News Archive January 2017
Civil society experts issue accelerated agenda for addressing illicit financial flows in Africa
Group highlights 14 steps African leaders can take to energize fight against illicit flows following Addis Ababa Action Agenda, SDGs, and ECA High Level Panel
As national leaders meet at the African Union Summit in Addis Ababa this week, a group of civil society experts has issued a set of recommendations to address illicit financial flows (IFFs), an issue of critical importance to regional development. Titled Accelerating the IFF Agenda for African Countries (the Accelerated IFF Agenda), the purpose of the document is to highlight for African leaders fourteen steps that can be taken to jumpstart efforts to address IFFs. Among the recommendations are suggestions to establish a multi-agency approach to fight IFFs, to collect information to identify corporate ownership, and certain tax-related measures.
Robbing the African continent of more than $70 billion per year, IFFs represent one of the largest problems facing Africa today. The international community has already recognized IFFs as a major impediment to development, incorporating reduction of IFFs into the Financing for Development Conference’s Addis Ababa Action Agenda and the United Nations’ Sustainable Development Goals. Likewise, the UN Economic Commission for Africa’s High Level Panel on Illicit Financial Flows from Africa published a watershed report on the subject in 2015, and the ambitious African Union Agenda 2063 highlights the importance of eliminating illicit flows as a key way to increase domestic resource mobilization.
“Development experts have identified domestic resource mobilization as the most crucial ingredient in reaching the Sustainable Development Goals,” noted Global Financial Integrity President Raymond Baker. “Illicit financial flows are corrosive to development efforts and curtail the ability to capture domestic resources. It will require energetic and concerted action from governments to fix the problem and the Accelerated IFF Agenda identifies effective steps to kick-start the process. ”
“African agency is critical to invent a future without illicit financial flows,” said Donald Ideh, Project Director on TrustAfrica’s Nigeria Anti-Corruption and Criminal Justice Reform Fund.
Jason Rosario Braganza, Deputy Executive Director of Tax Justice Network-Africa (TJN-A) in Kenya, added that “The accelerated IFF agenda for African countries comes at a time where there is vacuum in global leadership on the issues of IFFs. The 14 point agenda integrates fundamental political and institutional steps that African governments and African multilateral agencies have begun taking to curb IFFs from the continent. The Accelerated IFF Agenda is timely as African governments take up the mantle of leadership in track it, stop it, get it in order to further the continents’ development agenda.”
Donald Deya, Chief Executive Officer of the Pan African Lawyers’ Union (PALU) commented on one way in which the Accelerated IFF Agenda addresses governance and accountability concerns and why the African Union should take note of the document in its discussions this week. “The AU has taken a lead role in recognizing the problem of IFFs on the continent,” he stated. “It can take a step further by including IFF-measures in the African Peer Review Mechanism (APRM), stating loud and clear that good governance means addressing IFFs. I am in Addis Ababa this week to commence this discussion with government representatives, on behalf of our colleagues.”
“Many IFFs arise from corruption within countries,” added Auwal Ibrahim Musa (Rafsanjani), Executive Director of the Civil Society Legislative Center (CISLAC). “Establishing open procurement systems, using common, accessible approaches like the Open Contracting Data Standard, ensure that a government is not contributing to the theft of its people’s future.”
Jean Mballa Mballa, Director of the Centre Régional Africain pour le Développement Endogène et Communautaire (CRADEC), spoke about the group’s plans for outreach in the coming months, stating that “We look forward to discussing this list with senior government officials and civil society groups in all African countries. Some countries may already be working on some of these actions but have yet to embrace others. Nonetheless, each is a critical precursor to more advanced actions to combat illicit financial flows.”
The group of experts represents organizations based in Africa and the United States. Funding for the endeavor, which will include outreach to governments, civil society groups, the media and lawmakers, is provided by the government of Sweden.
Kenyan manufacturers identify five key areas to rev up sector
Manufacturers in Kenya have listed five priority areas to jump start a sector that has experienced a slump in the recent past, growing slower than the GDP since 2014.
At the top of the manufacturer’s agenda is a review of the regulatory policy framework that will support the sector under the devolved system.
Other focus areas unveiled by the Kenya Association of Manufacturers (KAM) include infrastructure expansion, enhancing local content, long-term financing access and SME expansion.
The priority areas, if pushed through, aims to increase the sector’s contribution to the GDP, spur job creation and increase foreign exchange earnings.
The manufacturing sector grew at a dismal rate of 1.9 percent in the last quarter of 2016 against a target of 8.7 percent set by the Vision 2030’s Medium-term Plan II.
“When compared to other rapidly industrialising nations, Kenya’s manufacturing sector growth rate is the lowest. Vietnam has grown at its highest ever rate in the last five years but it still falls short of Ethiopia which grew at 15.8 percent,” notes KAM’s 2017 Agenda report.
The report further says Kenya’s service-driven economic growth could lead to a jobless growth, “which is unsustainable in the long term.”
The Association’s Chief Executive Phyllis Wakiaga says creating and expanding markets locally and internationally remains a crucial factor to grow the country’s manufacturing output.
“We also want to see improved operational excellence within the sector and grow the number of manufacturers in the country,” says Wakiaga.
The turnaround plan comes as exports to the key EAC market declined by 23 percent, a factor that contributed to the dwindling manufacturing sector over the last two years.
The association says the Buy-Kenya, Build-Kenya policy through the preference and reservation regulations will tighten the 40 percent local content requiring the government to buy goods made in Kenya.
Creating Jobs a Priority for Industry in 2017
Manufacturers unveil focus areas toward achieving Industrialization
Kenya Association of Manufacturers have launched this year’s Manufacturing Priority Agenda 2017 under the theme “Driving industrial transformation for job creation and inclusive economic growth”.
The MPA focuses on emerging public policy, a review of the current business environment and relevant regulations, as well as a vision to industrialize for the benefit of Kenya’s economy. The guide details the need for investment in technical skills, creating a nurturing environment for SMEs with a special emphasis on women and youth enterprises, and making Kenya an export hub thereby increasing the competitiveness for local business.
During his keynote address, Principal Secretary, State Department of Industry and Investment Mr. Julius Korir stated that the government is keen on working with private stakeholders to achieve the manufacturing agenda. “The government is working towards ensuring that the manufacturing agenda becomes the only government agenda. I’m glad to see that the recommendations made in this year’s Manufacturing Priority Agenda are aligned with the Kenya Industrial Transformation Programme.”
KAM Chairlady, Ms. Flora Mutahi stated that KAM will continue to work with the Government and other stakeholders towards the development of the industry. “The Government has indeed shown willingness to engage with Industry towards the realization of vision 2030 from our past MPAs. This year we look forward to working even more closely, not just to advocate for better regulations for business, but more so to develop a manufacturing policy that will address issues of inclusive growth and economic stability for our nation. We strongly believe industrialization of our country should be a priority for all citizens, with a view to drive the creation of wealth and productive jobs.”
Additionally, on elections Ms. Mutahi said, “Elections are supposed to be a process and not a deterrent to our current democratic progress. Hence as the business community, we would like to see a show of leadership from both the opposition and current government in guiding a peaceful and transparent transition.”
The priority areas will be driven under five key pillars which, if strengthened, will lead to a more competitive environment and impactful economic gains for Kenya’s industrial sector. These are;
Pillar One: Policy, Legal and Regulatory Reforms
Pillar Two: Level playing field for manufacturing in Kenya
Pillar Three: Competitive Local Manufacturing Sector
Pillar Four: Make Kenya a manufacturing hub for Exports
Pillar Five: Securing the future of Industry
KAM Chief Executive, Ms. Phyllis Wakiaga stated that the MPA has been an instrumental tool in advocating for the growth of the industry over the years. “By clearly articulating our issues on previous MPAs, we have seen the Government stepping in, as our partner, to resolve critical matters such as VAT refunds, interventions on budget proposals (increased taxation on imported steel products) and their support on the ratification of EPAs among other major wins. We are confident that this year we shall achieve a lot under our theme, driving industrial transformation for job creation and inclusive economic growth, as we aim to make sustainable socio-economic impact.”
The fruits of growth: Economic reforms and lower inequality
Growth is essential for improving the lives of people in low-income countries, and it should benefit all parts of society. IMF Managing Director Christine Lagarde takes a look at reform and inequality in low-income countries.
Traveling through Africa in the last few days, I have been amazed by the vitality I have witnessed: business startups investing in the future, new infrastructure under construction, and a growing middle class. Many Africans are now making a better living and fewer are suffering from poverty. My current host, Uganda, for example, has more than halved its absolute poverty rate to about 35 percent from close to 90 percent in 1990.
But we have also seen a flip side. Poverty, of course, but inequality as well remain stubbornly high in most developing countries, including in Africa, and too often success is not shared by all.
We have learned, both from working with our member countries, and from our research, that sharing the fruits of growth – what we call inclusion – is key to achieving sustainable economic growth. All segments of society should feel that they have an opportunity to make a better life for themselves.
Our new staff analysis, released last week, uncovers the various channels through which critical reforms that promote growth (such as those in agriculture, the financial sector, and public investment) can sometimes widen inequality in lower-income countries. The study also illustrates how additional measures can mitigate such growth and equality trade-offs.
The bottom line is this: First, pro-growth policies can be truly inclusive only if policies are designed with careful attention to the details of who gains and who loses. Second, well-targeted measures can ensure that everyone gains from essential economic reforms – and help further strengthen the case for pursuing reforms.
A look at who gains and loses
Lifting growth and reducing inequality is especially hard in countries where workers cannot relocate easily and there are big productivity differences between services, industry, and agriculture. A large informal economy, poor infrastructure and lack of financial services make the task even more difficult. Yet, in many of the IMF’s poorest member countries, this is often the case.
In sub-Saharan Africa, for example, it is more than twice as expensive to move from rural to urban areas than it is in China. Only a third of sub-Saharan African households have electricity, compared to 85 percent in the rest of the world. And in low-income countries, only about 20 percent of the adult population has a bank account, compared to more than 80 percent in the rest of the world.
Such barriers get in the way of successful and equitable reforms. Infrastructure development and financial sector reforms are examples.
More, and more efficient, spending on roads, airports, power grids and education help an economy grow more productive and make it easier for people to relocate from farms to cities. But infrastructure investment can also increase inequality if some sectors of the economy become more competitive than others, particularly if labor mobility is limited.
The case is similar for financial sector reforms. On the positive side, these reforms could make it cheaper to borrow, thereby stimulating private investment and boosting growth. But unless financial reforms are deep enough, they may not help poorer segments of the population obtain access to credit and financial services.
How to deliver strong, but inclusive growth
So, what can be done? The answer is not for policymakers to hold off on reforms that boost productivity and growth. Rather, policymakers should consider options that make these reforms more palatable from both a growth and distributional perspective.
With this in mind, our staff paper looks at a number of country cases and analyzes how well-targeted measures can complement reforms and offset adverse distributional impact.
For instance, if Malawi were to consider reducing subsidies for maize production to enhance productivity in the agricultural sector, then targeted cash transfers to affected households would help provide immediate support to farmers who may be hurt by this move. This approach has been successful in reducing poverty and inequality in countries such as Ethiopia, which has one of the largest social transfer programs in Africa.
Similarly, with regard to financial sector reform, if Ethiopia were to increase credit to the private sector to promote manufacturing and boost growth and employment, complementing this by broadening financial access to the rural population and increasing labor mobility – through easier transport that connect rural and urban areas, affordable urban housing, and training – would help reduce inequality across sectors. Rural workers would then be able to find better paying jobs in more modern and competitive sectors, such as manufacturing and services.
Governments can also target investment to improve productivity in disadvantaged sectors, and even out the impact of other reforms. In Myanmar, for example, where half the workforce is on farms, investment in electrification, irrigation, and research and development for improved seed varieties could sharply improve agricultural productivity.
There is no doubt that governments will face challenges in building a consensus for bold policies to boost growth. The IMF will continue to work with them, advocating reforms that bear fruits for everybody to enjoy.
African Union Handbook 2017
A guide for those working with and within the African Union
It is a great pleasure to be writing a foreword for the fourth annual edition of the African Union Handbook. This edition coincides with the end of term for this current commission and, thus, offers us an opportunity to reflect on the strides we have recorded since we took up office in 2012, the Year of Boosting Inter-African Trade, which preceded the Year for Pan Africanism and the African Renaissance.
Since then, as this handbook bears testament to, we have placed our food security agenda firmly in the programmes of our Union and partners. This has, amongst other things, facilitated discussions and actions in relation to our green and blue economies.
Our OAU-AU 50th anniversary commemorations offered us an opportunity to reflect on the gains we have made in relation to Pan Africanism and the African Renaissance. Our Heads of State and Government took the opportunity to lay the foundation for our continent-wide 50-year programme, which allowed Africans to dream of the Africa they foresee over the next 50 years, Agenda 2063: The Africa We Want, which lays a solid foundation for a united, prosperous and peaceful Africa.
Last year, 2016, saw critical milestones across Africa for gender equality and the empowerment of women. It included the 30th anniversary of the African Charter on Human and Peoples’ Rights; the second phase of the African Women’s Decade 2010-20; the 36th anniversary of the UN Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW); and the 21st anniversary of the 1995 Beijing Declaration and Platform for Action.
For the African Union, 2016 was a special year dedicated to human rights with particular focus on the rights of women. It was also the second consecutive year that gender equality and women’s empowerment was adopted as the highest priority on the continental agenda. One of our many achievements was the Executive Council’s formal decision in January 2016 to ensure that the voices of both women and men are equally represented in all AU organs.
Our theme for 2017 is Harnessing Demographic Dividend through Investments in the Youth. This is another particularly significant theme. The future of our continent, our unity, our hopes and aspirations for the peaceful and prosperous Africa we want, rests in the hands of our young people.
The strides we have made towards our vision of “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena” could not have been possible without partners such as the Government of New Zealand, which continues to support the production of this important record of our work. The documentation of our work is important because it is an instrument by which the people whom we serve can hold us accountable whilst also providing guidance to our work.
Chairperson of the African Union Commission
The African Union (AU) was officially launched in July 2002 in Durban, South Africa, following a decision in September 1999 by its predecessor, the Organization of African Unity (OAU), to create a new continental organisation to build on its work.
The AU vision is: An integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena. Agenda 2063, officially adopted by the AU Assembly in 2015, provides a new collective vision and roadmap to build a prosperous and united Africa based on shared values and a common destiny.
Agenda 2063 is Africa’s endogenous plan for structural transformation and a shared strategic framework for inclusive growth and sustainable development. It is anchored on the AU Constitutive Act, AU vision, AU Assembly 50th Anniversary Solemn Declaration of 2013 and seven African aspirations for 2063, and sets out a national, regional and continental blueprint for progress. Agenda 2063 was adopted by the AU Assembly on 31 January 2015 at its 24th Ordinary Session. In January 2016, the Assembly reiterated that Agenda 2063 is a common continental framework for socio-economic development.
The seven aspirations for 2063 are:
A prosperous Africa based on inclusive growth and sustainable development
An integrated continent, politically united, based on the ideals of Pan Africanism and the vision of Africa’s renaissance
An Africa of good governance, democracy, respect for human rights, justice and the rule of law
A peaceful and secure Africa
An Africa with a strong cultural identity, common heritage, values and ethics
An Africa whose development is people-driven, relying on the potential of African people, especially its women and youth, and caring for children
Africa as a strong, united, resilient and influential global player and partner.
Under the First Ten-Year Implementation Plan (FTYIP) 2013-23, Agenda 2063 has 13 fast track or ‘flagship’ projects:
Integrated high-speed train network: aims to connect all African capitals and commercial centres
Pan-African virtual university: designed to accelerate development of human capital, science and technology and innovation
African commodities strategy: aims to enable African countries to develop a vibrant, socially and environmentally sustainable commodities sector
Annual African forum: designed to bring together Africa’s political leadership, private sector, academia and civil society to discuss Agenda 2063
Continental Free Trade Area (CFTA) by 2017: aims include to double intra-Africa trade by 2022, strengthen Africa’s common voice in global trade negotiations and operationalise the African Investment Bank (2025) and Pan African Stock Exchange; the African Monetary Fund (2023); and the African Central Bank (2028-34)
African Passport and free movement of people: aims to fast track continental integration by enhancing free movement of all African citizens from all African countries by 2018
Silencing the guns by 2020: aims to end all wars, conflicts and violations of human rights
Grand Inga Dam Project: aims to boost Africa’s energy production
Pan-African E-Network: designed to transform e-applications and services in Africa
African outer space programme: aims to bolster African development in various fields, including agriculture, disaster management, remote sensing, climate forecast, banking and finance, defence and security
Single African air transport market: aims to deliver a single African air transport market to facilitate air transportation in Africa
African continental financial institutions: aims to accelerate integration and socio-economic development of the continent. The institutions include the African Central Bank, African Monetary Fund and African Investment Bank
Great Museum of Africa: the Museum, to be established in Algiers, Algeria, was added to the flagship projects in July 2016.
As of September 2016, progress on the flagship projects included:
A common passport for Africa was launched symbolically at the AU Assembly Summit in Kigali, Rwanda, in July 2016. AU Heads of State and Government encouraged Member States to adopt the African Passport, and asked the AUC to provide technical support and to put in place a roadmap for the development of a protocol on free movement of people in Africa by January 2018 (Assembly/AU/Dec.607(XXVII) of July 2016).
The Inaugural African Economic Platform is scheduled to be held in Mauritius from 19 to 22 March 2017.
The AU Assembly adopted the African Space Policy and Strategy in January 2016 as the first major step towards an African outer space programme (Assembly/AU/ Dec.589(XXVI)).
The AU Assembly reaffirmed in July 2016 its decision to fast track establishment of the CFTA, and decided to establish a high-level panel to champion fast tracking of the CFTA.
This Handbook is published by the African Union Commission (AUC) in partnership with the New Zealand Government. Modelled on the United Nations Handbook, it is intended as a ready reference guide for people working in all parts of the AU system (Member States, government officials, Commission and other staff) as well as the AU’s many partners and wider civil society.