Business

AMMAN — Twenty-seven Jordanian companies will take part in the 31st Khartoum International Fair, slated to be held on January 30. The companies’ participation is organised by the Jordan Enterprises Development Corporation (JEDCO), according to a statement received by The Jordan Times. JEDCO Chief Executive Officer Yarub Qudah said the companies operate in the sectors of industry, medical appliances, health services, veterinary, engineering, food manufacturing and construction among others. He added that eight firms out of those taking part in the fair have benefited from JEDCO’s financial support for the first time. The trade volume between Jordan and Sudan reached JD78.2 per cent last year, of which JD48.4 per cent are in exports.

DUBAI — Iraq plans to establish a state-funded investment bank to help finance big infrastructure projects and steer money towards private sector companies which need it, a senior government official said on Monday.

An underdeveloped, inefficient banking system has hindered efforts to mobilise funds for investment in Iraq. Bankers at a financial conference in Dubai on Monday described how some Iraqi corporate executives carried around tens of thousands of dollars in cash to settle transactions that are too inconvenient to do through the banking system.

“We need this [state-funded investment bank] to push forward the economy,” Sami Al Araji, chairman of the National Investment Commission, told Reuters on the sidelines of the conference. “Our existing commercial banks do not have the skills or experience.”

The new institution, Investment and Development Bank of Iraq, would receive 1 per cent of annual state budget allocations over seven years under a proposal that will be sent to parliament for approval, he said.

That arrangement, if it goes ahead, could eventually provide the new bank with over $10 billion to invest; this year’s state budget is estimated at 174.6 trillion dinars ($150 billion).

Despite the militant violence plaguing Iraq, the economy has managed to keep expanding on the back of oil output; the International Monetary Fund forecasts annual gross domestic product growth of more than 6 per cent from 2014 to 2018.

Iraq already has 23 private conventional banks and nine private Islamic institutions, as well as seven state banks and 16 foreign banks operating in the country, according to the central bank website.

Araji said a dedicated investment bank could participate in financing some of the tens of billions of dollars of infrastructure projects which the government plans over the next several years.

It could also help arrange funding for small and medium-sized enterprises, which authorities want to develop to create jobs and diversify the economy beyond oil.

The proposal for the investment bank is part of a series of planned amendments to investment laws which will be submitted to parliament, Araji said. A parliamentary election is scheduled for April 30, so the proposal would probably be considered by Iraq’s next parliament.

Separately, officials in Baghdad want to promote tourism and believe visitor numbers can be increased threefold.

Though almost entirely dependent on oil exports for government income, the government wants to ease a reliance on Iranian pilgrims — most of the population of its enormous eastern neighbour is Shiite Muslim pilgrims annually who visit its multiple shrines and holy sites, from Samarra in the north to Basra in the south.

While tourists must struggle through Iraq’s decrepit infrastructure and often-frustrating bureaucracy, including a difficult-to-navigate visa system, a handful of tour operators is bringing groups to the country.

“Every area that we’ve been to has been totally, totally, different,” said Lynda Coney, one traveller on a trip organised by Britain-based Hinterland Travel.

“The Arab people, history, the archaeology... have absolutely grabbed me with interest,” the Briton told AFP while trudging through Baghdad’s main railway station.

Since 2009, Hinterland has been taking visitors on tours of Iraq lasting nine and 16 days, with prices starting at around $3,000 (2,265 euros) for the shorter trip, plus flights and visas.

The group travels in an unmarked air-conditioned van with Geoff Hann, Hinterland’s owner who has himself been making trips to Iraq since the 1970s, an Iraqi policeman for security, and a small team of drivers and guides.

They mostly try not to be noticed, do not announce where they are staying or headed, and generally have low-profile security.

By contrast, officials, diplomats and foreign company staff typically travel in heavily armed convoys of vehicles with tinted windows that zoom through Baghdad’s streets.

They travel from Iraq’s north, where they take in the ancient cities of Nimrud and Hatra, down through Baghdad to Babylon and on to the port city of Basra, before returning to the capital.

While in Iraq, Hinterland customers stay at hotels, though the quality of the establishments varies enormously. None of the tourists who spoke to AFP expressed any complaints about accommodation.

Hann’s tour operator is one of the few that has approval from the government to organise trips. Individual tourists often struggle to obtain visas to the Arab-dominated parts of the country.

Much of Iraq’s security-focused infrastructure is ill-prepared for Western tourists.

While moving through Baghdad, for example, Hann’s group was stopped at a checkpoint outside a cemetery, with federal policemen demanding authorisation papers, typically only required of journalists, from the capital’s security command centre for the tourists’ cameras.

For “most of our tours under the Saddam Hussein dictatorship, we were restricted with minders”, Hann said.

More recently, “it’s been difficult here because of the security situation. We’ve had to have a different sort of minder”, he added, referring to the policeman escorting the group.

“That’s still there, it hasn’t gone away, because the security position for everybody here is difficult,” Hann noted.

Officials admit that while they hope to promote tourism, they also lack the funds for advertising campaigns, since much is budgeted for physical reconstruction after decades of war, and resources are also lost to widespread corruption and incompetence.

Visas, meanwhile, are the domain of security officials, who are loathe to reform a complex system that prioritises entry permits for pilgrims over other tourists.

But that is all almost academic when compared to Iraq’s main problem — its reputation for poor security.

The country has been through decades of conflict, from the 1980-88 war with Iran to the bombings and shootings that continue to plague daily life.

“When Iraq is mentioned in Europe, the first things that people think of are terrorism and violence,” Baha Al Mayahi, a senior adviser to the tourism ministry, said.

“We need to put in place major efforts in order to change this, and to tell people that Iraq is not terrorism and killing, that Iraq is history and civilisation,” he added.

Mayahi said Iraq averages around two million tourists annually, but that with some basic improvements that figure could increase to six million.

By contrast, Hong Kong, with a population less than a quarter the size of Iraq’s, brought in more than 48 million tourists in 2012, according to its official data.

According to Zein Ali, a worker at a private house cleaning company, an influx of foreign tourists would help change Iraq’s image.

“I think tourists should come more often. There is violence here of course, but you can be killed anywhere in the world,” Ali remarked.

“Baghdad is not how we see it on TV. Tourists should come here, see this city, and I am sure they will come back again,” the 21-year-old said.

But the violence if anything appears to be worsening, with a surge in attacks and car bombings in recent months hitting much of the country. Although Hinterland is planning more trips, Mayahi admitted that security problems could scupper plans to promote tourism.

“If security worsens, tourism will decrease,” he said.

Despite the difficulties, few on the Hinterland tour expressed reservations about their trip.

“For a long time I’ve really wanted to come here,” said Greg Lessenger, a 32-year-old from Washington state in the United States. “There was no possible way for me to go travelling [to Iraq] on my own. But then I found out about this, and I thought, maybe I have got a chance, and I took advantage of it.

“If you’re a real traveller, you have got to see some of these places,” he added.

WASHINGTON — Big banks still pose a threat to the world financial system because there is a general assumption that governments will come to their rescue in case of trouble, according to an International Monetary Fund (IMF) executive.

“It is astonishing that officials in countries are still largely ill-equipped to deal with a Lehman Brothers-style bankruptcy, where assets and liabilities are scattered across multiple jurisdictions and entities,” Jose Vinals, tasked with financial oversight at the IMF, said in a blog post.

The 2008 bankruptcy of investment bank Lehman Brothers marked the height of the global credit crisis, and many of the reforms that have since been implemented were aimed at preventing a repeat of such a collapse.

During the financial crisis, a number of the world’s big banks were bailed out by governments with billions of dollars in taxpayer money.

“The not-so-good news is that, despite these efforts, implicit subsidies to these systemically important financial institutions remain too large,” Vinals said, noting that a related IMF study was due in April.

The problem of so-called too-big-to-fail banks is a priority for regulators in the Group of 20 (G-20), which is due to convene in November and expected to discuss a global financial reform agenda, Vinals said.

The G-20 includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the UK, the United States and the European Union.

The Basel III bank capital rules require banks to borrow less to fund their business, so they are better able to deal with problems. Governments have also told banks to draw up plans that would enable them to systematically unwind their businesses if the necessity arose.

The United States and Europe are putting into place so-called resolution authorities that would protect the wider financial system without the use of taxpayer funds in the event a bank needed to be bailed out.

Vinals said the G-20 had “yet to do much of the heavy lifting” to sort out what would happen if a bank with major operations abroad were to go under.

US and European regulators fined banks record amounts last year, imposing penalties and settlements of more than $43 billion as authorities work more closely across borders to clean up the financial sector.

Banks in the United States and Europe are paying for misconduct that includes mis-selling US mortgage bonds, rigging interest rates, and risky transactions such as JPMorgan’s “London Whale” trades.

Regulators across the globe are making banks dig far deeper than in the past for their misdeeds, led by US authorities who have long been more aggressive and imposed penalties more than 10 times those meted out in Europe.

Fines and settlements paid to US federal and state authorities have cost banks more than $40 billion last year, according to Reuters estimates, led by JPMorgan’s record $13 billion payout to a number of regulators for mis-selling mortgage bonds.

RIYADH — Saudi Arabia has doubled the number of its citizens working for private companies in the 30 months since it introduced wide-ranging reforms to tackle long-term unemployment, Labour Minister Adel Al Fakeih told a recent conference in Riyadh.

Policy makers fear a failure to create a productive local workforce will leave the kingdom vulnerable to any future fall in oil revenue.

Despite the lack of any significant protests during the 2011 Arab uprisings, they were uncomfortably aware that unemployment contributed to unrest in neighbouring countries and worry about the long-term risk of political instability.

“At this point in time, the employment in the private sector is about 1.5 million. This is 101 per cent more than it was 30 months ago,” the minister declared.

Although the official unemployment rate is around 12 per cent, economists estimate only 30-40 per cent of working-age Saudis hold jobs or actively seek work.

Most Saudis in jobs are employed by the government, but it cannot support such a large wage bill in the long term, and the International Monetary Fund has warned that the private sector must meet future job demand.

Most private-sector jobs are held by the 10 million expatriates in the kingdom.

In 2011, after decades of ineffective localisation policies, Riyadh imposed stricter penalties for failing to meet quotas for hiring Saudi citizens.

In 2012, it also introduced a levy of 2,400 riyals ($640) a year on every foreigner a company employed over the number of its Saudi workers.

Fakeih later told reporters that the increase of 750,000 jobs over the past 30 months only included those who had remained in the workforce, but that around 500,000 others had taken jobs and then left.

He noted that since the reforms were introduced, the average starting salary for Saudis had risen and that graduates of technical training colleges now found a job on average five months after qualifying, as opposed to 13 months in 2011.

Expatriate crackdown

Some companies, particularly in labour-intensive industries such as construction, have complained that the reforms have caused bottlenecks in important projects and cut profits by increasing the wage bill. Expatriates are typically paid less than Saudis.

Others have said they struggle to find qualified Saudis to replace expatriates despite high government spending on university scholarship programmes and technical training colleges. They have also complained that employment rules make it too hard to fire Saudis.

Young Saudi job-seekers often say they are reluctant to look for work in private companies, because government agencies offer better pay, benefits and job security.

Riyadh announced this month that it was introducing unemployment insurance for Saudis who lost their jobs for “reasons beyond their control” and who had been in work for more than a year. The policy was designed to encourage more young Saudis to look for jobs in the private sector.

Fakeih said the introduction of unemployment insurance was also designed to “make it easier” for the government to relax employment rules and give companies more flexibility to fire workers who did not perform well.

The minister defended a crackdown last year on foreigners breaking visa regulations by working for companies that did not sponsor their work permit as a necessary step to close loopholes that allowed employers to dodge hiring quotas.

Previous attempts to localise the Saudi labour market have foundered because companies could hire lower-cost foreigners who were registered to other sponsors.

But more than one million expatriates left the kingdom between March and November during an amnesty for foreign workers to leave without paying fines for visa violations or to switch their sponsorship to a new employer.

AMMAN — Airport International Group (AIG) — the Jordanian company responsible for the rehabilitation, expansion and operation of Queen Alia International Airport (QAIA) — announced Saturday in a press statement that QAIA’s 2013 annual traffic statistics showed robust growth across passenger and aircraft numbers.

“QAIA welcomed 478,245 passengers during December, an impressive 8.4 per cent increase compared with the same month in 2012. This boosted annual passenger traffic (PAX) by 4 per cent to settle at 6,502,323 PAX, marking over a quarter of a million passenger increase compared with last year’s results,” the press release said.

“Aircraft movements (ACM) in December 2013 also rose by 5.6 per cent over December 2012, recording 5,455 flights for the month and setting annual ACM up by 1.1 per cent to reach 67,959 ACM in total.”

QAIA kicked off its second expansion phase on January 20. Valued at over $100 million and scheduled to be completed in 2016, the expansion will help raise QAIA’s annual passenger capacity to up to 12 million, subsequently enabling Jordan to better serve as a regional transit hub for leisure and business travel, and supporting the Kingdom’s national tourism strategy goals. 

AMMAN — Central Bank of Jordan (CBJ) Governor Ziad Fariz on Saturday said the upcoming stage requires measures to ration public spending and increase revenues.

During a meeting with bankers and economic leaders, he stressed the importance of fair taxation with appropriate measures that encourage investment and economic activity to address challenges.

He called for reducing public indebtedness, budget deficit and energy losses in order to alleviate pressure on the balance of payments, besides restoring confidence in economic stability and ensuring that the public and private sectors are not competing to access funding.

The CBJ governor underlined the financial, credit and political measures as steps that spared the economy more harms and put it on the right track despite the difficulty of the previous stage.

The official highlighted a 3 per cent economic growth last year indicating that foreign reserves at the CBJ went up to $12 billion and the foreign investment flow to Jordan amplified by around 20 per cent until September.

Fariz said exports’ competitiveness has improved, particularly the untraditional produce, which went up by 7.9 per cent in 2013.

DEAD SEA — Experts on Thursday pointed to inadequate funding as the main cause inhibiting the growth of Jordanian small businesses into larger ventures.

Describing small-and medium-sized enterprises (SMEs) in the Kingdom as a “static” sector despite its huge magnitude, they lamented the “inflexibility” hindering its development.

“The sector is rigid. Small businesses remain small due to the lack of funding,” Omar Razzaz, chairman of the King Abdullah II Fund for Development, told a conference on the role of the private sector in supporting the economy.

Speaking at the conference entitled “Private Sector Led-Growth: promoting entrepreneurship, MSME development and job creation in Jordan”, he stressed the need a “structural” unemployment problem indicating that economic growth in Jordan is not accompanied by a decline in unemployment rates among citizens.

“It is one of the paradoxes of our economy,” Razzaz said.

Participants at the event, organised by the Jordan Enterprises Development Corporation (JEDCO) in cooperation with the “Mubadara” parliamentary initiative, listed access to finance, tax rates and lack of guidance and training as the main challenges facing micro, small, and medium enterprises (MSMEs).

“Citizens with innovative and applicable ideas are discouraged from implementing them due to banking requirements in terms of guarantees, interest rate and repayment period,” JEDCO Chief Executive officer Yarub Qudah said, calling for establishing a national fund to support SMEs.

Mohammad Amaireh from the Central Bank of Jordan revealed that a credit bureau will be established at the bank this year to provide information to banks on accredited entities that provide partial funding to SMEs in order to cooperate with them.

With small- and medium-sized enterprises (SMEs) representing nearly 97 per cent of the total private sector businesses, participants discussed ways to come up with an applicable national strategy that identifies funding and coordinating entities.

According to Luis Abughattas, European Union (EU) programmes team leader at JEDCO, Jordan along with other countries that need economic reforms, suffers from growth slowdown, sluggish productivity and relative high investment ratio, but not in tradable activities.

He noted that countries should prioritise developing capabilities at the social and company levels in order to overcome the aforementioned challenges.

The conference provided an opportunity for representatives of the public and private sectors, the EU and international organisations working in the area of financing and development to discuss best practices to promote entrepreneurship and present a draft on the national strategy and regulations governing SMEs.

AMMAN — Arab Bank Group announced in a press statement on Saturday that it weathered the challenging environment in the region with a record growth in 2013.

“Net operating income before provisions and taxes exceeded the $1 billion mark,” the press release said, pointing out that the group’s net profit after tax surged by 43 per cent to $501.9 million at the end of 2013 compared with $352.1 million at the end of 2012.

According to the press release, the board of directors has recommended distributing cash dividends at a rate of 30 per cent for the financial year ended in December 2013 and one free share for each fifteen shares.

“The bank has shown consistent solid growth over the last three years with profits growing from $305.9 million in 2011 to $352.1 million in 2012 and to $501.9 millioni n 2013,” the bank indicated. “Dividends payouts have also increased from 25 per cent in 2011 to 30 per cent in 2012 to 37 per cent in 2013.”

It pointed out that loans increased by 3 per cent from $22.5 billion in 2012 to $23.1 billion in 2013 and that customer deposits went up by 5 per cent to $1.5 billion from $32.9 billion in 2012 to $34.4 billion at the end of last year.

Noting that liquidity remains a key pillar of strength for Arab Bank, the loan to deposit ratio stood at 67.1 per cent and capital adequacy ratio at a solid 15.15 per cent.

Sabih Masri, chairman of Arab Bank, said in the press release that the solid growth reflects the bank’s prudent policies and strategic initiatives besides the confidence of customers in Arab Bank.

Chief Executive Officer Nemeh Sabbagh attributed the bank’s success in achieving several key strategic objectives in 2013, despite the challenges that emerged during the year, to higher operating revenues and lower spending.

Besides controlling operating expenses, Sabbagh added that the bank has continued to improve the quality of the credit portfolio with the provisions coverage ratio for non-performing loans in excess of 100 per cent, excluding the value of collaterals held.

Masri expressed confidence that the bank will continue to show strong performance notwithstanding the challenging regional environment.”

The bank’s results are subject to the final approval of the Central Bank of Jordan.

Separately, the bank’s share price ended last week’s trading at JD10.200, after recent jumps from below JD7. 

TOKYO — Toyota sold a record 9.98 million vehicles last year, it pointed out Thursday, outpacing rivals General Motors (GM) and Volkswagen to maintain its title of world’s biggest automaker.

The Japanese auto giant’s highest-ever annual sales volume came thanks to a weaker yen as well as strong US and China sales, signalling it had recovered from a series of damaging safety recalls and Japan’s 2011 quake-tsunami disaster.

The figures beat US-based GM, which said it sold 9.71 million cars last year, while Germany’s Volkswagen logged annual sales of 9.5 million.

Toyota broke GM’s decades-long reign as world’s top automaker in 2008 but lost the crown three years later as the quake-tsunami hammered production and disrupted the supply chains of Japanese automakers.

However, in 2012 it once again overtook its Detroit rival, which sells the Chevrolet and luxury Cadillac brands. GM’s strong results come after it emerged from bankruptcy and a government bailout during the 2008 global economic crisis.

Toyota, maker of the Camry sedan and Prius hybrid, expects this year to become the first automaker to break the 10 million vehicle sales barrier.

That growth would be driven by overseas demand — Toyota expects volume at home to slip 5 per cent this year as consumer demand takes a hit from an April sales tax hike.

Toyota has outmanoeuvred other automakers with a “comprehensive edge” in product lineup, sales network and cost structure, said SMBC Nikko Securities auto analyst Shotaro Noguchi.

“They have maintained that balance well, compared to its rivals,” he added. “Toyota should have reached the 10 million mark sooner if they had not faced major negative factors like the impact of the quake disaster and flooding in Thailand.”

But he warned that the auto giant should not get complacent.

“If they only pay attention to production and sales figures, they could lose their competitive edge and wind up in trouble,” he indicated

China, emerging markets driving sales

The sales figures cap off an impressive comeback for Toyota, which took a heavy blow from a series of mass recalls affecting millions of cars that damaged its once-stellar reputation for quality and safety and led to US congressional hearings in 2010.

The firm expects a net profit of 1.67 trillion yen ($16.02 billion) in the fiscal year to March thanks to a sharply weaker yen and improving sales in North America.

Toyota has ramped up its drive to tap emerging markets while key US demand has also been on the upswing, helping the firm book ever-increasing profits with its half-year earnings surging 82.5 per cent.

Japanese industry has benefited from the big-spending and easy-money policies of Prime Minister Shinzo Abe, with huge monetary easing measures from the premier’s hand-picked team at the Bank of Japan helping push down the currency.

The weaker currency boosts Japanese manufacturers’ bottom line by making them more competitive overseas and inflating repatriated overseas profits.

The latest sales also signal improving demand in China after Japanese automakers were hammered in 2012 by a damaging consumer boycott in the world’s biggest vehicle market that was sparked by a territorial spat between Tokyo and Beijing.

Toyota has also announced plans to develop components for hybrid vehicles with two Chinese automakers, in an unprecedented technology-sharing deal aimed at increasing green car sales in the fast-growing market.

The move marked shift away from Japanese carmakers’ traditional reluctance over such deals for fear of losing their competitive edge.

Previously, Toyota would make key components such as batteries and motors in high-cost Japan and then ship them to joint ventures overseas. But that drove up the price of models such as its Prius, which has seen sluggish sales in China.

China’s pollution problem has stoked big demand for environmentally friendly cars, such as electric and fuel-cell vehicles, while officials have promised stricter emissions standards to deal with the mushrooming public-health issue.

Toyota’s shares fell 1.32 per cent to 6,256 yen in Tokyo before the sales figures were published.

FRANKFURT — Sub-Saharan Africa is becoming increasingly attractive for foreign investors, even if a lack of infrastructure and other factors are holding back growth in the region, a Commerzbank study found Thursday.

"Persistently low global economic growth has not affected sub-Saharan Africa much so far," the German bank wrote in the study.

"The international financial crisis has barely touched the region. With real economic growth of 5 per cent in 2013 and an anticipated 6 per cent in 2014, the region ranks number two behind Asia" among the world's most dynamic regions, Commerzbank pointed out.

The countries in the region, with their wealth of raw materials, are benefitting from high commodity prices and are becoming lucrative growth markets that are awaking international interest.

"Even if there are still deficits in individual countries in democratisation and the efficiency of political institutions, political and economic stability has increased," the study found.

Rainer Schaefer, head of Commerzbank's country risk analysis, stressed that improvement and expansion of infrastructure were key to raising the economic dynamism and boosting exports from the region.

To meet its fast-growing energy needs, sub-Saharan Africa could become a key player in environmentally friendly and cost-efficient energy technology, suggested Florian Witt, head of Commerzbank's Africa department.

"There are plenty of opportunities for foreign investors with corresponding know-how in the areas of solar and wind technology and even biogas, " Witt indicated.

Separately, China has brought cheap consumer goods, roads and schools to many parts of Africa over the last decade but the continent's leaders are increasingly pushing for it to provide more of what many Africans want most: jobs.

From Pretoria to Abuja, governments have begun voicing frustration that China's use of Africa as a source of natural resources and a market for its goods may be hindering the continent haul its billion people out of poverty.

A recent report by the UN Economic Commission for Africa (UNECA) highlighted the risk that the continent's relationship with the world's second largest economy could strangle its attempts to industrialise.

China's trade with Africa ballooned from $10 billion in 2000 to an estimated $200 billion last year — four years after it overtook the United States as the continent's largest partner.

But some 85 per cent of China's exports from Africa are raw materials, such as oil and minerals. According to the African Development Bank, most minerals mined in Africa are exported raw, meaning the jobs and wealth from processing them is created elsewhere.

A flood of Chinese produce, meanwhile, has accelerated the decline in industrialisation since the 1980s. Africa's textile industry alone lost 750,000 jobs over the last decade, according to the Johannesburg-based Brenthurst Foundation.

Even in the continent's manufacturing powerhouse South Africa, some 40 per cent of footwear and fabrics come from China.

Expressing the concerns of many African governments, South African President Jacob Zuma bluntly warned that such an unbalanced pattern of trade was "unsustainable".

"The romanticised relationship surrounding China's investment in Africa has passed," said Alex Vines, head of the Africa programme at the Chatham House Research Institute.

"With the world's youngest and fastest-growing population, the main pressure on governments in Africa is to provide jobs. Having the Chinese take those jobs doesn't help," he added.

Vying for jobs

It is true China's boom has brought many benefits to Africa. Beijing has won fulsome praise from many governments for its willingness to finance massive infrastructure projects without conditions relating to democracy, governance and human rights — the "strings" Africa has often criticised in aid from the West.

Chinese economic growth rates averaging 10 per cent a year for almost a decade fuelled a commodities "super-cycle" which has lifted Africa's own growth to unprecedented rates.

And the cheap Chinese goods being imported help make everyday living more affordable and develop the consumer sector across the continent.

But in many countries, China's demand for ore, timber and oil is forcing African states to specialise at the bottom of the value chain in areas with low productivity gains, UNECA said.

With Africa supplying one-third of China's oil, much of it from Angola, UNECA highlighted the risk of “Dutch Disease” whereby demand for raw materials inflates a currency, making other sectors uncompetitive against foreign competition.

Even in Senegal, an arid West African country not usually associated with the “resource curse”, domestic peanut processing factories face the threat of being driven out of business as Chinese exporters buy up the crop to ship home.

Attempts to legislate for industrialisation, such as bans on the export of unprocessed logs from Gabon and Mozambique, have often proved fruitless. In Gabon, where Beijing has broken French dominance over logging, an estimated 60 per cent of timber is exported illegally to China.

According to respected Nigerian Central Bank Governor Lamidu Sanusi, China's extraction of resources from Africa had all the attributes of "colonialism".

In an apparent response to such criticism, Chinese President Xi Jinping stressed during an African tour last year that his country was seeking a win-win partnership.

"The development of China will be an unprecedented opportunity for Africa, and Africa's development will be the same for my country," he told lawmakers in Congo Republic.

Beijing has provided much-needed capital to a continent starved of investment. The China Import-Export Bank is the continent's largest creditor and Beijing has promised $20 billion more in loans over the next three years.

But Beijing's money comes with its own strings: it must be spent on Chinese goods or Chinese-built infrastructure. And Chinese firms often source their supplies and workers back home.

The number of Chinese in Africa has increased tenfold over the last 20 years to an estimated one million. From shopkeepers in Malawi to prostitutes in Cameroon, Africans complain that Chinese competition is making life tougher.

Unlike Western immigrants, the Chinese diaspora comes from the poorest section of society and competes directly for work with Africans, some 80 per cent of whom are in "vulnerable employment" according to the International Labour Organisation.

In Ghana, tensions flared into violence last year when police and residents attacked artisanal Chinese goldminers, claiming they were driving locals out of the industry. Many Chinese were brutally beaten and some 200 were deported.

Frustration has also emerged with the operating practices of some Chinese firms. In Gabon, Chinese refiner Sinopec's Addax Petroleum is embroiled in a $1 billion legal dispute over an oil licence after the government alleged it failed to pay customs duties and respect other laws.

Zambia, where Chinese mines have a record of violent labour disputes, revoked three licences for the Chinese-owned Collum coal mine, alleging non-payment of royalties taxes, and poor environmental and safety records.

"Now more countries are engaging with Africa, there are more options. Several countries are looking at Chinese investment with a more critical eye," indicated Razia Khan, head of Africa research at Standard Chartered Bank. "There will be more and more scrutiny of these contracts."

Responding to the criticism from Nigeria and South Africa, China's commerce ministry has encouraged firms to increase investment in Africa. China is launching Special Economic Zones for manufacturing companies on the continent.

Though it is Africa's largest trading partner, China has only 6 per cent of the stock of foreign investment — well behind France on 18 per cent — according to UN trade body UNCTAD.

Nigeria’s finance minister has urged African countries to woo Chinese manufacturing firms into offshoring their production as their domestic labour costs rise.

"We need to prepare ourselves to provide a welcoming home for some of the industries where the Chinese will no longer be competitive," she told a conference in London last year.