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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: EAC Secretariat

15 Oct 2019

Concluding today, in Lusaka: CII-Exim Bank Regional Conclave on India-Southern Africa Project Partnership

A guide to the WB/IMF 2019 Annual Meetings (which concludes on Sunday)

Updates, outcomes from last week’s EAC Council of Ministers meeting:

(i) Death of the East Africa shilling dream? The EAC Council of Ministers, the central decision-making and governing organ of the EAC, has resolved that the 2024 deadline by which the region was supposed to have formed a monetary union and adopted a common currency is not attainable. The Council, which was on Friday locked in a day-long meeting in Arusha, has therefore resolved to draw new timelines to achieve the ambitious target of creating an EAC Monetary Union, which is one of the four pillars of regional integration. Kenya’s Cabinet Secretary in-charge of EAC Affairs Adan Mohamed, who sits on the EAC Council of Ministers, in an interview said that there is still a lot of work needed towards implementation of the Monetary Union. “I think the first thing to do is to set up the East African Monetary Institute then we take it from there in terms of making the necessary progress. However, the necessary instruments for the creation of this body have been approved by the heads of state.”

The EastAfrican has learnt that the EAC Council of Ministers has agreed to review the roadmap for the implementation of the single currency with the technical committees expected to draw new timelines. “The review is on-going and we expect it will be completed by early next year. We will then know if new timelines will be proposed or not,” said the EAC’s director of Monetary and Fiscal Affairs, Pantaleo Joseph Kessy.

(ii) With reforms, EAC set to save $2.5m. Ministers responsible for EAC affairs on Saturday approved an institutional reform plan that will see the six-member bloc save up to $2.5m annually in staff salaries. The reforms were approved during an extraordinary meeting at the end of a week-long 30th Meeting of the Sectorial Council of Ministers responsible for EAC Affairs and Planning, held at the EAC Headquarters in Arusha. Amb. Olivier Nduhungirehe, Rwanda’s Minister of State in charge of the East African Community told the New Times on Sunday: “The institutional reform of the Community has been in the pipeline for almost a decade and we, yesterday [Saturday], agreed to have a reform of the structure of organs and institutions of the Community.” According to the Minister, once the new plan is implemented, job positions will fall from 529 to 402 for all organs and institutions of the EAC.

Nduhungirehe said: “Now we will have two DSGs. And those two will share the responsibilities along the four pillars of integration of the Community; meaning that the first DSG will be in charge of the Customs Union and the Common Market and the other one will be in charge of Monetary Union and Political Federation. We will no more have a Director-General in charge of Trade and Customs but we will have a Director-General in charge of Corporate Services. This is a comprehensive overhaul of the structure of the community in order to make it more efficient.”

(iii) EAC ministers to fast-track alternative funding mechanism. Regional ministers in charge of EAC Affairs on Friday resolved to accelerate a proposal to find an alternative financing mechanism as they discussed ways of pulling the six-member bloc out of its financial hole. Amb. Olivier Nduhungirehe, Rwanda’s Minister of State in charge of the East African Community, who chaired the extraordinary meeting, said a report of current contributions for the fiscal year 2019/20 shows that only Uganda, Rwanda, and Tanzania paid some money. Nduhungirehe said: “For now, Uganda has paid 72% of this contribution, which is around $6m. Rwanda paid 14%; $1.2m, and Tanzania paid 13% which is $1m. Other partner states, meaning Burundi, Kenya, South Sudan, are yet to pay for this fiscal year. But we still have arrears to be paid by South Sudan, $19m from previous fiscal years; Burundi has to pay $3.9m of arrears, and then Kenya also has a small amount of arrears of $160,000.”

Nduhungirehe said: “We decided that we should fast-track the process for an alternative funding mechanism because this issue of contributions by partner states will continue if we, as partner states continue to pay the same amounts of contributions yet we don’t have the same economic size. There is a process now which is with the Ministers of Finance of the EAC to find alternative funding mechanisms. There are several options and proposals, including a levy on imports basing on the model of what was done by the African Union.”

(iv) Time for EAC to send strong message to defaultersNew Times editorial comment: The EAC has been relying on the magnanimity of Western Europe to survive. The handouts it receives from the EU-member countries is what has been keeping it afloat, but now even that is no longer tenable. EAC-member countries, especially Burundi and South Sudan, have been failing to honour their financial obligations, causing huge shortfalls. But, at long last, the EAC has decided to cut its losses and bite the bullet; it has embarked on major reforms that will see it cut its workforce by at least 30 per cent and save $2.5 million in the process. Maybe the EAC could also use the downsizing to send a message to defaulters: Staff layoff should begin with countries that have failed to honour their financial obligations as it is not fair for them to enjoy the same privileges as fully paid-up members.

In other EAC news:

EALA calls on Burundi, Tanzania to embrace single tourist visa. A report of the Assembly on the Oversight activity on the Performance of the Tourism Sector in the region, wants the EAC to fast track the conclusion of the EAC Protocol on Tourism and Wildlife Management, as well as strengthening a pool of EAC Classification Assessors to ensure efficiency and effectiveness in classification of tourism establishment. The Assembly is also reiterating the creation of a well-coordinated and digitized information exchange hub for the advancement of joint tourist visa mechanism in a bid to attract tourists in the region. EALA Member Mary Mugyenyi from Uganda, who presented the report to the House, said it was necessary for the Partner States to harmonise their national laws on tourism and related sectors. The EAC Council of Ministers is further urged to follow up with Burundi and South Sudan and Tanzania to join the EAC Single Tourist Visa. According to the report, EAC tourism arrivals have increased from 3.5 million persons in 2006 to 5.7 million persons in 2017. However, this is still substantially low, given that it represents only 8.6% of the Africa market share and 0.3% of the global market share. Tourism contributed to the Gross Domestic Product of the EAC Partner States by an average of 8.8% in 2017. [The EALA statement; Dr Betty Radier: The trailblazing woman defining the tourism sector]

Today, in Arusha: Evaluation of the 2nd Action Plan for EAC Industrialization Policy

A summary by the Institute of Economic Affairs of the East African Community’s Trade Policy Review (20-22 March, Geneva)

Critical commentaries on the finances of Kenya’s SGR: An economic miracle needed to save new railway; Wheels come off SGR dream as Sh35 billion loan comes due

The rise and fall of Rift Valley’s timber and railway line towns

Two updates on Nigeria’s border closures:

(i) What Benin, Niger must do to get borders reopened. The Federal Government has commenced negotiations with the nation’s neighbours, especially Benin Republic and Niger, with a view to re-opening Nigeria’s borders with them. Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, disclosed this at the 2020 Budget briefing, in Abuja, yesterday. She said that once the neighbours demonstrated enough commitment to past deals, the borders would be re-opened, adding that Nigeria’s interest was uppermost in the border issue. Responding to a question on the border closure, the Minister said: “It is not forever. There will be an end to it. The government of Nigeria is currently in discussions with the governments of neighbouring countries, including Niger and Benin Republic. We are negotiating to make sure that the challenges that brought about closure of the borders are addressed on both sides but especially, we want our neighbours to meet the commitments we signed unto several years ago. Once those discussions are concluded, the borders will be opened again.”

(ii) Stakeholders yesterday warned the Federal Government that the complete closure of the nation’s land borders portends danger to the economy. Mr Increase Uche, President, National Association of Government Approved Freight Forwarders, described the policy as ill-timed and of great danger to Foreign Direct Investment. He said while Buhari’s security advisers might have genuine concerns, the “unfortunate” decision is coming at a time Nigeria had just signed the AfCTA agreement. According to him, the measure would make investors view the nation as “unserious” and as a place where a stable environment is not guaranteed. “As we speak, there was a global body that was planning an international conference in Nigeria, trying to drag multinational companies to the conference. But they have changed the venue to Ghana. That is one of the disadvantages, when you take such actions suddenly. You will impede programmes that are aimed at boosting the economy.”

But Minister of Agriculture and Rural Development Sabo Nanono yesterday maintained that Nigeria is not in jeopardy of a food crisis. “I think we are producing enough to feed ourselves. I think there is no hunger in Nigeria. There could be inconveniences. When people talk about hunger in this government I just laugh,” he said at a media briefing to mark World Food Day in Abuja. He added: “That’s the basis for the closure of the border. And I think Nigeria tried to make these neighbouring countries understand our predicament but to no avail. So long as these countries bordering us will not respect Nigeria’s stand on food importation, the borders will remain closed.” [Rice smuggling: Court orders interim freezing of 45 bank accounts; Jibrin Ibrahim commentary: Policing our borders]

Kagame: Africa must fund her own transformation (New Times)

The African continent cannot continue to rely on foreign aid to finance its transformation, President Paul Kagame has said. Kagame was speaking in Abidjan at the 8th CGECI (Confédération Générale des Entreprises de Côte d’Ivoire) Academy, the largest annual gathering of the private sector in the West African country. “We have to reach a point where our countries have the capacity to finance our own transformation. Development aid has been useful and it continues to be useful, especially when we work to get the most impact out of every cent that we receive. But the point has never been to remain dependent forever when we have always had the potential to be wealthy ourselves,” Kagame said during the keynote address. Rather than continuously look to other countries for aid, Kagame said that there are more productive ways for Africa to partner with various countries and regions for mutual benefit. The 8th edition of CGECI Academy brings together private sector from across West Africa with Rwanda featuring as the guest country with the aim of exchanging lessons on improving doing business and enabling private sector to reach its full potential. Close to 50 members of the Rwandan Private Sector from diverse fields ranging from agriculture, manufacturing and ICT are also are taking part and are scheduled to hold business to business meetings with members of the Ivorian private sector.

Today’s Quick Links:

Financial Times Africa Summit 2019: Andrew Stephenson, UK’s Minister for Africa, previews the UK-Africa Investment Summit (20 January 2020, London)

5th Conference of African ministers responsible for civil registration: Africa urged to harness digital technology for legal identity. Download all conference documentation here.

EITI discussion paper, by Alexandra Gillies: The EITI’s role in addressing corruption

Egypt’s trade deficit drops nearly 19%

Long-term macroeconomic effects of climate change: IMF’s cross-country analysis

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