Tanzania - a new regional power house for East Africa - 坦桑尼亚

 

Serengeti National Park, Tanzania, 坦桑尼亚

China is playing a significant role in helping Tanzania to become the regional economic power house of East Africa by providing financial support in development of major infrastructure projects. 

Tanzania's 坦桑尼亚 economic fortunes have been boosted by the discovery of vast natural gas reserves in the southern regions of Mtwara and Lindi, but it is China's investment that is helping to bring the new gas resources on stream as it is financing the major energy and infrastructure projects .

China 中国is financing a US$1.2 billion gas pipeline project from Mtwara to Dar es Salaam, which is expected to be completed later this year. Once completed, Tanzania will start to export its power to its East African neighbours in 2015.

In addition, China 中国 is also financing two mega-power projects at Kinyerezi area in Dar es Salaam, the Kinyerezi I and II which are expected to boost electricity generation for domestic consumption and export.

The Asian economic power house will also finance construction of a port, special economic zone and a railway network at the historical town of Bagamoyo on the coast in a project estimated to involve more than US$10 billion. 

 

Map of Tanzania 坦桑尼亚, Bagamoyo where the new port will be built

It is against this backdrop that Tanzania is on course to become the East African regional economic power. Tanzania is soon likely to have the potential  to become the regional centre for trade, manufacturing, logistics and IT upon completion of the major gas pipeline project and other mega electricity projects as well as the envisaged construction of Bagamoyo port.

 

Tanzania also has the potential to become the regional centre of tourism due to its tourists attractions including two out of seven wonders of the world. Tanzania is home to Mt. Kilimanjaro which at 5985m it is Africa's highest peak and the world's tallest freestanding mountain.

It is also home to the Serengeti National Park, famous for its annual migration of over 1.5 million white bearded wildebeest and 250,000 zebra. China is also working with Tanzania to improve tourist infrastructure such as hotels and transport services to make it an even more desirable tourist destination.

Trade in the 21st century

Global Trade patterns in the 21st Century are changing

The trade bargains to be had

In an ideal world a big trade deal would be global. This is because gains such as dismantling trade barriers for all is much better than lowering them on a regional basis. But since the Doha round of multilateral trade talks collapsed in 2008, in its place have sprung up three possible regional deals to be done. The first two are of great significance for the future of global trade. The third is of lesser significance.

The Tran-Pacific Partnership (TPP) was launched in June 2005 between 11 Pacific countries, it includes the US, México, Canada, Chile, Perú, Singapore, Malaysia, Brunei, New Zealand and Australia. It is currently into its 16th round of negotiations and the approximate value of trade is around $US1.492bn. Japan and South Korea are not involved in these negotiations as yet but if they were to join the TPP countries would account for around 30pc of global trade in goods and services. Interestingly, the TPP has aspirations to do much more than cut tariffs. Its goal is to develop a far bigger joint rule book, from regulation to competition policy. One study estimated that a deal could raise the region's GDP by more than 1pc.

To compete with the TPP is another regional trade agreement the Regional Comprehensive Economic Partnership (RCEC) that has just been launched in 2012, it includes the 10 ASEAN countries plus China, Japan, India, South Korea, New Zealand and Australia. This deal represents an approximate value of trade around $US1,412bn even without the US' involvement. Hence there are two competing Pacific regional deals to be done: One with China plus Pacific countries and one between Américas countries (US + Canada, México etc) and Asian countries. The risk here is that both these deals could split the world into competing regional blocks where each country would need to decide who the more important business partner is: China or the US. But this could be avoided by making sure that both deals are easily knitted together and easily opened to others by basing the deal on a similar template, avoiding unnecessarily restrictive prescriptions and by creating a set of rules that both China and the US can embrace.

Finally, there is a third smaller agreement on the horizon that is being pushed hard by Europe, called the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU. It was announced in February 2013 but it has not been formally launched. It's estimated value of trade would be less than half of the other two Pacific deals estimated at around $US618bn. It is not entirely clear what the purpose of this deal would be as the US is already engaged in the TPP negotiations. It would appear that Europe is slightly displaced in the 21st Century and is seeking to counter the Pacific regional deals with an Atlantic deal but this sounds rather like wanting to turn the clock back to the 20th century rather than looking forward to the realities of the 21st century.

Why free trade is good

Since the failure of the Doha Round in 2008 the WTO has struggled to rebuild interest in trade liberalisation. But, interestingly, global trade has grown faster than world output since 2010. One of the biggest problems is that decades of talks and treaties in the 20th century have exhausted many of the easy targets of trade liberalisation with the consequence that no new grand achievements are possible without resolution of some of the stickiest of trade issues. Furthermore, protectionism that has been largely held at bay, so far, throughout the economic crisis is beginning to become apparent in some places in the US and Europe. The video below offers a 1951 view of global trade and illustrates why we need free trade agreements: 

 

China and the other BRICS

But the fundamental strain on the multilateral system is the shifting economic balance of power. Emerging markets came into their own early in the Doha round that started in 2001, by rejecting the unappealing offers from the US and Europe. In fact the BRICS have become much more active over the last decade so much so that China's new President Xi Jin Ping习近平 announced that as part of his first foreign trips abroad he would be attending the fifth BRICS Summit on March 26-27 in Durban, South Africa after visiting Russia, Tanzania, and the Republic of Congo. This re-enforced the importance that China is attributing to its relationship with fellow BRIC countries, placing it on on a similar par to its strategic relationships with Russia and Africa.

The main outcome of the BRICS' Leader's Summit was to endorse plans to create a joint foreign exchange reserves pool. This proposal underscores frustrations among the emerging market economies at having to rely on the World Bank and the International Monetary Fund which are seen as reflecting the interests of the US and Europe. The UN Development Programme Report 2013 highlights this point and suggests that emerging economies need their own institutions to support their growth. The Report goes so far as to say that 20th century institutions do not meet the teutonic changes taking place in the so called "South" in the 21st century.

Conclusion

Freer trade and open markets is how the world has always grown and become richer and more developed from ancient times, therefore in the 21st century with the lions' share of growth of middle classes in the emerging world, it is a no brainer for the US and Europe to break down barriers to enhance trade with the emerging economies of the world. In fact the tables have turned and the US and Europe, for the first time in a while, now need the emerging economies as much as the emerging economies once depended on the US and Europe.

Dubai's Dragon Mart - selling to the emerging middle classes of the world

Aerial view of the Dragon Mart Shopping Centre, Dubai

Dragon Mart provides an insight into a different world. It is a mall that is 1.2km  long and contains 3,950 shops. Both the shops that fill the mall and the products that fill the shops do not bear US and European familiar brand names as most of the world's shopping malls do. Dragonmart is dedicated to efficiency and cheapness. The China Ocean Shipping Company (COSCO) has a huge logistics centre next to the mall allowing new goods to be brought straight off the ship from China and wholesale purchases to be exported anywhere in the world.

Who are the customers and what are they buying?

 

To a large extent, the customers are wholesalers and bargain-hunting migrant workers in Dubai. The bargains are attractive, for example, a digital camera for 99 dirhams ($27) or a treadmill for 700 ($190) dirhams.The Dragon Mart may not be everyone's cup of tea, that is, not everyone may be attracted to polyester Persian carpets or plastic executive desks. Many companies specialise in producing cheap imitations of popular US and European brands. Yet Dragon Mart (and its Chinese manufacturers) cannot be dismissed. Dragon Mart caters for what many believe is the world’s most exciting group of consumers, the emerging middle class. The Consultancy Mckinsey estimates that this group could include 2bn people who spend $6.9 trillion a year. These people cannot afford to shop buying expensive branded US and European products, yet they too are seeking the status symbols of middle-class life. For them, many of the goods displayed represent the dream of upward mobility. The below video shows some of the products on offer at the Dubai Dragon Mart.

Dubai Dragon Mart is also evidence of the rebirth of one of the world’s oldest trading routes, the silk road. The old silk road specialised in luxuries like silk. The new silk road specialises in everything, interestingly with a stress on plastic. Furthermore, Dubai boasts two of the most important transport hubs on this road: the world’s ninth-biggest container port and one of its busiest airports. The rebirth of the new silk route will increasingly branch out to the emerging economies of the world by sea and air bringing affordable consumer goods to the new emerging middle classes in the Américas and Africa.

Nollywood - Nigeria's thriving Lagos based film industry

Nollywood the second most prolific film industry in the world after India’s Bollywood.

In Lagos, Nigeria's financial capital, and other cities in the South, it's possible to imagine that Nigeria is going to be the next Brazil, an emerging giant. In the North, blighted by environmental degradation, struggling agriculture and collapsed industry, life is no better than in neighbouring Chad, Niger or Mali.

Lagos, the Nigerian business capital, is said by locals to have produced more films than there are stars in the sky. The streets are flooded with camera crews shooting on location. It is hard to avoid Nigerian films in Africa. Public buses show them, as do many restaurants and hotels. Nollywood, produces about 50 full-length features a week, making it the world’s second most prolific film industry after India’s Bollywood. 

Nigerian films are as popular through out Africa as they are at home. It is said that Ivorian rebels in the bush stop fighting when a shipment of DVDs arrives from Lagos. Zambian mothers say their children talk with accents learnt from Nigerian films.Millions of Africans watch Nigerian films every day. 

How did Nollywood come about?

The first true Nollywood film resulted from a failed business venture. In 1992 Kenneth Nnebue, a market trader, ordered a large consignment of blank videotapes from Taiwan. Finding them hard to sell, he hired a theatre director to make a cheap film and copied it onto the tapes to boost their appeal. “Living in Bondage”, the story of a farmer in a big city who loses his wife and is haunted by her ghost, sold more than half a million copies.

Interestingly the market traders still control Nollywood to this day. They make films for home consumption. DVD discs sell for a dollar. Print runs can reach a million. Studios, both in the physical and the corporate sense of the term, are unknown. Market traders double as financiers. All scenes are shot on location and with a shoestring budget of no more than $100,000. Most of the financiers are based in the massive, chaotic market of Idumota in Lagos. 

As soon as a film is released, pirates rip it off. It takes the pirates just two weeks to copy a new film and distribute it across Africa. The merchants must take their money during that fortnight, known as the “mating season”, before their discs become commodities. As soon as the mating season is over they start thinking about the next film.

The merchants curse the pirates, but in a way they are a blessing. Pirate gangs were probably Nollywood’s first exporters. They knew how to cross tricky borders and distribute goods across a disparate continent where vast tracts of land are inaccessible. Sometimes they filled empty bags with films when returning from an arms delivery. Often they used films to bribe bored guards at remote borders. The pirates created the pan-African market for Nollywood films. 

The Secret of Nollywood's success 

One of the key ingredients of success is that the actors in Nollywood films speak English, rather than one of Nigeria’s 514 native languages. Large parts of the continent are familiar with English due to colonialism, and Nollywood’s influence is continuing to spread the language more widely. A further ingredient that adds to their success is that the films’ plots have strong pan-African appeal. They often revolve around the difficulties of new arrivals in big cities, an experience familiar across the continent. The epic film “One God One Nation” portrays a Muslim man and a Christian woman who struggle to marry. “Caught in the Act” (see poster below) shows a wife who is wrongly accused by her own mother-in-law of abducting a child. The overarching theme of Nollywood films is Africa’s trials and tribulations of living in the 21st Century in an increasingly globalised world.

Film Poster for Caught in the Act

Cities in the 21st century — a city-dominated world

Picture of Beijing in the 21st century

The 18th and 19th centuries were the last centuries of empire in the world. The idea of the nation-state took hold in the 19th century. The Wesphalian idea of nation-state sovereignty that basically says that a nation's affairs are its own, and no other state has the right to act within its borders has been the basic diplomatic template since the 17th century. The limits to the nation-state were shown by European rivalries at the beginning of the 20th century while growth in cities began to flourish from the mid-20th century across the world. As a consequence the 21st century looks set to become the 'century of the cities'.

By the year 2030, three out of five people will live in cities. The UN forecasts that today's urban population of 3.2 billion will rise to nearly 5 billion by then. The top 25 cities in the world account for more than half of the world's wealth. And the five largest cities in China and India account for 50pc of those countries' wealth.

This increase will be most dramatic on the least-urbanised continents, Asia, América Latina and Africa. Surveys and projections indicate that most urban growth in coming years will be in emerging economies as the map below indicates.


Map of Growth in Cities since 1950s, 2000s and projected to 2015

Mega-regions

A new concept has recently arisen in the growth of cities known as the 'mega-region'. A mega-region occurs when growth in cities in a particular region is accelerated. Research shows that the world's largest 40 mega-regions cover only a tiny fraction of the habitable surface of the planet and are home to fewer than 18pc of the world's population but account for 66pc of all economic activity and about 85pc of technological and scientific innovation. The mega-regions, rather than countries, are becoming the key driver behind economic development and wealth creation.

The largest of these is the Shenhzen-Guangzhou region in China, home to about 120 million people. China is planning to create the world's biggest 'mega-region' by merging nine cities to create a metropolis twice the size of Wales with a population of 42 million.

Map of new Chinese mega-region

The new mega-region will cover a large part of China's manufacturing heartland, stretching from Guangzhou to Shenzhen and including Foshan, Dongguan, Zhongshan, Zhuhai, Jiangmen, Huizhou and Zhaoqing. Together, they account for nearly a tenth of the Chinese economy.

By 2015, around 150 major infrastructure projects will mesh the transport, energy, water and telecommunications networks of the nine cities together, at a cost of some 2 trillion yuan (£190 billion). An express rail line will also connect the hub with nearby Hong Kong.

A new concept 'Aerotropolis'

In a new book titled “Aerotropolis: The Way We’ll Live Next” by Kasarda and Lindsay, the authors develop a vision of the 'aerotropolis' as a symbol of a city-dominated world. The aerotropolis is “glocal,” a place that draws on local competitive advantages (like cheap labor) as it plugs into the  21^st century global on-demand-production supply chains. Therefore it makes sense to affix cities to airports on the model of the aerotropoli for air transport companies such as Fedex and UPS. Hence an airport, having begun life as an outlying curiosity, on the edge of the city, becomes the heart of the mega-region or mega-city, its raison d’être.

The book illustrates this new concept through a series of compelling numbers. While world GDP rose 154pc between 1975 and 2005, world trade grew 355pc. Meanwhile, the value of air cargo climbed an astonishing 1,395pc. More than a third of all the goods traded in the world, some $3 trillion worth - but barely one percent of its weight! - travels via air freight.

If the book is right and Aerotropoli do take off, then, this has the potential to further push international trade relations between mega cities and mega-regions into the foreframe and leave the country relationship as a minor detail. For example, when New Songdo, an aerotropolis near Seoul, does business with São Paulo, the South Korean-Brazilian relationship is of little interest. Likewise the new Chinese Shenhzen-Guangzhou mega-region is likely to pay little attention to what the UK thinks, but will be very interested in London.

Piracy on the high seas in the 21st Century – Somalia the new pirate base

Pirate Ship on the high seas

Far from the one-eyed barbarians and the Long John Silvers of folklore and fiction, pirates in the 17th and 18th centuries tended to come from highly skilled sailors who rebelled against the tyranny of their imperial masters. Once they had procured their own ship, articles were drawn up governing the conduct of the pirates. These articles were remarkably egalitarian. The captain of the ship was elected by the sailors and a quartermaster was elected to administer booty and to act as a counterweight in order to keep the captain’s power in check. Profits from shipping raids were distributed equally among all the sailors. When a pirate misbehaved, a meeting of all the sailors was called to determine the appropriate punishment. The pirates of the 17th and 18th centuries developed their own unique form of distributive justice.

New pirate base in Somalia in 21st century

Over the last decade Somalia has become synonymous with piracy. In 2010, alone nearly 1,200 people were taken hostage in the waters of Somalia. Rather than the more conventional 17th and 18th century "robbery at sea" piracy, Somali piracy takes the form of hijacking and extortion. This pattern evolved from so called "defensive" piracy that began early in the last decade as a response by local Somali tribal fishermen to unlicensed foreign trawlers and the dumping of toxic waste. These outsiders exploited the absence of a functioning Somali state capable of protecting its coastal waters.

The way the pirates operate is to take the commercial vessels usually by only firing warning shots before boarding the vessel. The goal is then to extract the highest possible cash ransom and to return the ship, its cargo and its crew in decent condition. So far this business model has proved very lucrative. It is estimated that Somali pirates may have earned around $238m last year alone.



Somali Pirate on board a hijacked commercial trade ship
know as a "mothership"

In 2008, almost all the attacks were in the Gulf of Aden – a passage for 20pc of the world's commercial shipping between Asia and Europe. But when international anti-piracy navy ships began to patrol these waters, the pirates modified their strategy to roam farther by using "mother ships" seized earlier as floating bases in the Indian Ocean. The below map sourced from The Economist shows the increased area of pirate operation in recent years:



Map of Somali Pirate Areas of Operation from 2008-2010


Piracy and ‘lawlessness’ in Somalia

A new study published in February 2011 shows that state failure is not necessarily a significant predictor of piracy. The study shows that for countries with very poor levels of governance, small improvements in such things as law enforcement, stability and security can actually lead to more piracy. 

Truly well-governed countries produce few pirates. However within Somalia– a so called "failed state", the report points out, most pirates originate from the relatively stable Puntland rather than the truly anarchic south and piracy is reduced when violent territorial conflict intensifies. The report argues that this is no coincidence: a basic level of law and order is necessary for pirates to ply their illegal trade.

The implications of this report are that Governments and multilateral organisations working on initiatives against Somali piracy in the region ought to focus on assisting Somalia and other neighbouring countries to truly enforce the rule of law. So far the EU has launched Operation Atalanta in 2008 and the UK has provided the Royal Navy's UK Maritime Trade Operations office in Dubai as a reporting hub for pirate activity. But much more needs to be done along the lines of Article 100 in the preamble to the UN Convention on the Law of the Sea:

"All states shall cooperate to the fullest possible extent in the repression of piracy on the high seas or in any place outside the jurisdiction of any state".

Until this happens, it is highly likely that the Somali pirates will continue with their devastatingly effective business model.

Airships of the Future – a revolution in airfreight?

Artist's impression of an Airship of the future

Airships are a means of transport few have taken seriously since the German Hindenburg Zeppelin went up in flames in 1937. The new generation of Airships use helium, not flammable hydrogen. Unlike the Zeppelin aircrafts, they are not lighter than air and have an internal frame where a large fraction of their weight is carried by aerodynamic lift on the wings and hull. They also have wheels and take off and land as passenger aircrafts do.

The new airships of the 21^st century mix the concept of planes and zeppelins. They travel at slower speeds than traditional aircraft, around 200km/hr but they can carry 3 times more freight than a Boeing 747. Hence, the big idea for the new Airships is to carry cargo: heavy loads, such as turbines, or bulky ones, such as segments of oil refineries.

A cheaper way to send airfreight

Air freighting goods is currently an expensive means of transport and is usually only used for perishable goods, valuables that warrant the extra cost like pharamceuticals or more generally for goods that are subject to arriving within a time limit like newspapers.

Current trends show that geographical trade of air freighted goods is predominantly from Asia to the US and Europe. Freight planes often fly with empty holds to Asia, solely to collect goods.

If the cost of airfreight were to become much cheaper, it would be able to compete with surface transport like road and rail but with the added advantage of being able to go where road and rail infrastructure is lacking, for example, in Latin America, Asia and Africa. If this were possible, it may just provide a catalyst for rethinking what is sent by airfreight.

New Slow Airfreight Infrastructure

Perhaps the real opportunity for the new Airships in the 21st century is in developing a new Slow Airfreight Infrastructure, as a means of intercontinental transport for slow shipping freight. It would be cheaper, compared with traditional fast air transport. And it would enable airfreight to reach places with little or no road or rail infrastructure.

There may also be the potential for passenger transportation in airships if a new Slow Airfreight Infrastructure were to be built. It could be adapted as a cheaper means for passenger travel too. It would be a means of travel, not as fast as traditional passenger air travel but surely much faster than travelling overland in Latin America and Africa to connect cities within a continent.

One of the most recent projects is spearheaded by Lockheed Martin. Their first experimental Airship is due to fly in 2012. Below is a video of their proposed new Airship: