Economy Stupid

Economy Stupid

economy-stupidUnending protests continue in Ethiopia, South Africa and Zimbabwe, and though unique issues power each country’s turmoil, the fundamental driver is economic.

South Africa and Ethiopia are both experiencing healthy growth despite the protests, while Zimbabwe is tanking. Excluding Zim’s recent plunge, all three countries were performing very much like the U.S. over the last 4-5 years: modest but steady growth and improved employment. So what’s going on?

Let’s examine their individual situations, first.

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Societal Upheaval

Societal Upheaval

ikundaanalyzestrump“How can a billionaire businessman who calls Mexicans rapists, …insults women, stereotypes black Americans, admires…Putin, threatens to bar Muslims from entering the country …become a presidential candidate? Surely decent, responsible, fair-minded people would not give such a national and international menace a chance to become the leader of the free world?”

To that South African columnist Donald Trump is as newsworthy as a dozen other crisis in his country this morning and hundreds across the continent.

There’s a lot of news in Africa, today. And a lot of it is about Trump.

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CITES Senses

CITES Senses

elephantgraphsMore than two thousand ardent scientists and advocates are in Johannesburg today preparing for next year’s CITES. Historical treaties like the Geneva Convention may actually effect our daily lives more noticeably but only CITES has attracted such global consensus that enforcement is aggressive and routine.

Today horse trading like you’ve never seen is going on, but in the end unlike so much else in today’s troubled world, everybody really will come together.

Sound nice? Yes, it is, but there’s still this one thing….

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Flying Where?

Flying Where?

tcrwandairEvery country wants an airline, its own airline, and how that airline works characterizes the country as a whole.

In a month Rwandair begins flying a new modern Airbus 330, the ninth modern aircraft in its fleet. Today, the third iteration of Air Tanzania begins as the first of two new turbo prop aircraft are delivered from Canada. I wouldn’t rush to buy tickets on either airline. Here’s why:

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Tribalism Exploding

Tribalism Exploding

VicFallsTrblFor the moment, there is no part of Victoria Falls comfortable for tourists. The Zimbabwean side of Africa’s greatest tourist attraction is ready to explode as President Mugabe’s health fails. Livingstone on the Zambian side Tuesday was filled with the smoke of burning tires and tear gas.

Britain issued new travel advice for Zambia this morning, but it was hardly severe urging its citizens simply to stay abreast of current news. The U.S. currently has travel warnings issued for 39 countries and “Europe as a Whole” but nothing this morning for Zambia.

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Africa’s Volcano

Africa’s Volcano

zimerruptsNot a good idea to be a tourist in Zimbabwe, today. In a still developing situation tourists are stranded and one Australian has been arrested.

Several reports confirm the Australian was waving placards in an anti-government demonstration. Tourists at Victoria Falls are also threatened by an absence of transport and electricity. (Both daily scheduled flights from the falls to Joburg, however, departed mid-day with only minimum delays.)

Serious protests have been growing in Zimbabwe for months and came to a head several days ago when civil servants didn’t receive their scheduled paychecks. It was the third time this year.

They organized a “stay-at-home” day for yesterday. The police reaction was so severe that protests continued into today.

WhatsApp is the principal social media platform in southern Africa, but the Zimbabwe government managed to shut it down late yesterday. Protestors immediately switched to Twitter using the hashtags #ThisFlag, #ShutDownZim, and #ShutDownZimbabwe2016. Twitter now tops its feed with instructions on how to keep using the service as government agents shut down different hashtags.

In typical reticent Zim fashion, even the protestors are being careful if coy. The five main demands being circulated are (1)-Fire corrupt cabinet ministers, (2)-Remove police road blocks, (3)-Pay civil servants on time, (4)-Abandon the bond notes and (5)-Lift the import ban.

The spark was (3)-, the lack of pay for civil servants. In this ruined country where unemployment may be approaching 80% civil servants are the last actively employed group. Until recently their loyalty to the incredibly corrupt government went unchallenged.

Demand (4)- is a complicated issue created by the Zimbabwe Reserve Bank when it announced that by October it would issue “export bond notes” in lieu of a domestic currency. Zimbabwe abandoned its domestic currency seven years ago when inflation exploded and most Zimbabweans use the U.S. dollar.

Many Zimbabweans believe the fancy named currency with its hard-to-imagine restrictions that limit it to purchasing foreign goods is simply an additional way for corrupt officials to reintroduce a local currency. As with the last domestic currency officials manipulated the notes to enrich themselves at the expense of the local population.

Last week the country tightened its ban on imports, ostensibly to spur domestic production although it’s failed miserably. The country until now has survived on goods brought in principally from South Africa, and those are now being stopped at border points.

The interesting thing, of course, is that the population as a whole will likely join the growing protests precisely because of (4)- and (5)-, which if civil servants succeed in getting paid (3)- might likely immediately be reversed.

In effect government concessions on those last three points could quash the protests.

It’s absolutely amazing how much misery Zimbabweans have accepted over the years. It’s now nearly two full generations who have lived under the oppression of Robert Mugabe. The 90+ year-old leader is reported very frail and rarely seen in public. So unfortunately his legacy has held and a body of the politic is readying to replace him.

It’s unclear this protest will do much more than previous ones, particularly if the government scrapes up the cash to pay civil servants. But it’s extremely clear that holidays in Zimbabwe are increasingly ill-advised.

Where’s the Beef?

Where’s the Beef?

IsthereacarThe Tanzanian government and safari companies appear to have embarked on suicide missions as they react to Brexit. Consumers beware : African companies raising prices in today’s climate are probably already deeply in debt.

The bottom is falling out of the Tanzanian safari market because the largest single component is the UK traveler. UK travelers are reacting to Brexit like Americans did to 9-11.

According to the British financial website, This is Money, more than 1 in 3 Brits now plans to cut back on planned holidays.

Brits book travel not quite as far in the future as Americans. Americans tend to do so about a year in advance. With Brits it’s about six months. This means that the very important end-of-year holiday season could be a disaster for Tanzania.

This follows several bad years because of ebola, terrorism, the persistent European recession and in the case of South Africa, the plummeting Rand.

One of the most horrible practices of any small business is to live on cash flow, and that’s legend among travel companies in particular. Now in Tanzania, those who have done so may be on the way out.

If you’re a consumer considering traveling to sub-Saharan Africa and Tanzania in particular, I really suggest you beware.

Hardly two days after Brexit, the panic began when the government of Tanzania decided to slap an 18% tax on many tourist products that had not previously carried it, such as transport and guided sightseeing. In Tanzania’s fairy world land, certain government officials claimed they were even slapping the V.A.T. tax on themselves, onto existing taxes!

However the math might eventually be done, government fees are rising and in some cases substantially. The cost for a vehicle headed into Ngorongoro Crater, for example, jumps 25% Friday.

V.A.T. is the value-added-tax of 18% theoretically applied across the board to anything sold in Tanzania. For many years, though, many tourist services have been exempt, an incentive of the sort many governments in the U.S. afford businesses for locating in their town.

Tanzania’s President, John Magufuli, has been crusading ever since being elected last year in a dark-horse contest, slipping incognito into ministries and firing sluggards on the spot. He reduced income taxes earlier this year for the “common man.”

He’s now trying to right the budget, which since time immemorial hasn’t really been one, rather just a siphon of foreign aid. It’s unclear that the huge V.A.T. announcement on tourism was entirely the result of Brexit, but clearly the rush to impose it – even unprecedented in Tanzania – suggests so.

Laudable as Magufuli’s efforts might be, it will have definite negative effects on Tanzanian tourism.

Healthy companies, I think, saw this coming. Particularly the old strongholds, the midmarket chain lodges like Sopa and Serena, have held prices steady or decreased them, trimmed staff without a noticeable trim in service, and moved towards dynamic website pricing.

Unhealthy companies, particularly some of the upmarket ones like Asilia, are doing just the reverse. In fact, they are using the current situation to raise prices higher than to just cover tax increases.

The upmarket could be the most effected under the current situation. Upmarket trends have been moderating or declining recently, stressing the health of those companies.

Three of Asilia’s main competitors in Tanzania, Nomads, Sanctuary Retreats and &Beyond, have either announced no increases or agreed to guarantee current rates on existing reservations for which deposits have been paid. Wannabe upmarketer, Elewana, has even announced new specials that essentially lowers its prices.

This will not be a fun year for a safari company working in Tanzania. But tricking the consumer goes too far. Consumers should exercise exceptional due diligence before planning to sip a gin and tonic on the veld at sunset.

What a Mess

What a Mess

freefallingrandLest this be too technical for those unfamiliar with Africa, this morning is a mess.

“Chaos has been unleashed and we all will be poorer,” writes a commentator this morning in the respected journal, African Arguments.

Many former British colonies in Africa are forcing calm while quietly panicking about Brexit, especially South Africa, Nigeria and Kenya.

I can’t see this getting better. Even if the hoped for British pivot occurs and somehow Article 50 is never triggered, the genie is out of the bottle. Economies don’t pause for politicians to catch their breath.

The biggest single concern with South Africa and Kenya is the plummeting pound. Kenya is also worried that a new British executive will be less disposed to foreign aid. Nigeria’s concern is the increased dollar which puts downwards pressure on oil prices, Nigeria’s lifeblood. South Africa suffered a 1.2% retraction last quarter and Brexit is likely now to dump them into a full blown recession.

There is even widespread concern that money transfers will be more difficult, something that will effect all aspects of business and trade.

By 0730cdt this morning all the indicators were moving in terrible directions. Former African colonies’ currencies usually move with the pound. Although weaker currencies are often spun positively for manufactured exports, most former colonies import more than they export so their economies become stressed when their currency weakens.

Add to this a 10% drop in the price of oil (as of 0730 cdt) and Britain’s former colonies are in a terrible mess this morning.

“Politicians paint a very beautiful picture of a very bad idea just to ascend to power,” writes one Kenyan about Brexit, today. “They dupe [the electorate] into voting for them, knowing very well that whatever they are promising cannot work even under any circumstance. That is exactly what Cameron did.”

Most Americans have never traveled to Kenya or South Africa or Nigeria, much less even the UK. Our economy remains the largest on earth so likely the one that can be least hurt by any other. But we are not immune to the effects of Brexit, and I mean that as much politically as economically.

Every Britain should have known what a disaster this would be, but their politicians duped them, to use the Kenyan’s words. The Leave Campaigners promised all sorts of things that they are today retracting like yo-yos, essentially admitting lying.

But there were even double-dupes like Cameron bringing up the whole idea then trying to turn it back; and triple-dupes like Corbyn only half-heartedly campaigning against the Leave because he really wants it.

In the end the electorate was only given one choice: leave or not. I think what the electorate manifest was a protest vote, a No vote, a vote against politics, against the status quo, because like many of us around the world, that’s the only power we’ve been left by our hoarding, power hungry politicians.

The most terrifying lesson to learn from this mess is that Donald Trump might win.

Poaching Politics

Poaching Politics

PoachersRichard Leakey’s conservation organization just announced that “poaching rates [in Kenya] have decreased dramatically” and that “Kenya’s elephant populations are now on the rise.”

This is, of course, good news but the May 25 press release was bereft of references or statistics. “Dramatically” needs to be substantiated, and frankly what I intuit here is that wildlife organizations are resyncing to reality: e.g., poaching was never as “dramatic” as had been suggested.

The group, Wildlife Direct, is one of the most respected in Africa. Leakey’s involvement goes way back to when he was the Wildlife Czar for the country in 1989 when poaching really was out of control. More than almost any other individual in Africa, he was instrumental in stopping that horrendous decimation of elephant.

He was integrally involved in Kenya’s collaboration with the U.S. prior to that which created the CITES treaty, which remains the mechanism worldwide for regulating the conservation of endangered species.

The recent Wildlife Direct report that monitored the creation, passage and implementation of wildlife laws in Kenya gives very positive ratings to the system in Kenya now used to prevent poaching.

It points out that many more persons are being prosecuted, including major black marketeer distributors, and that many more have gone to jail and that these represent “significant improvements.”

The group actually credits itself as well, claiming that its courtroom monitoring team is the principal motivation (for the courts, anyway) to implement the laws and put poachers behind bars.

But the battle’s not over, the group points out:

“The team of lawyers also warn that endemic delays and corruption mean that too many criminals are still walking free from the courts… The undermining of wildlife trials by corruption is the elephant in the room.

“Numerous cases are failing due to … the loss of evidence, witnesses fatigue, loss of files, wrong charges, wrongful conclusions, and illegal penalties. What’s worse is that there are no consequences for those involved in undermining these cases.”

Those criticisms apply to almost everything prosecuted in the Kenyan courts. Anyone remember why the President and Vice President of Kenya were let off their International Criminal Court prosecution for crimes against humanity? Loss of evidence, loss even of witnesses.

Wildlife Direct’s actions continue the long and uninterrupted integrity of Leakey’s involvement in all aspects of his native country, and bravo to that.

But when the stats arrive as they must, and as they trickle in from elsewhere in Africa, I think we’ll learn a couple very important things:

First, poaching in the last few years – as horrible as it is – was never as bad as we were told. I wonder how many media groups are publishing this current finding, that things are improving, compared to a couple years ago when anecdotal statistics were used to suggest an apocalyptic decline in elephants.

Second, as the individual stories of poachers get reported — as journalists study those who are prosecuted and jailed — I think we’ll learn that most poachers are ad hoc individuals just trying to survive: Criminals, if you will, forced almost against their will into illegal activity simply to get food and provide for their families.

Poaching is not cut-and-dried, and now we’re learning, it’s not even well documented.

American Privilege

American Privilege

trumpemigrationThe African diaspora in North America is a vital component of today’s modern African societies, and Africans are now worried that Trump could change that.

The possibility that a large number of Americans will emigrate to Canada in reaction to a Trump presidency is not a sarcastic joke, but a realistic threat to many Africans.

Concerned that Americans will be able to ‘break the queue’ getting residency rights to Canada, Africans worry they’ll be displaced from the pipeline.

Sunday, Nairobi’s main Sunday newspaper published a page 3 story assuring concerned Kenyans this was probably not the case.

Discounting several new websites in the States like “Maple Match“ the article interviewed “businessman Neil Katz,” a well-known agent who helps Kenyans obtain dual citizenship, for his take on the possibility that ‘Americans will flee to Canada.’

Katz told the Daily Nation, “Americans opposed to Trump hardly meet the UN definition of a refugee.”

Katz assured the interviewer that Canadians would not alter their policies for fleeing Americans, although he conceded that the Canadian “break the queue” loophole allows anyone with $100,000 to invest to go to the head of the line.

This could be someone who uses that money to buy a home, and this is the type of “mass emigration” that worries the Kenyans.

Diasporas are something quite foreign to Americans, since as of yet there really isn’t an American diaspora anywhere. In contrast, the 80,000 Kenyans, 40,000 Ethiopians and 120,000 Nigerians with residency in the U.S. are integral components to their homeland’s economy.

Jobs in North America pay roughly ten times the wage for a similar job in their African homelands, and many more jobs are available in North America than Africa.

Many of the jobs taken in North America by African immigrants are in nursing, home care and maintenance for which there aren’t enough American applicants. But there are also many very successful business people.

These folks create networks that stretch back home, bringing everything from high tech startups to simple manufacturing industry skills to these rapidly emerging economies.

Expecting the “largest increase in housing values” for years, one of American’s favorite Canadian holiday destinations, Cape Breton, is enjoying a remarkable housing boom.

A controversial Cape Breton website explicitly inviting Americans to emigrate was widely circulated in February, and has toned down in reaction to concerns like those expressed this Sunday in Kenya. It now emphasizes that it welcomes everyone around the world, not just those fleeing Trump.

It remains, however, the perfect example as to why foreigners considering emigrating to Canada are worried that Americans will displace them.

The average housing price in Canada is just over $80,000. The average home in Cape Breton is 50% higher, reflecting a genteel, modern and up-scale community. But that price is actually well below what most retirees in America considering emigration already hold as equity in their current home in the States.

The $100,000 threshold to break the queue in Canada is thus no big deal at all for these retiree ”asylum” seekers.

Note that a similar move by the well-off, older middle and upper class occurred in the Weimar Republic, not long before a populist became the leader of Germany.

A Stable, Stagnant World

A Stable, Stagnant World

for a stable worldTrickle-Down economics slams Africa and its leaders line up like misbehaving school kids to take the paddle.

President John Magufuli of Tanzania just reduced taxes. There’s no worse move at a time when Tanzania needs stimulus not austerity. All the creativity and imagination Africa has shown in the last several decades has been smothered by western starlight.

The “spring meetings” of the IMF and World Bank confirming that African growth is tanking so scared African leaders that they’re now doing exactly the wrong thing: playing capitalism at its worse.

The global economic system is stacked against the poor. It’s why China ultimately embraced it but also why China, India and Brazil will always play second, third and fourth fiddle to the puppeteers in the west.

The reason Magufuli’s move is so illuminating is that it exactly reflects what China did multiple decades ago: give in.

Tanzania’s economy never performed in any outstanding way, especially relative to its neighbors like Kenya and Ethiopia. Corruption is the main reason, but as I’ve often proved, corruption is western Trickle-Down. To bribe a Tanzanian official to build a ridiculous anti-missile defense system there has to be a briber. The briber is always from the west.

So it doesn’t matter that Tanzania is sitting on the world’s second largest streak of gold, or that it has some of the finest uranium deposits on earth. It doesn’t matter, because the capital that it takes to exploit this rests solely in the west.

And the dosey-doe game Tanzanian officials play with their bribing counterparts stalls development.

Modern Tanzania was born of Cold War China. Listen, that didn’t work, either, but the initial goals of humanism above capitalism still strike me as profoundly correct.

The first president, Julius Nyerere, was such a wonderful person. He began swimming in Chinese capital that allowed him to revolutionize education in at-the-time terribly illiterate Tanzania. He still wears proudly his nickname, Mwalimu, “teacher.”

But humanism grew doctrinaire, too, in China then Tanzania. Mwalimu tried to collectivize villages almost at the same time that they were failing in China. So the experiment didn’t work. The Cold War ended. China changed faces and Tanzania went flat out broke.

Well, like any good ole radical, Tanzania now seems to have flipped completely.

Humanism was and in most cases still is African’s main mission, and I remain hopeful that Africa can demonstrate this lesson to we egocentric capitalistic westerners.

Tanzania like Ethiopia and Nigeria should slap the western banker in the face. A one or two penny drop in payroll taxes is nada.

The government’s own mouthpiece, the Daily News, pointed out that “its effect on disposable income is insignificant.”

But its effect on education, tourism, mining and road building will be profound. So Tanzania will remain beholden to the west yet again, for aid and miserly capital. It will be incapable of generating its own wealth.

Wake up Tanzania.

You Can’t Burn Ivory Towers

You Can’t Burn Ivory Towers

width=No matter how much ivory Kenya burns or how widely NPR publicizes it, the poaching of elephant will not stop until individuals stop buying ivory and until rich people cede much of their wealth to the poor.

Conservation will not succeed if its implementation is so narrow as to neglect those who it could hurt or destroy.

It’s true that some of the earliest ivory ever used was for purpose not beauty. Its unusual molecular strength keeps it from splintering or breaking even under the most stressful conditions yet it has a “softness” that mutes rapid or forceful contact.

Ivory was plastic, before plastic was invented.

So what was useful for elephants and walruses undoubtedly was useful to early man.

Until seven millennia ago early elephants roamed China nearly as much as they are found in Africa, today. As they disappeared, ivory became a luxury item as much as a component of tools.

The “art of beauty” is often defined by levels of scarcity. Perhaps this contributed to ivory becoming a currency of the rich.

After more than a half century of very global and very public movements to save elephants and restrict ivory sales, even the Chinese are coming round. But demand for ivory, as with demand for old paintings or rare artifacts from Alepo, is not going to abate even as the Chinese public changes its attitudes.

The demand for ivory is global, not just Chinese. So long as there are rich people willing to pay for stolen treasures of the Mideast or blackmarket Picassos, there will be ivory seekers worldwide.

The supply side is equally daunting.

Today’s poaching of elephant is not the corporate business it was in the 1970s and 1980s. Virtually all the elephant killed today are lost to itinerant gangs unsupported by Emirate sheiks with their Sikorski helicopters and private ships.

These gangs risk the enormous hazards of killing an elephant then having to find some scumbag broker because they have no better way of surviving.

They have no jobs, no livelihood and the sustenance their ancestors eked out of their lands is no longer viable. The land is leeched or confiscated or over grazed, and sustenance living can’t provide the capital to be successful in a modern world.

It’s terribly disturbing to me that so many truly well-intentioned conservationists express “feeling sick” when they see a pyre of tusks being burned but are not similarly demonstrative over the destruction of Alepo or systematic reductions in U.S. foreign aid.

You just can’t separate the phenomena. It’s OK to “feel sick” seeing that media picture of burning tusks provided you in your mind also know how sick and neglected the children near that burning pyre actually are.

You must realize that the father and brother and uncle of that little girl care about her, that they care so much about her that they will commit a crime to feed her.

You’ll notice once you affect that understanding that things get more complicated, that your “sickness” isn’t quite what you thought. It’s cure isn’t quite as simple.

Kenya is doing the right thing. They are doing it possibly for duplicitous reasons, that tourism needs a boost, but I also really believe that young, educated Kenyans have seriously embraced conservation. That’s wonderful.

But it just … doesn’t matter.

It won’t stop poaching. Rich people alone can stop poaching. They can stop buying and hoarding ivory, and their wealth alone redistributed can eradicate global poverty.

Otherwise, the wild elephant is doomed.

Of Shoes & Planes

Of Shoes & Planes

slave-statesWhile one current election debate is about the immorality of American multinationals using slave labor abroad, it’s time to understand how entire societies are now doing this.

America’s alliance with the Gulf States is preeminent foreign policy. But the Gulf States are enslaving Africans as if it were the 18th century, again.

Gulf States need labor. They are cash rich and muscle poor. Seventy percent of Kuwait and 84% of Qatar’s population is composed of foreign laborers who have no rights, lured by the prospect of a job – any job.

An Ugandan journalist, Yasin Kakande, will soon publish a scathing account of such African labor in a new book, Slave States: The Practice of Kafala in the Gulf Arab Region.

In the preview to publication one of several personal stories is being circulated, that of “Harriett” from Uganda.

Harriet earned an advanced degree at a respectable Ugandan university but could find no job. Lured by recruiters from the Gulf States, she paid an agent $600 for a visa and air ticket to Dubai.

Part of the agreement includes a “sponsor.” This is very similar to what is required by immigrants into the United States. In Harriett’s case, it was a company, an airline.

The airline needed lots of unskilled laborers to clean its aircraft between flights. Kakande doesn’t name the airline, and he I think he should, but virtually all the Gulf airlines are expanding incredibly rapidly.

With fares and service that the more established carriers are finding hard to match, these companies do not use other Gulf States citizens for their employees because … there aren’t any.

So to give you the fine service and remarkable fares, these companies hire people like Harriett.

Harriett was offered a salary of $215 per month. That isn’t bad by Ugandan standards so she took it. What she learned, though, was that it hardly kept her alive in Dubai.

The only lodging she could find was to share a one-room apartment with three other foreign workers. The apartment didn’t allow any cooking, so all meals had to be purchased as take-outs, and that was expensive.

The apartment didn’t allow any laundry, except when using the apartment’s laundromat, and that was expensive.

When Harriett developed terrible rashes determined to come from the harsh cleaning agent the airline was using, Babacon, she was taken to a hospital and treated. When she left the hospital, the airline reduced her salary from $215/month to $54/month to cover the medical treatment.

The only way she could try to get another job was to get a “NOC” letter from the airline. This “No Objection Consent” from the sponsor was required, but the airline refused.

Harriett’s personal story actually ends better than this, but many don’t. Few workers have the savvy, intelligence or skills that Harriett had.

So I find it annoying that while our current election debate properly engages the question whether Nike is using Bangladesh labor, the liberal reply that they oppose such policies doesn’t address the current liberal administrations alliance with the Gulf States.

Much less the increasing number of Americans using Gulf States airlines.

Hypocrisy seems a part of all politics, but in today’s age a clarity of meaning is being demanded. Some say that’s why Trump is so popular – he might be wrong, he might be dangerous or dumb, but he says what he means.

I’m not sure I agree with that. But I understand the thirst for clarity of meaning, and criticizing American multinationals for subcontracting foreign labor is no more important than recalibrating our immoral alliance with the Gulf States.

Or deciding which airline you’re going to fly.