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Agricultural innovations can help African farmers compete, boost food security, says new report
Africa must embrace agricultural innovations to better compete in an evolving global bio-economy, according to findings from a new report issued by the African Development Bank (AfDB) and the International Food Policy Research Institute (IFPRI).
The report, entitled “GM Agriculture Technologies for Africa,” analyzes the benefits and constraints of adopting genetically modified (GM) technologies to address challenges related to population, poverty, food insecurity and climate change.
Speaking at the launch of the report on September 29, at a conference in Abidjan, Côte d’Ivoire, commemorating the Africa Year of Agriculture and Food Security, AfDB Vice-President Aly Abou-Sabaa, emphasized the underdevelopment of Africa’s trade in agriculture, especially intra-regional trade, in spite of the vast potential for its expansion.
“In order to meet their food and nutrition requirements, African countries import about $25 billion worth of food each year, but only about $1 billion worth of such imports come from intra-African trade,” said Abou-Sabaa, Vice-President for Agriculture, Water, Human Development, Governance and Natural Resources. “We must implement innovative solutions that can not only bolster agricultural performance, but also promote agri-food trade and food security,” Abou-Sabaa added.
“Agriculture is an economic engine for Africa,” said Shenggen Fan, IFPRI’s Director General. “Biotechnology is among the various technologies being adopted by advanced and emerging agricultural economies and offers the potential to help millions of people become more food secure,” he added.
This report, commissioned by AfDB and prepared by IFPRI, discusses the need to transform Africa’s agriculture sector from one of historically low productivity to one that is a high-potential driver of economic development, drawing on technological and systemic improvements to foster intensification as opposed to extensification. It focuses on GM technologies in particular, as these are the most controversial, directly impacting the adoption rates of biotechnologies in Africa. Based on published evidence about the benefits and constraints of the adoption of these technologies, the report provides an overall, evidence-based snapshot of GM technology in Africa.
While adoption of GM technology has been proceeding in many developing countries, notably in Asia and Latin America, Africa lags behind: of the 54 AfDB member countries, only Burkina Faso, South Africa, and Sudan are now planting and commercializing genetically modified (GM) crops. Other countries, including Ghana, Kenya, Malawi, Nigeria, and Uganda, are making important advances towards the commercialization of GM crops. Progress in most other African countries continues to be quite limited or non-existent.
The report demonstrates underinvestment, weak capacity, and weak regulatory structures for biotechnology in Africa. Therefore, efforts to increase public investment in biotechnology and to upgrade and strengthen science-based, cost-effective regulatory systems should be seen as the highest priority.
About IFPRI: The International Food Policy Research Institute (IFPRI) seeks sustainable solutions for ending hunger and poverty. IFPRI was established in 1975 to identify and analyze alternative national and international strategies and policies for meeting the food needs of the developing world, with particular emphasis on low-income countries and on the poorer groups in those countries.
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At UN meeting in Geneva, Ban spotlights trade as driver of global sustainable development
The critical role played by international trade in lifting economies out of poverty is an invaluable one but must remain consonant with the objectives enshrined in the sustainable development goals, Secretary-General Ban Ki-moon declared today in an address to the World Trade Organization (WTO).
Speaking at the WTO’s annual Public Forum during his trip to Geneva, the Secretary-General admitted that trade provides a unique fuel for economic growth but cautioned that its benefits could often be distributed inequitably, by-passing women, young people and the least advantaged and leaving environmental degradation in its wake.
“Trade provides a path to accelerated growth and prosperity,” affirmed Mr. Ban. “International trade is an essential component of an integrated effort to end poverty, ensure food security and promote economic growth.”
“The question is not whether trade matters, but how we can make trade a better driver of equitable, sustainable development,” he added.
Mr. Ban warned, however, that trade could have “profoundly negative impacts” on the environment in the manner of carbon emissions emitted through production, transport and the consumption of traded goods and urged the integration of least developed and land-locked developing countries into a more sustainable trading ecosystem.
In particular, he delineated a three-point strategy in which trade would have a “major role,” including the acceleration of the MDGs process and the obtainment of the predefined targets; the creation of “a universal, legal, climate change agreement” by the end of December 2015; and the outlining of a future development agenda defined as the sustainable development goals.
Moreover, he called for “an open, fair, rules-based and development-oriented international trading regime” which would correct market distortions, permit least developed countries to benefit from duty-free and quota-free exports, and address countries’ internal impediments to trade such as bureaucratic inefficiencies, lack of productive capacity and inadequate infrastructure.
“As part of the sustainable development goals, we must promote policy coherence between the economic, financial and trade systems and environmental sustainability, including the climate change agreement,” reiterated Mr. Ban.
The WTO Public Forum is the Geneva-based agency’s annual outreach event, which provides a platform for participants to discuss the latest developments in world trade and to propose ways of enhancing the multilateral trading system. According to the WTO, the event regularly attracts over 1,500 representatives from civil society, academia, business, the media, governments, parliamentarians and inter-governmental organizations.
In his remarks to the event, the Director-General of the World Trade Organization, Roberto Carvalho de Azevêdo, echoed Mr. Ban’s emphasis on trade as a driver of sustainable development for the world’s poorest countries.
“By boosting development, trade has helped to cut poverty around the world,” Mr. Carvalho de Azevêdo explained to the gathered delegates.
“For many, trade has meant better opportunities, better healthcare, better conditions in which to raise a family and greater opportunities to lead healthy, productive lives.”
The Director-General cited trade as “a force for good, a source for jobs” and noted that developing countries were among the most vocal supporters of trade today, pointing out that it had played a large role in the rapid growth of emerging markets and of the south-south trade routes.
“Our aim is to open markets,” he proclaimed, “but it is also to support less developed countries to participate, to prevent harmful practices, and to provide a fair system where rules are agreed by all, where disputes are settled in an open and transparent manner, and where everyone has a seat at the table.”
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Joint Global Survey to shed light on Trade Facilitation and Paperless Trade
The five United Nations Regional Commissions (UNRC) and the Organization for Economic Cooperation and Development (OECD) have recently launched a global survey to collect relevant data and information on trade facilitation and the implementation of paperless trade from their respective member states. The five entities comprise the Economic Commission for Africa, Economic and Social Commission for Asia and the Pacific (ESCAP), Economic Commission for Latin America, the Economic Commission for Europe and the Economic and Social Commission for South Western Asia.
Outcomes of the survey, including a joint UNRC global report aim to enable countries to better understand and monitor progress in trade facilitation, support evidence-based policy-making, provide a cross-regional knowledge sharing platform and further strengthen south-south cooperation. The joint UNRC report will be published in 2015.
The global survey is a key initiative under the framework of the Joint UNRC Approach to Trade Facilitation, which was agreed upon by the Executive Secretaries of the five UNRCs in Beirut, in January 2010. It will enable the UNRCs to present a joint (global) view on key issues in trade facilitation. The questionnaire for the global survey was jointly prepared and finalized by UNRCs and OECD. The data collected will also support the updating of the OECD Trade Facilitation Indicators.
The global survey builds on an annual regional survey carried out by ESCAP since 2012. Its results have provided its member countries with useful policy reference and cursor on implementation of trade facilitation measures.
The global survey covers the implementation of some important measures included in the World Trade Organization Trade Facilitation Agreement (TFA) and of measures aimed at enabling paperless trade, that is, the conduct of trade using electronic rather than paper-based data and documentation. A recent ESCAP report (download below) found that “next generation” trade facilitation measures have just as much potential as more traditional measures to reduce trade costs and increase intra- and extra-regional trade. The full implementation of cross-border paperless trade is expected to potentially generate an additional USD 257 billion in annual export revenue for the Asia-Pacific region alone.
The global survey will be mainly conducted through the questionnaire, supplemented by desk research, and, if necessary, followed up by face-to-face or telephone interviews for data and information clarification and verification. The questionnaire has been sent by the UNRCs to their respective focal government agencies and/or selected experts since September 2014. Compiling the survey responses, verifying data, constructing databases and writing study reports will take place from the time the survey is dispersed to mid-2015. It is expected that the final study report be published by mid-2015.
Any African experts who are interested in sharing their expertise and knowledge on different aspects of trade facilitation and paperless trade in their country are encouraged to participate in the survey. More information is available from the UNNExT website or you can enquire from This email address is being protected from spambots. You need JavaScript enabled to view it. and This email address is being protected from spambots. You need JavaScript enabled to view it..
See also: The Trade Facilitation Implementation Guide (TFIG), developed by United Nations Economic Commission for Europe (UNECE), with contributions from its UN Centre for Trade Facilitation and Electronic Business (UN/CEFACT)
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Day 2 of Public Forum looks at why trade matters to Africa
The plenary session of the second day of the WTO Public Forum offered trade facilitation, regional integration and development of small and medium-sized enterprises as some of the elements that would help foster fair and inclusive growth in Africa. Liberia’s Commerce and Industry Minister Axel Addy said that economic development of Africa was “only a matter of time”.
Keynote address
Director-General Roberto Azevêdo delivered the keynote address on Day 2 of the Public Forum on “why trade matters to Africa”. Reiterating the key messages from UN Secretary-General Ban Ki-moon and Deputy President of Kenya, William Ruto, on Day 1 of the Forum, DG Azevêdo highlighted Africa’s potential for growth and the role that trade can play in realizing this.
Mr Azevêdo emphasized that the very existence of an international trading system creates a stable, predictable and transparent business environment which supports growth and development in Africa. The WTO’s Aid for Trade initiative can play an important role, given that Africa is its largest beneficiary, and the full implementation of the Trade Facilitation Agreement can help to integrate Africa and cut the costs of trading significantly. His full speech is available here.
Plenary debate: What trade means for Africa
The moderator, Julie Gichuru, opened the debate with a short account of African history. She pointed out that a newly independent continent had started out rather optimistically on the basis of a regional integration and trade agenda in the 1950s but somewhere down the line countries had faltered and lost their way. She encouraged the panel to analyse what had gone wrong and what needed to be done to bring Africa back to a new growth trajectory.
Axel Addy, Liberia’s Minister of Commerce and Industry, said that economic transformation in Africa was inevitable but would take time. He insisted that there is a misplaced pessimism with respect to the continent’s speed of development and compared it to the growth witnessed in western countries, where it took centuries for people to build the nations they currently inhabit. He highlighted the new respect for the culture of governance that the continent has acquired, and stated that peace and development would not be reversed in Africa, and that economic development was only a matter of time.
Paul Brenton, Lead Economist at the World Bank, said he saw enormous potential for trade and integration in the region and that its realization was the Bank’s priority. While there was particular potential for trade in agriculture, an emerging trade in the manufacturing sector was generating a lot of jobs. In terms of trade-related infrastructure, he said that more liberalization and predictability were required. Building capacity for trade is important, as is the implementation of trade facilitating measures. He observed that the main beneficiaries would be small and medium-sized enterprises (SMEs) and the poorest people in the region.
Frank Matsaert, CEO of Trademark East Africa, said that farmers were producing sufficient quantities but were not aware of how or where to sell their produce. To this end, technological innovation is of immense importance to the poorest and most marginalized of producers. He observed that the reality on the ground is quite different to what is portrayed in the media. While people speak of Africa as a market for extractives, the continent has been riding on the wave of a services and construction boom.
Issam Chleuh, Founder and CEO of Africa Impact Group, said that investment was of particular importance to Africa. Investment in businesses could also have social benefits. He added that there was a need to further integrate the continent, to form regional partnerships and to create value chains to realize maximum economic gains.
Razia Khan, Managing Director of Africa Macro Global Research at Standard Chartered, said that African economies had grown considerably. She praised the above-average economic performance of the region compared with global growth. However, she recognized that while trade had been successful in addressing poverty in Asia, African countries had not benefited from inclusive growth. She said that a focus on SMEs must be renewed so that high economic growth is translated into better outcomes for society.
Closing the discussion, DG Azevêdo said that stability is extremely important for Africa as it would help to attract investment and lead to greater economic growth. Infrastructure, both physical and institutional, needs to be strengthened. He said that Africa has an important voice in global issues and that it is sure to achieve growth and become more competitive.
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From subsistence to profit, Swazi farmers get a helping hand
Men in blue overalls are offloading vegetables from trucks while their female counterparts dress and pack the fresh produce before storing it in a cold room.
When another truck drives in, the packed items are loaded and the consignment is driven away again.
Such are the daily activities at Sidemane Farm, situated a few kilometres outside the Swazi capital of Mbabane.
“The farmers have a contract to supply me with baby vegetables throughout the year,” Themba Dlamini told IPS.
In turn, he supplies Woolworths stores in South Africa with the vegetables, a business he said was very “sensitive”. Not only does his client demand high quality vegetables, but he has to be on time when it comes to meeting deadlines.
He bought the E1.6 million business from its previous owner in 2005 and he says demand has been growing each year.
“I’m competing with other suppliers from South Africa and Kenya,” he said.
The contracted farmers are critical to the survival of his business because the 90-hectare land that is cultivated by the existing farmers is no longer enough. He needs more farmers to supply him.
With a staff of 95, Sidemane currently exports 25 tonnes of vegetables monthly, although there is a potential to expand to 40 tonnes. But for the company to meet its growing demand, it needs to train more farmers. Lack of adequate funding was a limiting factor.
“When buying the farm, I took a loan and I was not in a position to get another loan until I finish this one,” he said. “It would have been difficult to expand without additional financial support.”
Last year, Dlamini applied and got an E380,000 grant from the European Union-funded Marketing Investment Fund (MIF), an initiative under the Swaziland Agriculture Development Programme (SADP). The Ministry of Agriculture implemented the SADP while the Food and Agriculture Organisation (FAO) of the United Nations provided technical assistance.
From the MIF grant, Dlamini got a mini-truck, a generator and crates in which he packs the vegetables. The truck is very useful for transporting the vegetables and reaching out to farmers for trainings.
“We experience a lot of power cuts yet we deal with perishables. The generator helps to keep the stock whenever we don’t have power,” explained Dlamini.
He is one of 47 famers and agro-processors to benefit since 2012, said MIF coordinator Betina Edziwa. The project is the boost that many farmers needed to grow their businesses and improve their livelihoods.
“It has been realised that production for farmers is not a problem but getting access to the market is a challenge,” said Edziwa. “That’s why you’d find farmers giving away their produce for free because that is the only way they can prevent it from being spoilt.”
This necessitated the need to create a funding mechanism to enable beneficiaries to buy equipment and get training to help farmers sell their products. The grants were not handed out in cash, but the farmers were given the equipment and trained in business management and marketing.
“Successful applicants were those working with smallholders or were involved in value-addition,” said Edziwa.
This is one government and development partners’ initiative to reduce poverty and food insecurity in the country, where 63 percent of the one million population lives below the poverty line, according to the 2010 Swaziland Household Income and Expenditure Survey (SHIES).
Given the high incidence of HIV/AIDS – with Swaziland leading the world at 26 percent of the productive age group – a lot of farmers took a knock.
This is the injection that many Swazi farmers needed to ensure that they are able to grow from just being subsistence to commercial agriculture, said Minister of Agriculture Moses Vilakati.
“The fund is in line with ministry’s approved strategy on diversification and commercialisation,” he said.
Although the disbursement of funds under the MIF came to an end in June, Vilakati said the ministry will establish an agribusiness section to ensure sustainability and expansion of the initiative through follow-up training, monitoring and evaluation of the enterprises and the farmers.
In a recent interview on the FAO’s website, SADP’s chief technical advisor, Nehru Essomba, said MIF is part of the broader SADP that has benefited 20,000 farmers in many other activities. One of the activities includes the rehabilitation of six dams for irrigation to support production, not only of crops but also livestock.
“We’re already helping more than 20,000 famers move from subsistence agriculture to a more sustainable high income-generating and market-led agriculture,” said Essomba.
It is a comprehensive approach in addressing the value chain, said EU Ambassador to Swaziland Nicola Bellomo on the same website. He said this programme links production, processing and marketing of the product, which is new in the country, a net importer.
“We are trying to develop a capacity and ability to export food,” said Bellomo.
And this is what Sidemane and many other famers are already doing.
Edited by Kitty Stapp
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Environmental Goods trade talks move forward
A second round of talks towards clinching a tariff-cutting agreement on select environmental goods was held last week in Geneva, Switzerland, with sources reporting significant progress on hammering out the substance of the deal, namely on what types of products to include.
Specifically, the group reportedly reached agreement on a number of categories that will serve as a basis for negotiating the final list of products.
In addition, last week saw discussion on two of these categories, namely around products related to the reduction and mitigation of air pollution and solid and hazardous waste management.
The effort to nail down the planned deal, known formally as the Environmental Goods Agreement (EGA), is being undertaken by 14 WTO members, though that group could expand.
The current group counts some of the world’s largest importers and exporters of environmental products in its ranks, including the 28 member states of the EU as one, the US, and China.
“The global challenges we face, including environmental protection and climate change, require urgent action,” EGA participants explained in a joint statement at the initiative’s launch in July.
A first round of negotiations was held immediately following the initiative’s launch, with participants focusing on the framework and structure of the negotiations.
Categories
While the EGA group is aiming to reach agreement on an ambitious and broad range of green goods, participants have indicated that the selection will also be based on a product’s ability to address certain environmental challenges.
As such, the nomination of possible EGA products – and the related discussions – is moving forward based on different environmental goods categories, or sectors.
In addition to the two already discussed last week, the current list of categories set to be reviewed includes goods related to energy and resource efficiency; environmentally preferential products; soil and water treatment; noise and vibration abatement; protection of natural resources; environmental monitoring and analysis; and the scaling up of renewable energy equipment.
Participants will be invited to put forward products relevant to each category, which will then be discussed by the group as a whole, with a view to deciding whether or not it merits inclusion in the negotiations.
Several discussion rounds are scheduled until early next year, at which point delegates are reportedly aiming to have put together a compilation of potential products to be liberalised.
Formal negotiations on tariff lines and the final list are expected to start once each of the sectors has been discussed.
In an effort to bridge the gap between trade negotiators and environmental specialists, the latest round saw experts from the Organization for Economic Co-operation and Development (OECD), the International Energy Agency (IEA), and industry invited to present on various environmental products, their components, and recent market trends.
EGA officials have also explained to ICTSD’s Trade BioRes that while the talks will initially focus on tariff issues related to environmental goods, participants have not ruled out returning to issues such as environmental services and non-tariff barriers (NTBs) at a later stage of the negotiations.
APEC list hurdles
The EGA group first signalled its intention to pursue a green goods trade agreement in January at the World Economic Forum’s annual meet in Davos, Switzerland.
At the time, participants said they would build on a list of 54 environmental goods agreed to by members of the Asia-Pacific Economic Cooperation (APEC) forum.
In late 2012, the 21-nation APEC group announced plans to reduce applied tariffs on a list of 54 green goods – including wind turbines and solar panels – to five percent or less by the end of 2015.
While the deal was welcomed as a significant advance at the time, many were quick to note that this commitment is not legally binding, and includes some products that already have low tariffs.
Given EGA participants’ stated commitment to secure “global free trade” in environmental goods, trade watchers have suggested that this would envisage the reduction of bound tariffs to zero in these talks, in contrast to the APEC format.
Applied tariffs are the actual duty a country levies on goods at the border, while bound tariffs indicate the maximum ceiling level WTO members could potentially apply.
Ahead of last week’s round, the US, Australia, New Zealand, Japan, and Canada – also APEC members – all tabled their initial indicative lists of air pollution and solid and hazardous waste management products that they favour for inclusion in the eventual Environmental Goods Agreement.
In each instance, the nominations are said to feature both relevant products from the APEC list, as well as additional products, consistent with the group’s plans outlined in January.
Some of the other members of the EGA group have reportedly indicated that their respective internal consultations are still ongoing and will follow suit in due course.
Experts have also said that, while the APEC 54 list has provided a useful building block for the new initiative, concerns have been raised about how APEC members have implemented the voluntary cuts to their respective tariff systems and some provisions in that regional agreement.
For example, APEC economies have to decide whether or not to cut tariffs at the Harmonized System (HS) 6-digit level – a World Customs Organization (WCO) classification used to identify traded goods – or pick and choose more specific products from within these categories, creating the so-called “ex-outs” issue.
Although the EGA will not carry forward the provisions of the APEC agreement but rather just its list, WCO officials were invited last week to brief EGA negotiators on the technicalities of “ex-outs” related to environmental goods and their respective HS classifications, according to BioRes sources.
New members to join?
When kicking off the initiative in July, the group stressed that they remained open to working with other trading partners interested in pursuing similar objectives and ambition.
Israel has been the first to take up the group’s offer and has expressed an interest in joining.
In order for a new participant to join, however, each existing EGA member will need to undertake necessary domestic consultations for approval.
This includes a possible 90-day notification period to Congress for the US that would preclude Israel taking part in the negotiations until the notification period has ended.
Other WTO members that have reportedly shown an interest in joining are Turkey, Peru, and Chile.
Next steps
The third round of the EGA negotiations is slated for the first week of December in Geneva. Goods and technologies related to water and wastewater treatment, as well as the abatement of noise and vibrations, will be under discussion at that stage.
The planned deal is expected to be negotiated as a most-favoured-nation (MFN) style pact, which would extend the eventual benefits of the EGA to the global trade body’s entire membership once reaching a “critical mass” of participants.
This would build on the precedent set by the WTO’s Information Technology Agreement (ITA), another plurilateral-type initiative whose participants have agreed to eliminate tariffs on select information and communication technology products.
Defining a threshold for a “critical mass,” or a significant enough portion of trade in the list of covered goods to stave off potential free riders seeking to benefit from tariff concessions without offering anything in return, is one of the details that will need to be dealt with in due course with this MFN-style agreement.
This article is published in Bridges, Volume 18 - Number 32, by the International Centre for Trade and Sustainable Development (ICTSD).
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EAC and partners push climate smart agriculture to ensure a food secure region
Regional experts from Eastern Africa are meeting in Nairobi, Kenya, to create a robust network to promote climate smart agriculture and highlight its importance in achieving increased agricultural yield and productivity within the region.
The three day dialogue, hosted by the Food and Agriculture Organisation (FAO) Eastern Africa, and supported by the EAC-COMESA-SADC Climate Change Programme, aims to form a sub-regional working group that will enable millions of farmers in the region to practice climate smart agriculture and thereby strengthen food security and improve farmers livelihoods.
The concept of Climate Smart Agriculture, initiated by FAO, addresses the interlinked challenges of food security and climate change, with the objective to increase agricultural productivity, adapt and build resilience of agricultural and food security systems to climate change and reduce greenhouse gas emissions from agriculture. Developing the resilience of agricultural systems to adverse weather events and climate change is fundamental to achieving food security in the region.
Regional efforts underway to support climate-smart agriculture include the Africa Climate-Smart Agriculture Alliance, which aims to help 25 million farming households across Africa practice climate smart agriculture by 2025 as agreed by the first Africa Congress on Conservation Agriculture in March 2014 in Lusaka, Zambia.
The three RECs of EAC, COMESA and SADC recognize that farming cannot remain business as usual: conventional farming of burning, cutting down trees and degrading landscapes will impact the environment adversely. Most Member States have already set their targets, for example, the government of Uganda, through the Ministry of Agriculture is implementing CSA in 11 districts and has a vision of covering 250,000 hectares and reaching one million farmers by 2025.
EAC together with COMESA and SADC are implementing a programme on climate change to bring significant livelihood and food security benefits to at least 1.2 million small-scale farmers through the application of well-tested, Climate Smart Agriculture that combines crop production with agro-forestry and livestock management. In 2010 these three Regional Economic Communities (RECs) agreed to jointly implement a Climate Change programme covering 26 African countries.
The experts meeting in Nairobi have agreed that there is sufficient evidence that Climate Smart Agriculture practices such as CA, agro-forestry, integrated pest management, crop rotation, mulching and residue management are promising options that, overtime can sustainably increase the productivity of smaller holder farmers to produce a surplus food.
Medium scale farmers can even do better with tractor rippers and seeders. Mr. Edward Gitta, who is implementing CSA project in 16 districts in Uganda and working with at least 25,000 farmers, with funding from COMESA through the program explains that climate smart agriculture is based on a few principles: minimal tillage, crop rotation and crop residue retention.
“Traditional ploughing is wasteful because continuous churning of soil leads to excessive soil erosion, nutrient depletion and water logging,” he said.
Climate Smart Agriculture involves making holes in the ground that are about 35cm apart, as opposed to churning the entire land. The holes, known as planting basins, are about 4 cm long and 15-20 cm deep. These increase water harvesting, filtration and stronger root growth. This technique is climate resilient and enables crops to better withstand excessive dry or rainy seasons, reduce soil erosion, and increase nutrient uptake.
Climate Smart Agriculture is a practice that the EAC wants to see up scaled in the region for productive and profitable agriculture that can feed the growing population without destroying the environment.
EAC, together with COMESA and SADC have facilitated the setting up of national task forces on CSA in Member States. The RECs are supporting the formation of regional platforms through which famers can access knowledge and information about CSA, and will work with Partner States to prioritise the scaling up of Climate Smart Technology and facilitate the public-private partnerships.
The experts in Nairobi are developing the terms of reference for the formation of a Climate Smart Agriculture Eastern Africa Regional Working Group to promote faster adoption of CSA in the region.
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Azevêdo highlights trade role in realizing Africa’s “sheer potential”
Director-General Roberto Azevêdo, opening the WTO Public Forum’s second plenary session “Why Trade Matters to Africa” on 2 October, said that trade has an important role in realizing Africa’s “sheer potential”. He said that fully implementing the Trade Facilitation Agreement “will help to integrate Africa – and cut the costs of trade significantly”.
Address by Roberto Azevêdo
Welcome to our 2nd plenary session at the 2014 WTO Public Forum.
As you know, our topic today is “Why Trade Matters to Africa”.
Yesterday we were discussing trade in much broader terms, and yet Africa was a constant theme – in comments from the floor, and from the stage.
UN Secretary-General Ban Ki-moon said that we must integrate Africa into the global economy through open, non-discriminatory and equitable trade.
And in closing the meeting William Ruto, the Deputy President of Kenya, gave a rallying call.
He said: that Africa has the youngest population of any continent; that Africa offers the greatest return on investment; and that it is the fastest growing continent, with 7 of the 10 fastest growing economies in the world.
And so the message that I think many of us took away from the debate, was a sense of Africa’s sheer potential.
And of course trade has an important role in realizing that potential.
This is one reason why African countries are beginning to make their voices heard more and more loudly here at the WTO.
It is why our Africa members were so active in striking the deal to secure the Bali package at our ministerial conference last year.
And it is why African nations are tearing down barriers so that they can trade more with each other.
In East Africa, for example, they have more than halved the transit time for goods between Mombasa and Kigali. And cut processing costs at the Kenya-Uganda border by $300 per container.
These are the kind of steps which allow businesses to grow and thrive – and in the end these are the kind of steps that will change people’s lives.
So perhaps we shouldn’t be surprised when studies show that, across the globe it is the African people who have the most positive view of trade.
So there is a lot to play for – and a lot to be optimistic about.
But of course there are real challenges too.
Despite the impressive growth, there is still a huge inequality gap. Per capita income in countries in Sub-Saharan Africa is just 6 per cent of the average in developed economies.
And of course when talk we about “Africa”, we are talking about more than 50 countries, each with its own strengths and its own challenges.
A significant proportion of Africa’s growth over the last decade has been supported by high commodity prices.
But of course these gains accrue mainly to the large commodity exporters – and particularly the oil exporting countries. So there are many that are not reached by that growth.
And then there are challenges such as inadequate infrastructure, or limited access to trade finance, or issues of security.
So there’s no doubt that there remains a lot of work to do. And I think there are a number of ways in which the WTO can help.
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Firstly, the very existence of an international trading system creates a stable, predictable and transparent business environment which supports growth and development in Africa.
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Secondly, the WTO’s Aid for Trade initiative can play an important role. Over $40 billion dollars was mobilised in Aid for Trade financing in 2012 – with Africa as the largest beneficiary.
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Thirdly, we can make a big difference by fully implementing the Trade Facilitation Agreement and providing the capacity building assistance that goes with it. This will help to integrate Africa – and cut the costs of trade significantly.
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Finally, we can help through our negotiations – by making progress on the Doha agenda.
So, I think there is a lot to talk about – and with the help of our guests on the panel, and all of you, that is precisely what we are going to do now.
Again, we have a fantastic panel, chaired by our friend Julie Guichuru. Welcome back Julie.
To her right, it is my pleasure to welcome Minister Axel Addy, Minister of Commerce and Industry from Liberia.
Liberia is currently in the process of joining the WTO. Minister Addy is the Chief Negotiator in that process. So he brings a very interesting perspective. And we are delighted to have him here today.
We are also joined by:
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Issam Chleuh – Founder and CEO of Africa Impact Group, which is all about investing in positive and philanthropic projects – though I’m sure he can explain it much better than I can – so I’ll leave it to him!
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Razia Khan, Head of African Macro Research at Standard Chartered Bank.
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Frank Matsaert, CEO of Trademark East Africa – which is all about supporting trade in that region.
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And Paul Brenton, Lead Economist and Trade Practice Leader in Africa, from the World Bank.
So we have a very wide range of interesting perspectives here – almost as formidable as the topic itself.
Thank you all for taking the time to be with us today.
I look forward to our discussion.
And with that, Julie, I will hand over to you.
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Dubai Chamber Study reveals key findings on GCC investments in African infrastructure
A study by the Dubai Chamber of Commerce and Industry has revealed that Gulf entities have provided at least US$30bn of funding, at current prices, to African infrastructure over the past decade, which amounts to between 7% and 10% of total inflows, of which approximately US$15bn in loans and grants from Gulf development agencies and approximately US$15bn in direct investments.
During a press conference held at Dubai Chamber of Commerce & Industry to reveal the results of the study, which was developed in collaboration with the Economist Intelligence Unit (EIU) ahead of the Africa Global Business Forum on the 1st and 2nd of October, the study expected that annual contributions are likely to average US$5bn in the coming years, which equates to at least 10% of the total average annual inflows to this sector.
It also revealed that Gulf funding for African infrastructure has focused on North Africa, which has received the bulk of aid (about 65% of the total) and also a large share of the direct private investment (60%). There has been a focus on countries such as Djibouti and Senegal. However, there are increasingly exceptions to this rule, seen for example with the Saudi electricity company ACWA Power focusing its efforts mainly in South Africa and telecom companies exploring increasing swathes of East and West Africa. To date, there has been relatively little Gulf investment in the continent’s fast-growing economies of Angola, Ethiopia and Nigeria, which have attracted considerable infrastructure funding from Brazilian and Chinese entities, as well as – in the case of Nigeria – companies based in the US and Europe.
Gulf aid and investments are diversified among different infrastructure projects in Africa. According to the study, more than half of Gulf aid has gone to transport projects, mainly road building, with about 30% on power (ranging from hydroelectric dams to rural electrification) and 15% on water projects, but very little on telecoms infrastructure. By contrast, the telecoms sector has been the main infrastructure focus of the GCC private sector, followed by ports and, increasingly, power generation. Gulf investors have been less involved with roads and water infrastructure because of a lack of potentially profitable projects.
In 2012, Arab funding, both public and private, was equivalent to over 10% of total external funding. This was comparable to funding from European donors and more than the US4bn from the World Bank. However, it was dwarfed by Chinese spending of US$13bn.
Yet while Chinese entities have invested far more in African infrastructure, a direct comparison is problematic. For Chinese companies, infrastructure deals in Africa are often part of broader commercial engagements with an eye on African resources. As such, the infrastructure is often a sweetener to win resource concessions. But Africa’s natural assets are not of such vital interest to Gulf countries (although some Gulf firms are investing in the sector).
H.E. Hamad Buamim, President and CEO, Dubai Chamber, noted this study highlights key facts about the economic reality in Africa and business opportunity. And due to cultural and historical ties to Africa, GCC investors are well positioned to invest in infrastructure in Africa.
Buamim said: “Opportunities are not limited to public and large companies, small companies are also well positioned to invest. Dubai Chamber’s study has revealed that given the perceived risks associated with mega-projects in several African markets, smaller-scale projects have becoming increasingly more appealing, especially in the energy industry.
“Gulf investors must take care to differentiate between the region’s many countries, rather than view them as a homogenous “African” market. The Africa Global Business Forum, organised by Dubai Chamber will further highlight the economic and investment realities and opportunities in the different African markets,” he added.
GCC investments in Africa
Economic growth over the last decade has been robust, consistently surpassing 5%. Although this is welcome news, it is putting increasing pressure on infrastructure, evidenced by transport congestion, high logistics costs, inadequate asset maintenance and insufficient service provision in critical areas such as water and power.
Telecommunications
According to the study, the Gulf’s interest in investing in telecoms started with Zain of Kuwait and Etisalat entering the African market in 2005. Saudi Telecom Company (STC) indirectly holds a 75% share in South Africa’s third operator, Cell C, through its stake in Dubai-based Oger Telecom.
This interest is largely a result of the sector’s relatively low risks compared with other infrastructure areas. Gulf players have been successful in those sectors where consumers pay upfront and where the cost in physical infrastructure investments in advance is relatively rather lower contrasted with the amount of business they get.
The challenge is that, below the Sahara, markets look very different to the Gulf. Most Sub-Saharan African economies are low-income countries. They do have small elites with consumer demand comparable with those in the Gulf countries, but most people in Sub-Saharan Africa are not remotely in the same spending power bracket.
Gulf companies may need to partner, as Etisalat has, or draw more from their own experience of serving lower-income customers at home, notably the significant African and Asian expatriate communities in the GCC region.
Different local market conditions need not necessarily be a disadvantage. It could give Gulf investors opportunities they may not have at home. If Gulf countries can master the art of operating in a low-income environment, the South African market still provides an environment closer to home conditions.
Transport
With regards to transport, Gulf investors are most heavily involved in ports, followed to a lesser extent, by airport and road construction and aviation. A landmark investment was DP World ’s concession to manage the Doraleh Container Terminal in Djibouti. Awarded in 2000, this was DP World ’s first investment outside Dubai and one of the first significant Gulf infrastructure deals in Africa. It has since invested around US$1.5bn and made Djibouti, the maritime gateway for Ethiopia, the third-largest container port in Africa and contributed around one-quarter of Djibouti’s GDP. DP World went on to invest in ports in Algeria, Egypt, Senegal and Mozambique, providing the company coverage across the continent, whilst at the same time boosting the integration of African economies into global trade.
Ports also proved a draw to the MENA Infrastructure Fund, a US$300m private-equity vehicle backed by three Gulf investors, which invested in Egypt’s Alexandria International Container Terminal. Another example is Agility, of Kuwait, which is involved in port projects and operates in 11 African countries,
In aerospace, while Gulf carriers such as Emirates have expanded in Africa, related construction projects are still small in number. A main investor in this sector is the Bin Laden Group of Saudi Arabia, which is nearing completion of a new airport in Senegal.
There is no direct Gulf involvement in the rail sector, although Gulf aid has been forthcoming.
Electric Power
Gulf power companies’ experience in implementing power projects, has helped meet rapid growth in Gulf power demand. Their interest is extending to Africa, and the first mover was Mubadala, which took a 25% stake in the development of a power plant in Algeria in 2006.
As of today, ACWA Power, founded in 2002 by a consortium of family conglomerates with state backing, has the most aggressive Africa expansion strategy of the Gulf players, having invested nearly US$500m in African power so far. It was part of a consortium that won the 2012 tender for the Ouarzazate solar power plant in Morocco, contributing to the country’s ambitious solar energy plans.
While North African energy projects have proved attractive to Gulf investors in past years, they have not been afraid to venture below the Sahara. Indeed, ACWA’s first African investment, in 2010, was the Moatize coal IPP in Mozambique. It has also invested in the Bokpoort solar plant in South Africa, and the company has been shortlisted in Botswana to develop a coal power plant and is bidding to build the Kudu gas power plant in neighbouring Namibia.
This study has also revealed that there are small and medium-sized Gulf firms working in the power sector in Africa, specialising in installing small-scale power generators in remote places and renting them out. Such low-cost distributed power solutions are popular in Africa where some industry experts are growing cynical of mega-projects, calling for more focus on smaller-scale, achievable ones.
Water
Water, one of the most pressing infrastructure deficits in Africa, has received little attention from Gulf investors. Most funding is coming from development agencies. Of the private companies in this sector, the largest and most interesting is Metito, a Dubai based firm.
Challenges
The study presented a number challenges which affect the investment decision in Africa especially when it comes to infrastructure.
Gulf investors continue to perceive Africa as a risky market. Risks from operational problems, non-honouring of contracts, currency volatility, political risks and change of government and policies, especially relating to long-term projects, are among the main concerns for Gulf investors.
However, Gulf investors particularly in sovereign wealth funds, which have done few major deals in Africa, could play a bigger role. One of the main factors preventing a more ambitious push is the high-risk perception of Africa among Gulf investors, particularly in the poorly understood countries across the centre of the continent, and it crucial to consider that each African country has its own risk profile.
Other investment challenges highlighted by the study include the availability of greater opportunities in home markets which affects the investment decision, high risk in a number of African countries and unfamiliarity with low-income environments.
Solutions
The study highlighted a number of recommendations to tackle the investment challenges in infrastructure in Africa and manage risks.
One way to better manage risk is through joint investment with global actors such as development banks and multilateral agencies.
African governments already partner with international institutions such as the African Development Bank or the International Finance Corporation, and investors have other options to protect themselves. The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, offers political risk insurance in all countries eligible for World Bank assistance.
Moreover, a growing number of African states have ratified bilateral investment treaties (BITs) that provide investor protection and commit governments to an independent tribunal in the event of a dispute. Kuwait has entered into an agreement with Ethiopia, locking protections for an initial period of 30 years, compared with the average of ten years found in European BITs.
As more of these agreements are signed, such as the one between Qatar and Kenya in May 2014, Gulf investors can feel more comfortable about managing investment risk on the continent.
Another risk protection method is to ensure that investments have clear value to the surrounding economy, lessening the chances of backtracking on the part of government.
Islamic Finance
African regulators effort to deepening of Islamic financial systems created and opportunity to encourage Gulf investment in infrastructure.
The sukuk market in Africa is modest, accounting for just 0.6% of total global sukuk issuances outstanding. However, several institutions, including Standard & Poor’s and the Malaysia International Islamic Financial Centre have indicated potential for growth.
However, experience shows that between announcing an interest and the actual issuance there are often long time lags, partly because of political and legal hurdles and the costs of issuance. A second challenge is ensuring that regulators have the skills and resources to execute Islamic finance reforms. If the architecture is put in place, however, the impact on GCC-based financiers and investors would be salutary, owing to their familiarity and comfort with Islamic financial systems and the broadening effects of Islamic finance reforms on the infrastructure investment landscape.
Recommendations
Africa’s infrastructure deficit is an increasing constraint on growth. Yet investment, while short of the sums needed, suggests optimism about the sector’s potential.
As much as US$93bn is required annually to meet the continent’s infrastructure needs through to 2020, with half of that amount currently being met, according to the African Development Bank. That leaves a large gap for investors to fill, including sovereign wealth funds, multilateral lenders, individual companies and private consortia.
The following measures would give GCC investors a better understanding of these risks and encourage African governments to attract a wider range of players into the infrastructure space.
Pooling investments
Joint investments bring together GCC-based companies with multilateral lenders, private investors and risk-protection bodies such as the MIGA, providing a more secure “investment club” approach that could entice conservative investors.
African governments can signal their intention to protect infrastructure investment through the active signing of bilateral, multilateral and regional investment protection agreements that would bind governments and investors to the ruling of an independent tribunal in the case of disputes.
Adding nuance to the risk map
Observers often group Africa’s diverse countries together when it comes to risk – and this is especially true of Gulf investors. While Africa’s strong economic performance over the last decade has gone some way to challenge negative stereotypes, greater efforts are needed to inform investors about each country’s distinct risk profile.
For African governments, implementing best practice on procurement, tendering, payment and contract stability will contribute to investor confidence – as will the communication of reforms to potential investors. Both African governments and those of the Gulf can work together to provide trade and investment fairs and information resources to increase awareness about the opportunities, and risks, of Africa.
In the government-led economies of the GCC, personal relationships with decision-makers are important for boosting trade. Such a strategy will also help stimulate and encourage investments outside of the traditional aid programmes.
Diversifying financial sources
African governments have fruitfully tapped bond markets over the last two years, raising financing for critical infrastructure projects. Islamic finance products such as sukuk, sharia compliant bonds, remain somewhat nascent, despite their increasingly mainstream status globally and their natural fi t with tangible asset projects. This ought to be the next phase.
Promoting such instruments could widen the investor base for infrastructure and provide Gulf entities with new opportunities that could promote Africa’s infrastructure financing.
African infrastructure in numbers
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Over 1bn people, with 41% under the age of 15
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Africa’s population increases by 2.1% every year (1.1% is the global average)
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Only 32% of population have access to electricity (74% is the global average)
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Only 65% of the urban population and 38% of the rural population has access to improved water and sanitation networks
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Just 19% of Sub-Saharan Africa’s roads are paved
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Access to mobile is 63.5% (96.2% is the global average)
The study was launched in full ahead of the Third African Global Business Forum, which kicked off on 17 November 2015. Download the report here: Mapping Africa’s Islamic Economy
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Adoption of EPA crucial to Ghana – Deputy Minister
The adoption of the Economic Partnership Agreement (EPA) is crucial to ensure that Ghana’s exports to the European Union (EU) are not disrupted from January 1, 2015.
Mr Murtala Mohammed, Deputy Minister of Trade and Industry said Ghana as a non-Least Developed Country would be the only country in the West African sub-region whose exporters would be greatly hit if it does not sign the West Africa EPA.
He said out of 16 countries in West Africa, 12 are classified as Least Developed Countries, and in view of this, they could export their products duty free and quota free to the EU under a scheme called “Everything But Arms (EBA)”, so they are not obliged to sign any EPA with the EU.
He explained that these Least Developed Countries however, have agreed to sign the West Africa EPA in order to move the ECOWAS regional integration forward.
Mr Mohammed stated this, on Tuesday in Accra at a half day symposium on the Economic Impact of the Common External Markets and the EPA.
The symposium was under the auspices of institutions such as the Association of Commonwealth Universities, the World Bank, the Department of Foreign and International Development and the Development Research Uptake in Sub-Saharan Africa.
The Minister said Cote d’Ivoire had already signed an interim EPA with the EU and as a result would not experience any export disruption to the EU market even if the West Africa-EU-EPA is not signed before October 1, 2014.
He said about 97 per cent of exports from Nigeria to the EU were made up of crude oil, and therefore, Nigeria would not be affected much if it does not sign the West Africa EPA.
He observed that Cape Verde has expressed its willingness to sign the West Africa EPA, declaring that Ghana would undermine the process of the regional integration in the West Africa sub-region if it fails to sign the West Africa EPA.
Mr Mohammed observed that for some Africa countries, including Ghana, the incentives to opt for the interim EPA were the fear of losing EU market access for selected commodities, lack of options as many of their most important export sectors were dependent on the EU market and a threat by the European Commission to raise taxes on exports to Europe if they fail to sign on.
“Given this situation, it appears to me that we should move on to sign, but let’s do so by being properly informed of the implications,” the Deputy Minister stated.
Dr George Owusu Essegbey, Director of Science Technology Policy Research Institute (STEPRI) of the Council for Scientific and Industrial Research (CSIR) said the symposium creates a platform for open and frank discussion of research output that must inform policy decisions – in this case, “we focus on Ghana’s policy decisions as they affect our international trade relations”.
He said the CSIR in collaboration with the nation’s universities would be placing a Research Fellow in the Ministry to coordinate the implementation of research findings.
Ms Karrine Sanders of the Association of Commonwealth Universities said there was the need to improve the accessibility and utilization of locally relevant research findings for development in Africa.
The EPAs are a type of ’preferential trade’ agreement in which both sides agree to reduce the tarrifs on import duties and going out of their countries. The EPA sought to replace the trade provisions of the Cotonou Agreement that granted non-reciprocal access to the EU market until 2008 with a non-discriminatory trade agreement in order to comply with the World Trade Organization.
The EPA between the EU and African, Caribbean Pacific Countries (ACP) has been fraught with disagreement since it was initiated over 10 years ago.
While the EU hails the agreement as a new form of partnership that would promote economic growth and poverty reduction in ACP countries, ACP countries are skeptical about the impact that the EPAs will have on their developmental priorities especially, industrialization, smallholder agricultural development, government revenues, unemployment, poverty and food security.
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EU-Nigeria bilateral trade volume to grow to N17trn by 2015
The Head of EU Delegation to Nigeria, Amb. Michel Arrion, has said that the EU-Nigeria bilateral trade volume is set to grow to N17 trillion (€80.8 billion) by 2015.
Speaking at the 3rd EU-Nigeria Business Forum in Lagos, tagged ‘Time for Private Sector’, he said that in 2013 alone the total trade volume between the EU nations and Nigeria stood at €40.4 billion (N8.5trillion) with the trade balance tilted in favour of Nigeria.
According to him, EU imports from Nigeria were valued at €28.7 billion (N6trillion) while EU exports to Nigeria stood at €11.8 billion (N2.5trillion) within the period.
Also, the EU Foreign Direct Investment (FDI) stock in Nigeria grew from €25.3 billion (N5.3trillion) in 2011 to €27.2 billion (N5.7tr) in 2012, adding that the EU is Nigeria’s most important trading partner.
“Though Nigeria maintains a positive trade balance with the EU and the EU remains the biggest market for both oil and non-oil exports (such as leather cocoa, sesame, etc.), it is imperative to address the EU- Nigeria relationship towards a more diversified composition and a strengthened ECOWAS regional market,” he said.
He stated that through the development cooperation between EU countries and Nigeria, the EU is working closely with the Nigerian authorities to improve its business environment and competitiveness, and to also boost its industrial revolution agenda through support to the reform of the electricity sector and accessing long term financing and tackling social issues like malnutrition.
This, according to him, was what informed the selection of the panel discussions, which centered on Business Climate, Electricity, Health and Nutrition and Access to Finance. He said that the objective is to find a meeting point for the private sector to leverage on the grants provided by the EU to these sectors.
“Though according to UNCTAD’s last available statistics, Nigeria has dropped from the top position in attracting FDI to the continent, inflows still remain significant. To attract more investments into the country, policies should be broad based and long term in outlook and not focused on satisfying individual short term interests, while the courts and rule of law in general protect individuals, assets and contracts,” Arrion stated.
“Nigeria is the largest economy in Africa and the industrial hub of West Africa. Nigeria must see the West African market as an extension of its domestic economy because Nigeria stands to be the greatest beneficiary of an integrated West African market.
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The African Union Commission and the Pan-African Quality Infrastructure discuss joint Strategic Plan
The 4th Pan-African Quality Infrastructure (PAQI) meeting kicked off today at the African Union Commission (AUC) headquarters. The one-day meeting was jointly organized by the AUC Departments of Trade and Industry and Strategic Planning, Monitoring and Resource Mobilization and the Pan-African Quality Infrastructure. The meeting’s main objective was to discuss and review the Joint AUC – PAQI Strategic Plan based on priority outcomes and outputs of the AUC 2014-2017 Strategic Plan vis-à-vis areas of expertise of the PAQI Pillar Organizations. The outcome would be a Strategic Plan Document that identifies priority areas for the AUC where PAQI can provide requisite policy support over the planning period.
The work of the four PAQI institutions is critical for economic integration in Africa and can play a critical catalytical role in the establishment and effective implementation of the Continental Free Trade Area (CFTA) by 2017 among other issues.
At the opening ceremony, Dr. Hermogene Nsengimana, the PAQI Chairperson pointed out that PAQI is a forum not an institution. “PAQI is a forum for all matters related to standardisation, conformity assessment, metrology and accreditation which all contribute positively to the CFTA”, he mentioned. According to him, the final document of the AUC-PAQI strategic plan will be presented to the African Union Commission by the end of the year following the completion and consolidation of internal review processes by AUC Departments.
In her opening statement, the Commissioner for Trade and Industry, Her Excellency, Mrs. Fatima Haram Acyl thanked the PAQI for the partnership and encouraged that AUC works closely with ARSO on their African Trade Portal as the Department of Trade and Industry also has started work on establishing the African Union Trade Observatory as part of the CFTA Architecture. She explained that the meeting is testimony to the common and shared vision for a more integrated Africa that can produce goods and services, feed its own people, generate jobs for its growing young people and maintain healthy populations and safe workplaces. She also recalled one of the outcomes of the meeting.
“One key outcome of this meeting is the Joint strategic plan between PAQI organizations and the AUC Departments. This plan will be accompanied by a clear implementation matrix that outlines timely and tangible realistic deliverables and results with dedicated roles and responsibilities amongst our institutions”, she said.
The Commissioner stated that Quality Infrastructure is cross cutting and hence crucial in the AUC-PAQI joint planning, reporting, monitoring and evaluation processes.
“It is my sincere hope that based on their Comparative Competencies, PAQI institutions will align their work programmes and activities in line with the key AUC sectors which are: Agriculture, infrastructure, transport, energy, environments, natural resources, health, trade and Industry sectors. I am aware that in the proposed implementation matrix, PAQI assigned its activities to some AUC programmes such as BIAT/CFTA, AIDA, CAADP, PIDA and PMPA which are programmes that need great support for the development of Africa”, she concluded.
PAQI was officially launched in August 2013 by the AUC Director of Trade and Industry, Mrs. Treasure Thembisile Maphanga following the signing of a PAQI MoU by ARSO, AFRIMETS, AFSEC, and AFRAC with the support of the AUC. PAQI pillars are already recognized for international good practices by the relevant international organizations in their respective fields of operation.
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Tantrade: Unrecorded exports high
Tanzania exports more goods than what authorities officially record, says a senior official.
The director general of the Tanzania Trade Development Authority (Tantrade), Ms Jacqueline Maleko, told The Citizen that many goods were exported to neighbouring countries unnoticed, with the country officially recording lower export volumes.
“A lot of goods pass the border unrecorded. We are feeding Kenya with cereals, fruits and vegetables but such exports are unrecorded. Kenyans come with trucks, load them and leave Tanzania without any record,” she said.
She said if proper measures were put in place to record every product for export the country would get shocked to learn how much it exports. Tantrade discovered that a lot of people who cross borders were from the informal sector. They are mainly women and young people.
“You find that even as there are simplified rules of origin, most informal traders don’t know the existence of such rules. As a result, they pass through informal routes,” said Ms Maleko. To ensure traders use formal routes Tantrade has initiated a programme of women informal cross-border traders which is implemented in collaboration with the International Trade Centre.
“With the programme we train women on the regulations and all procedures involved to enable them to cross the borders. Such a training programme will raise awareness on cross-border trade, making them use formal routes when crossing borders.” Tanzania’s earnings from exported goods and services increased by 6.4 per cent in the year ending July 2014, the Bank of Tanzania (BoT) data shows.
The BoT’s economic review for August established that the value of exports increased to $8.895 billion in the year ending July 2014 as travel, manufactured goods and traditional exports increased significantly during the period.
Annual income from travel or tourism, which is currently the leading foreign exchange earner, improved from $1.788 billion last July to $1.998 billion this July, according to the BoT statement.
The value of manufactured goods exports increased from $1.01 billion to $1.27 billion.
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ECOWAS to announce adoption of common external trade policy
Members of the Economic Community of West African States (ECOWAS) are expected to announce the adoption of a common external trade policy next year to ensure full economic integration.
Kofi Afresah Nuhu, Director in charge of manufacturing at the Ministry of Trade and Industry, who disclosed this, said ECOWAS was in the process of establishing administrative measures to regulate trade relations with non-member countries.
One notable trend in the global economy in recent times has been the accelerated movement toward regional integration to ensure free flow of goods and services, he stated.
Speaking at the inauguration of a new corporate office of Hush Enterprise Limited, importers of SoKlin detergents in Kumasi, Mr. Nuhu stated that the current business trend requires ECOWAS to comply with the Economic Partnership Agreement (EPA).
“We don’t want to be swept away by the events of globalisation. Ghana is not an island and that is why we signed onto EPA as a country because we have to conform,” he noted.
The Trade and Industry Director applauded Hush Enterprise Limited for chalking successes in Ghana over the last 20 years and offering quality detergents to the citizens.
He also welcomed the company’s decision to set up a manufacturing plant in Ghana and asserted that the Ministry supports such schemes to encourage companies to go into production.
“We’re championing made-in-Ghana goods and therefore there are support schemes for companies that go into manufacturing,” he stressed.
Chief Executive Officer (CEO) of Hush Enterprise Limited, Gifty Champion said the company is the sole importer and distributor of SoKlin detergents in Ghana, representing PT Sayap Utama, the manufacturers in Indonesia 20.
According to her, the construction of the new office and warehouse, which are positioned to serve the Northern sector of the country, formed part of the company’s efforts to delight the Ghanaian consumer.
“We hope to increase efficiency in distributing and bringing our quality services to the doorsteps of the consumers. The consumer will therefore enjoy better overall customer service,” she indicated, promising to establish a plant in Ghana.
Madame Champion called on the public to help Hush Enterprise rid the country of fake SoKlin detergents.
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Special courts expected in East Africa to arbitrate commercial disputes
Officials and legal experts attending a regional conference on alternative dispute resolution (ADR) in Nairobi said independent courts with trained manpower are required to arbitrate commercial disputes as regional integration gathers steam.
“Our justice systems should be reorganized to enhance their capacity to solve commercial disputes. Litigation through traditional courts is lengthy and holds back economic activities,” said Kenya Private Sector Alliance (KEPSA) chairman Vimal Shah.
Cross-border trade in goods and services has triggered a spike in commercial disputes across the east African region. Shah regretted that a backlog of cases at the industrial courts and inadequate personnel has slowed down business transactions.
“As a region, we need to reform arbitration process in our courts to ensure parties involved in a commercial dispute obtain justice promptly. Investor confidence is bolstered if the justice system is transparent and fast,” he said.
Discovery of hydrocarbons and precious minerals across the east African region necessitates the establishment of special courts to arbitrate disputes. Shah emphasized that a strong legal framework is critical to prevent resource-based conflicts in east Africa.
“The discovery of oil and gas in particular has elicited turf wars pitting communities against investors and governments. A win-win situation can only be achieved through arbitration and consensus building,” Shah said.
He added that mega-infrastructure projects like roads, ports and railways could trigger disputes over compensation. The establishment of ADR mechanisms will position the east African region as an investment destination.
Kenya’s Chief Justice Willy Mutunga said investor confidence is bolstered by ADR, which has the potential to increase trade and investment in the region. He added that it is important that ADR mechanisms and systems be developed to facilitate local dispute settlement by local and foreign investors.
Kenya National Chamber of Commerce and Industry vice-chairman Laban Onditi noted that faster dispute resolution will spur investments and wealth creation in the region.
“We need to adopt innovative dispute resolution models to boost regional trade, investments and knowledge transfer,” Onditi said.
The two-day conference, starting on Thursday, attracted over 150 lawyers, judges, politicians, investors and other economic stakeholders from Kenya, Uganda, Tanzania, Rwanda and Burundi to find solutions to the economic, social and political challenges of the region. Participants at the meeting said access to justice remains a key indicator for development of any country globally, and a major challenge for developing countries particularly in Africa.
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South Africa’s declining ranking in global competitiveness cannot simply be brushed aside – Labour Deputy Minister Nkosi Holomisa
Although the South African economy had mixed fortunes in the past decades, in the period between 1975-2012, it experienced the biggest declines in the overall performance, however, there are indications that the economy was on a recovery path.
Productivity SA Chief Economist, Keneuoe Mosoang tabling the summary results of the 2013 Productivity Report said productivity was not about how hard people work – but what was important was the ability of the economy to produce more with the same or less inputs.
Mosoang was speaking in Midrand, Gauteng during the launch by Productivity SA’s Productivity Month and the unveiling of the 2013 Productivity Statistics Report.
The report was based on data derived from sources such as the Stats SA’s gross domestic products, figures from the reserve bank and other stats and research agencies.
Mosoang said most sectors of the economy were showing a strong propensity towards capital-intensive means of production and this started deepening in 1994. She said the picture was becoming pronounced also in sectors such as construction, mining and electricity. She said all sectors were also faced with high unit labour cost.
She said the average annual growth rate pre-1994, showed there was a general contraction across all industries. However, post-1994 there has been an economic expansion.
According to Mosoang the mining sector needed to improve its business efficiency. She said the transport sector, although it was experiencing worsening unit labour costs it continues to steam ahead in growth, and was one sector experiencing jobless growth.
She said the electricity sector continues to incur high unit labour costs compounded by inefficiencies.
According to Mosoang although growth in the financial and agriculture sector slowed down in 2013 – the two sectors were showing a good promise of good times ahead.
Labour Deputy Minister, Nkosi Phathekile Holomisa said amidst the challenges faced by the country, the bottom line was that South Africa faces a myriad of challenges and one of the areas that required attention was the issue of unemployment.
“The release of the statistics is a pathway to understanding which areas in our economy need urgent intervention thereby, ensuring adequate support for the National Development Plan,” Holomisa said.
Holomisa also took an opportunity to launch the productivity month which start on October 1. This year’s theme is: “Productivity is everybody’s business”. The celebration of the month will see a number of workshops in different provinces and regional awards events being held. This is expected to culminate with the National Productivity Awards Gala on 30 October.
“Productivity affects the entire nation, therefore improving awareness means changing culture and behaviour.
“I therefore, reiterate the importance of organisations, companies, government departments to instil a culture of productivity, a culture of efficiency at the workplace,” Holomisa said.
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COMESA accelerates implementation of investment tracking tools
The Common Market for Eastern and Southern African (COMESA) on Thursday said that it’s fast-tracking the implementation of investment tracking systems in each of the 19 member states.
William Mut, Investment Policy Consultant with COMESA Regional Investment Agency (RIA), told Xinhua in Nairobi that the tools will allow member states to effectively compete for Foreign Direct Investments (FDI).
“The economic bloc’s growing middle-class is now changing the patterns of FDI from the extractive industries to the manufacturing and services sector,” Mut said on the sidelines of the COMESA RIA and Kenya Investment Authority investment workshop, a two-day event facilitated by the European Union Business Climate Facility.
Mut said the tools will help to facilitate and retain investments so as to make the COMESA region an attractive and profitable destination for investors.
Data from the UN Conference on Trade and Development (UNICTAD) indicates that in the COMESA trading bloc, Ethiopia, Sudan and Kenya experienced the largest increase in FDI since 2012.
Mut said the three states represented 25 percent of total COMESA’s FDI inflows last year, noting that the share of Sub Saharan Africa FDI projects in Africa reached an all time high in 2013.
He said that intra-African investment has also been growing in the past five years.
“Compared with other sources of FDI, intra-African projects are concentrated in manufacturing and services,” he said, adding that investment promotion is not an isolated activity and its success depends on strong collaboration between other organizations.
Kenya Investment Authority Research and Planning Manager Robert Bwire said between 2007 and 2013, FDI projects into Kenya increased at a compound annual rate of more than 40 percent.
He said that in the past two years, Kenya attracted the second highest number of FDI projects in Africa after South Africa, adding investors have increasingly been targeting Kenya as a springboard to the growing East African consumer markets.
Kenya is targeting to facilitate and register investment project proposals worth 1.68 billion U.S. dollars during the 2014/2015 financial year.
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World needs ‘paradigm shift’ towards sustainable agriculture, UN agency urges
In order to move towards more sustainable agriculture, a broader approach is needed to overhaul the world’s food system, the head of the United Nations Food and Agriculture Organization (FAO) said today, as he pressed for a global reduction in the quantity of chemicals and water in contemporary agriculture.
Speaking at the opening of the 24th session of the Committee on Agriculture (COAG) in Rome, Director-General José Graziano da Silva called for a “paradigm shift” in global attitudes on agriculture, adding that only by decreasing the amounts of “inputs,” such as water and chemicals, could the sector move towards a more sustainable and productive long-term path.
“We cannot rely on an input-intensive model to increase production,” Mr. Graziano da Silva declared. “The solutions of the past have shown their limits.”
Pointing to options such as agro-ecology, climate-smart agriculture, biotechnology and the use of genetically modified organisms, the Director-General emphasized that global food production would need to grow by 60 per cent by 2050 in order to meet the expected demand from an anticipated world population of nine billion.
“We need to explore these alternatives using an inclusive approach based on science and evidence, not on ideologies,” he continued.
Established in 1971 and with over 100 members within its ranks, the COAG’s biennial meeting is currently addressing a wide range of issues, including family farming, sustainable agriculture, food safety, water governance, soil management and agricultural heritage systems.
Addressing the Committee in his keynote speech, the President of the Dominican Republic, Danilo Medina, underscored his Government’s support of the principle that food be considered a universal right and noted that his country was on the verge of passing a law establishing said right.
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Mombasa to tax goods imported through port
The Mombasa county government has flexed its muscle by trying to control the stakes at the Kenya Ports Authority by introducing its own levies for all cargo passing through the facility.
In this year’s 2014/15 Finance Bill, the county government has proposed a Transport Infrastructure Development Levy of US$2 (Sh174) per metric ton to be remitted by all ships calling at the port.
The levies will be collected by Mombasa county through the port managers once the bill is ratified and implemented.
“Transport Infrastructure Development Levy of US$2 per metric ton or US$10 per shipment, whichever is higher, to be levied on all marine cargo through the harbours/port, to be collected through port managers,” reads part of the bill, which is still in its draft stages.
The bill has also introduced Port Health Fees and Charges for exports, imports, supervision and destruction of condemned goods, as well as the spraying and fumigation of vessels against vectors.
Port users will be required to pay US$20 (Sh1,740) per ton for Export permits and Import clearance respectively and shipping lines will have to pay $60 (Sh5,220) for vessel inspection each time they dock at the port.
The county argues that some vessels call into the country with diseases that must be controlled, and therefore the spraying of vessels against vectors will be $60 (Sh5,220) per square metre and fumigation will be $20 (Sh1, 740) per ton.
Mombasa County Trade executive Mohamed Abdi said all the shipping activities at the Mombasa port must be well-regulated for the county to also earn revenue.
“We are doing this for the benefit of the Mombasa residents and, also, if ships dock at the port and are not inspected against vectors, we might end up contracting diseases as a county,” he said.
He was speaking on Friday during the public participation session of the county finance bill at the Kenya School of Government in Kizingo, Mombasa.
The bill has also proposed that local ship’s chandlers supplies’ clearance fees will depend on the weight of the cargo being cleared.
Less than a ton, the chandlers will be paying Sh1,000 whilst for 2-5 tons they will pay between Sh2,000 and Sh5,000.
“Container verification charges will be US$40 (Sh3,480),” the new bill states.
This has already caused an uproar, with the Shippers’ Council of East Africa and Kenya Association of Manufactures saying that it will be double taxation, since there are other institutions in charge of regulation at the port.
Kenya Association of Manufactures’ Coast chapter vice-chair Jinal Shah, who was present during the public hearing at the KSG, said the move will lead to increases in the prices of imports and exports.
“We already have institutions that are in charge of revenue collection at the port. Taxation should be one-way because impositions of new port charges are not economically viable,” said Shah during the meeting.
Shippers Council of East Africa CEO Gilbert Langat yesterday opposed the new levies, saying they are unjustifiable and will increase the cost of doing business in the shipping sector.
“The cost of doing business in Kenya is already very high – by imposing such new levies, the county will lose business to the rival port in Tanzania,” said Langat.
He said the county government should cede the regulation and levy collection mandate to the national government and demand a certain percentage from the total revenue collected.
“We cannot have instances of everyone trying to regulate activities at the port. Let the county government agree with the national government that they will be getting a certain share from all the revenue collected,” he said.
Political observers said that the Mombasa government is trying to introduce charges at the port in an attempt to flex its muscle to try and control the facility’s operations.
Mombasa Governor Hassan Joho and Senator Hassan Omar have been in the forefront championing the devolution of the port facility to the county government.
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South Africa August trade gap widens to biggest in 7 months
South Africa’s trade deficit widened to the biggest in seven months in August as oil imports increased and iron-ore exports fell because of maintenance work on a rail line.
The trade gap swelled to 16.3 billion rand ($1.4 billion) from a revised 6.8 billion rand in July, the Pretoria-based South African Revenue Service said in an e-mailed statement today. The median estimate of 14 economists surveyed by Bloomberg was for a shortfall of 8.7 billion rand.
Transnet Holdings SOC Ltd.’s freight-rail unit shut its export iron-ore line from Sishen in the Northern Cape province to the Saldanha port for 10 days for annual maintenance last month, leading to a drop in shipments of the metal. Exports of vehicles and transport equipment rebounded after a strike in the metals and engineering industry in July forced carmakers such as General Motors Co. (GE) and Ford Motor Co. to shut their plants.
The large trade gap is “indicative of the very slow improvements of the productive sectors of the economy,” Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities in Johannesburg, said by phone. “South Africa’s trade deficit is likely to remain structurally high over the medium term and it suggests that the turnaround in the currency’s fortunes seem unlikely any time soon.”
Worst Performer
The rand reversed gains after the release of the trade figures, falling to the weakest level since January. It traded 0.4 percent lower at 11.3268 per dollar as of 2:36 p.m. in Johannesburg, extending its loss since the start of last year to 25 percent. That’s the worst performance of 16 major currencies tracked by Bloomberg.
The trade shortfall so far this year widened to 70.7 billion rand compared with 51.9 billion rand for the same period in 2013, the revenue service said.
Exports dropped by 9.6 percent to 77.2 billion rand in August as shipments of mineral products, which include coal and iron ore, fell by 5.1 billion rand, or 24 percent, and precious metals and stones decreased by 15 percent. Shipments of vehicles and transport components increased by 13 percent.
Imports rose by 1.4 percent to 93.5 billion rand as purchases of mineral products climbed 11 percent. Machinery and electronics purchases advanced 4.9 percent.
The monthly trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.
Trade Statistics for August 2014 (SARS)
The South African Revenue Service (SARS) on 30 September 2014 released trade statistics that includes trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS) for August 2014 and that recorded a trade deficit of R16.30 billion. The inclusion of BLNS country trade data was announced on 14 November 2013 and will be included in all future trade statistics.
The R16.30 billion deficit for August 2014 can be attributed to exports of R77.24 billion and imports of R93.53 billion.
Exports decreased from July to August by R8.19 billion (9.6%) and imports increased from July to August by R1.28 billion (1.4%). The cumulative deficit for 2014 is R70.74 billion compared to R51.88 billion in 2013.
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Africa: The surplus decreased from R14 179 million in July 2014 to R12 974 million in August 2014. Exports decreased by R 121 million to R24 970 million and imports increased by R1 084 million to R11 996 million.
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America: The deficit increased from R 838 million in July 2014 to R3 833 million in August 2014. Exports decreased by R1 596 million to R6 514 million and imports increased by R1 399 million to R10 347 million.
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Asia: The deficit increased from R14 927 million in July 2014 to R18 136 million in August 2014. Exports decreased by R4 187 million to R23 248 million and imports decreased by R 978 million to R41 384 million.
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Europe: The deficit increased from R8 645 million in July 2014 to R10 332 million in August 2014. Exports decreased by R1 943 million to R18 022 million and imports decreased by R 255 million to R28 354 million.
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Oceania: The deficit decreased from R 458 million in July 2014 to R 419 million in August 2014. Exports increased by R 319 million to R 933 million and imports increased by R 280 million to R1 352 million.
The trade data excluding BLNS for August 2014 recorded a trade deficit of R23.94 billion. The deficit for August 2014 can be attributed to exports of R67.02 billion and imports of R90.96 billion.
Exports decreased from July to August by R7.21 billion (9.7%) and imports increased from July to August by R1.23 billion (1.4%). The cumulative deficit for 2014 is R136.73 billion compared to R106.19 billion in 2013.
Trade statistics with the BLNS (only) for August 2014 recorded a trade surplus of R7.65 billion. The surplus can be attributed to exports of R10.22 billion and imports of R2.57 billion.
Exports decreased from July to August by R0.98 billion (8.7%) and imports increased from July to August by R0.06 billion (2.2%). The cumulative surplus for 2014 is R66.00 billion compared to R54.31 billion in 2013.
For further information, visit the SARS website.