level is currently around 40 percent, compared to around 30 percent in 2007, according to the World Bank. UNRWA – which cares for Palestinian refugees – says 80 percent of the population now depends on its food aid, up from 40 percent a few years ago.

Inhibiting recovery, Israel’s banned list includes building materials such as cement and steel – among other “dual use” goods it says could be used for military purposes.

Such materials will be allowed in, Israel says, but only for projects under international supervision.

Both are already available to Hamas and anyone else who can afford the services of smugglers who can supply anything you need through tunnels from Egypt.

“Creating monsters”
Typifying a new layer of industry based on making the most from what is available, rubble recycling has been one of Gaza’s few active sectors. Chunks of concrete, collected from the rubble of buildings, are delivered by donkey cart to plants which turn it back into bricks.

The blockade has been felt across all sectors, from food production to furniture. Industries have had to adapt or die.

Fishermen who are only allowed to sail up to three nautical miles from shore have abandoned large trawlers for smaller skiffs. Beyond the three mile mark, they risk running into the Israeli navy, which enforces the rule with Egyptian help.

Jamal Basala’s trawler, built at a cost of $80,000 in 1992, hasn’t been to sea in four years. Today, sitting on a beach in Rafah, the boat provides Basala with shade while he repairs fishing nets. “Today it’s smaller boats, smaller nets, catching fewer fish,” said Basala, interrupted by the sound of two warning shots fired by a warship on the horizon.

Wadih El Wadiah, the snack food manufacturer, has also been forced to adapt. He has turned the bomb-damaged remnants of a biscuit factory into a vegetable pickling plant. His business, like Basala’s, has gone backwards.

Wadiah has started receiving packaging materials from Israel recently. His wish list includes new machinery and access once again to the West Bank market where he used to sell most of his output. “As they have let products in, they must let them out for this crisis to end,” he said.

As businessmen in Gaza count the costs of the blockade, many have concluded that Israel has deliberately sought to destroy their livelihoods.

The policy has cost Israel what Palestinian friends it had in Gaza, said Amr Hamad, executive manager of the Palestine Federation of Industries. “We are losing the layer of legitimate businessmen who were the last layer of believers in peace,” he said. “Israel is losing friends and creating monsters.”

The London talks galvanised global support for Yemen and its government recognised the urgent need for economic and political reforms to help fight al Qaeda which risks threatening regional stability, according to a draft conference statement.

Prime Minister Gordon Brown called the meeting after a Yemen-based al Qaeda affiliate said it was behind a failed December 25 bid to blow up a US-bound plane with 300 people aboard.

Have the talks enough momentum to achieve a Yemen solution?
The botched Christmas bomb attack was a wake-up call to the US, its Western and Sunni Arab allies that Yemen’s lawlessness has reached an alarming level that could no longer be ignored in the oil-producing region.

It drove home how al Qaeda could threaten western interests from Yemen, compounding security challenges already posed by lawless Somalia just across the Gulf of Aden.

“This is a step in the right direction but a global solution and broader approach will have to follow. It is a very complicated situation,” London-based Yemen expert Khairallah Khairallah said.

“But it is the first time that all these countries are really concerned about Yemen, that it could turn into another Afghanistan or Somalia,” he said, adding: “They cannot face a state failure that can lead to worsening instability in the region and beyond.”

What differentiates this new approach to radicalism?
The meeting underlined a broader approach to tackling radicalisation in Yemen by targeting reforms, infrastructure, corruption, building institutions and most importantly addressing poverty, a breeding ground for militancy.

“The meeting is only a foundation and a starting point for all the major powers to work together but it is quite an important step really,” London-based Yemen expert Henry Thompson told reporters.

“This meeting has shown a greater level of international involvement, a much greater level of engagement from Yemen’s immediate neighbours on how to provide aid and how to foresee the implementation of this aid,” Thompson said.

What is the timeframe for fighting radicalism in Yemen?
Nobody expects a quick fix in a country beset by a Shi’ite Muslim insurgency in the north, separatism in the south, growing al Qaeda militancy, a weak state, corruption and a dire economy with 42 percent of Yemen’s 23 million people living on $2 a day.

Donors say it would take a while to gear up and provide assistance mainly because they would need to set up the mechanisms to oversee the distribution of funds.

One clear outcome of the meeting is that donors all agree that just pumping in more unregulated money or providing more military assistance as they did in the past was not enough. Any more aid will be closely scrutinised and conditioned with the Yemeni government enacting reforms.

“It’s more about trying to show international support, create unity, get a common sense of what is needed and what people’s capacity to contribute is, and then build a game plan from there,” said one US official, who declined to be named.

“Yemen is not a failed state but it’s an incredibly fragile state,” British Foreign Office Minister Ivan Lewis said.

“We want to get in there early to offer assistance and to prevent Yemen becoming a failed state,” he said.

Watched by heavily armed riot police, some 3,000 demonstrators marched towards the offices of the state-run Ivorian Radio and Television (RTI) broadcaster. Protestors chanted slogans calling for Gbagbo to give opposition parties equal access to the state media and hurry up with the polls.

Political tensions are rising in the top cocoa grower as Ivory Coast approaches the campaign period for an election meant to end years of stalemate following a 2002-3 war that split the country in two, leaving the north in the hands of rebels.

Opposition presidential candidates Henri Konan Bedie and Alassane Ouattara have complained of being marginalised by the national press, saying state broadcasters or pro-Gbagbo private media are giving the incumbent an unfair advantage.

“Equal access to state media is guaranteed to all by the law,” said a statement read out by opposition youth leader Karamoko Yayoro. “We condemn the stranglehold of the media … (exercised) by the candidate Laurent Gbagbo’s clan.”

Despite widespread fears of violence and a police roadblock preventing protestors marching onto RTI’s offices, the demonstration remained peaceful throughout.

The vote has been repeatedly postponed since 2005 but is currently scheduled for around early March. The opposition accuses Gbagbo of deliberately holding back the process to extend his mandate, a charge he denies.

After years of political instability and limbo, many Ivorians are desperate to draw a line under a crisis that has paralysed the economy and scared off investors in what was once West Africa’s economic powerhouse.

“We are in a situation of total hopelessness,” said protester Pascal Noe, 28, unemployed. “Gbagbo has brought us war and nothing else. We want out of this crisis.”

But efforts by military rulers to hand power back to civilians in both Guinea and Niger offer the best chance at progress in the vast zone, which is rich in mineral resources but notorious for coups and rebellions, Said Djinnit told reporters.

“There are governments trying, struggling to improve governance and the well-being of the people. And this has been a source of hope for me,” said Djinnit, the UN’s special representative to West Africa since 2008.

“On the other hand, we see that the poverty is still with the region, the gap between rich and poor is getting bigger, and the sense of frustration that governments are not up to the challenges of their responsibilities is growing,” he said.

Coups, corruption, insurgencies, piracy and kidnappings in West Africa are a worry for investors and Western nations that depend on the region for a growing share of their oil, minerals and agricultural commodities.

The US estimates a quarter of its oil will come from West Africa’s Gulf of Guinea by 2015, and has bumped up training operations for West African militaries to help them combat piracy, drugs smuggling and terrorist operations.

But the tumult will not stop until responsible governments are in place in West Africa to address endemic poverty that has lingered since the end of colonial rule and that has tempted many to engage in crime and rebellion.

“We cannot delink the issue of extremism from the issue of harmony in society and especially poverty. There is a sense of neglect and marginalization that can facilitate people to go to extremes,” he said.

“The core of the responsibility is with the governments.”

Djinnit said he was hopeful elections in Guinea, the world’s top producer of aluminium ore bauxite, and later in Niger, could mark some progress towards stability and potentially cement fragile gains made in countries like Sierra Leone and Liberia, which are recovering from brutal civil wars from the 1990s.

“The biggest achievement we could have in the region at this point would be stabilising Guinea,” he said.

Tribal divisions, lack of security outside towns, inexperienced government, corruption and signs that the semi-autonomous authority in the south has shown signs of repression have raised fears that an independent south Sudan may not end the problems faced by its people.

“The post-independence period – when the common denominator of self-determination is gone – could be marked by significant infighting and increased conflict on tribal lines,” Zachary Vertin from the International Crisis Group think-tank said.

Sudan watchers fear that without the unifying goal of an independent south to fight for, discontent may grow over the government’s poor provision of basic services, corruption and bad behaviour by the south’s ill-trained army.

Delayed and reluctant implementation of the 2005 peace deal between north and south, which promised democratic transformation, power and wealth sharing, elections and the prized referendum, has led many southerners to say they will vote to separate on January 9, 2011.  

The former rebel Sudan People’s Liberation Movement (SPLM), which fought the Islamic northern government over ideology, religion, ethnicity and oil and which dominates the south’s government, was kept busy ensuring the deal was implemented, leaving unresolved tensions under south Sudan’s surface.

Ethnic disunity was highlighted in 2009 when 2,500 lives were lost in inter-tribal violence. Many of the dead were women and children killed in ruthless, apparently highly organised attacks on large villages.

Southerners have accused Khartoum of arming rival tribal groups – as they did during the war – but have been unable to provide conclusive proof. Some believe rivalries among southern politicians and a security vacuum outside urban centres are to blame.

“Political jockeying is likely to intensify as elections and the referendum approach,” Vertin told reporters. “A high degree of cooperation is necessary if they are to forge a new and viable state.”

It has been a bloody process to disarm a people bristling with weapons after decades of civil war which has claimed two million lives and driven four million from their homes.

“Many communities have doubts about the (army’s) capacity to protect disarmed communities,” a report by the independent US Institute of Peace said. “Disarmament efforts have often been perceived as biased … and asymmetrical.”

The massive army, whose salaries the south has struggled to pay, has seen infighting and is accused of human rights abuses.

“In general (it) is not a united army, but rather a collection of former militias and ethnic groups, and a constant balancing act is needed to keep them together,” a report by the non-governmental Dutch organisation IKV Pax Christi said.

Foreigners, especially tens of thousands of east Africans who form a vital part of the nascent economy, complain of rough treatment with five Kenyans shot in December 2009. Most northern Sudanese have left the south after attacks on their businesses since 2005.

Some political parties have complained of harassment. A splinter group led by former SPLM Foreign Minister Lam Akol are petitioning the constitutional court after saying the south Sudan government has arrested their leaders and shut them down.

And journalists have sometimes faced harassment they say contravenes press freedoms enshrined in the constitution. Many worry about a proposed media law’s tough licensing requirements.

“Certainly, licensing would be used to control or refuse renewal to independent media outlets that are seen to be either critical of government or posing threats to vested interests,” said Hakim Moi of the Association of Media in South Sudan.

The City of Tshwane, which incorporates among other districts, Pretoria, is the administrative capital of South Africa which hosts 138 diplomatic corps, although government plays an import role in the city’s economy. The city is having six priority sectors of economic importance such as Aerospace, Agro-processing, Automotives, Creative industries, Tourism and Manufacturing. The City of Tshwane has adapted to globalisation remarkably well because of its competitive and comparative advantages, and has all the elements of a Smart City. It is:

• The home of the Automotive and Aerospace  industries with the new Centurion Aerospace village;

• Strategically situated to be accessible to South Africa and the SADC  market;

• It has a well-developed economic infrastructure  and communication network;

• A centre of 138 embassies, diplomatic corps and government in South Africa with all the national government departments located in it;

• It is part of Guateng Global Region, the wealthiest and fasted growing economic region on the African continent;

• The City is a national centre of research and learning with four major universities and seven of eight national Science Councils, i.e. CSIR (Council for Scientific and Industrial Research, HSRC (Human Science Research Council), ARC (Agricultural Research Council), NRF (National Research Foundation), MRI (Medical Research Institute), VRI (Veterinary Research Institute), and SABS (South African Bureau of Standards).

The City of Tshwane takes into account the broad economic and spatial strategies and goals of Gauteng Province, which include the re-alignment of the manufacturing sector away from traditional heavy industry input markets and low-value-added production towards sophisticated, high-value-added production, as well as the development of other high-value-added production activities in the Automotive, Aerospace, agricultural and mineral sectors.  Influenced by both global pressures and regional trends, the Gauteng Trade and Industry Strategy and the GDS identify six growth sectors and clusters for increased support and investment in the province, namely:
 
• “Smart” industries (including ICT, pharmaceuticals);

• Automotive Supplier Park;

• Centurion Aerospace Village;

• Trade and services (including finance and film);

• Tourism;

• Agriculture (agri-processing and bio-tech);

• Manufacturing (specifically of steel-related industries, automotive parts and components, beer and malt), and;

• Infrastructure expansion and investment.

Gauteng is the economic powerhouse of South Africa. The province covers 1.4 percent of the total area of South Africa, but is home to 17.1 percent of the country’s inhabitants. It is by far South Africa’s most densely populated province. Gauteng is highly urbanised. The adult literacy rate in the province (people 15 years and older who can read and write their home language) is 92.9 percent. Given the fact that the City of Tshwane falls within Gauteng, it enjoys the advantage of access to large urban markets and new technologies due to its relative proximity to well-developed nodes such as the Johannesburg CBD and Ekurhuleni. It is evident that the Finance and Business Services Sector (followed by the Manufacturing Sector) contributes proportionally the largest segment towards the economies of South Africa and Gauteng, revealing not only the strong nature of this sector, but also the economy’s dependence on finance and business activities. In Tshwane, however, the economy is dominated by the Government Services Sector, followed by the Finance and Business Services Sector.

Almost 30 percent of Tshwane’s economy is dependent on Government Services activities, followed by Finance and Business Services (22.6 percent), Manufacturing (15 percent), Wholesale and Retail (13.1 percent) and Transport and Communication (10 percent) activities. The relatively low level of diversification of the Tshwane economy has the potential to impact on economic growth rates, especially when sectors with high growth are not well represented in the area.

Innovation Hub
These assets are being used to speed up the city’s economic development strategy. One of the initiatives that is having a positive impact is the creation of The Innovation Hub, which contributes to the city’s positioning of itself as a “knowledge economy”. The Innovation Hub is South Africa’s first internationally accredited science park. It is located on a 60ha site in the eastern suburbs of the city. It is strategically located between the CSIR and the University of Pretoria – allowing synergistic interaction between these institutions and the Hub. For foreign companies entering South Africa, the hub offers a gateway to high-tech resources and new developments in the local market. It is also a transition zone – similar to “incubators” in the US – where investors can gain local knowledge and expertise. 

“Tshwane has established itself as a seat of government and a preferred residential location in the province. The future lies in growing, in parallel, a thriving business community with a strong knowledge economy base.” says Dr Gwen Ramokgopa, the Executive Mayor of the City of Tshwane. The rapid growth in the uptake of a number of hi-tech companies in the Innovation Hub’s Enterprise Building has confirmed that there is significant potential for the city of Tshwane to become an active player in the knowledge economy.

The City is also playing a critical role in enhancing itself as a smart city by providing infrastructure required. In particular, connectivity and specifically communication is vital. The City of Tshwane manages a vast electrical grid and an Information and Communication Technology (ICT) network infrastructure. This technology as presently deployed can fruitfully be applied to render additional communication services. It will generate revenue for the City whilst at the same time bringing about many cost savings for business and support the quest of “bridging the digital divide” in the city generally.

Tshwane owes its healthy local economy mainly to the strong presence of service industries in the central business district and manufacturing industries in the Rosslyn and Silverton industrial areas.

 “Tshwane offers unequalled business opportunities and a well-developed, dynamic infrastructure that allows all types of businesses to prosper and grow.”

A strong entrepreneurial spirit is also evident in the city – more than 50 percent of the economically active population are privately employed. It is also encouraging to note that knowledge-based service industries that have international links are gaining prominence, with technological innovation forming the cornerstone of their programmes.

Interesting trends have emerged regarding employment patterns, decoupling and decentralising functions and increasing importance being given to the second economy, which includes hawking, home crafts and activities in manufacturing, services and trade. The city has been adapting to these changes through local development planning that has resulted in the City Development Strategy. It is also promoting public-private partnerships and developing small, medium and micro enterprises by identifying linkages, niches and outsourcing opportunities.

Entrepreneurial Culture
The city is creating an even stronger entrepreneurial culture through its many initiatives and links with business and development institutions, the Council for Scientific and Industrial Research, the University of Pretoria, the Tshwane University of Technology and the University of South Africa.

“Tshwane does not have the sea like Cape Town, nor gold like Johannesburg to attract visitors and investors, but it does have the highest concentration of intellectual property in the country.”

Local economic development not only promotes economic growth and employment, but also increases the tax base of the city. Tshwane’s corporately inclined residents and its good, dependable workforce are meeting the challenges of globalisation head-on. The greatest challenge in the future lies, however, in ensuring further innovative and creative development so that the creation of jobs keeps pace with the population growth of the city. This can only be achieved by investing in the city’s economic development programmes, which offer investors ample opportunities in the trade and manufacturing industries.

Although the City of Tshwane is the Capital of South Africa and has therefore traditionally been an administrative city, a number of research and academic institutions have been established in the city during its history. A number of strategic investments have also been made in the city by both the public and private sectors. In 1925 ISCOR was established as a public entity to produce steel.  Although steel production has stopped in the city, its presence stimulated the investment of other manufacturers. These include a number of multinational corporations such as Ford, BMW, Nissan, TATA, Mahindra etc.  The city has therefore had a long history of working very closely with both SMEs and multinational corporations. 

The automotive and aerospace sectors are two of the sectors driving the city’s growth (7.8 percent in 2006). Both these sectors are well linked to the global value chain and many finished products are exported to discerning consumers across the globe. The ICT sector, although small by global standards is growing and finding its niche. Government has recognised the value of these sectors and has created specific infrastructure to meet their competitive goals. An Aerospace village is being developed adjacent to Waterkloof air force base.

This will enhance the competitiveness particularly of Aerosud which is a first tier supplier to both Boeing and Airbus. The Tshwane Auto Supplier Park has not only contributed to BMW’s success of the three series and also Nissan, but has also caught the eye of Tata and other Auto companies that are in the process of negotiating with the city. Tshwane’s location and infrastructure make it an ideal location to support the African Market, particularly SADC.

There are a number of high value added products that make up the City’s export basket. These include various service exports, automotive products, food and beverages, defence products, aerospace, ICT and Bio-Tech products (particularly veterinary products). A number of leading Multinational Corporations have made their base in the City of Tshwane not only because of the positive environment, but also because of the availability of critical inputs including a highly skilled workforce, and the access it provides to key markets.

Ajay Piramal is just the sort of big fish every Indian private banker would love to land. With businesses ranging from healthcare to glass and property, the 56-year old Piramal has a net worth of $1.4bn, according to Forbes, good for 39th on its India rich list.

The problem, at least for the swelling ranks of wealth managers in India, is that Piramal doesn’t need them, putting his millions instead in his own companies and  extensive property ventures.

“These are only two areas I invest in, and therefore we don’t need any advisor,” said Piramal, who is approached by private bankers “all the time”. India may be churning out millionaires, but that is failing to translate to profits for the banks that have set up teams of well-dressed, well-paid bankers to help manage those riches.

A narrow product range, falling advisory fees and billions of dollars in wealth hidden from tax officials has stifled profits for private banks, which have aggressively ramped up operations. At the same time, expenses – mostly salaries – are growing by as much as 20 percent a year, meaning many private banks must absorb potentially heavy running costs for years before they are profitable.

The industry’s difficulties in India come as more established wealth management centres in Hong Kong, Singapore and elsewhere are buffeted by poor markets. Profit margin pressure on the sector that serves the wealthy is “partly driven by a plain vanilla product platform available for clients,” said Atul Singh, head of global wealth and investment management for India at Bank of America Merrill Lynch , among the biggest players in the country.

The challenge is made greater by a poor market performance, with Indian shares sliding about 17 percent this year. A spate of corruption scandals embroiling the country’s business and political elite has also soured sentiment among the rich.

The tough conditions are exacting a toll, even as many banks such as Morgan Stanley, Royal Bank of Scotland, Barclays and Bank of America Merrill Lynch continue to add staff, with an eye to the long-term potential of the fast-growing economy. Credit Suisse, one of the largest global private banks and a player in India since 2008, is cutting its India wealth management staff by 12 people, or 20 percent, as part of a global reduction. Credit Suisse is unlikely to be the last to trim staff over the medium term, industry players said.

A dearth of fee-spinning alternate investment vehicles such as hedge funds and private equity, a $200,000 cap on overseas investments by onshore Indians, and an underdeveloped corporate bond market means most investments are channelled into run-of-the-mill equity products, bank deposits, and government bonds.

Investments in exotic assets such as art and wine are rare in India. Instead, the homegrown rich keep their money in property and gold, which doesn’t require the services of polished bankers of the sort that cater to the rich in places like London, New York and Singapore. “When product platforms are largely undifferentiated, then prices get driven down,” said Singh. “Making money is certainly tough for players in the sector, especially ones without scale.”

Many tycoons like Azim Premji, chairman of the third-largest IT services exporter Wipro and the third-richest person in India, with net worth estimated by Forbes at $16.8bn, continues to use in-house staff to manage his vast personal wealth.

In neighbouring China, wealth managers also contend with tight regulations and limited product offerings, but they also face less domestic competition. Many rich mainland Chinese invest in property or stash their wealth in Hong Kong or Singapore. Many of the richest Indians also have substantial wealth overseas and do their private banking in Singapore, Zurich, London or Dubai, where there are more investment options and where some banks cater specifically to non-resident Indians.

Cost pressure
Private banks in India charge between zero and 0.5 percent advisory fees to wealthy clients, which barely covers costs, compared to about two percent in more developed markets.Pressure on fees and rising costs have dragged down most wealth management firms’ margins to 40-50 basis points now from one to two percent a few years back.

The gradual shift from charging transaction-based fees to an advisory fee model, amid a global move to discourage selling of risky exotic instruments, has added to margin pressure. “No one is making money in private banking in India,” said the head of India wealth management at a US bank. “Margins are so very low here because very few people want to pay money for advice and your cost of operations is going up.”

To woo clients, some banks will send the adult children of entrepreneurs for short training courses at US universities on preserving and growing family wealth, giving them an opportunity to rub shoulders with the sons and daughters of rich Americans. Closer to home, private banks coddle prospective and would-be customers with wine tastings and live music and dance performances by Bollywood stars.

In 2010, the population of high net worth individuals – those with more than $1m in investable assets – rose nearly 21 percent in India to 153,000 – making it the 12th largest such market, ahead of Spain and just behind Brazil, according to a report by Capgemini and Merrill Lynch.

Black money
A large chunk of Indian wealth goes undeclared. Tax authorities say billions of dollars in funds have been deposited by Indians in Swiss bank accounts and other tax havens. A government panel in 2009 found Indian illicit funds to range between $500bn and $1.4trn, which is now nearly the size of India’s economy. Global Financial Integrity, a Washington-based think-tank, estimated illicit outflows of about $16bn a year from 2002-2006.

Technology consultancy firm Cognizant said in a report that the Indian wealth management sector in the short-term would remain fragmented with a large number of brokers, financial advisors, insurance agents and tax consultants offering services.

Bank of America-Merrill Lynch, Kotak Mahindra, and HSBC were cited by Cognizant as strong players in the sector in India because of their reach, potential for cross-selling banking products and focus on domestic equities. Big banks that have yet to take the full plunge on Indian private banking may end up looking prescient, or lucky. UBS, a global leader in private banking, is in the early stages of providing onshore wealth management services in India.

Goldman Sachs’ private wealth management arm serves high net worth Indians from Singapore but does not have an onshore presence in India, while JPMorgan has pushed back plans to launch onshore services to late 2012, according to a source with knowledge of the situation.

Rising salaries, poaching of talent and wafer-thin margins have made it tougher for smaller home-grown wealth managers to compete with the global rivals. However, while western banks bring brand cachet and global expertise, they also tend to be saddled with higher costs.

The unity government formed last year by President Robert Mugabe and his rival, Prime Minister Morgan Tsvangirai, has stabilised the economy but has yet to implement many of its agreed political reforms.

The fragile coalition has been marred by policy differences between Mugabe’s ZANU-PF and Tsvangirai’s Movement for Democratic Change (MDC) but its new programme sets a target of the end of this year to repeal and amend contentious security and media legislation.

Mugabe’s critics say the president, who has ruled since 1980, has used the laws to keep opponents in check and extend his stay in power and foreign donors have withheld funding until the new government implements political reforms.

The government plans to introduce at least 17 amendments to laws including the Public Order and Security Act, which police have used to ban protests by the opposition and unions, a document released recently shows.

The changes will also repeal the Access to Information and Protection of Privacy Act, used to ban foreign journalists from working permanently in the country.

Access to information

A Freedom of Information Bill allowing journalists greater access to official information will be introduced, while a Media Practitioners’ Bill will be tabled in Parliament to regulate the conduct of journalists.

Cabinet ministers will now be required to make monthly reports to the council of ministers chaired by Tsvangirai, who is in charge of government policy.

“The programme sets clear targets on which the government’s performance can, and should, be judged,” Tsvangirai said in a foreword to the document.

“This document is also intended to help members of parliament … in their task of holding government ministers to account for their performance.”

The government also plans a land audit to establish cases of multiple farm ownership.

The MDC has previously said Mugabe’s land seizure drive that started in 2000, in which white-owned commercial farms were redistributed among blacks, largely benefited the 86-year-old veteran leader’s allies, an allegation he denies.

“Timely implementation of this critical dimension (land audit) is likely to promote accountability and directly enhance productivity in the agricultural sector. It is therefore one of the critical targets under the government work programme,” the document said.

The Economist Dambisa Moyo’s arguments, set out in her new book, fly in the face of warnings from some African leaders, global financial institutions and campaigners that the world’s poorest continent needs more donor money to survive the downturn.

“In a way, the crisis actually provides the African governments with the situation where they cannot rely on aid budgets coming through from the West,” she told Reuters in a television interview.

“There is a real opportunity for policymakers to focus on coming up with more innovative ways of financing economic development,” said Moyo, a Zambian who until recently worked for Goldman Sachs and has just published Dead Aid.

Moyo believes Africa not only has little to show for more than $1trn in well-meant development aid over the past 50 years, but is worse off because of its effects in distorting economies and encouraging bureaucracy and corruption.

As alternatives she seeks an increase in trade, particularly with Asia, more foreign direct investment, more microfinancing and more efforts to raise money through capital markets.

The global financial crisis appears to have made all those avenues much harder, however. Kenya, Uganda and Tanzania are among states that recently shelved bond issue plans. Foreign funds have been leaving African markets.

But Moyo, who lives in London, said she was not discouraged.

“If you focus on traditional markets like Europe and the United States, you come to the conclusion that markets are really damaged and it’s very hard to raise money,” she said.

“But if you start to look towards China for example, which has $4trn or reserves, all of a sudden you could see there might be another opportunity to do a bond issue in the Chinese market for example.”

Risk
Moyo pointed to the fact that after successful Eurobond issues by Ghana and Gabon in the past couple of years, at least 15 African countries now have credit ratings that would allow them to raise funds when market conditions improve.

Africa’s economies have averaged annual growth of 5.8 percent over the past decade, but that is likely to slow to 3.5 percent or less this year as investment and prices for the continent’s commodity exports shrink, the World Bank estimates.

The bank, for which Moyo used to work, has urged developed countries not to let up in commitments to Africa to ensure that fragile groups are protected. But Moyo said any increase in political risk as a result of cutting aid could be exaggerated.

“I can’t envisage that things are going to get much worse because aid is taken away,” she said.

“It actually tends to pool at the top so it’s not like the average African is going to suffer. They don’t see the aid anyway. Essentially it’s going to really affect the bureaucratic processes at the top and would really impact on corruption.”

Moyo is unimpressed by celebrity campaigners such as rock stars Bob Geldof and Bono calling for more aid for Africa.

“I fundamentally object to the notion that Africa needs more aid and I do think it’s time to have many more Africans speak out, especially the policymakers, because many of the policymakers actually don’t support aid,” she said.

Tshwane has adapted to globalisation remarkably well because of its competitiveness. The city focuses on six economic centres as priorities for development, namely aerospace, agro-processing, automotives, creative industries, tourism and manufacturing. It is indeed a smart city by virtue of the following:

• It is the home of the automotive and aerospace industries with the Rosslyn plants and the new Centurion aerospace village respectively.

• It is readily accessible to the South African
market and the SADC.

• It has a well-developed economic infrastructure and communication network.

• It is home to 138 embassies, diplomatic representatives and national government departments.

• It is part of the Gauteng global region, the wealthiest and fastest-growing region on the African continent.

• The city is a national centre for research and learning with four universities and seven of eight national research councils, namely the Council for Scientific and Industrial Research (CSIR), Human Sciences Research Council (HSRC), Agricultural Research Council (ARC), National Research Foundation (NRF), Medical Research Institute (MRI), Veterinary Research Institute (VRI), and the South African Bureau of Standards (SABS).

The City of Tshwane follows the broad economic and spatial strategies and goals of the Goateng Province, namely repositioning the manufacturing sector towards more sophisticated, high value∞added production, which includes development in the automotive, aerospace, agricultural and mineral sectors.

Sector Breakdown
Almost 30 percent of Tshwane’s economy is dependent on Government services, followed by finance and business services (22.6 percent), manufacturing (15 percent), wholesale and retail (13.1 percent) and transport and communication (10 percent). The relatively low level of diversification in the Tshwane economy could impact on economic growth, especially when sectors with high growth are not well represented in the area.

The City of Tshwane’s Local Economic Development Department aims to accelerate higher and shared economic growth and development and fight poverty by:

• facilitating higher economic growth through investment, business retention, industrial development and trade linkages

• facilitating higher economic growth through the development of SMMEs and cooperatives, skills development and jobs creation; and

• fighting poverty through facilitating access to economic opportunities.

The Future
The greatest challenge for the future is to ensure continued innovative, value-added development so that the creation of jobs keeps pace with the population growth of the area.

This can only be achieved by investing in the city’s economic development programmes, especially in the trade and manufacturing industries.

Local Economic Development
Caiphus Chauke
+27 12 358 1361
caiphusc@tshwane.gov.za

Investment Promotion
Reginald Pholo
+27 12 358 1377
reginaldp@tshwane.gov.za

Trade Promotion
Riaan Labuschagne
+27 12 358 4563
riaanl@tshwane.gov.za

Trade Development
Joe Motshabane
+27 12 358 1425
joemo@tshwane.gov.za

Iranian authorities have been jamming foreign satellite broadcasts into their territory since late last year, affecting broadcasters such as the BBC and Deutsche Welle. Access to the internet for Iranian citizens has also been interrupted.

“The European Union expresses its grave concern over measures taken by the Iranian authorities to prevent its citizens from freely communicating and receiving information through TV, radio satellite broadcasting and the internet,” ministers said in a statement adopted at a meeting in Brussels.

“The EU is determined to pursue these issues and to act with a view to put an end to this unacceptable situation.”

The ministers said they were determined to ensure Iran lived up to its commitments to the International Telecommunications Union.

Nuclear reseach
It is not clear what measures the EU could take, but diplomats have indicated it could involve blocking European manufacturers’ export to Iran of equipment that makes it possible to intercept email and mobile phone conversations.

The French newspaper Le Figaro said that could involve equipment made by companies such as Siemens and Nokia.

It could also involve putting limitations on Iran’s broadcasting of satellite programming into Europe.

EU diplomats said the move should be seen in the context of keeping pressure on Iran over the freedom of its citizens and its uranium enrichment programme, on which the US is leading efforts to impose tighter UN sanctions.

Iran denies accusations that it is developing atomic weapons under its nuclear programme.

Finnish Foreign Minister Alexander Stubb said the EU remained committed to securing a UN Security Council resolution backing another round of sanctions on Tehran.

If that was not possible, he said, the EU should be prepared to push ahead with unilateral sanctions. They are expected to target Iranian banks and insurance companies, as well as senior members of the Revolutionary Guard Corps.

“Time is running out with Iran and time is running out really fast,” Stubb told reporters.

“We should now work on real sanctions through the Security Council. Failing that, we should move to unilateral EU sanctions. I think everyone is fed up with the Iranian government and the way in which they are conducting these negotiations.”

In its “World in 2009” feature the British news magazine The Economist  predicted, “At last, 35 years after the division of Cyprus into a Turkish-Cypriot north and a (legally recognised) Greek Cypriot south, there will be a settlement, based on the notion of a bi-communal, bi-zonal federation.” The publication must already be ruing its forecast.

True, when Mehmet Ali Talat and Demetris Christofias, the leaders of the Turkish and Greek Cypriot communities, first sat down last September, prospects looked better than at any time since 2004, when the Greek Cypriots overwhelmingly rejected the painstakingly negotiated UN Annan Plan that the Turkish Cypriots had earlier endorsed.

The UN, which has handled the “Cyprus problem” since the collapse of the unified state in 1963, three years after independence, and the EU, which made the tactical mistake of allowing the divided island to join in 2004 without insisting on a prior solution, were hopeful. There was the fact that Talat and Christofias, who had ousted his now-deceased nationalist predecessor Tassos Papadopoulos in March presidential elections, share leftist credentials as well as the belief time is running out if there is ever to be a deal to pull the island together.

“The big problem was Christofias saying the Annan Plan was off the table as it had actually sorted out much of the nitty-gritty. Both leaders have essentially had to start from scratch on everything from constitutional issues to property,” says James Ker-Lindsay, a long time Cyprus watcher currently working for the London School of Economics.

Cynics might ask – why bother about Cyprus at all? Over the years, both sides have proven themselves so resistant to reason and compromise that for international diplomats, the problem is second only to the Israel-Palestine dispute for its intractability.

Yet the investment benefits that would accrue from a solution are considerable. Indeed, the best thing that could happen to Cyprus’s economy right now – both south and north of the Green Line – would be a deal. Analysts say it could generate a peace dividend of Euro 1.5bn, benefiting tourism, construction and financial services – without factoring in any benefit from better relations between Turkey and the Greek Cypriots, and Ankara and Brussels, between whom relations have recently been strained (largely because of Cyprus)  A deal would also enable serious off-shore exploration for oil and gas, efforts at which have to date been stymied by Turkish objections that the Greek Cypriots have no authority to take decisions affecting the well-being of all Cypriots.

It would also enable the Turkish Cypriots to open up their relatively fledgling tourist industry to large-scale foreign investment (currently Turkish firms are the main investors). The north could also maximise gains from its six high quality universities that currently – despite their excellence – suffer a lack of international students.

Dimitris Hatziargyrou, the Greek Cypriot deputy high commissioner in London, remains confident. “Both leaders have demonstrated they can talk and are prepared to get down to the nitty gritty,” he says.

Others are not so sure. Talks have already moved onto property – which was always going to be the most divisive area of discussion – without resolving constitutional questions. Divisions have emerged with the Greek Cypriots arguing that Turkish Cypriot demands are essentially confederal, implying the coming together of two states – quite unacceptable given the Greek Cypriot refusal to extend any implied recognition of the TRNC. 

And the endless talking has done nothing to resolve the Catch-22 which has simultaneously been holding back a solution, intensifying northern Cyprus’s isolation and undermining the efforts of Turkey, the north’s only sponsor, to join the EU.

In violation of EU law, Ankara refuses to allow Republic of Cyprus traffic into its ports and airports until Brussels honours its 2004 promise to lift north Cyprus’s isolation by allowing direct trade and direct flights with EU member states. Brussels, in turn, has not been able to overcome the Greek Cypriot refusal to countenance anything conferring legitimacy on the “Turkish Republic of Northern Cyprus,” a state that has received official recognition from only Turkey during its 25-year life.

The deadlock infuriates Huseyin Ozel, official representative for the Turkish Cypriot’s London office, who says the EU should extend direct trade rights to the Turkish Cypriots in recognition of the fact they are the only side to have been actively looking for a solution over the past five years.

“For me as a Cypriot, the fact we cannot export our hellim cheese – almost identical to the halloumi the Greek Cypriots make – is absurd. Is the EU saying that cows from the south are European, but ours are not?”

There is little doubt that the biggest losers have been the island’s estimated 200,000 Turkish Cypriots. The paradoxical legal position of northern Cyprus – within the EU but not subject to its acquis communautaire, or body of laws – has stymied its efforts to close the income gap with the south. A spurt of growth between 2002∞2007, fuelled by construction and tourism initially increased living standards quite dramatically. Figures from YAGA, the north’s independent investment development agency, show that per capita GDP increased from around $4000 to $14,000 – still below the Republic of Cyprus level of around $21,000 but not bad for a state that still depends on the $800m Ankara gives it every year. However the economy has slowed thanks to the Greek Cypriot∞sustained block on external trade (although intra∞sland trade has increased) and to Turkey’s own economic slowdown. Construction has almost halted in the wake of the Greek Cypriot legal case against a British couple, the Orams, which has re∞ignited the many legal uncertainties surrounding property purchase in the north. 

Meanwhile, the south’s membership of the eurozone (the Turkish lira remains the main currency for the north, although the euro also circulates freely) is deepening the divide. Last year the north’s economy contracted by 1.7 percent after a 2.8 percent rise in 2007, with agriculture hit by drought and manufacturing by the lira’s fall against the euro, which has increased import costs.

However the south could also do with the stimulus a deal would bring. The EU recently suggested that along with the Czech Republic, Slovakia and Poland, (south) Cyprus would be one of only a few EU countries to enjoy positive growth, of 1.1 percent, rising to two percent next year. However critics have accused the government of being slow to respond to fears of a business slump, rising unemployment (probably to 5.1 percent by end-2009) and falling confidence. 

“We are expecting a slowdown rather than a recession,” says Dimitris Hatziargyrou, pointing to the latest government forecast of 2.1 percent (the third in as many months, after 3.7 percent and then three percent).

However the recent appreciation of the euro against sterling – by 20 percent in six months – will make 2009 a tough year for tourism and housing, as holidaymakers and homebuyers look to non-euro destinations such as Turkey and Croatia. Construction may be even worse hit, although Hatziargyrou says the expectation is for a “slide, not a crash.”

But time is beginning to run out if a deal is to happen. Parliamentary elections in the north in April benefitted the nationalists, who may slow negotiations, whilst next year Talat himself faces re-election. 

“What’s really needed is a time limit imposed by the international community; otherwise, we could go on talking forever, without any result” says Huseyin Ozel.

Others agree, pointing out that despite his enthusiasm for a deal, Christofias remains politically beholden to Greek Cypriot nationalists in Diko, the party of the late Tassos Papadopoulos. Meanwhile the UN is keeping a very low profile after getting its fingers burned five years ago, when the Greek Cypriots rejected the Annan Plan.

It is possible that the precedent set by the international recognition of Kosovo last year could encourage the Greek Cypriots to be accommodating, through fear that disillusioned Turkish Cypriots push for official recognition, particularly from sympathetic Islamic countries.

“The truth is that neither side wants to be blamed for talks breaking down. The Turkish Cypriots, because they would then be on a road to nowhere but also the Greek Cypriots, who cannot afford a repeat of the international opprobrium they received in 2004, when they rejected Annan but then swanned – without the Turkish Cypriots – into the security of the EU,” says Ker-Lindsay.