News Archive September 2014

Kenya: Highlights of the revision of National accounts

Kenya National Bureau of Statistics (KNBS) initiated the process of rebasing and revision of the National Accounts Statistics in 2010. Specific tasks were to implement some of the recommendations contained in 2008 System of National Accounts (2008 SNA), change the base year from 2001 to 2009 and, revise the annual and quarterly national accounts statistics for the period 2006 to 2013. In addition, the revision was to include for the first time the development of Supply and Use Tables (SUT) as an integral part of the National Accounts Statistics. The Supply and Use Tables gives detailed information on the production processes, the inter-dependencies in production, the use of goods and services and the generation of income in production. The SUT was used as a framework for the revision process. This was published in the 2014 Economic Survey report. Also presented in the same report were the preliminary revised GDP estimates for 2009 and have since been firmed up.

Broadly, the revision process involved use of a wide range of information obtained from surveys, censuses and administrative records. This was done in a coherent and consistent manner to achieve the overall goal of improved National Accounts statistics.

Rebasing of national accounts series means replacing the old base year used for compiling the constant price estimates to a new and more recent base year. It is essentially done to ensure that the principal measure of economic growth yields good estimates over the medium term following the base year. It is desirable to periodically rebase, to update the production structure; structural changes in relative prices of various products and; incorporate product changes due to developments and innovations. In addition, changes on the demand side like consumption patterns, utilization and acquisition of capital goods are all also updated through such a process. Rebasing is used to account for these changes, so as to give a more current snapshot of the economy.

This is the sixth time that Kenya has revised the National Accounts Statistics. The first official estimates of domestic income were prepared in 1947. The first revision was carried out in 1957 after a number of surveys were conducted to fill in the data gaps. Subsequent revisions were carried out in 1967, 1976, 1985, 2005 and 2014.

The revised GDP estimate translates to 20.5 per cent increase in the level of 2009 GDP and rises to 25.3 percent in 2013. The main contributing factors included improved coverage and revised input-output production structures which were lower in a number of sectors compared to the revised estimates. The use of new data such as 2009 Kenya Population and Housing Census (KPHC), 2005/06 Kenya Integrated Household Budget Survey (KIHBS) and 2010 Census of Industrial production (CIP) majorly contributed to the upward revisions.

Real estate, agriculture and manufacturing account for most of the change. Despite this, there are no dramatic differences in the structure of the economy in broadly defined categories. In contrast to many countries, the share of agriculture to GDP has remained relatively unchanged over the period.

Extracts taken from “Information on the Revised National Accounts”, published on 30 September 2014 by the KNBS.

Table 1 Revised GDP Kenya

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Kenya: Highlights of the revision of National accounts

30 Sep 2014
Kenya National Bureau of Statistics (KNBS) initiated the process of rebasing and revision of the National Accounts Statistics in 2010. Specific tasks were to implement some of the recommendations contained in 2008 System of...
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World Bank Group finds regulatory reforms improving Nigeria’s business climate, yet challenges persist

A new report by the World Bank Group finds that most states across Nigeria continue to implement regulatory business reforms with Cross River, Ekiti, Niger, Ogun, and Rivers making the biggest strides. Yet challenges and hurdles to local entrepreneurs persist. The report finds that there is room to learn from each other, with good practices being implemented in some parts of the country that can benefit other states if applied.

Released today [29 September 2014], Doing Business in Nigeria 2014 benchmarks 35 Nigerian states in addition to Abuja, FCT. The report covers four indicators: starting a business, dealing with construction permits, registering property, and enforcing contracts. The report finds that 22 states have improved in at least one of the areas measured since the last benchmarking exercise in January 2010.

The findings show big strides achieved in the past few years by some states. Ogun, one of the lowest ranked overall performers in both 2008 and 2010, is one of the top reforming states in 2014. A concerted effort across federal and state authorities, and in collaboration with the private sector, helped improve Ogun on three of the four indicators benchmarked.

The report also finds that most of the reforms documented focused on streamlining the complexity and cost of regulatory processes. One-stop centers have improved the time to issue a building permit in Rivers, Delta, and Oyo, in some cases dropping by 50 percent or more since 2010. Findings show that the case management provisions introduced by Ekiti’s new civil procedure rules in 2011 helped reduce average trial time by nine months. Data shows that states continued to digitize land records and introduce geographical information systems making property registration more secure and efficient.

Despite these improvements, challenges persist, with no single state ranking at the top on all indicators. For instance Abuja, FCT and Lagos are among the top performing states on the ease of starting a business, but rank in the bottom two positions on the ease of dealing with construction permits. Similarly, Sokoto and Osun rank two and three in dealing with construction permits, but 30 and 33 in starting a business, respectively.

Additionally, Nigerian entrepreneurs face different regulatory hurdles, depending on where they establish their businesses. Varied state regulations and practices along with uneven implementation of federal legislation drive these differences and impact local entrepreneurs differently.

“The report results show the importance of close coordination between federal and state governments in implementing more streamlined and efficient regulatory frameworks for all Nigerians,” said Mierta Capaul, Lead Private Sector Development Specialist with the World Bank Group. “States in Nigeria stand to gain a lot from adopting good practices that are already implemented and are working elsewhere in the country.” Capaul added.

Doing Business in Nigeria 2014 is the third in a series of World Bank Group sub-national reports studying the ease of doing business in the country. The report was produced in partnership with Growth and Employment in the States (GEMS), an employment project supported by Nigeria’s Federal Ministry of Industry, Trade and Investment. The project is funded by the United Kingdom’s Department for International Development (DFID). 

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Mo Ibrahim Foundation records improvement in overall African governance but highlights some concerning trends

The 2014 Ibrahim Index of African Governance, launched today, shows that between 2009 and 2013 overall governance improved on the African continent. However, over the past ten years, the main drivers of this overall positive trend have changed.

“The results of the 2014 IIAG challenge our perceptions about the state of African governance. Africa is progressing but the story is complex and doesn’t fit the stereotypes. Even if the overall picture looks good, we must all remain vigilant and not get complacent,” said Mo Ibrahim, Chair of the Mo Ibrahim Foundation.

At the country level, the 2014 IIAG highlights the potential of governance underperformers while revealing the weaknesses of current frontrunners. Countries in the bottom half of the rankings register the largest improvements over the past five years. Côte d'Ivoire, Guinea, Niger and Zimbabwe have changed course since 2009 from negative trajectories to become the biggest improvers on the continent. This progress has been driven in large part by gains in Participation & Human Rights. Meanwhile, the historically strong performers, Mauritius, Cabo Verde, Botswana, South Africa and Seychelles, have shown some deterioration in at least one category over the past five years, notwithstanding that all these countries remain on overall upward trends.

“The 2014 IIAG results show that high ranking countries cannot assume that future achievements will necessarily follow previous accomplishments. More generally, let us make sure that the Africa Rising narrative, that everyone is talking about, truly benefits all African people,” said Jay Naidoo, Board Member of the Mo Ibrahim Foundation.

At category level, the 2014 IIAG also reveals that the main drivers of the overall positive trend in African governance have changed. For the most recent five years, from 2009 to 2013, progress has been jointly driven by Participation & Human Rights and Human Development, whereas the main driver of gains in the previous period (2005-2009) was Sustainable Economic Opportunity, which has stalled in the most recent period.

Progress in the Participation & Human Rights category has gathered momentum, making it the most improved 2014 IIAG category over the last five years (+2.4). While in Rights and Gender the trends are both positive, it is in the area of Participation, particularly Political Participation, where the strongest gains in score have been achieved for this latest period.

“With a growing electorate that has demonstrated a desire to be heard, the results of the 2014 IIAG confirm that Participation & Human Rights is a crucial aspect of governance that governments cannot ignore,” said Mary Robinson, Board Member of the Mo Ibrahim Foundation.

In contrast, after an improvement of +3.4 between 2005 and 2009, the largest of any category in this time period, Sustainable Economic Opportunity has registered the opposite trend over the last five-year period, with a deterioration of -0.2. This is due to a reversal of trends in two of the four sub-categories, Public Management and Business Environment, and a slower pace of improvement in the other two sub-categories, Infrastructure and Rural Sector.

“Perhaps some of the low-hanging fruit of better economic management have been garnered. The challenge grows for the continent to become a fully competitive force in the global market at a time when commodity price trends are becoming less helpful to many countries on the continent,” said Lord Cairns, Board Member of the Mo Ibrahim Foundation.

Meanwhile, the Safety & Rule of Law category continues to expose concerning trends, with 12 countries showing their weakest performance since 2000, in 2013. Having shown a deterioration of -1.5 between 2005 and 2009, this dimension of governance registers another negative trend in the last five-year period, although to a lesser extent (-0.8). Safety & Rule of Law is the only category in the 2014 IIAG to have demonstrated two consecutive five-year period deteriorations in the last ten years. National Security is the only sub-category within Safety & Rule of Law to have shown progress over the past five years (+0.5), driven in large part by Cross-border Tensions, the most improved indicator in the 2014 IIAG. This aspect of improved citizen security is in contrast to the deterioration registered in Personal Safety (-1.1) in the past five years, driven by declines in four of the six underlying indicators.

“Even if overall governance trends are positive, contrasting performance in the 2014 IIAG is of concern. The strength and sustainability of Africa’s future prosperity will be defined by the continent’s commitment to all governance dimensions, including safety, security, and the rule of law,” said Salim Ahmed Salim, Chair of the Ibrahim Prize Committee.

On the other hand, Human Development has remained a consistent improver, showing positive movement of +2.3 since 2009, after a positive trend of +2.2 between 2005 and 2009. All sub-categories and 41 out of 52 countries have seen an improvement over the past five years, with a quarter of these having improved by more than +5.0 points. Health is the most improved sub-category within the 2014 IIAG. In the last five years, all of its underlying indicators, which measure issues such as maternal mortality, immunisation and undernourishment, have registered progress. However, this largely positive picture masks the poor performance of some countries, particularly in Welfare.

“The 2014 IIAG underscores the need to focus on building equitable and efficient institutions, such as health systems, accountability mechanisms and statistical offices. Without these, we will not be able to meet the challenges we face – from strengthening the rule of law to managing shocks such as the Ebola virus,” concluded Hadeel Ibrahim, Founding Executive Director of the Mo Ibrahim Foundation.

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How can the WTO better integrate the poorest countries into the growing knowledge-based economy?

In June 2013, the members of the WTO granted LDCs a second transition period extension for the implementation of the TRIPS Agreement of another eight years (until 2021). With an ongoing waiver alone, however, the integration of LDCs into the international system for the protection of intellectual property has merely been postponed, and the world’s poorest countries will remain cut off from the global knowledge-based economy. What is needed instead is a gradual and development-oriented approach for a properly sequenced IP reform in LDCs.

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was concluded in 1994 and sets out international minimum standards for the protection of intellectual property (IP) rights (i.e. copyrights, patents, trademarks, geographical indications, industrial designs, integrated circuit layout-designs and undisclosed information). Most least-developed countries (LDCs) had neither a comprehensive domestic framework for IP protection nor much experience in negotiating international IP conventions when they became WTO members.

They mainly accepted TRIPS as part of a package deal in exchange for concessions in other areas of trade, and because they were concerned at the possibility of losing their ability to attract urgently needed foreign direct investment and technology transfer. In addition, the Agreement contains provisions that foresee technology transfer as well as technical and financial assistance in order to support the creation of a viable technological base in developing countries and LDCs (Articles 66.2 and 67 TRIPS). TRIPS also allows for certain "flexibilities” (e.g. regarding the method of implementation, the substantive standards of protection and the mechanism of enforcement) to accommodate particular national interests or resolve issues that are specific to LDCs. Most importantly, the Agreement did not entail any immediate economic cost and no direct action was required as it provided LDCs with a generous transition period of ten years to meet the bulk of their new obligations (Article 66.1 TRIPS).

Establishment of a priority needs assessment process for LDCs in 2005

When the transition period of ten years ended in 2005, expectedly, most LDCs had not made substantial progress in implementing the Agreement. Consequently, the TRIPS Council extended the transition period for LDCs for another 7½ years till July 2013. The WTO members also established a process in which LDCs were requested to provide information on what they considered as priorities for technical and financial assistance that would enable them to successfully implement the TRIPS Agreement. Based on these self-assessments, it was thought that developed countries should then have been able to provide effective technical and financial assistance to LDCs. Some NGOs and other commentators criticised the priority needs assessment process as being merely a delaying tactic used by developed country members to further postpone honouring their promises of assistance. These critics also claimed that LDCs would be forced to spend already scarce resources on collecting data and information regarding the status of their implementation of the TRIPS Agreement.

Most WTO members, however, considered these self-assessments as a valuable exercise that allowed LDCs to table concrete and specific demands which could create the political momentum needed to mobilise potential international donors as well as raise awareness and commitment among the internal institutions and stakeholders in the beneficiary country. Unfortunately, the WTO members did not specify any formal requirements or a particular mechanism for the conduct and submission of these priority needs assessments by LDCs. Likewise, it was not specified who should be funding and conducting these stocktaking exercises. As a result, the priority needs assessments submitted thus far differ significantly in structure, quality, scope and analytical reasoning. From a development aid perspective, many of the proposed implementation plans did not meet the standards and principles of aid effectiveness that have been developed over recent decades (e.g. in the 2005 Paris Declaration on Aid Effectiveness). There also appears to be a certain disconnect, between LDCs and potential donors as to the overall objectives of the priority needs assessment. While the LDCs’ requests mainly focus on the establishment of a national IP system that is beneficial to the country’s socio-economic development, some donor countries believe that technical and financial assistance should be primarily targeted at bringing LDCs’ intellectual property laws and institutions into compliance with the obligations under the TRIPS Agreement.

The vagueness and ambiguity of the priority needs assessment process has hampered its effectiveness. Only nine out of a total 33 LDC WTO members have so far been in a position to submit such individual requests for technical and financial assistance (Sierra Leone, Uganda, Bangladesh, Rwanda, Tanzania, Senegal, Mali, Madagascar, and Togo). On the other hand, these previous submissions did not trigger substantial technical and financial assistance from the industrialised countries, which led to some frustration among the potential beneficiaries.

A second transition period extension for LDCs till 2021

Shortly before the deadline of 1 July 2013 was about to expire, a hard-fought debate took place in which LDCs requested an unconditional extension with an unlimited time frame. There was also widespread support among developed countries for a further extension, but concerns were raised about an open-ended time frame. In the TRIPS Council meeting of 11–12 June 2013, WTO members granted LDCs a second extension of the transition period for another eight years till 2021. Interestingly, no reference was made to the priority needs assessment process or to the provision of technical and financial assistance.

Although the LDCs did not succeed with their request for an open-ended extension of the transition period, agreeing on another extension of the transition period seemed to be the only pragmatic next step, given that neither side had considered LDCs’ TRIPS implementation as a priority. As most of the LDC WTO members have not yet addressed the issue domestically, it seemed premature to expect these countries to be ready to implement the TRIPS Agreement by mid-2013. Conversely, developed country members have to date mainly focused on shielding themselves from requests for unspecified technical and financial assistance (the first round of priority needs assessments has revealed the extent of their unpreparedness). Instead, they targeted their efforts on encouraging full implementation of the TRIPS Agreement in emerging markets where powerful economic interests are at stake and where they could reap significant benefits from having a functional IP system in place. Granting all LDCs an unconditional extension of the transition period for another eight years was therefore a convenient way for all parties to buy time and to avoid potential conflicts in other areas of trade.

Towards a more gradual and development-oriented IP reform in LDCs

An ongoing TRIPS waiver without considerable efforts to bring LDCs into compliance with the Agreement would lead to a further postponement of LDC’s integration into the international IP system. As a consequence, LDCs would be further excluded from international investment and technology transfer flows and continue to play a minor role in the global knowledge-based economy. Therefore, alternatives to simply offering further extensions of the transition period should be seriously discussed and adopted by the TRIPS Council.

WTO members should reinvigorate and refine the existing priority needs assessment process in order to make it more efficient, transparent and predictable. LDCs can only be expected to undergo such an internal stocktaking exercise if they have reasonable expectation to actually receive technical and financial assistance under Article 67 related to  technical cooperation. There is still a need for greater coordination on the national and multilateral levels in order to provide further incentives for all WTO members to engage in this process and to trigger increased technical and financial assistance for LDCs. Most developed country WTO members seemed to recognise this fact, with many delegations expressing their concern that without adequate coordination there was the very real risk of duplication of effort and, ultimately, a lack of sustainable impact. The establishment of a coordination mechanism as well as the creation of a multilateral fund for IP-related technical and financial assistance would play a crucial role in this regard. The TRIPS Council has already identified the Enhanced Integrated Framework (a multi-donor initiative of the IMF, ITC, UNCTAD, UNDP, World Bank, and WTO), as a potential multilateral mechanism for the coordination of IP-related technical and financial assistance. It will now require much effort as well as some additional fine-tuning to further promote this promising avenue.

As the establishment of an effective national IP system requires a broad consensus among various national stakeholders, LDCs should align their national IP policies with their national development plans. While substantial IP-related technical and financial assistance has been provided to emerging economies in recent years, the track record in LDCs is still very limited. Additional studies on the socio-economic impact of TRIPS in LDCs and the development of best practices in technical assistance would be crucial in convincing national development cooperation agencies to redirect development aid to IP-related projects. Future research should also focus on collecting empirical data about the IP systems of the world’s poorest countries as well as on adapting existing IP policies to serve the needs of LDCs.

Taking into account that most LDCs do not have the resources to implement the TRIPS Agreement in its entirety, and the legitimate question of whether this would even be desirable given their limited innovative and administrative capacity, it is unrealistic to expect LDCs to establish a functioning fully-fledged IP system similar to the ones operating in developed or even middle-income countries. Hence, it might be more practicable to apply a gradual and development-oriented approach. IP-related technical and financial assistance should primarily focus on those areas that are essential for the countries’ socio-economic development and that pave the way to a more stable, innovative and productive economy. Several LDCs have already taken this into account in their national IP policies and these efforts should be further strengthened. Introducing a basic but efficient system for the protection of national trademark holders, for instance, would support the establishment of non-informal small enterprises in LDCs, while a basic mechanism for collecting and disbursing copyright royalties would strengthen the position of domestic artists. Given the limited resources of LDCs, the implementation cost of each reform step needs to be carefully considered as well. The management of a sophisticated patent examining system, for example, would overstretch the capacities of most LDCs.

A development-oriented and properly sequenced IP reform will reduce potential negative socio-economic effects and allow LDCs to integrate more smoothly into the global IP system. It will also contribute to a sound business environment and increase LDCs’ ability to attract foreign investment, know-how and modern technology. This would allow the poorest countries to increase their productivity, to build up their domestic technological base, to achieve market diversification and to shift towards higher value-added products and services.

Arno Hold is a Fellow at the World Trade Institute (WTI) of the University of Bern, Visiting Fellow at the London School of Economics and Political Science and Director of the WTI/CUHK Summer Programme on IP in Hong Kong.

This article is published under Bridges Africa, Volume 3 - Number 8 by the International Centre for Trade and Sustainable Development.

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