What the AU Summit should have done for Africa

By William Babigumira (July 2007)

What an eventful week it has been for Africa! Our leaders gathered in the capital city of Ghana, once the bedrock of the anti-colonialism movement, spearheaded and pushed by visionaries of a past generation of leaders like Kwameh Nkrumah; strugglists who surmounted a lot of geo-political challenges of their time, to push a Pan-African agenda.

Alas! The divisions at the summit regrettably took centre stage. Our Great Leaders risked being reduced to a bunch of bickering prefects. Resentment was rife for Gaddafi's attempt to use Libya as a launch pad for what political pundits interpret as an “oil-fueled” domination of Africa. This in effect is pitting him against the United States of America, China, and South Africa. In my view, the cracks were largely due to colonial age divisions between Franco-fone and Anglo-fone Africa.

That said, and with the benefit of hindsight, the set of ideas pushed forward to realize an African Union are rather simple, and rightly so (an African passport, strengthening regional blocs, etc). This is because history tells us that the process of forging nation-states and existing United States’ was a rather bloody and drawn out one. Africa has had its fair share of wars, and as such, should digress from forging itself by spilling more blood.
Rather than deliver a damning indictment of what is generally accepted as an important milestone in the process of Africa’s integration, I choose to examine what it is that the Leaders at the AU summit could have focused their energies on. My view is that, rather than set an agenda for discussing an African government, out Leaders should have focused on agreeing on certain practical economic aspects of African integration which are measurable and plausible and ultimately help forge our continent together.
These roughly span two key areas:

Transportation and Communication Infrastructure:

State Unions of any kind are usually premised on the free and unhindered movement of persons across borders. The free movement of persons is less impacted on by diverse languages, cultures of ways of life, and more by the means for doing it. If I can travel by road or rail to Tripoli, it doesn’t really matter whether I can speak Arabic. Give me a highway, and you have opened up my choices to move. I therefore am free to move where best I can utilise my talent, or apply my capital (human or financial), and I can also tell what the Libyan doesn’t have which I can possibly sell to him. Furthermore, it matters that I am able to ship whatever is demanded which I produce with a comparative advantage, across this vast continent at a reasonable cost.
Key deliverable: An Interstate Highway System linking the geographically diverse markets of Africa. An Interstate Railway system linking the relatively rich markets of Southern Africa to the well endowed food production zones of central Africa and the oil rich Northern and Western Africa.

Energy Infrastructure

Another key factor that defines a viable union of states is freely transferable energy; large amounts of affordable fuel and electrical energy should move unhindered across the continent. Africa has vast potential for both. She however lacks the transformative ingredients to harness this energy. Open up the flow of energy from where it is abundant to where it is needed most, and viola! The economic possibilities are endless.
Key deliverable here; A transnational oil pipeline network linking the energy rich markets of West and North Africa to Energy starved markets of East, Central and South Africa. Likewise, a continental electricity grid linking the Congo basin with the rest of Africa is a necessary and requisite requirement for quick and rapid industrialisation.
Africa is saliently the only Continent investing heavily in pipeline infrastructure to channel oil “away” from herself to the more affluent markets of China, the EU and America, rather than “to herself”, a more energy hungry hinterland craving cheap sources of energy to enable Industrial transformation. A pity indeed!

The Way Forward

How then can our weak states possibly implement these mammoth projects? Rather than seek Aid from the rich west, with all its attendant conditionality and the vested interests it seeks to protect, member states of the AU could pledge to contribute between 2 - 3% of national GDP towards these projects (current estimates place real GDP growth for Sub-Saharan Africa at an average of 4.5%. Real GDP per capita growth was about 2.8% in 2006). Eventually, if a well thought out project implementation plan is tabled and ratified, then International financial investment corporations will be attracted to co-finance the project.

The AU Summit offered that unique forum for discussing such a plan. It was, inadvertently, missed.

One would argue that the economic disparity and instability across Africa’s regions is a major impediment to the viability of these infrastructure projects suggested herein. I believe this is not entirely true. Contrary to popular belief, Sub-Saharan Africa’s currently enjoys relative economic stability. This, combined with a favourable global growth climate, now offers opportunities that the region has begun to exploit. Sadly, this is being done at national level, with all the attendant weaknesses which I need not mention here. Further work is needed at a macro (read: Continental) level to harness and accelerate national efforts for development and poverty elimination.

According to the IMF, Sub-Saharan Africa experienced a third straight year of growth over 5% in 2006. The IMF projects growth to be around 6% in 2007 and the region is inching closer to 7% growth per annum, the rate needed to achieve the Millenium Development Goals of cutting extreme poverty in half by the year 2015. My considered view is that by 2015, if these two major economic areas are well consolidated and addressed, then poverty would be well below 5% by the year 2015.

Off course these ideas are not without challenges. Trans-continental projects of this nature can be very expensive and are subject to the successful negotiation and implementation of complex regional agreements, which is why the platform for action must be defined in palatable ways for all the Governments of Africa. National plans for electrical grids will have to be tweaked to fit a continental energy balance, and re-designed to meet the standards and specifications of an African Electricity Grid. Concession agreements for oil pipelines have to be negotiated and agreed within a specified timeframe.

In conclusion, what will forge a viable African Union is economic integration first. Political integration is far off in the future and will be realized if an African head of State has an integrated economic zone and her peoples to preside over.

When is £60 Billion in Aid a bad Investment?

By William Babigumira (June 2007)

Last week, the G8 group of leaders, once again, agreed in principle to provide £60 Billion to poor African countries mainly to fight Tuberculosis, HIV and Malaria. The world watched as Bono and Bob Geldoff pilloried World Leaders, decrying their indifference and at worst their inability to meet previously promised targets, largely meant to fight the same diseases.
The basic premise of the G8s promises is the "poverty alleviation principle" not the "poverty eradication principle". Ironically, it will only serve to fuel and aggravate the distortions that Aid has introduced into the complex development equation.

Interestingly, in your article, you quoted Jeffrey Sachs book, "The End of Poverty". Prof. Sachs advocates for an "increase" and not a "decrease" in Aid to Africa. I quote Jeffrey Sachs website, " In 2005, total aid from the 22 richest countries to the world's developing countries was just $106 billion—a shortfall of $119 billion dollars from the 0.7% promise. On average, the world's richest countries provided just 0.33% of their GNP in official development assistance (ODA). The United States provided just 0.22%. " Prof. Sachs would rather have this money pumped into what I really see is a poverty alleviation framework. One meant to "reduce" human misery, and not to "eradicate" it. One meant to ease the production process at subsistence level; giving the peasant appropriate technology to enable him produce. Give a poor peasant a mosquito net, and you will have given him or her, the chance to live a more decent life. This, in my view, is a good effort but a rather misdirected one. Prof. Sachs also doesn't offer clear ways on how to dispense this Aid. It is well known that the current systems and conditionality's are insufficient for meaningful dispensation of Aid.
What is really at the root of Africa's decline? Why does Africa continue to shamefully lag behind the global growth average? Is it a high HIV prevalence rate? Or weak governments incapable of ensuring that income and wealth is evenly distributed among their citizens? Or a weak and uncompetitive private sector? Or Inadequate infrastructure? Or a combination of all the above?
What exactly is it? I sure do not have the answers to that, but I can sure tell you what it isn't. It isn't primarily HIV and TB and Malaria that explain the persistent economic decline. Which is why I pose the question!

Why spend £60 Billion to fight the famous three?

Is TB and HIV and Malaria the biggest known threat to the existence of emerging African economies? If the disease rates were as low as 1% to 2%, would Africa slowly and surely climb out of the quagmire of economic desperation? I see no clear linkage between a healthy population with no work to do and development. The argument that "free enterprise" will take care of things is a lame one at the moment, because even in healthier economies, strong able-bodied people still need various interventions to find work to do and the highest levels of subsidy do exist in these economies to prop up agricultural production (America spends an estimated US$ 1 billion every day in subsidies to farmers. It is estimated that if the EU dropped all agricultural subsidies, then only France and Spain would most likely find it viable to engage in Agriculture as a business).

Unfortunately, when an image of Africa is painted in the view of the western world, the lenses used only deploy tunnel vision; they see disease and desperation. These are symptoms of a rather more complex problem; Africa's Economic marginalization and exclusion from mainstream globalization. Western capitals are citadels of immensely wealthy and valuable global brands. The East (China mainly) has boldly assumed the role of workshop of the world and Africa remains the subservient and dutiful supplier of raw material for their factories.
I was in Rotterdam last week, on a mission funded by the CBI-Netherlands to find markets for some of our products. I had premium roasted Ugandan coffee samples which I presented to another Consultant based in the Netherlands. What emerged from further discussions with her was that the International Coffee trade is really a cartel (Mafia) of only 6 International multinationals. All the coffee traded and imported into the Netherlands is handled by one company. It is an upstream task to introduce branded coffee into these markets. Exclusionist tendencies are only growing stronger. The current WTO rules do not clearly state a position on cartel like behavior. It also does not cater for the free movement of "brands" from the poorer countries to the wealthier ones. If the current round of negotiations succeeds, God willing, a lawsuit by our bigger brothers (Brazil, or India) may introduce some changes, but this is along shot off. After a long week of hard work, we took time of to take a tour of the Rotterdam sea port. It is huge expanse of containers and cargo liners delivering consumer goods to the benelux and other affluent markets of the EU. I engaged the Consultant I was with in idle talk about Rotterdam and comparing it to other ports. He stated that Shanghai has overtaken Rotterdam in size. But this rather ironically does not, in a bit, worry the Dutch. Instead they see opportunities arising from this. The Dutch know that the next big business idea is environmental engineering. Someone will have to clean up China's excesses in environmental pollution, due to her excessive growth rates. The Dutch are very good at this and have a control on that niche market. China's economy will expand to double or tripple it size in the next 5 to 10 years, but alot of value locked up in the "innovation cycle" and "global brands", will remain in the West.

In fact, the current explosion of manufacturing industry in the East only makes any meaningful chances of Africa climbing out of poverty by adding value to her raw materials, grimmer. Why? Because for the last 20 years, prices of manufactures across the board have continued to decline. Furthermore, South East Asia can manufacture a cheap consumer item for less and less cost, as a fraction of the price of that manufactured item. This only compounds an already complex problem. Can African really compete by adding value to some of these raw materials? Can we sustainably produce manufactures which will compete and find their way in the affluent markets of the western world? I am beginning to have my doubts. But that said, I often choose to look at the glass as half full and not half empty. Africa will have to find alternative products to sell to the west, niche products or sectors which the wealthy are willing to pay for and not engage in producing for themselves. This is a debate for another day.

It is true that the divide between rich and poor has grown to its highest in the last 5 years. Globalization is revving to full blast, and indeed signs of anxiety are beginning to creep into the mainstream media. I quote the New York Times, "Prof. Summers's favorite statistic these days is that, since 1979, the share of pretax income going to the top 1 percent of American households has risen by 7 percentage points, to 16 percent. Over the same span, the share of income going to the bottom 80 percent has fallen by 7 percentage points. It's as if every household in that bottom 80 percent is writing a check for $7,000 every year and sending it to the top 1 percent. "
Well what Prof. Summers could tell the world is that every African literally writes a check worth many times more, to every family living in the Western world, mainly through leaked value? My point is that, funding Africa's health and social infrastructure is a welcome initiative in the short term, but we fail to see what the benefits will be in the long term.

What does healthcare really do for the economy? It ensures that the working citizen is in good shape so that he or she can show up for work as consistently as the production cycle demands that he or she show up. Workers in the western industrial complex are more akin to guinea pigs; kept healthy by well functioning health care systems, so that they can put more hours of productive work into the economy, to grow the private businesses they work for and in the end, to create wealth and prosperity for themselves.

So, if a set of poor governments were handed £60 Billion, what would they then wish to pay for? A healthcare system fully facilitated to the last stethoscope, which would only eliminate disease if the rate of treatment of disease by the system is higher than the rate of disease replenishment? I need to hear a better argument from the gurus here. Because, simply stated, whenever a TB or malaria patient is treated, given that nothing is done to change the sanitation and hygienic conditions in which he or she lives in, he gets re-infected only to show up again for re-treatment. Even if he or she were not re-infected, more out there have no adequate access anyway. It does not take rocket science to see what kind of strains this imposes on the system. To compound the situation even further, at a rather high expense, this desperate person is treated, but this person's contribution to GNI is near nil. The rather cold stark reality is that there is no economic rationale for treating this human being; cold and heartless it sounds, but true. HIV presents a different set of challenges but in the overall setting the argument remains the same. Antiretroviral treatment is effective if it keeps a working and productive person alive. This way, he or she doesn't suck the system dry, but rather replenishes it whenever he works, pays his taxes, innovates and consumes etc.

Mans right to a healthy lifestyle is not debatable, but so is his right to live sustainably and to work for that healthy existence. The problem is one more of the absence of work aimed at profitable economic outcomes than it is of the inability to profitably and competitively engage in meaningful economic activity. If work does exist, then it is largely confined to tending infertile fields of less than an acre in size, for agricultural production on a meager subsistence scale, totally detached from the global economic system.

African economies and healthcare systems are broken, not because they cannot absolutely cope with a diseased population or more so, not because they were designed that way; to fail miserably, but because the disease replenishment rate in LDCs is way higher than the system can cope with. This then requires that the doctor-to-patient rate be increased to very high levels, something an already anemic government cannot afford. Solutions to this problem lie largely in hygiene. I often see medical practitioners and experts argue for increased funding for medicines and infrastructure, but I less often hear any of them mention increases in funding sanitation and hygiene initiative. A countrys health budget is sure to fall, if commensurate investments are made in hygiene.

What am I really saying? The G8 should really think hard about developing the trade capacities of the peoples in these governments and to address infrastructure bottlenecks. £60 Billion is better spent building power dams, or investing in large mining concessions, or building strategic value-addition facilities and factories. When the correct policy responses are in place coupled with the correct infrastructure to facilitate free movement of persons and industrial products (across Africa), is in my view, when real development starts to happen. Most governments in sub-Saharan Africa more often than not, have the "correct" responses in place but lack the "appropriate infrastructure" to allow for catalytic economic growth. Vice-versa is also true.
When the Marshal plan was conceived and implemented, it served to bridge glaring gaps between existing factories and production centers and the market. Europeans workers had the skills to run these factories. Africa on the other hand requires a massive investment in skills and retraining. She lacks basic infrastructure and adequate production centers.

So, if I were asked where to put £60 Billion over the next 5 years, I surely would advocate for something other than lavishing TB, HIV and malaria eradication programs. Pouring tons of money into investments like public infrastructure; roads, railways, bridges, ports, storage warehouses and factories, is very similar to investing billions in a good healthcare infrastructure. So, why choose the latter at the expense of the former? For the both of them, the returns come years down the road.

What the new Fuel Tax could mean for Uganda's Economy

Here are the plausible implications of the Ugandan Finance Minister’s increment in fuel tax ( 80/= on Diesel and 150/= on petrol) and how this could impact the economy in general and prices in particular.

1. Higher Consumer Prices: From a micro-economic perspective, when fuel prices rise, commodities and other goods in Uganda become more expensive. The increase in costs to produce (energy component), and transport the goods must be factored into a higher price for the consumer products.

2. Impact on Uganda's Exports: This will, in the medium term, have a negative impact on exports (declining volumes) since our products become more expensive and therefore less competitive, and this situation could be further compounded by the strength of the Uganda shilling which will continue to erode export earnings. (The outlooks on the Uganda shilling remain dismal in view of the upcoming CHOGM conference; a large inflow of US dollars is expected to continue to flow into Uganda, plus growing exports to our neighbors, and this will continue to further strengthen the shilling)

3. Impact on Uganda's Imports: One other thing to note is that fuel price increases may generally make Uganda’s imports look like “cheaper” alternatives since our locally produced goods are priced higher. However, from a micro-economic perspective, the volume of Uganda’s imports of consumer goods may decrease accross the board, even though they look relatively cheaper. The reason for this is that demand for petrol and diesel is inelastic in the short term. Commuters will still have to commute; truckers will still have to haul goods. Inelastic demand for means Ugandans will have to continue to buy and pay more for the fuel (because they have no immediate alternative) but will change their spending behavior elsewhere because of their inelastic or fixed amount of income. Less money is available to buy even the cheap imports currently flooding our market. However, high fuel prices could discourage the importation of consumer goods (increase transportation costs anyway), and encourage the importation of capital goods (machinery, plant, etc which allow for economies of scale and prospects for a better long term investment return).

4. Could this situation induce a shift in the structure of our imports in general? Yes and No?

Fuel oil is Uganda's single biggest import (the same for many other non-oil producing countries too). Uganda’s demand for fuel oil is expected to increase significantly in the medium term, so as to accommodate gross shortages in power generation capacity, to accommodate a generally expanding economy and a growing transportation sector (Uganda currently consumes approximately 10,000 barrels of oil every day). Assuming that International crude oil prices remain stable in the medium term (we see an upward trend at the moment, above US$ 70 a barrel), then the benefits of a strong shilling are clear in oil-importation terms; however, if international crude prices continue an upward trend, then increased (global) demand for the US dollar (by non-oil producing countries like Uganda) may happen, generally initiating a recovery of the US dollar, and this still ultimately wipes out our Uganda’s gains in favourable oil-import terms. If it was cheaper for us to import the same number of barrels of oil (strong local currency), it becomes less cheaper for us when the dollar starts to strengthen against our currency. (Note: by some estimates, over 70% of the worlds currency reserves are held in US dollars; indeed the pressures on the dollar are global).

5. Why the Fuel tax? It is important to note that the largest component of the price for fuel oil is really taxes. The Minister of Finance has traditionally found it easier to collect revenue using tax levied on fuel. What remains is to apply the effects of demand and supply on the final price. Ultimately, this is what determines the pump price.

Uganda Sugar – A Market Perspective

The debate of encroachment of Mabira forest by Sugar Corporation of Uganda Ltd (SCOUL) has brought bitter tastes to peoples mouths in the last two months. The media is awash with “environmental” positions on the issue. Threats to boycott SCOULs sugar have been passed and the Government risks a split in her ranks on the issue. Few arguments have cared to present an economic perspective to the argument. This could be because most stakeholders agree that Uganda should increase her production capacity, and that therefore this is a non-important aspect of this discussion. Well… I have seen arguments about how sugar can cause all kinds of health problems. True, except that it’s great industrial value in the production of a host of other products remains undisputed.

I choose as always, to look at the picture in a slightly different lens. This is not intended to rub the environmentalist the wrong way, but rather to crystallize the economic aspect of this argument. It is an informative writeup and not a position on the Mabira issue.
What is the real picture regarding sugar in Uganda? Why is production very anemic and why do we need to increase production capacity? To talk about why our production is anemic would take many pages of an elaborate discourse. That is best left for another day. However, here is why we need to think seriously about the sugar situation?

Uganda’s Position

What is Uganda’s import situation on Sugar?

In 2001, we imported 52,384 MT (26,388 MT from South Africa) worth US$ 21,843,000, in 2002 we imported 32,704 MT (23,692 MT from South Africa) worth US$ 13,660,000, in 2003 we imported 29,905 MT (14,287 MT was from South Africa) worth US$ 12,425,000, in 2004 we imported 47,083 MT (20,475 MT was from South Africa) worth US$ 19,621,000 and lastly in 2005 we imported 52,518 MT (30,000MT was from South Africa) worth US$ 23,698,000. In totality, over the 5 year period; 2001 – 2005, we have spent approx US$ 91.2 million on sugar imports. It is also clear that South Africa is Uganda’s biggest source of Sugar.
Let us then take a look at the export side. In 2001, Uganda exported 3,347 MT worth US$ 1,384,000 mainly to Rwanda (1,331 MT) and the Congo (1,468 MT). In 2002, exported quantities fell to 1,377 MT mainly again to Rwanda Sudan and the DRC. In 2003, exported quantities drastically fell to 267 MT. In 2004, exported quantities rose to 4,573 MT (of which 2,597 MT went to the DRC). In 2005, exported quantities continued to rise; 16,428 MT worth US$ 6,246,000. Lastly, in 2006 statistics estimate the US$ 11,290,000 was earned for 25,421 MT of sugar, mainly to Southern Sudan, the DRC and Rwanda.


So, what is the pattern exhibited by these figures?

Uganda’s domestic demand for sugar has hovered around 250,000 MT per annum and growing; we produce about 200,000 MT per annum. Our industrial capacity largely can’t meet all of this demand; this leaves a shortfall of about 50,000 MT. This gap is naturally filled by imports or by increasing production capacity. In Uganda’s case, the former has prevailed.

Interestingly, a closer look at the statistics reveals why a price shock came about in 2006. Our import quantities over the years have remained close to the deficit levels for local demand. We imported 52,518 MT in 2006 and exported about 25,421 MT mainly to the regional markets of Southern Sudan. This means that the quantities of sugar largely meant to satisfy local demand, left the country for better and more lucrative prices, leaving a glut of about 50% domestically. Obviously, it doesn’t take rocket science to figure out why the prices went up and scarcity prevailed.

The trend line for exports shows a growing market (demand) while the trend line for imports shows an invariably stable import bracket while production at home hasn’t changed much either.

The point for increased production is then made crystal clear. Uganda isn’t ready to take the opportunities offered by the regional markets for sugar. It is therefore logical to increase sugar production back home. We wouldn’t have to import 50,000 MT of sugar, if our production capacity rose by 50,000 MT. Also, we need twice this amount to meet increased export demand. In the event that 100,000 MT of sugar is added onto our production stack and the export market falls? Then we will consume all the “excess” sugar.

What are the market trends for sugar in the region?

Caution ought to be exercised. In 2006, Southern Sudan accounted for about 6,943 MT of our exports while DRC accounted for 3,349 MT. In my view, this is a temporary situation for both markets, likely to last about 5 or fewer years (the period given within the CPA for the GoSS to determine self autonomy). If Southern Sudan undergoes political changes which favour integration with the greater Sudan, then the market will fall. They would then take deliberate measures (not for sugar alone but other consumer goods) to create their own production capacity.

Currently, greater Sudan’s sugar production presents better prospects for Southern Sudan. I believe that the bottlenecks hampering sugar “imports” from greater Sudan to Southern Sudan are only temporary and will impact.

Here is why!

There are 5 sugar factories in Sudan (the the Guneid Factory, the New Halfa Factory, the Sinnar Factory and the Assalaya Factory - and one of them, the Kenana Factory), 4 are state owned. Kenena Sugar Factory is one of the biggest integrated sugar refineries placed under one administrative body in the world. It is one of the world’s largest individual producers with an annual capacity of over 300,000 MT. It is clear that our export opportunity for the region will be greatly impacted by this scenario over the coming years!!

Bullish about Sudan

I last posted a comment on these pages sounding overly optimistic about Sudan. Well, released export figures for Uganda show that Sudan rose to our second biggest market in 2006. Exports to Sudan were US$ 91.7 million, second to the United Arab Emirates which grew to US$ 186 million.

Rwanda (US$ 30.5 million), DRC (US$ 44.8 million) and Burundi (US$ 20 million) continued to grow in 2006.

Kenya, traditionally our largest trading partner, came in third with US$ 88 million. For the first time in the last 5 years, the top 3 export destinations are not in the EU.

This speaks volumes about market shifts, and trends in the short to medium term. However, putting this bonanza into perspective reveals that this growth in earnings may not translate into expanded production capacity to meet this huge demand.

This is not good for the economy in general. I will return to these pages with an analysis on whether imports from the region are growing anyway. (The last time I checked, we had a whooping US$ 450 million import value from Kenya)

Most consumer goods hitting the South Sudanese markets are imports which are then re-exported. However, some home grown industries like cement, building materials, metal products, soft beverages, sugar and confectioneries, will find they have to respond to this by growing their production capacity to meet this burgeoning demand, this despite power shortages back home.

Stanbic IPO - up up and away!!!

Thursday 25th January 2007; 9:00 am (East African Standard Time).....Stanbic Uganda started trading shares on the Uganda Stock Exchange. Well, in the first 1 hour and 15 minutes of trading, the share price was up 178% from 70 shs to 195shs.

To put it into perspective, an investor who bought Ushs 1 Billion worth of shares has just seen his investment grow to Ushs 2.78 Billion..... woohuh.

Well, at this rate, it is the proverbial up, up and away...untill, i daringly but humbly predict, a ceiling price of about 350 ushs, after which sanity will reign in the upward trend.

A little background:
According to the New Vision ( 17th Jan 2007), Number of Ugandan institutions' applications were 407 (value Ushs 30.7 Billion), and foreign: 1,463 (value Ushs 82.3 Billion). Number of Ugandan individual investors applied: 15,488 (value Ushs 41.1 Billion) and foreign investors: 20,091 (value: Ushs 56.1 Billion). Total applications were worth Ushs 210 Billion.

A Fish tale to Ponder!

2007 promises to be one full of challenges for Ugandan Tilapia and frozen Nile perch exporters to the EU:

1) Nile perch production seems to be waning. Catch from the lake is increasingly smaller, the kind that wont make fillet for the market. Besides, the local market doesnt like Nile perch too...

2) Nile perch prices in the EU are beggining to wane, it is suspected, mainly due to bad press...

3) Nile perch resource seems to be under strain in Lake Victoria while tilapia stocks are growing in the lake.

According to the publication sea food international, i quote "According to biologists, we may be seeing the development of a cycle in which tilapia stocks grow, which in turn provides more food for the carnivorous Nile perch. The Nile perch stocks will then increase until there is too little tilapia, and then the Nile perch will decline, and so on."

Interesting trends, since this may offer a temporary reprieve from the dangers of over-fishing in Lake Victoria. Uganda's exports of fish have reached phenomenal levels (over US$ 105 million) though they are still not comparable to larger fishing nations like vietnam (who have cultured our tilapia and conquered the market....)

Again, according to Seafood International, i quote, "US imports of tilapia continue to grow rapidly. According to US import statistics, the country’s imports of tilapia grew by over 25% during the first half of 2006 to 74,000 tonnes. At the same time, the average import price for tilapia increased by $0.03 per lb to $1.39 per lb, or $3.06 per kg."

Imports of frozen fillets into the USA grew particularly strongly; up 47% to 33,400 tonnes. Imports of whole frozen tilapia also grew in the first half of the year; the increase was 18% by volume and an amazing 48% by value, as prices for whole frozen tilapia have increased significantly.

Most of the whole frozen fish is supplied by China and Taiwan.

The bottom line, Asian exporters are moving aggressively into the market, while African producers struggle to catch up! ... this, in my opinion, leaves alot of Food for thought!!!

NB: italiscised text fully quoted from Seafood International