Trading And Investing In & Out Africa

APRIL 15 - MAY 14, 2004

Dr. Bienvenu-Magloire Quenum
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Welcome to Africabiz Online Synopsis RSS Feed edition. Previous issue available at this link

Dear faithful reader,


Previous delivery compared two indicators used to benchmark the wealth at the disposal of a country's citizens: the per capita Gross National Product (GNP) and the Parity Purchasing Power (PPP).

The conclusion was that per capita GNP is closer to the economic reality existing in developing countries than PPP. In the contrary, PPP gives a good picture of the economic status when applied to developed countries.

What are the reasons for the difference of appreciation between developing and developed countries?

In developed countries, the economy is legally run by owners. They pay taxes and duties to the state. Therefore the state garners sufficient budgetary funds to pay civil servants, undertake investments in infrastructure (roads, highways, schools, public universities campuses, hospitals) and sponsor other realizations to satisfy communities' needs (telecommunications, welfare infrastructure, utilities' supply).

In the contrary, in developing countries, the "legal" economy - the one that pays taxes and duties is weak. The number of legally run businesses is not sufficient for the states to garner taxes and duties for the national budget. Sixty percent of the economic output is provided by "gray" or underground economy that pay neither taxes nor duties.

In developing countries, national budget's revenues are generated at 90% by custom duties and taxes on imported goods or exported commodities. Most of the times, duties levied on imported goods represent up to 100% of the Cost Insurance and Freight (CIF) prices. Therefore, the acquisition of machinery or equipment are costly to set up businesses, which translates in high cost of production of manufactured goods.

In addition, in most African countries, the economy is either sluggish or stagnant experiencing growth rates in the 1% - 9% bracket - which is not sufficient for the take off. Therefore, the quantities of imported goods are not important to generating abundant taxes and duties to the national budget. Consequently, the state, in the developing world, is constantly on the verge of bankruptcy and cannot carry out vital infrastructures and even pay the salaries of civil servants.

In short, a vicious circle. Non performing legal economy and "buoyant" gray economy.

Nevertheless, it is true that "black" economy, which represents in some African countries up to 60% of the economic output - outside the rural sector - provides survival means to the majority of the populations. It also plays a strong "buffer" role to dampening social unrest's occurrences. In the contrary, the development of the underground economy is simply a national disaster as it develops criminality and reinforces corruption.

However, the existence of "black" economy, in spite of the crucial role it plays to cooling down the social atmosphere - exacerbated by the high level of poverty existing in African countries - represents a powerful hindrance to set up strong, healthy and high performing "legal" economies in African countries.

Yet, without a strong "legal" economy there is no way a poor country could build up riches at national level to uprooting poverty. Indeed, "black" and underground economies do not create riches for the entire nation. They only provide wealth to small groups of people at the disadvantage of the national budget.

The brief description that follows highlights some of the negative effects the "black" and underground economies have on the set up of a strong healthy economy in a sub-Saharan African country:

- First - The risk does exist for some SSA countries, which populations thrive in "black" economy (making their living "sucking the blood" of their neighbors endowed with natural resources) to loosing their independence and national identity. Nigeria's Police and Special Forces borders' crossing to Benin - that occurred several times in 2003 - standing as example.

- Second -
Fraudulent massive importation of all kinds of goods and commodities performed by black marketers and underground economy practitioners "suffocate" the rare entrepreneurship's initiatives occurring in African countries. "Legal" economy's operators cannot compete against the dumping selling prices of fraudulently imported goods. In addition, the government garners no taxes, rates and excises.

- Third -
Trans-borders smuggling in relation to the underground economy - and "black" economy - reinforces the development of corruption within the rank of customs officers, the Police, the Army and civil servants - to the highest level of the hierarchy. It also helps raising the level of criminality on national and interstate levels.

There is much more to say about the nuisance of "black" and underground economies on the road to building healthy "legal" economies in emerging countries. We shall, however, stop here discussing about and stress out that the only alternative left to breaking the vicious circle existing in developing African countries (not enough jobs creation to cope with the increase of the populations; not sufficient wealth building to alleviate poverty) is the setup of a strong economy that generates double digit growth rates year in year out over long period of minimum 30 years running.

"CONTRIBUTOR'S GUIDELINES" are available here. We invite you 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 on May 15, 2004.

Dr. B.M. Quenum
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Comparison between GNP and PPP

Business Opportunities


Gari is a fermented, gelled and dehydrated food produced from fresh cassava. It is a popular diet in Nigeria, Benin, Togo, Ghana and in other West Africa's countries. The consumption area even expands to Central Africa: Gabon, Cameroon, Congo Brazzaville and Angola.

Gari is a granulated, white or yellowish product - depending on production methods. It has 10 to 15% moisture content that permits a long conservation ( up to one year) period in normal atmospheric conditions.

As exposed in previous deliveries, fresh cassava contains cyanhydric acid (HCN) that should be eliminated from any product originating from cassava to render it fit for human consumption. Depending on the production method (particularly traditional methods) gari could contains up to 20 mg / kg of HCN - against 43 mg / kg for fresh peeled cassava. However, after one month of storage there is only traces (2 mg / kg) of HCN. One should remark that a gari sample that contains 30 mg / kg of HCN is not proper for human consumption.

Gari has a high swelling capability and can absorb up to 4 times its volume in water. It is a popular diet eaten in may flavors:

- In sugared water.
- With groundnuts and sugar, in water.
- Transform in pasta with hot water and eaten with a variety of sauces (vegetable, meats, fish).

Issue 61 deals with the African market and international market of Gari.

1- Roots & Tubers Market in Qatar
2- Roots & Tubers Market in Europe
3- Food Security: In Sub-Saharan Africa
In Latin America and the Caribbean
4- Roots and Tubers: A Vegetable Cookbook
by Kyle D. Fulwiler
5- Tuber Crops
by N. M. Nayar

6- Roots, Tubers, Plantains and Bananas in Animal Feeding
Proceedings of the Fao Expert Consultation Held in Ciat, Cali, Colombia 21-25 January 1991
7- Pest Management for Tropical Roots & Tubers Workshop on the Global Status of and Prospects
8- The Tropical Tuber Crops
Yam, Cassava, Sweet Potato, and Cocoyams by I. Chukuma Onwueme

Adobe Acrobat Reader Is Available here

More on Introduction to Gari

Control Your Desktop


There are many option to sending a large file over the net: 1- Split the file with a file splitter; 2- Post the file on a personal server and send the link to the file to your correspondent. 3- Use a third party server to post the file and send the link to your correspondent. 4- Make use of a dedicated Virtual Network Computing system.

I occasionally use second possibility as I do not send large file often. If you have a server of your own or have access to one it is the best option that costs you nothing.

If you send regularly large files to people around, option one is not user friendly. Your correspondent must have the same utility installed you use to split the large file, to join the splitted chunks.

There are on the marketplace several offers related to option N° 3. Africabiz online reported about one in a previous delivery (22 and here). That one is web based. Once on the provider webpage you reach the send page end proceed. Charges are on monthly basis.

Option N° 4 give you a private channel for peer to peer computing with your correspondents. Here is described a secured, firewall-friendly platform for peer-to-peer networking that is FREE to use.

Here is another server based offer that use your normal e-mail system. You have to install a small utility called FilePc that includes a add-on button to your mail system. When you send a large file, the file is automatically load to the provider server and a link is send to your correspondent. Simple and very efficient. Your e-mail system is not overloaded. It just send the link to your counterpart. Up to 50 MB of server space, it is free. Above 50 MB, the pricing is fairly reasonable and far cheaper compared to the previous possibility (22).

Click here to reach filePc webpage

More  on peer to peer networking

Freebie Of The Month


Here is a very useful website for the new comer to business and the seasoned one alike. Plenty of advises and a free course that make you comfortable with business strategy and management skills improvement. The Entrepreneur booklet is a must have (it cost 34 bucks though!)

Go and have a look for yourself


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