News Archive August 2016

The 11 bottlenecks facing Africa: Discussion paper by Ugandan President Yoweri Museveni

The 25th Summit of the Heads of State and Government participating in the African Peer Review Mechanism endorsed the following discussion paper presented by Yoweri Museveni, President of the Republic of Uganda

During the 23rd APR Forum in June 2015 in South Africa, His Excellency Yoweri Museveni, President of the Republic of Uganda presented a statement on Eleven (11) Bottlenecks hindering effective socio-economic transformation of the African continent. His Excellency called on countries to review themselves on how well they are progressing on the 4 thematic pillars namely: Democracy and political governance; Economic governance and management; Corporate governance and Socio-economic development, and further encouraged other African countries to participate in the APR process in order to generate creative solutions to African Governance challenges.

Following the statement, the Chair of the Forum requested His Excellency Yoweri Museveni to make a presentation on the bottlenecks he highlighted as pertinent areas for review at the next Forum.

“internally, we always mark ourselves on how well we are doing in terms of socioeconomic transformation. We need to ask what stimuli is needed for changing a predominantly traditional and peasant economy into a modern and prosperous middle income country”

In this regard, His Excellency would like to encourage the Forum to deliberate on the following Eleven Bottlenecks and consider them as part of the APRM tool.

1) Ideological disorientation

These include sectarianism of tribe and religion as well as gender chauvinism. In Africa, this sectarianism has resulted in conflicts, and wars which have hindered development in the continent since independence over 50 years ago. Africa should treat with contempt and not tolerate those who promote sectarianism and gender chauvinism; that is why Uganda’s record on women emancipation is excellent and there is peace in the whole Country.

2) Interference with the private sector

The mistake of interfering with the private sector like when former dictator Idi Amin uprooted the Indian Community from Uganda in 1972; yet these were the entrepreneurial class. Some people wonder why the Asian countries such as South Korea, Singapore, etc., which had no resources, developed faster than the African countries such as Uganda which had everything. Persecuting the private sector was one of the reasons. Private sector is the engine for growth and must be nurtured, regulated and supported to ensure economic development in a country. However, there are strategic areas where government state enterprises may participate. APRM member countries should, therefore, be reviewed on how they are promoting private sector as the engine of growth.

3) Under-developed Infrastructure (electricity, roads, the railway, the telephone, the ICT back bone etc.)

Effective modes of transport, including quality roads, railroads, ports, and air transport, enable entrepreneurs to get their goods and services to market in a secure and timely manner and facilitate the movement of workers to the most suitable jobs. Economies also depend on electricity supplies that are free of interruptions and shortages so that businesses and factories can work unimpeded. Finally, a solid and extensive communications network allows for a rapid and free flow of information, which increases overall economic efficiency by helping to ensure that businesses can communicate and decisions are made by economic actors taking into account all Public-Private available relevant information.

High transport costs affects doing business. Africa needs modern infrastructure to lower costs of doing business and enable the private sector to grow. For example, in EAC we are adding a modern Standard Gauge Railway to the current attempts in increasing stock of infrastructure. The tool should assess how far we are progressing in achieving these over the review period.

With respect to electricity there is a unit of measurement of power consumption called kilowatts per capita. In the United States, the Kilowatts per capita of electricity is 14,000, while in Africa some countries are at 17 kilowatts per capita. It is evident that a country cannot develop without electricity. In 1986, Uganda had 33 kilowatts per capita, later on it moved to 70, and now we are at 200 Kilowatts per capita. We have stepped this capacity up through funding from government and private, but it is very clear we still have alot to do in this respect to compete in the world.

Information and communication technologies (ICTs) have great promise to reduce poverty, increase productivity, boost economic growth, and improve accountability and governance. By providing access to information, equalizing opportunities in rural areas, and contributing to pro-poor market developments such as microfinance and mobile money, ICTs offer new tools to directly address poverty. Local ICT service industries create jobs, especially for youth and women – and promote trade and competitiveness through exports. The ICT sector also fosters innovation across the economy and greatly improves productivity. In Uganda for instance, the ICT Broad Band, we laid the backbone cable using a loan from China to enable us address this infrastructure deficit.

4) Weak states, especially the Army, the Police, etc.

Threats to international peace and security often come from the world’s weakest states. Such countries can fall prey to and spawn a host of transnational security threats, including terrorism, weapons proliferation, organized crime, infectious disease, environmental degradation, and civil conflicts that spill over borders.

On account of defeating the ideological disorientation, it is important to be able to create a strong State, starting with a revolutionary Army. For our case, the army was instrumental in not only liberating the country but also ensuring peace and security that enabled quick socio-economic recovery. Further, it enabled us to assist in controlling insecurity in the neighboring countries like genocide in Rwanda and conflicts in the Democratic Republic of Congo, Somalia, and South Sudan.

Therefore, Army building is very important especially for countries living in turbulent areas. This is important for governance and rebuilding of economies emerging from conflicts like ours.

5) Fragmented Markets, Market Access and Expansion

The problem of a fragmented African market on account of colonialism – when you produce a product but nobody buys or you do not get enough buyers, you cannot prosper and expand your business. We need a market to absorb what the private sector and traditional sector are producing. We must have a market to absorb and stimulate production in the economy.

The process that has already been launched of rationalizing the 53 states into more viable regional units-SADDC, COMESA, ECOWAS, EAC, etc, should be accelerated, deepened and be made into the major units of negotiating with the outside world. Belgium is a small country of only 10 million people with a land area (31,000 equivalent to one region of Uganda. They (Belgium) dare not negotiate on their own with outside partners. They negotiate behind the umbrella of the EU, their greater wealth compared to Africa’s notwithstanding.

In Uganda, we now have a population of 34 million, but this is not enough market. We are working with our neighbors to integrate within the East African Community (EAC) and have a bigger market of about 142 million people. In addition, we are also working with the countries in Common Market for Eastern and Southern Africa (COMESA) to even reach a much bigger market of 430 million and end the fragmentation of the African market. We are also advocating for the global market access and countries like United States, European Union, India, and China have partnered with us on this. However, we must have finished goods to sell in these markets.

6) Lack of industrialization and low Value Addition

Lack of industrialization – the modern slavery of exporting raw-materials where we get only 10% of the products we sell and export jobs to other continents.

On the issue of ending slavery of exporting raw materials, we need to focus on value addition and industrialization by implementing plans to add value to milk, meat, coffee, cotton, tea, fish, vegetable oils, minerals, steel products, sugar, and beverages (such as beers, sodas and fruits) etc. Value addition is another important aspect of transformation, ensuring that we produce for the domestic and export market, together with providing employment for our people.

However, we are still struggling with the value addition for coffee. The coffee bean from Uganda has been exported to United Kingdom at US $1 per kilogram for the last 100 years. The price of the coffee bean has recently moved to US $3 per kilogram in the international market. Yet, when this coffee is processed in the United Kingdom it is resold to us at US $15 per kilogram. This means for the last 100 years we have been donating 14 dollars per kilogram to United Kingdom. In addition, we are creating jobs in their country for their people in the coffee processing chain. We are working hard on reversing this trend to ensure that our people get access to employment in this coffee value chain.

This goes in tandem with an Export-led growth strategy which is another stimulus for socio-economic transformation. 30 years ago, South Korea was exporting raw materials such as human hair for wigs to the United States of America. Today, South Korea having pursued the export-led growth strategy of manufactured goods through advanced technology is now the 10th richest nation in the world.

7) Under-development of Human Resources (lack of education and poor health)

One of the major handicaps to Africa’s social and economic transformation is associated with the inadequacy of its human capital. There is therefore an urgent need for concerted and strategic investment in the continent’s human resource to turn it into the much needed human capital to drive the planned growth and transformation. The human resource must be healthy, educated and properly skilled. An educated, skilled and healthy workforce is important for the socio-economic development of a country.

We are working on education and health for all and this means we need schools and health centers. The massive free education programme for Primary and Secondary Schools, the expanding of tertiary and University education, massive immunization programmes have produced more educated and healthier generations; the literacy rate is now 75%; the struggle now is to skill these educated people and create jobs for them.

8) The under development of Agriculture

Agriculture has been and remains central to Africa’s economic growth and poverty reduction. It is a major source of raw materials for the manufacturing sector, a market for non-agricultural output, a source of surplus for investment and a source of employment. Strategic investments for modernization of this sector will transform it into a springboard for socio-economic transformation for Africa.

So many of our people are continuing to engage in just subsistence farming – growing only food crops or rearing livestock for subsistence.

The tool should check what progress is being made in universal commercialization of agriculture (small, medium and large scale).

9) The under-development of services sector (banking, insurance, tourism, etc.)

Producing services tends to require relatively less natural capital and more human capital than producing agricultural or industrial goods. As a result, demand has grown for more educated workers, prompting countries to invest more in education – an overall benefit to their people. Another benefit of the growing service sector is that by using fewer natural resources than agriculture or industry, it puts less pressure on the local, regional, and global environment.

10) The attack on Democracy and Governance

Democracy is very cardinal in socio-economic transformation. Absence of democracy in the whole colonial period and during much of the whole post-independence periods has meant that people’s real aspirations and grievances could not be accurately captured. There is growing and almost universal democratization throughout Africa, except for countries where there is still insecurity.

In the case of Uganda, we fought and restored Democracy, hence we respect and promote democracy in all its forms including regular presidential, parliamentary and local government elections, the last being in February, 2016.

With respect to governance, there is need to put in perspective our own specific needs. This means that good governance should reflect having such development imperatives like electricity for all, paved roads and railway networks in contrast to the narrow perspective that limits it to having elections.

11) Non-responsive Civil Service

The Civil Service is administrative service of a government to ensure plans, policies and programmes for transformation are implemented effectively and efficiently. The Civil Service is bedeviled with corruption of actors such as public servants or political leaders failing to supervise and discipline the civil servants.

Proposed solutions and way forward

As part of deepening the review, the way forward to our progress we need to make the questionnaire more focused on those areas that promote prosperity, peace and security for the member countries. The following APRM processes and documents should, therefore, be developed and/or revised in light of the above pertinent issues:

  • Review the APRM Methodology and Questionnaire to make it more focused and relevant to the current/ emerging challenges facing the continent.

  • APRM process to be reviewed and streamlined to avoid unwarranted delays in the production of the review reports.

  • APRM recommendations should be more focused on a few critical challenges and high impact solutions in a country context.

  • The APRM Panel should have deeper engagements with leadership and stakeholders to better understand the problems and potential solutions for the country.

  • The APR Forum should identify regional champions with a reporting mandate at the Summits.

In conclusion, His Excellency would like to highlight to the Forum that the policies governments pursue are not the end in themselves. Policies are a means to an end. The end is the total social-economic transformation of Africa as envisioned in Agenda 2063. Therefore, when countries are being Peer reviewed, it is important to see how far we have gone in eliminating these bottlenecks.

His Excellency further pledges the support of the government of Uganda and commitment to this home grown African Mechanism. He informed the Forum that his government is also keen to learn the best practices from member countries in pursuit of common governance programmes to enhance democratic, economic, corporate, and socio economic governance.

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tralac’s Daily News Selection

The selection: Tuesday, 30 August 2016

Dr Ngozi Okonjo-Iweala: ‘African central banks: rethink role or stay the course?’ (The Bank of Uganda)

But we now live in an age of unconventional monetary policy. This raises a fundamental question for African central banks. Do we need a change in paradigm, or should African central banks stay the course established over the last decade, when have been focusing on price stability? Recall that, in earlier decades, they had a much broader remit that included being a source of fiscal deficit and development finance. This is the question I will be addressing in this Memorial Lecture honoring the memory of the brilliant Joseph Mubiru, whose life was tragically cut short, but whose legacy of excellence endures. [RBI’s annual report: Raghuram Rajan says India’s growth below potential]

TICAD V: Progress Report 2013-2015 (pdf, MOFA)

As of 2015, the implementation status of the TICAD V Yokohama Action Plan (2013-2017) is good. This report summarizes the progress from January 2013 to the end of December 2015 (the data of 2015 includes provisional figures and some crucial progress until March 2016). The details provided by respective implementing bodies will be uploaded on the MOFA website database. This progress report was co-written by TICAD co-organizers, and for the first time includes efforts made by Africa as well as Japan and TICAD partners.

Japan and Kenya sign Sh27.3bn deal to build Dongo Kundu hub (Daily Nation)

Kenya has secured Sh27.3bn from Japan to construct an industrial and commercial hub in Dongo Kundu, Mombasa. The first phase of the Special Economic Zone, which is expected to alter the coastal town in terms of infrastructure and business, is scheduled to be ready by 2019. An agreement signed by the governments of Kenya and Japan on the sidelines of the Tokyo International Convention on Africa Development shows that of the Sh27.3bn ($269.9 million), Sh21.36bn is a long term soft loan while Sh5.969bn is a grant.

Zimbabwe: Imports drop as trade deficit narrows (The Herald)

The country’s total import bill dropped 20,34% in the seven months to July due to a number of factors which include troubles in the external payment systems, import restrictions placed on selected products by Government, troubles in the external payment systems and weak industry demand for raw materials. Weakness in the South African rand, whose country is the biggest trading partner, has also contributed with the rand trading around 12,45 on the dollar last year against last month’s 13,9. Data from Zimstat shows that imports fell to $2,89bn from $3,62bn same period last year. Month on month, July imports fell 8,09% to $394,83m from June’s bill of $429,58m as foreign payments continue to face delays. The greatest effect has been payments to countries out of Africa where supplier terms are stricter.

How Rwanda can reduce the growing trade deficit (New Times)

Rwanda’s trade deficit has been widening as the import bill continues to outpace export receipts. This has in turn continued to exert pressure on the local currency with the dollar gaining ground on the franc. In fact, the local unit shed about 4.9% of its value against the greenback in the first half of the year. The central bank estimates indicate that the country’s formal imports grew by 3.3% in value to $1,171.3 million, up from $1,134.1 million in the first half of the year. However, Rwanda’s exports revenue declined by 2.4% to $268.6 million compared to $275.1 million recorded over the same period last year. Export earnings had dropped by almost 6.3%% in the same period in 2015, driven by 36.6% decline in mining sector export revenue, as well as tea and coffee, which shed 5.7% and 9.2%, respectively. According to the National Bank of Rwanda monetary policy and financial stability statement (pdf) released last week, the growing demand for imports has led to a 5.1% trade deficit to $902.69 million in the first six months of the year, up from $858.98 million in 2015.

EAC tea exports rise (Daily Monitor)

All East African Community member states have had a good tea harvest that has resulted into high trade volumes. This is contained in the latest report from Tea Brokers East Africa Limited which shows that at the June Mombasa auction, nine million kilogramme bags were offered, up from the 7.4 million bags recorded in the same period last year. “Out of this production, the region exported a total of 8.3 million kilogrammes up from 6.2 million kilogrammes exported the same time last year thus indicating a 24.8%,” the report said. Out of the cumulative tea auctioned, Kenya the market leader, sold 6.5 million bags up from 4.8 million bags traded last year.

Rwanda: Textile firm seeks tax exemptions on raw materials (New Times)

Heavy custom duties are hampering the Made-in-Rwanda campaign as the Government moves to phase out used clothes, textiles manufacturers have said. According to industrialists, the campaign, launched in 2014, might be slowed down if more incentives are not introduced to promote locally manufactured clothes. They single out the 25% levy charged on imported raw materials on top of the 18% Value Added Tax. This, according to the textiles players, is one of the biggest challenge coupled with lengthy checks and bureaucracies, and high transport and transaction costs of both imported and exported materials.

Dangote shakes Kenya’s cement market with Ethiopia imports (Business Daily)

Nigeria’s Dangote Cement has started its shake-up of the Kenyan market with importation of the commodity from its plant in neighbouring Ethiopia as it prepares to establish a local manufacturing plant. Dangote’s targeting of the Kenyan consumer with low-cost cement from Ethiopia is expected to further drive retail prices downward in a market where they have remained static for nearly 10 years.

Ghana and Kenya agree to promote intra-trade after Uhuru, Mahama meet (The Star)

Presidents Kenyatta and Mahama exchanged views on the need to establish Double Taxation Agreements between the two nations, protect investments in each other’s country and how Nairobi and Accra could serve as effective sub-regional aviation hubs in East and West Africa respectively. The two leaders sought the implementation of various agreements signed between the two nations two years ago, which include development of partnerships in Air Services and Trade, Tourism, Agriculture, Energy, Oil and Gas, Information and Communications Technologies, (ICTs), and Education.

TAZARA to triple profit margins (IPPMedia)

The Tanzania Zambia Railway Authority targets to triple its profits to $44.1m in the last half of this year due to a petroleum products contracts from the DRC and Malawi. In the same period, the annual freight traffic for the authority reached 130,000 tonnes in 2015/16 from 87,000 tonnes in 2014/15, representing an increase of 49 per cent. On the outlook, for the 2016/17 financial year, the company plans to improve its cargo traffic by 200% and reach 381,000 tonnes.

Mohamed A. El-Erian: 'An opportunity for Egypt and the IMF' (Project Syndicate)

The Egyptian authorities and International Monetary Fund staff have struck a deal. If the IMF Board agrees next month, Egypt will receive a $12 billion loan to support the implementation of economic reforms. The primary objective of the three-year program will be to unleash Egypt’s considerable potential, enhance growth and job creation, and tackle foreign-exchange shortages. But the deal also represents an important opportunity to improve relations between Egypt and the IMF – an outcome that would yield far-reaching benefits for both sides. Egypt’s relationship with the IMF has long been rocky.

Coalition for an effective SADC Tribunal: statement on the reinstatement of the SADC Tribunal (with access to individuals)

On the occasion of the 36th Summit of the Heads of State and Government of the Southern Africa Development Community, we the undersigned members of the Coalition for an Effective SADC Tribunal, are raising serious concerns over state parties insistence in denying access to justice to the citizenry of this region as per the revised SADC Tribunal Protocol. The Protocol strips the Tribunal of its jurisdiction to hear complaints from individual citizens of SADC. This is inspite of the guaranteed right for people’s participation in the SADC Declaration and Treaty under Article 23. [Jay Naidoo: The future we want - Africans rising to build a New Africa]

SADC: Costed action plan for industrialisation to be finalised early next year (SARDC)

The regional Integration pillar aims to widen the economic space for development and create incentives for industry to expand, thus providing opportunities for economies of scale, clustering and economic linkages. Specific interventions under this pillar include full implementation of the SADC Free Trade Area to cover all Member States; a common external tariff by 2025; gradual phase-down and abolition of rules of origin by 2025; liberalization of exchange controls to allow free movement of capital within SADC by 2030; and ratification of the SADC Protocol on Trade in Services for implementation by 2020.

IGAD: stakeholders review the IGAD Regional Investment Plan 2016-2020

IGAD Member States representatives, regional and continental stakeholders, private sector actors as well as IGAD, FAO, AUC, and NPCA are attending a two day consultative workshop (29-30 August) to review the IGAD Regional Investment Plan 2016-2020. This workshop is organized with support from the FAO, and in close cooperation with the AUC. It will engage stakeholders in the review of the Investment Program Areas detailed in the IGAD-RIP and in the preparation of the official validation by Ministers of IGAD Member States on 31 August 2016.

ECOWAS SPCC reviews implementation arrangements of the Community Strategic Framework

The ECOWAS Strategic Planning Coordinating Committee is holding its 11th meeting in Lagos, 29-30 August. The meeting, organized with support from the GIZ, will discuss the finalization of the strategic action programme of all institutions and agencies, and will discuss and review the implementation arrangements for the Community Strategic Framework, among others. The CSF was adopted by the ECOWAS Council of Ministers in December 2015 and is already being implemented; as the 2016 Community Budget was based on the CSF. All ECOWAS Institutions/Agencies are expected to draw their programmes from this framework. [CSOs want ECOWAS countries to address economic inequalities]

Improving external sector statistics in Central and West African countries (IMF)

The three-year project (launched 29 August) aims to enhance external sector statistics quality and close data gaps in key areas such as balance of payments statistics, the international investment position, and external debt statistics. The opening workshop brought together mid– and senior–level central bank officials of 17 Francophone beneficiary countries. Representatives of the Central Bank of West African States, and of the Bank of Central African States, also participated in the workshop.

CEMAC: common policies of member countries (IMF)

CEMAC is buffeted by the oil-price shock. The outlook has deteriorated, as members continue to suffer from the shock. Regional and national authorities have yet to take appropriate measures to address the economic downturn, whilst continuing to face substantial capacity constraints. Although the banking sector has weathered the downturn so far, government payment delays could undermine its soundness. Risks are significant: a weaker-than-expected oil price recovery or deteriorating security conditions could jeopardize macroeconomic stability. Policy recommendations: [Money changers return as Congolese Franc weakens]

Extractive industries: maximizing human development outcomes (AfDB)

The AfDB's African Natural Resources Centre has published five case studies that look at the different ways in which countries [Ghana, Botswana, SA, Chile] are designing policies and partnering with investors to reap social and economic benefits from extractive industries. The case studies were commissioned by ANRC to bridge the knowledge gap as relates to natural resources project-driven small and medium enterprise development, supply chain-based domestic linkages, extractives revenue management, public-private partnerships and fiscal policy formulation. They showcase a range of extractives project-related initiatives and policies deployed in four countries and the positive effects these have on local and national economies. The case studies include: [OECD: Corruption in the extractive value chain (pdf)]

African Union calls for uniform fishing regime (Business Daily Africa)

The AU is pushing for uniform fishing laws and increased investment in the sector to control the Sh250 billion worth of resources currently trawled away by advanced nations. Mr Bruce Mukanda, a senior programme officer at the AU’s Animal Bureau said all member states need to adopt a framework already developed by the continental body. “At the continental perspective, we are looking at individual country policies as we aim to harmonise them across the continent in order to harness this huge fisheries resource,” Mr Mukanda said in Nairobi during a Ticad VI side event. The forum brought together over 10 ministers of Agriculture who discussed how Africa can best benefit from its vast aquatic resources. [Ministerial conference on ocean economies and climate change in Africa]

Regional workshop for Africa: towards productive, sustainable and inclusive agriculture, forestry and fisheries (FAO)

The objective of the Regional workshop for Africa (19-21 September, Kigali) is to discuss how the principles for sustainable food and agriculture can promote joint action to strengthen the contribution of agriculture, forestry and fisheries to sustainable development, and to identify priorities for FAO's support at national and regional levels. The workshop will identify priorities for action in the context of FAO’s Regional Initiative 2 (RI2) on “Sustainable Intensification of Production and Value Chain Development in Africa”. The following outputs are expected from the workshop:

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tralac’s Daily News Selection

30 Aug 2016
The selection: Tuesday, 30 August 2016 Dr Ngozi Okonjo-Iweala: ‘African central banks: rethink role or stay the course?’ (The Bank of Uganda) But we now live in an age of unconventional monetary policy. This raises a fundamental...
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African Central Banks: Rethink role or stay the course?

The Joseph Mubiru Memorial Lecture at the Bank of Uganda’s 50th anniversary was delivered by Dr. Ngozi Okonjo-Iweala, former Finance Minister of Nigeria, on 2 August 2016.

This auspicious occasion is a good time to take stock of how far we have come and the challenges we confront as the journey continues. We meet even as global macroeconomic uncertainty is extremely high and politics is growing increasingly insular and populist, as witnessed by the recent Brexit vote and the divisive presidential election campaign in the USA.

In our ever more connected world, the African continent has not been without its travails. The most tangible factor has been the big drop in commodity prices starting in 2014. A combination of slowing growth, a big fall in the terms of trade for commodity exporters and large fiscal and current account deficits has tarnished the Africa Rising narrative: was it simply a product of a large windfall driven by China’s almost insatiable appetite for commodities until 2014? We know that this is not the whole story. That policies, institutions and governance have greatly improved in Africa over the last decade.

Yet, we must heed the warnings signs. The most recent forecast, from the IMF’s July Update of the World Economic Outlook, has drastically cut the growth projection for 2016 from 3% in April to just 1.6%, with a forecast of 3% for 2017. These would be the worst growth outcomes in 15 years, with oil exporters hit particularly hard. The shocks include slowing growth in China, a major trading and investment partner of Africa and prime driver of the commodity super cycle; a massive loss in income for commodity exporters, energy and non-energy; tightening financial conditions reflected in higher commercial borrowing costs; and severe drought in Ethiopia, Malawi and Zimbabwe. Angola, Mozambique, the Republic of Congo and Zambia have suffered credit downgrades.

The point I wish to stress is that slowing growth and falling terms of trade may not be just a temporary rough patch. The consequences could linger especially in countries where public and private sector balance sheets have been overextended in terms of rising debt levels, worsening dynamics and currency mismatches. This is the environment in which African central banks need to define their strategy in conjunction with fiscal policy and structural reform as they seek to control inflation and help promote inclusive growth.

But we now live in an age of unconventional monetary policy. This raises a fundamental question for African central banks. Do we need a change in paradigm, or should African central banks stay the course established over the last decade, when have been focusing on price stability? Recall that, in earlier decades, they had a much broader remit that included being a source of fiscal deficit and development finance. This is the question I will be addressing in this Memorial Lecture honoring the memory of the brilliant Joseph Mubiru, whose life was tragically cut short, but whose legacy of excellence endures.

In answering the question, I shall draw lessons for African central banks from recent central banking developments in the advanced countries, or developed markets, as well as in major emerging markets. The weight of the experience points to being highly circumspect about unconventional monetary policy. Indeed, the overwhelming priority for African central banks is to pursue low and stable inflation in order to make their currencies credible stores of value, thus promoting financial deepening and long run growth. In the last section, I shall focus on the situation in Uganda.

Just a decade ago, the Great Moderation held sway. Inflation targeting was viewed as the ultimate stage in the evolution of monetary policy. It was the logical destination for responsible, mature central banks. Monetary policy would be conducted in an idyllic setting: the capital account is open, the currency floats with little or no intervention and central bank independence is the cornerstone of credibility and good macroeconomic management. With long run growth assured, central banks would operate counter-cyclically to minimize fluctuations around the trend, ensuring low inflation and full-employment growth. Monetary policy had arrived.

Ten years later, the situation could not be more different as consequence of the Global Financial Crisis of 2008-9, which I shall refer to as the GFC. The US Federal Reserve Board has completed three rounds of Quantitative Easing, with QE3 brought to a close at the end of October 2014. By then, the balance sheet of the Federal Reserve System had swelled by 400%, from USD 0.9 trillion in August 2008 to $4.5 trillion. But last December, the normalization of US monetary policy began, with the Fed hiking the policy rate, the Fed Funds Rate, by 25 basis points, lifting off above the zero lower bound where it had stayed for seven years.

Meanwhile, “unconventional monetary policy” has become the order of the day in DMs. Massive ongoing QE is being carried out by two major central banks, the Bank of Japan (BoJ) and the European Central Bank (ECB). Negative nominal policy rates have been adopted by the ECB, BoJ, Swiss National Bank (SNB), and central banks of Denmark and Sweden; the “zero lower bound” has been breached. And sovereign bond yields are below or close to zero out to ten years for Japan, Germany and Switzerland.

Yet, in spite of the prompt and massive unconventional action by DM central banks, growth remains anemic and inflation is well below targets! As Mario Draghi has repeatedly stressed, monetary policy cannot do it alone. This is a lesson for Africa: if monetary policy is to deliver the goods, it must be formulated in concert with fiscal and structural policy and improved governance and institutions.

Why not Unconventional Monetary Policy in Africa?

The unconventional steps taken by DM central banks after the GFC begs the question: why can’t central bankers in Africa adopt unorthodox measures to lower long-term interest rates and spur growth? Let me now illustrate why unconventional monetary policy should be viewed with caution by Africa by citing significant examples from prominent emerging markets, including Brazil, China and India.


I shall next discuss China, a major trading partner and an important source of infrastructure loans for Africa. Big challenges have arisen for China after the GFC as the result of a massive increase in leverage and related financial vulnerability as the growth drivers switched from investment and exports to social housing, real estate and public investments in infrastructure. Let me give three examples of rising financial vulnerability: First, trust funds, which are part of the so-called “wealth management products” now account for some 20% of GDP and constitute the core of the “shadow banking” system. Some 50% of trust fund proceeds are invested in real estate, infrastructure, energy and mining, with companies in these sectors taking a big hit. Wealth management products had their genesis in financial repression: with household deposits in banks severely taxed via financial repression, wealth management products with their much higher guaranteed returns, became a natural, albeit much more risky, alternative. Second, local governments, which account for 80% of public infrastructure investments, have seen their debt skyrocket. Some 50% of local government revenues come from land sales. Third, the real estate sector, which has become a major engine of growth post GFC, is described by the IMF in China’s 2014 Article IV consultation, as being at the center of a “web of vulnerabilities”.

In this environment, the approach of the central bank, the Peoples’ Bank of China, PBoC, has been to support the financial sector through rate cuts, liquidity injections and regulatory forbearance. Various measures have also been taken to support the Shanghai and Shenzhen stock exchanges in view of last summer’s equity market rout. And the seeming lack of will to confront the problem of non-performing loans in commercial banks has fueled concern that PBoC may be supporting growth at the expense of rising financial vulnerability. While there is no doubt about China’s headline-making historic economic accomplishments over the past three decades, and I am a great fan of that, the indecisiveness about addressing rising vulnerability in the domestic financial system after the GFC has become a major concern and potential headwind to growth.


I come now to the case of India, which has clearly been doing things right while sticking to orthodoxy. Indian economic growth is one of the few bright spots in the global economy. India formally adopted an inflation targeting regime in March 2015, setting a target for CPI-based inflation of 4% with a band of plus or minus 2% beginning in the 2016/17 financial year. But this was preceded by meticulous preparation to build credibility under the Reserve Bank of India’s Governor, Raghuram Rajan. Rajan took the helm of India’s monetary policy in 2013, a year which saw the county bracketed together with Brazil, Indonesia, Turkey and South Africa as the Fragile Five.

The first challenge was to exit the Fragile Five by lowering the current account deficit, bolstering foreign exchange reserves by attracting dollar deposits from the Indian diaspora overseas and establishing RBI’s seriousness about lowering consumer price index- or CPI-based inflation, which was in double digits, by hiking rates; with wage awards being based on the CPI, India was rapidly losing competitiveness relative to China and other emerging markets. Rajan’s goal was simple: make the Indian Rupee a credible store of value, thus dulling the seduction of gold, and raise interest rates above CPI inflation, making rupee-denominated assets attractive. Intermediate targets were also set for inflation: less than 6% by January 2016, which was met, and less than 5% by January 2017.

Rajan reminds us of the reasons why low inflation is important in a speech made only a few weeks ago on June 20. First, low and predictable inflation makes the currency a credible store of value. Second, the ones who benefit from negative real interest rates are rich industrialists and the Government, with the inflation tax hurting the middle class savers and the poor. Inflation is a tax that hurts the poor. But what struck me most is Rajan’s call for staying the course and adopting tried-and-tested orthodoxy – because it works. It enables sustained growth and lowers volatility. To quote him – and recall that he is a former IMF chief economist – “Decades of studying macroeconomic policy tells me to be very wary of economists who say you can have it all if only you try something out of the box. Argentina, Brazil, and Venezuela tried unorthodox policies with depressingly orthodox consequences."

Summary of lessons from Emerging Markets

Now let me distil a few lessons. Brazil’s experience point to the risks and costs of letting central banks and public banks become fiscal agents and trying to promote growth through large amounts of subsidized lending. This is not to say that some amount of subsidized lending targeted at SMEs and managed fiscally through the budget is not important. As a carefully crafted and targeted instrument to lift up the small enterprises, it can work. At the same time, it is vitally important to avoid domestic corruption and political shocks of the type that have befallen Brazil.

China offers several lessons. Let me focus on three. First, a prolonged and excessive reliance on financial repression can lead to undesired and risky responses such as the rise of shadow banking and unregulated financial instruments promising high returns as people try to escape the financial repression tax. Second, the massive forex reserves China has built up may have to be used to absorb potential losses in the clean up of the domestic financial sector. Already, some US$775 billion have been used up to support the Renminbi in the six months August 2015 to January 2016. Building up forex reserves is not enough. Central banks have to be proactive in anticipating potential sources of vulnerability and heading them off, through macroprudential tools, for example. Third, China is held up as a stellar example of cleverly used industrial policy to grow rapidly. But remember: China is not your standard small, open economy, a description that would apply to much, if not all, of Africa. No multinational could ignore its domestic market of over one billion. China could exploit its bargaining power to transfer technology as a quid pro quo for access to its market. The lesson for Africa: create a good climate for private investment and FDI in manufacturing and agri-business. Couple this with structural reform to spur competition and innovation.

India’s experience is a wake-up call for getting the basics right and resisting opportunistic and costly experimentation. We cannot let monetary and exchange rate policy be captured by economic and political elites for their limited goals of personal enrichment.

Financial Sector Challenges

These are important policy lessons for us in Africa. We must also acknowledge that our financial sectors face severe challenges and let me say a few words about that. The challenges include dollarization in loans and deposits, concentration risks in bank lending and a preference in lending to the government. Furthermore, the ability to conduct monetary policy in an inflation-targeting regime requires that the financial infrastructure, including a well-functioning interbank market, be in place to facilitate monetary policy transmission. This would ensure that changes in the bank policy rate affect the marginal cost of funds for commercial banks and eventually, for borrowers and lenders. Such transmission depends on the depth of the financial system in terms of the ratio of bank assets and liabilities to GDP, bank sector private credit to GDP and the use of local currency bank deposits as a store of value by the general public. It also depends upon the competitiveness in the banking system, lowering the degree of informality in the economy and strengthening the legal protection of creditors.

Studies uniformly show that African countries lag other developing regions in indicators of financial development. A sustained effort is required to improve corporate and bank governance, manage volatility from external and domestic sources, remedy the informality reflected in weaknesses in registration, proper land titles and documentation, and so on. Such obstacles can be overcome through programs of financial inclusion and the gradual building up of the necessary financial infrastructure.

But there are other impediments not so easy to deal with, such as the fragmentation in Africa and small average country size, which makes it hard to reap economies of scale in providing a diverse menu of financial products such as insurance, mortgage loans and various savings products owing to limited demand. Once again, market-based solutions might arise and we are beginning to see these, such as cross-border banks and the development of financial conglomerates. But this naturally calls for more complicated supervisory and regulatory frameworks. Innovations may also emerge to enable low-cost payments, such as M-Pesa in Kenya; but while filling a vacuum in the payments framework, such innovations may not be an adequate substitute for long-term development finance because of their short-term transactional nature.

The lesson here is clear. African countries need to improve the infrastructure underlying the financial sector while also pursuing the needed financial deepening. This is an ongoing quest, which will obviously be aided by credible monetary and fiscal policy and continuing institutional reform to make local currency assets a desirable store of value.

But what about the challenges posed by the diminished medium term prospects for growth and the terms of trade? The IMF suggests a “Policy Reset”. In many countries, particularly oil and non-energy commodity exporters, fiscal space and foreign exchange reserves are running low. Besides, external financing conditions are tighter, including FDI prospects, and the terms of trade shock is likely to persist. The Policy Reset would center on keeping exchange rates flexible and market-determined in order to maintain competitiveness and preserve scarce foreign exchange reserves; and ensuring fiscal adjustment given the persistent nature of the external shock, combined with greater domestic resource mobilization (DRM) from non-commodity sectors. Keeping fiscal deficits under control would also lower current account deficits, which are exceptionally high in most African countries.

This bit of orthodoxy may grate on our nerves but remember Africa’s rise in the last two decades has occurred partly on the back of good macro-economic policy. We need to bear this in mind in light of all the unconventional monetary policy we have been exposed to since the GFC. Based on the disparate experiences of Brazil, China, India, Russia and Turkey, and given the present structure of our economies, I am convinced the continent still needs to stay the course of sound conventional macro-economic policies. That it is the right way to go. In fact, I see one overwhelming priority: make the domestic currency a credible store of value, which will facilitate financial deepening, help control inflation and create a strong foundation for long run growth. Clearly, part of this package includes a focus on financial stability through macro-prudential tools focused on real estate and external borrowing by private banks and corporates, which may develop currency mismatches.

So what about Uganda?

This brings me to the last section of my speech, which I shall start by making a few observations on Uganda. In a speech on April 16 marking the start of the Bank of Uganda’s 50th Anniversary celebrations, Governor Emmanuel Tumusiime-Mutebile noted: “In the coming decades, our monetary policy will continue to prioritise, above all else, the control of inflation. This is because low and stable inflation is a precondition for mobilising high levels of savings and investment and for efficient resource allocation, which are essential for sustained economic growth.” In a speech last November on the role of the central bank in the post 2015 era, the Governor had observed: “Sound monetary policy is a prerequisite for a stable macro-economy, with low inflation, although it is not always sufficient in the absence of sound fiscal policy.”

I am delighted to say that the Bank of Uganda practices what it preaches! Last year, in the face of a depreciating currency and rising inflation expectations, the Bank of Uganda hiked interest rates by 600 basis points, the highest by any central bank in Africa. This eventually stabilized the exchange rate, even leading to a nominal appreciation of the Ugandan shilling against the US dollar. The willingness to hike indicates clear resolve on the part of the Bank of Uganda to meet its medium term target of 5% for annual core inflation. It also preserves foreign exchange reserves at a time when these are a crucial buffer against global uncertainty and is definitely preferable to introducing restrictions to stabilize the exchange rate, which fuels parallel markets for foreign exchange, lowers central bank credibility and hurts the private sector and economic growth.

But one should be clear that the ability to hike rates in this fashion would be impossible without good economic governance and assured central bank independence. And so I also congratulate President Museveni and the political leadership of Uganda. In fact, the positive effects of last year’s prompt hikes have enabled the Bank of Uganda to cut its policy rate by 200 basis points this year. In addition, the scale of monetary policy tightening in 2015 would not have been feasible had pubic indebtedness been excessive, because this would have immediately worsened public debt dynamics. And in a sign of pragmatic self-confidence, Uganda has entered into an agreement with the IMF under the Policy Support Instrument (PSI) program, which enhances credibility by signaling that macroeconomic policies are sound and that the country does not need balance of payments support.

Where is Uganda’s Economy Now?

But good monetary policy needs to be supported by sound fiscal policy, sectoral and structural reform. We have seen some positives on this in Uganda but challenges remain. Uganda’s recent economic performance has been favourable. Its fiscal policy stance has focused on enhanced revenue mobilization and improved public spending efficiency with some success, creating room for priority social and infrastructure investment. GDP growth has been significant, averaging about 7 percent over the past two decades, which is higher than the average growth in Sub-Saharan Africa for the same period. Growth has also been broadly inclusive- creating about half a million jobs each year- just enough to absorb new entrants into the labour market. This has also been accompanied by a steady fall in poverty with the absolute poverty rate almost halving during this period.

But as I said earlier there are significant challenges. Growth has not resulted in a material shift in shares of economic sectors over the past 15 years and the economy has not created enough jobs in high productive sectors. In addition, current job creation levels would have to be hiked considerably in order to absorb the doubling of new labour market entrants predicted by the ILO in the next decade. This means that despite improvements, inequality and job creation remain as central concerns.

In addition, a tough external environment has already resulted in slowed growth for the last 3 years which poses policy challenges. Climate change has resulted in additional risks and according to the New Climate Economy, this could be costing Uganda up to US$3-6 billion per annum in the near future if not addressed. We are already seeing some of these risks manifested in agricultural production. For example you would recall that in 2010 Uganda 17 suffered crop losses estimated at 16 percent because of extreme weather conditions. Successfully implementing Vision 2040 with a primary goal of achieving “A transformed Ugandan Society from a peasant to modern and prosperous country in 30 years” would therefore require appropriate sectoral and structural reform that is climate conscious to complement sound fiscal and monetary policy.


First and foremost, even in this low oil price environment and in the context of the immense infrastructure challenges facing the sector, Uganda must manage its fledgling oil sector responsibly, transparently and in an environmentally sound manner. It should learn from the mistakes of sister and brother countries on this continent and elsewhere. Part of the potential revenues generated from this sector, estimated at US$3 billion per annum at current oil prices should be saved to cushion future volatility and support future generations. It should also be directed to finance much needed infrastructure to serve as a base for growth whilst avoiding the Dutch Disease and crowding out broader diversification. Uganda’s infrastructure deficit- particularly in energy and transportation- is a cross cutting constraint on economic growth. Per capita energy consumption at 3.7kWh is one of the lowest in the world. But this infrastructure deficit is also an opportunity. With three-quarters of Uganda’s infrastructure still unbuilt, Uganda has the opportunity to lead in investing in sustainable and low carbon infrastructure reaping its attendant benefits in the long term. The potential for renewable energy in Uganda is substantial especially for solar and hydro enabling a clean energy transition with limited additional costs.


Reforms in the agricultural sector are of vital importance because up to 76 percent of Ugandan households earn income from this sector. Agriculture has also played a pivotal role in Uganda’s positive growth story over the past couple of decades. Research by the New Climate Economy which is currently working with the Ugandan government and in partnership with the Economic Policy Research Center, estimates that increases in agricultural income accounted for about 77 percent of the poverty reduction seen between 2010 and 2013. However the productivity of the sector is significantly low – the average productivity of a Ugandan agricultural worker in 2012 was US$581. To put this in perspective, the industrial sector is almost ten times more productive with an average productivity of $5,106. This needs to be addressed with the appropriate policy in order to achieve the ambitious targets that the government has set for this sector including increasing marketed output by 50 percent by 2025.

Modernising Uganda’s agricultural sector with new technologies to increase productivity in the sector is an important first step. There is significant potential to do this. For example, investment in productive working capital is low with only 2 percent of farmers using tractors. The use of improved crop varieties is similarly low with estimates ranging between 13 percent and 22 percent. Uganda has successfully entered innovative markets such as horticulture and innovation along critical agricultural value chains needs to be encouraged. Unlocking the potential of Uganda’s agriculture sector would also require significant improvements to rural land rights which would simultaneously increase farmer’s access to credits and investments, which in turn, would raise productivity. Also, investing in the right kind of infrastructure is critical-access roads connecting rural farmers to urban markets at reduced costs, irrigation to increase crop yields, improved communication technology to give farmers access to information on improved farming practices etc.

The challenges in this sector are further complicated by climate change impacts, which are depleting natural capital and leading to significant crop losses. Almost 46 percent of all land in Uganda is being severely degraded and soil erosion averages over 5 tons per hectare per year. Therefore it is important that policy geared at stimulating the agriculture sector is also climate friendly and sustainable.

Business Environment

Reforms aimed at improving the business environment by cutting red tape are also important particularly in achieving Uganda’s industrialisation goals. This government has already done a good job in making improvements to the business climate over the years. Between 2015 and 2016, Uganda improved from 135/189 to 122/189 in the World Bank’s Doing Business report- a significant improvement in just one year! However challenges remain that still need to be addressed- for example, getting a business registered still takes on average 32 days. Addressing this along with access to credit for the private sector would be instrumental in achieving growth, particularly in the industrial sector.


With the right policies and investments, the industrial sector – manufacturing in particular – can play a key role in Uganda’s growth story in the coming years. Uganda’s growth in the past 15 years has not been accompanied by significant structural transformation. According to World Bank data, Industry’s share of GDP has actually declined in the last decade from 25 percent in 2005 to 20.5 percent in 2015 and the sector accounts for less than 5 percent of total employment. This needs to be addressed. In manufacturing, there is potential to scale up agro-processing in key agricultural products such as coffee, tea, sugar cane and cassava. Similarly, there is potential to develop a petrochemicals industry in light of Uganda’s budding oil sector. This process of industrialisation would enable Uganda create high productivity employment opportunities and increase incomes. In addition, the diversification into industry will also increase the economy’s resilience to climate change with fewer poor people and less dependence on the agricultural sector, which is the most climate vulnerable sector in Africa.


Let me conclude by stating that although Uganda’s Vision 2040 sets an ambitious development goal, it is one that I see as very much within reach. Stable institutions, good governance and investment in human capital would be integral to its success. Improved macro-economic policy has laid a good foundation to achieving this goal but as we have seen, this needs to be complemented with bold real sector reform targeted at the sources of growth. Such reform must focus on building for the next generation to ensure they are gainfully employed. Any nation that neglects to make employment of its youth and women a centerpiece of structural and sectoral reform is harbouring a ticking time bomb. I know that I am preaching to the converted here and I have spoken long enough. As Warren Bennis, a renowned American scholar on leadership, said – “Leadership is the capacity to translate vision into reality”. Uganda’s economic success in the coming decades is dependent on the eadership to translate a well-articulated vision into reality for the everyday Ugandan man and woman.

The Bank of Uganda can be justly proud of the foundation it is helping to lay for sustained long run growth although there is still a long way to go. But there is so much potential for Uganda – in the words of Kofi Annan: “Africa’s creativity and resilience are enormous… It is time for African leaders to unlock this huge potential.” Once again, please accept my hearty congratulations as we look forward to another 50 years! Thank you.


African Central Banks: Rethink role or stay the course?

30 Aug 2016
The Joseph Mubiru Memorial Lecture at the Bank of Uganda’s 50th anniversary was delivered by Dr. Ngozi Okonjo-Iweala, former Finance Minister of Nigeria, on 2 August 2016. This auspicious occasion is a good time to take stock of...
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SADC Council of Ministers held in Mbabane, Swaziland

His Excellency, The Right Honourable Dr. Barnabas Sibusiso Dlamini, Prime Minister of the Kingdom of Swaziland officially opened the SADC Council of Ministers in Lozitha, Swaziland on 26th August 2016. The Council of Ministers is convened to prepare for the SADC Summit scheduled to take place from 30th to 31st August 2016.

In his opening statement, the Prime Minister welcomed delegates to the meeting and to the Kingdom. He noted that over the 36 years of its existence, SADC has made tremendous progress in enhancing regional integration and cooperation. He cited regional infrastructure projects in water, transport and energy, the political stability and increased levels of socio-economic development as compelling justification for enhanced regional integration.

He noted that while the region has developed a number of strategies including the RISDP and the Industrialization Strategy, and their costed Action Plans, resource mobilisation for accelerated industrialization, infrastructure development and agriculture development remains a challenge. He called upon the Secretariat to enhance the monitoring of regional initiatives to track progress made towards deeper regional integration.

Speaking during the opening session Opening Remarks, Her Excellency Dr. Stergomena Lawrence Tax, the SADC Executive Secretary, highlighted the significant progress that the Region has made on regional integration programmes. Among others, she noted that the Region remained peaceful and stable as Member States continued to adhere to the principles of democracy, good governance and increased levels of socio-economic integration.

Further, Dr. Tax highlighted progress on a number of regional initiatives in the just ended year including, energy development, finalization of the costing of the Regional Industrialization Strategy and Roadmap 2015-2020, the launch of the Regional Humanitarian Appeal in response to the El Niño induced drought and the finalization of the costed Regional Agriculture Investment Plan for the Regional Agriculture Policy 2014.

She further noted that implementation of the regional integration programmes require adequate  resources and therefore commended the incoming chair of SADC for the theme of this year’s Summit: “Resource Mobilisation for Investment in Sustainable Energy Infrastructure for an Inclusive SADC Industrialisation and for the Prosperity of the Region”, which demonstrates the Region’s continued resolve to push forward its collective efforts to mobilise resources to drive the regional integration agenda for socio-economic transformation and development. She thanked the Goverment of Botswana for the support rendered to Secreatariat during their tenure as Chairperson of SADC and expressed her readiness to work with the incoming Chairperson, Swaziland.

In his handover remarks, the outgoing Chairperson of the SADC Council of Ministers, Honourable Kenneth Matambo, Minister of Finance and Development Planning of the Republic of Botswana, highlighted a number of achievements made during Botswana’s tenure of office. These include, among others, the adoption of the Revised Regional Indicative Development Plan (RISDP) 2015-2020 and the Industrialisation Strategy and Road Map 2015-2060 whose implementation is critical for the regional integration agenda. He pointed out that this included the costing of these critical instruments which are expected to be tabled during this meeting.

Honourable Matambo also highlighted that considering the SADC Region’s high dependency on funding from ICPs, Botswana championed the development of the SADC Regional Resource Mobilisation Framework which is expected to be considered by the relevant Ministers on the margins of this Council. He further highlighted that notable progress had been made towards the development of the Regional Development Fund. With these remarks, Honourable Matambo handed over the SADC Chairpersonship to His Royal Highness Prince Hlangusemphi, Minister of Economic Planning and Development of the Kingdom of Swaziland.

In his acceptance speech, His Royal Highness Prince Hlangusemphi thanked the outgoing Chairperson, for the exemplary manner in which he steered the activities of SADC and also thanked the Republic of Botswana for keeping the thrust of the SADC agenda high, which enabled the Region to attain the unprecedented milestones reached during the year. He pledged the Government of Swaziland’s resolve to steer the region to greater prosperity and make SADC a better place for its citizens.

He highlighted that as Chairperson of SADC, Swaziland will, among other things, focus on the SADC Industrialisation drive, the roll out of infrastructure, the promotion of agriculture underpinned by the Regional Agriculture Policy, the scale up of the mobilisation of resources and the operationalisation of the SADC Regional Development Fund.

Post-Council Media Briefing, 27 August 2016

His Royal Highness Prince Hlangusemphi, Minister of Economic Planning and Development of the Kingdom of Swaziland, who is also the new Chairperson of the SADC Council of Ministers, held an encounter with the media fraternity at Lozitha Palace in Mandvulo, Swaziland on the 27th August 2016. The Post-Council Media Brief was intended to share the outcomes of the meeting of the SADC Council of Ministers. The SADC Council of Ministers successfully deliberated on several issues of importance to the region as espoused by the Regional Indicative Strategic Development Plan (RISDP).

Remarks by His Royal Highness Prince Hlangusemphi

The SADC Council of Ministers successfully deliberated on several issues of importance to the region as espoused by the Regional Indicative Strategic Development Plan (RISDP), noted the good progress made, and took decisions on how best to overcome the challenges faced by the region as well as on how to accelerate implementation of previous Summit and Council decisions.

The Council of Ministers Meeting took place here at Lozitha Palace Conference Centre, on Friday 26th and Saturday 27th August in preparation for the 36th Ordinary Summit of SADC Heads of States and Government.

You will recall the theme of the Summit, namely, “Resource Mobilisation for Investment in Sustainable Energy Infrastructure for an Inclusive SADC Industrialization and for the Prosperity of the Region”, as proposed by the Kingdom of Swaziland, in its capacity as the Incoming Chairperson of SADC, and was considered by the Council of Ministers, which endorsed it and recommended it for Summit approval on Tuesday, 30 August, 2016.

Council received the Report of the Executive Secretary which outlined the progress made with implementation of the activities within the first year of implementation of the Revised RISDP (2015-2020) during the last year. Council commended the progress made in the various areas, and noted the, challenges encountered, as well as Success Stories that have been documented by the Secretariat.

Council noted and approved the Costed Implementation Plan for the Revised 2015-2020 SADC Communications and Promotional Strategy, which will be used to communicate the SADC Agenda as well as showcase SADC achievements in the various programmes areas within the RISDP and the Industrialization Strategy and Roadmap.

Council noted the progress made with the Review of the SADC Secretariat Organisational Structure which is meant to respond to the Revised RISDP. Council directed the finalization of the study in order for it to render its approval at its next meeting in February/March, 2016, in order for the new positions to be filled and provide leadership for the implementation of the RISDP.

Council approved the Draft MoU between Southern African Development Community and the Russian Federation on Basic Principles of Relations and Cooperation. Council endorsed the decision of the MCO to mandate the InterState Politics and Diplomacy Committee (ISPDC) to consider the applications submitted by the Union of Comoros and the Republic of Burundi.

Council received a report on the costing of projects and programmes in the RISDP and noted that an amount of USD 398 billion will be required to implement infrastructure related projects. Council in adopting the report, directed the Secretariat to: map available resources, assess financing modalities, and prepare a coherent financing plan focusing on the preparations of infrastructure projects to bankability, and the convening of an Investment Conference to showcase such projects; and finalize the SADC Regional Resource Mobilisation Framework in order to give further impetus to resource mobilisation efforts for the priority regional programmes/projects.

Council received a progress report on the indicative costs of the SADC Industrialisation Strategy and Action Plan, and directed the Secretariat to finalise the process in consultation with Member States for consideration by Council and Extraordinary Summit in February/March 2017, to enable the region to solicit investment in identified areas.

Council endorsed that the SADC Industrialization Week be convened annually, alongside the SADC Ordinary Summit and received the Esibayeni Declaration of the Southern Africa Business Forum (SABF) Conference held during the SADC Industrialization Week on the margins of Council in the Kingdom of Swaziland, for transmission to the 2016 SADC Summit of Heads of State and Government.

Council considered the list of SADC candidates proposed for various international organisations and continental bodies including the African Union Commission, endorsed all the candidates, and urged Member States to support the candidates from the SADC Member States. On the Candidates for African Union Commission Positions Council endorsed Hon. Dr Pelonomi Venson-Moitoi, Minister of Foreign Affairs and International Cooperation from the Republic of Botswana as the Southern Africa Region candidate for the position of Chairperson of the AU Commission and urged SADC Member States to support her at the next elections in January 2017. Council further urged the Government of Botswana to share a strategy for the SADC candidate to garner support from AU Member States.

Council also received a report on the three High Level Ministerial Multi-Stakeholder Workshops on namely, (i) Poverty Eradication and Food Security, (ii) Energy and Water Crisis, and (iii) Illegal Trade in Wildlife. The Workshops accorded Ministers an opportunity to exchange ideas on how best to address challenges in all these areas, as well as agree on practical solutions towards addressing these challenges.

Council directed the Secretariat to operationalize the recommendations of the workshops and align them with RISDP activities going forward. Council recommended to Summit to commend the Outgoing SADC Chair for his timely intervention and for having successfully convened the workshops.

Council received the Annual Performance Report covering the implementation of the approved Corporate Plans, and noted that both physical implementation and budget utilization had increased from last year’s threshold, and directed the SADC Secretariat to continue strengthening organizational capacity in order to further improve on delivery of the SADC mandate.

Council reviewed and approved the Audited 2015/16 SADC Secretariat financial statements. Council adopted the Board of Auditors Report on the external audit of 2015/16 SADC Secretariat financial statements, and commended the Secretariat for achieving unqualified audit report and directed the Secretariat to expedite the implementation of identified financial controls.

Council received a Report on the Operationalisation of the SADC Regional Development Fund and endorsed the Roadmap for the establishment of the Fund, including the Member States contributions towards the fund over a period of three years.

Council reviewed the Food Security and Drought Situation in the Region and recommended to Summit to commend His Excellency Lt Gen. Dr. Seretse Khama Ian Khama, Chairperson of SADC and President of the Republic of Botswana for his timely Declaration of a Regional Drought Disaster and the launch of a Regional Appeal on 26th July 2016. Council further noted that the Humanitarian Appeal shows that the Region requires U$2.9 billion to cover the humanitarian needs of about 40 million vulnerable people, out of which US$393.7 million (approximately 14%) has so far been raised by Member States and their Cooperating Partners. This leaves a regional humanitarian gap of US$2.5 billion.

Council requested Member States to introduce special drought relief crossborder permits to drought relief transport operators, introduce expedited customs clearance procedures for drought relief cargo; waive cabotage restrictions and suspend third country rule for drought inputs/exports; and provide safe transit for rail and road convoy and security at logistics hubs where necessary.

Council approved that youth development and empowerment be considered as part of the progress report on the implementation of the RISDP to ordinary meetings of Council and Summit; and that 15th July of each year be recognised as a Youth Skills Day in SADC to be celebrated by Member States.

Council commended all Member States that have achieved high representation of women both in political and decision making positions in the public service and private sector and urged all Member States to strive towards reaching the gender parity target at all levels.

Council noted and approved the Roadmap on the recruitment of the SADC Executive Secretary and Deputy Executive Secretary – Regional Integration.

Council reviewed the status of Signature, Ratification and Accession to Current Protocols and urged Member States that are still not Parties to Protocols that have entered into force to accede to them; and to ratify the Protocols that have been adopted and signed but are not yet in force.

Council endorsed the following draft legal instruments and recommended them to Summit for adoption and signature:

  • Draft Agreement Amending the SADC Protocol Against Corruption

  • Draft Agreement Amending the SADC Protocol on Politics, Defense and Security Cooperation

  • Draft Agreement Amending Annex1 to the SADC Protocol on Finance and Investment

  • Draft Annex on Cooperation in Financial Matters

  • Draft Agreement Amending Article 3 (1)(c) of the SADC Trade Protocol

  • Draft Agreement on the Operationalization of the SADC Regional Development Fund and

  • Draft Agreement Amending SADC Protocol on Gender and Development

I wish to conclude this media briefing by congratulating you our Journalists for your continued support in disseminating information on Pre-Summit events that have taken place so far in the Kingdom of Swaziland, such as the Diplomats briefing, the Public Lecture by His Excellency Jakaya Kikwete, former President of the United Republic of Tanzania, briefings by SADC Directors and Heads of Units; Launch of the SADC Industrialization Week and Subsequent activities, and the Senior Officials and Pre-Council meetings.

Your efforts in disseminating information on what is happening throughout this Summit period on the SADC activities in the region are greatly appreciated. We encourage you to continue with the good work that you are doing in informing the region about SADC programmes, policies and activities even after the Summit.


SADC Council of Ministers held in Mbabane, Swaziland

30 Aug 2016
His Excellency, The Right Honourable Dr. Barnabas Sibusiso Dlamini, Prime Minister of the Kingdom of Swaziland officially opened the SADC Council of Ministers in Lozitha, Swaziland on 26th August 2016. The Council of Ministers...
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