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Prospects for Participation of ECOWAS Forces in Mali

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The Economic Community of West African States (ECOWAS) held a meeting of heads of Armed Forces Headquarters of the countries which discussed the terms and elaborated the specific plan of sending troops to Mali to protect the country’s territorial integrity.

On June 29, ECOWAS summit press release was published revealing the Community’s decision to “immediately” send a “technical assessment group” to Mali to make preliminary preparations for the arrival of “ECOWAS Mission to Mali” planned for the nearest future.

Creation of the unrecognized self-proclaimed state of Azawad in the region of Sahel contributed to increasing risks of spreading instability in the neighbouring countries.

Armed groups of young people are arriving in Gao from Burkina-Faso, thus increasing the number of foreign recruiters. The troop they formed now has about 300 members. Today, the group of foreign combatants from neighbouring countries also includes immigrants from Senegal and Cote d’Ivoire. In fact, it means that the conflict goes beyond the state of Azawad and the conflict between Tuareg tribes and Mali’s authorities, and therefore, may be rescaled into a regional one in case of aggravation thereof. Training camps of Islamic groups Ansar ad-Din and MUJAO demonstrate good military education and religious background which increases the risks of turning of military operations into terrorist attacks similar to those in Iraq and the countries surrounding Mali, and causes religion to influence political processes.

Such mobilization, in our opinion, has little to do with the aspiration to form a unified state by all the 7 large Tuareg confederations. Tuareg’s policy in the North of Mali is shaped mainly by two large confederated tribes of Ifoghas and Idnan with their long historical presence in the North-East of Mali. Representatives of the hierarchical governance of these tribes show the most powerful influence in MNLA. This movement’s success in Mali resulted in support thereto by representatives of other tribes and families which found it to be the first organization that was really worth support.

However, we believe that the activities of radical organizations cause motivation of participation of many supporters of Azawad’s independence in the political process to turn more religion-oriented. Thus, organization Ansar ad-Din follows the policy of keeping fixed borders in Mali and elimination of Sharia norms throughout the whole territory thereof. This ideology is obviously supported from abroad since the group’s leader Iyagh Ag Ghaly created the group after his return from the KSA where he had worked in the capacity of the Consul of Mali. Such rotation allows the extremist forces to gradually strengthen their position all over the region inhabited by Tuareg (especially Ifoghas tribes) and prepare a firm base for their activities in southern areas of Algeria.

We confirm our prognosis revealed on September 9, 2011 in the Da Vinci AG Breaking Report under the title Outlook of the Situation in Libya and the Regions after Kaddafi’s Regime Collapse regarding high risks of destabilization of the situation in Niger.

Notwithstanding the fact that the new state of Azawad is not likely to be recognized by the world community such outlook will hardly influence the stability therein. The necessary goods may be smuggled. At the same time, de facto lack of economic institutions and national statehood structure prevents possible conflicts for influence between Tuareg tribes.

The key problem in the negotiation process is lack of powerful political forces on the continent able to influence Tuareg tribes. Forced settlement of the issue will not bring the desired outcome and will facilitate increase of military and political, social and economic risks in the neighbouring countries. At the same time, delaying the settlement of the conflict imposes a significant threat for the region’s stability and suggests high probability of radical groups expanding their activities in the neighbouring countries.

  1. According to our estimations, the optimal way of settling the issue is elimination of the radical compound in Azawad. According to MNLA press-secretary Ham Ag Sid Ahmed, “Tuaregs want not to be taken as “terrorists from other regions, representatives of completely different culture while the Tuareg culture is based on tolerance, dignity and respect”. This is proven by the fact that Tuaregs have driven Islamists out of Tin- Bouktou. Then MNLA leaders attempted to settle the issue with the help of political means. However, negotiations between them and Ansar ad-Din leader Iyagh Ag Ghaly produced no result because Salafists insisted on turning Azawad into an Islamic republic and introduction of Sharia norms within the region. Therefore, we predict that the recipe of success in settling the situation is stimulation of split between Tuareg tribes and radical groups close to AQIM and Ansar ad-Din. In this case, the scenario suggesting support to Ansar ad-Din as an ally in the struggle against MNLA, in our opinion, is extremely dangerous and unpredictable. MNLA General Secretary Bilal Ag Cherif – like Iyagh Ag Ghaly – represent the same tribe of Ifoghas which points out at the probable future change in MNLA policy that will face the issue of recognizing the state of Azawad. As a result, MNLA may suffer a split, and a large fraction may separate supporting the scenario according to which the authorities will be forced to form a federation on the territory of Mali with the Islamic autonomy of Azawad. Achieving this task will result in the spread of violence to the South of the country influenced by the increase of significance of the religious factor for the confederation of Ifoghas tribes. This means that in future MNLA leaders may share their power over the tribes with the representatives and allies of Ansar ad-Din.
  2. Bamako’s inability to form legitimate government strengthens MNLA’s position creating political vacuum within the country and encouraging Tuareg tribes to support powerful groups of the radical forces. Financial and military and technical support of the Malian regular army in exchange for the democratic procedure of electing new leadership in the country is a more efficient scenario than sending ESF troops.

We believe that the most efficient scenario of the conflict settlement is:

А) legitimization of the transitional government and ensuring representation therein of members of Captain A. Sanogo’ group.

B) Declaring official Bamako’s readiness to commence negotiations on granting broad autonomy to Azawad or federalization in case of liquidation of terrorist cells therein. Such step will also allow to reduce tension in the neighbouring Niger.

C) Enhancing protection of Mali’s northern borders with Algeria and Burkina-Faso aimed at blocking smuggling channels including drug trafficking from the South America. Reinforcement of border control will allow to slacken the position of groups close to AQIM by cutting off financing and to facilitate establishing a dialogue with Tuareg representatives from Bamako. Liquidation of financial channels of Ansar ad-Din will allow to return some of the militants members thereof to the MNLA troops they left.

We believe that in the event of military operations undertaken by ESF they will face direct confrontation only with MNLA forces. This will strengthen the position of juhadists due to changing the power balance. In such case, the latter will get more room for manoeuvres and the possibility to undertake attacks in the country’s central and southern regions.

External intervention will facilitate consolidation of tribes supporting the creation of Azawad and enhancing inter-tribe confrontation within the country and the frontier areas, as well as intensify sentiments of the religious part of the population in respect to jihad. Such intervention may be resorted to in some other countries within the region as a trigger for activation of fundamentalism (e.g., in the North of Nigeria).

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Africa

Economic and investment potential of Gambia

Kester Kenn Klomegah

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The Gambia is a small country in West Africa and is entirely surrounded by Senegal except for its coastline on the Atlantic Ocean. English language is the official language. The Gambia’s economy is dominated by farming, fishing and has excellent natural spots for tourism. Previously, the United Kingdom and many EU countries constituted its major domestic export markets. However, in recent years, the United States, China and Japan have become significant trade partners of The Gambia. Despite that, The Gambia looks forward to developing a strong economic partnership with Russia and former Soviet republics.

In this interview, Alieu Secka, the CEO of The Gambia Chamber of Commerce and Industry, (who is also an accomplished corporate governance expert, industry leader, entrepreneur and business practitioner), recently shares his thoughts about opportunities available for potential foreign investors in his country with Kester Kenn Klomegah, an independent researcher and policy consultant on African affairs in the Russian Federation and Eurasian Union.

In your objective assessment, what can you say are the current achievements or gains in the economic sphere under President Adama Barrow? 

Since last year, The Gambia’s economy has begun to rebound. Firstly, the foreign exchange rates have been steady throughout. Secondly, inflation is contained, and most importantly, The Gambia’s export cover has risen from 1 month to over 4 months. Economic growth is expected to continue to rise up to 4% in the coming year.

How has your organization promoted the country’s business and investment potentials abroad, especially towards Russia and Eurasia (for example, Kazakhstan, Belarus) direction? 

The Gambia Chamber of Commerce is the private sector partner to the government. It has direct links with many Chambers of Commerce worldwide and is member of the International Chamber of Commerce, and receive enquiries throughout the globe. We have attended various state missions and business forums with the both President Adama Barrow to Belgium, France and Turkey, as well as with Ministers elsewhere. We share stories of business opportunities, plus our work with partners and give interviews to media houses throughout. Last year, we signed an MOU with Belarus Chamber of Commerce and hope we can expand to Russia and other Eurasian countries.

Can you discuss the main economic sectors that are currently attracting foreign investors to The Gambia?  

The Gambia has tremendous potential for businesses from Russia and Eurasia in many sectors such as infrastructure, agribusiness, health services, tourism and education. As The Gambia prepares to host the next Organization of Islamic Countries (OIC) in 2019, foreign direct investment is expected to peak including the Airport, Gambia Ports Authority, industries for agri-processing and packaging, and new luxury hotels to be built.

I should also mention that tourism is one of the biggest foreign exchange in The Gambia contributing some 18% of our Gross Domestic Product (GDP), and we have tried to work with some Russian travel companies to bring Russians to come enjoy the beautiful sandy beaches on the Atlantic Ocean and tropical weather year-round, build resorts to Russian taste etc. Cement production also has huge potentials as we see building construction expansion expanding each year.

What challenges still remain in order to make way for optimizing foreign involvement in various economic sectors? 

Air access is still a challenge for many entrepreneurs, even though we have regular schedule flights on Brussels airlines 4 times weekly and on Royal Air Maroc daily, and some 50 flights weekly from our tourism source markets. Unfortunately, these tourist flights mainly from England, Holland and Spain are seasonal, and therefore I believe this further provides an opportunity to invest for direct flights to Banjul.

What investment incentives and kinds of business support have been made available for foreign investors in the country?

The Gambia offers an attractive package to FDIs including tax holidays from 5 to 8 years, duty-free on equipment, access to land and affordable labour, 500 hectares of arable land for agriculture. Both The Gambia Chamber of Commerce and Industry, and Gambia Investment Promotion Agency, plus many other ministries and agencies will support investors to achieve their target goals including business registration and permits within 24 hours.

Over the past few years, which external countries have been active in The Gambia? Can you also discuss the kind of economic spheres there are engaged in and possible reasons why?

The traditional investors in The Gambia have been the British, Lebanese and Indians. Increasingly, more Turkish and Chinese companies are showing interest and investing in The Gambia. Many foreign businesses are in the real estate, tourism services and hotels, infrastructure development, renewable energy, fisheries, trading in essential commodities like rice, sugar, oil, building materials etc. Many products are imported from Asia, South America and re-exported or transited to neighbouring countries, making The Gambia the supermarket of southern Senegal, Guinea Conakry, Bissau, Mali and others in ECOWAS.

Do you see Russians as potential investors and/or partners for business and investment in your country? As the CEO of the Chamber of Commerce and Industry, would you advocate for a broader economic cooperation between Russia and The Gambia?

The Gambia and Russia have recently opened an embassy and consulate respectively, meaning that there is political will to strengthen relations between the two countries. It is now for Russian businesses to come and enjoy the sun, peace and paradise that The Gambia offers in all sectors of the economy as we have seen them invest in Turkey and elsewhere.

There are good reasons why there are so many British tourists flock to The Gambia, and 1 out every 3 return many times. Also, there is a new free economic zone being developed that can yield tremendous returns for processing and imports to the region with a market of more than 300 million, despite our small population of 2million. The Gambia is also presently considering applications in the oil industry.

At Gambia Chamber of Commerce, it is our obligation to support all businesses and where necessary to introduce local partners. We will welcome the strengthening of economic cooperation between Russia and The Gambia, and will work with the embassies to facilitate and receive business leaders so that they can experience the warmth and benefit from our unique location known as the “smiling coast of Africa.” As CEO, I look forward to the first delegation of Russian entrepreneurs, as we had welcomed Russian travel agents and media to The Gambia, when I was Chairman of The Gambia Hotel Association.

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South Africa: Better Education & Spatial Integration Crucial for Reduced Inequality, Job Creation

MD Staff

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In an environment of accelerating but still modest growth, government policies that stimulate competition and create the fiscal space needed to build a skilled labor force from the poor population of South Africa, would create jobs and help reduce inequality, according to the South Africa Economic Update released by the World Bank today.

The World Bank expects real growth in gross domestic product (GD) to accelerate from 1.3 percent in 2017 to 1.4 percent in 2018, supported by a rise in confidence, global growth and benign inflation. For 2019, the forecast is 1.8 percent and 1.9 percent in 2020. But despite this modest rebound, growth in South Africa remains constrained and continues to lag behind its peers. Overall, South Africa is projected to remain largely below the average growth rate of 4.5 percent in 2018 and 4.7 percent in 2019 in emerging markets and developing economies.

“This outlook calls for fundamental policy action to turn the economy around through policies that can foster inclusive growth and reduce inequality,” said Paul Noumba Um, World Bank Country Director for South Africa.  “Creating labor demand and fiscal space to finance improved education as well as reinforcing spatial integration will enhance the ability of the poor people of South Africa to participate meaningfully in the economy”.

The special focus section of this 11th edition of the South Africa Economic reviews the evolution and nature of South Africa’s inequality – among the highest in the world– arguing that it has increasingly been driven by labor market developments that demand skills the country’s poor currently lack. It suggests that significantly raising South Africa’s economic potential will require breaking away from the equilibrium of low growth and high inequality in which the country has been trapped for decades, discouraging the investment needed to create jobs.

Simulations assessing the potential impact of a combination of various policy interventions on jobs, poverty, and inequality suggest a scenario in which the number of poor people could be brought down to 4.1 million by 2030, down from 10.5 million in 2017. This would be driven by increasing the skilled labor supply among poor households through improved education and spatial integration as well as increasing labor demand through strengthened competition.

In this scenario, the Gini index of inequality would be reduced from 63 today to 56 in 2030. An additional 800,000 jobs would be created with higher wages for workers from poor households, and cheaper goods and services contributing to these outcomes, according to the report.

In the short term, these policy interventions would include, getting the implementation of the recently granted free higher education right, continuing to address corruption, improving the competitiveness of strategic state-owned enterprises, restoring policy certainty in mining, further exposing South Africa’s large conglomerates to foreign competition and facilitating skilled immigration,” said Sebastien Dessus, World Bank Program Leader.

In the longer term, the report suggests that improving the quality of basic education delivered to students from poor backgrounds and reinforcing the spatial integration between economic hubs, where jobs are located, and underserviced informal settlements, would reduce poverty and inequality and support job creation.

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Can Insurance Help Low-Income Ethiopians Cope With Risk?

MD Staff

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Photo: Binyam Teshome / World Bank

The loss of crop or livestock as well as concerns about illness and accidents are key financial expenses on the minds of low-income Ethiopians.

Unexpected expenses associated with these issues are relatively common. A third of low-income Ethiopian households experienced at least one major health issue in the previous year, often paying for it out-of-pocket.

In rural areas, almost 50% of households experienced some agricultural loss in the previous year. For three-quarters of these households, these financial losses accounted for more than half of their income in a typical year.

Yet even though these crises affect a large number of the population, Ethiopians don’t have adequate mechanisms in place to cope with the financial hardship they bring.

“People don’t put money aside to deal with risk. Instead, they rely on cash and savings, if they have them, borrow money from family, if possible, or as a last resort, sell livestock to cope with these unexpected shocks,” said Craig Thorburn, a Lead Financial Sector Specialist with the Finance, Competitiveness and Innovation Global Practice of the World Bank Group, and the technical lead for a FIRST Initiative funded project that produced the new report What People Want: Investigating Inclusive Insurance Demand in Ethiopia.

Informally borrowing money is a common coping strategy as loans from formal financial institutions are expensive and hard to get. However, when a crisis, such as drought, affects an entire community, informally borrowing money from relatives isn’t a viable option. And selling livestock may inject rural households with quick access to cash, but this approach ultimately leaves families poorer and less resilient.

Last year, the World Bank Group conducted a demand-research study in Ethiopia to examine risks low-income households face and see whether insurance could be a tool that Ethiopians could tap into to reduce and better manage these financial burdens.

This country-wide survey reached close to 3000 households, totaling 13,000 people, from both rural and urban areas.

“Understanding the needs of underserved populations, including low-income households, is key to developing quality insurance products and expanding insurance markets,” Thorburn said. “Without this knowledge, potential insurers wouldn’t understand the real and perceived risk of this unserved market segment.”

The survey found that people had little knowledge or experience with insurance, and that 50% of surveyed households never heard of insurance. However, people expressed interest in it if insurance products were devised as accessible and inexpensive.

Ethiopians have unserved needs that could be met with affordable products they actually want.

For example, 97% of focus group participants indicated they would buy a proposed prototype crop insurance product if it were available to them, as it would allow them to replace lost income and buy inputs for the next crop cycle.

And for health-related issues, the survey found that while many people fear a high-cost illness, they could manage many basic expenses with their existing resources, with 75% reporting that they were able to fully recover from financial hardship. This indicated that a well-designed insurance product could leverage existing strategies such as savings, and provide peace of mind. Interest in a hospital cash prototype was high, with close to half of participants willing to pay an actuarially sound premium.

This openness to insurance could provide a great opportunity for insurers, particularly if they can customize and tailor their products to suit customers’ needs.

While this initial research indicates that low-income households are interested in insurance, it would require insurers, the government and other stakeholders to work together to develop insurance products that are accessible, affordable and appropriately designed for people’s needs. Other aspects related to extending the insurance market would need to be considered as well. These include adapting the regulatory framework to motivate insurers to enter this market and devise financial education programs to educate people on insurance.

“Ethiopia provides a significant opportunity for insurers to expand their businesses, the government to improve the overall stability of the low-income population, and low-income people to stabilize their economic status,” said Thorburn.

Focus group participants indicated they would be most likely to purchase insurance from formal financial institutions, such as banks or microfinance institutions, which would bring stability and financial capacity. They indicated that they would be less likely to purchase insurance through informal formal groups, such as savings and credit cooperatives or Edirs, which are well-ingrained local community-based organizations created to help cover funeral expenses.

The World Bank is working in Ethiopia to create an enabling environment for inclusive insurance.

These survey findings are part of a broader World Bank study that that looked at supporting more inclusive insurance markets in Ethiopia.

This study and the report were done jointly with MicroInsurance Centre at Milliman and EA Consultants. The study and the report were funded by the FIRST Initiative.

World Bank

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