Africans-Stop-Being-Poor
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1563-4108

AFRICABIZ ONLINE SYNOPSIS RSS FEED
Trading And Investing In & Out Africa

ISSUES 40 & 41 - VOL 1
AUGUST 15 - OCTOBER 14, 2002

Dr. Bienvenu-Magloire Quenum
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Welcome to AFRICABIZ, Please scrolldown to see more

Welcome to Africabiz Online Synopsis RSS Feed edition. Previous issue available at this link

Dear faithful reader,

- AFRICABIZ editorial team is taking one month break from September 1 to September 30, 2002. Therefore this delivery stands for two issues: N° 40 / August 15 - September 14; and N° 41 / September 15 - October 14, 2002.

On September 15, this same delivery will be posted again to the new comers to AFRICABIZ... and thus to the whole mailing list of AFRICABIZ.

Our next new issue N° 42 will be posted on October 15, 2002.


AFRICAN COMMODITIES IN THE GLOBALIZATION JUNGLE

Since the 1985's, the beginning of Structural Adjustment Program (SAP) enforcement by the IMF and the World Bank, the so-called "globalization" of the economy took hold of the entire world and tightened its grip around sub-Saharan African countries fragile economies.

Sub-Saharan African countries are forced to compete, within the biased rules and regulations of the Uruguay Round / World Trade Organization (WTO), against the heavyweights countries of Americas, Europe, and Asia. They are obliged, under SAP, to renounce to or alleviate any subvention granted to their vital economic sectors (Utilities, and agricultural produces in particular), while America and Europe continue to granting billion of US$ financial subventions to farmers. (See Farm Bill in the States and Common Agricultural Policy - and CAP - in The European Union).

Furthermore, the selling prices of mineral and agricultural commodities produced by African countries (Iron, copper, manganese, coffee, cocoa, cotton, tea, and cashew nut. Etc.;) are under pressure from the "legal" trading speculation undertaken by international investors acting under the powerful umbrella of bourses located at Paris, Chicago, London, Amsterdam, and Singapore.

It is not a surprise therefore that the selling prices of African commodities are constantly submitted to highs and lows on the marketplace. Dramatic high and low - more lows than highs - fluctuations on which African decisions makers - private and governmental alike - have absolutely no say. (Visit New York Board of Trade (NYBOT) and click on Prices & Quotes tag to review prices' fluctuations of sugar, coffee, cocoa, cotton; you may also visit WorldBank website to download Pinksheets about Monthly commodities prices data in summary format.)

These unpredictable prices's trends make it difficult for the majority of industrial and trading African companies in the commodities's sector to plan for efficient marketing campaigns and budget for sound forecasted revenues.

Sometimes a minor nosedive of international selling prices of tropical mineral and agricultural commodities triggers, in sub-Saharan African countries, painful tightening of belt or final closing of shops.

QUALITY OF PRODUCTION, STRICT CONTROL OF THE COST OF PRODUCTION AND "INDEPENDENT" MARKETING STRUCTURE


The biased rules and regulations setup by the Uruguay Round, which put on the same competition pitch first division European, American and Asian countries - (heavily pampered with financial subventions in the range of US$ billions, and additional economic facilitations) against amateurs players from sub-Saharan African countries, are now well known and fiercely confronted by the anti-globalization movements.

Some diplomatic efforts are also currently made by African states's decision makers, within the legal frameworks of the World Trade Organization, to search for compensations. Click here for a Statement made on December 6, 2000 by Mike Moore the Director-General of the World Trade Organization and here for more on the state of negotiations - on April 8, 2002 - in the agriculture sector.

However, time will pass by (in the range of several decades!) before African countries gain something substantial from the powers of the day.

In the meantime, in addition to the lobbying efforts to obtaining compensations, African countries will be better off, in the prevailing jungle of economic globalization, if they get organized; adopt efficient management practices to producing value added products at competitive prices. Because, for would be international purchasers of commodities or any industrial product, only matter quality, product availability, delivery on time at agreed purchasing and competitive prices.

Documents and analysis produced for the Conference on export development of cashew nut from Africa, organized by the International Trade Center - ITC; Cotonou, Benin, July 22-26, 2002 (Click here for more) revealed some of the many obstacles and hindrances encountered by African producers of tropical commodities in the marketplace. (Documents and papers related to the Conference are available here at the international Trade Center's website. Click on the Events tag once on the website or make search with: cashew nut, Cotonou, Benin, July 22-26, 2002.)

THE USEFULNESS OF BUSINESS-TO-BUSINESS E-COMMERCE FOR AFRICAN COMMODITIES

To help solving the marketing problems encountered by Africa's cashew nut producers, ITC planned for the setup of a website portal dedicated to the promotion of African cashew nut on the international marketplace. (Paper drafted for Cotonou's Cashew Conference by Mrs. May El-Darwish - ITC's Associate Market Analyst - titled: "Introduction to, and demonstration of, the networking program developed for the project" - available here at ITC website, gives more information about the portal.)

- The website will be a meeting point for African producers of cashew nut: Benin, Burkina Faso, Cote d'Ivoire, Guinea Bissau, Senegal, Kenya, Madagascar, Mozambique, Nigeria, Tanzania - (Click here for countries briefs) and for international purchasers.

Transactions directly undertaken from the website will be made in complete transparency. The influence of speculators having less impact on the selling prices. High and low fluctuations above mentioned will be less jumpy. African producers will be in a better position to exercising more control on the selling price of their product.

Other sub-Saharan African countries' producers of mineral and agricultural products (Iron, copper, manganese, coffee, cocoa, cotton, tea. Etc.) will be better equipped, at the international marketplace, first to protecting their market share; and second to controlling the selling price of their product, if they set up similar Business-to-Business e-commerce portals.


"CONTRIBUTOR'S GUIDELINES" are available here. You are invited to contribute to AFRICABIZ ONLINE MONTHLY ISSUE - with articles related to "How Africa Could Bridge The Developing Gap".

Many thanks for subscribing to Africabiz. See you here on October 15, 2002.

Dr. B.M. Quenum
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Click here for the cashew conference at Cotonou


Business Opportunities

TROPICAL FRUIT INDUSTRY AS INCOME BUILDING POWER FOR AN AFRICAN COMMUNITY / PART VII: SOME INVESTMENT FIGURES ABOUT A MEDIUM SIZE TOMATO PASTE PROCESSING UNIT

In previous issue demonstration was made that if the technical management of a tomato plantation is well organized; particularly if trickle irrigation is applied and pest control up to standards, the expected yield per hectare could be in the range of 50 metric tons (conservative estimate) per hectare. That gives the cost of production of one metric ton of fresh tomato to be approximately: US$ 43.82 from which a selling price of US$ 52.58 (20 % profit margin) was adopted.

Let's consider investment related to establishing a medium size processing plant for the transformation of 15,000 metric tons of fresh tomato into 2,143 metric tons of double concentrated tomato paste at 28° I.R. One shift; 6 days / week (312 days / year); 48.077 metric tons of fresh tomato per operating day:

Items
Amount
(US$ x 1,000)
INVESTMENT

Total investment

2,460
PRODUCTION LEVEL
Tomato Concentrate at 28° = 2,143 metric tons
OPERATING COSTS

Operational Expenses: Raw material purchasing (fresh tomato, salt and so on) - production costs - insurance - utilities - staff and hands / management salaries - external management assistance - amortization - interests on loan and so on.

1,419
PRODUCTION COST PER METRIC TON
2,143 metric tons of Double Tomato Concentrate Paste at 28° I.R. =662
GENERATED REVENUES*
2,143 metric tons of paste x 1,500 US $ per metric ton3,620
GROSS PROFIT2,201

GENERATED REVENUES*: Figures listed in the pricing table here available show that the cost of production of one metric ton of tomato paste (obtained in optimized cultural and processing conditions in an African country) competes well with purchasing prices of imported products and allows for hefty profit margin.

Generated revenues above reported were conservatively calculated with a selling price (US$ 1,500) far below prevailing international prices. The management will have enough cash flow to servicing debts and increasing processing capacity if necessary.

- This is a real niche opportunity for an international investor or African country to improving its foreign exchange balance. It is also a perfect Economic Catalyst

More on the processing plant of tomato paste


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