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Mozambique due to become oil producer in 2014
Mozambique is due this year to become an oil producing country and significant progress is also expected to be made in natural gas and coal production, according to the Economist Intelligence Unit.
A small oil discovery next to the Temane gas field, in Inhambane province (south), will allow South African petrochemical company Sasol to launch oil production this year, said the EIU’s latest report on the Mozambican economy, to which Macauhub had access.
“The oil field is the first to produce oil commercially in Mozambique, where so far there have only been viable natural gas discoveries,” the report said.
The project will produce around 2,000 barrels of oil per day, which is a small amount commercially-speaking, but makes it possible to “diversify Mozambique’s export base,” it noted.
As well as this, Sasol’s representatives have already said that oil reserve estimates may be increased, as exploration activities are already underway in the area.
According to the Oil and Gas Journal, Mozambique has around 4.5 trillion cubic feet of proven natural gas reserves, but until the beginning of last year had no oil reserves at all.
The country has extensive onshore and offshore sedimentary basins containing natural gas, most of which has yet to be explored, as well as significant coal reserves, which are considered to be the biggest in the world.
William Telfer, an oil and gas specialist told DW Africa that the discovery “is very viable” and that 100 similar wells were the equivalent of Angola and Nigeria’s production.
“It’s not small, it’s very good. And we are soon going to hear about new discoveries that will increase the amount of wells,” said the specialist.
“Gross domestic product will increase. We have an excellent Finance minister and excellent deputy minister. A very strong staff. Mozambique is prepared to start exploring large quantities of oil,” he said.
Despite the announcement, the Economist kept its estimates for economic and export growth in the 2014–2018 period unchanged, as they already take into account substantial investments in the extractive industries and greater weight of exports.
Along with this Sasol is increasing production as its gas fields in Pande and Temane which is “welcome news for the nascent Mozambican energy sector,” and a “sign of confidence,” from an important foreign investors at a time that is sensitive in terms of both politics and security.
Sasol is investing in a number of areas, including increasing the capacity of its gas pipeline to South Africa (US$184 million) and a gas-fired power plant at the Ressano Garcia border (US$246 million).
The EIU for this year points to growth of the Mozambican economy of 6.5 percent, rising to 7.3 percent this year and 7.6 percent in 2015.
The industrial sector is expected to make the biggest contribution to economic growth over the next two years: 9 percent growth in 2014 and 14 percent in 2015.
Source: http://www.macauhub.com.mo/en/2014/01/06/mozambique–due–to–become–oil–producer–in–2014/
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Why Africa’s financial integration is difficult
There have been talks of Africa’s financial integration for more than two decades, but there aren’t any concerted, credible and encouraging signs that Africa is nearing its goals and objective of financial integration apart from a few disjointed accounts from various analysts’ opinions on Africa’s regional financial integration achievements.
Analysts have argued that African regional economic communities (REC), recognising the need for pooling of financial resources began establishing sub-regional capital markets in an attempt to solve the problem of their fragmented capital markets.
Realising the fact that there is a strong relationship between developed financial markets and economic growth, African regional economic communities (REC) saw the need to integrate and consolidate financial markets as a vehicle for promoting economic development on the continent.
REC also believed that financial integration would enhance, promote efficiency and productivity and facilitate the flow of information. Indeed, regional financial integration is seen as the only platform for establishing stronger links with financial systems and capital markets in more developed countries and economies.
But, has REC been able to establish this stronger links or has it the capacity to establish this stronger links with financial systems and capital markets in more developed countries? Kuper, S. (2013) argued that since 2000, Africa has been going off in different directions.
President Jacob Zuma, the South African president, in a speech while speaking on issues of toll roads recently lends credence to Kuper’s claim, and it is one of the reasons why Africa’s financial integration has proved difficult.
“We can’t think like Africans generally, we are in Johannesburg. This is Johannesburg. It is not some national road in Malawi”. If indeed, the belief of REC is to enhance, promote efficiency and productivity within regional communities, I do not see how Zuma’s statement meets this objective.
Ironically, South Africa and Malawi are both members of the same African regional economic community called Southern African Development Community (SADC) where South Africa dominates the region economically, accounting for 60% of SADC’s total revenue and about 70% of SADC’s GDP.
Evidently, South Africa has a critical role to play in the regional financial integration of that region. Therefore, such careless utterances of a high political figure like the president of South Africa which ridicules the economic and social development of a member country will not promote the desired cooperation that encourages positive and strong financial integration of that region and Africa as a whole.
Analysts believes that financial integration involves a process whereby a country’s markets become linked or integrated with those of other countries or the rest of the world. Therefore, in a fully integrated market, all forms of barriers are eliminated to enable foreign financial institutions to participate in domestic markets.
This is why it is argued here that careless statements like that of President Zuma should not be tolerated. It hampers development of the SADC region and Africa by extension.
Zuma should understand that whether a country, region or continent “chooses to integrate its financial markets formally or informally, it needs to create an enabling environment that would attract foreign participation” and his statement on Malawi’s development processes doesn’t create an enabling environment for the financial integration of the SADC and Africa as a continent.
It is time our African leaders demonstrate that Africa as a whole is their place and show love and respect for one another. Whether you are from Malawi or Nigeria or Ghana or Somalia or Cameroon or Senegal or Gabon or Kenya, we must look out for the things that promote the interest and common good of one another.
Our leaders must stop playing this superiority and inferiority game that divides the continent and by extension transcends down to the various nationals of the various countries. Africans must learn to leverage one another.
We have seen that why regional economic communities have not been able to harmonise the standards and regulations of governing financial markets and to create a larger central African financial market known as African Economic Community (AEC) that would support Africa’s regional integration agenda is due to such antecedents behaviours like the one exhibited by Jacob Zuma, the South African President.
Indeed, smaller African countries cannot achieve such economic impact by themselves unless they are linked up through the financial markets of the regional economic markets. Malawi should be encouraged to develop further its infrastructure within the SADC region and not ridiculed.
Zuma should focus more on the three benefits of financial integration which are the primary aim of the REC financial integration agenda.
These three benefits are (1) Risk sharing – South Africa should share its risk of expertise and know-how with Malawi that would boost specialisation in production.
(2) Improved capital allocation – South Africa should encourage better allocation of capital and support the smaller and poorer countries within its region to remove impediments to trading of financial assets and flow of capital.
(3) Economic growth – South Africa’s deeper financial integration can encourage and stimulate stronger economic growth for its region by making financial resources available for economic activities for smaller member countries like Malawi.
Germany did this for participating EU member countries like Greece, Spain and Italy during the recent financial crisis that engulfed the EU.
Tony Navah Okonmah, a financial and economic analyst, wrote from London.
Source: http://www.vanguardngr.com/2014/01/africas-financial-integration-difficult-2/
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SACU: Moderately bright economic future expected
A moderately bright future in the economy may be expected this year with the continued fiscal windfall from the Southern African Customs Union (SACU), analysts say.
However, an economist said this would only benefit the country if government maintained consistency in fiscal discipline, which also entailed cutting back on public expenditure.
He said the anticipated SACU receipts, expected to be in the region of E7 billion, would naturally bring about an increase in allowable expenditure, if and only if, closely and cautiously monitored.
“It can be said that the country has regained fiscal prudence, but government still needs to tread carefully in terms of its spending patterns. Priority needs to be given to developmental projects that will bring about economic growth,” he said.
The Economist Intelligence Unit (EIU) has forecast public spending growth to slow in 2013/14, although less sharply than previously expected. The agency further noted that Swaziland’s fiscal balance moved from a deficit of 5.6% of gross domestic product (GDP) in 2011/12 (April-March) to an estimated surplus of 0.3% of GDP in 2012/13, as a 30% rise in public spending was offset by a 145% increase in customs receipts from SACU.
Spending
The EIU said instead of using its latest SACU windfall to build up a fiscal buffer and clear domestic payment arrears in full, government chose to raise public spending sharply, with current outlays rising by an estimated 26%.
“This has reinforced the economy’s vulnerability to fiscal shocks,” the agency said. It further noted that in 2013/14 SACU’s payments to Swaziland were projected to rise more slowly, by 1.4%, adding that little progress was expected in expanding the domestic revenue base, given an absence of any major new tax-gathering measures in the 2013/14 budget.
“As a result, SACU receipts are expected to account for well over half of fiscal revenue,” said the agency. The EIU expects the growth in overall spending to slow to 7% and forecasts a fiscal deficit equivalent to 1.2% of GDP in 2013/14.
“Focal areas for a complete economic turnaround should be public sector expenditure management, investment incentives to improve domestic investment and improving of human capital through skills development, education and training,” the economist advised.
“We cannot continue to rely on the SACU receipts, especially because this revenue is expected to decline in the coming years. It is unfortunate that some of the economic reform policies government formulated during the fiscal crisis have never seen the light of day.”
According to the EIU, in 2014/15 SACU’s payments to Swaziland are forecast to fall by 9%, followed by an additional decline of 8% in 2015/16. The EIU said barring another subsequent upward revision in SACU receipts, government would be obliged to impose a tighter grip on public spending, given its limited financing options.
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Angola delays entry into SADC Free Trade Zone
Angola’s minister for trade, Rosa Pacavira said Saturday in Luanda that Angola may only join the SADC Free Trade Zone only in 2017.
The minister said that joining the Free Trade Zone would only happen when Angola had finished its membership road map, which is currently being drawn up, but noted that Angola’s entry “remains on the government’s agenda as part of its regional integration policy.”
“We are drawing up a road map and we will see if, by 2017, Angola manages to join the Free Trade Zone, but for that we will have to create industry and internal capacity so that Angola can compete with other countries that are already part of the zone,” said Pacavira.
“If we open up the market now we will stop producing a lot of things that we need to produce, because if Angola joins up now we will have the whole of the SADC selling products here and we will not be producing them,” she said.
The SADC Free Trade Area was set up in Johannesburg in August 2007, at the 28th SADC summit, and currently includes South Africa, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Swaziland, Tanzania, Zambia, Zimbabwe and Madagascar. The SADC countries that did not join are Angola, the democratic Republic of Congo and the Seychelles.
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2013 witnessed fruitful economic and trade cooperation between China and Africa with new bright spots keeping cropping up
In 2013, despite continuous global economic sluggishness, China and Africa continued a sound momentum of growth in their economic and trade relations. The two sides now enjoy a more solid foundation and show a stronger will for cooperation, and new bright spots keep emerging in the process.
In 2013, there were frequent exchanges of high-level visits between China and Africa. The Chinese President Xi Jinping chose African continent as one of the destinations in his maiden foreign trip after assuming the presidency in March. When visiting Tanzania, he promised that China would continue to facilitate Africa’s development, “China will strengthen mutually beneficial cooperation with African countries in the fields such as agriculture and manufacturing, and help African countries to translate their advantages in resources into development advantages so as to achieve internally-driven development and sustainable development.”
Apart from President Xi Jinping, Chairman Zhang Dejiang of the National People’s Congress, Vice-Premier Liu Yandong and Vice-Premier Wang Yang also paid respective visits to Africa. On the African part, Nigerian President Goodluck Jonathan, Kenyan President Uhuru Kenyatta, Zambian President Michael Sata and Ethiopian Prime Minister Hailemariam Desalegn visited China on different occasions. Through the exchange of visits, China and Africa have consolidated their traditional friendship and strengthened political mutual trust, laying the foundation for sustained development of economic and trade cooperation.
Talking about economic and trade cooperation, we have to mention FOCAC, by far the most important multilateral cooperation mechanism between China and Africa. In July, 2012, the fifth Ministerial Conference of FOCAC was held inBeijing, where China proposed three initiatives for its economic and trade cooperation with Africa, including expanding investment and financing cooperation, increasing development assistance to Africa and supporting Africa’s integration efforts. According to Chen Hao, deputy director of the Coordination Division of the Department of West Asian and African Affairs of the Chinese Ministry of Commerce, these three initiatives have been steadily implemented in 2013.
“On expanding of investment and financing cooperation, the implementation of the US$20 billion commitment of the Chinese government has been going on smoothly, with loaning agreements focusing on the areas of infrastructure, agriculture, manufacturing and SME development. On increasing development assistance to Africa, China increased its assistance to Africa in 2013, steadily implementing the programmes such as the construction of agriculture demonstration centers, Brightness Action campaigns and African talent development plan. On supporting Africa in its integration efforts, China and Africa have maintained close cooperation and conducted productive and in-depth discussions on helping Africa’s trans-border and trans-regional infrastructure construction and facilitating regional trade,” Chen said.
Trade is one important part of China-Africa economic cooperation. All the African leaders visiting China in 2013 attached strong importance to bilateral economic and trade cooperation with China. Nigerian President Goodluck Jonathan said in his visit to China in July, “Our two countries have constantly strengthened cooperation in trade and investment, with the two-way trade exceeding US$13 billion, and China is now Nigeria’s largest trading partner.
In August, 2013, Kenyan President Uhuru Kenyatta headed a big delegation of over 100 people to China including nearly ten government ministers such as on foreign affairs and international trade and on finance, leaders of key development departments such as the investment authority, and representatives of leading financial and business companies. He said during the visit, “I come to China to deepen the traditional partnership between our two countries and two peoples. This trip is not only about China-Kenya relations, but also about China-Africa relations. I come here against the backdrop of continuous development of China-Kenya relations and growing bilateral business cooperation. Therefore, I hope that we can work together to seek opportunities for mutually beneficial cooperation. In this way, our countries, governments, businesses and ordinary people can be better involved in the efforts to pursue sustained and fast development.”
At present, China has grown into Kenya’s top source of FDI and second largest trading partner. The two-way trade between the two countries exceeded US$2.8 billion. The increase of trade volume between China and Nigeria as well as Kenya and their growing economic and trade cooperation is only one epitome of the development of China-Africa trade.
Chen Hao said that from January to October, 2013, China-Africa trade reached US$172.83 billion, up by 5.5% than that of the same period of the previous year, and the figure for the whole year of 2013 is expected to exceed US$200 billion, which will mark another record high. At the same time, bilateral trade mix has also been improved, with high value-added mechanical and electrical products as well as high-tech products approaching nearly half of China’s exports to Africa. African complete industrial products such as steel and copper products have also started to enter China’s market. By offering zero-tariff treatment to 95% of the categories of exporting products from least developed African countries such as Ethiopia, Benin and Burundi, China has opened its market wider to African countries, which has given a strong boost to African exports to China.
Apart from trade, investment is also an important part of China-Africa economic cooperation. In recent years, with the acceleration of China’s domestic industrial restructuring and African industrialization and urbanization, more and more Chinese businesses have come to Africa for development, relying on their advantages in capital and technology to develop cooperation with African countries. Chen said that from January to October, 2013, China’s non-financial direct investment to Africa totaled US$2.54 billion, up by 71.6% than that of the same period of the previous year.
“There are now over 2000 Chinese companies having set up investment businesses in Africa, covering the fields such as agriculture, infrastructure, manufacturing and processing, resources development, finance, trade and real estate. The Chinese businesses also seek localized development and have hired over 80,000 local employees. The Chinese government has also introduced a host of measures to encourage Chinese businesses to invest in Africa such as by setting up the China-Africa Development Fund, creating the special loan for SME development in Africa, and establishing China-Africa economic and trade cooperation zones in African countries, all of which play an important role in facilitating Chinese businesses’ investment in Africa.”
While increasing investment in Africa, the Chinese businesses have also been actively involved in infrastructure construction on power, energy, transportation and livelihood in recent years, making impressive achievements. In June, 2013, Ethiopian Prime Minister Hailemariam Desalegn spoke highly of the contribution made by Chinese engineering companies to the development of Africa during his visit to China.
He said, “Many African countries including Ethiopia have taken on a new look with the support of the Chinese capital and help of Chinese engineering companies (in infrastructure). This will undoubtedly promote trade among African countries and bring about a bigger integrated market, both internally and externally.”
As a matter of fact, China-Africa economic and trade cooperation based on mutual benefit has not only helped to improve the livelihood of the African people and promote African countries’ diversified economic development, but also provided strong support to China’s economic and social development. Africa has now become the second largest overseas contracting market for Chinese companies. Chen Hao said that from January to October, 2013, the new contractual volume for projects in Africa by Chinese businesses was US$47.01 billion, up by 22.5% than that of the same period of 2012, with a turnover of US$32.21 billion, up by 11.4%. While consolidating their traditional advantages, the Chinese businesses are extending to the upper and lower reaches of the contractual projects in Africa. They have now also been involved in the feasibility research, planning and designing for the initial stage and operation and management after the projects are completed. With the growth of China-Africa relations, we can expect the further deepening and expanding of China-Africa economic and trade cooperation and exchanges.
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Crossing the SACU bridge
Martin Gobizandla Dlamini, the new Minister of Finance, is aware of the challenges of the country’s economy in case South Africa pulls out of the Southern African Customs Union (SACU).
However, the minister warned against pressing the panic button. He said there were no pellucid pointers that South Africa might pull out of the union.
Asked what measures were in place to sustain the country economically if South Africa pulled out or reviewed the revenue sharing formula to the negative, he said: “Let us cross the bridge when we get there. I am aware that South Africa calls for changes in the revenue sharing formula. This is a matter that has been on the table for quite some time.”
“I can’t comment now on how to survive with or without SACU receipts but I can mention that we are a sovereign state.”
He did not expand on the sovereignty of Swaziland. Dlamini said SACU member states would meet in February 2014 for a strategic session.
These are South Africa, Namibia, Swaziland and Lesotho. “We were to meet in February in the first place, to discuss strategies on how to modernise SACU and make it relevant to our needs. It’s not like we are going there for shocks or breaking news about South Africa’s position on SACU,” said Dlamini, the former Governor of the Central Bank of Swaziland.
The country’s Gross Domestic Product (GDP) stands at E37 billion for 2012 while that of South Africa is E3.8 trillion as at 2012. In the absence of SACU, Swaziland is left with a few companies that add value to the economy in terms of taxes.
They include among others Conco Swaziland which is understood to be contributing 40 per cent to the GDP, which translates to E14.9 billion and the sugar belt companies; Royal Swaziland Sugar Corporation (RSSC) which makes a turnover in excess of E1 billion and Illovo Group’s subsidiary Ubombo Sugar Limited (USL).
Illovo Sugar has a 60 per cent shareholding at Ubombo Sugar while the remaining 40 per cent is held by Tibiyo Taka Ngwane, a royal entity held in trust for the Swazi nation.
To Illovo Group’s profits, Ubombo Sugar contributed E272 million.
Bongani Mtshali, the acting Chief Executive Officer (CEO) of the Federation of Swaziland Employers and Chamber of Commerce (FSE&CC), said the country could be in a very bad economic situation if South Africa were to pull out of SACU.
He said the economic problem could still persist even if the revenue derived from the union was decreased. Mtshali advised Swazis to expand the revenue base and work hand in hand with the Swaziland Revenue Authority (SRA) in its collection of domestic taxes.
The taxes include company tax, pay-as-you-earn, sales tax, casino tax and value added tax. He said people and companies should be encouraged to honour tax obligations. He also called for business innovation. “We will be able to produce and sell if we innovate,” he said.
He said there was a need to have an innovation institution of some sort to produce talent, nurture and release it for productivity.
As it were, he said, it was suicidal to depend entirely on SACU revenue.
It can be said that over 60 per cent of the country’s budget comes from the union. The SRA collects over E3 billion and this money cannot finance the national budget of E11.5 billion.
Ministries that can save Swaziland from an economic crisis are the Ministry of Commerce, Trade and Industry; Ministry of Agriculture, Ministry of Natural Resources and Energy and the Ministry of Economic Planning and Development.
It can be said that Swaziland is an agricultural economy but the closure of the factory at SAPPI Usuthu and destruction of timber at Mondi by veld fires, spelled doom to the economic outlook of the country. It can also be said that the country’s mainstay product is now sugar.
Despite maize being the country’s staple food, government spent E123 million on maize imports from South Africa last year. This year, preliminary figures indicated that government could spend E95 million on maize imports.
The import price has decreased because the country recorded a higher maize harvest of 82 000 metric tonnes compared to 76 000 tonnes recorded the previous year.
Swaziland is still clutching at straws in terms of food security.
The unemployment rate is also high as there had been no massive investments witnessed on the shores.
Jabulile Mashwama, Minister of Natural Resources and Energy, said there were plans to expand the mining sector and reopen closed ones like Dvokolwako Diamond Mine.
There are only two official mines currently operational; Maloma Colliery, which made an export revenue of E126 million in the 2011/2012 financial year and Salgaocar which extracts iron ore from dumps at Ngwenya Iron Ore Mine.
Mashwama, the minister, said she would give details on the programme to revive the mining sector at a later stage. She hinted that the nation could also bank its hopes on her ministry for job creation and revitalisation of the economy.
Gideon Dlamini, the Minister of Commerce, Trade and Industry, has been given a task to industrialise the economy as one of the five-point plan by SACU. The industry minister was reported out of the country and was not reachable through his mobile phone.
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Australia ends dumping probe of South African peach products
The Australian Anti-Dumping Commission has ended its investigation of alleged dumping by South African producers of prepared or preserved peaches, following an application brought by Australian company SPC Ardmona in July last year.
The commission said in its termination report published in The Australian on December 13 that it had found goods exported to Australia by Langeberg & Ashton Foods and Rhodes Food Group had been dumped, but that the dumping margin was less than 2%.
International trade law expert Rian Geldenhuys said because of the negligible dumping margins, it could not hurt the Australian industry. It was insignificantly small and did not indicate any intention of dumping, so the commission had decided to terminate the investigation.
“As such the South African industry will not face anti-dumping duties when its products enter the Australian market,” he told Business Day following the publication of the notice.
Mr Geldenhuys is an international trade and commercial lawyer with Trade Law Chambers, who represents South African producers.
Australia announced last year that it wanted a total ban on all canned-fruit products produced abroad, a move that would have hit South Africa’s fruit industry‚ which supplies 40% of the total processed fruit market in that country.
Anti-dumping measures are introduced when the price of a product produced in one country‚ is sold in another at a price lower than the price at which local producers produce and sell.
The commission said in its termination report it was satisfied that the volumes of goods that had been exported to Australia over a reasonable examination period from South Africa, that had been dumped, was negligible.
Officials from the commission visited South African canners during the course of the investigation last year and recommended the termination of the investigation to the commission.
SPC Ardmona had also applied in July last year for safeguard duties to be introduced against South African canned-fruit producers, and although the Australian Productivity Commission last year found no grounds for implementing provisional safeguard duties on South African producers of canned fruit, its final report has not been published.
SPC Ardmona had asked for a duty of 45%‚ or a quota on imports that would have had a similar effect as the 45% duty. The company claimed the appreciation of the Australian dollar had led to imports becoming cheaper and the market share of domestic producers declining significantly. Further‚ there had been a decrease in fruit bought from domestic growers.
The Productivity Commission found in November last year that the requirements for introducing provisional safeguard measures in terms of World Trade Organisation rules had not been met. Mr Geldenhuys said earlier that the rules for the introduction of safeguard measures required a sharp‚ significant and recent increase in imports that caused material injury to the local market.
Evidence presented by South African producers showed‚ in fact‚ there had been a drop in imports in most instances and where there had been an increase‚ it was not significant.
Mr Geldenhuys said they had been informed that the Productivity Commission had completed its final report and had sent it on for government approval. “We will only know the outcome once it has been released by the Australian government,” he told Business Day.
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Trade Facilitation from an African Perspective
The proposed agreement on trade facilitation is one of the key issues on the negotiators’ table in the run-up to the World Trade Organisation Ministerial Conference, to be held in Bali, Indonesia, from 3 to 6 December 2013. In this context, this paper provides a thorough analysis of key trade facilitation issues from an African perspective, highlighting what is at stake for the continent, thereby contributing to inform the opinions of African negotiators at a critical juncture.
The premise of this analysis is that there is a consensus in the empirical literature, regardless of the methodology utilized, on the positive and significant impact trade facilitation could have for Africa’s trade performance. Against this background, the paper is admittedly not intended to assess the proposed agreement from a tactical negotiating perspective, nor does it address issues related to the “overall balance” of the deliverables that could be achieved in Bali. Taking some distance from the negotiations as such, it rather takes a technical stance and focuses on the four key aspects related to trade facilitation, as outlined below.
First, by analyzing relevant indicators from the World Bank Doing Business database, the paper compares red tapes and transaction costs (for what pertains to international trade) within Africa, as well as with the rest of the world. In light of the disproportionate magnitude of transaction costs by international standards, the analysis confirms how critical trade facilitation is for Africa. In addition, the reviewed evidence highlights the different incidence of transaction costs distinguishing between exports and imports flows, and underscores sub-regional and cross-country variability (with special reference to landlocked countries).
Secondly, the paper investigates the pattern of imports of African countries, focusing in particular on intermediate inputs. This analysis permits grasping the extent to which trade facilitation could boost exports not only by directly cutting transaction costs, but also indirectly through providing cheaper access to production inputs to be transformed domestically and then possibly re-exported.
Though currently this indirect effect appears to play a rather limited role, in view of Africa’s persistent dependence on primary commodities, it is certainly far from negligible. Moreover, such an indirect effect is set to gradually become more relevant, in so far as economic diversification advances and African firms successfully connect to regional and global value chains.
Third, the paper reviews the precise instruments covered by the draft negotiating text tabled at the World Trade Organisation, and compares them with the instruments already agreed within Africa at the level of Regional Economic Communities, as well as with legal provisions at the national level. This enables an assessment of the consistency of the multilateral agenda with Africa’s regional integration agenda and national policies, while also identifying areas of potential synergies and complementarities between the three. The paper also assesses the potential synergies and complementarities between the World Trade Organisation proposal and related multilateral conventions such as the Revised Kyoto Convention on the Simplification and Harmonization of Customs Procedures and the Customs Convention on the International Transport of Goods under Cover of TIR Carnets (TIR Convention).
Finally, the paper sheds some light on the costs underlying trade facilitation activities. Adequately “costing the trade facilitation agenda” is not only crucial in relation to Africa’s need for development finance, but also in view of the fact that the modalities of the proposed trade facilitation agreement introduced a unique feature: the implementation of certain commitments (the so-called category C) is conditioned upon the delivery of technical and financial assistance.
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Warsaw climate talks set 2015 target for plans to curb emissions
Overnight agreement gives countries until first quarter of 2015 to publish plans for cutting greenhouse gases from 2020
Governments around the world have just over a year in which to set out their targets on curbing greenhouse gas emissions from 2020, after marathon overnight climate change talks in Warsaw produced a partial deal.
Under the agreement, settled in the early hours of Sunday morning after more than 36 hours of non-stop negotiations, countries have until the first quarter of 2015 to publish their plans. This process is seen as essential to achieving a new global deal on emissions at a crunch conference in Paris in late 2015, for which the fortnight-long Warsaw conference was supposed to lay the groundwork.
“Warsaw has set a pathway for governments to work on a draft text of a new universal climate agreement, an essential step to reach a final agreement in Paris, in 2015,” said Marcin Korolec, the Polish host of the conference, who was demoted from environment minister to climate envoy during the talks.
The talks were characterised by discord and acrimony, and by the emergence of a new and highly vocal negotiating bloc among developing countries that forced through the watering down of key aspects of the deal.
Christiana Figueres, the UN’s leading climate official, said: “We have seen essential progress. But let us again be clear that we are witnessing ever more frequent, extreme weather events, and the poor and vulnerable are already paying the price. Now governments, and especially developed nations, must go back to do their homework so they can put their plans on the table ahead of the Paris conference.”
The conference began with an impassioned plea by the Philippines representative, Yeb Sano, for a strong agreement after the devastation of typhoon Haiyan. Sano remained fasting throughout the talks, and afterwards expressed frustration that there had not been a “meaningful” outcome.
The emissions goals, to come into force from 2020, will be set at a national level, but after they are published there will be a chance for other countries to scrutinise them and assess whether they are fair and sufficiently ambitious. At the insistence of a small group of developing countries, they will take the form of “contributions” rather than the stronger “commitments” that most other countries wanted.
These were the self-styled “like-minded developing countries”, a group that comprises several oil-rich nations, including Venezuela, Saudi Arabia, Bolivia and Malaysia. Several have large coal deposits and are heavily dependent on fossil fuels, such as China and India, and some countries with strong links to some of the others, including Cuba, Nicaragua, Ecuador and Thailand.
The “like-minded developing countries” group takes the view that the strict separation of nations into “developed” and “developing”, which was set at the first international climate talks in 1992, and enshrined in the 1997 Kyoto protocol – in which developed countries were obliged to cut emissions but developing countries had no obligations – must remain as the bedrock of any future agreement. They argue that the “historical responsibilities” for climate change lie with the first nations to industrialise.
That view is firmly rejected by the US and the EU, both of which have agreed to take a lead in cutting emissions, but have also repeatedly pointed out that the tables have turned on historic responsibilities. Emissions from rapidly emerging economies such as China and India are growing so fast that by 2020, the date when any new agreement will come into force, the cumulative emissions from developing countries will overtake those of rich nations.
Martin Kaiser, the head of the Greenpeace delegation, said: “China is making big strides domestically, but not yet translating it into a willingness to lead at a global level. Historical responsibility “¦ [is] no excuse for anyone to ditch their responsibilities over their current and future emissions.”
Loss and damage was one of the key rows in the early stages of the meeting, as some developing countries demanded “compensation” from rich countries for the damage they suffered from extreme weather. A compromise was reached with a new “Warsaw international mechanism” by which the victims of disaster will receive aid, but it will not be linked to any liability from developed countries.
Another success at the conference was the completion of a new mechanism to keep the world’s remaining forests standing. Called REDD+, for reducing emissions from deforestation and degradation, this has been in the works for most of the last decade.
But all countries admitted that most of the preparation work for Paris still remains to be done. Politically, the battle between the like-minded group – which is separate from, but claims to lie within, the broader G77 group of the majority of developing nations – and the US and the EU will be key. For both sides, gaining support from the rest of the unaligned developing nations – some of which are highly vulnerable to climate change and are desperate for a deal, but others who are courting economic investment from China – will be crucial.
The fragile truce reached after the marathon talks in Warsaw may not even last as long as the delegates’ flights home.
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Boosting trade in Africa: Why women are the key
In many countries in Africa, the majority of small farmers are women. They produce crops such as maize, cassava, cotton, and rice that have enormous potential for increased trade between African countries and with the global market.
Women are also involved in providing services across borders, such as education, health, and professional services like accountancy and law.
“Every day in Africa, hundreds of thousands of women cross borders to deliver goods and services from areas where they are relatively cheap to areas in which they are in shorter supply,” says Paul Brenton, Africa Trade Practice Leader for the World Bank.
However, Africa’s trade potential is undermined by constraints that women face. The contribution of women to trade is much less than it could be because of non-tariff barriers that impinge particularly heavily on the trade activities of women and women-owned enterprises.
These barriers often push women traders and producers into the informal economy where a lack of access to finance, information, and networks jeopardizes their capacity to grow and develop businesses.
Women and Trade in Africa: Realizing the Potential, a new report from the World Bank Group’s Africa Trade Practice, demonstrates how women play a key role in trade in Africa and will be essential to the continent’s success in exploiting its trade potential.
The report calls for African governments to recognize the role that women play in trade and ensure this is communicated to officials at all levels. It asks governments to ensure that the rules and regulations governing trade are clear, transparent and widely available at borders, and encourages policy makers to simplify documents and regulatory requirements where possible.
“Removing the obstacles to regional trade integration in Africa would be particularly beneficial for poor women, as they literally carry most of the small-scale, cross-border commerce that happens within the Region,” says Marcelo M. Giugale, Director of the Department of Economic Policy and Poverty Reduction Programs in the World Bank’s Africa Region.
“The potential benefits are huge and obvious: better food security, faster job creation, more poverty reduction, and less gender discrimination. This is a win-win-win-win reform agenda that is ready for action.”
Women and Trade in Africa highlights the need to design interventions that develop trade in ways that benefit women. According to the report, governments and donors are making concerted efforts to facilitate trade, increase productivity in export-oriented sectors, and improve competitiveness, but these need to be better targeted to ensure that not only men benefit.
Finally, it calls for governments to help women – who are generally more risk-averse than men-to more effectively address risks like physical harassment at the border and confiscation of goods, lack of access to stable trade networks and buyer relationships, risks to business arising from the need to provide family care, and constraints on access to finance which limited capacity to diversify.
“The aim of this book is to make available to a wide audience new analysis on the participation of women in trade in Africa,” said Brenton. “In addition to raising the profile of this public policy issue, we also hope that it will encourage more research and analysis over a wider range of African countries to extend the knowledge base.”
According to Brenton, policy makers typically overlook women’s contribution to trade and the challenges they face. This neglect reflects, in part, the lack of data and information on women and trade in Africa and also the underrepresentation of small traders and rural producers in trade and trade policy discussions.
“African countries have enormous potential for trade with the global market and for more intensive trade among themselves,” Brenton said. “Regional trade in Africa can play a vital role in diversifying economies and reducing dependence on the export of a few mineral products, in delivering food and energy security, in generating jobs for the increasing numbers of young people, and in alleviating poverty and promoting a shared prosperity.”
This publication was edited by Paul Brenton, Elisa Gamberoni and Catherine Sear.
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Africa climate adaptation costs could soar to USD $350 billion annually by 2070 if warming hits 3.5-4°C – UN Report
Africa faces huge financial challenges in adapting to climate change, according to a new report by the UN Environment Programme (UNEP) that spells out the costs faced by the continent if governments fail to close the “emissions gap” to keep warming below 2°C.
Adaptation costs for Africa could reach approximately USD $350 billion annually by 2070 should the two-degree target be significantly exceeded, while the cost would be around USD $150 billion lower per year if the target was to be met.
Africa’s Adaptation Gap, released today and endorsed by the African Ministerial Conference on the Environment (AMCEN) whose secretariat is hosted by UNEP, confirms the World Bank’s Turn Down the Heat Reports that there is a 40 per cent chance that we will inhabit a ‘3.5-4°C World’ if mitigation efforts are not stepped up from current levels.
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Africa is already facing adaptation costs in the range of US $7-15 billion per year by 2020.
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These costs will rise rapidly after 2020, since higher levels of warming will result in higher impacts.
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Combining adaptation costs with “residual” damages, the total costs can reach 4 per cent of Africa’s Gross Domestic Product (GDP) by 2100, under a 3.5-4°C scenario.
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If no adaptation measures are taken, damages are expected to cost 7 per cent of African GDP by 2100 in a ‘3.5-4°C World’, according to the Africa Gap report.
The report further cautions that, even if the world does manage to get on track to keep warming below 2°C, Africa’s adaptation costs will still hover around USD $35 billion per year by the 2040s and USD $200 billion per year by the 2070s – with total costs reaching 1 per cent of the continent’s GDP by 2100.
“Missing the 2°C window will not only cost governments billions of dollars but will risk the lives and livelihoods of hundreds of millions of people on the African continent and elsewhere,” said UN Under-Secretary General and UNEP Executive Director, Achim Steiner.
“Even with a warming scenario of under 2°C by 2050, Africa’s undernourished would increase 25-90 per cent. Crop production will be reduced across much of the continent as optimal growing temperatures are exceeded. The capacity of African communities to cope with the impacts of climate change will be significantly challenged.”
“I would like to welcome the decision by AMCEN to endorse the recommendations of the Africa Gap report; an important step towards strengthening political will and building resilient national policies.”
“Additional adaptation funding and technical know-how are imperative if Africa is to move towards a climate-resilient green future path. There is for example a need to develop drought-resistant crops, build early warning systems, invest in renewable energy sources and ensure that the catastrophic impacts of climate change are controlled or, better still, avoided,” he added.
UNEP’s Emissions Gap Report – launched days ahead of the UN Climate Conference in Warsaw – analyzes in much more detail and confirms that current pledges by individual countries to limit emissions by 2020 would lead to a global temperature increase of about 3.5-4°C warming by 2100 – unless emissions are reduced now and substantially reduced afterwards.
Even if nations meet their current climate pledges, greenhouse gas emissions in 2020 are likely to be 8 to 12 gigatonnes of CO2 (GtCO2e) above the level that would provide a likely chance of remaining on the least-cost pathway consistent with holding warming below 2°C.
“Africa cannot risk failure of implementing serious adaptation measures, especially with Africa’s predicted population rise of 2 billion by 2050 and the current ecosystem degradation trajectory,” said President of AMCEN and Minister of State for the Environment, United Republic of Tanzania, Dr. Terezya L. Huvisa.
Africa Warming
In a ‘3.5-4°C World’, Africa’s coastline is expected to undergo sea-level rise 10 per cent higher than the rest of the world, with several countries particularly hard hit.
In Guinea-Bissau, Mozambique, and The Gambia, up to 10 per cent of the entire population would risk flooding risks annually by 2100.
Arid areas in Africa, which already represent about half of the continent’s land area, are expected to increase by 4 per cent.
If we enter a ‘3°C World’, effectively all of the present maize, millet, and sorghum cropping areas across Africa would become unsustainable for current strains.
In a ‘4°C World’, southern Africa will likely see decreases of up to 30 per cent in rainfall each year.
At the same time, north, west, and southern Africa will also see declines of 50-70 per cent in groundwater recharge, according to the study.
The study further details how agriculture, fisheries and water access – among other sectors – will be impacted.
The degree to which these sectors will be impacted will depend on whether commitments are kept and whether better adaptation practices can be implemented.
The study points to a high risk of biodiversity loss, as species may be unable to migrate to suitable climates.
Up to 97 per cent of the 5,000 plant species studied could undergo range size reductions or shifts, while up to 40 per cent could experience total range elimination by 2085 in a ‘2°C World’ scenario.
At the same time, a ‘3.5-4°C’ scenario projects fish declines in freshwater lakes across places such as Chilwa, Kariba, Malawi, Tanganyika and Victoria, which would jeopardize the source of more than 60 per cent of the protein needs of the surrounding communities.
Perhaps the most drastic example of the effects of climate change in Africa is that coral reefs-which are essential support systems for marine fisheries, tourism, and coastal protection against sea-level rise and storm surges-are projected to be entirely extinct before we even enter a ‘4°C World’.
Adaptation Funding: Opportunities and Challenges
How well Africa deals with these climate impacts, now and in the future, will be co-determined by the funding it receives.
Adaptation measures such as early warning systems and coastal zone management to counter sea-level rise offer a possibility of minimizing these impacts, but Africa’s capacity to adapt depends critically on access to funding.
Traceable funding disbursed in Africa for climate change adaptation through bilateral and multilateral channels for the years 2010 and 2011 amounted to USD $743 and $454 million, respectively, although this figure does not fully account for the funding channeled through Development Finance Institutions, for example the World Bank, or national development banks.
To meet the adaptation costs estimated in the report for Africa by the 2020s, funds disbursed annually would need to grow at an average rate of 10-20 per cent a year from 2011 to the 2020s.
There is currently no clear, agreed pathway to provide these resources.
The UN Framework Convention on Climate Change’s developed country Parties have committed to provide funds rising to USD $ 100 billion annually by 2020 through the “Green Climate Fund”-established by the 2010 Cancun Agreements-from public and private sources, for both adaptation and mitigation actions in across all developing countries by 2020.
However, rules drawing up the allocation of funding for adaptation have yet to be defined and await negotiation.
At this stage, there is no clear sense of how much of these funds would benefit countries in the African region, nor of the likely allocation between adaptation and mitigation funding.
Until these issues are resolved it is not possible to assign a share of the USD $100 billion annual commitment by 2020 to Africa.
Assuming funding for adaptation efforts in Africa reached adequate levels by 2020 and assuming the world gets on track to limit warming to below 2°C, annual funding for adaptation efforts in Africa still needs to rise a further 7 per cent a year from the 2020s onwards to keep pace with continuing sea-level rise and warming peaking below 2°C after the 2050s.
This is considerably less than the funding challenge if the current mitigation efforts were not increased, and warming reached 3.5-4°C by 2100.
In this case, the scaling up of annual funds would need to be 10 per cent every year after the 2020s.
Challenged Capacity
In all scenarios, the capacity of African communities to cope with the effects of climate change on different economic sectors and human activities is expected to be significantly challenged, and potentially overwhelmed, by the magnitude and rapid onset of climate change impacts.
To reduce the magnitude of the impacts and their repercussions for African livelihoods, adaptation measures at different levels, from households to national and regional levels, are being planned and implemented and need to be further supported and strengthened.
These measures include:
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The development of early-warning systems for floods, droughts or fires to help populations anticipate and prepare for the occurrence of extreme events;
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Irrigation, improvement in water storage capacity, reforestation to protect surface water systems, sustainable use of groundwater resources, desalinization of seawater, and rainwater catchments and storage to maintain sufficient and reliable access to freshwater for human and agricultural needs;
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City infrastructure protection measures such as seawalls, dykes, wave breakers and other elements of coastal zone management, as well as city-level food storage capacity and urban agriculture to enhance food security;
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Improving design and drainage technology of sanitation facilities to reduce the risk of water-borne diseases in the aftermath of extreme weather events.
The majority of these and other adaptation measures require an anticipatory and planned approach, as well as large investments. The need for planned capital-intensive adaptation is greater at high than low warming levels.
What we know and don’t know about trade with Africa
A new report could shed light on whether efforts to develop African economies are doing any good.
On September 30, United States Trade Representative Michael Froman wrote a letter to Irving Williamson, chairman of the International Trade Commission, regarding the African Growth and Opportunity Act. In the letter, Froman requested that the International Trade Commission conduct four investigations and provide four reports related to AGOA and our [United States’] trade relationship with Africa.
The results will likely bring sanity to our approach to trade with Africa, and it may very well force changes in how we develop future trade agreements and policy with the second largest land mass on our planet, not to mention with more than a quarter of the world’s countries.
To understand the significance of the letter, one has to understand AGOA, legislation passed by the U.S. Congress in 2000 that was designed to allow African economies far greater access to the United States market, seemingly duty-free. At the time, some likened AGOA to the North American Free Trade Agreement passed during the Clinton administration. It wasn’t close to NAFTA in its terms, but since it was the first major legislation ever adopted by the U.S. Congress on behalf of its relations with the African continent, there was understandable euphoria about its passage and hyperbole about its likelihood to significantly affect the economic and political development of Africa.
To the African lobby in Washington, AGOA became a point of pride and accomplishment. Very quickly, it became politically incorrect to question the benefits of AGOA without being attacked as anti-Africa or worse. Later, under President Bush, AGOA legislation was further strengthened, with the intent to increase exports from Africa to the United States. Objective critique became even more difficult given clear bipartisan support. Groupthink became the rule in Washington.
Now, 13 years later, there are few if any who would say that AGOA has been an unqualified success. The apparel industry in Africa has been a primary beneficiary of AGOA, as has South Africa, which has exported car parts and textiles to the United States duty-free. Some might argue that China has also been a major beneficiary of AGOA, since it owns many of the textile and apparel plants in Africa that are shipping duty-free products to the United States.
However, beyond that there has been little benefit for most countries who are qualified as AGOA-certified. The reason for that is less the legislation but the fact that most African countries do not have the infrastructure or the capacity, including trained workforces, to use AGOA effectively. Furthermore, many African nations have been slow to reform their economic sectors, inhibiting more private sector development and limiting the possibility for investment.
This is hardly a secret, and is discussed openly everywhere but in the halls of Congress. In fact, a recent British study noted that AGOA has largely not affected African development, and stated unequivocally that except for the apparel industry, very few economic sectors in Africa benefited from AGOA.
Yet, here we are again, advocating for the extension of AGOA for another 10 years or longer, arguing that Africa only needs time to develop in order to use it effectively. This argument has a certain logic to it. Eventually Africa will develop and it will be able to use AGOA.
There are also those that argue for the extension of AGOA because, well, we really have nothing better to replace it with, and to have a new overreaching agreement that might work better will probably not be feasible in such a contentious Washington political environment. To abandon AGOA is to be seen as abandoning Africa.
Indeed, it would be difficult to say we weren’t abandoning Africa if we scotched the only significant trade agreement we ever had with the continent. The symbolism and reality of that would be very difficult to bear for the African lobby in Washington. The argument to extend AGOA is an emotional one as much as it is a rational one.
Enter the Froman letter. The first investigation that Froman asks ITC to complete within six months is a report that includes a review of all literature on the AGOA preference program, particularly “in terms of expanding and diversifying the exports of AGOA beneficiary countries to the United States, compared to preference programs offered by third parties such as the EU.” He also asks ITC to give an accurate report on the sectors that have increased the most in exports to the U.S., excluding petroleum sectors. He asks ITC to explain why these increases are so, as well as to identify factors that affect competiveness in AGOA-beneficiary countries.
The reason that petroleum products are excluded in the analysis is that USTR and others count petroleum products in the AGOA total, and petroleum makes up 93 percent of this total. However, some believe that petroleum should not be counted, as it was nearly tariff free before AGOA, and has been effected very little by being placed under AGOA. The purpose of AGOA was to increase and broaden economic benefits beyond petroleum. Froman’s request to ITC takes out a misleading figure and focuses on the real intent of AGOA: the development of other economic sectors throughout Africa.
Froman also asks that in the first investigation, ITC identify the effects AGOA has had on the business climates in AGOA-beneficiary countries (not all African countries qualify under AGOA but that is another issue), and finally, he asks for a comparison of trade agreements to AGOA between sub-Saharan African countries and other countries, including areas that are likely to affect U.S. trade with Africa. Noteworthy is that Froman asks that this report will be available to the public in its entirety. There will be one hymnal from which all can sing.
The report should go a long way in giving an objective analysis of AGOA, both its benefits and shortcomings, and it should then allow Congress, the USTR and others to develop a more effective trade policy towards sub-Saharan Africa, filled with more substance and objectivity and far less emotion and bias. Any new trade policy on Africa, whether it be called AGOA or any other name, should address the causes that prevent greater trade and economic investment in development.
Stephen Hayes is president and CEO of the Corporate Council on Africa.
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“Africa must take ownership of its institutions” says Mo Ibrahim and other participants at the 2013 Ibrahim Forum
African governments must take full ownership of the continent’s institutions to drive greater integration and unity, according to Mo Ibrahim and several other high-level participants at the 2013 Ibrahim Forum this weekend.
Speaking at the conclusion of the event, which was held in Addis Ababa, Mo Ibrahim strongly urged Africa’s leaders to give greater support, including financial resources, to the African Union in order to realise Africa’s true potential.
Convened by the Mo Ibrahim Foundation, the Forum brought together over 200 participants to discuss the major opportunities and challenges the continent faces during the next half century.
The Ibrahim Forum was a frank and open debate between high-level speakers, and an audience of media, business leaders, civil society and government, held at the African Union’s headquarters, around the 50th anniversary of African unity.
The Forum was structured as an ‘African Conversation’, with participants discussing opportunities and challenges around the four categories of the Ibrahim Index of African Governance (IIAG): Safety & Rule of Law, Participation & Human Rights, Sustainable Economic Opportunity and Human Development.
There was consensus that African ownership of its institutions; greater cooperation between states; and good governance and leadership will be key determinants of Africa’s success in the future:
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H.E. Dr Nkosazana Dlamini-Zuma, Chairperson of the African Union Commission, opened the debate by saying: “The narrative should be about tomorrow. It must be our narrative. We mustn’t hide anything; we mustn’t exaggerate anything. But we must tell our own story. It is in our hands to transform Africa into an integrated and prosperous continent.”
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H.E. Ato Hailemariam Dessalegn, Prime Minister of Ethiopia, also told participants that Africa “had begun to turn the corner”, certain in its conviction that a better future lies ahead.
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Pascal Lamy, former Director-General of the World Trade Organization, observed that Africa is disunited on trade integration within Africa, but it is good at defending African trade interests as a bloc.
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While Dr Sipho Moyo, Africa Director at ONE, was one of several panellists to highlight the need for governments to listen more to their growing youth population: “Young people want participation. They want to know that their voice is used in shaping and implementing policy.”
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Dr Salim Ahmed Salim, Former Secretary General of the Organisation of African Unity, reminded the audience of the continent’s vast wealth which juxtaposes against extreme poverty in some countries: “Africa is not a poor continent but the people are poor; and that’s because of the mistakes of our leaders.”
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While on the issue of Safety & Rule of Law, Robtel Pailey, Mo Ibrahim Foundation SOAS Scholar, contended that the African Union must assert itself much more strongly to make itself heard. She said that Africa must show that it has responsibility and not wait for the position of the West.
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Speaking on the same panel as Miss Pailey, Jean Ping, Former Chairperson of the African Union Commission, also said that Africa’s autonomy is reduced when it is unable to fund its own institutions. He said: “when we receive money from Europe, it comes with conditions.”
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Maria Ramos, Chief Executive of Absa Group and Barclays Africa, stressed that Africa cannot talk about integration and unity without talking about mobility: “We should ideally be able to have movement on the continent without visas.”
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Indeed, during the closing session, the BBC’s Komla Dumor asked speakers: “If you could make one decision to transform Africa, what would be?” Mo Ibrahim responded: “I’d get rid of all borders.”
To coincide with the Forum, the Foundation published the latest Facts and Figure report ‘Africa Ahead: The Next 50 Years’, providing analysis of Africa’s potential assets and key policy areas to be addressed through exceptional leadership and governance.
The 2013 Ibrahim Forum was the culmination of a series of events organised by the Mo Ibrahim Foundation in Addis Ababa this weekend. They kicked off on Friday with a football match between Ethiopian Bunna and TP Mazembe from Democratic Republic of Congo. On Friday evening, the Foundation hosted a special concert with performances from Angelique Kidjo, Youssou N’Dour and Jah Lude and the Mehari Brothers. On Saturday, the Foundation hosted its annual Leadership Ceremony, a celebration of Africa featuring speeches, music and film.
At the conclusion of the Forum, Mo Ibrahim was presented with a special award from the Gender Is My Agenda Campaign (GIMAC) Network. The ‘Male Champion Award’ recognises Dr. Ibrahim’s “leadership, innovation and bold thinking to advance the status of African women”.
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ACP Trade Ministers adopt declaration for Bali
During the African, Caribbean, and Pacific (ACP) Ministerial Trade Committee that met in Brussels on 9-10 October 2013, Ministers outlined the ACP countries’ common position for the upcoming 9th WTO Ministerial Conference.
The Declaration emphasized the importance of securing a meaningful outcome in the areas under negotiation. Ministers urged all members to show the required flexibility in the areas of development, agriculture and trade facilitation.
According to the ACP group, the inability of WTO Members to conclude the Doha round has contributed to a proliferation of free trade agreements, and the pursuit of plurilateral agreements in areas within the scope of the Doha Agenda.
LDCs’ share of world trade is currently very low, at around 1.12 percent, with more than half of the countries of the ACP group defined as Least Developed Countries (LDCs).
Development
The Declaration stresses the critical dimension of development, particularly with regard to special and differential treatment. The group expressed concerns about the “slow progress in that work”.
LDCs
Turning to least developed countries issues, ACP ministers urge the WTO to take commitment toward greater integration of the LDCs into multilateral trading system in line with the proposals put forward by the LDC group for the decision at the Ninth Ministerial Conference. The proposals relates to duty-free quota-free market access for LDCs, simplified and flexible rules of origin for exports that qualify for duty-free, quota-free treatment, the operationalization of the LDC services waiver, and the proposals on cotton.
ACP ministers reiterated the importance of the Enhanced Integrated Framework – a WTO programme aimed at helping LDCs play a more active role in the global trading system – and called for its extension after 2015.
Agriculture
The Declaration defined six areas of concern related to agriculture: market access, domestic support, export competition, cotton-sector issues, the right to use certain traditional trade policy tools for food security. With regard to these issues, ACP Ministers plan to address imbalances in the WTO that prevent numerous ACP countries from maintaining food security while confining them to the position of net food importing countries.
Trade Facilitation
On the theme of trade facilitation, the Declaration stressed that while ACP countries did not ask for trade facilitation in the WTO Doha Development Agenda negotiations, they nevertheless recognise the potential of such agreement that could facilitate reforms for ACP countries in the area of trade. To his end the ACP group further reaffirmed the need to provide LDCs with mandatory special & differential treatment.
Aid for Trade
The declaration urges donors to continue supporting efforts of developing countries, especially LDCs, to integrate into the world trading system by directing aid to trade through infrastructure, productive capacity, and costs of adjustment.
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New World Bank Group report charts road map for financial inclusion
Low-income populations benefit the most from technological innovations such as mobile payments, mobile banking, and borrower identification based on fingerprinting and iris scans, according to a new World Bank Group report.
That’s because those innovations make financial services cheaper and easier to access for the poor, women, and rural residents, especially those living in remote, less populated regions without brick-and-mortar bank branches, according to the report, Global Financial Development Report 2014: Financial Inclusion.
“Financial services are out of many people’s reach because market and government failures pushed the costs of these services to prohibitively high levels,” said World Bank Director of Research Asli Demirguc-Kunt, a co-author of the report. “Vulnerable populations benefit the most when policy and products address the regulatory and other hurdles to financial inclusion.”
The report, the second in a series, is the most comprehensive study yet on financial inclusion, a topic that has gained worldwide attention. More than 50 countries have committed to explicit targets to increase financial inclusion. And last month, World Bank Group President Jim Yong Kim set targets toward universal financial access for all working-age adults by 2020.
Many countries have made progress in expanding account use among those underserved by traditional financial institutions. Some policies have proven to be especially effective, such as requiring banks to offer low-fee accounts, waiving onerous documentation requirements, and using electronic payments to deposit government assistance into bank accounts. For example, South Africa, with a public-private framework, increased the number of bank accounts by six million in four years.
Technological innovations, which have grown rapidly in the past decade, can speed up the progress. Mobile banking has played a key role in expanding financial inclusion in low-income countries, such as Kenya, the Philippines, and Tanzania. Brazil increased financial access to people living in remote areas by promoting technology-based “correspondent banking” – financial services provided on behalf of banks by retails stores, gas stations, agents on motorcycles, and boats on the Amazon River.
To allow consumers to take full advantage of those innovations, also including e-mobile wallets and other e-money accounts, the report recommends that regulators encourage competition among financial service providers and improve the legal, regulatory and institutional environment. That will also minimize the chance that credit is overextended among people not qualified to receive it.
“Policy makers need to strike a balance between providing incentives for the new technologies and requiring them to be open to competition,” said Martin Cihak, lead author of the report and lead economist in the World Bank’s research department. “Competition policy is a key part of consumer protection, because healthy competition among providers gives more power to consumers.”
Challenges of reaching the “unbanked”
Considerable evidence has shown that people, especially the poor, benefit from having basic payments, savings and insurance services. But some 2.5 billion people – more than half of the world’s adult population – lack bank accounts. Low-income countries face especially daunting challenges. Thirty percent of the adults there saved in 2011, compared with 58 percent in high-income countries, according to analyses of the World Bank’s Global Findex database included in the report.
Technological innovations also present new challenges, partly because they take root in different fashions across the globe. Russia, for example, has one of the highest rates of mobile phone subscriptions in the world, at 179 phones per 100 people, but it ranks among the lowest in mobile phone use for financial transactions, at fewer than two transactions per 100 adults. By contrast, in Kenya, where one-fifth of the population has cell phones, 68 percent of the adults used a mobile phone in 2011 to pay bills or send or receive money.
The report cautions, however, financial inclusion should not mean finance for all at all costs. For example, creating millions of bank accounts has little impact if they aren’t used regularly. And promoting credit without regard to cost actually exacerbates financial and economic instability.
To promote financial inclusion responsibly, the report urges policy makers to encourage product designs that address market failures, meet consumer needs and overcome behavioral problems. For example, commitment savings accounts, where access to cash is possible only after a period of time or after a goal has been reached, can promote savings. Responsible financial inclusion also requires consumers to better understand finance.
For countries with strong banking bricks and mortar networks, which often view mobile banking as a trend that competes with checking and credit card use, the report recommends that regulators take care to price new products reasonably so that the unbanked can use them as well.
The report includes several datasets, including an updated version of the Global Financial Development Database. The database includes more than 100 financial system characteristics – such as the access, efficiency, and stability of financial markets and institutions – for more than 200 economies.
The report is a part of a broader commitment to provide knowledge and operational support to developing economies. The World Bank Group currently has financial inclusion projects with public and private partners in more than 70 countries.
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Gathering for the African Economic Conference, leaders call for wide-ranging structural change
Regional Integration Key to Transformation and Development
UPDATE: The African Economic Conference 2013 Report is now available for download.
Heads of State and business and development experts from across the world will gather at the three-day African Economic Conference from Monday, October 28 to Wednesday, October 30 in Johannesburg, South Africa, to discuss regional integration and its role in boosting economic growth and human well-being on the continent. [Click here to view previous coverage of the African Economic Conference 2013].
The conference will be opened by Jacob Zuma, the President of South Africa; Donald Kaberuka, President of the African Development Bank (AfDB); and Abdalla Hamdok, Deputy Executive Secretary of the United Nations Economic Commission for Africa (ECA).
Africa has seen high levels of economic growth over the last decade, however that growth has had limited impact on boosting competitiveness and increasing the quality of life of ordinary people on the continent.
Weaknesses persist in the quality of institutions, infrastructure, macroeconomic policies, education and adoption of new technologies, while there are big gaps between its highest and lowest ranked economies.
“This great gathering should do more than restate the case for regional integration: it must examine how to push the African continent to the next level, to become a global growth pole in its own right,” said Donald Kaberuka, President of the African Development Bank.
“At a time of diminishing multilateral solutions, this is the sure way to build resilience against external shocks. I applaud the steady progress that has been made in areas such as tariff reduction. Robust action is what is now needed on non-tariff barriers, trade facilitation, and the movement of people. Africa has the political will and the strategic vision to make this happen. The time is right.”
In addition, because of its focus on capital-intensive, commodity-based industries, Africa has seen limited economic transformation, with little investment in the manufacturing, services and agricultural sectors. Due to these limitations, the creation of jobs, markets and institutions required to help young women and men build better futures has lagged behind.
“There needs to be a much broader definition of regional economic integration. True, regional integration must include investments in regional infrastructure, trade and labour mobility. But countries would also gain by harmonizing regulations and standards, devising common approaches to macroeconomic policy, job creation, and effective management of shared natural resources for sustainable poverty reduction and structural economic transformation,” said Abdoulaye Mar Dieye, Director of UNDP Africa.
While the benefits of integration are now well-known and many of the legal frameworks in place, the biggest challenge is how to further that agenda. Among the major hurdles are harmonizing standards and regulations, boosting human resource capacities and mobilizing leadership and political will.
The African Economic Conference will look at the political economy of regional integration and examine closely some of the practical solutions to advance it. High-level dialogues will cover integration issues ranging from finance to water resource management, fiscal convergence and harmonization of social policies. Participants will also be exposed to cutting edge research on all aspects of regional integration based on new analysis from African researchers and institutions.
Participants at the conference will look at some of the trends and best practices unfolding across the continent.
“It is undeniable that regional integration will impel Africa to economic transformation and industrialization. Capitalizing on natural resources, industrialization can swiftly add value to the continent’s exports and, therefore, stimulate job creation,” said Abdalla Hamdok, the Deputy Executive Secretary of the Economic Commission for Africa.
Held every year and sponsored by the African Development Bank, the Economic Commission for Africa and the United Nations Development Programme, the African Economic Conference will also provide a unique forum for in-depth presentations of policy-oriented research by both established academics and emerging talents from the continent.
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“BRICS Bank to reduce risks in emerging markets”
China and India have agreed to step up cooperation in BRICS to safeguard “common interests”.
India Prime Minister Manmohan Singh has identified the BRICS Development Bank and the $100 billion Contingency Reserve Arrangement as major efforts “to support trade and investment and reduce risks in emerging markets”.
Singh said the India and China have a vital stake in preserving an open, integrated and stable global trade regime.
“We are in the midst of a significant and ongoing transformation where both political and economic power is being diffused. A multi-polar world is emerging but its contours are not yet clear,” he said.
“Protectionist sentiments in the West have increased and the global trading regime may become fragmented by regional arrangements among major countries,” he warned.
The Chinese President Xi Jinping during his meet with Singh urged that the world needs the common development of China and India.
A Chinese Foreign Ministry official said the agreements signed during Singh’s visit involve many long-term projects that will contribute to regional and world peace, and stability for several decades.
“China-India relations have gone far beyond bilateral scope and have global and strategic significance,” Xi said during his meeting with Singh.
In a reference to recent reports of the much-hyped American Asia pivot which seeks to “contain” China, the Indian Prime Minister said “old theories of alliances and containment are no longer relevant”.
“India and China cannot be contained and our recent history is testimony to this. Nor should we seek to contain others,” Singh said.
“We both know that the benefits of cooperation far outweigh any presumed gains from containment,” he added.
In his address to the Central Party School in Beijing, Singh also stressed on increased FDI from China.
“India plans to invest $1 trillion in infrastructure in the next five years and we would welcome China’s expertise and investment in this sector,” he said.
Singh also underlined the need for a stable, secure and prosperous Asia Pacific region.
“While both India and China are large and confident enough to manage their security challenges on their own, we can be more effective if we work together,” he said.
Xi also suggested the two most populous countries in the world should strive towards “revitalisation of oriental civilisation”.
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Regional integration is a primary condition for Africa’s industrial revolution
“Regional Integration in Africa,” the theme of this year’s October 28-30 African Economic Conference (AEC) in Johannesburg, is at the very core of the quest for the continent’s industrial revolution.
The AEC is an annual business intelligence forum organized by the African Development Bank (AfDB), the UN Economic Commission for Africa (ECA) and the United Nations Development Programme (UNDP), to discuss the continent’s major economic development challenges.
The conference groups government leaders, policy-makers, researchers and development practitioners from Africa and other parts of the world. This year, discussions will focus on how the continent of 54 disparate states can overcome its fragmentation and pool resources for industrialization and productive growth.
Africa’s stunted growth has mostly been attributed to the absence of large economic space that can spur and sustain economies of scale which is a primary condition for genuine economic development.
Empirical data suggest that the quest for an African industrial revolution can only occur where large markets drive competitive production to satisfy demand and supply, facilitated by appropriate public policies.
The lack of these probably explains why the traditional import substitution development and several industrial strategies enacted by many African governments in the past half century have failed to ignite and sustain worthwhile productive entrepreneurship.
Thus, for Sub-Saharan Africa, the need to build economies of scale would depend on the availability of energy, transportation, communication and social infrastructure, water resource management, fiscal convergence and labour mobility, among others, that feature prominently on the agenda of the African Economic Conference.
Integrated infrastructure helps to expand the political, economic and social space for increased production and consumption of goods and services. Besides, globalization and technology have respectively condensed space and heightened competitiveness to the point where micro entities can no longer survive on their own. They must come to the market with a variety of quality goods and services.
Even for the so-called resource-rich countries, indications are that relying solely on the proceeds of extractive industries without value addition would not deliver sustainable development.
This would only entrench the practice whereby African countries compete against each other vis-à-vis external partners in a buyers’ market where technology and innovation are gradually replacing hydrocarbons with biofuels and other forms of green energy.
The 2013 Africa Competitiveness Report on the theme “Connecting Africa’s Markets in a Sustainable Way,” makes this point more clearly. According to the report, jointly produced by the AfDB, the World Bank and the World Economic Forum, regional integration can help Africa to raise competitiveness, diversify its economic base and create enough jobs for its young, fast-urbanizing population.
This can be done by:
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Closing the competitiveness gap in which Africa is trailing other emerging regions by investing in quality institutions, infrastructure, macroeconomic policies, education and technological adoption.
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Facilitating trade by liberalizing intra-African trade currently estimated at 11 percent and by removing trade barriers; and diversifying products away from primary commodities.
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Building better energy, transportation and ICT infrastructure to link up African producers and consumers thereby leveraging economies of scale in manufacturing and service delivery.
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Developing growth poles through public-private investments in industries and support infrastructure to boost productive capacity for local and export markets.
These suggestions fit and easily tie in with the operational priorities of the African Development Bank as enacted in its Regional Integration Strategy 2009-2012, and its Strategy 2013-2022 which focuses on 1) infrastructure development; 2) regional economic integration; 3) private sector development; 4) governance and accountability; and 5) skills and technology.
Thus, the Bank will continue to channel considerable resources in African integration as it has done since it began operations in 1967, mostly in the areas of hard and soft infrastructure and the diffusion of knowledge products.
For instance, between 2009 and 2011, the Bank completed 51 transport projects valued at over $3 billion, covering road, airport, seaport and railway infrastructure. The institution has financed over 4,000 kilometres of roads and several major bridges in Africa. Its private sector arm supported a fleet modernization for Ethiopian Airlines as well as investments in regional information and communication technology networks, which represent important contributions to regional integration.
Yet, a lot more remains to be done given Africa’s geo-political configuration and demographics. Africa is the world’s second-largest continent (30.2 million km²) with a population of over one billion people, half of whom are below 20 years of age.
The continent’s 54 sovereign states and nine territories are shaped and impacted by emerging global megatrends that present challenges and opportunities for development and sustainable growth.
Forums such as the AEC can provide the knowledge base to ensure that Africa is properly integrated in the global economy.
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Traffic at port of Maputo increase four-fold in nine years
Traffic at the port of Maputo rose almost four-fold between 2003 and 2012, but the facility and its associated transport corridor still have potential to grow, the Economist Intelligence Unit (EIU) reported.
In a recent report on Mozambique, the EIU said that “a lot of progress was made” in setting up conditions to increase goods traffic at the port, which resulted in growth of 275 percent between 2003 and 2012, to 15 million tons of cargo per year, which even so is less than the record of 17 million tons per year in 1971.
Empresa de Desenvolvimento do Porto de Maputo, which is controlled by Dubai Ports World and South African logistics company Grindrod, and state port and rail manager Portos e Caminhos de Ferro de Moçambique, expects traffic to reach 40 million tons over the next six years and expects investments to total US$750 million by 2038.
“We expect business and investment in the port and in the associated corridor to continue to increase, but it will stay at below potential,” the EIU said
The Maputo Corridor includes the Johannesburg industrial hub and the South African provinces of Limpopo and Mpumalanga, which border Mozambique.
Support facilities such as opening the Ressano Garcia border on a 24-hour basis, have yet to be put in place.
“The current congestion at the Ressano Garcia border post has been a significant obstacle to trade,” the EIU said.
The United Nations Conference on Trade and Development in its latest report gave the Maputo Corridor as a success story, but also noted that trade needed to be liberalised.
The level of economic growth expected over the next few years – around 7.9 percent between 2014 and 2017 according to the EIU – will be the result of coal mining projects and investment in new transport facilities.
“Transport, communications, industry and Services, will grow significantly,” said the EIU.
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Economic Partnership Agreements (EPAs) – State of play, future perspectives and implementation
Address by Karel De Gucht, European Trade Commissioner, to the EU-ACP Joint Ministerial Trade Committee, Brussels, 11 October 2013
Ministers,
This is now the fourth time that I have the honour to address Economic Partnership Agreements (EPA) in this forum. I have always been – and still am – optimistic about the prospects of concluding the EPA negotiations. There is no reason to be pessimistic: we are implementing three EPAs and have made good progress in many negotiations. What we need now, is a strong commitment and political will to go that extra mile.
Let me start with an overview of the progress we have made, in negotiating and implementing agreements with the seven regions.
I'll start with EPA implementation. We are now implementing three EPAs, in the Caribbean, in the Pacific and in Eastern and Southern Africa. We are seeing good progress in all regions, new investments and business relations, regular engagement between the partners and a constructive partnership which helps to find solutions to sometimes tricky situations.
In the Caribbean, we are making progress in discussing outstanding issues, identified by the Joint EPA Council. Countries are proceeding with tariff cuts and completing ratification. The EPA Parliamentary committee held its second meeting in April. As you see, implementation is very much underway by both sides.
In the Pacific, the Trade Committee established under the interim EPA has met several times to review implementation between the EU and Papua New Guinea. The agreement is giving tangible results in Papua New Guinea. With major investments in the fisheries sector coming on stream, we are seeing the creation – directly or indirectly – of around 30,000 new jobs, mainly for women and locals.
Four countries of the Eastern and Southern African (ESA) EPA group have started implementing their agreement with the EU. Earlier this year, we held the second meeting of the EPA committee in Mauritius to review trade matters, customs and development co-operation. The Commission organised a seminar to increase awareness of the private sector in Madagascar. At the same time, some major regional aid programmes underpinning the EPA process are being approved still this year.
Turning to on-going regional negotiations, these are in much better shape than they are sometimes perceived to be.
In the Southern African Development Community's EPA group, we are discussing revised offers to increase agricultural market access. This is the main element and key to conclusion. Senior officials have frequent meetings to get this deal done. And I had excellent meetings on an otherwise physically punishing trip to Namibia, South Africa and Botswana. I hope that when we do conclude these negotiations – and by this I mean very soon – that my staff will plan for some time to breathe between meetings and flights.
In the context of continued negotiations, South Africa has agreed to work towards an agreement on Geographical Indications. Negotiations have also officially started on services and investment, which are being negotiated with a sub-group of interested countries. This year, we have made progress on a number of issues, but quite a few points remain on the agenda. Further to the last round of talks, the EU is doing some internal work and hopes to revert to partners before the end of October. I am ready to travel again to the region for focussed talks as soon as possible thereafter.
With the East African Community, several rounds of exchanges have helped to make substantial progress on all issues. During this year, EU and EAC teams managed to settle the development cooperation chapter – a major step. One further technical round in May allowed agreement on rules of origin in fisheries. I visited Kenya in July to urge rapid progress.
In the meetings of Arusha also in July, EU and EAC teams ended talks with open issues still on the table. They requested political guidance pushing them to overcome the few outstanding issues paving the way to concluding the EPA. So far, our main hurdle are overlapping diary commitments. I had hoped we could have a stock-taking ministerial back-to-back with today's JMTC but this was not possible. My invitation to EAC ministers to come to Brussels in October still stands and I would be delighted to find time to travel to East Africa for a conclusive round when our respective teams have resolved most of the open technical issues based on the expected political guidance. My main appeal would be to find time for stock-taking as soon as possible. Because of the WTO ministerial and a few EU institutional meetings with other trade partners, until the end of the year, my diary is filling up faster than I would like it to.
With West Africa, the agreement currently negotiated will cover goods and development-cooperation and include rendezvous clauses for services and rules chapters. Few issues remain open and most need addressing at Ministerial level. We are now waiting for a revised market access offer in order to make progress. The region is now taking the necessary political decisions. I had a much appreciated discussion with the President of Senegal, Macky Sall only two days ago and look forward to the outcome of the ECOWAS Summit on 25 October in Dakar. West Africa is on my list of places to visit as part of my commitment to advance EPAs on a political level. I could manage one country this year and certainly will follow up next year too. I thank Commissioner Ciolos for the discussions he had on EPAs in Senegal and Ghana last week.
In the Pacific, negotiations are following a regular pace, with clear commitment on both sides to forge an agreement. The agreement will cover trade in goods, development cooperation, sustainable development, and fisheries. Since October 2012, several technical working group meetings based on a revised draft text and market access offers for all countries have been held. These talks have revealed large differences, especially on fisheries (notably the issue of conservation and resources management). I therefore very much look forward to a stock-taking discussion with Pacific ministers in Brussels next week and thank them for coming such a long way.
Negotiations with other regions are less advanced. In the Eastern and Southern African region, we have been focussing on implementation of the interim EPA.
With Central Africa, we could not engage in negotiations as the Central African negotiators need political guidance from their governments. I do not exclude a visit to the region between this year and the first half of next year.
On the whole, I would say that EPA negotiations have clearly made much progress over recent years. In several regions, they have advanced so much that most technical issues are being settled and only a handful of politically more sensitive issues remain open. These are not the same everywhere, reflecting the regional nature of negotiations and needs.
In parallel, the EU adopted in May the amendment of the Market Access Regulation, thereby clarifying the options available to ACP countries in their choice of the trading relationship they wish to have with the EU.
This amendment is meant to bring closure on the agreements initialled in 2007. Countries concerned have until 1 October 2014 to sign and/or ratify and implement their existing interim agreements and maintain their free access to the EU. Meanwhile, on-going EPA negotiations may continue as long as they have the prospect to bear fruit. I take the opportunity to repeat once again that there is no deadline for EPA negotiations in progress since 2007.
I want to be clear on one point: there will be no new bridging measure.
The whole purpose of the amendment was to regularise the status of the older EPAs. For the rest, applicable trade regimes with ACP countries that choose not to have an EPA is GSP or where applicable MFN status. The only possible third way could be a regular comprehensive free trade agreement, but in such a set up EU market access is far less generous than the 100% duty and quota free access we offer in EPAs which were specifically designed to offer the best possible trade conditions to less developed but justifiably ambitious economies. Growth and a stronger position in world markets is what you all deserve.
We continue to see EPAs as the most promising means to use trade for growth, jobs and development. Openness to trade has been a key element of successful growth and development strategies. Cheaper imported inputs will lower production cost and facilitate integration into global value chains which in turn foster long-term business relations and investment.
Again, I care to repeat that EPAs are the most generous trade partnerships the EU has ever offered to any trading partner. They provide for full free access to the EU and for asymmetry in the level of obligations, for flexibility in their implementation and for provisions tailor-made to ACP development needs. Moreover, the EU stands ready to provide tailored development support in order to help ACP partners implement their EPAs.
The EU, including Commission President Barroso in his bilateral contacts with many of your leaders, has made it clear that EPAs are a priority. We stand ready for dialogue, in the competent ACP structures, in bilateral and bi-regional meetings. The choice is yours!
The year has been good, but it can even be better before 31 December. We need political determination to move forward and bring EPAs to conclusion. I have spent a good part of the year speaking to ACP ministers and statesmen. It has been a privilege to engage in meaningful dialogue and to learn of the economic vision set out by governments for ACP countries. We are not serving contradictory ends. I am a doer and am determined to end the year with even more progress on EPAs. For this, I need you to match or even outdo my ambition.
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