Niger Delta, a burning issue

After Chinese manufacturing sector recovery, I keep focusing on international issues. In this post, I will be going through the reading of several articles (Reuters, Daily Telegraph) concerning the harmful situation that is going on in the Niger Delta. This area suffers many problems at the moment and had been suffering these issues for decades now since oil production started. This asset has been mismanaged over years due to a lack of political efficiency. And from a potential wealth it has came to a source of conflict over several countries concerned by oil extraction.

First of all, oil production has led to social issues in the Niger Delta. Foreign companies are dealing with oil extraction and local population is in most cases left behind. This leads currently to a major issue in this area of Africa. Militancy is increasing and it appears that abducting has become a “fashionable” activity, because of the great amount of money it could provide. Indeed, many groups use to kidnap more and more people, mainly individuals suspected of having money or at least linked with people that do have money. Kidnappers are asking for ransom usually ranked between $700.000 and $3 million.

It is obvious to me that the government should lead as quick as possible legislative schemes in order to slow down militancy because as far as financial outcomes are concerned, this situation is likely to bring foreign investors reluctant on spending money in oil companies, joint ventures or upgrading production facilities schemes.

The main issue that local governments will have to face is oil productivity which has been cut by almost 40 percent due to sabotage or kidnapping of oil workers. Government earn $ billion a year and local population receive a very few part of it. That’s why government is trying to pass a proposal through parliament. Government should curb its stake in joint venture with foreign oil companies by 10 percent and give it to local trusts. That would bring local population to be involved in oil producing process and relying on it. This should lead to calm down militancy and offer local population what they had always be asking for. Then, it is all relying on governments processes, as it has always been a matter of implementation in this African area. But according to Nigerian President and his advisor this scheme is all Nigeria has always needed. Only time could bring a proper reply to this.

A comparison between different articles would not be relevant to this issue, because every single article deals with a different analysis of the situation. It allowed me to have an overall viewing of the situation in the Niger Delta though. Of course, to me it is pretty obvious that potential wealth are in most cases mismanaged in black Africa, and instead of leading to an upgrade of countries economic situation, it comes up more with conflict, disputes, attacks, kidnapping and murdering. Government has to run tightened policies to try and end up militancy in this area of the globe, and getting local population involved in oil producing process could be a great idea to keep the assets safe. This point is really important to keep the industry attractive to industrialized countries investors, on which this sort of countries are relying on their way to stand up as an economic power.

References :

http://www.telegraph.co.uk/expat/expatnews/6452428/Now-its-not-just-oil-workers-under-threat-from-Nigerias-kidnappers.html

http://uk.reuters.com/article/idUKLS714353._CH_.2420

http://www.telegraph.co.uk/news/worldnews/africaandindianocean/nigeria/6377224/Nigeria-planning-oil-deal-for-delta-to-reduce-violence.html

China, the greatest winner from the global financial crisis ?

Since I had focused the main part of my reading on Britain’s issues, I have decided this week to present a sharply different subject. I focused my reading on articles dealing with Chinese issue. The articles I will go through deal mainly with the outcomes of a survey issued in late October, according to which China’s manufacturing sector has been growing in October at its fastest pace in 18 months.

The main fact issued of this survey is the rise of the PMI index (Purchasing Managers Index) which came from 54.3 in September to 55.2 in October. The sector has been expanding for 8 months in a row now while major economies are just starting to show signs of recovery. The index has ended up its eighth month in a row above the 50 percent line while it was 38.8 last November. The nearly whole of this survey shows positive figures which should give way to a firmly Chinese recovery in the next months. This recovery will rely on the increase of both abroad and domestic demand.
"All these show that economic growth will accelerate in the future, and the growth rate in the fourth quarter is likely to be 9.5 percent," said Zhang Liqun, a researcher with the Development Research Centre, reported by Reuters.

The kickoff of such a recovery has been enabled by a government stimulus to industry, allowing financial packages to companies involving spending on infrastructures to boost the domestic economy. Even though government aid will be curbed in further quarters, China should be able to offset this decrease by relying on external demand, consumer spending and private real estate investment. That is why economists like Brian Jackson are quite confident about Chinese economy for the next quarters. These statements are released by Bloomberg and BBC News articles, which are quite optimistic and seem to rely on the same references.

But while BBC News article is kind of throwing figures and just quoting economists, the Bloomberg journalist tries to infer a little more.
To him, the manufacturing sector soar is kind of boosted by auto sales. Car purchased exceeded 1 million for the first time in September and General Motors said that sales doubled. Car industry grew mainly thanks to tax cuts.

So most of the lights are turning to green, like gross domestic product, which growth accelerated to 8.9 percent in the third quarter from 7.9 percent in the second. The report was not universally positive though. It showed a slump in employment and finished goods inventory and input prices rose.

Basically, all of these four articles are quite optimistic about Chinese recovery boosted by its manufacturing sectors. They are all more or less relying on the same figures, issued from the same survey. So differences between articles are how well they use these figures to try and infer the situation. It is obvious that outlooks are likely to be profitable to China with soaring both external and domestic demand which it can rely on. Furthermore, the restart of private real estate investment and low interest rates should help China to take advantage from the current situation. And if policy makers manage to deal with inflation that high demand should lead to, we might face a major shift in economic position, while China passing over United States. Thus, China could be the greatest winner from the global financial crisis (Bloomberg).

References :

http://news.bbc.co.uk/1/hi/business/8336695.stm

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2gJKUZAwJv0&pos=1

http://uk.reuters.com/article/idUKTRE5A00IM20091101?pageNumber=1&virtualBrandChannel=11564

http://www.ft.com/cms/s/0/1e91ee86-c6d4-11de-bb6f-00144feab49a.html