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Speaking Africa’s language
The US wants what we always wanted – two-way trade, investment, mutual respect and strategic collaboration, writes Kuseni Dlamini.
The inaugural US-Africa Leaders Summit marked a turning point in relations between the two in general and US economic diplomacy towards the continent in particular. The summit was a historic moment, indicative of President Barack Obama’s determination to reset the relationship between Africa and the US from being paternalistic and transactional to being strategic and mutually beneficial.
As Obama indicated in his eloquent address to the Business Forum, “in the past it used to be about what the US can do for Africa. Now it’s about what the US can do with Africa”.
We need to grow and develop the continent in such a way that the US and the world ask what Africa can do for the US and the world.
Africa has the right combination of natural and human resources (youthful and energetic population) to be a first-world continent, provided it does what is necessary. US-Africa relations are in a state of flux for the right strategic reasons.
The world has taken note of Africa’s inexorable rise. So has the US.
Never has the US publicly declared that African prosperity was in its national interest, until the summit, when Obama said US exports to Africa support 250 000 American jobs.
The more the US exports to Africa the more jobs it can create and maintain back home. Job creation is a global challenge for most economies, especially for South Africa’s.
Never before has the US engaged with Africa as a strategic partner with value to add. At the summit, it did.
Never before have the top guns in Washington DC, including a former president, lined up to tell Africa how important and critical it is to the world. At the summit, Obama did. As did former president Bill Clinton.
The summit marked Africa’s rare moment of glory, visibility and celebration. Washington DC almost came to a standstill because most roads were closed and traffic jammed. Hotels were taken over by African delegations accompanying the more than 40 heads of states. A hotel worker told me his five-star hotel was even busier than during the presidential inauguration, which is usually the busiest time in Washington.
Obama’s Africa policy pundits were in overdrive as they basked in the glory of what was, by all accounts, a great foreign policy moment for Obama since he came into office The summit brought about unity in the increasingly divided and quarrelsome Washington marked by bipartisan tension and division on most issues.
On Africa, however, it is encouraging that there is consensus that its rise and prosperity is in the best interests of the US and the world. Let’s hope this will manifest itself in the extension and enhancement of the African Growth and Opportunity Act (Agoa) which has resulted in 95 percent of South African exports enjoying duty-free access to the lucrative US market.
Other major Agoa beneficiaries are Nigeria and Angola.
We need more African countries to benefit from an enhanced Agoa. We also need the US administration to extend the life and mandate of the Export and Import (Ex-Im) bank which has underpinned many inward investments into Africa and South Africa.
Congress should unite in support of Africa’s prosperity by extending the lives of Agoa and the Ex-Im bank. Africa needs trade and investment. Not aid. If the summit is continued by future US presidents, as I think it should, credit will always go to Obama for initiating it.
During the Cold War US-Africa relations were shaped by the West-East divide which saw Africa split according to spheres of ideological influence between the capitalist West and the Communist East. Aid was an instrument to woo African countries to align themselves with this or that superpower’s foreign policy priorities and keep them dependent on handouts.
The post-Cold War era unleashed a new wind of change across the continent which saw hitherto despotic and autocratic regimes swept away by democratically elected governments with a “new generation” of enlightened leaders who pursued liberalisation and deregulation policies in pursuit of freer markets.
The Washington consensus underpinned by neo-liberalism entrenched its hegemonic project as a new world order or as Francis Fukuyama called it, “the end of history” was heralded.
Then came China and the rise of other key emerging markets such as Brazil, India, South Africa, Turkey, Mexico and Indonesia which tilted the established global configuration of economic and political power.
The advent of China and other emerging powers as aspiring new powers changed the balance of forces and gave African countries a new “look East” option with no strings attached in terms of governance, accountability, rule of law, transparency and other stringent criteria demanded by the West. The Brics alliance (Brazil, Russia, India, China and South Africa business communities) is partly an offshoot and symptom of that trend and dynamic in global affairs.
Beijing’s approach promised to respect the sovereignty of all African states by avoiding lectures on democracy and human rights – which is viewed as an encouragement of mischief by critics. Its foreign policy emphasised the notion of the equality of all nations and “mutual benefit and development” as cornerstones of Sino-African relations.
This is in direct contrast to Washington consensus-type conditionalities that are hated by corrupt and badly governed African countries because they are viewed as undermining their sovereignty and independence. Obama advocated a partnership premised on the respect for human rights, democracy, rule of law and good governance.
His Africa policy is bold, decisive and focused on key issues that matter to African economies and societies. It also puts African people at centre stage as demonstrated by his Young African Leadership Initiative (Yali). He wants what Africans have always wanted – two-way trade and investment underpinned by mutual respect and strategic collaboration.
It is up to Africans to leverage this new era in US-Africa relations to unleash Africa’s potential for generations.
The way American investors engaged African leaders demonstrated a high degree of maturity, respect and increasing sophistication. This reflects their appreciation of the changed and changing balances of forces in global economics.
Africa is experiencing its moment of glory with the world’s economic superpowers jostling for position to build and deepen better economic ties.
The EU, Japan and China are as keen as Washington is to have ever-closer investment and trade relations with Africa. They have all developed strategies on the continent.
The question that needs to be raised is to what extent has Africa developed smart and co-ordinated strategies on engaging with these suitors who are driven by the pursuit of their national economic and commercial interests?
Africa needs a strategic approach and concept on how best to maximise benefits from its engagements with these economic giants in ways that advance African economic and strategic interests.
It is one thing to be the most wanted bride and another to choose the right groom for your short-, medium- and long-term advancement and lifelong prosperity.
The need for Africa to have co-ordinated and well thought-out strategies on how to maximise leverage from the global fascination with its rise cannot be overemphasised.
Dlamini, the chairman of Massmart, attended the inaugural US-Africa Leaders summit in Washington DC.
The views expressed here are not necessarily those of Independent Newspapers.
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Kenyans move Sh1.1trn on mobile phones in 6 months
Kenyan consumers used mobile money services to transfer more than Sh1 trillion in the first six months of the year, the latest industry statistics show.
The new Central Bank of Kenya’s (CBK) report shows the value of mobile payments grew by nearly a third to Sh1.1 trillion in the first six months of the year compared to Sh872.1 billion last year. This means that consumers moved an average of Sh186.4 billion monthly or Sh6.2 billion per day compared to the Sh4.8 billion a day they moved in a similar period last year.
Kenya has six main mobile money platforms – Safaricom’s M-Pesa, Airtel Money, yuCash, Orange Money, MobiKash and Tangaza Pesa – backed by a network of about 120,781 agents.
The increased uptake of mobile money comes at a time when mobile money providers are fighting for a piece of the lucrative retail payments market with the launch of mobile payment products.
The merchant platforms include Safaricom’s Lipa Na M-Pesa; Lipa Sasa Na MobiKash; Airtel Money and yuCash. Tangaza Pesa is currently piloting MyDuka – a new online shopping product.
Safaricom reckons that the success of M-Pesa – Kenya’s pioneer mobile money service – has inspired ordinary consumers, companies, banks as well as government agencies to embrace mobile commerce.
“I think that the early success of M-Pesa has encouraged ordinary citizens to have confidence in a concept that otherwise would have been difficult for them to comprehend or accept,” said Bob Collymore, the Safaricom chief executive. “This growth is driven primarily by an increase in active M-Pesa customers and an increase in the average number of transactions per customer.”
Kenya had a total of 25.9 million mobile money subscribers at the end of June, having risen from 23.75 million in June 2013, a growth of 9.2 per cent.
The CBK’s data shows that the value of mobile money transactions more than tripled in the past five years to reach Sh1.1 trillion compared to the Sh322.5 billion that was moved in the first six months of 2010.
Sustained growth of mobile money is further attributed to the convenience it offers users beyond the traditional money transfer to include payment of utility bills such as water, rent and electricity, and for shopping and bus fare.
Safaricom in June 2013 launched Lipa Na M-Pesa - a service that enables consumers to pay for goods and services using M-PESA – which has so far enlisted 122,000 outlets including airlines, hotels, supermarkets, public service vehicles and oil marketers.
“Lipa Na M-Pesa has enabled cashless merchant payments and facilitated trade between businesses and their customers while improving business efficiency,” Safaricom said in a statement. Safaricom charges a flat processing fee of one per cent on the value of every Lipa Na M-Pesa transaction.
The Nairobi bourse-listed telecoms company has 19.3 million registered M-Pesa users who are serviced by 81,025 agents across Kenya. M-Pesa earned Safaricom Sh26.56 billion or nearly a fifth of total revenue in the financial year ended March 2014, confirming the growing importance of mobile money as a revenue stream.
Mobikash has launched the Lipa Sasa Na MobiKash, a merchant payment service that allows customers to pay for goods and services, that is available to subscribers of all the four mobile networks. Users pay a standard Sh15 processing fee. Mobikash, which is controlled by investment firm Foundation Enterprise Programme (FEP), has so far recruited 4,000 agents and 2,000 Lipa Sasa Na MobiKash merchants in Kenya.
“We are seeing more person-to-business payments, utilities and bulk payments such as salaries,” said Duncan Otieno, the chief executive of Mobikash Afrika.
Tangaza Pesa, which partnered with Airtel to acquire a Mobile Virtual Network Operator (MVNO) licence in April, said increased uptake of m-commerce is linked to the growing use of mobile money services.
Oscar Ikinu, the chief executive of Tangaza Pesa, said the advent of MVNOs in Kenya is likely to further propel the mobile money industry by increasing variety, lowering costs and signing up more retailers.
Equity Bank and Zioncell have also been awarded MVNO licences and plan to roll out mobile banking services complemented by voice and data offerings. “We see mobile money growing given that we can tie up value-added services to our mobile money offering once we have our own SIM cards,” Mr Ikinu said.
Tangaza Pesa has about 598,000 customers and a network of 3,800 agents. The company plans to roll out its own SIM cards and launch a merchant payment facility.
The 2013 FinAccess survey credits mobile money services for the more than doubling of Kenya’s banked population to 67 per cent from a low of 26.1 per cent in 2009. “There has been increased convergence of banking and mobile phone platforms as banks explore more convenient and cost-effective channels of banking,” said CBK governor Njuguna Ndung’u in the 2013 Bank Supervision Annual Report.
The shift towards retail payments, mobile banking and bulk transfers is seen as the next frontier in the evolution of mobile money growth. The volume of person-to-business payment using Lipa Na M-Pesa service and Pay Bill numbers grew 73 per cent to 11.0 billion per month in the year to March 2014.
Statistics from Safaricom show that bulk payments to settle dividends, per diems, salaries and wages through M-Pesa from businesses to persons grew 70 per cent to an average of Sh8.7 billion per month in the period under review.
This means retail and bulk payments on the M-Pesa network now account for nearly a fifth or 19 per cent of total cash moved on the platform – helping Safaricom diversify from peer-to-peer mobile transfers which is high volume but low in earnings.
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URA starts clearing global cargo through single customs system
The Uganda Revenue Authority (URA) will today (August 11) start a pilot project of clearing of bulk international cargo through the Single Customs Territory (SCT).
The SCT involves removal of internal border customs controls on goods moving between partner states with an ultimate realization of free circulation of goods.
According to the URA commissioner customs, Mr Richard Kamajugo, the trial project will involve overseas cargo bound for Uganda through the port of Mombasa.
“The bulk cargo on the list includes Clinker – a raw material used in the manufacturing of cement, edible oils and wheat grain,” Mr Kamajugo said.
The revenue body says the project will last for about three weeks before all international containerised cargo is brought on board.
URA commenced pilot SCT systems in February and by April, they had rolled out clearing of Uganda-bound light cargo through the port of Mombasa.
Mr Kamajugo added that URA has also started clearing cargo through the southern corridor’s Dar es Salaam Port.
“We commenced pilot clearing of fuel products imported to Uganda through the port of Dar es Salaam on August 4,” he said.
Experience with SCT
The businesses that have had goods cleared through the SCT system say they have experienced improved efficiency, seen increased supplies and improved bound time, something which has seen them reduce on the cost of doing business.
Talking to Daily Monitor, the general manager Hash Energy-fuel dealers, Mr Peter Ochieng, said: “We used to spend more time entering multiple entries of products but now with a single entry, which is done online we do save two to three days.”
About the single customs territory
The East African Community member states, through the Single Customs Territory, have adopted a destination model where duties are assessed and payable upon arrival of goods at the first point of entry.
This means the partner states where goods are destined will collect the taxes and notify the first point of entry to release the goods. At the first point of entry, depending on the level of risk, customs officers from the destination country-posted at the first point of entry (Mombasa and Dar es Salaam) – may subject the goods to physical examination before release.
Goods will, therefore, move directly to the owner without going through other customs controls at the internal borders and inland customs cargo centres. Goods destined to a bonded warehouse located inland will be declared directly for warehousing at the first port of entry and will move across the partner states on a single regional bond without subjecting them to other bonds at the internal borders.
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NDP implementation framework unveiled
Minister in the Presidency for Planning, Monitoring and Evaluation Jeff Radebe on Thursday released the government’s comprehensive framework for implementing the National Development Plan (NDP) over the next five years.
The Medium-Term Strategic Framework (MTSF) will serve as a prioritisation framework to focus the government’s efforts on a set of manageable programmes, as well as the principal guide to the allocation of resources across all spheres of government.
Radebe said the MTSF was a mechanism through which all five-year strategic plans and annual plans across government were being aligned to the NDP and made to pull in the same direction.
“The aim of the MTSF is to ensure policy coherence, alignment and coordination across government plans.”
He added that the MTSF would form the basis for performance agreements between the President and ministers.
“Cabinet will use the MTSF as the basis for monitoring the implementation of the NDP over the next five years. Cabinet will consider progress reports for each of the outcomes at least three times a year, and these progress reports will be made public through the Programme of Action website managed by the [Department of Planning, Monitoring and Evaluation in the Presidency].
“We will use our monitoring and evaluation work to inform improvements to our plans and programmes as we implement the MTSF.”
14 priority outcomes
The MTSF is structured around 14 priority outcomes, covering the focus areas identified in the NDP, namely:
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Quality basic education.
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A long and healthy life for all South Africans.
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Safety, and sense of safety, for all people in South Africa.
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Decent employment through inclusive growth.
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A skilled and capable workforce to support an inclusive growth path.
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An efficient, competitive and responsive economic infrastructure network.
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Vibrant, equitable, sustainable rural communities contributing towards food security for all.
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Sustainable human settlements and improved quality of household life.
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A comprehensive, responsive and sustainable social protection system.
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Responsive, accountable, effective and efficient local government.
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Protected and enhanced environmental assets and natural resources.
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An efficient, effective and development-oriented public service.
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A diverse, socially cohesive society with a common national identity.
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A better South Africa contributing to a better Africa and a better world.
In each of these outcomes, the MTSF document outlines goals, indicators, targets, actions and responsibilities.
Regarding the rapid economic growth outcome, Radebe said the MTSF would set the wheels in motion to grow the economy by a rate of 5% by 2019.
“Government’s programme of radical transformation is about placing the economy on a qualitatively different path that ensures more rapid, sustainable growth, higher investment, increased employment, reduced inequality and deracialisation of the economy.”
Targets for the economy
MTSF targets include increasing the investment rate to 25 percent of gross domestic product (GDP), increasing public sector investment to 10 percent of GDP, adding 10 000 megawatts of electricity to the national grid, and reducing the country’s unemployment to 14 percent.
MTSF also includes actions aimed at diversifying in order to reduce economic concentration. “It focuses on ensuring growth in the core productive sectors of manufacturing, mining and agriculture, and opening new areas of economic growth such as the oceans economy, the green economy and shale gas.”
There are also actions to ensure that small business can make a much larger contribution to growth and job creation, as well as actions to promote increased private sector investment. This is critical for higher growth, Radebe said, as the private sector accounts for 70 percent of production and employment.
“The MTSF includes actions aimed at achieving an economic environment that encourages business investment and rewards competitiveness, especially in sectors that can catalyse longer term growth and job creation.”
More opportunities for young people
He said the NDP and MTSF included a range of actions aimed at creating more opportunities for young people, many of whom did not currently share in the benefits of economic growth and development.
“The priority areas of youth development are employment creation, entrepreneurship support and education. By rapidly absorbing youth into the mainstream development of our country, we will have responded effectively to the fact that of the approximately 25 percent unemployed in South Africa, the vast majority are young people between the ages of 15 to 35 years.”
Local government outcomes
Radebe said the MTSF also introduced a range of actions to improve municipal management, such as providing basic water, sanitation, refuse removal and road services as well as fixing potholes, traffic lights, service interruptions and billing problems.
He said the Auditor-General’s 2014 audit outcomes report indicated that local government was far from achieving the vision of an efficient and effective local government as outlined in the NDP.
Actions in the MTSF related to improving local government include addressing maintenance and new infrastructure requirements in each municipality; addressing water and sanitation challenges among water services authorities; improving the financial management and governance of municipalities; and tackling corruption at local government.
The MTSF also aims to expand the Community Work Programme sites in 234 municipalities in order to reach one-million participants.
Reducing crime and corruption
South Africa has unacceptably high levels of crime, especially serious and violent crime, according to the NDP. This affects economic development, undermining people’s well-being and their ability to achieve their potential.
Some progress has been made over the past five years in reducing serious crime rates. But weaknesses in forensic, detective, investigation and prosecution services hamper the government’s efforts to reduce the overall levels of crime, particularly contact crimes.
“The NDP highlights the need to address the crime that is damaging our communities, and the MTSF contains a range of actions and targets in this regard,” Radebe said.
The NDP vision is that, by 2030, people living in South Africa feel safe at home, at school and at work, and enjoy a community life free of fear. Women should be able to walk freely in the street and children should be able to play safely outside. Businesses should be able to invest confidently and create jobs without the threat of livelihoods being undermined by crime.
Read the Media statement on the release of Medium-Term Strategic Framework 2014 - 2019.
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Employment levels declining despite increased investment
Despite increased growth in actual investment experienced in the last quarter of the previous financial year 2013/14, there was decline in both employment levels and number of planned investments, Uganda Investment authority data has shown.
The 4th quarter also witnessed 38 percent decline in planned jobs, which translate to 8,650 jobs from 13,850 anticipated jobs in the 3rd quarter.
“During the quarter under review, actual investment grew by 8 percent translating to $46.8 million (about Shs117billion) compared to $43 million (about Shs108billion) recorded in the 3rd quarter,” Mr Frank Sebbowa, the Uganda Investment Authority (UIA) executive director, said in a midweek news conference in Kampala.
He continued: “The actual capital investments were driven by three sectors which together accounted for 44percent of the actual investment in the 4th quarter. “Finance, Insurance, Real estate and Business Services sector registered $17million (about Shs43 billion; Agriculture recorded $10 million (about Shs25 billion) while in the manufacturing sector $9.1 (Shs about 23 billion) million was invested in various industries.”
The last quarter of the previous financial year also experienced improvement in the investment conversion rate which grew from five percent in the third quarter to 15 per cent by end of the financial year 2013/2014.
“The positive performance resulted from continued improvement in the macroeconomic environment – controlled inflation and less volatile foreign exchange among other reasons,” Mr Sebbowa said.
He continued: “It should be noted that there was improvement in actual investment in spite of an 11 percent decline in the number of licensed projects from 127 projects licensed in the third quarter to 113 projects in the fourth quarter.
Similarly, planned investment reduced in the fourth quarter from approximately $1 billion (about Shs2.5 trillion to $310 million (about Shs775 billion in the third quarter, registering a 69 per cent decline.
According to UIA ,this can be explained by the value of investments licensed during the period.
Explaining the improved conversion rate compared to the other previous quarters, Mr Sebbowa said: “In addition to our marketing strategies, we have been more cautious or if you like selective in giving licenses. We only license those that we are really sure that they will invest.”
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No plans to stop trade with Israel: government
There are no plans to impose trade restrictions on Israel amid its conflict with Palestine, the trade and industry department said on Wednesday.
“We have not yet made any assumptions against Israel. It’s not government’s call,” said department spokesman Sidwell Medupe.
“People in South Africa are free to trade with Israel and Israel is free to trade with South Africa.”
He said South Africa’s trade policy was aligned with its foreign policy, recently highlighted by President Jacob Zuma at the US-Africa summit in Washington.
Twice on Monday Zuma took the opportunity to tell the United States what South Africa’s position on Gaza was.
Firstly at a US Chamber of Commerce business forum, he said the country was outraged by the “continued violence that is claiming scores of lives of civilians in Palestine”.
Zuma said there would never be a military solution to the problem and urged both sides to sit and talk so that they could arrive at an internationally agreed solution of two states.
At a National Press Club luncheon, he changed his words a bit, also criticising Hamas.
“We are outraged by the killing of civilians by Israel, some in United Nations shelters,” he said at the time.
“We also condemn the killing of Israeli civilians by Hamas.”
The National Coalition for Palestine (NC4P) said on Wednesday it was calling for a boycott of all Woolworths stores because the chain had refused to remove Israeli products from its stores.
NC4P spokesman Edwin Arrison said the coalition was made up of the ANC Youth League, the Muslim Judicial Council, the Congress of SA Trade Unions, and other bodies.
“The call to boycott is due to Woolworths’s unwavering support for the apartheid state of Israel, and comes after much research and assessment of the status and level of trade between the chain store and the Israeli state,” Arrison said.
He said the coalition would call for boycotts of other companies once it had conducted further research.
Woolworths responded in a statement on Wednesday that it had no political affiliations.
“We respect our customers’ right to make individual purchasing choices, which is why we clearly label every product’s country of origin and fully comply with government guidelines on product from Israel,” it stated.
The company said that less than 0.1 percent of their food, mostly imported fresh produce, was sourced from Israel.
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Waking up to the BRICS
BRICS members should democratise the New Development Bank’s functioning if new stakeholders are included in the future. If anything, the NDB must be a template for change, not a mirror to the existing hegemony of money
In his 2001 paper titled “Building Better Global Economic BRICs,” (click here to download) economist Jim O’Neill of Goldman Sachs calculated that “if the 2001/2002 outlook were to be extrapolated, over the next decade, China would be “as big as Germany” and Brazil and India “not far behind Italy” on a current GDP basis. Cut to 2013; Jim O’ Neill’s expectations seem modest. Last year, China was the world’s second largest economy, Brazil ahead of Italy and India just one rank behind in terms of current GDP. In purchasing power parity (PPP) terms, all the BRIC countries were within the top 10, with China and India at second and third position respectively. BRIC, in Wall Street lingo, is an “outperformer.”
Despite the crippling financial crisis, BRIC has done better on pure economic terms than most expectations. But the acronym is today representative of much more than an investment narrative alone. With the inclusion of South Africa, BRIC became BRICS, giving a pluralist and inclusive veneer to an economic idea. This group now has a significant political dimension, as is evidenced by the increasing number of converging positions on political issues.
In a follow-up paper in 2003, titled, “Dreaming with BRICs: The Path to 2050,” (click here to download) Goldman Sachs claimed that by 2050, the list of the world’s largest 10 economies would look very different. It is remarkable then, that in 2014 the list already looks radically different, and it is clear that it is time to “wake up” to the BRICS.
NDB versus existing banks
In this context there were at least two concrete arrangements inked at the sixth BRICS Summit in July, which will have a large economic and political impact. These were the Contingent Reserve Arrangement and the New Development Bank (NDB). Conversations and reportage on these two were shrill, coloured and obtuse in the run-up to the Summit. It continues to follow in the same vein. Indeed the NDB is at once the most celebrated and critiqued outcome of the Fortaleza Summit. Now that we are a few weeks away from its public conception, it is time for a reality check on this widely discussed BRICS achievement.
The first reality is the NDB can neither replace nor supplant the role of the existing development banks. The NDB will not be able to compete with the reach and expanse of existing institutions such as the World Bank, which has a subscribed capital of over $223 billion. The bank borrows $30 billion annually by issuing Triple-A rated debt in international bond markets. Such easy access to capital markets on the back of high promoter creditworthiness allows the bank to have a lower cost of funds. Other development finance institutions enjoy similar financial backing. The Asian Development Bank (ADB) too has a large balance sheet, backed by 67 member nations and a subscribed capital of $162 billion.
In contrast, the NDB will require over half a decade before it can accumulate the stated capital base of $50 billion from within BRICS and another $50 billion (approximately) from other countries and institutions. Indeed, in the immediate term, only a modest $150 million has been promised by each of the BRICS countries. A contribution of $1,850 million thereafter, staggered over five to six years, will require some doing as the BRICS countries are grappling with weak balance sheets, fragile current accounts and other domestic imperatives.
Then, there are other questions that will need to be answered in the days ahead. If China is unable to dominate this institution, will it prefer to prioritise investments through its (proposed) Asian Infrastructure Investment Bank? How soon can the central banks of the member countries devise arrangements to act as depository institutions for the NDB? And, how will the NDB raise funds in different countries? What will be the currency or currencies of choice? All important posers which can be addressed if the resolve is unerring.
Development finance
The second reality is, in spite of its modest economic weight in the initial years, the NDB can change the ethos of development finance irreversibly. Rather than replacing or supplanting existing development finance institutions, the NDB will seek to supplement existing resources. In fact, the World Bank President, Jim Yong Kim, has welcomed the idea of the NDB and acknowledged its potential in infrastructure development and the global fight against poverty.
An important difference could be in the way conditions and restrictions are imposed on loan recipients. Bretton Woods Institutions such as the World Bank have been known to impose conditions for lending that create structural mismatches between project funding, demand and supply. As recently as last year, the World Bank Group decided to restrict funding for new coal plants in developing countries, deciding instead to invest greater resources in “cleaner” fuels. Of course, the World Bank would be well advised to reconsider this decision given lifeline energy needs and the energy access realities in developing countries such as India.
The NDB’s mission must be to create a business structure where borrowing countries are given greater agency in prioritising the kinds of projects they would want funded. Over a decade, this could become the demonstrator project through which the relationship between donors and recipients, lenders and borrowers, will be rewritten. Hopefully this will be in favour of developing economies and will enable the reimagining of economic pathways.
Location and ownership
The third reality – perhaps, the most debated – is that the location of the NDB is immaterial when governance and ownership is equally shared. Location has frequently been confused with ownership, skewed by our imagination of existing institutions such as the World Bank. According to its Articles of Agreement, major policy decisions at the World Bank are made through a Super Majority – 85 per cent of votes. Vote shares in turn are determined by the level of a nation’s financial contribution. With around 16 per cent voting share at the World Bank, the U.S. has a de facto veto. Conversely, BRICS, with 40 per cent of the global population and a combined GDP of $24 trillion (PPP), collectively accounts for a mere 13 per cent of the votes at the World Bank.
As such, the concentration of voting power and headquarter location in Washington DC in the case of the World Bank is merely a coincidence. Japan dominates the functioning of the ADB with a 15.7 per cent shareholding, despite the headquarters being located in the Philippines.
It is also useful to note that previous World Bank presidents have been U.S. citizens and the International Monetary Fund’s (IMF) list of managing directors is composed entirely of Europeans. Even the ADB’s presidents have been Japanese citizens, with almost all of them having served in the Finance Ministry in Tokyo. In this regard, the NDB, with its intention of rotating leadership, seeks to overhaul the existing governance framework prevalent in the international development finance institutions. Through equal shares of paid-in capital in the NDB, there is a clear intention of creating an alternative model that focusses on voting-power parity. The smallest country can negotiate at par with the biggest country.
Will BRICS create a framework that is as democratic in sharing governance space with other investors and stakeholders? This will be something to watch for as the systems and structures evolve. The notion that the NDB has been “Shanghai-ed” is perhaps a shallow understanding of this exciting new initiative.
With an equal voting share, all five countries have to be on board to move in a particular direction. Admittedly, this can be hugely inefficient and troublesome. Therefore, it is incumbent upon BRICS members to ensure that this initial at-par equity in governance does not unexpectedly allow for a super majority like gridlock, restricting decision making because of a lack of consensus. The NDB must be dynamic and lithe, much like the BRICS grouping itself. It would be useful for BRICS members to institute a professional management body for steering everyday operations of the NDB as well as all non-policy related decisions, including those dealing with project funding.
And most importantly, as discussed earlier, BRICS members should democratise the bank’s functioning if new stakeholders are included in the future. They must find ways to engage the recipients and beneficiaries in its decision-making apparatus. If anything, the NDB must be a template for change, not a mirror to the existing hegemony of money.
Samir Saran is vice-president at the Observer Research Foundation.
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Packed agenda for 34th SADC Summit
The 34th SADC Heads of State and Government Summit to be held in Victoria Falls, Zimbabwe on 17-18 August will deliberate on a wide range of issues including the political and socio-economic situation in the region.
SADC Executive Secretary Dr Stergomena Lawrence Tax told the incoming SADC chair and host President Robert Mugabe during her briefing on the preparation of the summit that the meeting will discuss a report on the Review of the Regional Indicative Strategic Development Plan (RISDP).
The RISDP is a 15-year strategic plan approved by SADC leaders in 2003 as a blueprint for regional integration and development
The plan was under review as part of efforts to realign the region’s development agenda in line with new realities and emerging global dynamics.
The first review was a desk assessment by the SADC Secretariat in 2010, followed by an independent mid-term review in 2013, and another assessment done by a multi-stakeholder task force as directed by the 2013 SADC Summit held in Lilongwe, Malawi.
The review process is now complete, and the revised blueprint is expected to be presented to regional leaders for approval. Once adopted, the plan is set to provide the impetus for deeper integration among SADC Member States.
Another key issue for discussion is how southern Africa can come up with viable strategies that ensures that the region fully benefits from its vast natural resources.
This is in realization of the fact that SADC continues to be among the poorest in the world despite the abundant natural resources since the majority of SADC countries do not have beneficiation and value addition policies, hence the bulk of the value-addition takes place elsewhere and benefiting others.
“Bearing in mind that the theme for this year is ‘SADC Strategy for Economic Transformation: Leveraging the Region’s Diverse Resources for Sustainable Economic and Social Development through Beneficiation and Value Addition’, efforts will be made to prioritise beneficiation and value addition in SADC’s economic strategies and programmes during the tenure of Zimbabwe as chair of SADC and thereafter,” Dr Tax said after meeting with President Mugabe on 6 August.
Southern Africa is home to a variety of natural resources including minerals such as diamonds, gold and platinum. Roughly half of the world’s vanadium, platinum, and diamonds originate in the region, along with an estimated 36 percent of gold and 20 percent of cobalt.
SADC leaders are also expected to review the global economic situation and general performance of the SADC economy.
As such, the summit is set to adopt measures of improving agriculture – a major economic sector in most SADC countries.
Since the 34th SADC Summit is held in the year declared by the African Union as the “Year of Agriculture and Food Security,” leaders are expected to encourage member states to speed up the implementation of Comprehensive Africa Agriculture Development Programme (CAADP).
CAADP is a continent-wide programme formulated in 2003 by the AU to encourage countries to reach a higher path of economic growth through agriculture-led development.
Under this programme, African governments made a commitment to allocate at least 10 percent of their national budgets to the agricultural sector each year.
Ultimately, this ambitious and broad vision for agricultural reform in Africa aspires for an average annual growth rate of six percent in agriculture.
Most SADC countries have already signed the CAADP agreement and are making vigorous efforts to meet the targets.
With regard to the political situation, the leaders are expected to receive a report from the outgoing chairperson of the SADC Organ on Politics, Defence and Security, Namibian President Hifikepunye Pohamba.
The report will discuss the situation in the eastern part of the Democratic Republic of Congo as well as an update on the situation in Lesotho.
Eastern DRC slid into political turmoil in 2012 when anti-government rebels invaded and captured the city of Goma, causing displacement of people and loss of lives and property. However, the situation is closely being monitored by SADC.
The Coalition Government in Lesotho led by Prime Minister Motsoahae Thabane is experiencing some challenges. However, at their recent meeting with President Pohamba, the leaders of the Coalition Government pledged to working together in addressing their challenges.
SADC leaders are expected to also receive a report on the SADC Tribunal. The SADC Tribunal was disbanded in 2010, following an order by the SADC summit for an independent review of its functions and terms of reference.
At the summit, Dr Tax will deliver her maiden speech since this is the first summit in her capacity as the SADC Executive Secretary.
Dr Tax was appointed the new SADC boss by the SADC leaders at their annual summit last year in Malawi to replace Dr Tomaz Augusto Salomão.
The 34th SADC Summit will also witness the historical launch and presentation of the publication on the Hashim Mbita Research on the Southern African National Liberation Struggle, and the launch of the Statistical Yearbook.
Prior to the SADC Heads of State and Government Summit, there will be a meetings of senior officials, followed by the Council of Ministers.
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The tricky business of administering natural resource revenues
The International Monetary Fund and the World Bank recently released a first of its kind joint publication that focuses much needed attention on the administration of revenues from natural resources. The publication entitled Administering Fiscal Regimes for the Extractive Industries: A Handbook fills a void that previously was neglected. While ample research has been conducted on fiscal policies that best enable sustainable growth from its revenues, this is not the case for their administration. This gap is significant since a fiscal regime is only as effective as the administrative capacity of the public institutions charged with its collection.
“This joint publication is one of the first of its kind to address the complex challenges of managing fiscal revenues from the extractive industries,” said Katherine Baer, Division Chief, Revenue Administration Division at the International Monetary Fund.
The publication focuses attention on effectively administering revenues from natural resources. It provides policymakers and officials in developing and emerging market countries with practical guidelines to establish a robust institutional framework, organization and procedures for administering natural resource revenue. It also highlights the importance of transparency in the face of ever-increasing demands from both domestic and international constituencies for clarity and accountability in the administration of public revenues from natural resources. Lastly, it provides recommendations on how developing countries can strengthen their managerial and technical capacity to administer these revenues.
“This publication makes an important contribution to knowledge on best practices that can help direct extractive industry revenues towards poverty alleviation and boosting shared prosperity.”
Charles Feinstein
Director, Energy and Extractives Global Practice, World Bank Group
The Handbook offers suggestions on very practical challenges that developing countries face when trying to retain adequate staff and capacity to handle the complex nature of natural resource revenue administration. While government salaries rarely compete with those of the private sector, the Handbook recommends that in resource-rich countries staff dedicated to revenue administration must have relatively competitive salaries in order to retain personnel. To overcome resource obstacles, the Handbook also recommends tactics such as training, performance management and recruitment practices that can help the government retain the professionals needed.
The organization of tax administration and inter-agency cooperation in governments is also highlighted as a key component of success. Integrated administration within a tax department is cited as an effective structure due to its simplification and centralization of efforts into one government agency. On the other hand, the Handbook notes that there are many disadvantages of fragmented administration across different government agencies, such as duplication of work, lack of accountability and uncoordinated procedures, among others.
“Everyone wants a piece of the pie when it comes to revenue windfalls, so centralization of natural resource revenue administration can be politically difficult, but it is key to ensuring quality control, transparency and capable staffing,” said Jack Calder, author of the Handbook and former Deputy Director of the U.K. Oil Taxation Office.
Other challenges unique to natural resources that create special challenges for administration include the high uncertainty and risk inherent in the industry, huge variation in scale and profitability, substantial capital investment, complex commercial structures and long development periods, among many others factors. This long list of challenges and the vast revenues that the extractive industries generate give rise to major governance challenges, especially in a context of weak institutional capacities.
The complexities and perceived difficulties of extractive industries revenue administration mean they can get less attention than they deserve. Tax-related administrative reforms and technical assistance to date have focused more on general rather than extractive industries-specific administration – even where EI resources often provide the higher proportion of government revenue. For example, in countries like Nigeria where 75% of total government revenues are hydrocarbon related, extra attention to the complexities of hydrocarbon tax administration is necessary for improved internal revenue mobilization.
“Improved administration of revenue is a key component of effective governance of the extractive industries,” said Charles Feinstein, Director of the Energy and Extractives Global Practice of the World Bank Group. “This publication makes an important contribution to knowledge on best practices that can help direct extractive industry revenues towards poverty alleviation and boosting shared prosperity.”
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Africa loses $85bn in ‘illicit flows’ – Dlamini-Zuma
Africa loses more money in illicit flows from the continent than it gets in aid, and multinational companies were responsible for most of this, African Union Commission chairperson Nkosazana Dlamini-Zuma has said.
Dlamini-Zuma told delegates at the United States-Africa Business Forum in Washington DC yesterday that “Africa loses in excess of $60 billion (R645 billion) every year” due to that practice.
Multinational corporations were responsible for more than 60% of these illicit transfers, while only 30% was due to organised crime and 8% due to corruption.
“Put in context, the amount lost in illicit capital flight out of Africa every year is higher than development aid,” she said.
Dlamini-Zuma said Africa needed a growth of more than 7% “in order to double incomes and eradicate poverty in one generation”.
Over the last decade, the continent has recorded sustained growth of more than 5% in resources sectors as well as in infrastructure and consumer sectors.
She said the continent’s most precious resource “is its over one-billion population, the majority of whom are young, and more than half of whom are women”.
She said it was critical to invest in their health, education and access to basic services.
US Vice-President Joe Biden gave African leaders the assurance that the US was putting in place regulations that prevented the continent from being used to harbour money earned from corrupt practices.
“Africa’s riches shouldn’t be stolen under the cover of darkness, but the continent should be enriched under the rule of law,” he said.
Biden, who earlier met with President Jacob Zuma about issues such as the renewal of the Africa Growth and Opportunity Act, said he had joked with Zuma that, as a “30-year-old kid” when he was first elected into the US Senate, he was trying to get businesses from disinvesting in apartheid South Africa.
“Now I have to get them to invest in South Africa,” he said.
US President Barack Obama yesterday announced almost $33 billion of investments in the continent, mostly from private sector companies. He said this would help create jobs in Africa as well as America.
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Red tape, graft retard Maputo Corridor
Greater use by South African shippers of Mozambique’s main port in Maputo would boost the economies of both countries, the Maputo Corridor Logistics Initiative (MCLI) said on Wednesday. However, a myriad challenges, some infrastructural and some political, have hampered fuller utilisation of the port by South African exporters.
“Lack of rail service, port congestion that leads to delays and negative perceptions about Mozambique are factors for low utilisation of the port.
“South Africa had an election and Mozambique will have an election in October and the cabinet ministers are not considering policy changes during elections. This is hampering finalisation of a one-stop border service and other needed measures,” MCLI chief executive Barbara Mommen said.
The MCLI met Swaziland and South African members and Maputo Corridor users at Ezulwini in Swaziland on Wednesday for an annual review of the lacklustre developments over the past year.
The corridor runs from Gauteng through the Lebombo-Ressano Garcia border post to the port of Maputo, a distance of 630km through some of southern Africa’s most industrialised locations. Along the way are citrus growers whose use of the Maputo port once infrastructure issues are resolved would reduce travel distance and cost compared with usage of the port of Durban, which handles most of South Africa’s citrus exports.
The MCLI is a marketing and advocacy organisation funded by three primary players, Grindrod, which runs the coal terminal at Maputo, the Maputo Port Development Company and South Africa’s Department of Transport. Secondary funders include Mozambican ports and railway authority CFM, Swaziland Railway and Transnet Freight Rail.
Corruption endemic to Mozambican customs and other officials along the transport chain have made cargo haulage by road unpredictable. A so-called single electronic window for customs clearance of goods will eliminate petty bribery by allowing prepayment of fees and preapproval of documents. However, while progress has occurred, there is no clarity on when this window will be open.
Government consultation with shipping stakeholders and cross-border traders is essential but not yet practised, as shown by Wednesday’s stone-throwing riot at the border post. South Africa’s Department of Home Affairs imposed a R3 000 “guarantee fee” for traders passing goods through the border. The sudden imposition of a fee that might represent the net income of an informal trader prompted a violent response that temporarily shut the border crossing. Mommen met with Home Affairs officials as the disruption ensued, and the surety requirement was withdrawn.
“The top priority to maximise Maputo Corridor usage remains the transforming of the N4 border crossing at Lebombo-Ressano Garcia into an efficient, one-stop 24/7 operation. Although both governments signed up to this goal in 2007, the project hasn’t been fully realised, including legal complexities and infrastructure constraints,” Mommen said in a presentation to stakeholders.
Some improvements have resulted from MCLI advocacy, including the separation of trucks from general traffic to relieve congestion. While the main border crossing can be open sometimes up to 18 hours a day, around the clock service is an elusive but necessary goal.
MCLI seeks to adhere to a 2015 deadline to become a public-private partnership, which would increase funding for advocacy programmes.
Some causes of shipping delays that have discouraged South African exporters from using Maputo have been rectified, such as the redundancy of customs officials scanning cargo twice, once at the border and once at the port. Now only one scan is performed, at the border unless border post congestion necessitates the customs scan is done at the port.
Incoming goods offloaded at Maputo port would boost corridor usage considerably if carried on the delivery trucks’ return “backhaul” trips to South Africa. At present, transport firms find that the problems associated with corridor usage are too great a hassle, and after offloading cargo at the port their trucks return across the border as soon as possible.
Mommen said: “One-directional trade is not good for anybody. If a truck is coming back empty it is bad for the environment, it snarls up the border crossing and it makes prices higher as costs have to reflect both legs of the journey.”
Nevertheless, traffic on the N4 from Gauteng to Maputo saw a double-digit increase last year. On average 800 trucks pass through the border post daily.
Increased use of the corridor would benefit more than local shippers, Mommen believes.
“There is a human side too, (including) benefits to the communities along the Maputo Corridor. Komatipoort is doing a feasibility study on setting up a special economic zone, for example. It has a strategic location on the Maputo Corridor and would create jobs and businesses.”
Read a statement from MCLI here: Maputo Corridor Traveller’s Held to Ransom by the Implementation of New Legislation
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Results from FinScope Malawi consumer survey 2014
FinMark Trust released the results of its 2014 FinScope Consumer Malawi survey today. The survey measures the current levels of financial inclusion in Malawi and tracks the changes in financial inclusion since the launch of the 2008 survey. In the past five years, the financial sector in Malawi saw a number of reforms and the survey also examines the impact of these reforms on the level financial inclusion in Malawi.
Levels of financial inclusion in Malawi
According to the survey, interventions from both the public and private sectors have contributed to enhanced financial services access resulting in an increase in financial inclusion from 45% in 2008 to 54% in 2014. The results indicate that the banked population increased by 14% in the last five years and the growth has been driven by transaction products (public employees that are paid through bank accounts, savings accounts with ATM cards, remittances and the innovative Makwacha PIN protected debit card).
The level of borrowing from formal (regulated) credit providers (mainly banks), has dropped slightly. This trend in borrowing could point to the challenges with either the demand appetite or financial providers’ low appetite for risk taking. The study indicates that 49% of those who are not borrowing fear debts and 27% are scared that they would not be able to pay back the money borrowed.
On the other hand, other formal credit providers (including MFIs) have steadily increased the number of people accessing financial services with an increase from 231 591 in 2008 to 276 366 currently borrowing in 2014. According to the survey, a further 400 000 Malawians claimed to have previously borrowed money from MFIs. The majority of these borrowers borrow from Village Savings Loan Association (VSLA).
Landscape of Access is driven by savings
The landscape of Access of the included population (i.e., transaction products, credit, insurance, remittances and savings) in Malawi is driven by savings products. Of those who are included, savings has increased from 53% in 2008 to 58% in 2014. Saving through banks increased from 14% in 2008 to 17% in 2014. Further 1.2 million (16%) adults save through Village Savings and Loan Associations while those putting money into livestock, farming and/or business as profit making investment has declined sharply since 2008.
Is insurance growing?
The insurance sector in Malawi continues to be a small but growing sector (in absolute numbers). The FinScope survey shows that insurance products in Malawi largely target the needs of those who are salaried, with large disposal incomes and with higher levels of education. Insurance products that are offered on a large scale are the types that would allow low-income individuals and households to better cope with health and funeral expenses and other livelihood risks.
The study shows that illness/medical emergencies) and funeral were the most costly events reported by Malawians, with 1.4 million (19%) individuals from households that experienced one or more deaths in the past 12 months prior to the survey. Microinsurance is an opportunity that could be pursued in this sector as alternative insurance products that would allow low-income individuals and households to better cope with health and funeral expenses and other livelihood risks.
Generic barriers to financial inclusion
The biggest barrier to the uptake of financial products and services is affordability, i.e. insufficient/low/irregular income and fear of having debt or the inability to pay back borrowed money. The lack of knowledge/awareness is another barrier to financial inclusion. Low levels of penetration in the areas of insurance, credit and mobile money uptake occur due to the lack of product education which could change people’s behaviour or attitudes.
Payments system
The payments system in Malawi has undergone significant developments in recent years. The infrastructure support programs reformed the functioning of the financial sector, for example, through Malswitch (a frame relay-based national network infrastructure and transaction) Malawi has managed to link all commercial banks and discount houses onto a common network platform providing a number of electronic-based payment, clearing and settlement facilities. The survey shows that while there has been an increase in the number of adults with the Malswitch card from 35 969 (3%) in 2008 to 216 530 (9%) in 2014, there has been low usage of electronic-based payment through the Malswitch cards – compared to about 500 000 individuals who used Makwacha PIN protected online debit cards to buy goods at the merchant stores.
Mobile money
The analysis indicates that mobile money has a strong potential to become an enabler for financial inclusion in Malawi. However, the lack of information (unawareness) of the mobile money facility poses a challenge. The survey indicates that eight in ten (80%) adult Malawians are unaware of mobile money. Out of 20% (1.5 million) who are aware of mobile money, only 22% (325 000) use it. The majority (43%) of those who are aware of mobile money do not have enough information to be able to use it. Malawi’s enabling regulatory environment and cellphone access rate of 72% (adult individuals) presents a huge opportunity to empower large segments of the cash-based society in Malawi. Mobile money usage (transactions) is similar to that of most other developing countries with use mainly for remote payments (purchase airtime 32%) and remittances (26%). Consumers are using mobile money where there is a very clear, simple value proposition and the differences in the rate of adoption of mobile money services across markets are dependent on what the user regards as being of value.
Livelihoods
Farming and ganyu (piecework) are two livelihoods strategies that are often related to low levels of income with about two in five adult Malawians earning less than MK10 000 (US$23.8) a month. The survey indicates that Malawians save and borrow for similar reasons; i.e. mainly for living expenses, farming and medical expenses. Evidence from FinScope surveys suggests that this is often the reason why people resort to informal mechanisms. The challenge for the formal sector will be to find ways of leveraging the informal sector (e.g. through providing services to savings groups) without creating usage barriers for those who depend on these mechanisms.
Low levels of financial literacy
The survey results show that low levels of financial literacy is one of many factors that contribute to the low levels of financial inclusion. The majority of adult Malawians do not have enough knowledge on most of the financial-terms used by financial institutions. The findings further reveal that adult Malawians would like to know more (desired financial education) about ‘how to keep money safe; saving products; how credit and interest rates work’. However, there is a gap between ‘the lack of knowledge about used financial terms, desired financial education and their current source of financial advice on how to manage the money. Two in five Malawians do not ask for financial advice, while 52% of those who seek advice on money management depend on family and friends. The usage of financial institutions and financial advisors is notably low. The findings also indicate low levels of education (78% have primary education or lower) among the adult population. The absence and/or poor state of financial literacy can lead to making poor financial decisions that can have adverse effects on the financial health of an individual.
FinScope
FinScope was launched in 2002 by FinMark Trust (www.finmark.org.za). Its purpose is to establish credible benchmarks on the use of, and access to, financial services. It is designed to highlight opportunities for innovation in products and delivery. The FinScope survey is a comprehensive and national representative study on financial inclusion, looking at how people source their income and manage their financial lives. It has been implemented in 18 countries (10 in SADC, 5 non-SADC Africa and 3 in Asia).
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EU launches new programme to support Africa’s continental integration
The European Commission has launched the first phase of a new programme that will foster Africa’s integration process at continental level – the first ever EU programme in development and cooperation that covers Africa as a whole.
The so-called Pan-African Programme will fund activities in a broad range of areas and offer new possibilities for the EU and Africa to work together. Today’s decision will launch projects for the period 2014-2017, with a total allocation of €415 million.
The President of the European Commission, José Manuel Barroso, said: “The challenges with which we are faced can no longer be tackled within national borders. This is as true in Europe as it is in Africa or elsewhere. This is why I have proposed to create a Pan-African programme to find solutions at regional and continental scale and support the process of African integration, where the African Union plays a critical role. The alliance between Africa and Europe is indispensable, today more than ever. This programme will make it even stronger”.
EU Development Commissioner Andris Piebalgs commented: “The major innovation of this programme is that it allows the EU to link up the cooperation it has with Northern Africa, South Africa and sub-Saharan Africa. It will also help us to achieve better policy coherence for development by building synergies between development cooperation and other EU policies.”
The Pan-African Programme, which was announced by President Barroso at the 4th Africa-EU summit in Brussels in April 2014, will amount to €845 million from 2014 to 2020. It will contribute, amongst others, to increased mobility on the African continent, better trade relations across regions and also better equip both continents for addressing trans-national and global challenges, such as migration and mobility, climate change or security. The first phase that was launched today will include projects ranging from sustainable agriculture, environment, and higher education to governance, infrastructure, migration, information and communication technology, as well as research and innovation.
Concrete projects will, for example, support election observation missions operated by the African Union in its member states or improve the governance of migration and mobility within Africa and between Africa and the EU. Some initiatives will benefit citizens directly, such as a student’s academic exchange programme or the harmonisation of academic curricula across a range of African universities facilitating the mobility of African students and academics.
Background
Africa’s continental integration has become a key priority for both the African Union and the EU. The Pan-African Programme will provide a major contribution to the EU-Africa Partnership, which the two continents established in 2007 to put their relations on a new footing and to establish a strategic partnership, responding to mutual interests and based upon a strong political relationship and close cooperation in key areas. The programme, which is financed from the EU budget will be a key instrument for the European Commission to implement, in close cooperation with African partners, the joint political priorities of the roadmap which was adopted by African and EU Heads of State and Government during the 4th EU-Africa summit in April this year.
For more information:
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Washington summit considered major boost to U.S-Africa relations
After nearly a week of wheeling and dealing in Washington D.C., business leaders and policy makers from the United States and Africa are calling the first ever U.S.-Africa Leaders Summit an enormous success.
Recognizing African Development Bank President Donald Kaberuka by name for his role in helping to boost business ties between the U.S. and Africa, President Barack Obama said, “We’ve joined with African governments, the African Development Bank, and the private sector – and I will tell you, the response has exceeded our projections.” Obama went on to say that “projects and negotiations are underway that when completed, will put us nearly 80 percent of the way toward our goal. On top of the significant resources we’ve already committed, I’m announcing that the United States will increase our pledge to $300 million a year for this effort.”
It was all part of a gathering of American and African entrepreneurs, business leaders and remarkably, more than 40 Heads of State interested in harnessing the economic power of Africa, which is home to six of the world’s 10 fastest-growing economies.
“I’ve been to many summits where Africa has been discussed but I found this summit to be a discussion of mutual understanding,” said AfDB President Donald Kaberuka of the economic and development interests forged at the three-day meeting. “I want to commend President Obama for convening this summit, which is business oriented and seeks to look at Africa as a land of opportunity, with residual challenges of course, but a land of opportunity.”
The summit highlighted trans-Atlantic dedication to improving Africa’s security, along with human and democratic development through a series of public and private partnerships. The main events of the summit’s final day hit on regional peace and stability, governing for the next generation of Africans and investing in the continent’s future.
When it comes to Africa’s future, Kaberuka said going forward it is important that all sides work hard to ensure the agreements made at the summit are realized. One of the key projects Kaberuka said he has his eye on is the “Power Africa” program.
“The African Development Bank plays a big role,” Kaberuka said. “Inside the Power Africa program we’ve committed close to $3 billion to bring more electricity to African homes and businesses.” With fresh pledges made at the summit to the program, Kaberuka said the bank “will be working with the U.S. institutions to accelerate the programs related to trade and facilitation, logistics, moving goods and nationalize across the boarders inside the African continent because, as the president [Obama] put it very well, trade with the world begins with your neighbor.”
Other outcomes include The African Union Commission pledge to redoubling its efforts to advance educational opportunities through the Pan-African University. Benin has set up two business-type incubators and committed to recruiting 15,000 youths in 2015 to fill civil servant positions. Burkina Faso announced a youth investment project involving 46,800 young men and women who will be offered an opportunity to find sustainable jobs in the labor market.
But the betterment of the African continent will not come without challenges; one of the most pressing is health care. It was a topic in which Kaberuka made international news early in the week when he announced the AfDB made close to $60 million immediately available to fight the worst Ebola outbreak in recent history.
“These countries need structural support to build up their health systems,” Kaberuka told Reuters.
Whether it was powering the continent, shoring up health care, securing nations or educating the next generation of African leaders, fruitful negotiations and bilateral commitments this week led to more than $14 billion in commercial investment deals. That is a marked shift in the U.S.-African relationship, moving it from aid focused to trade focused.
South Africa’s initial offer for the Transport Services Sector under the Southern African Development Community (SADC) Protocol on Trade in Services negotiations
Cabinet approved South Africa’s initial transport sector offer under the Southern African Development Community (SADC) Trade in Services Negotiations.
The objectives of the SADC Protocol on Trade in Services are to progressively liberalise intra-regional trade in services, create a single market for trade in services, enhance economic growth and development and improve the capacity and competitiveness of the services sectors of SADC State parties.
Cabinet Spokesperson, Minister Faith Muthambi said, “The services sector is critical to South Africa’s growth and job creation prospects, both as an intermediate input to merchandise trade and as a tradable in its own right.”
Intra-regional integration of transport services can generate commercially valuable market opportunities for South African service suppliers as well as investment across the transport sectors in the region.
“As income is generated by exporting services within value chains, South African companies could obtain commercial benefits at the same time as they contribute to the development of the regional transport sector,” said Minister Muthambi.
If these are accepted they will offer South African services exporters better terms of access to those markets than non-SADC countries.
Commitments include in Maritime, Internal Waterways, Air Transport, Space, Rail, Road, Pipeline, Cargo-handling storage and warehouse and Freight transport agency services.
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Asia-Pacific developing countries see ‘subdued’ growth for third straight year – UN report
Developing countries in Asia and the Pacific are experiencing yet another year of subdued economic growth, marking the third successive year of growth below 6 per cent, according to the annual flagship publication of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
“Developing countries in the region are forecast to grow at an average of 5.8 per cent in 2014, up from 5.6 per cent last year,” according to the Economic and Social Survey of Asia and the Pacific 2014.
“This marks the third successive year of growth below 6 per cent. By comparison, growth averaged 9.5 per cent in the pre-crisis years of 2005-2007 and over 7 per cent in 2010 and 2011.”
The Survey is the oldest and most comprehensive annual review of economic and social development in Asia and the Pacific, according to ESCAP.
This year’s report was launched today by Shamshad Akhtar, the Executive Secretary of ESCAP, in Bangkok, Thailand, where the Commission is holding its 70th annual policy session. The session, focused on the theme “Regional connectivity for shared prosperity”, opened Monday and closes on Friday, 8 August.
Among its other findings, the report notes the growing disparity in incomes and access to social opportunities is a dampener on economic dynamism in Asia-Pacific developing countries.
The estimates indicate that the poorest 20 per cent of people in 40 Asia-Pacific countries account for less than 10 per cent of national income. The net wealth of about 49,000 ultra-wealthy individuals in the region – with at least $30 million in assets – is 17 times the combined gross domestic product (GDP) of Asia-Pacific least developed countries.
Ms. Akhtar stressed the urgency for bridging gaps in infrastructure and development in the region and addressing environmental degradation in order to promote higher, well-balanced and sustainable growth. Another priority for ensuring the sustainability of growth is to better address climate change through improved climate finance.
“The constrained domestic growth prospects of the region have underlined the importance of productive counter-cyclical public spending to support inclusive growth and sustainable development,” Executive Secretary Akhtar said in a press release on the report.
She went on to say that developing economies in Asia and the Pacific are experiencing subdued growth for different reasons, including economic rebalancing and sustainability considerations in China, monetary tightening to fight capital flight and inflation in India and Indonesia, and the impact of geopolitical instability in the Russian Federation.
China, India, Indonesia and the Russian Federation are projected to grow at 7.5, 5.5, 5.4 and 0.3 per cent, respectively, in 2014, compared to 7.7, 4.7, 5.8 and 1.3 per cent, respectively, in 2013.
The group of 12 least developed countries in the region are forecast to grow at 5.6 per cent in 2014 – slower than the developing Asia-Pacific average.
Asia-Pacific countries are also coping with the fallout from monetary and trade policies in the developed world, according to ESCAP. The withdrawal of quantitative easing by the United States has jolted regional financial markets.
The 2014 survey estimates further financial market volatility, expected from the continued normalization of monetary policy in the US could cut annual growth by between 0.7 to 0.9 per cent in India, Indonesia, Malaysia, the Russian Federation, Thailand and Turkey.
Trade-restrictive measures in advanced economies outside the region may also have deprived Asia-Pacific developing countries of $255 billion in goods export opportunities between 2009 and 2013, translating into a cumulative decline of more than 1.6 per cent of regional economic output, the ESCAP analysis reveals.
ESCAP proposes the establishment of an Asia-Pacific Tax Forum of experts and officials which it would coordinate, to monitor tax legislation and regulations across the region, help develop regional best-practice, and address issues ranging from avoiding tax competition for foreign investment, to double taxation, and preventing the illicit transfer of funds.
“The 2014 Survey makes a valuable contribution to the development discourse underway in the Asia-Pacific region and beyond. It provides fresh data, new perspectives and policy guidance on issues which are critical to fostering more inclusive and sustainable development,” the ESCAP Executive Secretary said.
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Kenya lines up raft of mega-projects on the road to middle income status
A list of multi-billion infrastructure projects was released Wednesday that will be handed over to the private sector in a bid to make Kenya a middle-income status nation.
In a Wednesday advertisement the National Treasury said it had received approval for 59 projects that the government plans to execute through public/private partnerships.
The projects range from telecommunications, agriculture, health, energy, transport, real estate to water and sewerage.
More than a quarter of the projects involve construction of roads, railway, ports and railway lines, highlighting the government’s focus on improving transport to make it easy to do business in the country.
LONG-TERM SOLUTION
This is intended to improve the country’s business environment.
Treasury principal secretary Kamau Thugge said the public private partnership approach was long-term that could improve the government’s quest to realise a double digit economic growth rate.
“Kenya’s public/private partnerships is not as a series of independent projects. The national list of projects published here has been subjected to a series of sustainability checks and has been granted formal clearance by the Cabinet to proceed for development,” Mr Thugge said.
PROJECTS
Projects under the Ministry of Transport and Infrastructure include construction of major highways, maintenance of the green field terminal at the Jomo Kenyatta International Airport and development of container terminals at the Port of Mombasa.
Construction, operation and maintenance of a railway line proposed to connect Jomo Kenyatta Airport and Nairobi city centre is also lined up. In energy, the government will work with the private sector to develop up to 4,660 MW of power from geothermal, solar and coal in the next 25 years.
In tourism, a marina will be held at the Coast, a first class hotel at the Bomas of Kenya and conference centres in Mombasa.
Separately, the Kenya Urban Roads Authority invited bids for 40 projects involving the setting up, running and maintenance of roads in different urban centres and municipalities.
Implementation of the plans is expected to yield good fortunes for the local construction sector and result in creation of jobs for thousands of youths.
As part of the government’s plans to help create jobs, the Ministry of Education, Science and Technology has invited bids for the construction of 60 technical training institutes across the country. This project is fully funded by the government.
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New pact aims to expand trade between U.S., West Africa
The Economic Community of West African States (ECOWAS) and the United States have signed a trade and investment framework agreement (TIFA) aimed at expanding trade and investment between the United States and the 15 ECOWAS member states, and across the entire West African region.
U.S. Trade Representative (USTR) Michael Froman announced the pact’s signing August 5 during President Obama’s historic U.S.-Africa Leaders Summit, the largest event any American president has held with African heads of state and government.
This signing took place in conjunction with the White House’s announcement that major American companies have committed to invest $14 billion in Africa’s future.
“As President Obama’s U.S.-Africa Leaders Summit has illustrated, this is a tremendously exciting and formative time for U.S.-Africa trade relations,” Froman said. “Africa is an increasingly critical trading partner for the United States, and the signing of this Trade and Investment Framework Agreement with the 15 countries of the Economic Community of West African States is emblematic of our commitment to strengthening the economic bonds that connect America and the African community. Building on the launch of our campaign yesterday to renew the African Growth and Opportunity Act, the signing of this TIFA demonstrated that the United States welcomes Africa’s rise, and looks forward to ‘Investing in the Next Generation’ together as we work toward Africa’s regional integration.”
The new TIFA will play an important role in advancing President Obama’s U.S. Strategy toward Sub-Saharan Africa, which calls for more enhanced and focused engagement on trade and investment between the United States and sub-Saharan Africa, according to a USTR press release. The strategy recognizes that trade and investment is a critical engine for broad economic growth.
Total United States-ECOWAS trade (exports plus imports) was valued at $23.3 billion in 2013, USTR reports.
U.S. exports to ECOWAS members were valued at $9.9 billion in 2013.The leading categories were mineral fuel ($3 billion), motor vehicles and parts ($2.1 billion), machinery and parts ($1.2 billion), and wheat ($977 million).
U.S. imports from ECOWAS members were valued at $13.4 billion in 2013. The leading categories were mineral fuel and oil (crude oil) ($11.8 billion), cocoa and cocoa preparations ($1 billion), rubber and rubber products ($206 million), aluminum and titanium ores ($113.1 million), and edible fruits and nuts ($36.4 million).
Of this trade, ECOWAS’ exports to the United States under the African Growth and Opportunity Act totaled $11.0 billion – up substantially from $5.73 billion in 2001, the first full year of AGOA trade. Those exports included significant growth in non-oil products such as cocoa powder, cocoa paste, apparel, baskets, fruits, nuts, beans, yams, cassava and spices.
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Statement by the Chair of the U.S.-Africa Leaders Summit
Washington, D.C., 4-6 August 2014
I. Background
President Obama welcomed leaders from across the African continent to Washington, D.C., for a three-day U.S.-Africa Leaders Summit, the first of its kind. The largest event any U.S. President has held with African heads of state and government, the Summit strengthened ties between the United States and one of the world’s most dynamic and fastest growing regions.
The Summit advanced our shared interests in increased U.S.-Africa trade and U.S. investment in Africa and highlighted America’s commitment to Africa’s security, its democratic development, and its people. By enabling discussion of tangible actions that can be taken to deepen the U.S.-Africa partnership, the Summit fostered stronger ties between the United States and Africa.
The Summit theme, “Investing in the Next Generation,” reflected the common ambition that the people and government of the United States share with the people and governments of Africa to leave our nations better for future generations by making concrete gains in peace and security, good governance, and economic development.
Based on extensive consultations and reflecting shared goals, Summit events included sessions on trade and investment, development, peace and security, and governance. Other events enriched and informed the dialogue among heads of state and government, including the Young African Leaders Summit, the Civil Society Forum, the landmark U.S.-Africa Business Forum, and the African Growth and Opportunity Act (AGOA) Ministerial. These events included a range of U.S. and African civil society, youth and business leaders and – underscoring a tradition of broad, bipartisan support for U.S. engagement with Africa – participation by Members of the U.S. Congress. The Summit also included a day-long Spousal Program, hosted by First Lady Michelle Obama and former First Lady Laura Bush, that focused on the impact of investments in education, health, and public-private partnerships.
Leaders’ discussions centered on how to tackle shared challenges and accelerate progress in key areas: expanding trade and investment ties; creating educational and job opportunities for youth; accelerating and expanding our progress in promoting inclusive and sustainable development; intensifying cooperation on peace and security; and securing a better future for Africa’s next generation.
II. Investing in Africa’s Future
Leaders discussed Africa’s potential as a new center of global growth that is creating more opportunities for its people than ever before. Leaders also noted the challenge to ensure these gains are expanded and spread to benefit all of Africa’s people, which will create new markets and reinforce stability and democracy.
Leaders also agreed on the positive impacts that U.S.-Africa partnerships on public health have had on moving us closer to an AIDS-free generation, improving maternal-child health, dramatically reducing deaths from preventable disease, and moving people out of poverty. They committed to redoubling efforts to control the outbreak of the Ebola virus in West Africa and, critically, working together to share expertise, as Africa moves towards the realization of the African Center for Disease Control and Prevention.
President Obama welcomed the progress made under the New Partnership for Africa’s Development (NEPAD) Comprehensive Africa Agriculture Development Programme (CAADP) and the commitments made to continue Africa’s leadership on food security, including those made for the African Union (AU) Year of Agriculture to triple agricultural trade in order to end hunger. Leaders welcomed the announcement of new investment commitments to the New Alliance for Food Security and Nutrition, which has now mobilized more than $10 billion. They pledged that agriculture, nutrition, and food security would remain high on their shared agenda and to redouble efforts to promote resilience in order to increase the capacity of vulnerable communities to withstand the impact of external shocks, including climate change, and to promote climate-smart agriculture and value-addition.
Leaders welcomed the success of Power Africa, and decided to intensify joint efforts to double access to electricity in Africa, including within the African Union’s Programme for Infrastructure Development in Africa (PIDA) Framework. They emphasized the importance of regional power projects to fostering regional economic integration and the need to provide increased electricity through national grids and beyond the grid, particularly to remote and rural areas. President Obama pledged $300 million in assistance per year to expand the reach of Power Africa in pursuit of a new, aggregate goal of 30,000 MW, and announced that Power Africa has now mobilized more than $26 billion.
Leaders decided to intensify efforts to increase intra-African trade, including through trade capacity building, regional integration, enabling the adoption of the legal and regulatory reforms that break down barriers to the free flow of goods and services, and improving Africa’s capacity to meet international standards. President Obama announced the expansion of trade and investment platforms across the continent as well as additional trade capacity building assistance.
Leaders agreed on the importance of the prompt, long-term renewal of an enhanced African Growth and Opportunity Act (AGOA), and pledged to work together to increase its utilization by African countries. Leaders also agreed on the importance of increasing U.S. investment in Africa and welcomed the announcements made at the U.S.-Africa Business Forum, including over $14 billion in new private sector deals. President Obama announced $7 billion in new financing under the Doing Business in Africa Campaign that will support U.S. trade with and investment in Africa over the next two years. Leaders pledged to take action to drive further investment and industrialization.
Leaders affirmed the importance of working together to ensure that negotiations on the post-2015 development agenda focus on clear, measurable goals and reflect the rich experience and commitments of developing countries and the spirit of partnership between our countries. President Obama welcomed the commitment and sincerity conveyed by Africa’s decision to develop a thoughtful and substantive Common African Position and their long-term vision outlined in “Agenda 2063: The Africa We Want.”
III. Advancing Peace and Regional Stability
Leaders noted that, at the same time that Africa is growing economically, conflict, crime, and terrorism continue to threaten many communities and constrain the continent’s prosperity. Thus, Leaders resolved to address the root causes of conflict and to enhance conflict prevention mechanisms and capacity-building for peacekeeping. They also determined to confront an increasingly lethal and geographically expansive set of transnational security threats.
Leaders agreed that Africa’s complex security challenges demand increased state capacity and regional solutions. Various leaders noted the need to confront transnational threats, including terrorism, with holistic approaches employing development in addition to security tools, advancing religious tolerance and supporting community voices.
The Summit afforded President Obama the opportunity to laud African leadership in responding to crises while reaffirming America’s commitment to be a strong partner in confronting peace and security challenges. To further this cooperation, the United States committed to: a new initiative over the next three to five years to build the capacity of African militaries to rapidly deploy peacekeepers in response to emerging conflict; create a Security Governance Initiative to pursue a strategic approach to building capacity in partner military and civilian security institutions and match expanded investments with leadership to pursue reforms; and expand its work to support information sharing among regional partners.
IV. Governing for the Next Generation
The theme of the Summit, “Investing in the Next Generation,” represented recognition of the fact that Leaders have the opportunity and responsibility to ensure their actions pave the way for the freedom, dignity, and prosperity of their citizens. Leaders engaged in a forthright and constructive dialogue on critical issues of governance and pledged to sustain this dialogue.
Leaders agreed that efficient, effective, and transparent governance is vital to the well-being of citizens, to boost investor confidence, and to sustain economic growth. They recognized that an active, empowered citizenry can contribute most effectively to the prosperity and well-being of their nations, and discussed the role of civil society, volunteerism, and public service. They further agreed on the centrality of inclusive growth and protection of human rights that benefit all citizens and communities.
Recognizing the losses to the continent and its people from illicit financial flows and corruption, Leaders decided to establish a joint high-level working group to develop a plan of action for further work in this area.
V. Investing in Women for Peace and Prosperity
Recognizing that nations reach their full potential only when women and men enjoy equal opportunity and respect for their rights under the law, Leaders resolved to work toward fuller participation for women in government, the economic sphere, and civil society. They determined to seek expanded roles for women in forging peace and security, and to augment efforts to protect women and girls from gender-based violence. They decided to promote women’s economic empowerment by improving access to markets and capital and by strengthening legal systems to protect their rights and opportunities. And understanding that education is one of the most effective ways to expand opportunities and life choices for girls and young women, they decided to seek to close education gaps between boys and girls.
To advance these goals, the United States announced commitments to further support women’s participation in peacebuilding activities, increase efforts to help women entrepreneurs launch and expand their businesses, and support parliamentary efforts to promote women’s rights.
VI. Providing Skills and Opportunities to Youth
The “Investing in the Next Generation” theme provided Leaders with the opportunity to discuss how to create opportunities, promote skills development especially in science, technology, research and innovation, and generate jobs for youth so they can advance economic growth and build the strong civic and public institutions needed to achieve shared goals. Leaders discussed how Africa’s youth are already shaping political, social, and economic realities – and can be the driving force behind economic prosperity, good governance, and peace and security.
In anticipation of the Summit, President Obama hosted a town hall with participants in the Mandela Washington Fellowship for Young African Leaders to hear directly from young African entrepreneurs, civic leaders, and public servants. President Obama announced the expansion of his Young African Leaders Initiative (YALI) to create regional leadership centers on the continent, an online network of educational tools (including to support professional and vocational education), the doubling of the Mandela Washington Fellowship, and expanded resources for entrepreneurs to further support leadership development, promote entrepreneurship, and connect young leaders with one another and the United States.
Various African Leaders announced commitments to further expand their investments in youth. The African Union Commission committed to redoubling its efforts to advance educational opportunities through the Pan-African University; to carry forward the African Youth Charter by urging Member States to consider the African Youth Decade Plan of Action as a road map for implementation; and to propose for adoption by Member States a Declaration and Plan of Action on Employment, Poverty Eradication, and Inclusive Development, with a primary focus on youth and women, at the upcoming Extraordinary Summit of Heads of State and Governments of the African Union in Ouagadougou in September 2014.
Benin has set up two business-type incubators and committed to recruiting 15,000 youth in 2015 to fill civil servant positions. Burkina Faso announced a youth investment project involving 46,800 young men and women offered an opportunity to find sustainable jobs in the labor market. Burundi recently established the Youth Employment Agency, which helps high school graduates obtain jobs and internships. Cabo Verde will expand its current 20 youth centers to open one at each city and on every island in the country. The Republic of the Congo has instituted the “Corps of Young Volunteers and Civil Service Trainees” to promote community service and civic education activities. Cote d’Ivoire has declared 2014 a Year of Employment with special initiatives focused on youth, including a young entrepreneur’s competition. Gabon has supported the creation of the Central African Economic and Monetary Community’s (CAEMC) “Train my Generation” Fund, which aims to support the training and employment of young people. Guinea will host “The Guinea World Youth Congress” in December 2014. Senegal included young leaders in its delegation to the U.S.-Africa Leaders Summit and will do the same for the G-20. Seychelles will use a newly set-up fund to support young entrepreneurs to boost youth employment. Somalia will launch a youth empowerment framework with key initiatives in job creation and youth representation in the government. Tanzania announced the establishment of a “State House Fellows” program, modeled on the long-standing White House Fellows program in the United States, to identify, train, and provide high-level experience to the next generation of Tanzanian leaders.
VII. Conclusion
Leaders underscored their appreciation for the strong benefits and positive outcomes that deepened U.S.-Africa cooperation affords and reiterated the need for intensified cooperation to advance shared security interests and our common goals to increase prosperity for the United States and African countries and to advance the dignity, well-being, and freedom of our people.
Leaders underscored the importance of ensuring steady follow-up regarding the commitments made at the Summit and of further deepening the partnership between the United States and the people and governments of Africa, as well as coordination with the African Union. President Obama announced that the U.S.-Africa Leaders Summit will be a recurring event.
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President Obama engages with African leaders on final day of the U.S.-Africa Leaders Summit
President Obama and African leaders took part in three action-oriented sessions today [6 August 2014] as part of the U.S.-Africa Leaders Summit in Washington, D.C. The summit is the largest event any U.S. president has held with African heads of state and government, and builds on President Obama’s trip to Africa last summer.
In remarks at this morning’s opening session, the President explained the purpose of the event and noted the progress across the African continent – and what that means for America:
We come together this week because, even as the continent faces significant challenges, as I said last night, I believe a new Africa is emerging. With some of the world’s fastest-growing economies, a growing middle class, and the youngest and fastest-growing population on Earth, Africa will help shape the world as never before.
Moreover, Africa’s progress is being led by Africans, including leaders represented here today. More governments are embracing economic reforms, attracting record levels of investment. Gains in development, increasing agricultural production, declining rates in infectious diseases are being driven by African plans. African security forces and African peacekeepers are risking their lives to meet regional threats. A new generation of young Africans is making its voice heard.
Africa’s rise means opportunity for all of us – including the opportunity to transform the relationship between the United States and Africa. As I said in Cape Town last year, it’s time for a new model of partnership between America and Africa – a partnership of equals that focuses on African capacity to solve problems, and on Africa’s capacity to grow. And that’s why we’re here.
The President called the summit “an opportunity to focus on three broad areas” where the U.S. and Africa can make progress together: expanding trade that creates jobs; strengthening governance; and deepening our security cooperation against common threats.
“We are here not just to talk,” he said. “We are here to take action – concrete steps to build on Africa’s progress and forge the partnerships of equals that we seek; tangible steps to deliver more prosperity, more security, and more justice to our citizens.”
At a press conference this evening, President Obama thanked the African leaders for taking part in the summit, noting that today’s sessions were “genuine discussions – a chance to truly listen and to try to come together around some pragmatic steps that we can take together.”
Here’s what he covered at the press conference:
Expanding trade
Yesterday, the President announced $33 billion in new trade and investment commitments that will help spur African development and support tens of thousands of U.S. jobs. And as a result of new commitments to the Power Africa initiative, the U.S. now aims to bring electricity to 60 million homes and businesses across the African continent.
At the press conference, the President emphasized that Africa’s prosperity depends on the people of Africa:
Ultimately, Africa’s prosperity depends on Africa’s greatest resource – its people. And I’ve been very encouraged by the desire of leaders here to partner with us in supporting young entrepreneurs, including through our Young African Leaders Initiative. I think there’s an increasing recognition that if countries are going to reach their full economic potential, then they have to invest in women – their education, their skills, and protect them from gender-based violence. And that was a topic of conversation this afternoon. And this week the United States announced a range of initiatives to help empower women across Africa.
Our New Alliance for Food Security and Nutrition continues to grow, aiming to lift 50 million Africans from poverty. In our fight against HIV/AIDS, we’ll work with 10 African countries to help them double the number of their children on lifesaving anti-retroviral drugs. And even as the United States is deploying some of our medical first responders to West Africa to help control the Ebola outbreak, we’re also working to strengthen public health systems, including joining with the African Union to pursue the creation of an African Centers for Disease Control.
I also want to note that the American people are renewing their commitment to Africa. Today, InterAction – the leading alliance of American NGOs – is announcing that over the next three years its members will invest $4 billion to promote maternal health, children’s health, and the delivery of vaccines and drugs. So this is not just a government effort, it is also an effort that’s spurred on by the private sector. Combined with the investments we announced yesterday – and the commitments made today at the symposium hosted by our spouses – that means this summit has helped to mobilize some $37 billion for Africa’s progress on top of, obviously, the substantial efforts that have been made in the past.
Good governance
President Obama went on to explain that good governance is “a foundation of economic growth and free societies,” noting that while some African countries are making “impressive progress,” there are also “troubling restrictions on universal rights.”
Today was an opportunity to highlight the importance of rule of law, open and accountable institutions, strong civil societies, and protection of human rights for all citizens and all communities. And I made the point during our discussion that nations that uphold these rights and principles will ultimately be more prosperous and more economically successful.
In particular, we agreed to step up our collective efforts against the corruption that costs African economies tens of billions of dollars every year – money that ought to be invested in the people of Africa. Several leaders raised the idea of a new partnership to combat illicit finance, and there was widespread agreement. So we decided to convene our experts and develop an action plan to promote the transparency that is essential to economic growth.
Deepening our security cooperation
The President also detailed how the U.S. and Africa will deepen security cooperation, in order to “meet common threats, from terrorism to human trafficking.”
We’re launching a new Security Governance Initiative to help our African countries continue to build strong, professional security forces to provide for their own security. And we’re starting with Kenya, Niger, Mali, Nigeria, Ghana and Tunisia.
During our discussions, our West African partners made it clear that they want to increase their capacity to respond to crises. So the United States will launch a new effort to bolster the regions early warning and response network and increase their ability to share information about emerging crises.
We also agreed to make significant new investments in African peacekeeping. The United States will provide additional equipment to African peacekeepers in Somalia and the Central African Republic. We will support the African Union’s efforts to strengthen its peacekeeping institutions. And most importantly, we’re launching a new African peacekeeping rapid response partnership with the goal of quickly deploying African peacekeepers in support of U.N. or AU missions. And we’ll join with six countries that in recent years have demonstrated a track record as peacekeepers – Ghana, Senegal, Rwanda, Tanzania, Ethiopia and Uganda. And we’re going to invite countries beyond Africa to join us in supporting this effort, because the entire world has a stake in the success of peacekeeping in Africa.
President Obama then announced that, due to the success of this summit, U.S.-Africa Leaders Summits will now take place every four years “to hold ourselves accountable for our commitments and to sustain our momentum.”
“Africa must know that they will always have a strong and reliable partner in the United States of America.”
Meanwhile, at the Kennedy Center today, First Lady Michelle Obama partnered with former First Lady Laura Bush and the Bush Institute to host the day-long “Investing in Our Future” symposium on advancement for women and girls in Africa.
The symposium – which focused on the impact of investments in education, health, and public-private partnerships – brought the two First Ladies together with African first spouses from almost 30 countries, as well as leaders from nongovernmental and nonprofit organizations, private-sector partners, and other experts.
In her remarks kicking off the event, Mrs. Obama discussed the need to “lift up our young people,” as well as the importance of “bringing these young people to the table” and listening to their voices and views:
The question is, can we and our governments learn from them and follow their lead? Can we embrace their ideas and incorporate them into policies and strategies? And in our work as First Ladies, First Spouses, can we find new ways to be more inclusive of these young people and show them that we truly value their voices?
And so many of you are already embracing the young leaders in your countries through your work – whether it’s improving girls’ education, or fighting cervical cancer or HIV, or supporting microfinance. You all have the potential to inspire millions across the globe.
So it is my hope that today, we will rededicate ourselves to these efforts and commit to new efforts to lift up our young people. And I hope that you all will have a chance today to really connect with each other, and learn from each other, and hopefully be inspired by each other.
The symposium also included the announcement of more than $200 million in investments to support programs fostering improved education, health, and economic opportunity for more than 1 million Africans. Find out more about those investments here.