I sold my houses to begin suitcase manufacturing when banks refused me loans

At a time, no one thought it was possible to localize the production of once-upon- a- time imported brief cases in Nigeria, Chief James Uzuh dared and proved skeptics wrong.

Starting off under very stringent operational environment, for the Managing Director of J. Jumac International Company Limited, the journey was not only uncertain, but strewn with bumps.
Like a-never-say-die, Chief Uzuh brazed the challenges and today, boasts the first on the continent to begin the manufacturing of suitcases in this part of the world.

However, he tells anyone who cares to listen that as a manufacturer, if you can make a head way in this part of the world, where candle light has become the surest source of energy, coupled with other infrastructural desiderata, you can break even, even in hell.

According to him, it is only people with large hearts that can go into manufacturing and survive.
He lamented that because of the variable power supply, he spends about N2 million every month on diesel. This is besides the two generators, which cost a whooping N16million to procure.
In this chat with Saturday Sun, he also spoke on the vision he has for his company, what government should do to encourage manufacturers and sundry issues. Excerpts:

Beginning
As a young entrepreneur, I had wanted to be like the Razaq Okoyas and the Dangotes of this world. But I must say that as result of the lack of infrastructure in the country, manufacturing is not for lily livered people.
I was inspired by what they were doing, but when the Federal Government placed a ban on the importation of suitcases, which was one of the major items that I was importing from Europe, I thought that my time had come to be like my heroes. That is like Razaq Okoya-Thomas and Alhaji Aliko Dangote, but I did not know that I was venturing into a murky water without hope of getting out.

I first of all built a factory. After that, I began to go from one bank to the other to source for loans or at worst equity participation, but there was nobody interested in that because they felt that they would not make much money from it. Their interest was on short term loans and import finance. I thought then that as somebody going into manufacturing, that would not do me any good. I resorted to selling my houses. I sold three of my houses and with the capital I raised, I imported machinery for the commencement of production of suitcases. It was at this stage that banks began to come to do business with me, that is after I had built and equipped my factory with all that was needed to go into production.

Challenges
The challenges facing manufacturers in the country is enormous. I can use my personal experience as an example. After I had managed to build and set up a factory, I became broke. So I had to depend on the national grid for power. Because of that I lost a lot of machines due to power surge. Then I decided to go for generators. I spent N16 million on two generators. Now I use about N2 million every month on diesel. If this money is channeled into the company, we will grow faster. After production, it takes more than N200, 000 to transport the finished products to the markets. This is due to poor road network. If it were in countries where the railway system is effective, transporting goods from Lagos to Kaduna cannot take more than N50, 000.

The banks are also not helping matters. I had thought that after the much talked about re-capitalization, banks would make things easier for people who are in the manufacturing industry, but the reverse is still the case. Their focus is on short term loan and import finance. But how can our country develop if it remains an importer of finished products? When I was engaged in importation, I had only five staff, but now as a manufacturer I have more than 150 staff. If my company goes under as a result of unfavourable business environment and these people are thrown into the streets, they might be compelled to engage in vicious means to survive and by that, threaten the security of you and I. What I am saying is not peculiar to me alone, this is the experience of every manufacturer in the country. I am therefore calling on government to create an enabling environment for manufacturers to flourish. They should try to make the power sector functional. They should also address the poor road network being experienced in the country. Banks should reduce interest rate and also begin to encourage manufacturers by giving them long-term loans.

Between made in Nigeria and foreign suitcases
With all honesty, I want to say that suitcases manufactured in Europe for consumption are of very high quality, but the ones produced for export, especially for African markets are of very low quality. This is because they feel that Africans are poor and for that cannot afford quality suitcases. That is the reason why you see people handling imported suitcases, as if they are eggs, because they know that once anything happens to them, they will break.

Days are gone when people had the impression that made in Nigeria products were inferior to that made in Europe or Asia. For instance, there is no doubt that wires made in Nigeria are today the best in the world. Those who felt that Nigerians couldn’t come up with quality products have been put to shame by the wire manufacturing company in Nigeria. In the same vein, J. Jumac suitcases are the best in the world. Anybody who doubts this can go and ask anyone experienced in suitcases. Our products are very rugged. We have been to trade exhibitions in Ghana, Mali Tanzania and other countries where we exhibited our products alongside the ones produced in Europe and they came up tops. So we are no longer babies in the field of manufacturing

VISION
My vision is to make sure that Nigerians are given the best in terms of suitcases. I also want to control over 90 per cent of the suitcase market, not only in Nigeria but the whole of Africa. As I said earlier, we have gone for trade exhibitions to Ghana, Tanzania Mali and other African countries. Our finding was that we were on top of the industry. But the reason we have not begun to export was because we had not got the Standard Organisation of Nigeria (NIS) certificate. And without that, they would doubt the quality of our products.

Now that we have got the certificate, we can now start in earnest to export our products to other countries. So we have plans to also expand our factory, more so that we will become the biggest in Africa. If you go to our factory, you will see a new building that is being constructed.
I feel on top of the world receiving the NIS certificate from the Standards Organisation of Nigeria. It is a testimony that J. Jumac suitcases are of international standard. It is because only companies that their products have met International Standard Organisation specified standard that get the NIS certificate. Therefore, I see the certificate as a surety on our products from SON to the world that J. Jumac products are of international quality and standard.

Barbara Horscraft: The world is at her fingers

Barbara Horscraft had just given up a career in teaching when she met 19-year-old Indian named Mahaveer Jain at a hotel in Jodhpur, India.

The boy took her to his home on a Vespa scooter so she could see the items he wanted to sell, including a religious painting called a pawaya. Horscraft, who had just started an import business in Santa Cruz, bought a few things from him.

But when she got home, the boy called her frantically to ask that she send the painting back. He had just discovered it was stolen, he said. Horscraft packaged up the item and sent it back to him.

Years later, on another buying trip to India for her Santa Cruz store, Gravago, the owner of the large export businesses where she shopped offered to drive Horscraft back to her hotel.

Sitting in the back of his limousine, the elegantly dressed man turned and asked Horscraft if she remembered who he was.

"You changed the course of my life," he told her. If she had not sent back the painting, he would have been in prison instead of owning one of the largest export businesses in India, he said.

It's just one of the stories Horscraft has collected from her travels around the world; stories of sinking into village life in India, riding a swaying bus through Afghanistan and once fending off a group of drunken men who believed that, because she was traveling alone, she was for sale.

There are stories too in the colorful rugs, inlaid mirrors and shining vases she sells in her narrow storefront off Cooper Street: the smiling wooden lion that came from a children's merry-go-round in India in the late 19th century. The settee upholstered with camel skin that the nomadic Tuaregs of Africa decorated and once used for water carriers in the Sahara. The rugs she bought from a man in India who wanted to explain the complete history of natural dyes before he would allow her to buy.

It is something the slightly built woman with the curling blond hair has always loved: histories big and small.

It is a topic she was drawn to, studying history in college and teaching it in school. She loves the politics of history, the dark underpinnings, the mysterious details.

"I've always liked the intrigue of history," she says.

She wanders through her store telling the history of a girl who yearned to travel, of a woman who did just that; running a hand over the history of faraway lives in all the things she sells.

UAE bans import of birds from India

The United Arab Emirates has enforced a temporary ban on imports of all kinds of birds from India after bird flu was detected there.

Mohammed Saeed Al Kindi, Minister of Environment and Waters, said the ban covers "all domestic and wild birds, including ornamental birds, and their products."

The decision was taken as a precautionary measure following reports by the World Organisation for Animal Health on the emergence of bird flu cases in India, the official Emirates news agency said.

India confirmed on Thursday an outbreak of bird flu in poultry in the remote northeast part of the country was the H5N1 strain.

In June, the UAE has lifted a ban on Indian table egg.


Latest News Headlines on Bird Flu :
Bird Flu

India monitors four children after bird flu outbreak -- NEW DELHI (Reuters) - Health officials in India were monitoring four children suffering from fever on Wednesday after they had contact with dead or sick poultry in Manipur state, where authorities are fighting a bird flu outbreak in fowl. -- Reuters

U.S. report card shows work ahead for bird flu plan -- WASHINGTON (Reuters) - The United States has helped many countries watch and prepare for a bird flu pandemic, but lacks the rapid tests and hospital capacity to cope with one at home, the White House said on Tuesday. -- Reuters

Czechs confirm H5N1 bird flu at two more farms -- PRAGUE (Reuters) - Tests confirmed the H5N1 type of the bird flu virus in poultry at two farms in the eastern Czech Republic, the State Veterinary Authority (SVS) said on Thursday. -- Reuters

Va. flock of turkeys has bird flu -- Virginia banned all live poultry sales and shows for the rest of July following the discovery of suspected avian flu antibodies in a flock of 54,000 turkeys on a Shenandoah County farm. -- MSNBC

French swans test positive for bird flu -- Three swans found dead in a pond in eastern France have tested positive for the H5N1 strain of bird flu, the Agriculture Ministry said Thursday. -- MSNBC

French Swans Test Positive for Bird Flu -- PARIS (AP) -- Three swans found dead in a pond in eastern France have tested positive for the H5N1 strain of bird flu, the Agriculture Ministry said Thursday.... -- AP

UN Finds Progress in Tackling Bird Flu -- ROME (AP) -- Countries are making progress in fighting bird flu but concerns remain for some nations - especially Indonesia, Egypt and Nigeria - where human contamination is still possible, the United Nations said Wednesday.... -- AP

Experts meet on bird flu threat -- Scientists trying to combat avian flu are being brought together in the Highlands by the UN. -- BBC News - UK

Bird flu heats up in Asia with five new cases -- Bird flu has resurfaced with a vengeance in Vietnam ? with five people falling ill in as many weeks ? after no human cases had been reported for a year and a half. -- MSNBC

U.S. leads bird flu preparation efforts: report -- WASHINGTON (Reuters) - The United States has pledged more than a quarter of all the funds being used to prepare the world for an influenza pandemic, but is still having trouble identifying which countries need the most help, according to a report released on Thursday. -- Reuters


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MoF plans to cut import tax on CBU cars

Under the draft tariff compiled by MoF, several kinds of CBU imported cars will be imposed with a tax of 70% instead of 80%. These include cars capable of carrying 8 persons at maximum (including driver); cars capable of carrying more than 10 persons; 4WD cars; cars having diesel engines; cars having internal combustion engines with cylinder capacities of from 1,800cc to 4,000cc; cars designed to carry people (not including ones belonging to 87.02 group); vehicles specially designed for travelling on snow; and golf-class vehicles.



The new tariff is expected by MoF to be effective as of August 8, 2007.



As for used imports, MoF is also considering lowering the tax on medium-size cars by 5%, which would become effective on the same day as the tariff on brand new imports. The ministry has calculated that with the reduction of 5%, the average tax on every used car will be $1,000 lower.



MoF in February 2007 reduced the tax rates on used imports by 15-20%, which made the taxes lower by $1,500-3,000 per unit.


Under WTO commitments, the import tax on vehicles for carrying people can be 100% at maximum. Vehicles for carrying people now have the protection tax rate of 80%. However, the still relatively high protection level has led to the higher prices of cars in Vietnam compared to those in other regional countries and in the world.



Deputy Minister of Finance Truong Chi Trung said that MoF on August 4 officially asked the government to allow the application of the new tariff as of August 8.



Prior to that, when Vietnam officially became a member of the WTO on January 11, 2007, MoF lowered the tariff on imported cars from 90% to 80%.



In another move, MoF has decided to lower the tax rates on car parts. The 10% tax rate (instead of 20%) will be levied on the imports of semi-assembled engines used for vans of 10-20 tonnes. Used vehicles for carrying cargo with the maximum tonnage of 20-24 tonnes will bear the tax rate of 30% instead of 35%, while several other kinds of parts and accessories will be imposed 10%, 15% and 20%.

Singapore Dollar to Rise to Record, BNP Paribas Says

Aug. 6 (Bloomberg) -- The Singapore dollar may rise 10 percent to a record in a year as an influx of tourists and bankers supports economic growth, BNP Paribas SA said.

The currency may reach S$1.38 per dollar by June 30, passing the record of S$1.3835 reached in 1995, as the Monetary Authority of Singapore seeks gains to curb inflation, said Thio Chin Loo, senior foreign-exchange strategist in Singapore at France's largest bank by market value.

Appreciation in the Singapore dollar slowed to 1 percent this year, from 8.5 percent last year, as a global semiconductor glut caused electronics production to stagnate. The slack was taken up by drugs production, asset management and construction. The city this year started building a Las Vegas Sand Corp. casino and a gaming resort with a Universal Studios theme park.

``Efforts to try to draw investment into entertainment, education and financial services will continue to prop up the economy,'' said Thio. ``Growth is strong and inflation is on the rise.''

The Singapore dollar was at S$1.5187 against the U.S. dollar at 1:55 p.m. local time from S$1.5176 late in Asia on Aug. 3. BNP Paribas has the most bullish forecast of 24 financial institutions surveyed by Bloomberg News. It predicts S$1.42 for year-end, compared with the median estimate of S$1.50.

The Monetary Authority bank targets the exchange rate instead of interest rates to control price gains, as a stronger currency cuts import costs and curbs export earnings. In April, it reaffirmed a three-year policy of a ``modest and gradual'' appreciation of the Singapore dollar.

Export Outlook

The central bank, in its annual report released July 25, said policy makers need to remain alert on prices. It said inflation this year may be at the upper half of its 0.5 percent to 1.5 percent range and reach as high as 2 percent next year.

The government increased the goods and services tax to 7 percent from 5 percent on July 1, which will add as much as 0.6 percent to consumer prices next year, the central bank said.

The Singapore dollar fell 0.9 percent in the second quarter on concern a U.S. housing slump will restrain growth in the world's largest economy, curbing demand for the island's exports.

International Enterprise Singapore, the government's trade promotion body, last month cut its 2007 export growth forecast after an eighth decline in electronics shipments in nine months. It now expects between 4 percent and 6 percent growth in non-oil exports, from a 7 percent to 9 percent range in January.

``Housing concerns may escalate and threaten the U.S. growth outlook and impact Asia,'' said Emmanuel Ng, a currency strategist at Overseas-Chinese Banking Corp. in Singapore. ``Any Singapore dollar strength may be contained'' to S$1.4900 against the U.S. currency by year-end and S$1.4850 by June, Ng said.

Cars, Casinos

A Formula One race through the city, scheduled for September 2008, is among attractions planned to support economic growth. The government wants to double overseas visitors to 17 million by 2015.

The island-state also last year awarded two casino licenses to Las Vegas Sands, the world's largest casino company by market value, and Genting Bhd., Asia's biggest operator, which plans a Universal Studios theme park larger than that in Los Angeles.

Average hotel room rates surged to a record in June, surpassing S$200 ($132) for the first time, the Singapore Tourism Board said last month. More than 4.9 million tourists have visited Singapore this year.

``Hotels and restaurants are doing very well,'' said Philip Wee, senior currency economist at DBS Group Holdings Ltd., Southeast Asia's largest bank. ``The Singapore dollar will resume its appreciation,'' reaching $1.49 by year-end, he said.

More Millionaires

The government is also hiring teachers and extending its subway, predicting the population will rise 44 percent to 6.5 million. Singapore cut its corporate tax rate to 18 percent from 20 percent to narrow the gap with Hong Kong's 17.5 percent rate.

Singapore had the world's biggest growth in the number of millionaires, rising 21 percent last year, a global survey by Capgemini SA and Merrill Lynch & Co. showed in June. The central bank forecasts the economy will expand as much as 7 percent this year, led by growth in financial services.

The city's expansion has caused inflationary pressures as electricity tariffs rise and employers offer bigger salaries to fill job vacancies. Average wages before accounting for inflation rose 5.5 percent in the first quarter, faster than the 3.1 percent rate of increase in the last three months of 2006.

Singapore's price index of private residential property rose 8.3 percent in the second quarter from the first to 147.8, the highest in almost a decade, the Urban Redevelopment Authority said last month. Rents of private homes climbed 10 percent from the previous three months, the URA also said.

Singapore's inflation data are ``understating'' the housing boom, said Glenn Maguire, chief Asia economist in Hong Kong at Societe Generale SA, France's second-biggest bank. ``The risks are to the upside.''

The Singapore dollar may advance to S$1.50 against the U.S. dollar this year, Maguire said.

Zimbabwe Warns of Bad Wheat Crop

HARARE, Zimbabwe - Zimbabwe's upcoming wheat harvest is likely to be the worst since the country gained independence in 1980, state media reported Sunday, another sign of the economic crisis triggered in the former regional breadbasket by a land redistribution program.

An electricity shortage prevented farmers from irrigating the crop, the official Sunday Mail said. Production was expected to fall below the 86,000 tons harvested last year and well short of the 375,000-ton target set by the government of longtime ruler President Robert Mugabe.

"In some areas farmers could go for four consecutive days without electricity. It became impossible to irrigate and complete the required cycles, resulting in the crop wilting," President of the Zimbabwe Indigenous Commercial Farmers' Union, Wilson Nyabonda, told the newspaper.

Corn, rather than wheat, is the staple diet of most Zimbabweans, so a weak wheat crop is unlikely to cause mass starvation. Nonetheless, it means already scarce bread will be harder to find and adds to Zimbabwe's woes since seizures of white-owned commercial farms began in 2000.

The International Monetary Fund has warned Zimbabwean authorities that inflation could top 100,000 percent by the end of the year, South African Deputy Foreign Minister Aziz Pahad said last week. Officially, inflation in Zimbabwe is 4,500 percent - the highest in the world - but economists say it's at least twice that.

Acute shortages have affected numerous sectors, including electricity, which in turn has affected the farming of wheat. Zimbabwe imports up to 40 percent of its power from neighboring nations, largely because coal shortages have shut down power-generating facilities.

The harvest usually takes place around August or September.

In many areas, mechanized farming has been replaced by cattle-drawn plowing since the often violent seizures of thousands of white-owned commercial farms began, disrupting the agriculture-based economy.

The World Food Program last week appealed for $118 million to help more than 3.3 million Zimbabweans - more than one quarter of the population - facing severe food shortages.

In rare welcome news, the Sunday Mail said the government had repealed proposed legislation to limit the amount of products including cooking oil and beef that Zimbabweans could import.

This would have cut an increasingly important lifeline to desperate Zimbabweans who flock to the borders each day to shop in neighboring countries.

Although South Africa bears the brunt of the influx, Zambian officials said Sunday that the number of Zimbabweans crossing the border to buy basics such as milk and bread had increased from 60 per day to 1,000.


Copyright 2007 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

Economic Prognosis

August has begun and Vlast analytical weekly is offering its traditional prognosis for the month. The following questions will be considered: what will happen to the ruble and dollar on the Russian currency market, how consumer prices will change, where world oil prices are going and what will happen to the euro and dollar on the world currency market. But first we will take a look at the main economic events from July.
The main economic event of July was probably the fact that inflation in Russia exceeded last month's indicator, reaching 1.1 percent according to the preliminary calculations of the Ministry of Economic Development and Trade, while prices rose only by 0.7 percent in July last year. Considering that inflation in June of this year reached 1 percent (compared to 0.3 percent last year), it has to be acknowledged that prices are rising noticeably faster this year. That acceleration has eliminated the lengthy lag in the inflation rate this year, compared to last. As a result, prices rose 6.8 percent in the first seven months of this year, which is an inflation rate comparable with last year's 6.9 percent in the same period. Meeting the plan for the year of 8-percent inflation looks as unlikely as it did last year, when the final result was 9-percent inflation.

At the end of July, the Economic Ministry issued a review of the condition of the Russian economy in the first half of the year. There it says that consumer prices rose 5.7 percent in the first half a year, against 6.2 percent in the first half of last year. Base inflation, which takes into account the rise of prices due to monetary factors, was 3 percent, compared to last year's 3.9 percent. The ministry noted that “Although inflation was reduced in the first half of the year on the whole, there were no stable tendencies in the development of inflationary processes in that period.” In the first quarter, everything looked fine. Consumer prices rose just 3.4 percent, while they rose 5 percent in that period of last year. However, according to the Economics Ministry, the first quarter showed only the continuing effects of the anti-inflationary factors – growth in the supply of goods, especially imports, and stronger competition in trade due to a rapid increase in the number of stores – from April-December 2006, when prices rose an average of 1.3 percent per quarter. Lower inflationary expectations also played a role, as did high growth in production and the continuing dedollarization of the economy, which led to a rapid increase in the demand for money. Finally, the slowing of inflation in the first quarter of the year was related to the slowing of the rise in prices for produce, which was due to growth in the supply of Russian potatoes and vegetables and a lower price for sugar. In the first quarter of last year, there were big problems with the supply of vegetables and, especially, sugar.

In the second quarter of the year, inflation was twice as high as in the second quarter of last year: 2.2 percent vs. 1.1 percent. The Economics Ministry emphasized that “reduced supplies of a number of food products and low competition on the foodstuffs market, simultaneously with rapidly growing salaries, were the basic causes of the increased pace of inflation in April-June 2007. Growth of the money supply did not cause inflationary pressures in the first half of the current year, as can be seen from the slowing of the growth of base inflation and lower growth rate of cash on hand.”

Prices for groceries in January-June rose 6.1 percent, somewhat less than in the same period a year ago, when that indicator was 7 percent. In January-April, groceries increased in price relatively slowly at 0.9 percent per month. But then price growth picked up and in June groceries increased in price by 1.7 percent, the biggest price hike since March 2006. Produce especially gained in price in June. Its price growth was 12.2 percent and, if vegetables are taken alone, the price growth hit 22.3 percent. In all, price for produce in the first half of the year grew by 38.6 percent. Last year in that period, they that price grew by 31.5 percent. Vegetables nearly doubled in price and the price of potatoes went up by 40 percent. Economics Ministry experts explain that the cause of the situation was mainly a reduction in imports of carrots, onion, cabbage and beets by an average of 17 percent, decreasing competition on the foodstuffs market, as well as a price increase of 40 percent for imported vegetables “as a result of the replacement of cheap imports from the CIS with more expensive imports from further abroad.”

Non-food items increased in price insignificantly in the first half year, by just 2.2 percent (compared to last year's 2.3 percent over the same time) “mainly because of the continued growth of imports, which dominated the given market. Nonetheless, in spite of the high saturation of the market, the rate of price growth did not decrease (leaving aside prices for gasoline, growth was the same as a year ago) as a result of the continual growth of solvent public demand.”

On the whole, conditions on the Russian market are interesting. The continued high exchange rate of the ruble in relation, for example, to the dollar looks strange. How can the currency of a country with inflation of close to 10 percent annually rise in relation to the currency of a country where 3-percent annual inflation upsets the authorities. On the other hand, the rise of the ruble against the dollar and other foreign currencies stimulates imports, which, according to official declarations, is practically the only anti-inflationary factor. Where import falls, consumer prices rise quickly, and where import does not fall, prices rise comparatively slowly. (We can note that the rise in value of currencies of a country that is too heavily dependent in consumer relations is not very logical either. What foreigner needs the money of a country that clearly cannot take care of its own needs?) In any case, July showed definitively that inflation does not want to decrease and the public is spending money in a hurry, before it loses more of its value.

1. What will happen to the ruble and dollar on the Russian currency market?

June began with an exchange rate of 25.81 rubles/$, and ended at 25.54 rubles/$. Thus, the Central Bank strengthened the rubles quite decisively. As the Economics Ministry indicated in its review of the Russian economy in the first half of the year, “A significant rise in the supply of foreign currency was characteristic of the domestic currency market in the second quarter of 2007 in connection with funds attracted to take part in auction of the property of OAO YUKOS and the initial placement of shares in Vneshtorgbank. As a result, the Central Bank's monthly balance of operations with foreign currency reached a historical maximum. The dynamics of quotations of the ruble to the U.S. dollar and euro was determined by changes in the exchange rate of the two leading world currencies on the international market, the surplus of foreign currency on the domestic market and Central Bank's rate policy. In the second quarter, multidirectional dynamics of movement of the nominal exchange rate of the U.S. dollar and euro to the rubles was observed. At the end of the quarter under consideration, the official exchange rate of the dollar to the ruble dropped by 0.75 percent to 25.8162 rubles to the dollar. The official exchange rate of the euro to the rubles rose insignificantly to 34.7150 rubles to the euro.”

In general, the Russian Central Bank may continue to raise the exchange rate of the ruble (especially in relation to the dollar), making reference to the fact that the American currency is weak not only in Russia, but throughout the world, world oil prices remain unbelievably high, a surplus of dollars is still observed on the Russian domestic market and, besides everything else, raising the ruble rate is an anti-inflationary measure, the need for which is not falling, but rising. The natural limit for raising the exchange rate of the ruble is the psychologically important 25-ruble mark, which should not be passed too quickly or the public will become alarmed.

Our prognosis: In connection with unwillingness to pass the 25-ruble mark, the dollar will remain higher than 25.3 rubles in August.

2. How will consumer prices change?

The final calculations of inflation in July have not been completed yet, but preliminary figures point to an inflation rate of 1.1 percent. Thus, in the first seven months of 2007, consumer prices rose 6.8 percent, with five months and 1.2 percent left to go to the planned 8-percent mark. Nonetheless, Russian officials have yet to admit defeat officially. Rather, they say that everything is still possible. Inflation may suddenly slow down – a lot.

Of course, price growth was insignificant last August and occasionally deflation was even noted. Produce became cheaper, which has great importance in the calculation of the consumer price index in Russia, bringing a general price reduction with it. This year, however, the sharp slowdown in inflation will look too effective. It was 0.3 percent June in last year, 0.7 percent on July, 0.2 percent in August and 0.1 percent in September. Thus the August result was far from off the chart. This year, there was 1.0 percent in June and 1.1 percent in July, and 01-0.2 in August would be strange to see, most of all for the public, which has gotten used to inflation over the summer. Russia no longer resembles Zimbabwe, where the situation is so serious that people get money in the morning and run to spend it while it is still worth something. But Russian buyers are spending money with great willingness too and one reason for that is that it is noticeably losing it value. That willingness to spend money causes price rises by itself.

Our prognosis: In August, inflation will be no less than 0.4 percent.

3. Where are world oil prices going?

July was a good month for world oil prices. Both American WTI and North Sea Brent gained more than $8 per barrel in the course of the month. And as soon as the month ended, on August 1, WTI set a new absolute record high of $78.77 per barrel, passing the old record of $78.40, set when the Israelis invaded Lebanon last year.

There were no particular causes for the new record. It is estimated that OPEC produced 26.75 million barrels per day in July, which is 150,000 more than in June. The cartel officially declines to expand production, in spite of the high prices, saying that U.S. petroleum product producers have more than enough reserves as is. In addition, the fact that the American economy is not in brilliant condition should play against rising oil prices. Economic growth is slowing and investors are made nervous by the problems with the mortgage crediting market. So there is unlikely to be any higher demand for toil in the United States.

Speculators still decided to have decided to play on American authorities' announcing a reduction of oil reserves by 6.5 million barrels due to increased petroleum product production. Thus oil may remain expensive not only from geopolitical causes, but also because of speculative funds' unwillingness to give up hope for a good profit from their investments in oil futures.

Our prognosis: In August, oil will not be cheaper than $74 per barrel after last month's highs.

4. What will happen to the euro and dollar on the world currency market?

July was a bad month for dollar prices on the world currency market. On July 2, the euro had already passed $1.36 and players on the world currency market began to talk about the euro setting new record, to replace the high of $1.3682, set on April 27 of this year. On July 10, the euro passed $1.37 for the first time since it was created in 1999. On July 12, the European currency cost more than $1.38. On July 24, a new absolute record for the fall of the dollar against was set when it reached $1.3852.

A host of reasons could be found for speculators to play against the dollar. For example, the euro passed $1.38 on July 12 after American authorities announced a fall in retail sales of 0.9 percent in June. The market decided that the American economy was in bad shape indeed if American consumers, who never failed to show lively demand, especially for imported goods, stopped wanting to shop. Consequently, the American Federal Reserve Board will not want to shake up shoppers any more by raising the interest rate to slow the economy down, and so the dollar will only become cheaper. (Theoretically, the board could suggest that, as a result of the reduction of demand for imported goods, the huge American foreign trade debt will be reduced as well, which was one of the arguments behind the IMF's urgings that the dollar be devaluated.) After Federal Reserve chairman Ben Bernanke appeared before Congress and said that he was still worried about inflation, and even more worried about the condition of the mortgage market, everyone began to sell even more dollars after what they considered practically an official refusal to raise interest rates. Only toward the end of the month did speculators decide it would be better not to get carried away, and the dollar rose to $1.36/euro.