News Archive January 2014

The AU Summit and 10 years of agriculture

The 22nd African Union Summit began on Tuesday, 21 January 21 in Addis Ababa with the 27th ordinary session of the AU’s Permanent Representative’s Committee, chaired by Ethiopia’s Ambassador Konjit Sinegiorgis. It will conclude on Friday, 31 January with the end of the two-day Assembly of the Heads of State and Government.

The theme of this Summit, “Agriculture and Food Security”, was chosen in order to mark the 10th anniversary of the Comprehensive Africa Agricultural Development Program (CAADP) which was adopted by the Heads of State and Government Summit in July 2003.

Agriculture is the primary economic sector of many African countries, generating more employment opportunities and export earnings than other sectors. It is estimated that more than 65 percent of Africans derive their livelihood from agriculture, both in employment and in food production. It is the single most important sector in the continent’s macro-economic portfolio, with a conservative estimate of close to a 40 percent contribution to GDP and providing more than half of the continent’s export revenue. The vulnerability to seasonal fluctuations in food production and the all-too-frequent incidents of food insecurity, therefore, make a continent-wide policy focus on agricultural development an economic and social imperative.

This much needed policy focus was demonstrated when African leaders endorsed the Comprehensive Africa Agricultural Development Program (CAADP) at the AU’s second ordinary session in Maputo, Mozambique. The Assembly that endorsed CAADP noted that 30 percent of Africans were “chronically and severely undernourished” and that the continent was then “a net importer of food and the largest recipient of food aid”. In order to change that grim reality the Maputo Assembly declared that Africa needed to use “its full potential to increase its food and agriculture production so as to guarantee sustainable food security and ensure economic prosperity for its people”. It agreed to urgently implement the CAADP and adopt effective policies that would encourage the sector’s development domestically across the continent.

As it name signifies, CAADP aims for a rapid and comprehensive development of Africa’s agricultural sector with the stated goal of enabling African countries to attain a “higher path of economic growth through agriculture-led development, which eliminates hunger, reduces poverty and food insecurity, and enables expansion of exports”. In order to achieve these goals, African governments agreed to devote at least 10 percent of their national budgets to agricultural development and the CAADP set 6 percent as a minimum threshold for an annual agricultural productivity growth rate.

The Program focuses on four critical strategic areas that it identified as high impact and structurally valuable. The first of these pillars, as they are referred to, is to extend the area under sustainable land management and reliable water control systems. That will go a long way in terms of efficient utilization of the vast and so far unutilized or underutilized arable land on the continent.

The second pillar of the CAADP is improving rural infrastructure and trade-related capacities for market access. Considering the fact that the most severe impediments to Africa’s competitiveness in primary products are to be found in physical and structural shortcomings, investment in these areas is most essential. Africa’s infrastructure, primarily in transport and logistics, were put in place during the colonial era with the sole aim of shipping raw materials out of the continent. The absence of infrastructure relevant to domestically vibrant economies divorced from a primary feeder role has indeed held Africa’s agriculture back for decades. Improvements in both the physical and systemic infrastructure will certainly boost the continent’s productivity.

The third pillar of engagement for the CAADP revolves around ensuring food security by increasing food supplies, reducing hunger, and improving the response to food emergency crises. The fourth pillar focuses on improving agriculture research, technology dissemination and its adoption. This will provide the much needed scientific support to the sector through innovative solutions that boost productivity.

Taken in tandem with the domestic focus on agriculture by member countries, the AU’s initiative of agricultural development has effectively revitalized the continent’s agricultural sector and attracted huge foreign investment. Some African countries, including notably Ethiopia, have made agriculture development the centerpiece of their development agenda and their agricultural productivity growth rate has been instrumental in sustaining the overall economic growth of the past decade.

Ethiopia’s impressive economic performance over the past eleven years has been well publicized internationally. What has been less emphasized is the fact that the double digit growth rate (averaging 10.6 percent for the past ten years, according to the World Bank) has been made possible through intensive and extensive investment in agriculture. By earmarking an average of 15 percent of the national budget to agriculture and achieving close to 10 percent growth rates in the sector, Ethiopia has been one of the handful of countries that have met the 6 percent productivity growth rate and the 10 percent budget allocation targets set by the AU Summit in Maputo back in 2003. An additional fact is that this has enabled Ethiopia’s economic growth to have a real impact on the most vulnerable members of the society, often farmers.

In a continent where it is the most important economic sector both as a source of people’s livelihood and as the source of the largest contributions to GDP, the historical neglect of policy makers towards agriculture have resulted in devastating humanitarian crises. The meager overall level of investment in the sector from both public expenditure and private finance has proved disastrous for Africa’s economic prospects and its human capital development. A rejuvenated agricultural sector is not only necessary to increase income levels for the majority of people who live off the sector but also ensure food security through increased food supply and lower costs.

To mark the tenth year anniversary of the CAADP, the 22nd Ordinary Session of the Heads of State and Government is expected to declare 2014 the “Year of Agriculture and Food Security”. In addition, the Summit will also hear reports on the implementation of previous decisions, on the activities of the Union’s Peace and Security Council, of NEPAD and of the activities of the High-Level Committee on the Post-2015 Development Agenda, as well as other pertinent reports. The Summit will also appoint ten new members of the Peace and Security Council to serve for the next two years as well as choose the new Chairperson for the African Union for 2014.

This article originally appeared in A Week in The Horn of Africa, a newsletter that focuses on economic developments in the Horn of Africa region.

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The AU Summit and 10 years of agriculture

30 Jan 2014
The 22nd African Union Summit began on Tuesday, 21 January 21 in Addis Ababa with the 27th ordinary session of the AU’s Permanent Representative’s Committee, chaired by Ethiopia’s Ambassador Konjit Sinegiorgis. It will conclude...
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Deal signed for Asia Africa Europe cable system

Seventeen telecommunications companies have signed a construction and maintenance agreement for the planned Asia Africa Europe-1 (AAE-1) cable system.

The cable will interconnect Hong Kong, Asia, the Middle East, Africa, and Europe and is expected to be ready for service in 2016.

It will facilitate and provide support for the unprecedented growth of Asia-Africa trade. Providing robust, reliable, low latency connectivity which underpins one of the highest growth and most active global trade routes, AAE-1 will also bring much needed protection and diversity to the existing heavily congested subsea cable systems connecting the various countries along the route, it said.

Participating operators include PCCW Global, China Unicom, Telecom Egypt, Etisalat, Omantel, and Ooredoo. PCCW Global unveiled plans to land the cable at the Cape D’Aguilar Cable Station in Hong Kong, and then extend connectivity to its city data centre.

It will be the first submarine cable linking the Far East to Europe at the possible lowest rate of delay and high transfer capacities ranging up to more than 40 terabits which will contribute significantly to the growth of the business volume in the countries passing through.

The submarine cable will connect Hong Kong, Vietnam, Malaysia, Singapore, Thailand, India, Pakistan, Saudi Arabia, Oman, United Arab Emirates , Qatar, Yemen , Djibouti, Egypt , Greece, Italy and France.

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Deal signed for Asia Africa Europe cable system

30 Jan 2014
Seventeen telecommunications companies have signed a construction and maintenance agreement for the planned Asia Africa Europe-1 (AAE-1) cable system. The cable will interconnect Hong Kong, Asia, the Middle East, Africa, and...
1 ~ 496

South Africa was continent’s top FDI recipient in 2013

Foreign direct investment flows to Africa increased nearly 7 percent to an estimated $56 billion last year, nearly a fifth of which went to top recipient South Africa, a United Nations report said on Tuesday.

Africa, along with Latin America and the Caribbean, helped drive FDI inflows to developing economies to a new high of $759 billion in 2013. That was more than half of global FDI, the United Nations Conference on Trade and Development said in its latest Global Investment Trends Monitor.

Sub-Saharan Africa’s robust economic growth, which the IMF expects to increase to 6.1 percent in 2014, from 5.1 percent last year, has made it an attractive destination for investors.

South Africa’s performance has lagged the rest of the region, however, with the IMF forecasting growth of 2.8 percent in the continent’s biggest economy this year, an increase from 1.8 percent in 2013.

Investors have also been unnerved by recurrent labour unrest, most recently a platinum mining strike that began on Thursday which has hit half of global output of the precious metal.

Despite these woes, FDI inflows to South Africa more than doubled to $10.3 billion in 2013, UNCTAD said, while other African countries like Nigeria and Ghana saw a decline in investment.

Most of the rise in FDI flows to South Africa was due to greenfield, or new investment, particularly in the consumer goods sector, said Masataka Fujita, head of UNCTAD’s investment trends and issues branch.

Mozambique, where companies like Brazil’s Vale, London-listed Rio Tinto and Italy’s Eni are developing huge offshore gas and coal deposits, was another strong performer, attracting inflows of $7.1 billion, up more than 30 percent from a year ago.

Inflows to Africa’s top crude oil producer Nigeria declined about 20 percent to $5.5 billion, the report said, largely due to asset sales by foreign oil companies such as Royal Dutch Shell and Chevron.

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South Africa was continent’s top FDI recipient in 2013

30 Jan 2014
Foreign direct investment flows to Africa increased nearly 7 percent to an estimated $56 billion last year, nearly a fifth of which went to top recipient South Africa, a United Nations report said on Tuesday. Africa, along with...
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African countries need united action on infrastructure development – AU chairperson

AU Commission Deputy Chairperson, Erastus Mwencha, on Tuesday called on African countries to unite in implementing the continent’s approved programme for infrastructure development.

“We need to harmonise our vision and strategies and act together toward a common destination,” he told the first meeting of the Council for Infrastructure Development (CID), being held on the margins of the 22nd Ordinary Session of the AU Assembly.

Taking part in the meeting are ministers responsible for infrastructure development and transport as well as chief executives of regional economic communities.

Mwencha, who chaired the meeting, said that Africa’s infrastructure was one sector that has a huge deficit in terms of implementation and funding.

Underscoring the need for effective supervision of projects, he urged the CID to get involved in improving the connectedness of the continent, saying it should be seen as an action Council.

In 2012, African heads of state and government approved the Programme for Infrastructure Development in Africa (PIDA) with a resolution to undertake institutional reforms, conducive to the creation of a favourable business climate for private investment in infrastructure.

They also resolved to promote financing mechanism reflecting a commitment to speed up infrastructure development on the continent.

In the priority action plan for 2012 to 2020 of PIDA, 51 projects and programmes were identified, calling for a total investment of 68 billion dollars.

Of these ventures, 24 are in the transport sector, 15 for energy, nine for trans-boundary water and three for information, communication and technology (ICT) development.

The transport programme is aimed at linking major production and consumption centres, providing connectivity among major cities, defining the best hub ports and railway routes and opening land-locked countries to improved regional and continental trade.

According to the PIDA outlook to 2040, US$ 360 billion was required as capital cost for the development of 37,300 km of highways; 30,200 km of railways; port added ton capacity of 1.3 billion tons; 61 099 MW hydroelectric power generation; and 16,500 km power lines interconnection.

The trans-boundary water programme targets development of multipurpose dams and the capacity of lakes and river basin organisations so they can plan and develop their own water-based infrastructure, besides addressing food needs for Africa’s population.

Meanwhile, the ICT programme seeks to establish an enabling environment for completing the land fibre optic infrastructure and installing internet exchange points in countries that lack such.

Mwencha said that the one-day CID meeting was scheduled to set up an implementation mechanism for the PIDA projects and programmes toward attainment of Africa’s Agenda 2063 on the overall continental development.

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