The Yellow Continent Getting Green

The sun of the growth and prosperity shining on the African continent again between 2000 and 2014 grain production tripled in countries as far-flung as Ethiopia, Mali and Zambia. Rwanda did even better (see article). Farming remains precarious in a continent with variable weather and little irrigated land. But when disaster hits, farmers nowadays have a bigger cushion.

African countries are on the whole more peaceful and better run than they were. Farmers are no longer forced into disastrous socialist collectives or banned from selling their crops in open markets. Border tariffs are lower and export bans rarer. As a result, innovation is accelerating. Africa has seen an explosion of seed companies producing clever hybrids, which can endure drought and resist disease. Perhaps the best proof of the importance of good government comes from Zimbabwe. It has an awful one, and productivity has crashed.

The progress that has been made elsewhere is wonderful, but not enough. African farms remain far less productive than Asian ones: Chinese farmers harvest more than three times as much grain per hectare. Climate change is expected to make conditions harder. Yet agriculture is essential for firing economic growth across the African continent. More people still live in the countryside than in cities and many of Africa’s cities are not all that dynamic. Asia has a tight grip on labour-intensive manufacturing, although there is certainly space for more food-processing factories in Africa—so, for example, it could export cocoa powder instead of cocoa beans.

Turning an agricultural uptick into a lasting boom will demand more reforms. One priority for Africa’s governments is to dismantle the remaining barriers to innovation in farming. It still takes years to approve new hybrid seeds in some countries. With a few exceptions, such as South Africa, the continent is holding the line against genetically modified crops. This is mad. GM is particularly helpful in making plants resistant to pests—a terrible scourge. The region’s governments should also take greater advantage of mobile technology. Many try to subsidise fertiliser for poor farmers, only for the stuff to be stolen before it reaches the intended recipient. They should be sending money or vouchers directly to mobile wallets.

Africa’s cities are swelling, and the people who live in them crave meat and processed food. That is a huge opportunity for local farmers, but it will be missed if transport does not become far cheaper and easier. At the moment, the rule of thumb is that it costs three times as much to move goods one mile along an African road as it does to move them along an Asian one—and that is before the police shake you down. As a result, fertiliser is expensive and much food is wasted on the way to market. More investment in upgrading shoddy rural roads would be good. Better still would be an assault on the trucking cartels that keep prices high.

Clearing out the weeds

It would help a lot if farmers—particularly women—had clearer rights over land. Proper titles would encourage them to make long-term investments, like terracing and tree-planting, and allow them to use land as collateral for loans. Getting there is tricky. Many countries have long traditions of communal land management and a complicated web of customary farming rights. Charging in and handing out freeholds can actually strip people of rights. But a sensible first step, which a few countries are trying, is to register farmers’ entitlements so their land cannot be pinched.

The rest of the world can help, too. Although some egregious subsidies have been trimmed, the rich world’s taxpayers still spend vast sums propping up their own farmers. America heavily subsidises peanuts and cotton—two things that Africa can grow well. Why shell out to make Africans poorer?

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I will Do It My Way, Amazon said.

To build you own delivery air network is not an easy to achieve, But for Amazon Inc. going to be great investment as they will lease 20 Boeing Co. 767 freighters from Air Transport Services Group Inc., sending shares in the lessor up the most in six years.

The agreement shows Amazon’s commitment to expanding its own logistics network to make deliveries faster and more efficient. The Seattle-based company wants to lessen its dependence on United Parcel Service Inc. and FedEx Corp., which have sometimes run into delays during the busy holiday season.

“This is the first formal confirmation from Amazon that they are in fact pursing an air transportation network and more logistics services,” said Colin Sebastian, an analyst at Robert W Baird & Co. who rates the stock outperform. “We can dispense with all the speculation and actually look at something that’s real and happening.”

 

Shares of Air Transport Services surged the most since March 2010, rising as much as 27 percent. They gained 18 percent to $13.89 at 1:12 p.m. in New York. As part of the deal announced Wednesday, Amazon also has the right to buy as much as 19.9 percent of Air Transport Services common shares over five years at $9.73 per share, based on its Feb. 9 closing price. Amazon shares fell almost 1 percent to $555.22.

By taking a small stake to begin with, Amazon gets a chance to test progress on its long-term goals and see if it likes how it works before committing to a purchase outright.

Amazon has been quietly building out its strategy for years. A 2013 report to Amazon’s senior management team proposed an aggressive global expansion of the company’s Fulfillment By Amazon service, which provides storage, packing and shipping for independent merchants selling products on the company’s website. The project, called Dragon Boat, envisioned a global delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta, New York and London, according to a person familiar with the initiative, who asked not to be identified because the information isn’t public.

FedEx said the announcement wasn’t a surprise.

“We work closely with Amazon and have been aware for some time about their need for supplemental air capacity related to inventory management,” said Patrick Fitzgerald, senior vice president, integrated marketing and communications. “Amazon continues to be a valuable FedEx customer.”

Amazon’s plans are now progressing rapidly. After having leased five freighters last year for a trial network, it will get 15 more by the end of this year, Air Transport Services said on a call with analysts. Under terms of the deal, Amazon will hold the leases for five to seven years. 

“It gives you a sense of the scale at which they are operating and the scale at which the plan on operating in the future,” said Steven Weinstein, an analyst at ITG. “To take on something this ambitious really requires a great deal of confidence that you are going to be moving significant volumes for a long period of time.”

As Amazon is expanding its Prime members, who pay an annual fee and get free, expedited shipping on millions of products, the agreement with Air Transport will “ensure air cargo capacity to support one and two-day delivery for customers,” said Dave Clark, Amazon senior vice president of worldwide operations and customer service, in a statement.

While the deal allows Amazon to add growth capacity, Sebastian said, over time it could also allow the company to compete more directly with firms like DHL Worldwide Express and FedEx in offering shipping and logistics services to third parties.

“In 20 years, Amazon will have its own delivery fleet,” said Michael Pachter, an analyst at Wedbush Securities Inc. who rates the stock outperform. “This is a baby step toward that goal.”

 

African Economy Is Growing

The yellow continent shows a signs of gaining in the economic side specially after the Africa’s biggest economy, slowed in the fourth quarter as oil prices fell and manufacturing sank deeper into recession.

Gross domestic product expanded 2.1 percent from a year earlier, compared with 2.8 percent in the third quarter and 5.9 percent in the last three months of 2014, the National Bureau of Statistics said in an e-mailed report on Tuesday. The median of 11 economist estimates compiled by Bloomberg was for growth of 2.85 percent. The economy expanded 2.8 percent last year, the slowest pace since 1999, according to World Bank data.

Tumbling oil prices have battered Nigeria, which relies on crude for two-thirds of government revenue. The economy will grow by an estimated 3.2 percent this year and 4.9 percent in 2017 as long as the government boosts investment in infrastructure, according to the International Monetary Fund. The Washington-based lender wants the government to diversify its income sources, broaden the taxpayer base and pass new legislation governing the oil sector.

 

Oil output fell to 2.16 million barrels a day from 2.17 million barrels in the third quarter. The oil industry contracted 8.28 percent in the three months through December compared with expansion of 1.1 percent in the previous quarter, the statistics office said. Growth in the non-oil industry, which accounts for 90 percent of GDP, was little changed at 3.1 percent. Manufacturing contracted 3 percent, extending the recession in the industry.

Electrical Cars are the game changers

2016 Geneva motors show was full of surprises after the diesel cheating scandals, electric vehicles that have long struggled to find buyers in Europe are finally getting endorsed by major carmakers.

At the Geneva International Motor Show this week, automakers from mass-market PSA Peugeot Citroen to upscale Daimler AG’s Mercedes-Benz promised to challenge Tesla Motors Inc. with electric cars that have longer ranges and more affordable prices. After largely sidelining the technology in recent years amid sluggish demand, the revived interest in battery-powered cars is necessary for automakers to meet tighter European Union regulations for carbon-dioxide emissions starting in 2020.

The Volkswagen scandal gave other automakers a “push toward electric cars,” Karl-Thomas Neumann, head of General Motors Co.’s Opel unit, said in an interview. The German-based brand plans to roll out the Ampera-e next year. It’s Opel’s first electric-powered car since the 2011 Ampera plug-in hybrid, which struggled to lure buyers because of its high price.

 

Diesel engines are typically 25 percent more efficient than gasoline versions, making them critical to lowering CO2 emissions. But Volkswagen’s revelation in September that it cheated on diesel lab tests for years increases scrutiny of the technology and threatens to blow a hole in plans to meet regulatory requirements. That makes once-eschewed battery cars unavoidable for the manufacturers, even if consumers aren’t biting yet.

Citroen E-Mehari

“You see a very nice trend about electric vehicles, so we are developing our own technology and we are happy with that,” said Peugeot Chief Executive Officer Carlos Tavares. The French company, which presented the Citroen E-Mehari electric off-road concept in Geneva, has been largely dependent on diesel technology. Its first electric cars — the Peugeot iOn and Citroen C-Zero — were rebadged versions of Mitsubishi Motors Corp.’s i-MiEV.

Volkswagen, meanwhile, has made electric vehicles a linchpin of its plan for recovering from the crisis, accelerating a push to add 20 additional plug-in hybrid and battery-powered cars to its lineup by 2020. That includes the first battery-powered vehicle for the Porsche sports-car brand as well as an electric Audi crossover. And it’s promising new leaps in technology, including ranges of more than 500 kilometers (310 miles) by the end of the decade.

“Charging will only take as long as a coffee break,” instead of hours, Volkswagen CEO Matthias Mueller said in Geneva. “And in the long term, an electric car will cost less than a car with an internal combustion engine.”

 

Such technology advances will help electric cars eventually. But in the meantime, demand is tepid, with the clean-running vehicles accounting for just 0.68 percent of sales in western Europe, according to Automotive Industry Data Ltd. Much of that demand comes from Norway, where electric cars enjoy generous perks such as tax exemptions and free charging. In Germany, where there are limited benefits, just over 30,000 have been sold to date. Cheap oil prices provide little incentive for consumers to take the leap.

Fiat Abstaining

“The market for electric cars in Europe has been extremely disappointing,” said Peter Schmidt, chief editor of Automotive Industry Data. “Five years ago, carmakers were really optimistic, but at the moment, in my view they will be lucky if the market share reaches 1 percent by 2020.”

Automakers are hoping politicians come to the rescue. BMW AG CEO Harald Krueger was among industry leaders at the show lobbying for state help, including sales incentives and assistance in adding public charging stations. “We need government support to boost sales,” said the executive, who is leading talks with the German government. The Munich-based carmaker hasn’t introduced a fully electric vehicle since the i3 city car in 2013.

Adidas will attack China in 2020

Four years from now and China will have more than 3,000 Adidas store as a future plan from the German sportswear giant is expanding to 12,000 stores in China from its current 9,000 and aspires to more than double the cities where it sells its running gear and tennis shoes to 2,200-plus, said Adidas China head Colin Currie in a news briefing Friday.

Mr. Currie said that Adidas is catering to China’s economic upsides, such as new government policies to foster the soccer industry and population growth.
The company will zero in on China’s smallest cities, expecting continued urbanization even in the face of economic challenges, Mr. Currie said.

“We are cautiously optimistic, but we’re far more on the optimistic side, ” Mr. Currie said. Adidas executives plan to keep a close eye on the company’s sales data to track any fallout across China, now its fastest-growing global market, he said.

Adidas has continued to grow in China even as sales fall away for some foreign food-and-beverage companies, such as Yum Brands Inc., owner of the Pizza Hut and KFC franchises, and chocolate maker Hershey Co.

Adidas reported Thursday that its sales last year in the China region, including Hong Kong and Taiwan, increased 18% excluding foreign-exchange effects. In the fourth quarter, sales were up 16% excluding such effects. Much of the company’s growth has come from aggressive expansion across China.

China is a key growth market for sportswear makers, as more middle-class Chinese hit the gym, take up sports or travel for outdoor adventures.

The sportswear market in China, including everything from swimsuits to soccer shorts, grew to 165 billion yuan, or $25.3 billion, last year, up 11% from a year earlier, according to market research firm Euromonitor International.

As part of diversifying the economy, China’s leaders are also championing the development of sports, building up athletic events as well as arenas and television stations to support them.

A big priority is soccer. Chinese president Xi Jinping, a huge soccer fan, has said his dream is that China will qualify for, host and win a future World Cup. Chinese companies have invested in overseas soccer teams and Chinese teams have paid large transfer fees to bring in star players from Europe. Conglomerate Dalian Wanda Group bought a 20% stake in Spanish soccer club Atlético Madrid last year.

Adidas is attempting to piggyback on a government mandate making soccer compulsory in schools. Last year, it signed a three-year deal to create soccer programs in 20,000 elementary and middle schools across China, training 50,000 teachers and running a national summer camp.

Adidas is hoping to repeat in soccer the success that Nike has had in building up basketball in China, now one of the country’s most popular sports. Nike is now the No. 1 sports brand in China by market share, leading with 17.5% share of sales, while Adidas is right behind with 16%, according to Euromonitor International.

Mr. Currie said he believes that China’s soccer agenda will boost the participation rate and benefit the company. Many Chinese still wear Adidas as “athleisure” wear, but the demand for athletics gear is likely to grow over the next five to 10 years, he said, adding, “I think we’re at the crossroads of a cultural change.”

To be sure, many sportswear companies expected a sporting boom in 2008, when China hosted the Summer Olympic Games in Beijing. Yet companies, including Adidas, overestimated the demand and suffered from a glut of inventory for years as a result.

Mr. Currie said the trends are different now as more people participate in sports and as women and girls have become a key segment of the athletic market.

The company plans to open stores that focus on individual sports and population groups, selling soccer gear and more apparel to children. Mr. Currie also sees a boost from the end of China’s one-child policy, which he expected to result in more children playing sports.

Big deal between UAE and Hungary

The biggest Airlines in middle east working to open a bridge to connect middle Europe with the United States of America.

The United Arab Emirates is seeking to establish Budapest as a bridgehead for onward flights in a move that could allow two of the Gulf region’s biggest airlines to carry people between central Europe and the U.S.

The application for so-called fifth-freedom rights concerns services to two points beyond Hungary, Saif Al Suwaidi, director general of the U.A.E.’s General Civil Aviation Authority, said in an interview, adding that those locations have yet to be determined, but could include the U.S.

Such flights can make a huge difference in the growth of airlines, opening up completely new markets that they wouldn’t otherwise be able to access. Since 2013, Emirates, the biggest U.A.E. airline, has been extending a Dubai-Milan service on to New York, tapping travel between prosperous northern Italy and the eastern U.S. with Airbus Group SE A380s seating more than 450 people.

 

Hungary is unusual in lacking a flag carrier after the collapse of Malev Zrt. in 2012, with Beijing and Qatar the only long-haul routes in addition to Emirates’s Dubai service. Peter Szijjarto, the country’s foreign minister, said in Dubai that the U.A.E. application had been received, while his office added that the government is “open to such cooperation” and aims to start discussions soon.

Connectivity Gap

Al Suwaidi said the Budapest initiative comes as the U.A.E. works to convince countries lacking fifth-freedom provisions to permit such access — “especially where there is no connectivity, such as Hungary-U.S.” — though airlines must decide if they want to take up accords put in place. An onward trip to London would be equally possible, he said, though the route is already well-served.

A Hungarian deal could open the door for Emirates, the biggest airline by international traffic, to provide flights to the U.S. as an extension of the daily Dubai-Budapest service. The carrier told Bloomberg it has “no immediate plans” for such operations.

Tim Clark, the company’s president, said last year that Emirates was looking at fifth-freedom opportunities and that Greece had asked it to consider extending flights from Dubai to the U.S., which has no Athens service. Proposals from the U.A.E. for Swiss flights to carry on to Mexico may be resolved this month, the Swiss Federal Office of Civil Aviation said Thursday.

Audi follows WV’s road

Another unexpected auto scandal from a big auto manufacturing German company with diesel cheating issue, Audi AG’s operating profit dropped 6.1 percent last year, hurt by the cost of fixing manipulated diesel cars and developing electric-vehicle technology.

Earnings fell to 4.84 billion euros ($5.26 billion) in 2015 from 5.15 billion euros a year earlier, the luxury-car manufacturer, Volkswagen AG’s largest earnings contributor, said Thursday. Revenue rose 8.6 percent to 58.4 billion euros, helped by higher deliveries and currency shifts. Spending related to the rigged diesel-engine issue amounted to 228 million euros, Chief Financial Officer Axel Strotbek said at a press conference. The cost of repairing vehicles in the U.S. will be in the “mid-double-digit” million-euro range, Chief Executive Officer Rupert Stadlersaid.

“We will ensure full transparency and we assure you: we will fix it,” Stadler said at the press briefing at Audi headquarters in Ingolstadt, Germany.

 

The results are an early look at how the scandal may have affected Volkswagen as a whole. The parent company postponed its own earnings report until at least April due to lingering questions about how resolving the manipulation scandal will affect finances. Maintaining Audi’s sales and profits is key for Volkswagen, the world’s No. 2 carmaker, as it faces billions of euros in costs triggered by its admission last September to cheating on emissions tests.

Volkswagen rose 0.4 percent to 116.20 euros as of 11:10 a.m. in Frankfurt, reversing a drop of as much as 3.1 percent earlier in the day. The stock has fallen 13 percent this year, valuing the parent company at 63.7 billion euros.

U.S. Talks

Audi has also been embroiled in the cheating. The luxury unit will recall about 2.3 million cars, about a fifth of those affected across the group, and it also developed one of the engines that U.S. authorities view as illegal. Talks over fixing the cars so they comply with diesel-emission rules stricter than those in Europe have been dragging on in the U.S. for months and will resume later Thursday.

About 90 percent of the affected vehicles are equipped with 2-liter engines, which require only a software update to comply with regulations, Stadler said. Hardware and software fixes will be required for 1.6-liter motors.

 

The manufacturer is seeking sales momentum this year with a new version of the best-selling A4 sedan and station wagon as well as fresh sport utility vehicles including the flagship Q7 model and the tiny Q2 unveiled at the Geneva International Motor Show this week. Audi reiterated a commitment to diesel-technology development Thursday as Stefan Knirsch, the division’s development chief, unveiled a high-performance version of the Q7 equipped with a turbocharged direct-injection diesel motor.

Audi dropped to third place in global luxury-car sales behind BMW AG and Mercedes-Benz last year due to an aging model lineup compared to its German rivals. Audi said Thursday that it plans to bring out 20 new or revised vehicles in 2016 and is forecasting a “moderate increase” in deliveries. Investments will amount to “more than 3 billion euros,” down from 3.53 billion euros in 2015.

Cloud services are most welcome

Many companies the recent time are showing more interest in cloud-based services for the huge benefits that it provide including the unlimited data storage and apps.

Workday Inc. rose more than 9 percent after reporting revenue that topped analysts’ estimates, reassuring investors that demand for cloud-based software is growing despite concerns about the economy.

The company, which provides financial and human-resources software, late Monday said fourth-quarter sales rose 43 percent to $323.4 million. That topped estimates of $319.7 million, according to Bloomberg data. Workday also reported a narrower adjusted loss than was expected.

Chief Executive Officer Aneel Bhusri is benefiting from a growing customer list that shows businesses are moving more of their software to the cloud, holding off pressure from rivals and a global economy that’s struggling to gain momentum. The report comes less than a week after Salesforce.com Inc., which also delivers services via the Internet, issued a forecast that easily topped analysts’ estimates.

 

“Quietly and with little fanfare, we believe both the stock and the business
could be marking a turning point,” analysts at JPMorgan Chase & Co. said in a note. They upgraded the stock to overweight from neutral.

Shares of the stock rose 7.5 percent to $65.01 at 11:24 a.m. in New York, after being up as much as 9.2 percent earlier. The stock had fallen 24 percent this year through Monday’s close.

Refugees or Enemies?

They ran away from the falling bombs that brought the horror to their life and walked days and weeks to find the same horror Macedonian’s policemen who fired tear gas to stop a group of about 5,000 migrants from entering the country from Greece after the former Yugoslav Republic and its neighbors cut the number of refugees they’ll accept crossing their borders.

The group was pushed back after some broke through a fence at the border and one officer was injured, national police spokeswoman Dejana Nedeljkovic said by phone from Skopje on Monday. Officials from both countries are now meeting to try to find a solution to how to handle the thousands of people trying to cross Greece and the western Balkans from Turkey to seek better lives in richer European Union nations, said Igor Ciobanu, senior field coordinator for the United Nations High Commissioner for Refugees.

Macedonia joined its northern Balkan neighbors and Austria this weekend by cutting the number of refugees it’s allowing to enter, crimping the main route of people fleeing war and poverty in northern Africa and the Middle East. Greece warned on Thursday that countries shutting their borders to the north would trigger a humanitarian crisis as more refugees arrive on its shores. The number of those trying to traverse Greece’s northern border swelled to about 8,000 on Monday, from 6,000 earlier, Ciobanu said by phone.

 

Slovenia and Croatia both said last week they’ll accept only about 500 refugees a day, a fraction of the thousands of people who’ve been crossing the countries’ borders daily. The closures underscore the EU’s struggle to solve its worst migration crisis since World War II. Leaders from the 28-member bloc will hold a summit next month to try to forge a strategy to deal with the crisis and avoid having to curtail Schengen, its visa-free travel zone.