All News
Be realistic in budget allocations, EA govts told
The East African Community (EAC) governments have been told to be realistic when allocating financial resources geared towards execution of economic development projects carried out jointly by partner states.
Related News
Maritime Piracy: New two-part report published by UNCTAD
The report considers the costs and trade-related implications of maritime piracy and takes stock of regulatory and other initiatives pursued by the international community in an effort to combat piracy.
Part I of the report presents overall trends in maritime piracy and related crimes, and highlights some of the key issues at stake by focusing on its costs and broader trade-related implications.
Part II of the report provides an overview of the contemporary international legal regime for countering piracy and identifies key examples of international cooperation and multilateral initiatives to combat the phenomenon.
The importance of oceans and seas for trade-led economic prosperity has increased in tandem with growth in the world economy, global merchandise trade and maritime transport activity. However, increased international trade volumes and value have also heightened the exposure and vulnerability of international shipping as a potential target for piracy, armed robbery and other crimes.
During the past decade, which has seen a dramatic rise in maritime piracy in East African waters and pirates becoming more sophisticated, violent and resilient, the issue has considerably increased in importance and emerged as a transnational humanitarian, economic and security challenge.
While intensified international counter-piracy efforts have since contributed to a reduction in the number of incidents in the region, this positive trend remains fragile and could be undermined and reversed unexpectedly. In addition, with a surge in piracy observed in the Gulf of Guinea, West African waters are also emerging as a dangerous hotspot for piracy.
Given the issues at stake and the broad range of costs and trade-related implications of maritime piracy at both the regional and the global level, sustained long-term efforts to combat and repress piracy clearly remain a matter of strategic importance. While progress will ultimately also depend on the economic situation and on political ?stability ?in affected regions, addressing the challenge of piracy in an effective manner requires strong cooperation at the ?political, economic, legal, diplomatic and military levels, as well as collaboration between ?diverse public and private sector stakeholders across regions.
As part of its mandate on trade logistics, UNCTAD carries out substantive research and analysis on a wide range of legal and policy issues affecting transport and trade, and disseminates information on recent developments including in the field of maritime and supply-chain security, and maritime piracy.
Related News
Kenya scores poorly in EAC logistics survey
Kenya is ranked fourth in the East Africa community behind Rwanda, Uganda and Tanzania as far as performance of its logistics industry is concerned.
This is according to ratings in the East Africa Logistics performance Survey 2014 that is being officially launched today by the Shippers Council of Kenya.
Rwanda is ranked in the first position with a score of 3.52, followed by Uganda in second place with a score of 3.07. Tanzania comes in third with an average score of 2.89 while Kenya and Burundi are ranked at position 4and 5, with scores of 2.82 and 2.78 respectively.
Some of the indicators on which Kenya ranks poorly include timely delivery of shipments, competence and quality of logistics services, percentage of shipment physically inspected, transparency in conducting customs valuations, manner in which trade disputes are handled and incidence of corruption and rent-seeking.
However, it performed very well in areas such as the efficiency of good clearance process, level of preparedness of shippers to undertake international trade, security of cargo while in transit, communicating information when trade regulations change and quality of transport and ICT infrastructure.
“For Kenya to improve its ranking in logistics performance, measures have to be put in place to increase investments in infrastructure, improve services delivered by both private sector entities and State agencies involved in the goods clearance process and an attitude change in the level of preparedness of shippers to effectively fulfil their obligations in international trade transactions,” the report says.
The logistics performance of individual EAC Partner States is rated using 11 key indicators and individual country scores aggregated across all respondents, resulting in a single average score for each indicator.
For the region to become competitive, the report recommends development of regulations that facilitate and encourage private-public partnerships, especially for large regional infrastructure projects such as ports and railroads.
Global economy
There is need for a well-functioning specialised logistics infrastructure to ease freight handling, streamline inspection processes, and provide value-added services in areas closer to ports, airports and border crossings. This report advances some recommendations that are critical to the improvement of the logistics performance of EAC Partner States and their related ability to promote international trade and spur economic growth.
The findings of this logistics performance survey for East Africa focuses on logistics drawn on a set of data collected over a period of four months beginning February to May 2014 from freight forwarding and Shippers companies in East Africa.
The survey tracks specific quantitative indicators of logistics performance in terms of cost, time and complexity of executing trade transactions which EAC countries can use to target policy actions to improve logistics and monitor their progress.
Its findings are expected to spur public and private agencies that have direct or indirect power over logistics performance to focus attention on reducing sources of delays so as to improve the ability of the region to effectively compete in today’s global economy.
It recommends that EAC governments will need to sufficiently invest in transport infrastructure and provide an enabling environment for private sector to provide more efficient transport and logistics services.
Related News
Stakeholders to meet on Post-2015 Development Agenda and the Common African Position
African stakeholders, including academia, CSOs, government representatives, media, private sector and women and youth groups will meet later this week in Addis Ababa to deliberate and propose a concrete accountability framework for the Post-2015 Development Agenda.
Stakeholders are determined to play a strong role in the Post-2015 Development Agenda given the limited role of Africa in the formulation of the MDGs, which many assert resulted in weak ownership and slow progress by many African countries.
Consequently, the forum, which will take place at the United Nations Conference Centre from 21-23 August, is part of a substantial proactive effort to ensure African ownership of the forthcoming global development agenda that will replace the current Millennium Development Goals (MDGs). The event, led by the African Union High Level Committee (HLC) on the Post-2015 Development Agenda comes as a result of a request, made by the AU Heads of State Summit held in Malabo from 26-27 June 2014, to explore the “emerging issues of accountability”. This includes the need for a data revolution – a central issue to monitor, evaluate and assess progress, which are, in turn, key aspects of accountability, according to the Decision of the Malabo Summit.
According to the Chairperson of the HLC Sherpas, Abdoulaye Dukule, “In the spirit of accountability, work has already started on the development of metrics for the six pillars of the Common African Position (CAP), this meeting will therefore serve as a continuation, which will lead to a concrete accountability mechanism. Accountability, in its various formulations, is the first step towards transparent governance”. In addition, the Special Advisor to the Secretary-General on Post-2015 Development Planning, Amina Mohammed emphasised that “this meeting provides African stakeholders with an opportunity to build on successful regional experiences and effectively contribute to the global discussions on robust approaches to monitoring, review and accountability for the post-2015 development agenda. Without credible accountability mechanisms at global, regional and national levels, there is little hope that promises made will become promises delivered”.
Furthermore, Abdalla Hamdok, ECA’s Deputy Executive Secretary, stated “Africa has indeed been a visible presence in the Post-2015 development agenda and as early as 2011, the continent initiated consultations to articulate its priorities for the successor global development framework”. “The consultations are intended to build on existing accountability frameworks, so as to design and formulate an accountability framework suitable for the post 2015 development agenda”, reiterated Hamdok. Such a framework is expected to provide alignment from the global to continental to national levels.
African Forum on Post-2015 provides elements for accountability
African stakeholders from the CSO spectrum represented by NGOs, women, youth and media organizations; as well as government representatives and the international community met in Addis Ababa to deliberate and propose measures for ensuring an accountability framework for the Post-2015 Development Agenda.
The forum, which took place at the United Nations Conference Centre from 21-23 August, proposed key elements for an accountability framework, which is expected to feed into the Secretary-General’s report to the General Assembly in September.
In her opening statement, Ambassador Marjon Kamara, Liberia’s Permanent Representative to the UN, who chaired the meeting underscored the importance of statistics in determining an accountability framework calling for “concerted action, genuine commitment, and empowerment of African society, including youth, women, faith-based organisations, as well as the business community”.
Dr Anthony Maruping, AU Commissioner for Economic Affairs, said that when it comes to accountability mechanisms, Africa was “not starting from scratch”, as the continent had experienced with other regional, sub-regional, national accountability frameworks, such as the African Peer Review Mechanism (APRM)”.
Furthermore, Abdalla Hamdok, ECA’s Deputy Executive Secretary, helped clarify the objective of the consultative meeting, by stating that participants’ “wide-encompassing deliberations need to identify key elements to build an accountability architecture for the post-2015 development agenda that is aligned from the global to continental to national levels”.
In his opening address, Mr Eugene Owusu, UN Resident Coordinator, UNDP/Ethiopia urged participants to help in “demanding real accountability for one billion people, emphasising participatory mechanisms, in which it is possible for the people to hold their leaders accountable”.
Ms Amina Mohammed, Special Advisor to the Secretary-General on Post-2015 Development Planning informed participants that there was a significant momentum for this new agenda, which comes with a high political mandate. Ms Mohammed, stressed the importance of crafting an accountability framework that is “fit for purpose” for the Africa region.
Participants unanimously agreed that an accountability framework for the Post-2015 and the Sustainable Development Goals, which will replace the Millennium Development Goals (MDGs) by 2015, should be based on a set of core principles, accompanied by bold goals and targets and a plan on the means of implementation. Participants emphasised the need for an accountability framework to be implementable across the broad spectrum of society, namely being “bottom-up and people centered. In addition, participants called for country-level commitments to action skillfully led by a multi-stakeholder partnership represented by public, private, civil society and citizen interests”.
Another important element originating from the Forum was the need for a strong culture of reporting, based on accurate and timely data – making a case for evidence-based accountability. This would provide the basis for measuring progress and also mobilize citizens and civil society to hold institutions and partners accountable towards their commitments.
The Forum was organized by the HLC/African Union Commission (AUC) and the United Nations Economic Commission for Africa (ECA) with support from the UN Development Group.
Related News
KRA opens new battlefront with multinationals
The Kenya Revenue Authority (KRA) has turned the heat on cash-rich multinationals, accusing them of using grand tax evasion schemes to deny the government billions of shillings it needs to meet its obligations to the citizens.
The taxman’s claims, which the multinationals deny, have sparked a flurry of multi-billion-shilling suits that are expected to define the future of corporate tax in Kenya.
So far, the battle over multinationals’ tax obligations has generated 40 cases before the arbitration tribunal and a similar number in court, underlining the KRA’s aggressiveness and the muscle of the companies on its radar.
Tax experts said the suits are most likely related to the KRA’s interpretation of transfer pricing rules that the multinationals have contested.
“In most of the cases they are dealing with transfer pricing which deals with multinationals. Their understanding is that the multinationals are hiding their profits, which is not good because it interferes with taxpayer relations,” said Martin Kisuu, a tax consultant with Taxwise Consulting Limited.
Mr Kisuu described transfer pricing as a new area and a learning curve for everyone, and not a precise science heralding differences of opinion among practitioners.
The list of companies that have recently gone to court against the taxman’s mega tax claims include Kenya-Re, which is facing a Sh1.2 billion bill, and cement maker Bamburi which has been billed Sh942 million.
The KRA said its targeting of the firms is based on risk profiling and expansion into areas it has not aggressively pursued in the past.
“KRA usually picks on areas where compliance has been low and the legal framework previously hazy,” said commissioner for domestic taxes – large taxpayer office Pancrasius Nyaga.
The KRA has previously announced that it was pursuing a large number of multinationals for Sh25 billion following transfer pricing audits.
It started tightening the noose around transfer pricing in 2011 when it announced plans to increase the number of staff in the large tax department.
Transfer pricing involves use of foreign subsidiaries or related parties to drastically reduce taxes due to local authorities. The eruption of court cases is the culmination of the taxman’s audits that began in 2011.
Bamburi says in its annual report that its tussle with the KRA started in February 2012 when the authority issued it with a tax assessment bill of Sh3.9 billion composed of Sh2 billion as principal tax and penalties and interest amounting Sh1.9 billion.
“This assessment is in respect of the company’s corporate tax, value added tax and withholding tax affairs for the years 2007 to 2011,” the firm says.
The amount was reduced to Sh2.67 billion last August but the cement maker appealed the decision before the local arbitration committee.
Mr Nyaga said the taxman won five of the seven issues raised before the committee and Bamburi sought the court’s intervention on the matter.
Bamburi has gone to court to stop the KRA from collecting Sh942 million before it fully exploits the appeal process.
“The local committee erred in failing to consider that the manufacturer had provided, over and above the transfer pricing report, additional documentation on a sample basis of the services provided,” Bamburi says in its court papers.
The Treasury has more recently been working on tax laws to ensure clarity on transfer pricing.
“To further deter misuse of transfer pricing scheme, I have proposed an amendment on the definition of permanent establishment to restrict transactions between related parties and their local establishment at an arm’s length for tax purposes,” Treasury secretary Henry Rotich said in his 2014/15 Budget speech.
The court cases arise from differences over the letter or principle of law that the KRA uses to impose tax demands.
The battle is hinged on the fact that the parties have conflicting interests on the subject of taxation with businesses seeking to minimise tax expenses to maximise profits while the taxman seeks to grow its collection to meet targets set by the Treasury.
Kenya-Re was slapped with a corporate tax demand note of Sh258 million and a Sh960 million withholding tax bill on commissions and brokerage fees.
“Out of the total assessment of Sh258 million, management made payments of Sh103 million in 2013. The remaining amount of Sh156 million is the subject of ongoing discussions with the KRA to establish the KRA’s basis for the assessment,” said Kenya-Re in its financial statement.
The Nairobi-listed reinsurer has made a provision of Sh139 million relating to the outstanding corporate tax assessment but did not set aside any money for the Sh960 million claim arising from commissions and brokerage fees based on the opinion that it would not be payable.
“KRA has included brokerage deducted by brokers resident in India, the United Kingdom and Zambia. These countries have a double taxation treaty with Kenya,” Kenya-Re says in its court filings.
Mr Nyaga noted that Kenya-Re had not exploited the local arbitration process before going to court.
The haste by Kenya-Re to seek court protection underlines the panic among corporates in a row with the taxman.
Karuturi Flowers made an out-of-court settlement of Sh340 million ($4 million) last year after it got a Sh1.7 billion ($20 million) invoice from the taxman.
International lenders Barclays Bank and Standard Chartered have noted in their annual report that they are facing demands from the taxman but they have both not made any provisions to settle the claims, stating they were confident the money was not payable. Barclays Bank has gone to the Court of Appeal.
Tightening of the loopholes helped the taxman achieve its revenue target of Sh963 billion with large taxpayers’ contribution jumping 15.3 per cent to Sh431 billion.
Related News
Brazil now highest buyer of Nigeria’s crude
Brazil has overtaken India as the largest buyer of Nigeria’s crude oil, spending $990.09 million, about N158.414 billion on the purchase of crude oil from Nigeria.
Data from the Nigerian National Petroleum Corporation, NNPC, on activities in the oil and gas sector for March 2014, disclosed that Brazil purchased 9.442 million barrels of crude oil from Nigeria in the month under review.
Brazil’s increased demand for Nigeria’s crude, according to analysts, may be as a result of the football World Cup, which the South American nation hosted between June and July.
As at March, three months to the tournament, preparations were in top gear in Brazil, to ensure a successful hosting.
The analysts are of the view that Brazil will very likely remain? the highest importer for Nigeria’s crude for May, June and July, when data for the periods are released by the NNPC.
India, on the other hand, purchased 8.56 million barrels of crude oil from Nigeria, estimated at $897.71 million, about N143.633 billion, using a crude price of $104.86 per barrel.
The Netherlands spent $825.56 million, about N7.873 billion on the purchase of 7.873 million barrels of crude oil from Nigeria; followed by Spain with the purchase of 6.638 million barrels of crude oil, estimated at $696.061 million, about N111.37 billion.
France purchased 4.015 million barrels of Nigeria’s crude; United Stated of America imported 3.892 million barrels, while Indonesia purchased 3.89 million barrels of crude oil from Nigeria.
Others are: South Africa 2.897 million barrels of crude oil, Germany 1.985 million barrels, and Cote D’Ivoire, which imported 1.62 million barrels of crude oil from Nigeria.
In general, the NNPC document revealed that Nigeria earned $6.561 billion, about N1.05 trillion from the export of 62.566 million barrels of crude oil in the month of March.
Nigeria’s crude export in March is a 4.77 per cent decline from the previous month’s crude export of 65.7 million barrels, estimated at $6.889 billion, about N1.102 trillion.
Specifically, Europe was the highest buyer of Nigeria’s crude, with the importation of 26.57 million barrels.
Asia and the Far East followed with the purchase of 15.3 million barrels of Nigeria’s crude oil, while South America imported 10.39 million barrels of crude oil from Nigeria.
Other African countries purchased 4.454 million barrels of crude from Nigeria; North America and Oceania/Pacific countries purchased 3.89 million barrels and 961,105 barrels respectively of Nigeria’s crude.
Continuing, the NNPC said, “Total crude oil and condensates lifting for both domestic and export were about 64.60 million barrels. Oil companies lifted about 35.59 million barrels, representing 55.09 per cent, while NNPC lifted 29.01 million barrels, representing 44.91 per cent of the total.
“Lifting by fiscal regime shows 33.61, 28.22, and 2.77 million barrels for JVC, PSC/SC, and Others respectively. Out of NNPC’s lifting, 24.29 million barrels was for Federation Account, while 4.72 million barrels was for domestic use.”
In the month of February, three countries – India, the Netherlands, and Brazil, spent $2.97 billion, about N475.08 billion in the purchase of crude oil from Nigeria.
Specifically, the three countries accounted for more than a third of Nigeria’s crude export in February, purchasing 26.75 million barrels of oil.
Specifically, India purchased 10.44 million barrels of crude oil from Nigeria in the month under review, followed by the Netherlands, with 9.385 million barrels, and Brazil 6.922 million barrels.
This is a slight difference from export figures in January, which revealed that India, Netherlands and Spain, were the highest buyers of Nigeria’s crude oil, accounting for 45.01 per cent of Nigeria’s total crude export in January.
Related News
Britain and the world in 2030
Tapping into the BRIC and MINT countries is vital for inclusive prosperity. The challenge is to succeed as a trading nation, offering more affluent consumers in the emerging world the sophisticated, higher-value products they will increasingly desire. Brand UK is well-placed to prosper
I have spent more than 30 years in business and economic forecasting. If this time has taught me anything, it is this: no matter how strong your views of the future, you can’t let one of them dominate your planning for the possible outcomes. So when it comes to Britain’s planning for the world in 2030, it is important to remain adaptable and not to put all your eggs in one basket. While it is right to have a clear view about where our strengths lie, it is dangerous to be too prescriptive. In recent years, various policymakers have declared export targets for particular sectors, often with the notion of doubling them by the end of 2020. While such an aspiration is understandable and admirable, the reality is that the biggest driver of any country’s exports is demand in the key markets. And clearly these conditions are not easily influenced.
The rise of the BRIC and MINT countries
Having made this comment on the uncertainties of the future, I do of course have quite a clear view of what the world might look like in 2030. It is one where China has reached the same size as the US economy (in US$ nominal terms). One in which India is on the verge of becoming one of the five largest economies in the world, and where the remaining BRIC nations of Brazil and Russia ‒ together with the MINT countries of Mexico, Indonesia, Nigeria and Turkey ‒ are all striving to be in the top 10 economies.
After the Great Recession of 2008-09, many people assumed that these large emerging economies would continue to see their presence in the world economy rise, mainly thanks to the probable slow recovery of the so-called developed world. Today, such optimism in the emerging world is not so widespread. Concerns about their economies’ prospects have grown, against a backdrop of increased confidence in the US economy, improving hopes for Japan and tentative hopes that the worst fears for continental Europe will not materialise.
While it is unlikely that every major economy in the world can grow strongly at the same time, that does not mean that ongoing economic growth in the emerging world will prevent growth in developed countries. In this regard, a key issue for any trade-orientated country is its relative contribution to world growth. It is not commonly known, for example, that world GDP growth in the decade 2001-10 averaged 3.7%, despite the Great Recession and the earlier bursting of the global IT bubble in 2000-01, both in the same decade. This growth was higher than in the two previous decades 1981-90 and 1991-2000, in which it averaged around 3.3%, and was preceded by weaker growth in the 1970s. This was mainly explained by the rise of China (and to a lesser degree that of the other BRIC and large emerging economies) and despite the challenges facing many western economies.
Since 2011, I have assumed that for the current decade, world GDP growth will average an even stronger 4.1%. This is based on the continued rise of the BRIC and MINT economies, and the absence of crises on the scale of 2000-01 and 2008-09. Moreover, this assumption is predicated on an expectation that China will grow by less, specifically by around 7.5%. With it, the growth rate of the BRIC countries will be softer than in the last decade, even though their contribution will rise. At the end of 2013, China’s economy was around US$9.2 trillion in size, bigger than the combined size of the German, French and Italian economies, and about half that of the American one. From a global GDP perspective, China growing by 7.5% in 2014 is broadly equivalent to the US growing by 4%. So although China is “slowing,” it is contributing more to the world economy.
The changing Chinese and American economies
For the two decades up to 2030, my best guess is that China will grow by around 6.5%. This should be sufficient to take it towards $30 trillion in current 2013 US$, slightly bigger than the US. Crucially, this growth is likely to be different to the growth China has seen for most of the 1990-2010 period, fuelled less by exports and state investment and more by domestic consumption. For the rest of the world, providing what more affluent Chinese consumers want will become an increasingly important part of international business. So the winners and losers of this “new” China may well be different to the winners and losers of the old China. As I will discuss below, the UK could well be one of the winners, reaping the rewards of a China that is increasingly interested in value-added services and better-quality products rather than commodity-intensive and basic goods.
As China changes, so too does the US. We are already seeing signs of the US emerging as a somewhat different economy to that of before the Great Recession. The country will cease to be the world’s number one importer, especially of energy but also of other consumer products. Consequently, its companies will join the competitive battle to export to China and other rising emerging nations. In my judgement, the US will be able to grow at a rate in the vicinity of 2.0-2.5% between now and 2030.
On one simple model, what happens to the US and China will be the key driving force for the rest of the world. They will easily remain the dominant economies, accounting for at least a third of the global economy, with no other economy coming close to half their individual sizes. In such a simplified model, it is important to think of the US and China as gradually moving towards different sorts of economies to those familiar to many. The US becoming a bit more like the old China ‒ saving more and consuming less, with a smaller current account deficit. China becoming a bit more like the old US ‒ saving less and consuming more, with a smaller current account surplus.
Critical to the success of China and the US, and fundamental to the world as a whole, is the way in which the two countries handle relations with one another, as well as with everyone else. This transcends global peace and security, as well as international monetary and economic policy matters. One would imagine that the monetary system will gradually become less dependent on the US$ and that the role of the RMB will rise. In this context, the UK and its international financial role from London should be well-placed to benefit. Policymakers should certainly be prepared for this.
Other major economies
As for the other emerging economies, India has the best chance of becoming a global economic power. Due to historical ties and language, this could be particularly beneficial to the UK. At the time of writing, China’s economy is one-and-a-half times the size of the Brazilian, Indian and Russian economies combined, each of which is around US$2 trillion depending on their exchange rates. Yet, with its powerful demographics and scope for huge improvements in urbanisation, governance and productivity, India has a reasonable chance of achieving stronger GDP growth rates than China between now and 2030. The incoming Modi government has been given a platform by the electorate to force through much-required structural change and I think there are some grounds for excitement here. India has a reasonable chance of rediscovering economic growth of 7-8%, however the potential for even stronger growth should not be ruled out.
For Brazil and Russia, unless they can reduce their dependency on commodities and government spending, they might not return to the growth rates enjoyed in the last decade. Economic growth in the 2-3% vicinity, rather than the 5-6%, could well become a reality. As disappointing as these rates may be, they will likely be higher than those of Japan and continental Europe (given the poor demographics of these latter countries), and it is probable that their share of global GDP will continue to rise modestly.
Several other emerging economies, including most of the MINT countries and some parts of Africa, could continue to experience very strong (and potentially faster) growth rates, comparable to those of China and India.
By 2030, the world’s top 10 economies will come in a very different order. China will in all likelihood hold the number one spot, closely followed by the US. Japan and Germany are expected to stay in the top 10, whilst France and Italy could well slip down the rankings and will be fighting harder than ever to remain part of this elite. The UK has a chance of remaining in the top 10 ‒ given our favourable demographics ‒ but only if we can improve our productivity and remain adaptable. In addition to Brazil, India will almost definitely be included, and both are expected to see their ranks in the top 10 rise. Russia will be vying for a place in the top group, alongside Indonesia and Mexico.
UK and global trade patterns
In recent years, the UK has remained absorbed by its historical trade relationships with the US, while its position in the EU has become more fraught. I think it is quite plausible that relationships with Europe in general will become more difficult, not least because the EU will continue to see its share of the world economy and trade decline. While most of today’s generation of British leaders see their prime relationships as being those with the EU and its largest economies, this is likely to change. For example, China might replace France as Germany’s number one export market. And for other strong European exporting nations, shifts in the same direction ‒ if not the same magnitude ‒ are likely. This will probably mean that the economic ties that bring so many continental economies together will be loosened, although the political and security ties should remain just as strong. How the EU adjusts in terms of its overall structure is difficult to predict and while it remains important for the UK to have good relations with Europe, the strength of our relationships with China, India and the rising emerging world will become increasingly significant.
I have often described London as the “BRIC capital of the world” in recent years. I occasionally wonder whether this is an early sign of what could happen to the UK if it succeeds more broadly as a trading nation, offering more affluent consumers in the emerging world the sophisticated, higher-value products they desire. Our time zone and our use of the English language give us an edge that virtually no other country has. If we can maintain high-quality finance and legal systems, Brand UK is well-placed to prosper in the world I envisage.
At the start of this coalition government, our Chancellor made reference to the fact that we exported more to Ireland than the BRIC countries combined, in an attempt to justify our role in the Euro crisis bailout. Fortunately this is no longer the case – but there is more to do. By 2030, we will probably be more concerned about a major crisis in the BRIC and MINT world than the Euro zone. Whether we are or not will be the test of whether the UK economy has adjusted appropriately. If so, we will be doing rather well.
Jim O’Neill is an economist and former chairman of Goldman Sachs Asset Management
This is a contribution to Owning the Future: How Britain can Make it in a Fast-Changing World, edited by UK Shadow Business Secretary Chuka Umunna and published by Rowman and Littlefield International.
Related News
Chinese yuan penetrates African markets
Could it be the next global reserve currency?
In March this year Zimbabwe joined a growing list of countries in Africa and the world using the Chinese currency, yuan, also known as remnibi (RMB), as one of its official currencies after its central bank added the RMB, the Japanese yen, the Australia dollar and the Indian rupee to the existing basket of currencies.
Zimbabwe abandoned its currency in 2009 when it was rendered worthless by excessive inflation. Since then, it has been using a basket of currencies dominated by the US dollar. In announcing the decision to adopt the yuan and other currencies, the then Reserve Bank of Zimbabwe acting governor, Charity Dhliwayo, said that the southern African country’s trade and investment with China, India, Japan and Australia “had grown appreciably.”
China is Zimbabwe’s third largest trading partner after South Africa and the European Union, and until recently was the biggest buyer of its tobacco. In 2013, trade between China and Zimbabwe amounted to $1.1 billion.
Gift Mugano, a trade expert and lecturer at the Nelson Mandela Metropolitan University, told Africa Renewal that the addition of the RMB to the basket of currencies would only consolidate Zimbabwe’s bilateral relations with China rather than boost trade, and help China’s quest to make its currency popular.
He added that RMB was not expected to address liquidity challenges as enunciated by the Reserve Bank of Zimbabwe in its January 2014 monetary policy because the level of trade between the two countries had not yet reached a level where enough critical mass could be built to flood RMBs into its market and Africa at large.
“Very interestingly, currency issues are so psychologically influenced, economic agents may not be comfortable to just accept one currency overnight when they were used to the US dollar. This is a complex matrix which the RMB will face in Africa,” Mr. Mugano said. South Africa is Zimbabwe’s biggest trading partner, accounting for at least 40% of its exports and 60% of imports, he said, but despite this, the rand, the South African currency, has failed to dislodge the dollar as the dominant currency because of its volatility.
Wang Yi, a commercial consular with the Chinese embassy in Harare offered a different opinion on the prospects for acceptance of the RMB in Zimbabwe. In an interview with Africa Renewal, he said the adoption of the Chinese currency by Harare would positively influence investments from China to Zimbabwe, which amounted to about $600 million last year.
“It’s an option that will increase trade between the two countries, as well as lower the cost of doing business. Chinese businesses have welcomed this action but its success also depends on how local companies embrace it,” he said.
With a new report from the International Comparison Program, a World Bank-affiliated global statistical initiative, suggesting that this year China could depose the US as the world’s largest economy, Mr. Wang said many more countries will use the RMB to avoid foreign exchange losses when trading with China.
Zinanayi Steve Zhao, the deputy chairman of the newly-launched Chinese Federation of Zimbabwe, a lobby group for Chinese companies in Zimbabwe, said while the use of the RMB was still minimal, it would be a convenient trading tool for the Chinese. Mr. Zhao told Africa Renewal that the RMB was a strong currency that is used by many countries in Asia for daily business transactions. “China has only recently come into Africa. The RMB would need time. The more trade there is, the more popular it will be.”
In 2012, the deputy governor of the People’s Bank of China, Li Dongrong, told a business forum in Beijing that China would promote the RMB for settlement and investments with Africa as the demand for the currency was increasing at a time when the continent’s economy was expanding.
A number of countries in Africa, among them the Bank of Ghana, are using the RMB as part of their settlement and reserve currency. Early this year, the Nigerian central bank reportedly announced that it planned to shift more of its foreign reserves into yuan from dollars as the RMB gains greater traction in global trade. About 85% of Nigeria’s reserves are held in US dollars. In March last year, the South African Reserve Bank signed an agreement with the People’s Bank of China to invest in China’s bond market.
Mauritius is one of the countries where a growing demand for the Chinese currency has been reported. And while the Bank of Zambia has not yet included the RMB in its reserves, it has pledged to increase its use for trade settlements with China. During his visit to China in August last year, Kenyan President Uhuru Kenyatta promised to host an RMB clearing house.
As Sino-Africa ties continue to outperform, a number of African central banks are applying to the Chinese Central Bank for currency swap, which is the exchange of a loan in one currency for another and the placing of a share of their reserves in the RMB. China has remained Africa’s largest trade partner since 2009. Total trade between China and Africa reached $210.2 billion in 2013, up 5.9 % from the previous year, according to the data from the China Chamber of International Commerce.
Mr. Mugano said the global economic crisis motivated China’s move to internationalise the RMB. Since then, Beijing has encouraged the use of its currency in international trade, swap arrangements between central banks, bank deposits and bond trades.
“It [Beijing] signed several bilateral currency swap agreements, expanded settlements of cross-border trade transactions in RMB and allowed new forms of RMB operations in the Hong Kong offshore market,” he said.
Mr. Mugano noted that the main obstacles to the further internationalisation of the Chinese currency included the lack of exchange rate flexibility and limited access to capital markets. This, he said, would constrain the RMB as a widely used vehicle currency like the US dollar, which plays a unique role in the world of international finance – as the world’s reserve currency, which is used to settle most international transactions.
“Most global central banks hold their reserves in US dollars. In addition, many smaller countries choose either to peg their currency’s value to that of the dollar or forgo having their own currency, choosing to use the dollar instead as is the case in Zimbabwe. This contributes to the dollar’s status as the world’s most important currency,” said Mr. Mugano.
According to Swift RMB Tracker, the RMB is already being transferred over Swift by more than 1,000 banks in 85 countries. Swift, or Society for Worldwide Interbank Financial Telecommunication, is a global transfer system used by companies for financial transactions. Recent data by Swift shows that the growth in the use of the RMB in traditional trade finance has propelled the RMB to the second most used currency in the market.
China’s rapidly increasing trade with Africa provides fertile ground and demand for cross-border RMB settlements. While its use is still limited, the currency is gradually penetrating the African market.
This article appears in the August 2014 edition of Africa Renewal, published by the United Nations.
Related News
China hopes WTO can ‘resolve differences’ and sign deal
China said on Monday it regretted World Trade Organisation members had failed to reach an agreement on simplifying global customs rules, a breakdown it said could damage multilateral trade.
India last month torpedoed a global deal to standardize and streamline customs regulations, known as “trade facilitation”, after it demanded more freedom to subsidize and stockpile food grains than is allowed by WTO rules.
Many WTO member states, including the United States, voiced frustration after India’s demands led to the collapse of what was the first major global trade reform pact in two decades.
WTO ministers had already agreed to the global reform of customs procedures in Bali last December, but were unable to overcome India’s last-minute objections by the July 31 deadline.
“China hopes all parties can quickly resolve differences and find a way out of the impasse,” Chinese Commerce Ministry spokesman Shen Danyang told reporters at a monthly press briefing, adding it was “worried” about the possible negative impact on multilateral trade and Doha round negotiations, referring to the latest round of talks.
“China ... has called for all related parties to push forward the implementation of the Bali ministerial conference and work out a balanced, practical work plan within this year to lay a foundation for wrapping up the Doha round,” Shen said.
India has said it believed it could convince other members that its need for more leeway on food subsidies was legitimate, and has said a deal could be signed as early as September if its concerns were addressed.
Most diplomats had expected the pact to be rubber-stamped, marking a unique success in the WTO’s 19-year history which, according to some estimates, would add $1 trillion and 21 million jobs to the world economy. India calls these estimates highly exaggerated.
India blocked the text because it wanted more attention paid to its concerns over WTO limits on stockpiling of food which will ultimately hit its subsidized food distribution program, the world’s largest, targeted at nearly 850 million people.
Related News
Five key lessons for city competitiveness
More than ever, cities are the lifeblood of the global economy, and increasingly determining the wealth of nations.
Productive policy innovation is taking place in cities, more often than in the halls of national governments or international forums such as the UN, EU and G20. The closer it is to the citizen, the more flexible and practical policy-making becomes. Also, the more experimental it becomes, contributing to all-round learning and adaptation. Cities emulate one another and adopt best international practice better than nations do.
Competitiveness hinges on the productivity of the city, its ability to use available inputs to drive sustainable economic growth and prosperity. In The Competitiveness of Cities Report, we compiled 33 case studies of cities around the world – cities with different endowments and at different stages of development. Some are proven success stories, others are potential success stories, while yet others have become stuck or failed.
So what did we learn? Urbanization is the “megatrend” that is most relevant to city competitiveness. Never before have urban spaces and populations grown at the speed and scale they are doing today. As of 2010, for the first time in history, more than half of the world’s population lives in cities. But they already account for over 80% of global GDP. According to the UN, an extra 2.4 billion people around the world will urbanize by 2050.
For the foreseeable future, rapid urbanization will be almost exclusively a non-Western affair: 94% of those who move to cities in the next few decades will come from the developing world. McKinsey Global Institute estimates that, by 2025, the developing world’s top 443 cities will account for close to a half of global GDP growth and 18% of global GDP. These cities will contain the bulk of about 1 billion new middle-class consumers.
So what are the key lessons for city competitiveness? We offer a checklist of four items, which constitute our what-to-reform, how-to-reform agenda.
1. Think institutions, the decision-making framework of the city. Leadership and vision (a clear, farsighted view of where cities should head, and a single-minded practical will to ensure they get there) show the power of city leaders as CEOs. Lee Kuan Yew in Singapore, Sheikh Mohammed in Dubai, Sergio Fajardo in Medellin, Colombia, and SR Rao in Surat, India, are stellar examples.
Singapore highlights the importance of gradually building up institutional strengththrough successive phases of development. But Monterrey in Mexico and Cebu in the Philippines point to fragile institutions that can endanger existing gains as well as future competitiveness. Cities should also look out for windows of opportunity – often during a political or economic crisis – to push through a critical mass of decisive reforms. This is what happened when Singapore was kicked out of Malaysia in 1965, and when Surat was stricken by plague in 1995.
2. Think of the regulatory framework for the city’s business climate. “Getting the basics right” – stable and prudent fiscal policies, including low and simple taxation, a flexible labour market, openness to trade and foreign investment, simple and transparent business regulation – is the primary lesson for good public policy, at both national and municipal levels. Cities should develop their own foreign economic policies on trade, foreign investment, tourism and attracting foreign talent, and go global as far as they can. Singapore, Dubai, Hyderabad and Ahmedabad in India, and Ningbo in China are great examples.
3. Think “hard connectivity” – the city’s core physical infrastructure. Cities need a mixture of planning and organic growth, which are complements, not substitutes. Manhattan is a great example with its street grid and room for organic expansion over the past two centuries. Brasilia, Chandigarh in India, and many Chinese cities today are counter-examples of overplanning. Next, urban density, including “building tall” in city centres, is preferable to urban sprawl. Hong Kong and Singapore are great examples of urban density, as is Chicago in recent years.
4. Think “soft connectivity” – the city’s social capital. Education is the ultimate form of this. US cities such as Boston, Pittsburgh and St Louis have escaped post-industrial decline and specialized in knowledge-intensive niches by capitalizing on their strengths in education. Next, cities need to facilitate digital infrastructure to support human-computing interfaces that empower individuals. Also, making cities more liveable – improving the quality of urban life – must be a higher priority for upper-middle-income and high-income cities. Wroclaw (Poland), Leipzig (Germany), Busan (South Korea) and Curitiba (Brazil) are good examples.
The renowned urbanist Jane Jacobs said that successful cities are those that are flexible and adapt quickly to changing conditions. That is borne out by the success stories mentioned here. The alternative is to become stuck in mono-industrial, monocultural decline, such as happened in Detroit.
The right mixture of priorities requires tailoring to specific conditions and stages of city development. Most obviously, priorities for a Western city with a stable population, facing sluggish growth, unemployment and ageing, will be quite different to those of an emerging-market city with lower income levels, high growth potential, a fast-expanding population and big gaps in infrastructure.
5. Reforms at the municipal level are usually more feasible than at the national level, even when they seem impossible in national capitals. Urbanization trends enlarge these possibilities. Cities should grasp this opportunity, experiment with new rules and put reforms on a fast track.
Sally was chair of the World Economic Forum’s Global Agenda Council on Competitiveness in 2013-14 and coordinated its new study on the competitiveness of cities.
Related News
Botswana remains committed to an open economy through the rule of law
As a democratic Government we respect opinions and welcome criticism from all quarters. This is as true for retired political leaders as it is of any other Motswana. It is thus with the utmost respect that we find it necessary torespond to a few points that were raised by the former President Festus Mogae at an African Leadership Forum held last month in Tanzania. We do so in recognition that there is public interest in the points that were raised.
When responding to specific questions that were put before him during a panel discussion, the former President had expressed his view that our country was regressing from its longstanding commitment to an economy that was open to foreign participation in the context of the number of foreign nationals who have for various reasons left our country.
While the former President is entitled to his opinion, it is important for the Government of the day to make its own position known. In this respect we can reassure both domestic and international observers that Botswana remains firmly committed to building an open society that welcomes the participation of foreign nationals and investment. In pursuit of this objective, Government has adopted a “Botswana Excellence Strategy” that specifically promotes an enabling environment for doing business in Botswana. This commitment is reflected in the importance Government attaches to not only maintaining, but further fine tuning, its administrative institutions and legislative framework for external skills transfer and investment.
Botswana’s overall attractiveness as a location for investment is attested to by the 2014 Baseline Profitability Index, in which our country was ranked first among 112 countries, having overtaken Hong Kong.
While opening its doors to outside participation in the economy, this Government likewise also remains committed to promoting citizen participation in the economy through proactive citizen empowerment initiatives as well as the upholding longstanding labour laws with regard to the enforcement of legitimate expectations of localisation.
Balancing the recognised need for foreign participation and citizen empowerment in our economy has been and will remain a challenge for this Government, as indeed it was for previous administrations. To this end requirements for residence and business permits are constantly reviewed to simplify and in some cases eliminate unnecessary processes.
It may be further noted that we also live in times where Governments around the world have had to be increasingly mindful of domestic and global security concerns when making decisions about the presence of foreign nationals in their jurisdictions. In addressing such concerns the current administration, to a greater extent than those before it, has had to deal with the threat of global terrorism along with increasingly complex and organised transnational criminal activity, such as the illegal trafficking drugs, humans and arms as well as game products associated with poaching.
It has been through the collaborative effort of our law enforcement agencies and the judiciary that Botswana has maintained its status as one of the world’s most peaceful societies. In the process is unavoidable that foreign nationals involved in illegal activities have been sent back to their countries of origin.
Numerous independent international ratings provide what is arguably the best testament to Botswana continued status as an open society with an open economy grounded in democratic good governance based on transparency and the rule of law.
With regard to the rule of law, in the 2014 World Justice Project Rule of Law Index Botswana is once more ranked first in Africa and 25th in the world. The same report notes that: “the country continues to enjoy effective systems of checks and balances, including a fairly independent judiciary and a free press. Corruption remains minimal and all branches of government operate effectively.”
The robust quality of our democratic institutions was further confirmed by the latest, 2013, Global Democracy Index in which Botswana is ranked 30th in the world, up five places from the previous survey.
In terms of domestic perceptions, we note that Botswana is ranked number one in Africa according to Afrobarometer’s 2014 Transparent and Accountable Governance Index (TAGI), based on scientific internal polling at national level. In other words data on Botswana was in this instance collected exclusively in Botswana by questioning a nationally representative sample of Batswana, with an expected margin of error of less than 3%.
Included in the TAGI data were public perceptions findings as to whether heads of state and public officials in each country were operating within the law. In this respect, 75% of respondents agreed that President Khama never or rarely ignored courts of law in the country, while only 8% were of the view that he often or always ignored the courts. With respect to public officials Botswana civil servants were considered to be the most disciplined on the continent with nearly two thirds of Botswana agreeing that they never or rarely went unpunished for abuses.
Related News
World Export Development Forum (WEDF) 2014
The Government of Rwanda, through the Rwanda Development Board, will host WEDF 2014 in Kigali. Rwanda, an excellent gateway for doing business in the East African region and beyond, is an emerging services and outsourcing hub. It has been ranked by the World Economic Forum’s Global Competitive Index Report 2013-2014 as the most competitive country in East Africa and the third on the entire African continent.
The theme of WEDF 2014, ‘SMEs: Creating jobs through trade,’ reflects the importance that ITC and its partners attach to the role of a vibrant private sector in driving trade-led growth and development. The urgent need to create employment opportunities, in particular for youth, will be at the core of the discussions between global thinkers and practitioners from the public and private sectors. They will explore the necessary policy and support measures required to enable SMEs to realize their potential as growth and employment drivers. The task for governments, trade support institutions, trade and investment promotion authorities, multinationals and the international development community is to unlock SMEs’ potential by investing in building productive capacity, improving skills and supporting access to capital and finance. SME competitiveness is a key factor in determining a country’s overall competitiveness and its ability to respond to international market demand.
The programme
WEDF 2014 will explore how SMEs can become and remain competitive by addressing issues that impact their entrepreneurial capacity and operating environment. Developments in trade facilitation, regional integration, South-South cooperation and trade in services will be examined.
In the main sessions, high-level speakers and participants working in complex and dynamic environments will share best practices to address the challenges faced by developing countries and economies in transition, and propose solutions based on the principles of partnership, inclusiveness and sustainability.
See the full programme.
Background
The World Export Development Forum (WEDF) is a unique global platform dedicated to supporting export-led development.
WEDF provides an issue-focused setting for policymakers, trade support institutions and business leaders to gain practical understanding in trade competitiveness. It also provides unparalleled opportunities for business operators to network and meet with potential partners. Organized by the International Trade Centre (ITC), the only United Nations organization with an exclusive focus on assisting small and medium-sized enterprises (SMEs) to internationalize, WEDF is dedicated to the development of SMEs.
SMEs are the backbone of the global economy, especially in developing countries, where they contribute two-thirds of employment. Their role is even more important in least developed countries, where they account for 80% of jobs and are key to inclusive growth. Increased participation of SMEs in regional and global trade leads to improved livelihoods for a large segment of the population, including for women and youth. SMEs’ contribution to job creation in developing countries is thus essential. They will be a key source of employment as 500 million men and women enter the global labour market by 2030. Given their role in providing decent employment, supporting economic growth and reducing poverty, SMEs must play a central part in the global development framework.
WEDF will bring together over 500 senior national and international policymakers, heads of trade support organizations, business leaders and representatives of international agencies. Through a varied programme, participants will increase their practical knowledge in the latest innovations, processes and policies, and establish new partnerships and contacts through networking.
Related News
Regional bodies move to curb cyber-crimes
Three trade organisations, which Zimbabwe is member to, have conducted a study on key public infrastructure protection to curb Information Technology (IT) related crimes which are affecting business productivity.
The widespread use of private devices to access corporate emails, process online and banking transactions as well as various internet connections is leading to more firms being vulnerable to cyber-crimes.
The Common Market for East and Southern Africa (Comesa), Association of Regulators for Information and Communications in Eastern and Southern Africa and the International Telecommunication Union (ITU) conducted the study in a bid to promote a culture of cyber security within the regional trading bloc.
Comesa secretary general Sindiso Ngwenya said the study was conducted with various aims besides assessing measures taken by Comesa member states on IT Security.
“The objective is to come up with frameworks for cyber-security and Critical Information Infrastructure Protection [CIIP]. It is also intended to share best practices adopted internationally on similar CIIP efforts,” Ngwenya said.
He said the benefits that IT has brought modern organisations have not come without risks as these vary in size and scope, from revealing new vulnerabilities in the Eastern and Southern regions’ critical infrastructures to enabling new forms of fraud.
Cyber-crime takes various forms such as spam, which interrupts networks, cuts productivity and spreads computer viruses.
Such IT-related crimes primarily target banks and bank-related services, as well as identity platforms.
It is distributed broadly across the economy, since it targets the main components on which much of the digital economy rests namely payments and identity.
Ngwenya said a robust market for cyber-insurance would offer several key benefits to society, foremost, a strong incentive to individuals and organisations to take appropriate precautions.
“Insurance companies could reward security investment by lowering premiums for less risky actors. Because insurance companies base their competitive advantage on risk-adjusted premium differentiation, they have an incentive to collect data on security incidents where claims are made,” he said.
Ngwenya said this development would make it inevitable for countries to develop insurance systems which will provide benefits to their citizens, financial sector and opportunities to the insurance sector.
Strategies concerning implementation of the cyber-crime programme will be developed with involvement of the public sector, private sector, financial institutions, and development partners’ regional and international organisations.
Related News
Rwanda set to ease customs procedures
The Rwanda Revenue Authority (RRA) is ready to implement the Single Customs Territory system across the Northern Corridor, writes Agnes Bateta
RRA officials believe this will also help widen the tax base of the country. The Northern Corridor runs from Mombasa and is the major transport link for Rwanda, Uganda and parts of Burundi.
Richard Tusabe, the RRA Commissioner General was recently giving a news conference.
“We have continued to train and sensitize traders about this initiative launched last year which is not promoting trade only in Rwanda, but in Kenya and Uganda, hence helping increase on revenue collections,” Tusabe said.
“People are able to pay from Mombasa port and now we have opened up the Dar-es Salaam port which is promoting trade and helping widen the tax base of the country,” he said.
However, RRA has continued to develop other ways of widening the tax base, all in a bid for RRA to achieve its set targets.
“We want to aggressively expand the tax base by working with the local government to ensure that all traders are registered with the tax administration as per the laws,” Tusabe said.
The body again aims at enhancing Value Added Tax (VAT) invoicing operations and enforcing use of Electronic Billing Machines (EBM) in not only Kigali, but also other trading centres across the country.
“With this we want to bring all the 6,896 tax payers under the EBM system in to the system from the 5,154 we have now,” Tusabe said.
Other strategies developed to help widen the tax base are among others continuing to enhance various initiatives aimed at improving service delivery and the business environment.
Here RRA aims at expanding usage of e-services for filing and payment of taxes, enhancing implementation of the electronic window system, and rolling out the gold card scheme in customs.
Tusabe said, “We want to further improve the collection of local taxes by investing in modern technology that will assist in having a reliable database for collection, audit and enforcement.”
“All these will be possible with educating taxpayers’ to help improve the understanding of tax matters and compliances,” he said.
Revenue performance has continued to register good results. Between July 2013 and June 2014 tax and non-tax revenue amounted to Rwf769billion (about $1 billion) against the set target of Rwf793.2billion $1.1 billion) a 96.9% performance.
This shows growth of revenue collection of 15.9% as compared to the same period fiscal year 2012/13.
Total tax revenue collection was targeted at Rwf782.5billion and RRA managed to collect Rwf758.6billion which is a 96.9% achievement.
Tusabe said, “Economic growth performance slowdown in 2013 which was 4.6% against the projected 6.6% contributed to the above performance.”
The body aims at reducing smuggling by intensifying surveillance and intelligence operation which is again aimed at increasing the tax base of the country.
Tax payers’ day was celebrated on the 13th time with a theme “Invoicing: a basis for taxation and a foundation for Book keeping”, and it was celebrated in all districts across the country.
This day is used as a platform for raising Taxpayers’ awareness which has contributed to increased revenue collection for the past 13 years.
Related News
34th SADC Summit Communiqué
Communiqué of the 34th Summit of SADC Heads of State and Government
-
The 34th Ordinary meeting of the Summit of the Heads of State and Government of the Southern African Development Community (SADC) was held in Victoria Falls, Republic of Zimbabwe on 17th and 18th August 2014.
-
The Summit took place under the theme: “SADC Strategy for Economic Transforma-tion: Leveraging the Region’s Diverse Resources for Sustainable Economic and Social Development through Value Addition and Beneficiation.”
-
Summit elected H.E. President Robert Gabriel Mugabe of the Republic of Zimbabwe as Chairperson and H.E. Lt. General Seretse Khama Ian Khama, President of the Republic of Botswana as Deputy Chairperson of SADC, respectively.
-
Summit also elected H.E. Jacob Gedleyihlekisa Zuma, President of South Africa, and the Right Honourable Thomas Motsoahae Thabane, Prime Minister of the Kingdom of Lesotho as Chairperson and Deputy Chairperson of the SADC Organ on Politics, Defence and Security Cooperation, respectively.
-
Summit was attended by the following Heads of State and Government and or their representatives:
- Botswana: H.E. President Lt. Gen. Seretse Khama Ian Khama
- DRC: H.E. President Joseph Kabila Kabange
- Lesotho: Rt. Hon. Prime Minister Thomas Motsoahae Thabane
- Madagascar: H.E. President Hery Rajaonarimapianina
- Malawi: H.E. President Prof. Arthur Peter Mutharika
- Mauritius: Prime Minister Dr. the Rt. Honourable Navinchandra Ramgoolam
- Mozambique: H.E. President Armando Emilio Guebuza
- Namibia: H.E. President Hifikepunye Pohamba
- Seychelles: H.E. President James Alix Michel
- South Africa: H.E. President Jacob Gedleyihlekisa Zuma
- Tanzania: H.E. President Jakaya Mrisho Kikwete
- Zimbabwe: H.E. President Robert Gabriel Mugabe,
- Angola: Hon. Vice President Dr. Manuel Domingos Vicente
- Swaziland: Rt. Hon. Sibusiso Barnabas Dlamini, Prime Minister
-
Zambia: Hon. Vice President Guy Scott
-
Summit was also attended by H.E. Dr Nkosazana Dlamini-Zuma, Chairperson of the African Union Commission (AUC) and H.E. Dr. Stergomena Lawrence Tax, SADC Executive Secretary.
-
E. President Robert Gabriel Mugabe, incoming Chairperson and host of the 34th Summit welcomed the SADC Heads of State and Government and other delegates to the Republic of Zimbabwe. President Mugabe paid tribute to the outgoing Chairperson of SADC, H.E. President Prof. Arthur Peter Mutharika of the Republic of Malawi for having provided leadership to the Region during his tenure.
-
The Summit was also addressed by newly elected Heads of State and Government, namely, H.E. President Professor Arthur Peter Mutharika of the Republic of Malawi and by H.E. Hery Rajaonarimapianina, First President of the IV Republic of Madagascar, who delivered their maiden speeches, in which they re-affirmed their governments’ commitment to the SADC political, regional integration and developmental agenda..
-
Summit was also addressed by H.E. Dr. Nkosazana Dlamini-Zuma, the AUC Chairperson who expressed the AU’s commitment to work with SADC in order to strengthen the region’s peace and security initiatives, as well as in key priority areas of programmes implementation, within the framework of the AU Vision 2063.
-
Summit commended the people and governments of the four (4) SADC Member States namely, Swaziland, Madagascar, South Africa and Malawi for holding peaceful, free, fair and credible elections between the 33rd and 34th Ordinary Summits.
-
Summit congratulated their Excellencies, Hery Rajaonarimapianina, Jacob Gedleyihlekisa Zuma and Prof. Arthur Peter Mutharika for emerging victorious in the elections held in their respective countries.
-
Summit received a Report of the Outgoing Chairperson of the SADC Organ on Politics, Defence and Security Co-operation, H.E. Hifikepunye Pohamba, President of the Republic of Namibia highlighting the political and security situation as follows:
-
The Region remains generally peaceful and stable.
-
On the Democratic Republic of Congo: Summit endorsed the decision by the last Joint SADC-ICGLR Ministerial Meeting that the voluntary surrender and disarmament by FDLR shall be done within a six month time frame. Summit also called upon the United Nations in co-operation with the African Union, to play its role in repatriating the FDLR elements that have voluntarily surrendered and disarmed or provide them with temporary resettlement in third countries outside the Great Lakes Region.
-
On the Republic of Madagascar: Summit reaffirmed its commitment to support Madagascar in the context of dialogue, national reconciliation and national building processes. Summit also appealed to the international community to support Madagascar in the development process. Summit urged all stakeholders in Madagascar to adhere to and ensure full implementation of the SADC roadmap.
-
On the Kingdom of Lesotho: Summit encouraged the Coalition Government Leaders to continue to provide leadership in its effort to find a lasting political solution to the current impasse, and underscored SADC’s commitment to support the leaders of the Coalition Government. Summit further appealed to all political leaders and the people in general to refrain from any action that may undermine peace and stability in the country and urged political stakeholders to resolve the political challenges in accordance with the Constitution, laws of the land in line with the Democratic Principles.
-
-
Summit commended H.E. President Hifikepunye Pohamba for successfully steering the SADC Organ on Politics, Defence and Security Cooperation.
-
Summit underscored the need to appropriately honour Founding Leaders who played an outstanding role in the liberation of Africa, at both regional and continental levels.
-
Summit launched the SADC Hashim Mbita Project Publication outlining the history of the national liberation struggles in Southern Africa and the SADC Statistical Year Book. To this end, Summit urged Member States to honour Brigadier General Hashim Mbita as demonstrated by the Republic of Zimbabwe which conferred the highest honour for a foreign national, the Order of Munhumutapa.
-
On the Theme, Summit directed that industrialisation should take centre stage in SADC’s regional integration agenda. To this end, Summit mandated the Ministerial Task Force on Regional Economic Integration to develop a strategy and roadmap for industrialisation in the region.
-
Summit noted progress in the review of the Regional Indicative Strategic Development Plan and directed its finalisation and the preparation of an Implementation Plan in order to provide guidance towards the implementation of SADC programmes.
-
Summit received a report from the Committee of Ministers of Justice/Attorneys General relating to progress on negotiating a new Protocol on the SADC Tribunal, and adopted the new Protocol on the SADC Tribunal.
-
Summit received a report from the Ministerial Task Force on Regional Economic Integration, outlining among others, status in tariff phasedowns and intra-SADC trade. Summit also received a progress report on the ongoing tripartite free trade area negotiations and directed the expeditious completion of the Tripartite FTA negotiations in order to pave way for the Continental FTA process.
-
Summit reviewed the regional food and nutrition security and noted increases in food production during the 2013-2014 growing season. However, humanitarian assistance and malnutrition still remain a challenge. To this end, Summit endorsed a Regional Food and Nutrition Security Strategy for 2015 to 2025 to ensure improved food availability, accessibility and utilisation in a more sustainable manner.
-
Summit noted progress on the status of women’s representation in politics and decision making and urged Member States to put in place effective legislation, policies and strategies necessary to sustain the achievements recorded so far.
-
Summit also noted progress in the prevention and control of HIV and AIDS, TB and Malaria, all of which have shown a declining trend. Summit also reviewed the threat posed by the Ebola Virus Disease and urged Member States to continue putting in place measures to prevent its outbreak and to effectively contain it in case of an outbreak in the SADC Region.
-
Summit signed the following Legal Instruments:
-
Protocol on the Tribunal in the Southern African Development Community;
-
Protocol on Environmental Management for Sustainable Development;
-
Protocol on Employment and Labour; and
-
Declaration on Regional Infrastructure Development.
-
-
Summit adopted a Declaration in support of Small Island Developing States ahead of the Third Conference of Small Island Development States (SIDS) to be held in Samoa in September 2014.
-
Summit did call upon all Member States to fully support the Legitimate Claim of the Republic of Mauritius for the restoration of its sovereignty over Chagos Archipelago without which the full decolinisation of Africa is not complete.
-
Summit re-appointed Ms Emilie Ayaza Mushobekwa as the Deputy Executive Secretary – Finance and Administration, and noted the appointment of Dr Thembinkosi Mhlongo as Deputy Executive Secretary – Regional Integration by Council, as mandated by Summit in Malawi in August, 2014.
-
During the Official Closing Ceremony, Summit received farewell statements from H.E. President Armando Emilio Guebuza of the Republic of Mozambique and H.E. President Hifikepunye Pohamba of the Republic of Namibia whose presidential terms of office are nearing their end.
-
In his remarks, H.E. President Guebuza commended SADC for the major achievements it has made since its existence, the solidarity and fraternal support he had received from other Heads of State and Government, and urged them to support his successor.
-
In his remarks, H.E. President Pohamba told the Summit that it had been an honour for him to have worked for the last nine years with his colleagues, the SADC Heads of States and Government, with whom they collectively made strides in addressing peace and security challenges, as well as advancing the SADC regional integration and development agenda.
-
Summit was officially closed by SADC Chairperson, H.E. President Robert Gabriel Mugabe of the Republic of Zimbabwe.
-
The Deputy Chairperson of Summit, H.E. Lt General Seretse Khama Ian Khama, President of the Republic of Botswana delivered a vote of thanks and invited the Heads of State and Government and all delegates to the next Summit to be held in Gaborone in August 2015.
-
Summit expressed its appreciation to the Government and people of Zimbabwe for hosting the Summit and for the warm hospitality extended to all the delegates.
Related News
SADC signs Protocol on Trade and Services
SADC Heads of State and Government attending the regional summit in Victoria Falls have signed the Protocol on Trade and Services.
SADC Chairperson, President Robert Mugabe led other regional leaders in signing the legal instrument that is expected to improve trade and infrastructure development in member states.
The signing ceremony was followed by the swearing in of the SADC Deputy Executive Secretary for Finance and Administration, Ms Emily Ayaza Mushobeka.
Ms Mushobeka took an oath of office before Zimbabwe’s Chief Justice Godfrey Chidyausiku.
After the ceremony, the presidents of Mozambique and Namibia, Armando Guebuza and Hifikepunye Pohamba respectively, were given a chance to bid farewell to the summit as they will be stepping down after elections in their respective countries later this year.
The two will step down after completing two successive terms in office and according to their respective constitutions, they with not be allowed to seek fresh mandates.
President Guebuza said Mozambique will go to the polls on the 15th of October, and he will hand over the baton to his successor who will be elected during the elections.
He thanked SADC Heads for the solidarity and support to Mozambique over the years and urged the bloc to extend the same support to his successor.
He said he is humbled by the assumption of the SADC Chairmanship by Zimbabwe’s President Mugabe, who is the only sitting president from the region to have attended all SADC summits since the first Lusaka meeting on April 1, 1980.
He said the region cherishes Cde Mugabe’s leadership, adding that the bloc continues to grow from strength to strength especially in the strengthening of democracy.
President Guebuza’s Namibian counterpart, President Pohamba also gave his farewell remarks, saying his country has over the years remained committed to the development of Southern Africa and its citizens.
He urged the bloc to continue promoting peace, good governance and the social well-being of its citizens.
Related News
SADC pins growth on South Africa
South Africa should take advantage of its comparative industrial advantage to lead other regional countries in building their manufacturing base to ensure collective socio-economic transformation in Southern Africa, SADC Chairman President Mugabe has said.
The President said roping the economic giant into regional industrialisation efforts would facilitate reciprocal trade and not open other countries to large-scale importation of South African products.
Addressing journalists at the end of the 34th Ordinary Summit of SADC Heads of State and Government in Harare yesterday, President Mugabe said it was critical for the region to prioritise value addition and beneficiation ahead of market liberalisation.
He said collective industrialisation would help all regional countries derive higher value from their resources.
“But in the process, we also appeal to South Africa, which is highly industrialised, to lead us in this and to work with us and co-operate with us and not just to regard the rest of our countries as open markets for products from South Africa.
“... because we want a reciprocal relationship in which we sell to each other and not just receiving from one source. Products that we consume without our ability to sell to that source our own products which can add that value that I have made reference to on beneficiation.”
President Mugabe said Sadc was actively working towards its industrialisation objective and would convene a Summit specifically dedicated to the subject before May 2015.
Trade ministers, he said, have been tasked to strengthen the Regional Indicative Strategic Development Plan’s industrialisation pillar to establish a relationship between industrialisation and market liberalisation.
He said market liberalisation was futile without first building manufacturing capacity.
“Ministers will do preliminary work and we must discuss this before May next year, which means we must have another Summit to discuss this subject so we can look at how we can work together to integrate.
“Companies come together or different countries come together if they are producing the same product. What prevents them from coming together, creating a much larger production base so that the secondary industries, the factories they are going to establish, will rely on a larger base of primary goods to which they add value.”
Closing the Summit, the President said Sadc hoped to establish the Regional Development Fund to finance its programmes and reduce donor-dependence.
He advocated swift implementation of Summit decisions that benefit Southern African citizens, and also pledged to amplify Sadc’s voice at different forums.
“The decisions that we make will only be meaningful to the people if we implement them. We, therefore, need to improve our scorecard on that front.
“During my tenure as your Chairman, I pledge to represent the interests of our region at various fora so that the Sadc voice, programmes and projects, are ever present. This is a task that cannot be accomplished by the Chair alone.
“I, therefore, will count on your individual and collective support to steer the agenda of Sadc in order to achieve effective implementation of our programmes. I have no doubt that together we will succeed.”
President Mugabe took over Sadc chairmanship on Sunday and will over the next year lead the regional bloc towards its major objective of social and economic transformation through value addition and beneficiation.
Sadc has identified several key intervention areas under its Industrial Development Policy Framework of 2012.
The focus areas include sector-specific strategies for regional value chain development; promoting industrial upgrading through innovation; technology transfer and research and development; improving standards as well as technical regulations and quality infrastructure.
Others include upgrading skills for industrialisation; mechanisms for industrial funding; improving infrastructure provision for industrial development and promoting local cross border and foreign direct investment.
The Summit, attended by 13 Heads of State and Government, resolved that industrialisation be at the centre of integration efforts.
It also mandated the Ministerial Task Force on Regional Economic Integration to develop a strategy and roadmap for industrialisation.
In addition, the leaders directed the expeditious completion of Tripartite Free Trade Area negotiations to pave way for continental Free Trade Areas. FTAs are essentially agreements that remove trade barriers between or among member states.
On food and nutrition security, Summit endorsed the 2015 to 2025 Regional Food and Nutrition Security Strategy that aims to improve sustainable food availability, accessibility and utilisation.
The annual gathering also urged member states to put in place effective measures to deal with Ebola in the event of an outbreak in the region.
Related News
The New Frontier of Competitiveness in Developing Countries – Implementing Trade Facilitation
Trade facilitation has a long history in UNCTAD, whose mandate in this area dates from the Final Act of its First Ministerial Conference in 1964.
The Final Act of the Conference recommended that UNCTAD
“should promote, within the United Nations family, arrangements for: ... (c) Inter-governmental action for research into improved marketing techniques, the organization of trade fairs, the dissemination of market intelligence and the simplification of formalities relating to Customs procedure, commercial travel, etc.”
With the beginning of the negotiations on a WTO Trade Facilitation Agreement in 2004, supporting the developing countries in these negotiations became another major focus of the UNCTAD trade facilitation activities. This support included preparing analytical and policy publications on trade facilitation issues, organizing training and awareness-raising events in the developing countries and in Geneva for Geneva-based delegates, as well as implementing technical assistance and capacity-building (TACB) activities tailored to the needs of developing countries.
Under the framework of the UNCTAD projects on the development of national trade facilitation implementation plans, 26 countries, comprising LDCs, middle income developing countries, landlocked countries and small island economies in Africa, Asia, the Caribbean and Latin America, evaluated their current situation with respect to the considered trade facilitation measures being negotiated in the WTO. In doing so, they assessed the current level of implementation of each measure included in the WTO negotiating text, rating the implementation level as absent, partial or full.
The following report consolidates these results to help assess the progress thus far achieved in the implementation of the trade facilitation agreement (TFA) as negotiated at the WTO. The challenges remaining will be examined and addressed.
The report is intended to serve as a guidance tool for trade facilitation policy makers at the national, regional, and multilateral levels in both developed and developing countries.
These insights, summarized in the present report, concern:
-
Level of implementation of trade facilitation in the participating countries (chapter I)
-
Implementation priorities and time and financial requirements (chapter II)
-
Expressed needs for special and differential treatment (SDT) (chapter III)
-
Use of selected implementation tools: A special focus on customs automation systems and national trade facilitation committees (chapter IV).
The conclusions (chapter V) will present a number of policy implications that can be drawn in terms of implementing the trade facilitation reforms under the framework of the future WTO Trade Facilitation Agreement.
The analysis pays particular attention to the situation of LDCs and highlights their specificities in their situation and the expressed implementation needs.
It is hoped that the report will provide a guidance tool for trade facilitation policymakers at the national, regional and multilateral levels in both developed and developing countries, assisting them to plan and implement trade facilitation reforms and/or tailor TACB activities to the needs of the developing countries.
Related News
EAC states to formulate cooperatives law
The East African Legislative Assembly (EALA) will in two weeks time start collecting public views on the new East African Community (EAC) Cooperatives Bill 2014.
The Bill’s objective is to create a harmonised legislative framework that will facilitate co-operative societies to exploit their potential in the EAC region.
The public hearings to be conducted in all the region’s member states including Kenya, Uganda, Rwanda, Tanzania and Burundi will later be handed to EALA Committee on Agriculture, Tourism and Natural Resources to compile the report.
After receiving these comments, the Bill will go for the 2nd and then the 3rd readings in Parliament, where the comments will be further interrogated with the goal being to reach the Heads of States during their summit in December this year.
“The Bill went through the first reading in EALA in January; it has gone through the national Parliaments through the committees on regional integration and we have also met the ministers in charge of cooperatives in all the partner states,” Stephen Muchiri, CEO of Eastern Africa Farmers Federation (EAFF) said while giving an update on the draft Bill on Wednesday.
The federation has been spearheading the process and is working closely with EALA and all stakeholders to have it passed into law before December this year.
The Bill is intended to improve the respective national co-operative legislations in the five EAC partner states by adopting the good practices from the different country laws.
Muchiri says if passed into law, it will enhance the autonomy and independence of cooperatives which have over the years suffered from government interference.
“I think there has been too much government in many cooperatives societies in each of the partner states. For example the minister, commissioner or registrar dissolving a cooperative’s management team. And in the 70s, this actually created a lot of problems in the movements and that’s why many of them collapsed,” Muchiri said.
The common law will also provide a framework to facilitate cooperative business, which is highly dominated by agricultural-related activities and enterprises.
“There is a problem in terms of the market and we believe with cooperatives as it has been in other countries, that they actually have power in the market. Our idea is to actually see that farmers are price makers and not price takers. We want to increase value for our regional farmers,” Muchiri said.
The new law also proposes the formation of an East African Co-operative Society.
Related News
Botswana: Energy Policy to be in place by 2015
The Minister of Minerals, Energy and Water Resources Kitso Mokaila has revealed that government is currently drafting an energy policy. The policy is expected to map out a successful way forward for Botswana’s renewable energy landscape.
Speaking at a two-day renewable energy conference in Gaborone on Monday, Mokaila said the policy is expected to be finalised and be ready for approval by 2015. The Energy Policy will provide a policy framework to guide effectiveness and sustainability in energy planning, development and provision. The plan is also to develop a detailed renewable energy strategy.
He said that government, in collaboration with the Japanese government, is undergoing a research project to cultivate a Jatropha carcus that will be resistant to Botswana’s extreme weather conditions.
“It is hoped that the species cultivated through this project will provide feedstock for Biodiesel production. I am first to admit the deficiency of the policy framework for the energy sector in general, and the renewable energy sub-sector in particular,” he said.
Currently, there is only one Biodiesel Plant in Lobatse with a capacity to produce at least one million litres per annum and about seven biogas installations nationwide.
However, the Minister stressed that there are other potential energy sources that can be harnessed such as; bi-energy for bio-diesel production, municipal solid waste for electricity generation and biogas for heating.
Botswana sees, on average, 320 clear sunny days per year, but the resource so abundantly available has not been utilised due to some key barriers with regard to information, finance, policy and framework, institutional arrangements and perceptions.
“At the country level, there was insufficient knowledge about available technologies and technological developments but we need to significantly harness this resource with respect to which we have a comparative advantage,” Mokaila added.
In order to successfully incorporate renewable energy into the main steam energy mix, the government has been working on initiatives to use natural resource to generate energy.
Earlier, government embarked on several initiatives aimed at introducing renewable energy into the mainstream energy mix. Unfortunately, some weren’t successful enough to become long term sustainable solutions.
Some such initives included the Botswana Renewable Energy Technology project, which was in operation during the 1980s, the Manyana PV Rural Electrification Programme, which started in 1992, as well as the National PV Rural Electrification Programme, which was implemented in 1997 with the aim of disseminating PV electrification throughout the country.