News Archive September 2016
tralac’s Daily News Selection
The selection: Thursday, 29 September 2016
Profiled tweets from the WTO Public Forum:
@wto: For Liberia it is more expensive to trade with neighbours than with China, so trade facilitation is essential - Minister @AxelAddy; @Gonzalez_WBG: In Africa, we must view trade ministries differently...for their ability to drive jobs & transform economies - Minister @AxelAddy
The Namibian-German Centre for Logistics annual conference is underway in Swakopmund. The theme: An opportunity for trade in Africa
The OECD’s Africa Forum 2016 takes place today in Paris. The theme: African cities for Africa’s development
The UNECA’s Carlos Lopes announced yesterday, in an interview with Le Monde, that he would be stepping down at the end of October this year.
Profiled new trade publications:
Launched, in Arusha: ‘The EABC Business Agenda: deepening private and public sector participation in EAC integration’ (EABC): The EABC Business Agenda salutes and celebrates the EAC business community’s many success stories, invaluable contributions, and innovative solutions that respond imaginatively to the unique challenges that continue to confront our region. The book further demonstrates that at the EABC Secretariat, we are ready to engage with both the private and public sectors in the EAC at every level - from having strategic dialogues to meeting the challenges of day-today regional integration and development issues through the collaborative efforts of stakeholders from diverse sectors across the region. The EABC Business Agenda is, at once, both a ready reckoner and an elegant coffee-table accessory, with unique and crisp profiles, in-depth interviews and shared global best practices pioneered in the corporate world to promote new efficiencies and improve both the transparency and accessibility of quality service delivery to support key integration and development initiatives in our region.
Launched in Geneva: African perspectives on trade and the WTO (WTO): The WTO launched a new publication entitled “African perspectives on trade and the WTO” on Day 2 of the Public Forum. The book – co-published by the WTO and Cambridge University Press — examines how enhanced participation in world trade could help Africa achieve further growth and emphasizes the need for the continent to undertake structural reforms to underpin its economic transformation. The book brings together contributions from African policy-makers and representatives of partner institutions to assess how the multilateral trading system could assist Africa in overcoming some of its greatest challenges in areas such as governance, economic diversification and integration into global value chains.
Abidjan-Lagos Corridor: coordination meeting update (AfDB)
Delegates from the five member countries – Nigeria, Benin, Togo, Ghana and Côte d’Ivoire – gave status reports of their implementation activities on the corridor, while highlighting areas for further improvement. In terms of trade facilitation, the countries called for the creation of a knowledge- and data-sharing platform. The representatives also espoused the need for effective implementation of rules and protocols to facilitate free movement of people and goods. The following recommendations and key takeaways were drawn from the meeting: (i) combining and strengthening financial interventions (ii) creating a platform for knowledge management and sharing (iii) assessing development impacts of activities along the corridor (iv) drawing valuable lessons and adopting best practices from other regions (v) setting up a coordination mechanism for improved and accelerated corridor performance, as well as the creation of an effective tool to monitor implementation of Heads of States’ decisions.
The overall objective of this mission (26-30 Sept) is to set the basis of an ECA technical assistance to Burkina Faso, to support its development strategy, mainly with regard to development planning systems and statistics. In parallel and over the same period, the ECA Subregional Office for West Africa is organizing, at the request of Nigerien authorities, a mission to share experiences on the strategy to promote development poles, between senior officials from Niger and their counterparts from Burkina Faso.
In West Africa, exports to the US from seven countries (Benin, Burkina Faso, Cameroon, Côte d’Ivoire, Ghana, Nigeria, Senegal) totaled $5.3bn in 2014, of which $1.3bn was exported under AGOA (including GSP – Generalised System of Preferences), which represents about 24.52% of total exports to the US. The low percentage of AGOA exports can be attributed to the fact that most West African countries export primary products that attract no duty under the Normal Trade Regime. In addition to the low level of AGOA exports as a result of duty-free under the NTR, US importers also paid duty on products that were supposed to enter the US duty-free under the GSP and AGOA, hence a missed opportunity for the selected African countries to take advantage of AGOA. For the seven selected countries, the total value of unclaimed AGOA/GSP exports in 2014 was $1.3bn, or 24.77% of exports, while in 2015, the total value of unclaimed AGOA/GSP exports was $520m, or 17.85% of total exports. By value, top product categories – petroleum products excluded – that entered the U.S. from the seven countries with unclaimed AGOA benefits were: prepared foodstuffs, vegetable products, and textiles and apparel. [The author is a senior trade and investment officer at the AfDB]
Related: Speech by Axel M. Addy (pdf), Liberia’s Minister of Commerce and Industry at AGOA Forum
The specific duties and responsibilities of the consultant will include: (i) provide support to three selected RECs, namely ECOWAS, WAEMU and CEMAC in designing or reviewing their Regional Investment Policy Framework or regional investment agreements and SMEs policies to address the misalignment between the regional policy and the national policies (ii) help the above-mentioned RECs and regional member countries to review these frameworks, agreements and policies; update, harmonize and implement them (iii) develop and recommend SMEs policies to promote SMEs integration in the regional productive/value chains and access to intra-regional/African investments and markets.
A trade in services special feature:
At WTO, India proposes ways to cut transaction costs (LiveMint): India has floated a concept paper (pdf) at the World Trade Organization on how to reduce transaction costs that impose regulatory and administrative burden on global trade in services, on the lines of what was concluded in the so-called Trade Facilitation Agreement of 2014 for trade in goods. “Like the TFA, there is a need for a counterpart agreement in services, an agreement on Trade Facilitation in Services, which can result in reduction of transaction costs associated with unnecessary regulatory and administrative burden on trade in services,” India argued in the paper submitted to the WTO’s Working Party on Domestic Regulation on 23 September. India’s concept note also covers specific issues in four modes of supply of services of the WTO’s General Agreement on Trade in Services.
Services trade data in LDCs & LICs: challenges, “better performers” and pathways for improvement: Nevertheless, some have performed better than others at collecting, compiling and reporting on services trade data. This paper identifies good practices successfully adopted by these “better performers”, which could be replicated in other countries. It suggests that, more than the level of economic development itself, key determinants of success are an enabling legislative provisions, the use of multiple data sources and checks and balances, as well as securing external technical assistance.
Improving services data collection in Least-Developed and Low-Income Countries - a toolkit: Designed based on good practices tested in similar countries, the strategy proposed in this toolkit follows a sequenced process from adopting enabling legislative provisions and institutional frameworks, to securing external technical assistance and diversifying data sources. [Both papers can be downloaded after user registration]
India to sign social security pacts with other BRICS nations (LiveMint): India will sign social security agreements with Brazil, Russia, China and South Africa after a consensus emerged at a BRICS labour ministers conference on Wednesday that they will promote labour mobility in the grouping. India has been trying to persuade the US to sign a similar bilateral social security agreement, which could help bring back billions of dollars worth of contributions made by Indians while working in the US even though they were not allowed to avail of that country’s social security benefits. Though there is not much labour movement among BRICS countries at the moment, India is of the opinion that with relations strengthening among the five emerging economies, more of their citizens will seek jobs in each other’s countries and an enabling framework is the first formal step in that direction. [BRICS Labour and Employment Ministers’ declaration: full text]
Kenya, CCA trade MoU signed (Standard)
The Corporate Council on Africa and the Kenyan Ministry of Trade, Industry and Cooperatives have signed a MoU to formalise a partnership to promote US-Kenya trade and investment. “We view this MOU as an important and serious commitment to work on key programs between Kenya and the US private sector so that both our nations benefit,” said CCA President Stephen Hayes. “We will be working with Kenya closely over this period and far beyond.”
Bank of China Mauritius: update (GoM)
The Bank of China Mauritius Ltd will add to other major international names operating in Mauritius including HSBC, Barclays, and Standard Chartered, amongst others. According to Minister of Finance and Economic Development, Mr Pravind Kumar Jugnauth, besides enhancing the credibility of our jurisdiction, this subsidiary would enhance trade ties and direct investments between Mauritius and China, and contribute in a significant way to expand the global connection of our financial system. He further underlined that with the setting up of operations of the Bank of China in Mauritius, it will be easier for Mauritius to realise its ambition of hosting a renminbi clearing centre for the region which he said will further cement the role of Mauritius as a regional financial hub.
Tanzania: Researchers propose policy reviews to spur pharmaceutical sector (Daily News)
Policy Research for Development (REPOA), in its policy brief report (pdf) released yesterday in Dar es Salaam, proposed the restructuring of policies to favour local producers currently moving out of production of basic affordable medicines over profitability concerns. Mr Katera said that successful African experiences show that the pharmaceutical industry can be sustained and grown with an active industrial policy. He noted that policies to reverse any decline would require government’s action on targeted business support and collaboration with manufacturers. Mr Katera identified some of the challenges as tax exemptions on imported medicines, the situation that discourages domestic manufacturers.
Zambia: Government determined to revamp textile industry (Lusaka Times)
Government says it is determined to revamp the Textile and Garment subsector because of its vast potential to spur economic diversification. Commerce Minister Margaret Mwanakatwe said her Ministry is to this effect revising its commercial, trade and industry policy in order to have a more integrated and coherent policy intervention that support growth and development of Zambia’s trade and industrial sector.
Citizen engagement in rulemaking: evidence on regulatory practices in 185 countries (World Bank)
This paper presents a new global data set on citizen engagement in rulemaking and provides detailed descriptive statistics for the indicators. The paper then provides preliminary analysis on how the level of citizen engagement correlates with other social and economic outcomes. To support this analysis, we developed a composite citizen engagement in rulemaking score around the publication of proposed regulations, consultation on their content and the use of regulatory impact assessments.
East African nations urged to take advantage of strong growth: an FT interview with Kenya’s central bank governor, Patrick Njoroge
Alan Winters, Jim Rollo, Peter Holmes: ‘Leaving the EU Customs Union: what is the issue?’
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New book examines African perspectives on trade and the WTO
The WTO launched a new publication entitled “African Perspectives on Trade and the WTO” on Day 2 of the Public Forum on 28 September 2016. The book – co-published by the WTO and Cambridge University Press – examines how enhanced participation in world trade could help Africa achieve further growth and emphasizes the need for the continent to undertake structural reforms to underpin its economic transformation.
“African Perspectives on Trade and the WTO: Domestic Reforms, Structural Transformation and Global Economic Integration” brings together contributions from African policy-makers and representatives of partner institutions to assess how the multilateral trading system could assist Africa in overcoming some of its greatest challenges in areas such as governance, economic diversification and integration into global value chains.
The launch was attended by the three co-editors – Patrick Low, Chiedu Osakwe and Maika Oshikawa – and by H.E. Joshua Setipa, Lesotho’s Minister of Trade and Industry, and H.E. Dr Okechukwu Enelamah, Nigeria’s Minister of Industry, Trade and Investment, who contributed to the publication. H.E. Axel Addy, Liberia’s Minister of Commerce and Industry, also participated in the panel discussion, focusing in particular on Liberia’s accession process, which concluded on 14 July 2016.
In his opening remarks, WTO Director-General Roberto Azevêdo said: “The WTO’s African members have been increasingly central in the debates here over recent years. All members are working now to plot the way forward after Nairobi, and it is clear to me that Africa’s voice will be more important than ever in that conversation. The WTO can help to deliver a more inclusive trading system – and that’s why I think this book is so welcome. It is a reminder of the importance of the multilateral system for growth and development in Africa. And it is a reminder that African members must continue to play a leading role in forging the way forward.”
Minister Setipa said: “We need to ensure that the multilateral trading system is supportive and aligned with our regional priorities as Africans. The cost of moving a container to an African neighbouring country is higher than moving it to New York. Unless we make efforts to bring trade costs down, our trade competitiveness will be undermined. Now that we have ratified the Trade Facilitation Agreement – we need to exploit its potential gains. For Africa, the WTO is the best platform to contribute and get issues on the agenda and the only place where we can deal with structural challenges like agricultural subsidies.”
Minister Addy said: “This book provides some useful insights into where Africa is going, and I hope we can leverage some of the inputs such as foreign direct investment and trade facilitation. In the last decade, as we were reintegrating Liberia into the global economy, we considered WTO membership as an opportunity to announce to the international community that Liberia is ready for business. The role of the private sector will be crucial in leveraging the necessary investment.”
Minister Enelamah said: “This book captures the importance for stakeholders to exchange their experiences. Trade is central, and must be underpinned by proper investment and industry policies. This is why Nigeria has launched a new industrialization plan to create an enabling environment to help businesses to thrive. As part of this, President Buhari is committed to his priorities of good governance, economic welfare, security and the fight against corruption. WTO members need to be good trade neighbours to invite each other to build a strong multilateral trading system. I believe that Africa will emerge. With our critical mass, I am convinced that as Africans, we can actively participate in the global trading system. We reaffirm our strong support for DG Azevêdo.”
The book opens with a message from Kenya’s President, Uhuru Kenyatta, and a joint foreword by DG Azevêdo, the Cabinet Secretary for Foreign Affairs and International Trade Amina Mohamed and China’s Commerce Minister Gao Hucheng.
The publication includes contributions by:
the African Union Commissioner of Trade and Industry Fatima Haram Acyl
South Africa’s Minister of Trade and Industry Rob Davies
Morocco’s Minister for Trade, Industry and Investment Moulay Hafid Elalamy
the Executive Director of the International Trade Centre (ITC) Arancha González
the United Nations Conference on Trade and Development (UNCTAD) Deputy Secretary-General Joakim Reiter
the Senior Director of the Global Practice on Trade and Competitiveness of the World Bank Group Anabel González.
The contributors to the book provide insights into how African governments could foster sustainable and inclusive economic growth and eradicate poverty by undertaking reforms to address market turbulence, increase intra-African trade, widen participation in global value chains and diversify exports.
The book is based on contributions to the Fourth China Round Table held just before the WTO’s Tenth Ministerial Conference in Nairobi, Kenya in December 2015. The China Round Table is part of the China Programme, which aims to help least-developed countries (LDCs) integrate more effectively into the global economy by strengthening their participation in WTO activities and by helping those not yet members to join the WTO.
Book launch: “African Perspectives on Trade and the WTO: Domestic Reforms, Structural Transformation and Global Economic Integration”
Opening remarks by DG Azevêdo
It is a pleasure to welcome you all to the launch of this new WTO publication: “African Perspectives on Trade and the WTO”.
This volume looks at the challenges and opportunities for Africa as it continues to integrate into the multilateral trading system. And it is closely associated with our 10th Ministerial Conference, held in Nairobi last year.
It evolved from an event held the day before the Conference began – the Nairobi China Round Table. I joined President Kenyatta, Cabinet Secretary Amina Mohamed, Chinese Vice-Minister Wang, and a number of other Ministers to exchange views on the role of Africa in the future of the multilateral trading system.
That debate raised many important issues and ideas, which are developed in this new publication. And it helped to focus minds ahead of the Nairobi Ministerial Conference, which of course went on to deliver some very important outcomes for Africa.
Those outcomes included the biggest reform of global agriculture trade in 20 years – which also delivered on a key target of the UN Sustainable Development Goals.
So I’m pleased to be joined by these Ministers today, as they played a key role in that success.
The WTO’s African members have been increasingly central in the debates here over recent years. And I think the fact that the WTO Ministerial Conference was held in Africa for the first time helped to strengthen that sense of ownership.
All members are working now to plot the way forward after Nairobi, and it is clear to me that Africa’s voice will be more important than ever in that conversation.
This is an exciting time for the WTO – and it is an exciting time for Africa.
The continent is often described as the next “growth frontier”.
The collapse of commodity prices has led some to question whether this is still the case. However, I think the fundamentals are strong. Africa is projected to be the world’s second fastest growing continent between 2016 and 2020, with an annual growth rate of 4.3%. It has the youngest population and a growing consumer base. By 2034, the continent is expected to have a larger workforce than China or India. And African entrepreneurs are increasingly innovating and capturing people’s attention.
Facebook Founder Mark Zuckerberg said recently that Africa’s technology companies would help change the whole world.
But for all this to happen, we have to be making progress across the board. That means tackling poverty and inequality. It means shifting away from a reliance on primary commodities. It means finding ways to boost infrastructure – both traditional and digital.
Only one in four people in Africa use the internet. But numbers are growing. And as we’ve seen with the spread of mobile phone usage in Africa and innovations like M-Pesa – technology allows you to make big jumps forward.
And I think the WTO can continue to play an important role in a whole range of ways – but I want to mention just three this afternoon.
First, by offering a platform to influence the debate.
When we talk about “Africa” of course we are actually talking about 54 very diverse countries.
44 of these are WTO members – meaning that Africa already makes up more than a quarter of the total membership. And seven more are in the process of joining.
The discussion at the WTO is currently more open and dynamic than we’ve seen in a long time. This is an opportunity to put Africa’s issues and economic priorities on the table and work to push them forward. And the time to do it is right now.
Second, the WTO can be a means to help achieve goals on regional integration.
Intra-regional trade accounts for only about 17% of the total trade in Africa. So clearly there is scope for more to be done on this front.
The WTO’s Trade Facilitation Agreement can have a big impact here, helping reduce barriers to intra-regional trade.
We’ve all seen the difference that these kinds of reforms have made in East Africa, for example. This Agreement will allow us to achieve even more.
On this point, we need to keep up the momentum to ratify the Agreement as soon as possible.
On a related point, I’d like also to mention the TRIPS Amendment on access to essential medicines, which members are also in the process of ratifying. This Amendment was agreed at the request of African members – but it has waited far too long to enter into force.
I’m pleased to say that we are now just a handful of ratifications away from the finishing line. So I ask for your help to ensure we deliver on that important commitment.
This brings me to my final point, which is that the WTO can help to deliver a more inclusive trading system.
We can do this by continuing to deliver reforms to the trading system which work for developing and least developed countries. And we can do it by delivering even more aid and technical assistance to help these countries to improve their capacity to trade and compete.
So I think the WTO has a vital role to play – and that’s why I think this book is so welcome.
It is a reminder of the importance of the multilateral system for growth and development in Africa. And it is a reminder that African members must continue to play a leading role in forging the way forward.
So I want to thank all of the contributors who have shared their experience and knowledge in this publication.
I would also like to thank the co-editors: Patrick, Chiedu and Maika for their excellent work.
And I would like to say a word of gratitude to the Government of China for supporting the Nairobi China Round Table, which led to the production of this book today.
I urge everyone to read it – and I wish you all a productive and engaging discussion this afternoon.
The EU’s new offer to Africa
The European Commission’s plan for a multi-billion African investment vehicle was one of few highlights in Jean-Claude Juncker’s often turgid state of the Union speech earlier this month.
As with the original European Fund for Strategic Investments (EFSI), the main plank of the Juncker commission’s economic policy, there’s not much hard cash behind the initiative.
The investment vehicle will be based on a €1.5 billion guarantee from the EU budget, and a further €1.85 billion from the European Development Fund and EU budget. It will subsume the existing EU-Africa Infrastructure Trust Fund, which has paid out more than 90 grants to infrastructure projects since 2007.
EU officials hope that the seed capital and new guarantees, which will allow the European Investment Bank (EIB) to cover €750 million of potential losses, will persuade private firms to fund riskier projects in sub-Saharan Africa.
African investment based on blending small amounts of public money with private capital is not new. The EIB has been steadily expanding its operations in sub-Saharan Africa over the past decade.
Sweetening the pill
The EIB is not the only player in an expanding market. In Europe alone, the consolidated portfolio of European Development Finance Institutions (EDFI) members jumped from €10 billion to €28 billion between 2003 and 2014. The big international players are the World Bank’s International Finance Corporation, the African Development Bank, along with the French, German and Japanese development agencies.
So what’s the big deal?
Unlike other development finance vehicles, the EFSD is overtly political. The commission says the fund will “address the factors that constitute the root causes of migration and to support partners to manage its consequences”.
At a time when European governments are seeking to increase their deportation rates, the fund is a bid to sweeten the pill on tackling migration to their African counterparts.
The fund will also be formally directed by the commission, rather than the EIB, and the hope of the EU executive is that MEPs and ministers will have passed the legislation needed to make the fund operational by the next EU-Africa summit planned for autumn 2017.
The rationale behind the fund and, indeed, the individual “country compacts” launched earlier this year, under which the EU will offer financial support to countries who work to stem economic migration, and that the EU is seeking to broker with a group of African governments, is that economic incentives will persuade African governments to do more to control their borders.
As Juncker put it, the fund “will offer lifelines for those who would otherwise be pushed to take dangerous journeys in search of a better life”.
What is new are the incentives that the Fund offers to European companies, governments and their African counterparts.
In a bid to persuade European treasuries to cough up some money, the commission proposes that national contributions to the fund be classified as “off balance sheet” to avoid being classified as public spending, and allow governments to earmark their contributions to a specific region or sector.
The commission hopes that its €3.35 billion will lead to projects worth €44 billion, and potentially more if national governments boost the coffers.
However, EU governments have so far been reluctant to back up their rhetoric with cash, stumping up a €80 million to the EU-Africa Emergency Trust Fund set up last December to pay for migration-control related projects.
The commission also sees the fund as a way to encourage European firms to invest in African countries, potentially making them a competitor to Chinese firms who dominate the infrastructure investment sector in the region.
Yet it is also part of the move away from conventional development aid in favour combining public guarantees with private investment,
A carrot among the sticks
The EU has been pushing blended finance for many years. “Official Development Assistance does not have the capacity alone to eradicate extreme poverty... it should be used to mobilise domestic and private finance,” said one EU development minister at last year’s Financing for Development conference in Addis Ababa, and this sentiment reflects a consensus view amongst European governments.
“Humanitarian aid is not the solution for dealing with long-term migration,” a senior commission official told EUobserver in August.
The Fund may be intended as a complement to the EU-African “compacts”, but linking the investment fund to migration tool is a risky political move.
Amnesty EU director Iverna McGowan described the proposed “compacts” as amounting to “little more than ‘let’s throw money at keeping them out’”.
An investment fund based on €3 billion isn’t going to suddenly turn around the boats making the treacherous journey from North Africa across the Mediterranean. Improving the long-term economic prospects across sub-Saharan Africa will take years, and much more investment. At best, it is another incentive for African leaders to give higher priority to border management.
But it is, if nothing else, a carrot among the sticks.
Benjamin Fox, a former reporter for EUobserver, is a consultant with Sovereign Strategy, a London-based PR firm, and a freelance writer.
The EABC Business Agenda: Deepening private and public sector participation in EAC integration
This is the First Edition of the East African Business Council (EABC) Business Agenda, themed on the critical role of private and public sectors in deepening the ongoing East African Community (EAC) integration and development.
The first of an annual and strategically-integrated policy advocacy programme, this corporate book publishing project will be rolled out under varying themes critical to the deeper participation of the corporate sector in the EAC development agenda.
Various overarching and reinforcing motivations underpin this edition. Specifically, this first edition will endeavour to:
Critically analyze EAC integration; celebrate the significant milestones so far realized; and showcase the Private Sector’s increasing significance as the primary engine of growth and socio-economic development in the region;
Highlight the critical role of the EABC, and our strategic partners against our establishment objectives; outline our organization’s strategies towards addressing emerging issues in the regional integration agenda; and showcase our ongoing policy advocacy programmes, which are critical in the achievement of reforms that are necessary in propelling the EAC to greater socio-economic growth and enhancing its overall competitiveness;
Extensively detail how the EAC Partner States’, National Focal Points, and sector associations are seeking to further promote Public-Private sector engagements through policy framing mechanisms that address strategic and cross-cutting issues aimed at improving the Partner States’ economies and the region’s business environments; and,
Ultimately, sensitize, inform and empower the people of East Africa to make informed decisions so as to have a more meaningful participation in EAC integration and cooperation.
In order to sufficiently address these multi-pronged book publishing objectives, we have strategically leveraged on the direct collaboration and shared experiences of stakeholders from diverse sectors across the region, including policy framers, business leaders and industry experts through in-depth interviews, thought-provoking opinions, and exclusive case studies.
While we remain fully aware that matters integration cannot be covered exhaustively in a single publishing project of this nature, it has, nonetheless, remained our utmost ambition to stimulate, inspire, enthuse and motivate our readers and the general populace in the region and beyond, towards a greater understanding of our individual, corporate and ultimately, collective responsibilities in the ongoing EAC integration and sociodevelopment agenda.
Marking 16 years of integration: The achievements and tasks ahead
Last year, Uganda once again joined the other four Partner States of the East African Community to celebrate 16 years of integration and mark the EAC Day. This day has a rich history. It goes back to that memorable Thursday, on 30th November 1999, at Sheikh Amri Abeid Memorial Stadium in Arusha, when the three Heads of State of Uganda, Kenya and Tanzania, put pen to paper to ink the Treaty re-establishing the East African Community. Rwanda and Burundi would accede to the Treaty in 2007.
It is also for this reason that, in commending the successful celebrations of the 10th anniversary of the signing of the Treaty, the 20th EAC Council of Ministers meeting held in March 2010, underscored the need to reinforce the spirit of East African unity as well as to galvanize a passionate and visionary participation of the citizenry in the integration plan under the clarion call of, “One People, One Destiny”. The Council not only directed the EAC Secretariat at Arusha to plan in advance for future commemorative events, but also urged Partner States to hold EAC Weeks annually.
More recently, the East African Legislative Assembly passed the East African Community Holidays Bill 2013. The Bill, which was passed in August 2013, was meant to further promote the spirit of East Africanism through the annual celebration of the East African Community Day, on 30th November. However, owing to other engagements, in Uganda, the day was marked on 4th December 2015.
These activities are not only aimed at raising awareness on the benefits and opportunities of EAC integration, but also to reflect on the vision and progress made as well as the opportunities arising from integration.
The EAC journey has been an illustrious one, with a lot of achievements that we should take pride in as East Africans, the challenges notwithstanding.
The community is now at a crucial stage of social and economic integration, following the establishment of a Customs Union in 2005, a Common Market in 2010, and the signing of the Monetary Union Protocol in 2013, which has since been ratified by all the Partner States.
Regional economic groupings such as the EAC common goal of economic transformation and development, which implicitly includes the eradication of poverty. This means that economic integration should not be seen as an end in itself, but rather as a means towards sustainable economic development.
Today, the EAC has, indeed, realized remarkable economic integration as evidenced by the continued growth in intraregional trade among the Partner States.
By creating a single large market that spans an area of 1.82 million square kilometres, with a population of over 145 million, the EAC has and will continue to be an attractive destination for foreign direct investment, which will, in turn, spur greater economic growth and the development of the Partner States. The establishment of the Customs Union has, for instance, led to an increase in intra-regional trade.
According to recent figures, Uganda’s volume of trade with its fellow EAC Partner States increased since the establishment of the Customs Union in 2005, from US$670.7 million to US$1539.9 million in the 2014/15 financial year.
But, in addition to celebrating the achievements of the EAC, it is vital to evaluate whether the circumstances leading to the challenges of the original EAC of 1967-1977 have been adequately addressed and what measures have been put in place to prevent a recurrence.
Whereas the political will continues to present a serious challenge for many regional integration arrangements, this has, by and large, not been a serious problem for the EAC. It is, indeed, unprecedented that the EAC is the only regional bloc whose establishment clearly brings out a political federation as its ultimate objective. Federating will not only fortify the EAC as a bloc, but it will also empower the region to play a meaningful role in the era of globalization and enhance our bargaining strength in bilateral as well as multilateral negotiations.
Regional arrangements face challenges along the way to integration. It should, therefore, not surprise anyone that the EAC still has a lot to do, as was aptly encapsulated in the theme for last year’s celebrations: 16 Years of EAC Integration: So Much Done, So Much to Do.
For our economies to become vibrant and successful, there is a need to implement adequate tax and social security reforms as well as policies that will contribute to the expansion of the private sector, create jobs and increase productivity. We have to deal with the scourge of corruption and strengthen regional as well as national institutions to promote the rule of law.
We also have to address the infrastructure deficits, including those that deliver basic essentials such as access to clean water and sanitation. Good health is a premium and so is education, which needs to be galvanized at the primary, secondary and university levels through adequate funding, staffing and facilities. Energy and durable transportation networks need to be built whilst tourism, a potentially huge foreign exchange earner, should be aggressively promoted.
As a community, we need steadfastness to adopt harmonized economic policies that enhance a collective approach in tackling problems. Indeed, for integration to succeed, regional policies must take eminence over domestic policies and programmes.
Report by Ms Edith Mwanje, Permanent Secretary, Ministry of EAC Affairs, Republic of Uganda
The EAC Trade Report 2013
In 2013, the process of East African Community integration gained momentum when an agreement was reached on the policy and institutional framework for the Single Customs Territory. As a result, a number of non-value adding processes of transporting goods from Mombasa to Kigali through Kampala will be removed and, therefore, the number of days taken to move cargo from Mombasa to Kampala and finally to Kigali will be reduced.
Further, the year 2013 saw the signing of the Monetary Union Protocol, which is very important for the integration of financial systems within the region. These developments are expected to ease doing business in the East African Community, making the region one of the major investment destinations in the world.
The developments within the community require regular monitoring and evaluation as we move towards a Monetary Union and subsequently a Political Federation. The 2013 EAC Trade Report presents detailed analysis of trade flows within the community and between the EAC and other regional blocs and is a tool which will enable the improvement of trade policy within the region and with other regions. It is important to note that current negotiations for a Free Trade Area between the EAC, and other regional blocs like SADC are guided by the information provided in this and similar trade and investment reports.
The 2013 Trade Report provides trends in the intra-EAC trade. It is clear that intra-EAC trade continued to exhibit a positive trend by posting a 6.1 per cent growth. Burundi posted the highest intra-trade growth rate of 91.5 per cent, which is an indication of improvement of its participation in regional trade.
The EAC's total trade with the rest of the world maintained an upward trend by posting a growth rate of 8.3 per cent in 2013. On the investment front, the Foreign Direct Investment (FDI) in the EAC increased by 6.6 per cent to US$3.7 billion in 2013, an improvement over 2012. This increase was mainly driven by developments in the oil and sectors in Kenya, Tanzania and Uganda.
In the community, GDP growth remained strong, averaging 5.1 per cent, but Tanzania recorded the highest economic growth rate of 7.1 per cent. Inflation remained within a single digit range with Rwanda registering the lowest rate of 4.2 per cent, while both Tanzania and Burundi have the highest rates of 7.9 per cent each.
World trade remained sluggish after recording a growth rate of 2.1 per cent in 2013. Trade between developing countries, especially in the Asian region, was much stronger than what it was with the developed countries. Africa’s exports declined by 3.4 per cent during 2013, which can be explained by the 2012 recession in the European Union zone that extended to 2013. The European Union remains the major trading partner of the African countries and, therefore, any volatility in the EU affects African trade.
The total EAC trade with the rest of the world declined by 0.8 per cent due to a 6.7 per cent reduction in exports. Most export markets such as the European Union suffered a recession while South Sudan and Democratic Republic of Congo faced political instability. The value of EAC imports increased by 1.8 per cent, but was lower than the 8.1 per cent growth recorded in 2012. The Intra-EAC trade growth slowed down to 6.4 per cent in 2013 from 21.9 per cent in 2012.
The value of goods imported under the exemption and remission regime declined in all the Partner States except Tanzania. Over the years, the value of goods imported under the exemption and remission regime has been growing, resulting in much revenue foregone (34.9 per cent of total trade taxes). Most imports under the exemption and remission regime included goods for investment projects, funded projects, charitable organizations and embassies and consulates. The value of sensitive goods imported by EAC Partner States declined by 20 per cent to US$2,941.8 million in 2013.
The value of sensitive goods imported within the EAC Partner States was US$285.7 million, which was 9.7 per cent of the total value of imported sensitive goods in 2013. Customs revenue from all Partner States increased by 6.9 per cent to US$6,993.2 million in 2013 from US$6,544.8 million recorded. VAT on imports remained the major source of Customs revenue, which is explained by the destination principle design of the VAT system. In all the Partner States, the share of Customs revenue to total tax revenue is declining. This is largely explained by improvements in domestic tax collections as economic integration continues to deepen.
The political stability, improving economic environment and expanding market in the community continue to be the major drivers of investment. The FDI inflows to the community increased by 6.6 per cent to US$3.7 billion in 2013. Uganda and Tanzania recorded relatively high inflows due to developments in the oil and gas sector. On the Intra-EAC investment flows side, the total value increased by 9.8 per cent to US$236.6 million in 2013 from US$215.4 million in 2012. Kenya was the main source of intra-EAC investment, while Uganda was the major destination. In line with the increase in the value of investment flows, the number of projects increased to 70 in 2013 from 53 in 2012.
The number of jobs created through licensed FDI projects increased by 24.9 per cent to 131,967 jobs in 2013 from the 105,618 jobs recorded in 2012. New investment opportunities are emerging in the region, especially in the oil and gas sector. Whereas FDI inflows to the region continued to grow, infrastructural bottlenecks, especially in the transport and energy sectors, and limited skills base have remained major challenges to investment promotion. Further, lack of a harmonized investment regime has perpetuated uncoordinated promotion of investments in the region.
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