Rostow’s Stages of Growth Model (For College Students)
January 21, 2012 | 
Author Main points of Rostow’s stages of growth model:
-Rostow’s stages of growth model is of the Neo-Classical tradition.
-The model takes a linear view of development, this means that countries are believed to develop in the same way over time.
-It is a structuralist model, it analyses development as the result of complex interactions between a number of different societal parts.
Rostow believed that economies develop by going through a number of stages. He attempted to define the characteristics of each of the 5 stages of development.
Traditional Society Stage
-Economic activity is on a subsistence basis, output (food etc) is consumed by those who produced it rather than traded. Economic activity is dominated by agriculture and is labour intensive.
Transitional Stage
-This stage is when a society has the preconditions for takeoff (the characteristics a society must have before it can start to grow quickly such as with the UK industrial revolution) in place but has not yet entered a period of high growth. Trading increases supported by an emerging transport infrastructure, savings and investment grow and entrepreneurs emerge.
Take Off Stage
-Industrialisation takes place, workers transfer from the agriculture to manufacturing. Growth is concentrated in to certain parts of the country and in one or two industries (for example, cotton processing in Manchester during the industrial revolution). New political and social institutions emerge to support industrialization.
Drive to Maturity Stage
-The economy diversifies from the industries that originally drove growth. The massive poverty caused by the Take Off Stage starts to be reduced.
High Mass Consumption Stage
-The stage that countries reach once they have developed. Rostow, writing in 1960, believed that this was the stage which Western countries were in. Living conditions are good and the economy is based on the consumer society.
Limitations of Rostow’s Stages of Growth Model:
-The Rostow starts with the assumption that countries will develop along the same path, that countries cannot skip stages, do stages in a different order. Splitting the process of development into stages may be simplifying what actually occurs.
-The model is ethnocentric, it is based on American and European history and shows American high mass consumption to be the end result of development.
-The model assumes that capitalist development is the only way to achieve economic development his model represents a “non-communist manifesto”.
How to use Rostow’s Stages of Growth Model in Essays and exams:
The ideal use of Rostow’s Stages of Growth Model in A level exams is to set it up as a straw man to knock down. The model is a good way of setting out a basic model which is easily criticised using more up to date models or models from a different political viewpoint. Don’t worry about spending too much time writing about Rostow’s model, just give the examiner an outline of your knowledge referring to the main points of the model (see start of article). This will then allow you to spend more time showing off your knowledge to the examiner about other more complex development models.
Beer – The Top Manufacturers
You see beer commercials all over the place. You probably even have your favorite, especially if you’re a chest pounding, sports watching brute of a he-man. The only thing you really care about is getting your hands on a nice cold brew. But did you ever sit down and wonder who the top beer manufacturers actually are? Of course not. That’s why you’re reading what’s about to follow as we reveal the top beer manufacturers in the world today.
The top five beer manufacturers have quite a few surprises, especially for those of you who are glued to your TV and see nothing but ads for Bud, Bud Light, Miller Light, Molson, Schlitz and the whole cast of characters that follow one bad B-Movie after another.
Well, would it surprise you to know that the fifth largest beer manufacturer in the world is Inbev? Who? You heard right. This worldwide company comes in at number five. They own a ton of premium brands like Beck’s. Ah, yes, now you know who they are. They also manufacture a few specialty brands like Belle-Vue. Okay, so maybe you’re not so familiar with that one. This company sells most of their beer in America, Europe and Asia.
Coming in at number 4 on the hit parade of brews is Scottish & Newcastle. In case you’re not familiar with them, they actually make a lot of other drinks besides beer, including water, cider and even soft drinks. Talk about diversifying. Their main markets are in the United Kingdom and Europe. They export their beer to over 60 countries. Their main base of operations is in Edinburgh.
The third largest beer manufacturer in the world is one you have probably heard of. The company is Heineken. This company is literally all over the place, operating in over 170 countries in Africa, Europe, North and South America, the Middle East and even Asia. What most people don’t know is that Heineken also manufactures many soft drinks and other non alcoholic beverages. The company operates out of Amsterdam and employs more than 60,000 people.
Just missing the top spot is a company by the name of Asahi. Asahi is all over the world, literally. There is hardly a county in which they don’t operate. Their main beer is Asahi Super Dry. You may not have heard of it but it’s the number two seller behind the company we’re about to reveal. This company also makes soft drinks and nutritional supplements. And if you think beer and Japan don’t go together, then you better think again because that’s just where the headquarters of this giant resides.
And finally, we get to the number 1 beer manufacturer in the world and this should come as no surprise to anyone who’s ever walked into a bar or just watch a little TV. The Anheuser-Busch brewery is the number 1 beer making company, not only in the United States, but all over the world. It’s Budweiser brands are known by all. Even though they operate mostly in the United States, they own 50% of Mexico’s leading brewer and 27% of the top brewer in China. Yes, Anheuser-Busch, or Budweiser, really IS the king of beers.
Just like it says on the commercial.
Top 5 Worst Foods You Can Eat That People Think Are Healthy
1- Fermented Cheese. Fermented, or ripened cheese is one of the most toxic foods known to man. The smallest quantity has a catastrophic effect on the system. It disturbs digestion and makes everything ferment in the digestive tract, so foods eaten don’t benefit the body. According to Albert Mosséri, a European natural hygienist and researcher, fermented cheeses can create or exacerbate the following conditions: infection, fever, headaches, nausea, cold sensitivity, bad stools, bad digestion. Fermented (or ripened) cheese includes many French cheeses such as: camembert, roquefort, parmesan, blue cheese, aged goat cheese, brie, etc. Fresh or cooked cheese, aren’t as bad, but are not recommended either. Their consumption leads to other problems. So in conclusion, no cheese is recommended for health,
but fermented cheese should be avoided like poison.
2- Fish and Seafood. Fish is getting a good reputation these days. We are told to eat
fish due to its richness in omega 3 oils. That is too bad, because fish and seafood
are some of the worst foods we can eat.
Fish has a tendency to putrefy much faster than meat – perhaps because it contains
more protein. If you put a piece of meat and a piece of fish next to each other in the
open air, you’ll see that fish will go bad much faster. In our digestive tract, heat and
humidity encourage this putrefaction. The poisons then created from the
putrefaction of flesh foods, particularly fish, are dangerous to the system.
On top of that, there is absolutely no safe fish on this planet anymore. They are all
more or less contaminated with heavy metals such as mercury, whose effects on the
human body are extremely detrimental and difficult to deal with. We know that 40
tons of mercury are released into the US by power plants using coal combustion.
The mercury contained in coal moves through the air, finds its way into the water
and then accumulates in the flesh of fish that live in it. For that reason, there is no
safe fish anymore. Just one serving can contain enough mercury or other heavy
metal to contaminate a person. For all of those reasons, I would recommend
avoiding fish like your life depended on it. Is seafood any better? It’s actually worst.
Animals such as lobsters, oysters, etc., are literally filters of the ocean. A large
quantity of water goes through them which makes them some of the most
contaminated “foods” on this planet.
3- Spicy Food. Spicy food is any food where strong (or mild) spices has been added
to it. Spices include: black pepper, white pepper, cayenne pepper, ginger, chili
peppers, raw garlic, raw onion, etc, and all the foods that contain them: kimchee,
hot sauces, Tabasco, etc. The consumption of spices is extremely detrimental to
health. They irritate the entire digestive tract, create mucus (that the body produces
to protect itself), and wreck digestion. Spices were first used as medicines, out of
superstition, and then in food. People became quickly addicted to the stimulation
they provide and found themselves progressively unable to enjoy food in its natural
state. The worst food you can eat is spicy food, such as Indian, Thai, Mexican, etc.
In someone not used to it, it will cause diarrhea. The person that is used to it has
undergone a process of morbid adaptation, where the protecting itself from the
harsh spices by hardening its surfaces. This protects against the harmful effect of
spices to some extent, but at the same time it greatly diminishes assimilation, no
the food eaten doesn’t benefit the body very much. Children and anyone with
normal instincts refuse spicy foods. Personally, I refuse to eat spicy food, whether
the spices are in a raw dish or a cooked one.
4- Coffee, Black Chocolate and Cacao — First premise: coffee, chocolate and cacao
(raw or cooked) are stimulants. They contain certain substances (caffeine and
theobromine) that disturb the nervous system. If a person is eating a more natural
diet, these poisons have an even more disturbing effect on the system. For a raw-
foodist, one cup of coffee has the effect of maybe four cups for someone eating a
standard American diet. Personally, half a cup of coffee taken in the morning will
disturb my sleep at night, while my dad can drink a cup in the evening and still fall
asleep. However, as Shelton wrote: “toleration to poisons is merely a slow method of
dying. Instead of seeing in the phenomena of toleration something to be sought
after, it is something to seek to avoid the necessity for.” A detoxified person is
much like a child: she will strongly react to the smallest dose of any intoxicant.
So there is no room for compromise with caffeinated drinks and cacao products,
which include: coffee, hot chocolate, black chocolate, raw cacao beans, black tea,
green tea, maté tea, etc.
5- Wine, and alcohol — According to toxicology (the branch of pharmacology that
deals with the nature and effects and treatments of poisons), alcohol is classified as
a protoplasmic poison, because it is poisoning to both plants and animals – from
the smallest microbe to the most complex animal. Alcohol kills microbes but also
kills the cells of a complex organism, such as the human being. It is an intoxicant
that ruins millions of lives and kills people by the thousand each day, directly or
indirectly.
Unfortunately, it has become a social habit in many parts of the world to intoxicate
oneself with alcohol. This poison habit is so prevalent and is such an intricate part
of our lives that is now considered abnormal to abstain from this popular intoxicant.
Most health professionals are aware of the ill effects of alcohol, but few will
recommend to give it up completely. They will talk about “moderation.” “Drink, they
will say, but be moderate.” How can someone be moderate with such an unhealthy
and addictive product? To my understanding, moderation is only valid for the
healthy factors of life, not unhealthy one. For example, no doctor will tell you, “be
moderate in smoking,” although that is what they used to say. Can we be moderate
with cocaine too?
Now, my readers should understand that when someone eats a healthy diet, alcohol
has an even more disastrous effect on the body. That is because the body has
stopped protecting itself from the various poisons found in a modern diet, because
it is no longer or less in contact with them. Just like a child who has never taken
alcohol will strongly react to it when drinking it for the first time. So my dear
readers, even that little glass of wine has a catastrophic effect on the system. And
when drunk with a meal, it makes everything ferment in the digestive tract. No if
you cannot resist that glass of wine, only have a little and on an empty stomach
only, not with a meal.
Economic Status of the United States in 1950
Introduction
Emerging victorious from World War II five years earlier, the United States in 1950 was reaping the benefits of a growing economy – benefits that were actually derived out of the country’s participation in the War. The destruction and mayhem brought by the global conflict also brought with it several positive contributions to the economy. Some would even argue that the country’s participation in World War II actually saved it from the Great Depression.
To understand the economic boom of the 1950s it is necessary to appreciate the positive impacts that were borne out of World War II. The foundation for the economic expansion and growth experienced in 1950 and several years after that were laid during World War II.
To fund and support the country’s war time efforts, it had to recruit millions of American soldiers to be sent to the war front as well as to be stationed at home. Factories had to be built to produce war materiel – guns and ammunitions, military transport, tanks, fighter planes and bombers, etc. To man the factories women and older people had to be recruited as most of the able-bodied men were at war. WWII created jobs and gave life to many industries and energized a nation. Among the industries that prospered during and immediately after the war were the newspaper industry, the agriculture industry and even Hollywood. Industries that produced transport and plant machineries also prospered. Throughout the War, women, for the first time, were given the opportunity to work outside their homes and participate in nation building. The participation of the women in the labor force started to increase during this time.
The War also provided opportunities that would later be manifested in the 1950s. Take for example many of America’s products went overseas – introducing themselves to new markets.
Many had actually feared that the end of the War would lead the country back to depression. With production of military supplies coming to an end, this fear had its basis – for the entire economy was propped up by all that had to do with the global conflict.
Fortunately, this was not the case. The victory relished by the nation brought about confidence in the government and the economy. The common consumer best exhibited this confidence as the strong consumer demand spurred economic growth after the War.
Leading towards the 1950s, industries that experienced a surge in growth included the automobile industry and the housing industry, and new industries experienced fantastic births – industries such as aviation and electronics.
There was also another outcome of WWII that contributed to post War growth – the Cold War between U.S. and the U.S.S.R.
Many of the military industries that sprouted during the war continued to do big business after it. As communist block emerged as a military power in Europe, America had to arm itself against what it considered as a threat. Huge investments were made in the defense of the country. Such investments meant jobs, factories, huge spending – all contributed to the boom of the 1950s.
The economic success of the country probably influenced its leaders to advocate the replication of an open economy at the international level. This is best evidenced by the country’s spearheading the establishment of the International Monetary Fund and the World Bank.
Gross Domestic Product and Per Capita GDP
In 1950, the country’s GDP was at $293.8 Billion (in current dollars). At that time, Per Capita GDP was $9,573.00 – making the United States the number one country world wide in this aspect. By 1996, GDP was at $13.194 Trillion. Per Capita GDP was at $43,800.00 – however, the country ranked only at 10th place world wide in this respect.
Post World War II scenario showed that too few economies survive the war while a great majority, especially in Europe, was greatly affected. Many developments starting in the late 1970s toward the early 2000s enabled other countries to overtake the U.S. in terms of Per Capita GDP.
As Per Capita GDP is influenced by population, countries that had significant economic growth coupled with low birth rate were able to surpass the U.S. in this indicator. However, the U.S. remains the most powerful economy in 2007 taking into consideration other indicators.
Employment and Unemployment
In 1950, the civilian labor force was about 58 million strong. Only 5.3 percent of the labor force was unemployed. 41.6 million of the labor force at that time were males, while only 17.34 million were females. By 1996, the labor force grew to about 142 million while unemployment rate as at 5 percent. 76 million were males while 66 million were females in the labor force. In the 1950s, the number of workers in the services sector caught up with workers in goods production industries. The same time also saw the rise of white-collar jobs and the strengthening of labor unions. Awareness on labor rights was on a rise. The biggest impact experienced by the labor force was the increase in women’s participation in employment activities. Accordingly, women have literally poured into the labor force starting in 1950. By 1990, women’s participation in the labor force would nearly double. On the other hand, men’s participation would drop over time.
Per Capita Personal Income
In 1950 the Per Capita Personal Income was pegged at $1,501.00. By 2006 this rose to about $36,600.00. Though marked by huge difference in amount, it can be noted that $1,501.00 in 1950 could by more goods and services than the $36,600 in 2006 as illustrated by the CPI rates for both years.
Consumer Price Index and Inflation
With 1967 as base year, CPI in 1950 was registered at 72.1 – meaning that a basket of goods and services bought in 1950 were 72.1 percent of the price of the same goods and services bought in 1967. By 2006, the CPI was at 603.5. This meant that the same basket of goods and services bought in 1967 would cost 603.5 percent more in 2006. Inflation rate in 1950 was at a steady 1.09 percent. In 2006 the rate was at 3.24 percent.
Emerging Industries
1950 saw the emergence of new industries that were anchored on new technologies. Among these is the aerospace industry. The great success of the heavy bombers during the war emphasized importance on innovation. Improvements in engine design, metallurgy, and arms technology helped advance the industry as well as improve manufacturing procedures.
The onset of the Cold War ensured that the industry was there to stay. At its peak, the industry hired hundreds of thousands of workers in four major factories. The industry was also fueled by a $3 billion government spending.
Other industries that grew during this time were boosted by other industries. Take for instance the housing boom experienced after war. New homes meant additional furniture and appliances as well as new cars. The consumer-led growth likewise spread to other areas. The introduction of television to the masses spurred the growth in electronics.
There were also after effects in the growth of industries. As the demand for homes and cars increased, many Americans were lured out of central cities to the suburbs. The construction of better highways also contributed to these phenomena.
Farmers though were facing tough times. As people left farm lands, lesser people were left behind to do farm work. This led to a drop in the productivity of the farm sector.
Innovations and the Transformation of Business
At a personal level, 1950 saw the introduction of the first hand held T.V. remote control – a device that would be seen as a necessity in many households for years to come. Color TV also emerged thru the issuance of a license to CBS Network. Another innovation is the introduction of the first credit card – Diners – also an item that would come across as a necessity in modern times.
The first pagers were also developed in 1950.
In the business front, 1950 would usher in an era marked by consolidation of large companies. Businesses would combine to create bigger, greater businesses. Example, International Telephone and Telegraph bought Sheraton Hotels, Continental Banking, Hartford Fire Insurance, Avis Rent-a-Car, and other companies.
Notable Events and Personalities
Notable events of 1950 included the following:
Start of the Korean War – influenced greatly by the U.S. and USSR at opposite sides, North and South Korea would tangle in a three-year war that highlighted the tension during Cold War regime.
Development of the Hydrogen Bomb – raged by the atomic bomb testing by USSR, the government pursued the development of a hydrogen bomb.
Senator Joseph McCarthy – started the Red Scare in halls of the U.S. Senate – making accusations that the State Department was filled with Communists or their sympathizers. The Senator’s actions led to the adoption of the term McCarthyism – describing intense anti-Communists sentiments.
This period coincided with and fueled the onset of the Cold War between America and the USSR. Thousands of Americans were accused of being Communists or sympathizers during this time – Americans in various sectors of the society. History would later judge these accusations as reckless and baseless. While Senator McCarthy gained considerable media mileage at the start of his “campaigns,” he would be later unmasked as a grandstanding antic who had little or no evidence to back up his accusations. Many of the people Senator McCarthy accused suffered greatly. Many loss their jobs, had their careers ruined while some were even unjustly imprisoned.
Conclusion
The end of World War II led to the end of the Great Depression and the start of a long period of economic expansion through the 1950s. It is quite ironical that the most destructive war in history would contribute to the emergence of the strongest and biggest economy in the world. The confidence on the economy was obviously brought about by the country’s victory in the War. Tempered by strong collaboration between the government, businesses and the consumers, the U.S. emerged from the War a lot stronger and economically strengthened. Industrial expansion during wartime brought economic impetus that would be carried on even after WWII. The fact that most of the major economies were slow to recover from the after effects of the conflict placed the United States at absolute and relative advantage over both its allies and its enemies.
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The Japanese Diet – a Diet To Lose Weight, Remain Slim & Be Healthy!
For no people on earth is it more true than the Japanese, when you say, “you are what you eat”. The Japanese are, by all accounts, the people with the least obesity problem, the highest longevity rate, and best health record. What are they eating?
The importance of rice
Rice is the main carbohydrate food in Japan, consumed with every meal. However, the real basis of the Japanese diet is not rice but fish, consumed at more than 70 kilos per person per year–which means 190 grams daily. This combination of rice and fish, as their staple food is far superior to the American meat and potato, the European little of this, little of that diets, and light years ahead of the Russian pork, potato and mayonnaise daily fare.
Let’s see what else they eat. Miso and other soy products! Miso is a fermented soy product, and a soup is made from it that is light tasting and easy to digest. One gets all the benefits of soy from it. Also, the famous soy sauce. Japanese people, on the average consume about 200 grams of soy products daily.
So why are they so thin and so healthy?
There are a few very good reasons. One is their sparingly consumption of sugar.
Low in sugar
Japanese consume only 20 kilos of sugar per year (compared to the American 71 kilos per year). Another is the Japanese consumption of cereals (which obviously includes rice) to be 105 kilos per year (compared to the American 68 kilos per year).
The human body appears to be doing much better with natural cereals and less sugar than fried potatoes and ‘sugar in everything you eat’ diets. The Japanese have far less incidence of heart disease and cancer than Americans. As they eat as much meat as the Americans do (or more), and smoke more, the theory is refined sugar and stress are the two biggest contributors to destroying one’s health.
Portion size
Another important factor in the Japanese diet is portion size. The portions are small.
This means they savor their food; eat slowly and enjoy it. No “scarfing” down hamburgers and fries here, and king size cola drinks.
Eating with chop sticks help, as you eat more slowly, take smaller bites and are able to appreciate what you are eating. This aids in digestion, and that is a proven fact.
There are two more factors which must be mentioned that make the Japanese diet so successful.
The first is breakfast.
The typical Japanese breakfast can (and usually includes) green tea, steamed rice, miso soup with tofu, spring onions and omelet and both raw and grilled fish.
This gives your body all it needs to start your day well. You will feel better, and such food does not add weight to your body at all. In fact, it stimulates the metabolism mechanism. You will not gain weight, and if overweight, will lose weight.
Variety Never be bored
The second factor is variety.
A typical American will have about 30 varieties of food per week. A typical European (especially southern European) will have about 45. The typical Japanese will have about 100 varieties of food per week, and will include lots of fresh fish, vegetables, fruit and a variety of meats.
There is one over-riding element here as well; the Japanese cook their foods lightly and thus are never feeling stuffed and stuffy after eating.
As you can see the diet is great and its healthy and is perfect for those wanting to lose weight and avoid illness.
The Evolution of Jazz Music in the 1930s
Jazz is a musical art form that has expanded well beyond its own genre definition, transforming with every era and begetting countless other popular modern genre forms in the process. As an artistic invention of African American communities primarily in the Southern region of the United States, jazz finds its earliest roots in New Orleans, where black performers blended Southern blues, the startling variations of Caribbean music, and an altered form of traditional European instrumentation.
Resistance to “hot jazz” in the early twentieth century ultimately contributed to the evolution of jazz music in the 1930s. In the 1920s, jazz music had spread to the North, Chicago and New York, where bands gave their performances on the margins of society. During the Prohibition era, jazz was often performed in illegal speakeasies and the Red Light district, causing this “wild” music to be associated with the decadence of that era. However, with the onset of the depression the Dixieland jazz that had dominated up until the end of the 1920s was gradually supplanted.
The End of Dixieland
Jazz slowly began to creep in at the edges of mainstream music because of its popularity on college campuses, and in general, amongst American youth. The evolution of jazz music in the 1930s amounted to a compromise between the music industry and the older generation of white Americans, who were gradually accepting the presence of jazz music in popular culture. However, this increasing popularization affected a considerable dilution of the form, shedding much of the raw, impromptu quality of earlier Dixieland jazz.
Dixieland was characterized by the convergence of many forms – polyrhythmic ragtimes, the low pitch of blue notes, French Quadrilles, and improvisation, as well as a large rhythm section of the trombone, trumpets, tuba, guitars, clarinet, the piano, drums, and banjo. It was unpredictable, and the individual performers showcased their improvisational skills, playing from their souls not their notes.
The Rise of Big Band Swing
At the beginning of the decade white big band swing performers played “sweet” jazz, making use of violins and arranged sheet music. The reasons for this particular evolution of jazz music in the 1930s were twofold. It was more composed and less offensive to the older white American audience. At the same time, the onset of the Depression created a widespread need for inexpensive pleasantries, and jazz-inspired music gradually gained footing in the newly burgeoning radio industry.
The more recognizable swing arrangements evolved when dancing became linked to big band. Dance styles, such as the Lindy Hop, that had been popularized in black communities in the 1920s were appropriated by white teenagers and introduced in dance halls. Swing orchestras became larger, with 20-25 pieces in a typical band. Music was still arranged, but individual performers were given complex solos, and as was also typical in sweet jazz, a singer performed vocals to the music. Popular performers of the era include Shep Fields, Benny Goodman, and Glenn Miller.
The undomesticated “hot jazz” of black performers – including Duke Ellington, Count Basie, and Jimmie Lunceford – persisted throughout the big band era, but never gained the popularity of its white counterpart. Big band singlehandedly dominated the entertainment industry, extending beyond radio to television and film in the 1940s. The evolution of jazz music in the 1930s led to its eventual popularity across the continent and later, internationally. Jazz music has been adapted globally across cultural lines, but its humble roots remain in New Orleans, Louisiana.
Hong Kong Clothing Industry
Overview
Textile quotas were eliminated among WTO members at the first day of 2005 in accordance with the Agreement on Textiles and Clothing (ATC). However, resistance to quota removal spread in the US and EU. Subsequently, China reached agreements with the EU and the US in June and November 2005 respectively. The China-US agreement, effective from January 2006, governs the exports of a total of 21 groups involving 34 categories of Chinese textiles and clothing products to the US during 2006-2008. The China-EU agreement, effective from June 2005, covers 10 categories of Chinese textiles and clothing exports to the EU during 2005-2007.
On the other hand, the mainland and Hong Kong agreed in October 2005 to further liberalise the mainland market for Hong Kong companies under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Along with other products of Hong Kong origin, the mainland agreed to give all products of Hong Kong origin, including clothing items, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin, will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met.
Hong Kong clothing companies are reputable for ODM and OEM production. They are able to deliver quality clothing articles in short lead time, as foreign importers and retailers request clothing suppliers to tighten up supply chain management to ensure the ordered merchandise reaching the store floor at the right time. Increasingly, Hong Kong clothing companies, the established ones in particular, have shown enthusiasm for brand promotion.
Hong Kong’s total exports of clothing rose year-on-year by 9% in the first 11 months of 2005. While Hong Kong’s re-exports of clothing rose by 20%, domestic exports fell by 14%. In the first 11 months of 2005, Hong Kong’s clothing exports to the US and EU rose by 11% and 18% respectively. While Hong Kong’s clothing exports to Japan levelled off, those to the Chinese mainland declined by 11%.
Industry Features
The clothing industry is a major manufacturing sector of Hong Kong. Its gross output is one of the highest among all manufacturing sectors, amounting to HK$35.9 billion in 2003. It is the largest manufacturing employer in Hong Kong, with 1,673 establishments hiring 28,752 workers as of June 2005. It is also the leading earner in terms of domestic exports, taking up 40% of the total in the first 11 months of 2005.
Hong Kong’s geographic boundary has never constrained the development of the forward-looking clothing industry. The majority of clothing manufacturers have set up offshore production facilities in an attempt to reduce operation costs. Relocation of production facilities offshore has however resulted in a steady decline in the number of clothing manufacturers in Hong Kong.
Hong Kong is not only a leading production centre but also a hub for clothing sourcing globally. Companies doing garment trade in Hong Kong are experienced in fabrics procurement, sales and marketing, quality control, logistic arrangements, clothing designs and international and national rules and regulations. The professionalism that they command and the combined services offered are not easily matched elsewhere. With a total of 15,190 establishments hiring 95,889 workers, they form the largest group involved in import-export trade in Hong Kong.
Performance of Hong Kong’s Exports of Clothing
Hong Kong’s total exports of clothing rose year-on-year by 9% in the first 11 months of 2005. While Hong Kong’s re-exports of clothing rose by 20%, domestic exports fell by 14%. The contrasting performance of Hong Kong’s re-exports and domestic exports was basically ascribed to the increasing relocation of garment manufacturing to the Chinese mainland, resulting from the removal of quotas under WTO’s Agreement on Textiles and Clothing (ATC). But the declining trend of domestic exports has been reversed somewhat in recent months, due to the re-imposition of quantitative restraints on mainland-made textiles and clothing by the US and EU.
Retail sales in the US held firm in the first 11 months of 2005, rising by nearly 6% from the same period in the previous year. In the first 11 months of 2005, Hong Kong’s clothing exports to the US rose year-on-year by 11%.
In the first 11 months of 2005, Hong Kong’s total clothing exports to the EU surged year-on-year by 18%. Clothing exports to major EU markets like France, Germany and Italy recorded growth rates in excess of 20%.
On the other hand, Hong Kong’s clothing exports to Japan levelled off in the first 11 months of 2005 partly due to the trend of direct shipment. On the back of the rising income however, Japanese consumers tend to resume their spending spree on premium clothing items. Meanwhile, Hong Kong’s clothing exports to the Chinese mainland dropped by 11% in the first 11 months of 2005, compared with the same period last year.
Product-wise, Hong Kong’s exports of woven wear rose by 12% in the first 11 months of 2005. While woven wear for women/girls grew by 13%, those for men/boys recorded a growth of 8% from the same period in the previous year. Knitted wear grew by 2%, with women/girls and men/boys rising by 1% and 6% respectively. While clothing accessories declined by 3%, other apparel articles, for their part, increased by 13%.
Sales Channels
Hong Kong’s clothing manufacturers have forged strong relationships with their customers. They are able to understand and cater for the preferences of very broad customer bases. Exporters also have good knowledge of international and national rules and regulations governing clothing exports, such as rules of origin, quota restrictions, tariff rates and documentation requirements. Cut, make and trim (CMT) arrangements are common although many Hong Kong manufacturers have moved to higher value-added activities such as design and brand development, quality control, logistics and material sourcing.
A few well-established local manufacturers have entered into the retailing business, either locally or in overseas markets. Many of them have retail networks in major cities around the world including Beijing, London, New York, San Francisco, Shanghai, Singapore, Sydney, Taipei and Tokyo. Some well-known manufacturing retailers include Baleno, Bossini, Crocodile, Episode, Esprit, G-2000, Giordano, JEANSWEST, Moiselle and U-2.
As a global sourcing hub in Asia, Hong Kong attracts a number of international trading houses and major retailers. Buyers sourcing from Hong Kong include American and European department stores (e.g. Macy’s, JCPenney, Federated, Karstadt Quelle, C & A), discount stores (e.g., Sears, Target and Carrefour), specialty chains (e.g., The Gap, The Limited) and mail order houses (e.g. Otto and Great Universal Stores). Many international premium designer labels — such as Calvin Klein, Donna Karen, Ralph Lauren, Tommy Hilfiger and Yves Saint Laurent — source clothes in Hong Kong through their buying offices or other intermediaries.
Hong Kong’s fashion designers have been gaining worldwide reputation for their professional expertise, sensitivity to current trends and ability to blend commercialism with innovation. Medium to high-priced fashion clothing bearing Hong Kong designer labels is being sold/have been sold in renowned department
stores overseas such as Bloomingdale’s, C & A, Harrod’s, Isetan, Macy’s, Marui, Mitsukoshi, Nieman Marcus and Seibu.
Trade fairs and exhibitions remain common places for buyers and suppliers of clothing to congregate. To establish connections and explore market opportunities, Hong Kong manufacturers and traders have involved themselves actively in international shows led by the Hong Kong Trade Development Council (TDC), including the ones in Beijing, Chengdu, Dalian, Dubai, Dusseldorf, Hong Kong, Moscow, Mumbai, Paris and Tokyo. ‘Hong Kong Fashion Week’ is organised twice a year and attracts international suppliers and buyers to participate in the exhibition. Organised by TDC, ‘World Boutique, Hong Kong’ is the first independent event in Hong Kong dedicated to promoting designers’ collection and brands from around the world.
Industry Trends
Changes in retail landscape: In the US and EU, large-scale retailers are undergoing drastic restructuring and consolidation, in particular, the growing prominence of hypermarkets such as Wal-Mart. To strengthen competitiveness, Sears and Kmart have merged to form the third largest retail group in the US.
Growing importance of private labels: Private labels, in essence, have become an increasingly effective marketing tool among garment retailers. In order to differentiate as well as upgrade the image of their products, major retailers have started to put a stronger emphasis on their own labels. According to Cotton Incorporated, private labels accounted for 45% of total US apparel sales in 2003, up from 39% in 2001. In some adult apparel categories, such as skirts, private labels accounted for as high as 76% of the total sales. It is also estimated that 45% of products sold in the EU are sold under private labels. Renowned retailers such as H&M, Marks & Spencer, Orsay, Palmers, Pimkie, Springfield and Kookai have owned their private labels. As consumers desire to have private labels on everyday garments like jeans, accessories and T-shirts, the doors are also open to the supply of these clothing items to private label owners.
Growing interest in China’s domestic market: The rapid expansion of mainland’s economy has attracted great interest of Hong Kong clothing companies to explore its clothing market. A TDC survey on mainland’s garment shoppers indicates that Hong Kong brands are ranked number one by the respondents in the mid-range segment. While international brands are most preferred in the high-end segment, mainland brands dominate the low-end. In addition, the same survey finds out that in the eyes of mainland consumers, Hong Kong companies are very strong in casual wear, as they are generally of good design and quality. In essence, many mainland consumers have developed a stronger awareness of Hong Kong brands through tour to and shopping in Hong Kong. Therefore, Hong Kong’s casual wear has successfully projected a positive image to mainland consumers.
CEPA
On 18 October 2005, the mainland and Hong Kong agreed to further liberalise the mainland market for Hong Kong companies under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Along with other products of Hong Kong origin, the mainland agreed to give all products of Hong Kong origin, including clothing items, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin, will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. But non-Hong Kong made clothing products will remain subject to tariff rates of 10-25% when entering the mainland.
The promulgated rules of origin for clothing items to benefit from CEPA’s tariff preference are basically similar to the existing rules governing Hong Kong’s exports of these products. Generally speaking, the principal manufacturing process of cut-and-sewn garment is sewing of parts into garments. If linking and/or stitching is/are required, such process/processes must also be done in Hong Kong. For piece-knitted garment, if it is manufactured from yarn, the principal process is knitting of yarn into knit-to-shape panel.
If the piece-knitted garment is manufactured from knit-to-shape-panels, the principal process is linking of knit-to-shape panels into garment. If stitching is required, it must also be done in Hong Kong.
Trade Measures Affecting Exports of Clothing
According to the ATC, textile quotas were eliminated among WTO members at the first day of 2005. However, resistance to quota removal spread in the US and EU. Particularly in the US, China-specific safeguards on 10 categories of clothing items from China were invoked. Against this background, China reached agreements with the EU and the US in June and November 2005 respectively.
The China-US agreement, effective from January 2006, governs the exports of a total of 21 groups involving 34 categories of Chinese textiles and clothing products to the US during 2006-2008. It allows an annual growth of 10-15% in 2006, 12.5-16% in 2007 and 15-17% in 2008. The China-EU agreement, effective from June 2005, provides for an annual growth of 8-12.5% in 10 categories of Chinese textiles and clothing exports to the EU during 2005-2007. In addition, both EU and US agreed to exercise restraint in invoking China-specific safeguard against Chinese textiles and clothing that are not covered in the agreements.
Product Trends
Formal Dressing: While casual wear accounts for the bulk of clothing sales, a general trend towards stricter corporate dress codes has led to a rising demand for formal dressing, particularly suits. According to a survey by Cotton Incorporated in late 2004/early 2005, 38.5% of respondents believe that people dressed too casually at work. This is a 6.5 percentage point increase over the same year-ago.
Teenager: One of the major driving forces of clothing market appears to be the teenagers in the coming years. The number of teenagers in the US expects to increase from 31.6 million in 2001 to 34.1 million in 2010. A recent survey by Teenage Research Unlimited found that teens are saving money by value shopping. While JCPenney is their favourite department store, Target and Wal-mart are their favourite hypermarkets. In addition, Old Navy is their choices among specialty apparel stores.
Silver Market: Ageing population becomes a common phenomenon in many developed countries in Europe as well as Japan and the US. Elderly people constitute a major market segment called ‘silver market’. Supported by savings, social security benefits and pensions, many elderly people have rather strong spending power. It is estimated that the age group of 65 year and above accounted for about 21% of Japan’s consumption expenditure in 2000. A survey conducted by the Japanese government also shows that people who are 60 years old and above possess almost three times the financial assets of those in the 40-50 age group. In the US, those aged at or above 65 amounted to 18.1 million in 2001, and the number is expected to swell to 26 million in 2015.
Plus-size Market: The plus-size market has been an area of growth for many years, and the trend is expected to continue in the coming future. It is estimated that 65 million women in the US wear size 14 or above. This group represents one-half of the US female population. It is reported that some renowned brands have already responded to the trend by offering merchandise of larger size; these companies include Liz Claiborne, Ralph Lauren and Tommy Hilfiger.
Easy-care Clothes: Clothes made of stain-resistant and wrinkle-free fabrics are well received in the market. It is estimated that about a quarter of apparel is now made of easy-care fabrics, and its popularity is expected to continue in the next few years. While major apparel brands like Dockers and Liz Claiborne have already marketed extensively easy-care clothes, major hypermarkets, like Wal-Mart, also offer more merchandise of such quality.
Source: Hong Kong Trade Development Council
How To Work Out Betting Odds
Pricing is a way of expressing the odds on a bet… that is, how much you will win if you bet (thus giving you an indication as to how likely it is that you could win).
Although there are other types of pricing, we are going to look at the most popular pricing systems: first the US pricing system and then the European version.
To understand the difference, we need to clarify some terminology that follows. Imagine that you’re betting on the outcome of game. You put down an even money bet of $100 (which is matched by a $100 bet by the bookie). Your team wins.
You get back $200 but you’ve only won $100. Notice the difference?
- You get back $200 (your stake plus the bookie’s bet).
- You won $100 (the bookie’s bet).
Recognizing this difference will help you understand the difference between two of the major pricing systems.
US Pricing System: In the US pricing system, they show you how much money you could win (that is, not including your bet) and it is expressed as a percentage… as if you bet $100 on every single bet.
European Pricing System: The European pricing system is also called the digital method of pricing and it is an increasingly popular method of stating a price. This is because it is potentially easier to use and it is becoming more widely accepted around the world.
Unlike the American system, which represents how much you’d win, the European system tells you how much you’d get back. That’s a big difference in knowing how to read the systems.
And, rather than being expressed as a percentage, it is expressed in a “digital format”… that is, as a number greater than 1.0.
Investing In A Developing Economy – A Possible Solution To Global Financial Crisis
INTRODUCTION
If there were security problems in Nigeria, no businessman would go to the country to explore opportunities, companies like Celtel, MTN, Etisalat, would not have ventured into security risk country to do business. Those who spread rumour about security and corruption problems in Nigeria are saying so to stop others from making money in the country. Figures don’t lie. They are the biggest testimonies for how conducive Nigeria’s environment for business and opportunities are. If you want to do business in Africa and record good returns on your investment, I welcome you to come to Nigeria. The political environment in Africa, particularly in Nigeria is tremendous.
Dr. Hamadoun Toure,
Secretary General,
International Telecommunications Union,
Cited in the Punch Newspaper, May 13, 2008)
What is happening currently with the Nigerian financial system is far from being affected in any way by the global credit crisis. At global level currently, the banks are under-capitalised, but Nigerian banks are over-capitalised. And I do not think this is a problem at all. I believe that Nigerian banks are under pressure from other economies within Africa continent that are affected by the credit challenges.
- Gordon Smith,
Head of Research, Africa and the Middle East, International Consilium,
(Reported in the Punch Newspaper, June 30th, 2008).
The foregoing statements aptly connote two understandings of the state of Nigerian economy. These understandings show that, the economy is one of the fastest growing economies in Africa and in the world. Although Nigeria has had hash economic history, it has undergone and still undergoing economic reforms, which are aimed at making Nigeria the Africa’s financial hub and one of the twenty largest economies in the world by the year 2020. Needless to say that the country has experienced political instability, corruption, and poor macroeconomic management in the past, this was responsible for unpleasant and harsh economic situation. The government relentless efforts to reposition the economy have translated into a remarkable economic growth and development. Several mechanisms have been put in place to sustain this growth and development, capable of balancing the interests of stakeholders. Perhaps, this view must have influenced Gordon Smith submission. He described Nigeria as the most dynamic market in Africa, which is under severe pressure from some countries in Africa to serve as a cushion against the effects of global turbulence. He also noted that some countries like Ghana, Malawi, Mauritius, among others were depending on her at the moment due to global risk exposure and that the country’s economy, led by the consolidated banks, was far from being affected by the global credit crisis currently rocking the world’s financial giants. He stressed further that foreign investors, who will be patient enough to weigh the Nigerian financial system on the credit risk perspective relative to global events, will find the nation’s financial sector more interesting to invest and raise capital from.
Faced with numerous challenges, Nigerian government is determined to strengthen, diversify and make the economy attractive and investment-friendly to both local and foreign investors. The government has adopted total liberalization and globalization as the economic policy, instituted privatization and commercialization programmes of public enterprises, provided total security for business and people, extended invitation to domestic and foreign investors, abolished laws inhibiting competition, embraced and fine-tuned policies to ensure quick realization of growth and development of all sectors of the economy. The effort is already paying off as Nigeria is now the focus for foreign investment thereby increased exponentially Foreign Direct Investment (FDI). Scores of economic missions and delegations from developed and developing countries have visited Nigeria, thus accelerating the growth of the economy at a very fast rate.
It becomes pertinent to direct the course of this discussion to embrace the second understanding of the above statements made by Hamadoun Toure and Gordon Smith. However, it becomes more pertinent to enumerate the inherent investment opportunities in Nigerian economy before discussing the issue of security as raised by Toure.
INVESTMENT OPPORTUNITIES AND SECURITY ISSUE IN NIGERIA
No doubt, Nigeria is an investment haven with countless and lucrative investment opportunities including oil and gas, solid mineral, agriculture, tourism, telecommunication, power and steel, transport, trade processing zone, financial sector, real estate / property, manufacturing, sport and entertainment, and fashion industry. Investors have a wide range of opportunities to choose from. It is important to note that the rate of growth of investment is fantastic and exponential in any of these sectors. Investors are at advantage of presenting their products and services to already-made market taking advantage of the population of over 140 million.
In telecommunication, statistics reveals that mobile phone users in Africa were about 280 million, overtaking United States and Canada with their 277 million users in the opening quarter of 2008. With 70 million connections in 2007, the Continent became the fastest growing region in the world, representing a growth of 38 per cent, ahead of the Middle-East (33 per cent) and the Asia-Pacific (29 per cent).It was also revealed that the fastest growing markets are located in northern and western Africa, representing altogether 63 per cent of the total connections in the region. The record showed that Nigeria, Zambia, Tanzania, The Democratic Republic of Congo, Kenya, Algeria, Tunisia, Ghana and South Africa are highly competitive markets in the Region. The record further contends that two-third of Africa’s telephony are in their early phase of development, with penetration rates below 30 per cent at the end of 2007.In percentage terms, it was noted that Africa is the fastest growing market in the world, but also the second smallest in terms of connections after Middle-East.
As Nigeria accounts for 57 per cent of the West Africa mobile phones, the country is acknowledged as the leading and the fastest growing telecom market in Africa. With mobile phone users at 44,932,181 and 734,444 for GSM and mobile CDMA respectively, her contributions to West Africa and Africa’s telecommunication growth can not be overemphasized. While the overall economic growth rate stands at 7% per annum, the mobile telephony is about 35-50%. Assuming that each of these connections was busy for a minute in a day, the country telecoms market has the capacity to generate over USD 16 million per day (USD16, 666,667) and close to USD 6 billion per year (USD 5,833,333,300). This is why telecom companies such as Visafone and Etisalat quickly joined the likes of MTN, Globacom, Celtel and other telecoms service providers in exploiting opportunities in the country.
Early this year, one of the main GSM service providers with a subscriber base of over 15 million announced a profit after taxation of USD650 million (78 billion naira) for the year 2007.Putting all these together, one can easily understand Toure’s submission describing Nigerian telecoms market as the best investment destination in Africa.
Recognizing the fact that the Nigeria telecoms industry is enormous and there is need to further exploit the sector to its fullest, the Nigeria Communication Commission (NCC) and the Ministry of State for Information and Communications have made their positions clear by extending invitation to global investors for active participation in the sector as they are willing to grant pioneer status and license for prospective applicants for various undertaking such as Fixed telephony, Mobile telephony, Fixed satellite (VSAT),Paging, Payphone, Internet and other value added services.
With the above facts, one can safely conclude that Nigerian telecom sector offers fantastic and lucrative investment opportunities to global investors. And putting into consideration 40% GSM market growth rate in the first quarter of this year (2008), there is potential for high return on investment in this sector.
Agriculture, the dominant sector of Nigeria economy, engages about 70 per cent of the population directly and provides nearly 88 percent of non-oil foreign exchange earnings. It contributes about 41 per cent of the GDP of the country. The sector recorded an overall growth rate average of 7 per cent in the last three years, a major improvement from under 3 per cent in the 90′s.
Statistically, 91 million hectares of the country’s total land area of 92.4 million hectares is adjudged to be suitable for cultivation. Approximately half of this cultivable land is effectively under permanent and arable crops, while the rest is covered by forest wood land, permanent pasture and built up areas. Among the states, which have the most abundant land, areas are Niger (7.6 million hectares) and Borno (2.8 million hectares).
Agriculture crops in Nigeria are grouped into cereals, root and tuber crops, grains legumes and other legumes, oil seeds and nuts, tree crops, and vegetable and fruits. Governments and the Ministries of Agriculture have made land acquisition easy, encouraged agricultural practices, extended (still extending) invitation to foreign investors and have put in place several incentives to stimulate growth in the sector. Despite, the agricultural potential of Nigeria is barely being tapped and this explains the inability of the country to meet the ever-increasing demand for agricultural products and her rank as 55th in the world (although first in Africa) in farm output.
As the world experiences food crisis and persistent rise in fuel price, the country’s agriculture offers unlimited opportunities for foreign investors and the world at large to provide solutions to these crises. Foreign investors will find investments in cultivation of sugar cane, sugar beet, sweet sorghum, starch (corn/maize), palm oil, soybeans, jatropha, and algae. These products are lucrative as they are potential for biofuels, a good substitute for fossil fuel. Presently, there is a very high demand for these crops from the developed economies.
Solid Mineral is another sector with great investment opportunities. Nigeria is endowed with numerous mineral resources. Recent policy reforms have brought the solid minerals sector to the fore. The emphasis is on encouraging massive foreign investors’ participation in this sector as less than 0.5 per cent is contributed to the Gross Domestic Products from Solid mineral sector. However, the Ministry of Mines and Steel and the Ministry of state’s focal attention in the last one year is to strategically place the country in a better position to explore and exploit just seven minerals in the plethora of minerals so as to increase Gross Domestic Product to 5 per cent within the next few years. The seven strategic minerals are coal, bitumen, limestone, iron-ore, barite, gold and lead / zinc.
Coal can be found in Enugu, Benue and Kogi. Within these three districts 396 million metric tones can be demonstrated using JORC classification criteria, while an additional 1,091 million tones of inferred and hypothetical coal resourced for the areas studied is 1481 million tones.
Knowing fully that development of coal will assist in the realization of energy, the Government and the Ministries are inviting foreign investors to participate actively in the exploration and exploitation of the mineral. Companies such as Denver Resources and Western Metals have already committed US$10 million and US$15 million respectively for two coal fields in the country. Another Chinese firm, Grid Xin Yuan International Investment Company that is providing more than half of China’s electricity needs is also in the country, indicating their interest in the development of a coal field in Kogi State.
The Bitumen reserve in the country is estimated at more than 27 billion barrels of oil equivalent while iron-ore is estimated at over 5 billion inferred reserves with presence in Kogi, Enugu, Niger, Zamfara and Kaduna States. Gold in just 10 locations is estimated at 50,000 ounces, barites 10 million metric tones and limestone at 2.3 trillion reserves.
Talc with an estimated reserve of over 100 million tones can be found in Niger, Osun, Kogi, Kwara, Ogun, Taraba and Kaduna States.The colour of the Nigerian talc varies from white through milky-white to grey. The talc industry represents one of the most versatile sectors of the industrial minerals in the world. The exploitation of the vast talc deposits in Nigeria would therefore satisfy not only the local demands but also that of the international market as well.
The national demand for table salt, caustic soda, chlorine, sodium bicarbonate, sodium hydrochloric acid and hydrogen peroxide exceeds one million tones. A colossal amount of money is expended annually to import these chemicals. There are salt springs at Awe (Platue State), Enugu, and Uburu ( Imo State), while rock salt is available in Benue State. A total reserve of 1.5 billion tones has been indicated. Government, to ascertain the quantum of reserves, is now carrying out further investigations.
In the same vain, large bentonite reserves of 700 million tones are available in many states of federation ready for massive development and exploitation, over 7.5 million tones of barite been identified in Taraba and Bauchi states, and an estimated reserve of 3 billion tones of good kaolinific clays has also been identified.
Gemstone mining has boomed in various parts of Plateau, Kaduna and Bauchi States for years. Some of these gemstones include Sapphire, Ruby, Aquamarine, Emerald, Tourmaline, Topaz, Gamet, Amethyst, Zircon, and Fluorspar, which are among the best in world. Good prospects exist in this area for viable investment. Understanding that this sector requires urgent investment, the Ministry has directed miners who are still in small artisan levels to form cooperatives so as to benefit from World Bank US$10 million assistance. Apart from this, three Nigerian Banks have also established solid minerals desk with fund of over US$ 8 million each for the development of the sector.
Foreign investors will find this sector worth-investing on as Nigerian governments have put in place various incentives and strategies for investment such as 3-5 years tax holiday, deferred royalty payments, possible capitalization of expenditure on exploration and surveys, extension of infrastructure and provision of 100% foreign ownership of mining concerns.
Recognizing that only a sustained macroeconomic environment and a sound and vibrant financial system can propel the economy to achieve the country’s desire to become one of 20 largest economies in the world by the year 2020, on the July 6, 2004 the Federal Government through the Central Bank of Nigeria (CBN), under the leadership of its Governor, Professor Charles Soludo launched a 13-point reform agenda to restructure, refocus and strengthen the Nigerian Financial System. To complement this agenda, another comprehensive long-term reform agenda for the Financial System (the Financial System Strategy 2020-FSS2020) was launched. The grand objectives of these agendas are substantially being achieved. The country financial system now comprises of strong, efficient and internationally competitive banks with an eye for global markets, a capital market with highest returns on investment, in dollar terms, a sound and rewarding insurance industry and other competitive financial participants.
Gordon was right in his submission to have described Nigeria as the most dynamic market in Africa. His view that “foreign investors, who will be patient enough to weigh the Nigerian Financial System on the credit risk perspective relative to the global event, will find the nation’s financial sector more interesting to invest and raise funds from” x-rays the truth about the country’s financial sector.
The country’s banking system is the safest and the soundest it has ever produced in history. It is the fastest growing banking system in Africa and one of the fastest in the world. In fact, the most outstanding contribution towards realization of the country’s dream came from this sub-sector. Economic analysts have observed that it has taken Nigeria less than 3 years to achieve what it took South Africa 20 years to achieve in the area of banking. In a short word, a world-class banking system has emerged in Nigeria.
Statistically, banking sector contributes 10 per cent to the Gross Domestic Product (GDP) and represents 60 per cent of the stock market capitalization, while there was a reduction in the number of banks from 89 to 25, the number of banks branches rose by 33 per cent from 3383 in 2004 to 4500 in 2007. The total asset base of banks rose by 104 per cent from $ 26.8 billions ( 3.21 trillion naira) in 2004 to $54.7 billion ( 6.56 trillion naira) by mid 2007; capital and reserves rose by 192 per cent from $2.72 billion (327 billion naira) to $7.98 billion ( 957 billion naira); capital adequacy ratio rose by 42.6 per cent, point from 15.18 per cent to 21.6 per cent and ratio of non-performing loans total loan improved massively by 51.3 per cent, point from 19.5 per cent to 9.5 per cent. The sector has also remained one of the most profitable in the country’s capital market. It was noted that 13 out of 21 quoted banks on the Nigerian Stock Exchange recorded returns in excess of 100 per cent since January 2007.
According to the April 2008 edition of the African Business, (the best-selling Pan-African Business Magazine published in London) 18 out of 28 West African Companies with market capitalisation of more than $1 billion are Nigerian Banks. The magazine stated that First Bank Nigeria Plc with market capitalization of $7.4 billion remains the largest company in West Africa. Two other Nigerian banks namely Intercontinental Bank Plc and United Bank for Africa (UBA) remain the second and the third largest companies in the sub-region with market capitalization of $6.2 billion and $4.6 billion respectively.
Apparently, the rising tide of banks in the country from all indications has made the sub-sector very attractive, not only to local investors, but also to foreign investors, and in particular, foreign banks. For instance, the consolidation of Regent Bank, Chartered Bank and IBTC to form IBTC Chartered Bank attracted the interest of the Standard Bank Group, the largest financial institution in Africa with a market capitalization of $ 17.8 billion, whose subsidiary Stanbic Bank, also of South Africa has just sealed a Merger deal for the latest Merger in the country, Stanbic IBTC Bank Plc. In this direction, other foreign banks have started making enquiries with CBN of a possible Merger or take-over.
To further substantiate the opportunities the banking sub-sector offers the global investors, a cursory look into Intercontinental Bank Plc will reveal the success of banking system in the country. Intercontinental Bank Plc is known to be the second largest companies in West Africa to have recorded a phenomenal growth in gross earnings, which stood at $1.45 billion ( 173.5 billion naira) in 2008. This is an increase of 99 per cent over the $728 million (87.4 billion naira) in 2007, profit after tax grew by 102 per cent to $380 million ( 45.6 billion naira) as against $188 million (22.6 billion) in 2007, while the capital base rose to $1.67 billion from $1.31 billion. The bank deposit base soared to $8.75 billion ( 1.05 trillion naira), an increase of 126 per cent from $3.9 billion (468 billion naira) in 2007, while the total assets also recorded a quantum leap to $14.2 billion (1.7 trillion naira), representing a growth of 108 per cent from $6.86 billion( 823 billion).
The bank is also in strategic partnership with BNP Paribas, the world leading energy financing bank, Afrexim Bank; Export Development Canada (EDC); Finance for Development (FMO); China Exim Bank; Export-Import of United States; International Finance Corporation in financing projects in different sectors of the economy. However, it is relevant to say that the success recorded by Intercontinental bank is a good example of the Nigerian banks’ strength and prospects, and a testimony to opportunities available to global investors in the country’ financial sector.
Apart from the above, Nigerian Capital Market offers viable opportunities as it is positioned to help companies to raise capital, and to generate high returns on investment. Its total market capitalization has grown by over 4000 per cent to $100 billion (12 trillion naira) in March, 2008, up from $2.39 billion (287 billion naira ) in August 1999.Among emerging markets, the Nigerian Capital market remains one of the most viable in terms of returns on equity. Historically, the market has delivered 28 per cent returns.
Insurance industry is not an exemption to this growth and development the country’s financial sector is witnessing. Although there are few black spots on the regulatory handling, the industry has equally recorded success in their reforms and operations. With the inflow of robust capital, insurance companies are now faced with the challenges of delivering returns to shareholders, maximizing value and exploring overseas markets. Their presence can be felt in countries like Ghana, Liberia, Sierra Leone, Sao Tome, South Africa among others.
Although Goldman Sachs’ report titled “New Market Analyst” with issue number 08/09 released on March 13, 2008 (cited in the Thisday newspaper March 19,2008) posited that Nigeria is a better economy than South Africa, International Monetary Fund (IMF) reported that Nigeria and South Africa got close to 50 per cent of the $53 billion private equity and debt flow to Sub-Saharan Africa in 2007. This underscores the growing confidence of International bodies and foreign investors in country’s financial sector and economy at large.
Furthermore, Fitch Rating Agency and the Standard and Poor rated Nigeria BB-(minus) in the area of sovereign credit, high in development of local currency debt market, and low in the areas of debt to GDP ratio and inflation. The opportunities for growth in Nigeria financial sector are still strong as the underlying fundamentals driving the growth are still present. All these and more, position the financial sector and the country at large as a leading and most dynamic market in Africa and present viable investment opportunities to global investors.
Needless to say that the opportunities presented above are typical examples and an evidence of opportunities awaiting foreign investors in other sectors of the economy.
Nigeria is the largest producer and exporter of oil in Africa (although recently placed second behind Angola in the latest OPEC report as a result of Niger Delta Crisis) with a production of 2.5 million barrels and above a day. Besides, the Nigeria is the 7th world’s gas reserve holder and the highest flaring nation in the world, with the potential to become a major player in LNG export. It has annual gas flares’ capacity to generate over 12000 MW of electricity needed to catalyze the growth of any economy. Although it currently flares an average of 1.2 TCF of gas annually, the sector has the potential to generate great returns on investment.
One of the greatest opportunities awaiting foreign investors is Real Estate / Property. For instance, Lagos Metropolis with a population of about 18 million has attained mega city status. The State has one of the highest urbanization rates in the world according to the World Bank. Consequently, there is an insatiable demand for housing delivery, which has necessitated the introduction of the New Private Estate Developers Scheme. Under the programme, the government will make large parcels of land ranging from 1 to 25 hectares available to corporate organizations capable of undertaking development and delivery of housing units. Such organization must however demonstrate that they have the financial capacity and technical expertise to deliver quality and affordable housing units.
Among other sectors of the economy that foreign investors will find viable and worth-investing on are Transport, Sport and Entertainment, Tourism, Power and Steel, Export Processing Zones, Privatization. And available records reveal that the rate of returns in these sectors is as high as in the sectors discussed above.
Apart from the opportunities mentioned above which our office is strategically positioned to maximize opportunities for the benefit of prospective investors. We also offer consultancy services in the areas of general management, manufacturing, marketing, finance and accounting, personnel, research and development, packaging, administration, international operation, specialized services and other value-adding services. And our strategic partnership with national and international companies put us in position to deliver quality service and high returns on investment.
Nevertheless, there have been fears raised by international observers, agents and bodies that Nigeria is a high-risk nation for investment and other business transactions. This development is attributed to security, multiple taxation, epileptic power supply, bad roads and poor work environment.
It may appear that doing business in Nigeria is challenging because of the activities of a few untrustworthy Nigerians who are unscrupulous. But such are simply characterization of human nature; as it can be found anywhere else in the world. It must be said emphatically that the world has been biased in their judgment and treatment of Nigeria security issue. There have never been terrorist attacks, suicide bombings or kidnapping until recently when the issue of Niger Delta came on board.
Niger Delta region-the source of nation’s oil wealth- has become an area of perennial tension, agitation, and recently, militancy. However, a confluence of factors such as environmental damage by oil exploitation, failure to develop the region, lack of job opportunities and sense of deep deprivation from the low share of derivation revenue accruing to the states in the region, has led to the present situation. Acknowledging their situation, the Federal Government has organised a Summit, to be chaired by Professor Ibrahim Gambari, the United Nations Under Secretary General, to provide everlasting solution to the crisis. Frankly speaking, Nigeria is a safe and investment-friendly place and Nigerians are accommodating and industrious.
Cyber Crime is another fearsome crime, which often put-off prospective investors from involving or investing in the business opportunities in Nigeria. This crime was actually imported into the country by expatriates. It has never been part of Nigeria culture. It is perpetrated by a few section of the population. Their operations are carried out via Internet and their targets are people who transact business via the medium. They pose as government officials and sometimes as businessmen with United Kingdom identity who deal in digital products. However the list of their tricks and operations is not exhaustive. With the help of Economic and Financial Crime Commission (EFCC), Independent Corrupt Practices and Related Commission (ICPC), and other Anti-Criminal Agencies, Cyber Crime and their perpetrators are under control and disappearing.
The grand objective of the present administration, as encapsulated in VISION 2020, is to make Nigeria a major industrial and economic power, and one of the 20 largest economies in the World by the year 2020 by providing enabling investment and business environment and maximum security for active participation of local and particularly, foreign investors. The realization of these aspirations had informed the radical and pragmatic reforms designed to increase the attractiveness of Nigeria’s investment opportunities and foster the growing confidence in the economy. In this direction, the Federal Government has provided incentives and strategies for investment such as 3-5 years tax holiday, deferred royalty, possible capitalization of expenditure and provision of infrastructures such as road and electricity, just to mention a few.
African economy is witnessing the strongest growth in 30 years; no doubt, Nigeria is one of the major contributors to this development. Most commentators have observed that the opportunities for business and investment in the country look increasingly rosy with GDP growth of 7 per cent in 2007 and 13 per cent in the next 12 years. The International Monetary Fund (IMF) forecast of 9 per cent growth rate for Nigeria in 2008 (which is second to India 10 per cent and ahead of China 8 per cent) lays credence to their observations.
Furthermore, the increase in Foreign Direct Investment, the entrance of multinational companies, the strong financial sector, the favourable and tremendous business environment, the government support, the abundant natural resources, and the population of over 140 million people, among others, put Nigeria in a comparative ( and possibly absolute) advantage over other African countries.
Just as it is difficult to ignore China as a market in the global arena, (one out of every five persons in the world is Chinese) so is it very difficult to ignore Nigeria as a market in Africa (one out of every three persons in Africa is Nigerian). With a population of over 140 million people and its economic potential, Nigeria still remains Africa most important market.
IMPACT OF GLOBAL FINANCIAL CRISIS IN A DEVELOPING ECONOMY
Unlike China and India, African economy(developing economies) is yet to be integrated into the world economy. This is as a result of slow rate of integration and globalization at which the economy is being fixed into the global economic and financial system. Consequently, developing economies will only suffer a limited financial impact from the credit crunch. However, this is not to say that developing economies are in isolation and totally free from the crisis.
To grant a point, this paper will continue to use Nigerian economy for its analysis as it represents a paradigm of a developing economy with valid and considerable variables.
According to the report from a recently concluded Bankers Committee Meeting, which ended on October 20 th, 2008 , the Nigerian banks are safe as they operate at 22 per cent capital adequacy ratio( 14 per cent above the world 8 per cent requirement) and the financial sector is far from being affected by the current global financial crisis. The report also posits that any bail-out scheme is unnecessary as the situation that warranted bail-out schemes in developed economies- poor quality assets and heavy loan losses resulting from exposure to inadequately collateralised mortgage loans- is absent in Nigeria. To underscore its point, the report noted that, as the Direct Foreign Investment in Nigerian banks is comparatively low and the banks connection with their foreign counterparts is loosely fixed, the impact of the crisis will be limited and indirect.
Conclusion
The words of Mr. Dominique Strauss-Kahn, the Managing Director of International Monetary Fund, at a meeting in Washington D.C are the corner stones of the concluding thoughts of this paper. He stressed as follow:
We meet at an extra-ordinarily difficult time- a time of uncertainty and insecurity, with a danger that those fears push us away from- not towards- a more inclusive and sustainable globalization….At its best, multilateralism is a means for solving problems among countries, with the group at the table willing to take constructive action together. When multilateralism is dysfunctional, globalization can be a Babel of Tower, with competing national interests colliding to benefit none. The new multilateralism, suiting our times, is likely to be a flexible network, not fixed system. It needs to maximize the strengths of interconnecting actors, public and private, profit-making and civil society Non-Governmental Organisations (NGOs). The multilateralism must respect state sovereignties while solving interconnected problems that transcend borders…The private sector cannot restore confidence on its own. Macroeconomic policy measures by governments cannot restore confidence on their own. Piecemeal measures on financial markets will not restore confidence on their own. What will restore confidence is government intervention which is clear, comprehensive and cooperative among countries..The world must act quickly, forcefully and cooperatively to contain the ongoing financial and economic downturn.
Thus, the position of this paper is that the confidence will only be restored if “government intervention which is clear, comprehensive and cooperative” is complemented with investment in developing economies with less or no crisis impact as “flexible multilateralism” and cooperative and sustainable globalization is solution that suits our time, not” economic isolationism”.
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Philippine Peso Dollar Exchange Rate
Forecasting what the Philippine Peso Dollar Exchange Rate would be is not as simple it may look. There are a lot of variables to look out for, the economy, government, news and environmental factors contribute to what the Philippine Peso Dollar Exchange Rate would be for the day. It is govern by supply and demand. When one is in this field of buying or selling dollars, be an importer, exporter, traveller or a currency changer, they will do have a hunch on what the Philippine Peso Dollar Exchange Rate be.
The trend most of the time for the Philippine Peso Dollar Exchange Rate to go down is during June and December. Most Oversea Workers send a lot of remittances to the Philippines during June for enrollment and specially on December, Christmas holidays. A slight increase in the Philippine Peso Dollar Exchange Rate on the months of January and September where importers pays out goods purchased.
Decades ago, the Banko Central ng Pilipinas controlled the Philippine Peso Dollar Exchange Rate to a fix twenty six pesos P26 to a dollar. Today, the Philippine Peso Dollar Exchange Rate is governed by the supply and Demand of it. Since 2004, Peso has been gaining and appreciating from the dollar. From a high of Fifty six pesos P56 on the year 2004, it has come around to Forty four P44 now, October 2007. The Philippine Peso Dollar Exchange Rate has not really been going down each day, there are also times when bad government news affected a slight increase on the Philippine Peso. But because of good economic performance Peso has been gaining stronger.
The Philippine Peso Dollar Exchange Rate has also been strengthening because of the poor economic update on the United States. United States has been in economic crisis which has also have a strong effect on the Philippine Peso Dollar Exchange Rate.
Economist has predicted for Peso to strengthen up to Forty Pesos P40 this coming Christmas holiday where Remittances would be fast coming in the Philippines. Oversea Workers mostly send remittance during this season. But the Oversea Workers and Exporters has been complaining of the sudden downfall of the Philippine Peso Dollar Exchange Rate. Oversea workers should be remitting more to cope up with the exchange rate, thus working more hours or having lesser savings. Exporters have also been complaining on the low exchange rate, their dollar earned when converted is much lesser now a days. There are a lot of exporters who have closed down due to their crisis right now. On the contrary, there are a lot of happy importers, and dollar spenders. They can buy goods much cheaper with the Philippine Peso Exchange Rate going down.
It may not be easy on how to predict what Philippine Peso Exchange Rate would be, but hope it has given you a few insights and tips on it.
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