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QUEST MEANS BUSINESS
South Africa Labor Unrest; "Guptagate" Grips South Africa; South Africa's Economy; Why Guptagate Matters; Cannes Jewel Heist; Aviation's Future
Aired May 17, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Tonight, South Africa's finance minister tells me the disruption in the country's mines will not hurt the national economy.
Also, a heist on the French Riviera: $1 million worth of jewels stolen in Cannes.
And IATA's former director general says airlines: evolve or die.
I'm Richard Quest live from South Africa's financial capital, Johannesburg, where I mean business.
Good evening from Johannesburg. From the country, South Africa, that put the S into BRICS, which now claims to represent the world's emerging markets when it comes to the financial world and act as a counterweight to the developed world and the rich world economies. A member of the G20, a member of the BRICS, we are in South Africa tonight.
On this program, the finance minister, Pravin Gordhan, tells me the group representing those economies, the G20, is in the doldrums, and he forecasts what he's looking forward to in the next G20 in July. Also, an interview with the finance minister of Africa's second-biggest economy, Nigeria.
We start, though, of course, with a threat to bring the South African economy to a standstill. The leader of the most powerful platinum mining union is accusing the government of ignoring violence against its members. The union is demanding a meeting with President Jacob Zuma.
This is all a serious matter not just for the mine workers. Months of labor unrest has cost the economy billions of rand, lost production and, of course, created tensions within the country.
This week, workers at Lonmin's Marikana mine staged a two-day illegal strike in response to the killing of a union official. Now, of course, violence at that very mine caused more than 30 deaths last year.
South Africa relies on mining for more than a half of its export earnings. It is no mean feat to say that the mining economy is crucial. Further outbreaks of violence could damage competitiveness, which Moody's says the country's rating is already at risk.
And it would also, of course, create serious problems of confidence in the country. Nkepile Mabuse now reports, as the tensions rise, she's been to the Marikana mine.
NKEPILE MABUSE, CNN INTERNATIONAL CORRESPONDENT (voice-over): A somber ceremony for yet another fallen mine union leader. For two days, these Lonmin platinum mine workers refused to go underground as rival unions blame each other for the renewed violence.
MABUSE: This is how a similar wildcat strike by the very same workers at the world's third-largest producer ended last year: 34 were gunned down by police in front of the world's media. Preceding this dramatic shooting was a week of brutal killings.
MABUSE: Ten people were killed in a bloody battle for members between the established National Union of Mine Workers and newcomer, the Association of Mine Workers and Construction Union.
The chaos quickly spread to other mines, threatening the survival of South Africa's mining sector.
UNIDENTIFIED MALE: We of the working class, we are not yet liberated.
MABUSE: Nine months later, union rivalry is again being blamed as tensions escalate.
MABUSE (on camera): On Wednesday, shots were fired at a gathering similar to this one. No one was injured. Union leaders allege that some mine workers are going underground, armed with guns. Police tell CNN four people have died in this area in recent weeks. The suspicion is, the violence is mine-related.
(MAN LEADING CROWD IN CHANT)
MABUSE (voice-over): It's wage negotiation season in the mining sector, and fears are that this unrest will spread.
AZAH HAMMINE, ECONOMIST: This is obviously very bad news for South Africa, and in particular, for the platinum industry, because the platinum industry has for some years now been the most important mining industry in South Africa's mining sector, accounting for some 30 percent of all South Africa's mineral exports.
(MAN SPEAKING TO CROWD THROUGH MEGAPHONE)
MABUSE: Mass job cuts are expected in the coming months, a situation that is likely to add fuel to an already volatile climate.
Nkepile Mabuse, CNN, Marikana.
QUEST: Now, if the mining situation wasn't serious enough for the economy, one story that has gripped South Africa in the past few weeks, call it "Guptagate," if you will. The Guptas are a wealthy, influential family. Three brothers: Atul, Ajay, and Rajesh.
There was a major family wedding on April the 29th, and bringing relatives from India on a chartered A330 from Jet Airways, the plane carrying 200 guests was allowed to land at the Waterkloof Air Force Base -- a military base.
Serious questions being asked of security officials, who have been suspended, and about the Guptas' close relationship with President Jacob Zuma. Issues of corruption, transparency, influence peddling.
They are racking the South-African political elite, especially since the Guptas' business empire covers mining resources, aviation, and technology.
The government has conducted an investigation into Guptagate. The report is expected in the next week, or at least will be revealed. I spoke to the finance minister, Pravin Gordhan, earlier today in Pretoria. We talked mining, we talked the economy, we talked the G20. But we started with Guptagate.
PRAVIN GORDHAN, SOUTH AFRICAN FINANCE MINISTER: We're very concerned about the incident itself. In fact, as a cabinet committee, in the next ten days or so, we will publicly address and disclose the findings of an investigation that has just been concluded, and which are in the process of discussing as I meet you, actually. Secondly --
QUEST: I assume you're not going to tell me what that is.
GORDHAN: I don't know, I'm missing the meeting so that I can talk to you. We're quite frank that this is an incident that should not have occurred. Those who are responsible must have their heads rolling, and improper relationships between anybody in society and anybody in government is something that we don't want to encourage at all. And the stench is a little bit too strong.
QUEST: And if there is a perception of corruption, or widening corruption, that is something as finance minister you need to take seriously.
GORDHAN: We take it very seriously. We've talked about it repeatedly, and we don't want a South African narrative dominated by a phenomenon that happens all over the world, a phenomenon that is not just focused on government, but it's a phenomenon that business and government in South Africa need to work on.
And the appeal I make constantly for South Africans is let's work as a society, particularly let's work as government and business, because there's two to tango int his relationship. And let's create a new ethical environment within South Africa.
QUEST: The IMF last year puts your growth at 2, 2-and-something. What are you now forecasting growth will be?
GORDHAN: 2.7 for 2013 and getting up to 3.3, 3.5 around 2015, 2016.
QUEST: And to those who say you will not hit that target, you'll barely be lucky to get 2 percent this year, what would you say?
GORDHAN: No, I think that's overly pessimistic. There are more positive factors than negative factors at this point in time, and if the European situation is more stable, it provides less surprises and less shocks to the global economy, I think we have a much more optimistic outlook.
QUEST: Are you worried that Marikana is about to become violent again, as many people are suggesting?
GORDHAN: I don't think so. The police are better prepared. The messages we've been sending out are much more categorical: no violence. And the roundtable situation we've created with business, labor, and government, is being activated at the moment and hopefully will contain some of the emotions that we are talking about.
And remember, the bottom line here is two competing unions. It's not disruption in the industry as a whole.
QUEST: Whether it's because of a dispute between two unions or between unions and government, it matters little when it takes its toll on the economy.
GORDHAN: The disturbances that we see at the moment are in a very small part of the overall mining industry. It's in the platinum -- parts of the platinum sector. Iron ore, gold, et cetera, et cetera, actually are carrying on with normal business in a normal environment.
QUEST: I'm going to briefly finish off by talking about the G20. If we talk about the G20 in July, what would you hope comes out of that process?
GORDHAN: Firstly that the G20 has fallen into -- into a doldrum, put it that way -- over the last two years or so. Secondly, it offers such possibilities of optimism for the globe in an environment where there are so many risks.
QUEST: You're basically saying it needs to be reformed.
GORDHAN: In the sense that it must go back to is original purpose, which is that there was a crisis, we needed a collective response to the crisis. The crisis has mutated into a different form, now, but the crisis is there nonetheless.
It needs to be more cohesive, it needs to have more common purpose, and it needs to have people around the table who are going to make a concrete contribution to that.
QUEST: It's a waste of taxpayers' money, going to the G20 meetings.
GORDHAN: We come from a country of optimism.
QUEST: Pravin Gordhan, who says he is an optimist. I'm joined by Eleni Giokos, the business news anchor on E News Channel Africa. Good to have you.
ELENI GIOKOS, ENCA BUSINESS NEWS ANCHOR: Good to be here.
QUEST: I -- you very kindly had me on your program this morning, and I'm more than delighted to return the favor and to have you this evening. Now look, Guptagate, how serious is it, and why is it so serious?
GIOKOS: So, the Guptagate saga that's been playing out in the past while has created this notion that the South African government doesn't have control over the various departments, and this is why it's become one of the biggest topics in South Africa over the past while.
And also because of the way that the departments have handled this scenario. So, when the media went and asked the Department of Defense, the Department of International Relations what was going on, we had different messages from the very beginning.
QUEST: What does it tell us, though? Because it's not just about landing a plane at an air force base, is it?
GIOKOS: No, it's not. It's about the fact that certain people with money could possibly have more power than others. So, it's basically giving power to other families in the economy.
QUEST: Has this scandal got further legs, do you believe?
GIOKOS: I don't think it does. And what's really sad is the debate was made to happen in parliament today. It's been pushed forward to next week. And again, it seems that they haven't decided if they're going to make the findings public. That is of concern, because it is of national interest.
QUEST: What about the economy. Pravin Gordhan there says he's expecting 2.7 to 3 percent rising.
GIOKOS: I've spoken to so many economists, Richard, and I doubt that we're going to get a 2.7 to 3 percent rise in the economy. And you mentioned a little earlier that mineral exports account for 50 percent of total exports in South Africa. Last year, when we saw the stoppages, shaved off 0.5 percent off our growth last year.
QUEST: All right. But where does the main threat come from? Does it come from the global scenario, the European Union and the eurozone, as Pravin Gordhan said, or is there a real risk from the mining crisis that we're talking about?
GIOIKOS: OK, it's the combination of factors, because what we see from the eurozone, we know it's still still a key export market, what we see from China, slowing growth, we export a lot of our goods there.
But also in South Africa, the mining sector is really important, because it accounts for 5 percent of GDP. But more importantly, it's a good employment base as well. If we start losing jobs there, it's going to affect us. If we start exporting less, it's going to widen our current account deficit extensively.
QUEST: Finally, looking tonight, the lights are on, people are out enjoying a cold winter evening -- by their standards cold, by our standards, my standards, it's quite warm -- is the fundamental strength of South Africa still there?
GIOKOS: There's a lot of optimism about South Africa, because we're part of the BRICS nations, and also, we're seen as a springboard into the rest of the African continent. I don't think that we've lost our role in Africa. We're still the strongest economy here.
But what's important to note is our current account deficit is 6.5 percent. It's the biggest in the group of 20 nations. Pravin Gordhan was alluding to it earlier. We have a debt-to-GDP ratio which is sitting at --
QUEST: Are you optimistic?
GIOKOS: Unemployment, Richard, is sitting at 25 percent. Real unemployment --
QUEST: All right.
GIOKOS: -- 36 percent. I am optimistic, but we need to start figuring a way to sort out the unemployment figure. That is fundamental.
QUEST: Eleni, good to see you. Thank you very much.
GIOKOS: Thank you so much.
QUEST: We'll talk more again in the future. Now, when we come back, you couldn't write it, and if you did, they wouldn't believe it, and if they believed it, they'd make a movie about it. French police are considering how to catch a thief, after thieves pulled off the most audacious robbery, multimillion-dollar jewelry heist in Cannes. QUEST MEANS BUSINESS, live from Jo-berg. Good evening.
QUEST: The world's most famous film festival has become a real-life set for an extraordinary multimillion-dollar jewelry heist. The official sponsor of the Cannes Film Festival, the Swiss company Chopard, has been left red-faced after a safe full of diamonds was stolen from a hotel room.
Now, this isn't just a few jewels that were taken, these were serious pieces of jewelry. Atika Shubert is in London and joins me now. Atika, who -- what was stolen? What were those jewels there for, and how on Earth did this thing happen?
ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: We don't know, exactly. We don't know what exactly was inside the safe. What we do know from French police is that they were inside the hotel safe of a Chopard employee.
That employee went out for dinner, and while she was out, the thieves were able to gain access to the room, and they just unscrewed the safe from the wall and took the safe with the jewels inside.
Now, Chopard has put out a statement saying that some of the estimates that the jewels were as much as $1 million are not correct, that in fact the jewels were worth less than that. And there were also some reports put out by the police saying that these were jewels intended for the red carpet, and Chopard has said no, no celebrity was intended to wear these.
But they do confirm that they were stolen from the room of a Chopard employee and that they are currently investigating it.
QUEST: This is extraordinary. I mean, this ranks alongside the Cary Grant movie "To Catch a Thief," "The Pink Panther" with Peter Sellers, and so on. You just don't expect this sort of thing to happen. So, I'm assuming the police won't -- it won't be long before they think that maybe this is an inside job of some sort.
SHUBERT: Well, they are questioning the employee and hotel staff. But it's interesting you point that out. You don't expect it to happen, but when you consider the fact that, really, every single day of this festival, tens of millions of dollars of clothing and jewelry are being worn by A-listers. In fact, it's a very tempting target for criminals.
And Cannes is known for having quite a number of thefts. They made a movie, "To Catch a Thief," about that. And in 2009, there were two major heists of jewelry totaling about $30 million. So, it does, in fact, attract a lot of criminal attention.
QUEST: All right. I'm a bit suspicious, here, Atika. You were talking to me about the Swiss -- the Brussels diamond heist. Now we're talking about the Cannes diamond heist. If I see you wearing diamonds in the office next week, there'll be some serious questions to be asked.
QUEST: Atika Shubert, joining me from London.
Now, a South African Currency Conundrum for you this evening. The krugerrand is a South African gold coin. That much you probably know. It's after the former president, Paul Kruger, who's pictured on one side. What national symbol is on the reverse? I'll have the answer for you later in the program. QUEST MEANS BUSINESS from Johannesburg.
QUEST: Airlines are dying and risk extinction from overcapacity and from vanity when it comes to the numbers of seats and routes. That's the warning from the former head of IATA, Giovanni Bisignani. And he should know: he not only ran an airline for many years, he was also the DG at IATA for ten years at the helm.
Now, Giovanni and myself, when he was at IATA, well, we've jousted on more than one occasion.
(BEGIN VIDEO CLIP)
GIOVANNI BISIGNANI, FORMER DIRECTOR GENERAL AND CEO, IATA: The most important thing is have someone stand there. Because passengers do not know if he has to take out his computer, the belt in, belt out, shoes in, shoes off?
QUEST: When they tried to organize a discussion or a symposium on the effects of volcanic ash, no one was interested. No one showed up.
BISIGNANI: We showed up at IATA. It was not a very popular meeting, that is true. But in the emergency situation, Europe did not -- was not fast enough. It took five years -- five days to arrange a conference call.
QUEST: What do you want to do here?
BISIGNANI: We want to get rid of this, of the passport. My idea is to try to board with your fingerprint. It is possible, we have the right technology, it's a matter of coordination and harmonization with governments.
QUEST: But are you happy for every airline, every airport, every government agency, to have your fingerprint?
BISIGNANI: As a passenger, I would be much more pleased to be able to board quickly, and I have no risk and no concern in giving my fingerprint.
(END VIDEO CLIP)
QUEST: Giovanni joins me now from London. Good to see you, Giovanni. Thank you. You're promoting your new book --
BISIGNANI: Hello, Richard.
QUEST: -- "Shaking the Skies." Giovanni, what -- good to see you. What is the single biggest risk to aviation today, which is making such poor profits and having such difficulties?
BISIGNANI: We are still in an emergency situation. When you see that this year, we will have a 0.6 margin, when you see that we are in the last 60 years, we had 0.3 margin, if we don't change the rules, we will be in real problem.
There is a -- a way to solve this. And it's the biggest sin of the airline I could never discuss this when I was in IATA --
BISIGNANI: -- but if we were able to reduce capacity by 6 percent this year, we will start to make a decent result. And unfortunately, this is something that IATA doesn't handle. It's a wise decision of airlines to start thinking of this.
QUEST: There are two ways to reduce capacity: airlines can lower the number of flights, or some airlines can go out of business. But at a time when you've got 380s coming off the production line, 777s and, in some cases, those planes will never go off the line, so Giovanni, you're 6 percent reduction is not going to happen.
BISIGNANI: But it's the only way in which we can return to be a normal industry. Because this industry has invested $650 billion. We would need at least $60 billion of profit every year just to roll the capital. When we celebrated in 2010 $20 billion in profit, it was the best year ever. And this cannot go on forever.
QUEST: All right. When you now look at the areas -- you've got the Emirates of this world, nearly 100 A380s, you've got Etihad, you've got Qatar, you've got these new relationships building up. Do you see and acknowledge the shift in aviation from the traditional carriers to the Gulf?
BISIGNANI: Yes. The two biggest regions, I would say, now first of all is Asia. Asia represents 40 percent of the total market, and the incredible thing that Asia is managing the industry very effectively: right infrastructure, right regulations, and that is the future. Because that is the biggest market.
In Asia -- in the Middle East, they're growing. They went from 4 percent to 11 percent in a short time, and they're doing a good job.
BISIGNANI: And what I appreciate more in the Middle East airlines is -- and the Gulf, that now we have started a good cooperation with many of the Western airlines.
QUEST: All right. Giovanni, we're just about out of time, but I do need to ask you, in all the years that you were in aviation, what was it about the airline industry that you loved, briefly? What was it?
BISIGNANI: I would say the people and the men that live in the airline business. When are around -- and the board of IATA, you have 30 of the biggest CEOs of the world. Everybody is taking away its help, and it's just thinking and the interest -- and of the interest of the airline.
And you will have a lot of inside stories from what happened behind the scene and those ten years in my "Shaking the Skies" book.
QUEST: Ah. Good, right to the end, managing to get the plug for the book. "Shaking Skies," Giovanni Bisignani, joining me from London. We will continue to joust in the years ahead.
When we come up in a moment, what Rupert Murdoch has to say about Facebook on the even of the company's first anniversary on the stock market. Good evening, it's QUEST MEANS BUSINESS, we're in Johannesburg.
RICHARD QUEST, CNN HOST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS from Johannesburg in just a moment. First, though, this is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The U.N. secretary-general has backed the effort by U.S. and Russia to stage a global peace conference on Syria. Ban Ki- moon has been holding talks with Russia's foreign minister, Sergey Lavrov. Lavrov says all Syria's neighbors should be invited to the conference and that includes Iran.
South Africa's finance minister Pravin Gordhan has told QUEST MEANS BUSINESS he's not worried that fresh strikes in the platinum mine will become violent again. Speaking on this program, Mr. Gordon said the police are better prepared.
The sacked head of the IRS, the Internal Revenue Service in the United States, has told a U.S. congressional hearing his agency was guilty of foolish mistakes. Steven Miller was forced to resign this week over the agency's unfair targeting of conservative groups. Today, he publicly apologized.
(END VIDEO CLIP)
QUEST: Now time goes fast. That much you don't need me to remind you. But you may not realize it is a year since Facebook IPOd and went up.
One powerful voice now says that Facebook is headed for the same fate as MySpace. In a tweet, Rupert Murdoch said, "Look out Facebook! Hours spent participating per member dropping seriously. First really bad sign as seen by crappy MySpace years ago."
Now we must take this seriously because Rupert Murdoch, of course, lost more than $500 million after he bought and then sold at a thumping great big loss MySpace.
Is there a touch of schadenfreude by Mr. Murdoch at the displeasure of what's happening to Facebook? Either way, the IPO was not a great success when it launched. But the shares have recovered somewhat, as Alison Kosik now explains.
(BEGIN VIDEO CLIP)
ALISON KOSIK, CNN BUSINESS CORRESPONDENT (voice-over): First came the excitement. Then came the waiting.
CHRISTINE ROMANS, CNN ANCHOR: We're still waiting for the actual (inaudible) indications over the Nasdaq, where it could be.
FREDRICKA WHITFIELD, CNN ANCHOR: Facebook was to begin its trading about 25 minutes ago. And now finally the moment has arrived.
KOSIK (voice-over): The sheer size of its public debut, 400 million shares, overwhelmed computer systems at the Nasdaq, delaying orders. It cost the exchange up to $62 million to compensate some firms involved.
After the share price peaked at $45 on IPO day, the price plummeted. By the end of the summer, it was under $18. But new products, like Graph Search and the Facebook Home mobile platform helped the price recover and stabilize around $27 a share.
But the key to recovery has been meeting the biggest challenge dogging Facebook since it went public: how to money from mobile. In the last year, Facebook has worked to move ads from the side of the page and into the news feed, making them more mobile friendly.
DAVE KERPEN, CEO, LIKEABLE MEDIA: So people are seeing the ads the same way that they see their friends' updates. And that's what's gotten a lot of great responses for advertisers.
KOSIK (voice-over): How effective the ads are depends on Facebook's 1.1 billion users, 750 million of whom now use the mobile app each month. Users can see which friends like the brand or products being advertised, an extra enticement to click and buy.
KERPEN: Right here, my friend, Victor, is recommending MasterCard to me right on my phone. And that's really powerful.
KOSIK (voice-over): And lucrative: at the time of the IPO, Facebook was getting less than 15 percent of its ad revenue from mobile. Today, it's 30 percent. That's helped Facebook shares to a 20 percent gain over the past six months. But there are plenty of challenges ahead as Facebook's user base has gotten older it risks losing younger ones.
KERPEN: For the short and medium term, the fact that your mom is on Facebook and your kids aren't on Facebook is a good thing for advertisers and a good thing for investors. But over the long term, it's dangerous to see younger people leaving Facebook.
KOSIK (voice-over): Still, as it enters year two as a public company, more and more young people see Facebook as an essential part of their lives, whether they like it or not.
UNIDENTIFIED MALE: Sometimes like I wake up in the middle of the night with like my phone plastered to my face.
UNIDENTIFIED FEMALE: I don't know if it's cool, but I think it's standard (ph).
KERPEN: Facebook has become a utility. It's no longer something that people like or want. It's something that people need.
(END VIDEO CLIP)
QUEST: Now here in the Southern Hemisphere, it is winter, as I've been noticing. Jenny Harrison is at the World Weather Center.
You didn't warn me it would be a bit parky down here.
JENNY HARRISON, CNN METEOROLOGIST: Listen, listen, you say it's a bit parky. I'm going to give you one guess, who has had the best weather today, you in Johannesburg or your colleagues back in London? Go on, one guess, one guess.
QUEST: Hmm. Hard one, that, but I think I know the answer.
HARRISON: Yes, exactly, you in Johannesburg, because my goodness, the weather across Western Europe, you might be heading into winter down there in South Africa at the high veldt, of course, is (inaudible) Johannesburg there, the interior. But it's a pretty good climate actually all year long.
Not so across the west of Europe. We have had nothing but rain and some very cold air. So look at this, Friday in London, there's not get beyond 11 degrees Celsius right now Johannesburg, by the way, it is 15 degrees Celsius. And the average for London this time of year is 18 degrees. As for Madrid in Spain, 10 Celsius. That is the best you saw this Friday.
And the average in May is 21; in Paris, 16 degrees, so actually faring the best. And the average is 19. And unfortunately, of course, coming with a lot of rain as well, in fact some areas picking up huge amounts of rain since Thursday. Northern areas of Italy, (inaudible) 420 millimeters of rain, enough to produce some landslides, some mudslides, so huge concerns there.
We've still got this incredible split, the warm, dry air to the east and this cold, very wet air across the west. And so this is what temperatures are doing right now. There is that 11 Celsius still in London. And we've got 20 Celsius in Warsaw, 24 in Berlin and on Friday, as I say, across the west, it was very cold across the east, extremely warm.
So you'll stay in Russia 34 degrees Celsius, such a huge difference in the temperatures. It's going to stay very warm across the east, cool across the west. It'll take you right the way through the weekend and right now we're heading to a break. Richard Quest will be there to greet you the other side of this break. So do stay with us.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The answer to tonight's "Currency Conundrum," what was the national symbol on the other side of the Krugerrand gold coin? It was the springbok antelope.
(END VIDEO CLIP)
QUEST: Now to Nigeria, where the country's long delayed petroleum industry bill, the reform, is making its way through the parliament. The country's oil minister says it will transform the sector after decades of mismanagement and corruption. Fionnuala Sweeney asked the minister how much this bill overall and can it really improve transparency?
(BEGIN VIDEO CLIP)
DIEZANI ALISON-MADUEKE, NIGERIAN MINISTER FOR PETROLEUM: You know, it is always said that Nigeria is a very corrupt country. There is corruption in Nigeria. And it is also, I think, (inaudible) of the fact that there is corruption in most other places in the world, at varying levels, of course.
When we put in place bills like this, the intention is to ensure the sort of transparency and accountability that pushes back at that corruption and opaqueness. And I think we've done that.
We've created at least five comer (ph) companies, that is five companies with shareholding and equity from externals, which means that the government is actually divesting its control, a national oil company, which will stand independent of government.
FIONNUALA SWEENEY, CNN CORRESPONDENT: Do you foresee, with your increase in reserves and this petroleum bill, that you will be able to be more independent and therefore more in control, in a sense, of how the funds are disbursed for your country throughout your country?
ALISON-MADUEKE: The states get their portion of the revenues every month. And at the state governments, then they're disbursed to the local governments as well. And it is expected that the local governments will then ensure that these funds trickle down throughout the economies of the states. So it is not just a burden on the federal government alone; no, no.
It is also a burden on the states to ensure that correct implementation of the revenues that they gain from the oil wealth of the country is properly implemented and properly disseminated as well.
SWEENEY: Where do you see Nigeria maybe five years, 10 years from now?
ALISON-MADUEKE: Well, I'm very hopeful that the national assembly will implement the petroleum industry bill, at least this year.
If that happens, and if we have that support to move forward, then I do believe that in the next three, four, five years and 10 years, you know, and beyond, you will find that Nigerian -- the Nigerian oil and gas sector is one where it is much, much harder for the manipulative corrupt practices that we have seen.
It means that our revenues derivable from this sector have a much, much higher percentage chance of being equivalently or equitably distributed throughout the levels of the Nigerian economy and affect the quality in the way and manner in which they should be (inaudible).
(END VIDEO CLIP)
QUEST: The oil minister, talking to Fionnuala Sweeney.
Robyn Curnow, the presenter of MARKETPLACE AFRICA, is with me.
Robyn, the economic and business environment, you spend longer than most of us looking at these issues and knowing what's happening in business in Africa.
ROBYN CURNOW, CNN HOST: I do, and I think the key is, if Africa is going to overtake Asia as the fastest growing region in the next year or so, according to the World Bank, if they're going to capitalize -- this whole continent is going to capitalize on the opportunity, the real key is the youth. Seventy percent of the population under 25, I mean, that is key.
QUEST: But those issues of corruption and transparency that we heard -- we're talking about (inaudible), you deal with this issue every day here.
CURNOW: Absolutely. And it --
QUEST: (Inaudible) getting better?
CURNOW: I think there is more political will. I think there is a sense that things are changing. But still, look at the kind of impact -- give you some numbers. The Congo, five mining deals in the last two years have cost the Congo US$1.3 billion in lost revenue in the sale of assets to foreign companies. Now that, that number alone, is double the amount of the education and health departments.
QUEST: You'll be talking -- go ahead.
CURNOW: Absolutely. And so this is an impact on ordinary people. And if that's not sorted out, then this growth cannot be capitalized on.
QUEST: (Inaudible) we're talking more about this on MARKETPLACE AFRICA, which is coming up next as we continue to look at the business sector in Africa.
But that is QUEST MEANS BUSINESS for this Friday night. I'm Richard Quest in Johannesburg. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you on Monday.
CURNOW: From Johannesburg, I'm Robyn Curnow. Thanks for joining us.
Now South Africa remains the continent's largest economy. But Nigeria is closing in with its growing middle class the potential is real for Africa's most populous nation.
And making sure that that potential is capitalized on is a job of the finance minister, Ngozi Okonjo-Iweala. I recently sat down with the minister, who told me her focus was the country's young people. Nearly 70 percent of the population. She says economic success will only come if Nigerians under 30 feel included and empowered.
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NGOZI OKONJO-IWEALA, NIGERIAN FINANCE MINISTER: With the (inaudible) youth population, if we get the training and the skills right, then we have what we call a demographic dividend, because with these people working, the productivity is very high.
And they give a boost to the economy, the same way that they did to Korea in the '60s and '70s, because they were able to up the level of education and skills. But if we fail to act, you know, to provide opportunities for these youth, then it could become a demographic nightmare so --
CURNOW: And potentially encourage, create more political instability.
OKONJO-IWEALA: But that's the point. We know about this. And therefore in Nigeria, we are working extremely hard to make sure that, one, we create jobs now for our youth. And how we are doing that? We are looking at our biggest diversification opportunity for the economy and that's agriculture.
We are completely turning our agriculture around with the mindset as minister of agriculture says, not agriculture as a development project but agriculture as a business, for the small holder, for the large partner, only 44 percent of our arable land is used now.
So we have great opportunity, both to up production and increase productivity, using young people, farming in a different way and looking at it in a value chain approach. From that sector, we hope to produce 20 million metric tons of food by 2015 so that we import substitute for the food we import now.
We are almost the largest importer of rice in the world. And yet you can produce all the rice we need.
CURNOW: We can talk about Africans fixing Africa's problems. But when it boils down to it, there's sometimes other forces that are out of your control.
Global economy is one thing, but then there's also just ordinary climate issues, which sometimes devastate local economies, whether it's famine, whether it's floods. You're involved in something that's -- is hoping to address that. Tell me about it.
OKONJO-IWEALA: Yes, Robyn, I'm really proud of this thing you said about Africans fixing African problems. We are really turning to ourselves and saying that, look, this global crisis has made us realize more than ever before that we have to fix our problems. So in the area of climate change, yes. We've seen the devastating drought and floods on the continent.
You know, each time there is a flood or there's a drought you see South African children cries for aid from the international community, everybody is waiting. And we're saying we are tired of this. The African Union has done something very, very interesting. They've formed an organization, a institution called the African Risk Capacity.
And what it is, this is an insurance agency.
Rather than waiting for international community to come to our aid, African countries have decided to buy -- set up an insurance agency, buy insurance, buy -- put -- to mitigate the risk of weather events and climate change so that when you pay this premium to this organization, which has been formed by a treaty of the A.U., then when you have a flood or a drought, you'll be able to get insurance payments out.
And instead of looking and waiting for people to come and rescue you, you are going to deal with your population immediately. You know, and then if it's larger than that money, you can then go ahead and look for additional help.
So the African Risk Capacity is designed to provide weather-based insurance risk mitigation for African countries, 22 countries have signed a treaty. Eight of them are about to go to market now to pay their premium.
For instance, if you pay a premium of $3 million, when you have an event, you can get up to $30 million to be able to deal with it. And it's often this initial money coming quickly -- and it would come quickly, within a week to two weeks the country will have it. Will be able to buy the necessary goods and think of its population.
Sometimes when the international community's doing an appeal, it takes weeks, six weeks, eight weeks, you know. And people are dying during that process. So now we've built this. And so you know, all these things are happening that also show Africans being very, very -- thinking of their own problems, their own challenges and then saying, how do we solve this?
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CURNOW: From Africa's most populous country to one of its smallest, we head to the Seychelles, where fighting pirates is becoming a double- edged sword for the country's fishermen.
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PETER SIMON, SEYCHELLES MINISTRY OF NATURAL RESOURCES AND INDUSTRY: We now fish where we are allowed to fish.
CURNOW: Welcome back. Now nowhere is the threat of piracy felt more than on the island nation of the Seychelles. Their two main industries are fishing and tourism. And even though many of the pirates have gone, the fishermen say their industry still hasn't recovered. Well, Jon Jensen went to the Seychelles to find out why.
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JON JENSEN, CNN CORRESPONDENT (voice-over): On the high seas off the East Coast of Africa, the Seychelles Coast Guard is armed, ready and on the lookout for one of the biggest threats to their nation in recent years, pirates from nearby Somalia.
MAJOR JEAN ATTALA, SEYCHELLES COAST GUARD DEPUTY OPERATIONS OFFICER: It's a big problem. Anything that disrupts the fishing, tourism industry or the (inaudible) equilibrium is a very problem for us.
JENSEN (voice-over): That's why they're on patrol, monitoring the newly defined safe zone for fishing. Local fishermen are restricted from sailing beyond its perimeter. Several dozen miles outside the main port.
The added security started in 2009 and already it seems to be working. Authorities say piracy is declining here. There have been no successful attacks in nearly a year. But that doesn't mean the problem's over for Seychelle law (ph) fishermen.
PATRICK PIERRE, FISHERMAN: There is no fish (inaudible) fishing in the same place.
JENSEN (voice-over): Patrick Pierre has been fishing for 12 years. His job was hardest, he says, during the worst of the piracy in 2007 and 2008. These days, he says he feels safer, but the hull of his boat is nearly empty. Restrictions on his movement mean fewer fish and less money, too.
PIERRE: (Inaudible) fish and you can go -- you could go anywhere we want without the fear of piracy and everything.
JENSEN (voice-over): The Seychelles has been at the forefront of the global fight against Somali pirates, mostly for economic reasons. Attacks by Somali pirates cost the world $18 billion a year, the World Bank estimates. It certainly affects the fishing industry here and the market.
SIMON: It has made the industry more costly in terms of going out there, be secure to bring in what usually was, well, our daily supply of protein.
JENSEN (voice-over): Fishing and fish processing are big business here. It's the second largest contributor to the economy. And this is the Seychelles' biggest employer, the French-owned Indian Ocean Tuna Factory. It's one of the largest tuna canneries in the world. When the fish come in, they're sorted, cleaned, cooked, chopped and eventually canned.
1.5 million cans come down this line each day, one of the biggest exports here. No wonder the government calls tuna the country's blue gold. And why general manager Joram Madnack still worries about pirates. He says fish intake has gone down nearly 25 percent in the past five years.
JORAM MADNACK, GENERAL MANAGER, INDIAN OCEAN TUNA: The impact has been on the price, which to (inaudible) has gone up by 70-80 percent compared to the 2007 prices.
JENSEN (voice-over): That's why the Seychelles Coast Guard has stepped in.
JENSEN: This is the front line in the Seychelles battle against piracy. It's the Topaz, a fast-attack craft armed with a 30 mm cannon and 25 sailors. But this vessel is only one of four of its kind in the entire fleet. And the Seychelles may be one of the smallest nations in Africa. But with its oceans, it's more than twice the size of France.
JENSEN (voice-over): It's too much area to protect completely, they say, and why fishing zones are so restricted in size.
UNIDENTIFIED MALE: This is not adequate to cover such a large area. So we need more assets. We need more (inaudible).
JENSEN (voice-over): They are getting help. This French carrier is one of many aiding the fight. For fishermen like Pierre, though, it's a double-edged sword. The protection is still necessary, he says, but all of them miss the freedom to sail about and return with a big catch -- Jon Jensen for MARKETPLACE AFRICA, in the Seychelles.
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CURNOW: Well, next week we stay in East Africa with a series of reports on Somalia's economic renaissance. Until then, I'm Robyn Curnow. Thanks for watching.