Libya—Concluding Statement of the 2012 Staff VisitJanuary 26, 2012

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Libya—Concluding Statement of the 2012 Staff Visit January 26, 2012

TRIPOLI, Libya, January 31, 2012/African Press Organization (APO)/ — Libya—Concluding Statement of the 2012 Staff Visit

January 26, 2012

I. Overview

1. The mission is grateful to the Libyan authorities for their hospitality, collaboration and valuable input during technical and policy discussions. It benefited greatly from interactions with government and central bank officials.

2. While the challenges are daunting, economic activity could recover quickly when the security situation normalizes. Restoration of hydrocarbon production is well-advanced at over half of pre-revolution levels and remains critical to economic recovery and reconstruction will boost non-hydrocarbon economic activity. In the short term, the key challenges for the authorities are to exercise budget discipline and resuscitate the banking system while maintaining macroeconomic stability. Most of the UN sanctions that froze Libya’s foreign assets (a total of 200 percent of 2010 GDP) were lifted on December 16, 2011, which will allow the Central Bank of Libya (CBL) to support the exchange rate. Medium-term issues include rebuilding infrastructure, reorienting the economy away from hydrocarbon dependence, and setting up a governance framework that promotes private sector development, job creation and inclusive growth.

II. Recent Economic Developments

3. GDP is estimated to have contracted by 60 percent in 2011 while consumer prices increased by 14 percent. During the conflict, crude oil production fell from an average of 1.77 million barrels per day in 2010 (2 percent of global output) to 22,000 barrels per day in July 2011. Non-hydrocarbon economic activity was also affected by the destruction of infrastructure and production facilities, the departure of expatriate workers, disruptions to banking activity, and limited access to foreign exchange. Accordingly, hydrocarbon GDP is estimated to have contracted by 71 percent in 2011, while non-hydrocarbon output declined by 50 percent. Inflation picked up significantly in 2011, reflecting constraints on imports, domestic supply limitations, and monetary expansion.1

4. The loss of hydrocarbon income has reduced the current account balance. Exports declined from $48.9 billion in 2010 to $19.2 billion in 2011, while imports declined from $24.6 billion to $14.2 billion in the same period due to the lack of access to foreign exchange. Accordingly, the current account balance decreased from a surplus of 21 percent of GDP in 2010 to 4½ percent of GDP in 2011.

5. As of end-2011, the Libyan dinar (LYD) was trading at a 20 percent discount on the parallel market.2 The value of the LYD fell on the parallel market in 2011 due to the inability of the CBL to sell foreign exchange because of the lack of access to its foreign assets. As of January 15, 2012, the spread between the official and parallel market exchange rates had narrowed to below 10 percent.3

6. Budget revenue declined sharply due to the fall in hydrocarbon revenues while current expenditure increased in 2011. Revenue is estimated to have declined by 69 percent from 57 percent of GDP in 2010 to 39 percent of GDP in 2011. In 2010, expenditures on wages, subsidies, and transfers were equivalent to 21 percent of GDP. The budget for 2011 was reallocated to accommodate: (i) first-quarter policy changes including increased salaries; (ii) the drop in oil revenues; (iii) humanitarian needs; and, (iv) a disruption of most capital expenditure. Spending on wages rose by approximately 60 percent, driven by a March 2011 public sector wage increase. The 2011 budget was financed by domestic borrowing of LYD 13.5 billion, revenues from hydrocarbon exports LYD 15.8 billion, as well as estimated arrears of LYD 6 billion.

7. Despite the removal of UN sanctions on the CBL the public sector’s financial situation remains precarious. The bulk of foreign assets was unfrozen on December 16, 2011, and the authorities have mostly regained access.4 As of end-November 2011 around $3 billion had been made available to Libya and further amounts were made available toward the end of last year. The government is financing itself by borrowing from the CBL and drawing down its deposits.5 The counterpart to this on the CBL balance sheet is money creation, primarily through an increase in currency in circulation as well as in commercial bank balances at the CBL.

8. The money supply increased significantly in 2011 due to monetization of the budget deficit. Currency in circulation doubled from LYD 7.5 billion at end-2010 to LYD 15.4 billion at end-2011.6 In response to a shortage of banknotes—vault cash held by the CBL and commercial banks is largely exhausted—the CBL imposed a limit on cash withdrawals by individuals. Demand deposits increased by 13 percent, linked to forced savings caused by the limits on cash withdrawals.

9. In 2011, credit to the private sector declined by about 6 percent, compared to an increase of 14.3 percent in 2010. The change in the stock of credit during 2011 was affected by loan repayments, primarily through salary deductions, and limitations on trade financing due to constraints on access to foreign exchange. Linkages between the financial system and the real economy are weak, with the ratio of credit to GDP in 2010 less than 20 percent. Nevertheless, reduced bank lending to the private sector is likely to have had an adverse impact on non-hydrocarbon economic activity.

10. Commercial banks had adequate capital buffers before the conflict, but the quality of their assets has deteriorated. Non-performing loans (NPLs) in the banking system were 17.2 percent of total loans at end-2010—one of the highest in the MENA region. Nevertheless, risk-weighted capital adequacy was 17.3 percent—well in excess of statutory requirements—and provisioning was 85 percent. Given the depth and length of the conflict, NPLs will have increased sharply due to economic disruption (which will delay some repayments) and because of a deterioration in asset quality (including physical destruction). Some loans may have been made to elements of the former regime and may be irrecoverable. Moreover, the threat of legal challenges to property seized by the former regime creates potential risks for the banking sector, particularly if these properties had been used as collateral.7 The magnitude of these losses has not been estimated.

III. Economic Outlook

11. Economic activity is projected to recover in 2012, concurrent with an improvement in the security situation. The mission prepared a preliminary macroeconomic framework, which is set out in Table 1. Crude oil production increased from 22,000 barrels per day in July to an average of 980,000 barrels in December 2011. Hydrocarbon output, including natural gas, is expected to increase by over 100 percent in 2012 and reach the pre-conflict level during 2014. Non-hydrocarbon GDP is expected to recover by 2014, driven mainly by reconstruction. Although consumer prices increased significantly during 2011, consumer price inflation is expected to ease significantly once imports have resumed and the CBL withdraws money from the system by selling foreign exchange.8 The external current account surplus in 2012 will increase with the restoration of hydrocarbon and non-hydrocarbon exports.

12. Risks to the outlook include delays in normalizing the security situation and lower international prices for oil and gas. Uncertainties in the security environment would constrain private sector economic recovery and could impede the return of expatriate workers that are needed to alleviate workforce bottlenecks. Intensifying strains in the euro area and fragilities elsewhere have resulted in deteriorating financial conditions and escalated downside risks to global growth. Although hydrocarbon prices remain high, the risk of a widespread economic slowdown could lower petroleum prices and present additional challenges to Libya’s hydrocarbon-dependent economy.

IV. Policy Issues

13. The discussions focused on issues related to short and medium-term priorities as well as fiscal sustainability. Medium-term issues will continue to be addressed as part of the continuing dialogue between the Fund staff and the authorities. A key issue will be the establishment of governance and policy frameworks that promote sustainable growth and job creation while maintaining macroeconomic stability.

14. The mission encouraged the authorities to establish a policy framework to set out fiscal and monetary objectives. These objectives should include macroeconomic stability and private sector led and inclusive growth. This framework should integrate the activities of the Libyan Investment Authority (LIA), which should receive and transfer revenues to the budget, and not undertake public spending on behalf of the government.

15. The mission encouraged the government and the CBL to coordinate fiscal with monetary policy. The Ministry of Finance should start preparing projections of the in-year profile of cash flows through its accounts at CBL, in coordination with line ministries and the tax and customs departments. These projections should be updated during the year and discussed with the CBL’s liquidity management operations.

Exchange Rate and Monetary Policy

16. The mission welcomed the announcement that the exchange rate peg to the SDR will be maintained by the CBL to maintain confidence in the currency and it will be important to ensure that adequate foreign exchange is made available to the market.9 The peg has been associated with generally low consumer price inflation, providing a policy anchor and a low degree of exposure to foreign currency risks. Moreover, the peg has helped underpin confidence in the currency during the conflict. Looking forward, maintaining the exchange rate peg will help ensure rapid macro-financial normalization. This policy must be accompanied by fiscal restraint to prevent fuelling inflation and a damaging appreciation of the real exchange rate.

Banking System

17. The mission noted that the current shortage of dinar cash in the banking system is linked to the slow normalization of the foreign exchange market. The lack of access to foreign exchange constrained the operation of commercial banks, undermined public confidence in banks, and prompted the private sector to hold dinar cash outside the banking system. The unfreezing of CBL’s foreign assets will allow it to provide foreign exchange liquidity to banks, which should normalize the demand for dinar banknotes and commercial banking operations. The restoration of the non-cash payment system should also help to reduce the demand for cash. The mission suggested that the authorities consider introducing an explicit guarantee of deposits, albeit with adequate safeguards to avoid the moral hazard of an indefinite blanket guarantee.

18. The development of Islamic banking needs appropriate institutions and regulatory framework. In the short term, Islamic banking activities could be limited to Islamic facilities at licensed commercial banks. A draft amendment to the banking law is expected to be prepared by end-January on Islamic banking. The mission offered to assist the authorities with drafting legislation, drawing on international experience. It also urged the authorities to proceed cautiously, ensuring that appropriate legislative and accounting principles are in place, supervisory staff is trained, and Islamic banking products are presented to the public in a transparent manner.

19. The mission urged the authorities to develop a framework for addressing NPLs. For 2012, net credit to the private sector is expected to be broadly unchanged, with write offs of NPLs offset by a pickup in new credit. By February, the central bank expects to have information on NPLs as of end-2011. It will be important for the CBL, as banking supervisor, to verify that the commercial banks obtain as clear a picture as possible of the impact on their balance sheets of the recent conflict, and to ensure that they have sufficient capital to cover losses and to support credit creation during the reconstruction period.

Fiscal Policies and Framework

20. The mission underscored the need to balance short-term spending pressures against fiscal sustainability and prospects for private sector development. The mission recognized the need to address urgent needs resulting from the conflict. Wage increases implemented by the previous regime will raise the wage bill from 9 percent of GDP in 2010 to 18.7 percent of GDP in 2012. A high level of public sector wages will reduce the incentive for individuals to seek employment in the private sector and undermine efforts to advance economic diversification. The envisaged increase in subsidies will raise their cost from 11.7 percent of GDP in 2010 to 15.9 percent of GDP in 2012.

21. The mission discussed with the authorities the 2012 budget. Revenues are expected to be LYD 55.9 billion (57.9 percent of GDP), expenditures to be LYD 62.4 billion (64.7 percent of GDP), and the deficit of LYD 6.6 billion (6.8 percent of GDP) financed through the issuance of government bonds and a drawdown in government deposits at the CBL.10 Although the government can afford to finance elevated current spending in the short-term, the mission cautioned that the level of recurrent spending is likely to be inconsistent with appropriate budgetary prioritization and fiscal sustainability, and put upward pressure on the real exchange rate.

22. The mission discussed with the authorities the need to develop a medium-term budget framework linked to sustainable fiscal policies. The large increase in current spending will require medium-term consolidation to provide the needed space for capital and reconstruction spending while preserving long-term fiscal sustainability. Capital spending, constrained in the short-term by capacity constraints, will have to be reassessed given urgent reconstruction needs, efficiency considerations and the need to assess absorptive capacity of the economy.

23. Reforms will be needed to contain the wage bill and increase the efficiency of the public sector. Medium-term measures that have been implemented successfully in other countries include retrenchment of government employees, decompressing the wage structure, aligning civil service remuneration with the market, monetizing allowances to make compensation more transparent, introducing performance-based incentives, computerizing payroll and personnel systems, and, strengthening the recruitment system to depoliticize government hiring and professionalize the civil service.

24. The mission noted that subsidy reform over the medium term should aim to reduce the economic inefficiencies while better protecting low-income households. Universal subsidies, particularly fuel subsidies, are not targeted and disproportionately benefit higher income households. Subsidies affect consumption and production patterns as well as the allocation of resources, with negative implications for the budget, expenditure composition, and private sector development. Subsidy reform is usually difficult to implement due to the absence of a social safety net to shield low-income households. If the implementation of a sophisticated social safety net is not feasible, the government could consider: (i) limiting the speed at which prices of goods primarily consumed by low-income are raised; (ii) identifying a package of short-term measures to mitigate the adverse impact of price increases on the low-income households; (iii) utilizing some of the savings from subsidy reform to increase public spending to benefit low-income households; and, (iv) using a range of methods to improve targeting of low-income households, such as categorical or geographical application or linking benefits to a self-targeting work program or schooling requirement. Although such measures are imperfect, they are more cost-effective in protecting low-income households than universal subsidies.

Growth Strategy

25. Institutional reforms are necessary to reorient the economy away from hydrocarbon dependence and to promote job creation and inclusive growth. In the decade prior to the conflict, average non-hydrocarbon growth was 8 percent. Nevertheless, the economy remained dependent on the hydrocarbons, social development and governance indicators remained poor, job creation for nationals was lackluster, and dependence on expatriate workers increased. According to the Ministry of Labor, the unemployment rate was estimated at 26 percent and the conflict is likely to have had an adverse effect on the labor market. Redressing unemployment will require a substantial increase in the rate of economic growth. Since unemployment is a structural problem, particularly among youth, it is critical to identify policy measures and structural reforms that would raise employment elasticity and create jobs. In this connection, diversification from hydrocarbons is key to promote job creation and inclusive growth. Accordingly, it will be important for to enact institutional reforms to improve the business environment, deepen the domestic financial system, and clear the path for the development of a competitive private sector.

V. Other Issues

26. The mission discussed the technical assistance strategy for the CBL and explored options to implement PFM technical assistance recommendations. At the CBL, technical assistance could focus, inter alia, on rebuilding and continuing modernization of the CBL.11 Similarly, the Fund offered to provide assistance to implement PFM recommendations with resident advisors and experts, funded through a dedicated subaccount at the Fund.

27. The mission urged the authorities to unify the compilation of national statistics under the umbrella of an independent agency. The mission emphasized the importance of improving the coverage, quality and timeliness of statistics and offered to provide technical assistance in this area.

1 The collection of data on consumer prices during the conflict was limited and may underestimate inflation. End-2011 inflation is estimated at 19.2 percent.

2 Since June 14, 2003 the official current exchange rate has been pegged to the SDR.

3 The CBL suggested that the remaining discount on the parallel market rate is partially attributable to the selling of dinar holdings by individuals with close links to the former regime.

4 Foreign assets consist of approximately $140 billion in liquid assets (almost 200 percent of pre-conflict GDP) and roughly $30–40 billion in other assets.

5 The government increased its borrowing from the CBL in the first 10 months of 2011 by LYD 9 billion.

6 Currency in circulation was equivalent to approximately $12 billion at end-2011. The CBL issued the equivalent of $2 billion in LYD in newly-printed notes and reissued banknotes that had been withdrawn from circulation, the equivalent of $4 billion. The CBL plans to replace the entire stock of currency in circulation in the coming months beginning with the denomination of the LYD 50 note by mid-March. The CBL expects that some currency held by elements of the former regime will be identified during this process.

7 Starting in the late 1970s, tens of thousands of residential and commercial premises were confiscated by the former regime—under Law No 4—and were given, sold or rented at below market rates to new occupants.

8 Significant private capital outflows are expected once access to foreign assets is restored.

9 Temporary controls on conversion of large amounts of LYD cash into foreign exchange may be necessary to mitigate the extent to which assets that were obtained illegally, fraudulently, or on the basis of unscrupulous activity are transferred abroad. These controls should not prevent the authorities from meeting bona fide requests for foreign exchange for making payments or transfers for current international transactions.

10 The mission also highlighted the importance of clarifying current banking arrangements for government cash flows and balances, including the roles and responsibilities of different stakeholders (the Ministry of Finance, the CBL, and the LIA).

11 The mission could provide additional advice, including: (i) supervision issues related to the appropriate balance between write offs and forbearance on non-performing loans; (ii) AML/CFT issues, including verifying ownership of accounts and the source of deposits; and, (iii) in due course, a possible exchange of banknotes.

SOURCE 

International Monetary Fund (IMF)

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Canadian International Trade Minister Ed Fast Meets with Libyan Minister of Higher Education and Scientific Research

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Canadian International Trade Minister Ed Fast Meets with Libyan Minister of Higher Education and Scientific Research

OTTAWA, Canada, January 31, 2012/African Press Organization (APO)/ — The Honourable Ed Fast, Minister of International Trade and Minister for the Asia-Pacific Gateway, meets with Naim Ghariani, Minister of Higher Education and Scientific Research for the Libyan interim government, to discuss the important role that Canada plays in the Libyan student scholarship program. There are approximately 600 Libyan students currently studying in Canadian institutions. The many thousands of students who have come to Canada to study act as a bridge of knowledge and cultural exchange between Canada and Libya. Both Libya’s Minister of Electricity and Minister of Telecom were educated in Canada

Photo (from left to right): Dr. Karen McBride, president of the Canadian Bureau of International Education, Mr. Naim Ghariani, Minister of Higher Education and Scientific Research; Minister Fast.

SOURCE 

Canada – Ministry of Foreign Affairs

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Minister Fast Meets with Canadian Trade Mission Participants in Libya

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Minister Fast Meets with Canadian Trade Mission Participants in Libya

OTTAWA, Canada, January 31, 2012/African Press Organization (APO)/ — International Trade Minister Ed Fast meets with Canadian companies interested in doing business in Libya during a corporate social responsibility round table. The event provided Canadian companies with an increased understanding of what it means to work in the new Libya and how best they can support long-term stability. The Minister also highlighted the work of Canada’s trade commissioners and the embassy in Tripoli, which reopened in early September to help facilitate Canada-Libya relations.

SOURCE 

Canada – Ministry of Foreign Affairs

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Gaga’s little monsters want pizza

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Lady Gaga’s parents, Joe and Cynthia Germanotta, are opening a restaurant on Manhattan’s Upper West Side on Wednesday. Photograph by: Steve Marcus, Reuters

NEW YORK — On Wednesday, a small dining room will open on Manhattan’s Upper West Side, another unassuming Italian restaurant in a city whose residents are seldom more than three metres from a lasagna.

Despite the best efforts of the proprietors, Joe and Cynthia Germanotta, to play it down, the Joanne Trattoria is a subject of intense excitement. The curious gawp at its plain frontage and there has been fevered speculation as to the menu, all prompted by a single glaring fact that threatens to overshadow recipes such as “Grandma Ronnie’s meatballs.” Their daughter is Stefani Germanotta, known to fans and 18 million followers on Twitter as Lady Gaga.

The pop singer announced the new restaurant in a tearful television interview last year, and questions have been asked over her role in the venture and influence on the menu. Had the chef, Art Smith, taken inspiration from her decision to wear a lobster as a hat? Could he possibly evoke, perhaps in the form of a carbonara, the time that Lady Gaga emerged from a giant egg to perform at the Grammy Awards? If she had not personally grilled the steaks, might she perhaps have worn them? “My dad and I opened up a restaurant together,” she said in an interview with Katie Couric last year. She said it was named after his sister, who died of lupus at 19.

There were suggestions that the menu would contain a 10-layer lasagna, mini-martinis and Nutella doughnuts. Smith was seen cooking with Lady Gaga on the same television program, A Very Gaga Thanksgiving, in November. He cited a waffle recipe favoured by “grandmother Germanotta” containing “pecorino, crispy salami … with these wonderful Italian herbs,” adding that “your Aunt Sheri and Uncle Steve make the most amazing spiced pecans.”

Last week, Joe Germanotta acknowledged that his daughter “just generates a lot of sizzle” though he warned that fans should not expect a Gaga-themed restaurant. He would perhaps also appreciate it if they did not turn up in the fancy dress outfits that are de rigueur at his daughter’s concerts. Besides Tuscan landscapes and a homespun hearth, the couple were considering placing a picture of their daughter on one wall, if they could find an older photograph.

“If they’re expecting to come in here and see Grammys and pictures and stuff like that, it’s not going to happen,” he told the New York Times. It seems likely, however, that Lady Gaga’s fans, the legion of what she calls “little monsters,’ will come anyway, hoping to find a little of their idol in the spaghetti.

The Times, London

©Times Newspapers Ltd. 2012

Djokovic ready for assault on calendar grand slam

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Novak Djokovic of Serbia holds the men’s singles winner’s trophy at a media call in Melbourne January 30, 2012. Credit: Reuters/Daniel Munoz

When the year began common logic suggested Novak Djokovic would struggle to emulate his extraordinary 2011 but after retaining his Australian Open title in astonishing fashion on Sunday the question is can anyone stop him setting the bar even higher.

The Serbian world number one was the last man standing in Melbourne after two ferocious battles spanning more than 10 hours against Andy Murray in the semis and then Rafa Nadal in the final. He now towers like a chunk of granite at the top of the men’s game.

Having risen through the ranks in an era when Roger Federer and Nadal shredded the record books the 24-year-old now looks capable of achieving the feat that eluded both of them, and many more of the game’s greats, the fabled calendar grand slam.

Djokovic won three of the four majors last year, only tripping up in the semi-finals of the French Open to an inspired Federer who himself collected three pieces of the jigsaw in 2004, 2006 and 2007 — each time Nadal proving an insurmountable barrier on Parisian brick dust.

Nadal won the French, Wimbledon and the U.S. Open during his dominant 2010, since when Djokovic has taken over.

While Federer has never mastered Nadal’s topspin brutality at Roland Garros — his only triumph coming there when Nadal was injured in 2009 — and Nadal often suffered on the hard courts of Melbourne and Flushing Meadows, Djokovic’s game is tailor-made for any surface.

His rubber-limbed movement means any ball appears within his reach, his serve is now a major weapon and his ability to generate pace off either wing by stepping inside the baseline means virtually all his matches are played on his terms.

Even when Murray launched a staggering onslaught in Friday’s semi-final, Djokovic weathered the storm behind his steely defences.

He proved last year that he had Nadal’s number on slow clay, de-throning the Mallorcan powerhouse in Madrid and Rome without dropping a set — defeats that eroded Nadal’s aura of invincibilty on a surface he has ruled on since 2005.

While talk of a calendar grand slam, a feat not achieved since Rod Laver in 1969, is loaded with pitfalls, Djokovic was doing nothing to play down the possibility after his five hour 53 minute victory against Nadal on Sunday.

“I’m prioritising grand slams this year, as every year, and the Olympic Games. I think that’s one of my highest goals,” Djokovic said after becoming just the fifth player to win three of them in succession.

“That doesn’t mean of course that I’m not gonna prepare well and perform my best on the other tournaments. It’s just that, you know, the grand slams matter the most.”

Clay has proved the most problematic for former greats such as Federer, Pete Sampras, Stefan Edberg, John McEnroe and Jimmy Connors but Djokovic has no demons on the surface and he clearly believes the French Open is winnable for the first time this year.

“I want to do well and I want to get the first final at least in Paris, you know,” he said.

“I have never been in finals there, and I have a feeling that I’m ready this year to achieve that.”

Despite Nadal’s upbeat reaction to defeat by Djokovic, a seventh consecutive defeat to the relentless Serb will have left mental and physical scars — similar to the ones he seems to regularly inflict on Federer.

While Sunday’s epic was desperately close and Nadal should arguably have won the fifth set against an exhausted opponent, there were long periods of the match when Djokovic called the shots and only Nadal’s tenacity kept him in contention.

The good news for Rafa fans is that he is up for the fight and appeared energised by the prospect of trying to stop the Djokovic juggernaut despite acknowledging that the Serb has taken the game to new heights.

“Now he’s the best of the world,” Nadal said after losing the longest grand slam final ever.

“That’s how great it is. Five grand slams, so the history says that he has a part in the history today winning five grand slams, winning a lot of titles, number one of the world.”

“We’ll see where he arrives,” added the 25-year-old.

By Martyn Herman, Reuters

Malaria fight wins Kikwete African recognition

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President Jakaya Kikwete

President Jakaya Kikwete was on Monday awarded for leadership excellence in the campaign aimed at eradicating malaria in Tanzania and Africa.

The award was presented to Dr Kikwete by Liberian President Ellen Johnson Sirleaf at a luncheon for African leaders  organised by the African Leaders Malaria Alliance (ALMA) on the sidelines of the 18th AU Summit here.

During the occasion, Tanzania was also among a few African countries that received the ALMA special excellence award for their efforts towards eliminating malaria within the next few years. ALMA is an alliance of African Heads of State and Government working to end malaria-related deaths on the continent. These leaders have come together to say that malaria deaths are unacceptable.

President Kikwete has been the chairman of ALMA since it was launched at the UN Headquarters in New York, in September 2009. Dr Sirleaf took over the chair of the alliance on Monday. In his response to the special ALMA award, President Kikwete said: “I am honoured by your recognition of my contribution and shall always value this award, primarily because it recognises our joint efforts and our common success in the fight.

“Together and working with our people and partners we must achieve zero malaria deaths by 2015.” According to the World Malaria Report 2011, there were 216 million cases of malaria and an estimated 655,000 deaths in 2010. The disease claims about 60,000 lives annually in Tanzania.  Malaria mortality rates have fallen by more than 25 per cent globally since 2000, and by 33 per cent in the African Region. Most deaths occur among children under five. In Africa  a child dies every minute of malaria and the disease accounts for approximately 22 per cent of all childhood deaths.

Malaria is caused by Plasmodium parasites spread by Anopheles mosquitoes that bite people mainly at night, after weeks of high profile lobbying, an election for the chairman of the African Union Commission ended in deadlock on Monday and a new vote is going to take place in June, President Michael Sata of Zambia told a news conference here.  “We went for an election and none of the two candidates emerged as a winner,” the Zambian leader said. In the race were the South African Home Affairs Minister, Dr Nkosazana Dlamini-Zuma, who sought to unseat outgoing chairman, Dr Jean Ping from Gabon.

AU Commission Deputy Chairman, Mr Erastus Mwencha from Kenya, will now serve as the chairman until the next elections are held in June, at an extra-ordinary AU summit in Lilongwe, Malawi.  Neither candidate secured the required two-thirds majority in the three rounds as the election was going on. Dlamini-Zuma was then forced under AU rules to pull out, leaving Ping to face a fourth round on his own, but he still failed to muster the necessary votes, according to sources.

Observers say that the election of the AU Commission chief witnessed intensive campaigning to the extent that it overshadowed the two-day African leaders meeting under the theme: “Boosting Intra-African Trade. Dr Dlamini-Zuma (63), who had the support of Southern Africa Development Community (SADC), Portuguese-speaking and some Anglophone countries, had earlier circulated a brochure vowing to promote peace and security on the continent as well as the welfare of men and women in Africa.

Dr Ping (69), a seasoned diplomat holding a doctoral degree in economics from the University of Paris, had earlier said that he was confident of re-election, counting on support from French-speaking West and Central Africa countries. On Sunday, the 54-member African Union elected Benin’s President Thomas Boni Yayi as the new chairman, a rotating post held for one year, taking over from Equatorial Guinea’s Teodoro Obiang Nguema.  The summit ended on Monday evening.

By JOHN KULEKANA, Tanzania Daily News

Angola blunder their way out of Nations Cup

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Emmanuel Eboue (L) of Ivory Coast head the ball while as Miguel Geraldo Quiami (C) and Dani Massunguna of Angola look on during their African Nations Cup soccer match in Malabo January 30, 2012. Credit: Reuters/Luc Gnago

(Reuters) – Angola, needing a point to reach the African Nations Cup quarter-finals, were eliminated on Monday after slapstick defending sent them to a 2-0 defeat against a largely second-string Ivory Coast team.

Angola’s low point came just after the hour when, trailing 1-0 but still on course to qualify, Dani Mussunguna tried to head the ball back to his goalkeeper but instead sent it over his head, leaving Wilfried Bony to tap into an empty net.

Emmanuel Eboue had put the Ivorians ahead after 32 minutes following another blunder at the back.

Angola, who were twice close to pulling a goal back, finished third in Group B with four points, losing out on goal difference to Sudan, who took second place with a 2-1 win over Burkina Faso.

Ivory Coast had already qualified and topped the group with maximum points from three games, which they completed without conceding a goal.

“We always put Angola first,” said coach Lito Vidigal, who spent most of the news conference complaining about the standard of the translation from Portuguese to English, which was provided by a director of the Angolan federation.

“We had a lot of problems which I don’t even want to talk about. My players did a fantastic job,” added Vidigal, who pulled faces when his words were translated and complained they were being taken out of context.

NINE CHANGES

Ivory Coast made nine changes to the side that started the 2-0 win over Burkina Faso while Angola’s ambitions were clearly limited to collecting the point they needed as they packed their defence.

On another steamy Malabo evening, the few first-half chances all fell to the Ivorians. Bony produced a run and powerful low drive which was well saved by Wilson Pereira and Kolo Toure drove a 35-metre shot narrowly wide following a free kick.

Bony also had a helping hand in their first goal with a strong run down the left and low ball into the area. Angola defender Miguel Quiami appeared to have the ball covered but it slipped through his legs for Eboue to tap in at the far post.

With Sudan winning their game against Burkina, Angola looked increasingly edgy and they gifted Ivory Coast another goal.

In the 65th minute, Mussunguna got his head to Abdulkader Keita’s long ball forward but sent his attempted clearance over the head of stranded Pereira and Bony tapped the ball into the empty net to take the credit for the goal.

Facing elimination, Angola came to life and were twice close to pulling back a goal which would have taken them through on goals scored.

Manucho had a powerful header brilliantly punched away from under the bar by Daniel Yeboah, then Kolo Toure hooked a goalbound shot off the line.

BoT to float 100bn/- T-bills

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Bank of Tanzania (BoT)

The Bank of Tanzania (BoT) will on Tuesday float a twelve-month treasury bills tender worth 100bn/- amid expectations of continued striking performance because of easing liquidity stance.

The beginning of the year has seen improved performances on trading of government securities compared to the preceding period when the T-Bills performed poorly in the market due to tax obligations that had overwhelmed investors as well as tight liquidity in the market applied by the Central Bank.

The total amount tendered in the previous treasury bills auction for instance reached 169bn/- against the 100bn/- floated, although the central bank accepted only 95.5bn/- as successful bids. But, the 100bn/- tender floated last December attracted only 71bn/-.

BoT has been working tirelessly on new monetary policies and buyers held back investment resources making yields to continue building up in every primary auction. In tomorrow’s auction, the BoT on behalf of the government has invited applications from both primary dealers and corporate investors to tender in 35 days offer that goes up to 5bn/-, 91 days set at 30bn/-, 182days at 30bn/- and 364days at 35bn/-.

However, analysts hold that as yields in the money market instruments take a downward trend, large investors are expected to channel their funds back into the stock market in the coming weeks to explore advantage of the dividends and long term stock appreciation at equity market.

“We anticipate low to medium level of activity as the rate of return on money market instruments have started to edge downward,” commented the Tanzania Securities Limited (TSL) in a weekly market commentary. The BoT monthly economic review for November last year show high demand for T-Bills in October compared to September 2011.

But, the maturities for the treasury bills tendered in the month of January were oversubscribed. The mounting demand according to the report resulted into over-subscriptions recorded only on the 364 days maturities while under-subscriptions documented on 35 and 91 days and 182 days maturities.

By SEBASTIAN MRINDOKO, Tanzania Daily News

Azam edge out Moro United to put pressure on Simba, Yanga

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Azam FC players

Azam FC bolstered excitement in the Mainland Premier Soccer League’s title chase after edging Moro United 1-0 at the former’s Chamazi Stadium, on the outskirts of Dar es Salaam on Monday.

Towering striker, John Bocco, scored the lone goal in the first half to eventually see Azam collect 29 points, two points adrift of big guns, Simba and Yanga, who occupy the first and second positions respectively in the standing despite being level on 31 points.

The match was previously scheduled to take place at the same venue a day before but the Tanzania Football Federation (TFF) decided to push it back so as to avoid a low turnout that could have happened in the game considering that majority of domestic soccer fans in the city were expected to attend the return leg of the African Women Championship (AWC) Qualifiers pitting the senior national women soccer team, Twiga Stars, against Namibia at the National Stadium the same Sunday.

Azam dominated the Monday game in the first half, in which the side put scintillating displays and went close on several occasions only to see its strikers, Bocco and Mrisho Ngasa, miss the chances. Moro United were a rejuvenated side in the second half, pinned their opponents down for a while but their efforts to cancel out Azam’s lead hit snag.

Azam FC had, until the Monday game, been occupying the third position with 26 points from 14 matches, five points adrift of rivals, Simba and Yanga. The ice-cream makers opened their second round campaign with a hard fought 2-1 over African Lyon in the match played at the former’s venue at Chamazi, with an own goal by one of African Lyon players and a second half strike by centre forward, John Bocco, earning big spending Azam crucial three points.

The victory over African Lyon boosted Azam’s chances of continuing to stay in the title contention and a win in the yesterday match was definitely crucial to their pursuit of the maiden triumph. Azam had grabbed a slim 1-0 win over Moro United when the two sides met in the league’s first round match and expectedly, this second round encounter  game had equally all the qualities of a tightly contested duel.

Azam, coached by English tactician, Stewart Hall, bolstered its squad by roping in Ivorian midfielder, Kipre Balou, and towering striker, Gaudence Mwaikimba, during the mini-transfer window in December, last year in a bid to strengthen its chances to emerge champions for the first time ever. Mwaikimba, coincidentally, was recruited from Moro United and the striker could have faced his former side for the first time in the season had coach Hall decided to play him.

Moro United forced a 2-2 draw with defending champions, Yanga, in their first game of the second round at the National Stadium in Dar es Salaam a fortnight ago to stay at the ninth position with 15 points from 14 matches. Moro United head coach, Hassan Banyai, admitted the draw had frustrated his side’s attempt to climb up the league standing and promised to work on the team’s weaknesses with a view to winning forthcoming games.

League giants, Simba, are expected to return to action on Wednesday, in which they will face Oljoro JKT of Arusha at the National Stadium.  Victory over the fourth-placed Oljoro would see Simba again open a three-point gap with their closest challengers and rivals, Yanga.

Source Tanzania Daily News

Tanzania sugar production potential yet to be fully exploited

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Sugarcane farm

Tanzania stands a good chance of becoming sugarself sufficient and net exporter of the essential product if there are strategic moves to attract more investors in the local sugar sub-sector.

Apart from increasing sugar supply in the market and stabilising prices, increased investments would create employment and support in the implementation of the governments’ ambitious Kilimo Kwanza Initiative. Sugarcane is mostly grown in processing factories’ owned estates and some outgrowers in contracts with the factories.

Experts have it increased acreage under sugarcane and improved productivity would significantly raise sugar production in the country. Despite major sugarcane estates by Kilombero Sugar Company and Mtibwa Sugar Estates in Morogoro; Kagera Sugarcane Estates in Kagera; and Tanganyika Plantation Company in Kilimanjaro, the demand for sugar has always surpassed supply, with imports bridging the gap.

One of the critical problems facing the local sugar industry is the country’s porous borders and ports that facilitate smuggling. Smuggling is not only creating shortage in the local market but also subjecting the government to huge losses due to tax evasion. Last year, for example, the government was compelled to engage security organs to block illegal exportation of sugar to the neighboring countries with acute shortage that pushed prices of the commodity to extraordinarily high levels.

Mr Kombe said the commodity price in all factories has never changed but blamed distributors destabilise supply in the market. However, for the imported sugar, he observed that the prices depend largely on the commodity value in the world market. Likewise, sugar prices are likely to remain less unaffected despite power tariff hike because the producing firms use alternative energy that they generate.

“Almost all the sugar factories no longer depend on the national grid rather produce their own source of energy from sugarcane remains,” remarked Mr Kombe. Effective from January 15, this year, the energy regulator approved an electricity price hike of 40.29 percent for the state-run power firm (TANESCO).

Increase of power charges would affect power users from individual, commercial, industrial and mining segments. Despite government interventions few months ago, sugar price continued to rise and in some regions especially those in the boarder with neighboring countries, a kilo was sold for as high as 2,600/-.

In Dar es Salaam for example, retail price for sugar ranges between 2,000/- and 2,400/-, a kilo. Tanzania’s sugar consumption is estimated at 480,000 tonnes per annum, but the four factories, namely the Tanganyika Plantation Company (TPC), Kilombero, Kagera and Mtibwa Sugar produce only 320,000 tonnes.

Last year for example, sugar demand exceeded 330,000 tonnes at the time when production stood at 250,000 tonnes, creating a deficit of nearly 80,000 tonnes. The balance was covered by imports. It’s a contradiction to promote Kilimo Kwanza on one side and prohibit exports that fetch premium prices on the other hand.

Boosting supply therefore should go hand in hand with the establishment of better export structures. Some analysts did however criticise the export ban, which they described as a reflection of serious weakness in the supply side. They instead proposed for concerted efforts to increase production and tape the shortage in other countries as business opportunity.

“Increased production will close the current demand-supply gap and create sugar surplus for export markets,” says Mathew Kombe, the Sugar Board of Tanzania (SBT) Director General. Mr Kombe advises local producers to capitalise on frequent shortages in neighboring countries. The board ruled out the possibility of intervening sugar prices last week but blamed few distributors for accumulating the commodity to create artificial shortages to make quick gains.

“There are no plans to intervene on sugar prices for the time being instead market forces will be the determinant factor,” Mr Kombe was quoted as saying. The short term plans, he said would be to increase output in the four producing factories and importing certain amount to cover deficit. But, in the long run more investments in the sector would provide lasting solution.

By SEBASTIAN MRINDOKO, Tanzania Daily News

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