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CSTD 2015-2016 Inter-Sessional Panel: Smart Cities and Infrastructure and Foresight for Digital Development
Opening statement by Taffere Tesfachew, Acting Director, Division on Technology and Logistics; Director, Division on Africa, Least Developed Countries and Special Programmes, UNCTAD, at the CSTD 2015-2016 Inter-Sessional Panel
It gives me a great pleasure to welcome you – on behalf of UNCTAD – to the CSTD Inter-Sessional Panel meeting to discuss – among others – two important and timely issues: “Smart Cities and Infrastructure” and “Foresight for Digital Development”. This Inter-Sessional Panel is timely because it comes at a critical juncture in the international development discourse – and a time of transition from the Millennium Development Goals (MDGs) to the much broader 2030 Agenda for Sustainable Development and the much more ambitious Sustainable Development Goals (SDGs). A succession of international Conferences and agreements during 2015 has created a new global development agenda. In September, world leaders adopted a comprehensive and ambitious 2030 Agenda for Sustainable Development at the United Nations Sustainable Development Summit, committing themselves and the international community to ending poverty in all its forms and dimensions. In July, they adopted the Addis Ababa Action Agenda, which complements and supports the means of implementation for the 2030 Agenda. In December 2015, at the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change, they agreed, with similar ambition, to limit global warming to 2°C and pursue efforts to limit it to 1.5°C.
The outcomes of all these agreements have – both direct and indirect – implications for many of the issues that the CSTD will be addressing in the coming years, including in the coming three days here in Budapest. When viewed from a broader perspective, collectively the outcomes are the result of a culmination of a half century of profound changes in the world economic order which have at times supported, and at times hindered, the efforts of developing countries to achieve a more prosperous and dignified life for their populations. Sustainable and inclusive development remains a challenge for many countries and communities; and meeting this challenge will require integrating the economic, social, technological and environmental dimensions of sustainable development, nationally and globally, and creating an enabling environment for inclusive and sustainable development.
In an increasingly more complex and inter-dependent world, Science, Technology and Innovation (STI) are key drivers of the inclusive and sustainable development to which the 2030 Agenda aspires. As a UN Commission – responsible for articulating the nexus between STI and development and as a subsidiary body of the ECOSOC with its universal membership – the CSTD has a critical role to play in defining and supporting the science and technology-related actions which flow from recent global agreements. This is a momentous responsibility – but also in line with the overall mandates and Terms of Reference of the CSTD, which was established to provide the ECOSOC and General Assembly with policy advice on the implications of Science and Technology for sustainable development. Above all, the CSTD could serve as a multilateral forum for sharing experiences and best practices in the application of STI for achieving the SDGs. There is no doubt that STI is inextricably linked to the outcome of the 2030 Agenda for sustainable development and the successful conclusion of the SDGs. In this respect, I wish to highlight four points:
First, practically all major international agreements completed in last year or so have recognized the critical role of STI in the development process – and this is reflected in their action plans and the policy measures proposed. For example, goal 17 of the SDGs identifies technology as one of the important means of implementing and achieving the SDGs by 2030. Similarly, the Financing for Development Conference in Addis Ababa in July 2015 and its outcome – the Addis Ababa Action Agenda (AAAA) – have singled out technology for special emphasis in the new Global Development Partnership for advancing the universal development goals. In fact, the first outcome from the Addis Ababa Conference to be implemented was related to technology. I am referring – of course – to the establishment of the United Nations Interagency Task Team on STI for the SDGs and the launching of the Technology Facilitation Mechanism (TFM). How the TFM will function and its role vis-à-vis the CSTD may require further discussion. Nevertheless, its establishment signals the recognition by the international community of the critical role of technology in achieving the new and more ambitious and universal development goals. In the same vein, the recently adopted Paris Agreement on Climate Change has also underlined the centrality of STI in the mitigation and adaptation efforts.
My second point is to highlight that – regardless of the official declaration of the importance of STI – given the diverse, multidimensional, ambitious and absolute nature of the SDGs – it will be practically impossible to achieve all these goals successfully by 2030 without the development and appropriate application of STI. With the vision of “no one must be left behind”, the 2030 Agenda has raised the bar and demands unprecedented actions and efforts. It is clear that in the new global development agenda, islands of prosperity surrounded by poverty, injustice, climate change and environmental degradation are viewed as neither sustainable nor acceptable. It is no longer enough to reduce poverty by half – as envisaged by MDGs – we must now eradicate it totally and everywhere – while ensuring availability of water and sanitation for all, ensuring access to affordable and reliable energy for all, reducing inequality within and among countries, making cities and human settlements inclusive, resilient and sustainable, and so on. For many developing countries, such ambitious goals will be practically impossible to achieve in 15 years without effective and widespread application of technology and innovative ideas. From recent experience, we know already – that new technologies and innovations can transform economies and improve the living standards of many people within a short period. For example – information and communication technologies have had major macro- and micro-level impacts in many low-income economies, especially with increasing application of mobile phones and the internet to find solutions to the challenges facing the poor and marginalized communities. Other technologies, such as synthetic biology and recent advances in gene editing technology equally hold promises for addressing key challenges in developing countries, such as food security, improvement of agricultural productivity and health care. The development of renewable energy technology is another area where poor countries will be able to develop adaptation and mitigation strategies for climate change while, at the same time, decoupling production from negative environmental impacts. These are only a few examples, but as many of you know, the achievement and sustainability of many of the goals in the next fifteen years will not happen without active – in some cases – extensive application of technologies.
The third point concerns the issue of “inclusiveness”, which is a one of the critical criteria of achieving the SDGs along with “sustainability”. The point is – in implementing the Goals – it is equally important to ensure that the “inclusiveness” principle also applies to the dissemination and application of technologies and new innovative ideas to improve productivity and promote social development. This, in effect, means that efforts must be made to apply STI in an ‘inclusive’ manner and ensuring that existing technological gaps do not leave some countries and communities behind. The two major topics addressed in this Inter-Sessional Panel namely “Smart Cities and Infrastructure” and “Foresight for Digital Development” provide excellent examples of the types of new technologies and innovations that are indispensable for advancing the sustainable development objective but difficult to access for poor economies where resources are limited, although urbanization in these countries is taking place at a very fast and unsustainable pace and production is dominated by informal activities and low-pay and low-productivity jobs. As you will see in the course of the next three days, smart technologies can contribute to the achievement of goal 11 by making human settlements in urban areas safe, comfortable, resilient and sustainable. A good example, as shown in the draft background paper, is the deployment of smart water meters in Mumbai, India, which are helping to control water supply remotely and reduce portable water waste by as much as 50%.
However, harnessing STI for SDGs requires an enabling environment, in particular the skills, basic infrastructure (both soft and hard), appropriate policies to facilitate technology transfer, a conducive regulatory framework and a domestic productive capacity, which is essential if technology transfer and diffusion is to take place through linkages. The role of CSTD will be critical in articulating the policy measures and actions that developing countries, especially the least developed among them, need to take in order to facilitate technology transfer and the application of STI aimed at meeting the SDGs.
Finally, the trade-off between the benefits and risks of applying STI for achieving SDGs must be assessed carefully. The potential risks of intensifying the technological divide between communities and countries if the development and application STI is not applied judiciously and the potential dangers of creating dependency on technologies that are incompatible to local production capability and resource endowment need to be factored in policy actions that promote STI for implementing SDGs. All these are issues that the CSTD is mandated to address and share its findings and policy recommendations to member States through the General Assembly. Inter-Sessional meetings among experts – such as this one – provide opportunities to address how STI could be made an effective tool to meet the universal goals that all member states of the United Nations agreed to achieve by 2030. As a final note, I wish to reassure you that UNCTAD – as a secretariat of the CSTD – will continue to provide – both the substantive and logistical support – that the Commission requires to discharge its responsibility and become an effective forum for addressing new and emerging issues in the area of STI and its contribution to the collective and global vision of inclusive and sustainable development. I look forward to the discussions in the coming three days.
Thank you for your attention.
A selection of documents/presentations from the meeting is available below.
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tralac’s Daily News selection
The selection: Thursday, 14 January 2016
Two commentaries on US trade policy, by Ambassador Michael Froman:
Since President Obama took office, the United States has brought 20 enforcement actions at the World Trade Organization, winning every one that has been brought to closure. Last year, the United States saw victories in a wide range of trade enforcement cases that benefit American industries, including high-tech steel producers, farmers, rare earth manufacturers, and other exporters, while launching cases and dispute settlement consultations to protect American manufacturers and exporters.
I’d like to focus on what yet another group has said about TPP. This is a group that you might not normally associate with trade policy, but it’s a group whose advice we often turn to when the stakes couldn’t be higher. Our national security and foreign policy experts - U.S. Secretaries of Defense and State, National Security Advisors, Generals, Admirals, and others - are all saying that TPP is a strategic imperative. They recognize that trade agreements, first and foremost, must stand on their economic merits. They appreciate that the foundation of US national security is a strong economy and that by driving growth and keeping America competitive, TPP will strengthen that foundation. But they also appreciate that TPP is strategic in the broader sense of the word. TPP is the economic centre piece of our rebalancing to Asia and a concrete manifestation of America’s ability to show global leadership. Right now, this critical region is in flux.
Released today: 2016 World Development Report - Digital Dividends (World Bank)
Digital technologies can promote inclusion, efficiency, and innovation. More than forty percent of adults in East Africa pay their utility bills using a mobile phone. There are eight million entrepreneurs in China - one-third of them women - who use an e-commerce platform to sell goods nationally and export to 120 countries. India has provided unique digital identification to nearly one billion people in five years, and increased access and reduced corruption in public services. And in public health services, simple SMS messages have proven effective in reminding people living with HIV to take their lifesaving drugs. To deliver fully on the development promise of a new digital age, the World Bank suggests two main actions: closing the digital divide by making the internet universal, affordable, open, and safe; and strengthening regulations that ensure competition among business, adapting workers’ skills to the demands of the new economy, and fostering accountable institutions - measures which the report calls analog complements to digital investments.
Forthcoming event: African Data Consensus and the implementation roadmap, role of NSOs (UNECA)
Expected outcomes: a common understanding (position) on the concept of data revolution and what it means for Africa; a consensus on the role of NSOs in its implementation; an action plan for implementing the Data Revolution in Africa based on the principles set in the African Data Consensus, SHaSA and the African Charter on Statistics and, an opportunity to prepare for the United Nations Statistical Commission in March 2016. [Addis Ababa, 20-22 January]
The ‘International trade and economic globalisation statistics’ session for forthcoming UN Statistical Commission (8-11 March): Report of the Secretary-General on international trade and economic globalization statistics, Report of the Inter Agency Task Force on international trade statistics
From global SDGs to country policymaking (World Bank)
To kick-start needed country-level analysis, the World Bank recently issued the volume 'Trajectories for Sustainable Development Goals: framework and country applications', co-authored by the authors of this blog. This framework, which is simple and transparent, may be used to analyze the likely progress in SDGs and their determinants, and to discuss policy and financing options to accelerate progress. In the volume, selected parts of the framework and indicators are applied to 10 countries – Ethiopia, Jamaica, Kyrgyzstan, Liberia, Nigeria, Pakistan, Peru, Philippines, Senegal and Uganda – a group that is diverse in terms of initial conditions and future prospects.
Kenya: Yuan clearing house to boost Sino-Africa trade (Shanghai Daily)
State-owned National Bank of Kenya said its Chinese yuan clearing house which was launched in Nairobi last year will help to boost Sino-Kenya trade. NBK's Managing Director Munir Ahmed told Xinhua in Nairobi that the clearing house will make it easier for Kenyan businessmen to access the Chinese currency. The Chinese Embassy in Nairobi estimates that there are over 200 companies operating in Kenya, a factor which influenced the Central Bank of Kenya to include the yuan as a reserve currency given the growing trade between Kenya and China.
Related: China's imports from Africa shrank nearly 40% in 2015: it could get really painful for these 10 countries (M&G), China’s imports from Africa plummet in 2015 (The Zimbabwean), China GDP guide: how the data is sliced and what's new this time (Bloomberg)
The road ahead for EAC regional competition regime (CUTS Africa)
The report highlights: the status of the competition related policy environment in the EAC Partner States; the areas, which need close scrutiny by the national competition authorities; the provisions of the EAC competition law and how it can be used to deal with such anti-competitive practices. The report further identifies the challenges facing the implementation of the EAC Competition Policy and Law at both the national and regional-level, respectively, and proposes recommendations that can be deployed to mitigate these challenges in ensuring that we have well-functioning competitive markets in the EAC region.
Great Lakes region: private sector investment conference (SADC)
Following the Peace, Security and Cooperation Framework Agreement, signed by 13 countries of the region, the overall objective of the Great Lakes Private Sector Investment Conference (Kinshasa, 24-25 February) is to mobilize investments for the transformation of the region, catalyze regional projects that significantly increase employment, improve productivity, and expand the connection of the region to value markets, including intra-regional trade, and to promote shared prosperity across countries while yielding significant returns on investments. The specific objectives are to:
Egypt to host African investment forum (GNN Liberia)
Next month (20-21 February) Egypt will host 'Africa 2016', the first international business and investment forum of its kind. This is an Africa to Africa investment forum aimed at strengthening business ties within Africa, both at a business and presidential level. The Forum will be opened by the President of Egypt, H.E. Abdel Fateh El-Sisi, and a number of African Heads of State are also expected at the forum.
Botswana: Annual review of the Pula basket of currencies (Botswana Government)
Following the annual review of the Pula basket in 2015, and in pursuant to Section 21 of the Bank of Botswana Act, His Excellency the President has approved the Honourable Minister of Finance and Development Planning's recommendation to: maintain the Pula basket weights at 50% South African rand and 50% SDR and change the rate of crawl from zero to an upward crawl of 0.38% per annum, effective 1st January, 2016.
Future of SA not all doom and gloom (Business Day)
SA faces many of the same global challenges as other developing markets — including lower commodity prices and the risk of rising interest rates — but has reason to be upbeat, says global intelligence consultancy, the Oxford Business group. In its SA report for 2016, the group says the future for inclusive growth in the continent’s most sophisticated economy is still seen as "encouraging" compared with other Brics nations Brazil, Russia, and China — but excluding India — and big emerging market Turkey. According to the report, SA needs to diversify its exports beyond the European Union and China, especially into the rest of Africa. [Read the Oxford Business Group 'South Africa 2016' report online]
Related: South Africa to expand international market access: minister (Xinhua), State should ‘intervene decisively’ to lift economic growth, Radebe says (Business Day), Daniel Mminele, Deputy Governor of the SA Reserve Bank: speech to the European Economics & Financial Centre
November traffic demand (IATA)
African airlines experienced their fifth consecutive month of positive traffic growth in November, posting a 12.2% rise compared to November 2014. However, the trend for the year-to-date so far remains weak, with growth of just 1.3% reflecting adverse economic developments in parts of the continent, including in Nigeria, which is highly reliant on oil revenues. Over the past few months, exports from Africa have held up better than they did earlier in 2015, and this could be helping boost international air travel on the region’s carriers. Capacity rose 9.8% and load factor rose 1.5 percentage points to 65.1%.
Egypt's Suez Canal saw more ships, less US-dollar revenues in 2015 (Ahram)
Despite seeing an increase in traffic, Egypt’s Suez Canal saw a drop in revenues in 2015, registering $5.17bn compared to $5.46bn in the previous year. Last year, the canal, which links the Mediterranean and the Red Sea, saw the passage of 17,483 ships compared to 17,148 in 2014, the statement added.
More bad news for ocean trade (Business Standard)
The Baltic Dry Index (BDI) slid to a level of 402 on Wednesday, a new low, and this might stop much of trade across the Indian Ocean and Asia-Pacific market, say observers. There could be a strong aversion, for instance, to long-term deals. The BDI is an economic indicator issued daily by the London-based Baltic Exchange.
Swaziland/Mozambique port: update (Club of Mozambique)
The proposed $2.14 billion Swaziland/Mozambique port earmarked to be constructed at Mlawula in north-eastern Swaziland, is in its initial stages of construction, local media report here Wednesday. The project aimed at creating jobs for 10,000 people has started despite the fact that Swaziland has not yet received approval from the Mozambican government for the construction of a 26 kilometre canal that will connect the Mozambican sea to Mlawula (at 15 to 20 hectares of land).
UN forum on ethics for development (UN News Centre)
The universal inclusiveness of the 2030 Agenda for Sustainable Development is an ethical imperative, UN Deputy Secretary-General Jan Eliasson told a forum for UN Member States today on ethics for development. “Fundamental principles that underpin the new goals are interdependence, universality and solidarity. They should be implemented by all segments of all societies, working together. No-one must be left behind. People who are hardest to reach should be given priority,” he said.
Currency manipulation – was the Metical overvalued? (SPEED)
Egypt: Western Union transfers from Egypt to China curbed amid dollar shortage (Reuters)
Nigeria: CBN forex policy responsible for declining production, says manufacturer (ThisDay)
Obinna Chima: 'IMF's prescriptions and Nigeria's challenges' (ThisDay)
Offshore West Africa confirms partnership with UK Trade & Investment (ThisDay)
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Digital technologies: Huge development potential remains out of sight for the four billion who lack internet access
While Digital Technologies Have Spread Fast Worldwide, Their Digital Dividends Have Not
A new World Bank report says that while the internet, mobile phones and other digital technologies are spreading rapidly throughout the developing world, the anticipated digital dividends of higher growth, more jobs, and better public services have fallen short of expectations, and 60 percent of the world’s population remains excluded from the ever-expanding digital economy.
According to the new ‘World Development Report 2016: Digital Dividends,’ authored by Co-Directors, Deepak Mishra and Uwe Deichmann and team, the benefits of rapid digital expansion have been skewed towards the wealthy, skilled, and influential around the world, who are better positioned to take advantage of the new technologies. In addition, though the number of internet users worldwide has more than tripled since 2005, four billion people still lack access to the internet.
“Digital technologies are transforming the worlds of business, work, and government,” said Jim Yong Kim, President of the World Bank Group. “We must continue to connect everyone and leave no one behind because the cost of lost opportunities is enormous. But for digital dividends to be widely shared among all parts of society, countries also need to improve their business climate, invest in people’s education and health, and promote good governance.”
Although there are many individual success stories, the effect of technology on global productivity, expansion of opportunity for the poor and middle class, and the spread of accountable governance has so far been less than expected. Digital technologies are spreading rapidly, but digital dividends – growth, jobs and services – have lagged behind.
“The digital revolution is transforming the world, aiding information flows, and facilitating the rise of developing nations that are able to take advantage of these new opportunities,” said Kaushik Basu, World Bank Chief Economist. “It is an amazing transformation that today 40 percent of the world’s population is connected by the internet. While these achievements are to be celebrated, this is also occasion to be mindful that we do not create a new underclass. With nearly 20 percent of the world’s population unable to read and write, the spread of digital technologies alone is unlikely to spell the end of the global knowledge divide.”
Digital technologies can promote inclusion, efficiency, and innovation. More than forty percent of adults in East Africa pay their utility bills using a mobile phone. There are eight million entrepreneurs in China – one-third of them women – who use an e-commerce platform to sell goods nationally and export to 120 countries. India has provided unique digital identification to nearly one billion people in five years, and increased access and reduced corruption in public services. And in public health services, simple SMS messages have proven effective in reminding people living with HIV to take their lifesaving drugs.
To deliver fully on the development promise of a new digital age, the World Bank suggests two main actions: closing the digital divide by making the internet universal, affordable, open, and safe; and strengthening regulations that ensure competition among business, adapting workers’ skills to the demands of the new economy, and fostering accountable institutions – measures which the report calls analog complements to digital investments.
Digital development strategies need to be much broader than information and communication technology (ICT) strategies. To reap the greatest benefits, countries must create the right environment for technology: regulations that facilitate competition and market entry, skills that enable workers to leverage the digital economy, and institutions that are accountable to people. Digital technologies can, in turn, accelerate the pace of development.
Investing in basic infrastructure, reducing the cost of doing business, lower trade barriers, facilitating entry of start-ups, strengthening competition authorities, and facilitating competition across digital platforms are some of the measures suggested in the World Development Report that can make businesses more productive and innovative. In addition, while basic literacy remains essential for children, teaching advanced cognitive and critical thinking skills and foundational training in advanced, technical ICT systems will be key as the internet spreads. Teaching technical skills early and exposing children to technology promotes ICT literacy and influences career choices.
Digital technologies can transform our economies, societies and public institutions, but these changes are neither assured nor automatic, cautions the report. Countries that are investing in both digital technology and its analog complements will reap significant dividends, while others are likely to fall behind. Technology without a strong foundation risks creating divergent economic fortunes, higher inequality and an intrusive state.
Over the last decade, the World Bank Group has invested a total US$12.6 billion in ICTs.
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South Africa to expand international market access: minister
The South African government is committed to intensifying efforts to expand international market access for its agricultural commodities, Minister of Agriculture Forestry and Fisheries Senzeni Zokwana said Thursday.
The minister was speaking at a meeting in Pretoria with industry stakeholders affected by trade related to exports of poultry, beef and pork meat from the United States to South Africa.
Zokwana convened the meeting to brief the affected agricultural industry stakeholders on the outcomes of the recent intensive negotiations around South Africa's eligibility to the Africa Growth and Opportunity Act (AGOA).
The minister said the objective of the meeting was to ensure that all affected stakeholders were of the same understanding in respect to the recent negotiations between South Africa and the U.S. on key areas related to the importation of poultry, beef and pork from the U.S. to South Africa, their outcomes and the proclamation made by U.S. President Barack Obama.
The White House issued a presidential proclamation on Monday that South Africa's trade benefits on agricultural goods under the AGOA will be suspended if American poultry is not allowed into South Africa by March 15.
Zokwana stressed the importance of maintaining a close partnership between his ministry and its stakeholders not only during this time but as the norm.
The minister committed his department to ensuring that they will again work tirelessly to make sure that the deadline is met.
SA Minister of Trade and Industry Rob Davies announced on January 7 that his government had concluded negotiations with the U.S. on the final barriers to the import of American poultry into South Africa.
But now the U.S. government says it is testing the system to make sure the meat will be available on store shelves in South Africa.
The office of the U.S. trade representative says if the remaining benchmark – the entry of U.S. poultry into South Africa under the agreed-upon conditions – is met before March 15, Obama will be able to consider a revocation of the proclamation before suspension takes effect.
Under the deal reached with the U.S. last week, South Africa will import 65, 000 tonnes of U.S. poultry a year.
With regard to pork, South Africa has agreed to permit the unrestricted importation of the shoulder cuts after the U.S. agreed to apply mitigation measures. South Africa has also agreed to import beef from the U.S..
In return, South African agricultural products will continue to enjoy trade preferences for quota and duty-free entry into the U.S.
The March 15 deadline is the second placed on South Africa by the U.S.. In November last year, Obama set December 31 as the deadline for South Africa to conclude the negotiations on opening its markets to poultry, pork and beef from the U.S. or face the risk of losing AGOA benefits.
The two sides allowed negotiations to continue for some more days to resolve outstanding technical issues, particularly highly pathogenic avian influenza and salmonella.
South African had blocked chicken imports from the U.S. because of outbreaks of avian flu in parts of the U.S. and because of concerns about salmonella infection. It has also been citing concerns about diseases in pork and beef to block imports of those products.
SA exported 176 million U.S. dollars worth of agricultural products to the U.S. last year, mainly citrus and wine. South Africa's total exportss amount to 70 billion rand (4.5 billion U.S. dollars) and of these, 25 million rand (about 1.6 billion dollars) are to the U.S. market.
SA has allowed virtually no U.S. chicken, pork or beef imports into the local market for several years, partly through anti-dumping duties and partly through health restrictions.
Last June officials from both sides agreed partly to lift the anti-dumping duties on U.S. chicken imports, to allow a quota of 65,000 tons a year to be imported. This would be subject to several conditions being met. But virtually chicken imports were not allowed into the SA market because of outbreaks of avian flu in parts of the U.S. and because of concerns about salmonella infection.
Although the U.S. renewed the AGOA for another decade last July, Washington said South Africa's participation in AGOA had to undergo out-of-cycle review.
The AGOA, a legislation that was approved by the U.S. Congress in May 2000, is to assist the economies of Sub-Saharan Africa and to improve economic relations between the U.S. and the region. The act provides trade preferences for quota and duty-free entry into the U.S. for certain goods, under certain conditions.
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As oil crashed, renewables attracted record $329 billion
The slump in oil prices that’s brought upheaval and cost-cutting to the traditional energy industry spared renewables such as solar and wind, which raked in a record $329.3 billion of investment last year.
The 4 percent increase in clean energy technology spending from 2014 reflected tumbling prices for photovoltaics and wind turbines as well as a few big financings for offshore wind farms on the drawing board for years, according to research from Bloomberg New Energy Finance released on Thursday.
“These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices,” said Michael Liebreich, founder of the London-based research arm of Bloomberg LP. “They highlight the improving cost-competitiveness of solar and wind power.”
While oil companies such as Exxon Mobil Corp. and Royal Dutch Shell Plc eliminate jobs and curb capital spending to cope with prices that have fallen two-thirds in 18 months, renewables are enjoying a renaissance underpinned by rules designed to curb fossil-fuel emissions damaging the atmosphere.
Fears that low oil prices will continue into 2016 have knocked confidence among oil companies, delaying $380 billion worth of investment in upstream projects, according to analysis by industry consultant Wood Mackenzie Ltd. on Jan. 12. Companies are "going into survival mode" this year with more projects delayed and budgets cut, said Angus Rodger, one of the report’s authors.
Brent crude oil has traded near $30 a barrel this month, down from more than $110 in 2014 as exporters led by Saudi Arabia battled for market share. Coal and natural gas prices have followed, already pushing a handful of producers into bankruptcy. While BNEF has said lower prices may hurt funding for efficiency projects and the spread of electric cars, the main clean energy technologies enjoyed record installations in 2015.
Another “strong year” is in store for renewables in 2016, said Angus McCrone, chief editor at BNEF, stopping short of saying another record will be reached. Balancing that is a potential slip in funding for yieldcos, which drew higher investment in 2015, and a clouded outlook for offshore wind in its biggest market.
“There is a lot of uncertainty on how strong U.K. support for offshore wind is going to be,” McCrone said. “It is conditional on costs coming down, and I think that will happen, but it’s hard to say how many will be supported."
China remained the biggest market for renewables, increasing investment 17 percent to $110.5 billion. That’s almost double the $56 billion invested in the U.S., which was second in the BNEF rankings. The strength of the dollar helped boost the value of investment.
In India, funding for clean energy rose 23 percent to $10.9 billion, and new markets including Mexico, Chile and South Africa attracted tens of billions of dollars. Brazil bucked the trend with a 10 percent drop to $7.5 billion.
“Wind and solar power are now being adopted in many developing countries as a natural and substantial part of the generation mix,” Liebreich said. “They can be produced more cheaply than often high wholesale power prices. They reduce a country’s exposure to expected fossil fuel prices. And above all, they can be built very quickly to meet unfulfilled demand for electricity.”
New wind and solar power accounted for about half of all new generation last year. Around 64 gigawatts of new wind power and 57 gigawatts of new photovoltaics was added, representing an increase of 30 percent from to 2014.
Investment was driven mainly by large-scale projects, including a number of major offshore wind farms. The U.K.’s 580 megawatt Race Bank offshore wind farm was the largest project financed last year, attracting $2.9 billion, followed closely by the $2.3 billion Galloper offshore wind farm, also in the U.K.
U.K. Record
As a result, the U.K. was by far Europe’s strongest market, despite Prime Minister David Cameron’s effort to roll back incentives for the industry. Renewables investment in the U.K. rose 24 percent to a record $23.4 billion from 2014, according to BNEF.
The U.K.’s rooftop solar power market grew to $1.8 billion, putting the U.K. in fourth place for investment in solar installations smaller than one megawatt, behind Japan, the U.S. and China.
Globally, rooftop solar installations like the ones championed by SolarCity Corp. were another big winner, reaping a 12 percent increase to $67.4 billion.
Europe recorded its weakest year since 2006, in part because of slower activity in Germany after the government cut subsidies and revealed plans for a new auctioning system in 2017. Investment in the continent’s biggest economy fell by 42 percent to $10.6 billion. The continent as a whole suffered an 18 percent drop to $58.5 billion.
Clean energy defies fossil fuel price crash to attract record $329bn global investment in 2015
2015 was also the highest ever for installation of renewable power capacity, with 64GW of wind and 57GW of solar PV commissioned during the year, an increase of nearly 30% over 2014.
Clean energy investment surged in China, Africa, the US, Latin America and India in 2015, driving the world total to its highest ever figure, of $328.9bn, up 4% from 2014’s revised $315.9bn and beating the previous record, set in 2011 by 3%.
The latest figures from Bloomberg New Energy Finance show dollar investment globally growing in 2015 to nearly six times its 2004 total and a new record of one third of a trillion dollars (see chart), despite four influences that might have been expected to restrain it.
These were: further declines in the cost of solar photovoltaics, meaning that more capacity could be installed for the same price; the strength of the US currency, reducing the dollar value of non-dollar investment; the continued weakness of the European economy, formerly the powerhouse of renewable energy investment; and perhaps most significantly, the plunge in fossil fuel commodity prices.
Over the 18 months to the end of 2015, the price of Brent crude plunged 67% from $112.36 to $37.28 per barrel, international steam coal delivered to the north west Europe hub dropped 35% from $73.70 to $47.60 per tonne. Natural gas in the US fell 48% on the Henry Hub index from $4.42 to $2.31 per million British Thermal Units.
Source: Bloomberg New Energy Finance
Michael Liebreich, chairman of the advisory board at Bloomberg New Energy Finance, said: “These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices. They highlight the improving cost-competitiveness of solar and wind power, driven in part by the move by many countries to reverse-auction new capacity rather than providing advantageous tariffs, a shift that has put producers under continuing price pressure.
“Wind and solar power are now being adopted in many developing countries as a natural and substantial part of the generation mix: they can be produced more cheaply than often high wholesale power prices; they reduce a country’s exposure to expected future fossil fuel prices; and above all they can be built very quickly to meet unfulfilled demand for electricity. And it is very hard to see these trends going backwards, in the light of December’s Paris Climate Agreement.”
Looking at the figures in detail, the biggest piece of the $328.9bn invested in clean energy in 2015 was asset finance of utility-scale projects such as wind farms, solar parks, biomass and waste-to-energy plants and small hydro-electric schemes. This totalled $199bn in 2015, up 6% on the previous year.[1]
The biggest projects financed last year included a string of large offshore wind arrays in the North Sea and off the coast of China. These included the UK’s 580MW Race Bank and 336MW Galloper, with estimated costs of $2.9bn and $2.3bn respectively, Germany’s 402MW Veja Mate, at $2.1bn, and China’s Longyuan Haian Jiangjiasha and Datang & Jiangsu Binhai, each of 300MW and $850m.
The biggest financing in onshore wind was of the 1.6GW Nafin Mexico portfolio, for an estimated $2.2bn. For solar PV, it was the Silver State South project, at 294MW and about $744m, and for solar thermal or CSP, it was the NOORo portfolio in Morocco, at 350MW and around $1.8bn. The largest biomass project funded was the 330MW Klabin Ortiguera plant in Brazil, at about $921m, and the largest geothermal one was Guris Efeler in Turkey, at 170MW and an estimated $717m.
After asset finance, the next largest piece of clean energy investment was spending on rooftop and other small-scale solar projects. This totaled $67.4bn in 2015, up 12% on the previous year, with Japan by far the biggest market, followed by the US and China.
Preliminary indications are that, thanks to this utility-scale and small-scale activity, both wind and solar PV saw around 30% more capacity installed worldwide in 2015 than in 2014. The wind total for last year is likely to end up at around 64GW, with that for solar just behind at about 57GW. This combined total of 121GW will have made up around half of the net capacity added in all generation technologies (fossil fuel, nuclear and renewable) globally in 2015.
Public market investment in clean energy companies was $14.4bn last year, down 27% from 2014 but in line with the 10-year average. Top deals included a $750m secondary share issue by electric car maker Tesla Motors, and a $688m initial public offering by TerraForm Global, a US-based ‘yieldco’ owning renewable energy projects in emerging markets.
Venture capital and private equity investors pumped $5.6bn into specialist clean energy firms in 2015, up 17% on the 2014 total but still far below the $12.2bn peak of 2008. The biggest VC/PE deal of last year was $500m for Chinese electric vehicle company NextEV.
There was $20bn of asset finance in clean energy technologies such as smart grid and utility-scale battery storage, representing an 11% rise on 2014, the latest in an unbroken series of annual increases over the past nine years. The final category of clean energy investment, government and corporate research and development spending, totaled $28.3bn in 2015, up just 1%. This figure provides a benchmark for any surge in spending in the wake of announcements at COP21 in Paris by consortia of governments and private investors, led by Bill Gates and Mark Zuckerberg.
National trends
China was again by far the largest investor in clean energy in 2015, increasing its dominance with a 17% increase to $110.5bn, as its government spurred on wind and solar development to meet electricity demand, limit reliance on polluting coal-fired power stations and create international champions.
Second was the US, which invested $56bn, up 8% on the previous year and the strongest figure since the era of the ‘green stimulus’ policies in 2011. Money-raising by quoted ‘yieldcos’, plus solid growth in investment in new solar and wind projects, supported the US total.
Europe again saw lower investment in 2015, at $58.5bn, down 18% on 2014 and its weakest figure since 2006. The UK was by far the strongest market, with investment up 24% to $23.4bn. Germany invested $10.6bn, down 42% on a move to less generous support for solar and, in wind, uncertainty about how a new auction system will work from 2017. France saw an even bigger fall in investment, of 53% to $2.9bn.
Brazil’s clean energy investment slipped 10% to $7.5bn in 2015, while India’s gained 23% to $10.9bn, the highest since 2011 but a far cry for the figures needed to implement the Modi government’s ambitious plans. Japan saw investment rise 3% to $43.6bn, on the back of a continuing PV boom. In Canada, clean energy investment fell 43% to $4.1bn, while in Australia, it edged up 16% to $2.9bn.
A number of “new markets” together committed tens of billions of dollars to clean energy last year. These include Mexico ($4.2bn, up 114%), Chile ($3.5bn, up 157%), South Africa ($4.5bn, up 329%) and Morocco ($2bn, up from almost zero in 2014).
Africa and the Middle East are two regions with big potential for clean energy, given their growing populations, plentiful solar and wind resources and, in many African countries, low rates of electricity access. In 2015, these regions combined saw investment of $13.4bn, up 54% on the previous year.
[1] Large hydro-electric projects of more than 50MW are not included in this asset finance figure or in total clean energy investment. However, BNEF’s estimate is that $43bn of large hydro projects reached “final investment decision” worldwide in 2015.
Note: Following minor revisions to prior year totals to reflect additional deal information, Bloomberg New Energy Finance’s historical series for global clean energy investment is: $61.9bn in 2004, $88bn in 2005, $128.3bn in 2006, $174.9bn in 2007, $205.6bn in 2008, $207.3bn in 2009, $273.7bn in 2010, $318.3bn in 2011, $297bn in 2012, $271.9bn in 2013, $315.9bn in 2014 and $328.9bn in 2015.
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China’s imports from Africa plummet in 2015
China’s imports from Africa fell nearly 40 percent last year, officials said Wednesday, as low commodity prices and slowing growth in the Asian giant hit trade.
Imports from the continent fell to 440 billion yuan, some 38 percent lower than in 2014, China’s Customs administration said.
Natural resources from Africa such as iron ore and oil have helped fuel China’s economic boom, and it became the continent’s largest trade partner in 2009, giving it growing diplomatic influence.
But growth in the world’s second-largest economy has slowed to its lowest since the aftermath of the global financial crisis, punishing world prices for commodities – the bedrock of African exports.
Economists say Chinese growth is becoming less dependent on heavy industry, further hitting demand for raw materials.
However, Chinese exports to Africa rose by about 4 percent to reach 670 billion yuan, officials said.
Oil exporters are expected to be hit especially hard. China said its imports from Nigeria slumped more than 50 percent by value last year.
Beijing said in November its direct investment in Africa dropped “more than 40 percent” to about $1.2 billion in the first six months of the year.
China’s President Xi Jinping announced $60 billion of assistance and loans for Africa last month, signalling ongoing commitment to the continent despite the investment drop.
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From global SDGs to country policymaking
What should countries do to accelerate progress on the UN Sustainable Development Goals (SDG) agenda?
The agenda, adopted by the world’s leaders in September is very comprehensive: its 17 goals and 169 targets cover economic, social, and environmental dimensions of development. It is also very ambitious: the general spirit of the targets under each goal is that everyone should benefit in full from the fruits of development across all areas (be it electricity, health, or education) and that, accordingly, no one should be left behind. Inspired by these ambitions, individual countries now face the tough challenge of translating this agenda into feasible (but still ambitious) development plans and identifying policies that reflect their initial conditions and priorities.
To kickstart needed country-level analysis, the World Bank recently issued the volume Trajectories for Sustainable Development Goals: Framework and Country Applications, coauthored by the authors of this blog.[1] This framework, which is simple and transparent, may be used to analyze the likely progress in SDGs and their determinants, and to discuss policy and financing options to accelerate progress. In the volume, selected parts of the framework and indicators are applied to 10 countries – Ethiopia, Jamaica, Kyrgyzstan, Liberia, Nigeria, Pakistan, Peru, Philippines, Senegal and Uganda – a group that is diverse in terms of initial conditions and future prospects.
The analysis is done from a cross-country perspective, with the outcomes for each country assessed relative to what is typical for countries at the same capacity level, proxied by income per capita. It offers a practical starting point for a discussion of how policies and financing should be designed to speed up development outcomes. The framework achieves this by:
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benchmarking recent outcomes for SDG target indicators and the factors (including policies) that influence them – how well is a country doing compared to other countries at similar levels of per-capita incomes?
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projecting 2030 outcomes for selected indicators (when the association between GNI per capita and an indicators is deemed sufficiently strong) – under current trends and given expected growth, what are likely achievements for SDG indicators by 2030?; and
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assessing options for accelerated progress – what can a country and its government do to increase fiscal space for the SDG agenda and raise the effectiveness of its policies?
What are the next steps? This cross-country approach is useful to benchmark current achievements, to project likely developments, and as an input into detailed country strategies. Countries need to consider in-depth country-specific knowledge, prioritize and sequence their efforts. As part of this, it is important to strike a balance between steps to support immediate growth accelerations and investments in education and other areas that only can promise payoffs over the long haul.
The cross-country approach limits the analysis to what is available in cross-country databases. While the database underlying the framework contains nearly 300 indicators, many of these are second best options; and data exist only for a minority of the 169 targets that are identified. Hence, our work echoes the urgent need to improve within- and cross-country databases. The UN report A World That Counts: Mobilising the Data Revolution for Sustainable Development provides key recommendations for this urgent call of action.
[1] The work was sponsored by the office of Mahmoud Mohieldin, the World Bank Group President's Special Envoy for Millennium Development Goals.
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Yuan clearing house to boost Sino-Africa trade: official
State-owned National Bank of Kenya (NBK) said its Chinese yuan clearing house which was launched in Nairobi last year will help to boost Sino-Kenya trade.
NBK’s Managing Director Munir Ahmed told Xinhua in Nairobi that the clearing house will make it easier for Kenyan businessmen to access the Chinese currency.
“It is now much more convenient for importers to get Chinese Yuan,” Ahmed said during a ceremony where National Bank and Airtel signed a partnership agreement.
Under the agreement National Bank account holders will be able to access their funds using the Airtel mobile platform.
National Bank is currently one of the banks in Kenya that offers the Chinese currency.
Ahmed said that their service reduces the need for the business community trading with China to use financial intermediaries.
“As a result it reduces the cost of transactions of Sino-Kenya trade,” he said.
Experts say the clearing house could boost trade between the two countries by easing commercial transactions as Kenyan exporters normally have payments processed through a lengthy process that involves physically sending Chinese payment cheques back to the country for clearance and payment.
However, with a clearing house, the cheques could be processed locally through an agreement between the two central banks thus expediting payments and easing the cost trade.
Last year, the Chinese Yuan was included into the International Monetary Fund’s (IMF) basket of currencies that includes the U.S. dollar and the Euro.
One of the key priorities of the National Bank is to tap into the growing demand for the Chinese yuan that is fueled by expanding Chinese presence in Kenya. Ahmed said that China is a global leader in international trade.
“Therefore the easy access of the Chinese Renminbi will also help Kenyans to access the global value chains,” he said.
National Bank Director Business Development Yao Sandra said that there is an expanding Chinese community in Kenya.
“They now find it convenient to access the Chinese yuan while in Kenya,” Yao said.
She said that when Kenya traders land in China, they are now able to conduct business immediately.
National Bank, which is owned partly by the government, plans to take members of its business club to this year’s Canton Trade fair.
Yao said the demand for yuan has especially increased among Kenyans heading to China for business trips and holiday goers.
“Business is brisk and the yuan has brought value to our customers. We are receiving new customers daily and the Chinese Banking Unit has experienced the most significant growth in the bank,” Yao said.
Yao said the volume of transactions has made direct shilling to yuan business deals less expensive and bothersome by-passing the dollar.
“We have sufficient reserves to cater for the influx of customers. The service is also significant to the Chinese nationals who need to deal directly in yuan,” Yao said.
Kenyan traders prefer going through the yuan transaction to settle their obligations because of increased costs and the volatility risks that three currencies expose them to.
The Chinese Embassy in Nairobi estimates that there are over 200 companies operating in Kenya, a factor which influenced the Central Bank of Kenya to include the yuan as a reserve currency given the growing trade between Kenya and China.
More bad news for ocean trade
A fresh plunge on the main global index of the cost of moving major raw materials by sea has potential implications for trade.
The Baltic Dry Index (BDI) slid to a level of 402 on Wednesday, a new low, and this might stop much of trade across the Indian Ocean and Asia-Pacific market, say observers. There could be a strong aversion, for instance, to long-term deals.
The BDI is an economic indicator issued daily by the London-based Baltic Exchange.
“The trade climate is full of insecurity, as charterers are not sure if the price at which they have negotiated is the right low price,” Kiran Kamat, owner of Link Shipping & Management Systems, a leading chartering and shipping company, told Business Standard. “Charterers are unable to take a call, leading to last-minute back out (from deals), even if ship-owners are being flexible.”
The index began falling from early August last year, when China initiated a devaluing of its currency. From a high of 1,222, it has lost two-thirds in five months. Wednesday’s level is a three-decade low; the all-time high of 11,793 was on May 20, 2008. Since then, the index has been volatile, being down for much longer than thought likely.
A charterer might own cargo and employ a broker to find a ship to deliver for a certain price, the freight rate. A charterer might also be a party without a cargo, taking a vessel for a specified period from the owner and then trading the ship to carry cargoes above the hire rate.
“There have been very few inquiries and even of those, most were not firm. Of (every) five inquiries, three have failed,” said a ship owner, on condition of anonymity. “The charterers are fixing rates and then trying to trade the cargo. Freight is low enough but still charterers are not able to sell the cargo.”
The BDI measures a change in transportation cost of raw materials such as metals, ore, coal, grain and fertiliser by sea. The continuous fall since August followed China’s economic data, which set a strong bearish tone for the bulk trade market across the globe. For, China is the world’s largest importer and exporter of several commodities. A slowing in its economy now indicates a grimmer trade climate.
“Interest in fixing freight contracts for a longer period is absolutely absent from the charterers’ side,” said someone from a steel company. “No charterer wants to lock-in freight at a premium to the spot price, as they see little upside over this year. Ship owners might have to consider laying off some of their vessels to stem the slipping freight rates.”
On the India-specific trade scenario, sectoral officials said with coal supply higher in the domestic market, the iron ore export market completely out of the picture due to a long-period ban, and a diminished fertiliser trade, small-size Supramax and large-size Capesize vessels are idle, pushing even the ancillary industries out of a job. The latter caters to Capesize vessels, as these ships need constant maintenance.
“Shipping is a gamble and one cannot say when things will look up. It's all about being optimistic in the business,” say officials in the sector.
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tralac’s Daily News selection
The selection: Wednesday, 13 January 2016
Conference alert: '2016 Conference of Ministers: exploring the synergies between the African and the Global Development Agenda' (UNECA)
The Conference will address the question of how African countries could design and implement effective strategies and policies that will support the promotion and implementation of a common framework for meeting the goals of the Agenda 2030 and 2063. Such strategies should not only focus on promoting high and sustainable long-term growth but also ensure that the benefits of such growth are widely shared in order to reduce poverty and improve the standard of living for all Africans. Furthermore the Ministers will, at the end of their deliberations, offer guidance on mechanisms for the successful execution of a common framework at the national, regional and continental level. [Conference: 27 March - 1 April]
The African Lions: Kenya country case study (UNU-WIDER)
This paper mainly analyses the drivers of economic growth in Kenya and the linkages to the labour market dynamics, with a focus on population growth, its structure, and the prospects of reaping a demographic dividend. This is in recognition that Kenya, as the ninth largest economy in Africa and the fourth largest in sub-Saharan Africa and with a locational advantage, presents some policy lessons and challenges that can boost its capacity for growth and take advantage of its location and the policy environment to drive growth in the region. [The authors: Mwangi S. Kimenyi, Francis M. Mwega, Njuguna S. Ndung'u]
Project details: ‘Understanding the African Lions - growth traps and opportunities in six dominant African economies’ (UNU-WIDER)
Profiled documents prepared for UNDP's Executive Board’s First regular session 2016: Draft country programme documents for Ethiopia 2016-2020, Tanzania 2016-20121
Africa Tourism Monitor 2015: Unlocking Africa’s tourism potential (AfDB)
One of the key findings of the report, as indicated in its introduction, is that the tourism sector in Africa is growing. In 2014, a total of 65.3 million international tourists visited the continent – around 200,000 more than in 2013. Back in 1990, Africa welcomed just 17.4 million visitors from abroad. The sector has therefore quadrupled in size in less than 15 years. According to the World Tourism Organization, Africa’s strong performance in 2014 (up 4%) makes it one of the world’s fastest-growing tourist destinations, second only to Southeast Asia (up 6%). This influx of tourists means more money coming into the continent. Transport infrastructure and services is one of the key constraints limiting growth of the tourism sector. As the report indicates, “Journeys in the African continent are not always seamless”. In fact, it is more difficult – and more expensive – to travel across Africa than to get there from Europe, America or the Middle East. [Download]
Uhuru waives visa fees for children to spur tourism (Business Daily)
Uhuru Kenyatta on Tuesday announced plans to waive visa fees for children under the age of 16 in yet another move aimed at wooing foreign visitors into the country. Kenya currently charges Sh10,200 ($100) for a multiple entry visa and Sh5,100 for single entry tourist visa. The fees apply to all visitors, including children under 16. The official guideline at the Directorate of Immigration and Registration of Persons indicates that all children under 16 require a visa unless they are on the same passport as a parent.
The civil society guide to regional economic communities in Africa (AfriMAP)
As regional integration gains momentum, there is growing interest among civil society and citizens to participate in the processes and programmes of regional economic communities (RECs). The constitutive treaties of RECs provide for citizens’ participation, but the accessibility of REC treaties and protocols remains a challenge. Decision-making remains state-centric despite growing citizen and civil society interest in regional integration. The Civil Society Guide to Regional Economic Communities aims to assist citizens and civil society in engaging with the policies and programmes of three RECs in Africa: EAC, SSADC, ECOWAS. [Download]
Featured infographic, @PatrickMcGee_: Compare RMB and US$ trade reports
China trade volume falls 7.0% in 2015: Customs (Business Times)
China's total trade volume fell 7% year-on-year to 24.59 trillion yuan (around US$3.74 trillion) in 2015, Customs said Wednesday, as slowing growth in the world's second-largest economy and plunging commodity prices took their toll. It was far below the government's target of 6% growth in trade, and the fourth year in a row that external commerce had missed its goal. China's imports slumped 13.2 per cent on the previous year to 10.45 trillion yuan, Customs said, while exports were down 1.8 per cent to 14.14 trillion yuan.
China sees 'many challenges' in 2016 as trade slumps on weak external demand (The Guardian)
South Africa: AGOA deadline stretched to retain US leverage (Business Day)
The US government has adopted a "prudent, risk-averse" approach in extending rather than completely lifting the threatened suspension of SA’s agricultural products under the African Growth and Opportunity Act, the Department of Trade and Industry’s director-general Lionel October says.
Mozambique: Mozal profits quadrupled in 2015 (Zitamar)
Mozal, the aluminium smelting business at Beleluane, Maputo, saw its profits almost quadruple last year to hit $238m according to data released by its majority owner, Australia-based South32.
Zambia Development Agency, China seal economic deal (Daily Mail)
Zambia's dependency on copper processing is set to change following the signing of an economic co-operation agreement that will spearhead value addition to natural resources and agricultural produce. On Monday evening, ZDA director general Patrick Chisanga and deputy director of commerce bureau of Qingdao Chunyu Xianli signed an economic co-operation agreement to provide a platform for strengthening joint ventures among the two countries’ business entities.
Zambia’s cross-border traders on trade sensitisation drive (Daily Mail)
CBTA secretary general Charles Kakoma said the association is keen to ensure that members are educated on the importance of cross- border trade formalities and the incentives that exist. He said in the spirit of promoting dialogue between the various stakeholders, the association intends to establish another trade information desk at the main Common Market for Eastern and Southern Africa trading centre market.
Zimbabwe: Non-essential imports bad for the economy (editorial comment, The Herald)
As a nation we need to tame our appetite for foreign goods. This is in the national interest. It is our economy we are destroying by resorting to needless imports in the name of choice. No amount of foreign direct investment can substitute for prudent use of our foreign reserves. Does it make sense that the country is in dire need of foreign currency to import maize because somebody used the money to import chocolate, second hand clothes or to import a musician to come and sing for one evening and take away $40 000 as payment?
Rwanda’s horticulture exports rise to Rwf4.7b (New Times)
Rwanda’s horticulture industry fetched more than $6.1m (Rwf4.7bnion) in the 11 months to November 2015, an increase from $4.3m realised in the same period in 2014. This was an increase of 41.3%, according to National Agricultural Exports Board report released last week.
Effectiveness of anti-corruption agencies in Kenya, Tanzania and Uganda (AfriMAP)
The study makes recommendations, based on the findings, for stronger, more relevant and effective institutions, which are aligned to the regional and continental frameworks such as the African Union Convention on Preventing and Combating Corruption (AUCPCC), which the three countries have ratified.
Tanzania: Fate of Bagamoyo port clarified (The Citizen)
The government has said the processes for the construction of the Bagamoyo Port will not be halted and will continue. Reacting to reports about the suspension of the construction of the $10 billion port the Ministry of Works, Transport and Communications said in a statement that the construction of the port will start in July this year upon conclusion of financing negotiations with key partners. The government was currently in discussions with China Merchant Holding International and Oman which are expected to be concluded by March, this year.
New report on global migrant trends highlights rising numbers for 2015 (UN)
Presenting the key finding of the latest United Nations survey on international migrant trends, the UN Deputy Secretary-General stressed that the issue of migration is one of the most challenging and important that the Organization is taking on in the new global landscape. “When we get into a period of dealing with the migration and refugee issues, it’s important that we have the facts,” Jan Eliasson told reporters at a press briefing, at UN Headquarters, thanking the UN Department of Economic and Social Affairs (DESA) for producing the latest international migration report. [Downloads available]
The future of ACP-EU relations: a political economy analysis (ECDPM)
Principles and practice in measuring global poverty (World Bank)
Dark clouds over ECOWAS single currency (Graphic)
Kenyan dealers cry foul over influx of cheaper Ugandan cars (Business Daily)
Zimbabwe: Millers set maize import target (The Chronicle)
Uganda approves Islamic banking (The Citizen)
Developing public-private partnerships in Guinea-Bissau: getting the policy framework right (AFDB)
Nigeria: the challenge of job creation (AfDB)
Christine Lagarde: 'The case for a global policy upgrade' (IMF)
CELAC summit to highlight strategies to combat poverty and economic inequalities (Caribbean News)
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Principles and practice in measuring global poverty
Collecting data on global poverty levels helps measure progress towards the goal of eliminating extreme poverty by 2030.
For more than 35 years, the World Bank has estimated the number of people living in extreme poverty by setting a global poverty line and collecting data from households around the world. In 2015, more than 700 million people were estimated to be living on less than US$1.90/day. The same line is used by the World Bank, the United Nations, and many others to track progress towards the elimination of extreme poverty and to hold the international community accountable for achieving progress.
So when a team of World Bank economists set about updating the poverty line earlier this year, they knew they had a daunting task ahead of them. They had to balance the requirements of ensuring methodological rigor, using the best available data, and keeping the goalpost for eliminating extreme poverty securely fixed in place.
“When the World Bank says that global poverty numbers are going down, we are criticized for showcasing our success. When we say they are up, people accuse us of rigging the numbers so that we can stay in business a little longer,” said Research Director Asli Demirguc-Kunt, “Keeping this goalpost fixed has become even more of an issue recently, since in 2013 the World Bank announced the goal of ending extreme poverty by 2030.”
At a Policy Research Talk last month, Francisco Ferreira, Senior Adviser in the World Bank’s Research Department and a leading member of the team charged with the poverty line update, sought to bring transparency to the update by explaining in detail all of the methodological choices and data constraints the team faced in setting a new poverty line.
The measurement of global poverty trends over time requires establishing a benchmark line that is consistent across countries. Once that line is drawn, it needs to be held constant in real terms as relative prices change – that is: as the prices of goods and services vary differently over time across countries. Between 2008 and 2015 that line was set at $1.25/day in 2005 dollars. But in 2014, the release of new Purchasing Power Parity (PPP) conversion factors for 2011 necessitated the adjustment of the poverty line as expressed in dollars. PPP exchange rates allow for the comparison of the prices of goods and services across countries, even if they are not traded internationally.
Ferreira explained that in approaching their task, the team followed three principles:
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Use the most accurate set of prices available to compare the standards of living across countries – in this case the recently released 2011 PPPs.
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Minimize changes to the World Bank’s goalpost for the objective of ending extreme poverty by 2030 – set at $1.25/day at 2005 PPP exchange rates.
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Anchor decisions on the most relevant price levels: those faced by the world’s poorest people.
In following these principles, the team arrived at a line of $1.90/day in 2011 dollars. This upward revision in the line reflected a shift in relative prices between the U.S. and the world’s poorest countries, with the dollar losing value in PPP terms between the 2005 and 2011 price collection rounds. The revision helped ensure that the new poverty line reflects approximately the same cost for a basket of goods and services as the $1.25 line did in 2005.
“$1.90 appears to be much higher in US dollar terms. In Indian rupees it is not higher. And in Ghanaian cedis it’s not higher,” said Ferreira.
But so much for principles: did the updated poverty line succeed in keeping the goalpost constant in practice? The answer, as Ferreira explained, is a robust “yes”. Estimates of the incidence of global poverty moved only slightly, from 14.5 percent of the world’s population in 2011 using the old line to 14.1 percent using the new line. In addition, a number of alternative approaches to choosing a new line tend to yield figures that are very close to $1.90.
However, Ferreira was quick to caution that much more could be done to enhance the World Bank’s global poverty monitoring work. High on his wish list were a better understanding of what drives periodic changes in PPPs – which would require access to micro-level price data from the International Comparison Project (ICP) – and improved monitoring of key non-income dimensions of well-being, such as health and education.
Discussant Jan Walliser, Vice President for Equitable Growth, Finance, and Institutions, reflected on the value of the global poverty line and the data that it generates. “It’s the only number that is out there… It may not be perfect, but it’s something that we’re expected to provide for the international community. It’s one way of telling people where poverty trends are going across the world, and not just country by country.”
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Classifying countries by income: a new working paper
The World Bank has just released a working paper reviewing the Bank’s classification of countries by income.
As Tariq Khokhar and Umar Serajuddin pointed out in their recent blog about whether we should call countries developing or not, there’s a strong appetite for classifying and ranking countries. Where is the best country to live, according to the OECD? (it depends, but it might be Australia, Norway or Sweden.) Which are making the most social progress, according to the Social Progress Imperative? (Norway and Sweden again.) Where is it easiest to do business, according to the World Bank? (Singapore.) Which countries have highest or lowest human development, according to the United Nations Development Program? (that’s Norway once more, and Niger is lowest.).
Using GNI per capita
The World Bank has used a specific measure of economic development - gross national income (GNI) per capita – for the purpose of ranking and classifying countries for over 50 years. The first compendium of these statistics was called the World Bank Atlas, published in 1966 – it had just two estimates for each country: its population, and its per capita gross national product in US dollars, both for 1964. Then, the highest reported average income per capita was Kuwait, with $3,290. In second place was the United States, with $3,020, third was Sweden, a fair way behind, with $2,040. The bottom three were Ethiopia, Upper Volta (now Burkina Faso), and Malawi, with GNP per capita estimates of $50, $45 and $40 respectively (GNI used to be called GNP). It probably comes as no surprise that today Norway is top. Malawi is still bottom.
Grouping countries
In 1978, the first World Development Report went a step further. It introduced groupings of “low income” and “middle income” countries, which were those countries that were not industrialized, surplus oil producing, or centrally planned, and had 1976 per capita incomes lower and higher than $250, respectively. In the 1983 WDR, the middle income grouping was split into “lower” and “upper” bands around a cutoff of $1,670, and in 1989 a “high income” threshold of $6,000 was introduced. This system has remained in place since then, by adjusting the thresholds for inflation each year. Over time the terms have become a regular part of the development discourse, and many practitioners even just refer to the shorthand: LICs, MICs, and HICs.
This chart shows the GNI per capita of any country against the three thresholds, using the latest data from World Development Indicators.
Of course, the world has changed since 1989. Back then, well over half of all people on earth lived in countries classified as LICs – two thirds of them in just two countries, India and China. In 2014, some 25 years on, the effect of economic growth has meant that some countries have moved to a higher classification, from LIC to MIC, or from MIC to HIC, and less than 10% of the world lived in 31 LICs in 2014. 70% of those living in extreme poverty now live in MICs, although the extreme poverty rate in LICs is extremely high, at around 50%. So we’ve been taking a closer look at the the income classification. Our working paper was published recently – in it, we’ve attempted to review whether it is still relevant for its original analytical purpose.
The income classification is still useful
Our general finding is that using fixed thresholds that are held constant over time, adjusting only for price inflation, provides an absolute method of assessing change that many still find appealing. Other methods seem to have more limitations. For instance relative thresholds, such as those purely based on rankings (such as quartiles), are attractive but they have the inherent limitation that the target is constantly moving.
GNI per capita also continues to be a reasonable choice for a classifying variable. While clearly not perfect, GNI correlates well with several other indicators commonly used to assess the progress of countries. There is also an important practical advantage of data availability – for the most part, there are enough data, and estimates of both GNI and population size are available in time to update the classification each year.
Both measures are subject to difficult-to-qualify error, especially in countries with weak statistical capacity. This can be a source of volatility in the classification (i.e. sudden changes from one classification to the next), since GNI per capita estimates are occasionally revised when methods or source data improve – a new census is conducted, for example, or GDP estimates are “rebased”. You can see this effect for yourself, by taking a look at our archive database – we’ve selected GNI per capita for three April releases of the WDI six years apart: 2003, 2009, and 2015).
A further source of unwanted volatility is the conversion of GNI to US dollars, since standard market rates can fluctuate in the short term. However the smoothing “Atlas” method works largely as intended. The use of purchasing power parity exchange rates would likely be a further improvement that would provide a better basis for cross-country comparisons of GNI. But data availability and reliability continues to limit their use for this particular purpose – the sizeable revisions at each “benchmark” round of the International Comparison Project make PPP estimates currently unsuitable for an annual classification system (see this selection of GNI per capita estimates using PPPs to see the impact of PPP revisions from the last three benchmark years of the ICP: 1993, 2005, and 2011.)
Suggestions for further study
Some aspects of the methodology might still warrant further examination. There are alternative choices for the measure of inflation used to the adjust the thresholds, for example. And, while the general conclusion is that using the absolute thresholds continues to be the most useful approach compared to a relative classification, and that there is value in maintaining them, alternatives could be considered.
One relatively simple and attractive adjustment would be to align the low income threshold with the cutoff used as one of the inputs to determine eligibility for the World Bank’s concessional lending arm (IDA) – currently set at $1,215, compared to the $1,045 LIC cutoff. This is a source of confusion for many users, who tend to equate the two already.
Another option might be to define an additional set of thresholds based on the relative ranking of countries, say quartiles, and then hold these thresholds constant in real terms going forward, perhaps as a pilot system in parallel with the existing one. There are many other options and possibilities, and we welcome your views.
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The case for a global policy upgrade
IMF Chief Christine Lagarde makes the case for a stronger global financial safety net and safer capital flows at the farewell symposium for Christian Noyer, Banque de France, Paris, 12 January 2016.
Introduction
Ladies and gentlemen, distinguished guests, Christian, mon cher ami!
I am honored to pay tribute to someone who is greatly admired in all the different roles played in a very public life. As head of the Paris Club, Directeur du Trésor, Vice President of the ECB, Governor of the Banque de France, and Chairman of the BIS. All demanding roles, with different stakeholders, which you have fulfilled with diligence, distinction and courage.
At the helm of the Banque de France, you reigned with a steady hand. You came to be known as the “banquier anti-stress.”
Yet there is another quality that distinguishes you as a central banker – the ability to see all sides of an issue; to recognize that changes in the global economy necessitate a change in mindset and policies.
You recently said: “As the geography of the world economy changes, so will the shape of the international monetary system.”1
Dear Christian, with major shifts unfolding on the global landscape, the world today is more than ever in need of people that can see it from all sides. And this will be the theme of my remarks today!
In fact, I would like to talk about a subject that has been close to your heart since your days at the Paris Club – about the prospects of emerging and developing countries, and how monetary policies in advanced economies are impacting them. I will also discuss why a stronger international monetary system is essential – a topic which you have considered quite deeply.
1. The Role of Emerging and Developing Countries in the Global Economy
So why focus on emerging and developing economies? It is worth remembering that these countries are home to 85 percent of the world’s population. And it is not surprising that – slowly but steadily – these 85 percent have become a major engine of global activity!
Today, emerging and developing economies account for almost 60 percent of global GDP, up from just under half only a decade ago.2 They propped up the global economy as advanced countries grappled with the after effects of the financial crisis. Together they contributed more than 80 percent of global growth since the crisis.
Clearly, the 85 percent matter for the global economy!
China, of course, has emerged as an economic superpower. It has also recently become a member of the SDR currency basket – a decision based on a technical assessment that was wholeheartedly endorsed by our Executive Board.
After years of success, however, emerging and developing countries are now confronted with a new reality. Growth rates are down, and cyclical and structural forces have undermined the traditional growth paradigm.
On current forecasts, the emerging world will converge to advanced economy income levels at less than two-thirds the pace we had predicted just a decade ago. This is cause for concern.
China itself has embarked on an ambitious multi-year rebalancing of its economy, toward slower and more sustainable growth. This is a positive endeavor that, in the long run, will benefit everybody. In the short run, however, this transformation generates spillover effects – through trade and lower demand for commodities, and through financial channels as well.3
Not only have oil and metals prices fallen by around two-thirds from their most recent peak, but supply and demand side factors suggest that they are likely to stay low for a sustained period.
Many commodity exporting emerging and developing economies are under severe stress, and some currencies have already experienced very large depreciations. We have all seen it in Latin America, and I have seen it first-hand last week in Nigeria and Cameroon – two countries that are hit hard by lower oil prices and domestic fragilities.
So where does this leave economic policy? And what can the other 15 percent of the global population do for global growth, and to help emerging and developing countries adjust to the new global environment?
Certainly any solution must involve individual countries – both advanced and emerging – tackling their own vulnerabilities and policy constraints.
More generally, in advanced economies, monetary policy can no longer be the only game in town. It needs the support of fiscal policy and structural reforms to support aggregate demand and raise growth potential. And emerging economies need to redirect their economies toward new sources of growth.
2. Monetary Policy in Motion
We at the IMF have made these points repeatedly, and you know them well. Allow me therefore to focus only on monetary policy, which has arrived at a critical juncture. After all, we are here at the Banque de France and honoring a central banker par excellence!
In the Euro Area and Japan, weak growth and low inflation call for continued monetary accommodation. In the United States, firming activity laid the ground for monetary normalization by the Federal Reserve. Lift-off has gone smoothly. It was clearly communicated and priced in by financial markets.
The key issue going forward is the pace of normalization. I agree that it should be gradual, as the Fed has stressed, and based on clear evidence of firmer wage or price pressures.
But let us consider what this implies for emerging and developing countries – for the other 85 percent. This is an important issue, and I know that our IMFC Chairman Agustin Carstens will also say a few words on this later.
Clearly, emerging market are benefiting from the fact that many central banks in many advanced economies still have a very easy policy stance. And yet, if financial tightening by the U.S. were to coincide with further easing in the euro area and Japan, there could be further dollar appreciation vis-à-vis the euro and the yen.
For emerging economies, this could raise vulnerabilities in sectors with dollar exposures, especially corporates. Foreign exchange exposures by corporates have grown sharply over the last five years, in part because of the search for yield in a low interest rate environment, as Jean Tirole reminded us.4
Beyond dollar appreciation, there is also the potential for increased exchange rate volatility. This volatility could be induced not only by the divergence in monetary policies in major advanced economies, but also by uncertainty about their overall prospects and policy action.
Putting it all together, the key issue for emerging economies is that heightened volatility is manifesting at a time when many of them are already under stress. Another bout of global risk aversion could lead to further commodity price declines, widening spreads, and depreciating exchange rates.
Spillbacks
Of course, this matters a lot for advanced economies too. It matters because of the current environment of elevated uncertainty and financial market volatility.
In such an environment, events and policy decisions that in “normal” times may have limited cross-border effects can now trigger much larger financial reactions. Just think of the market spike in response to China’s announcement of a new exchange rate arrangement last August. Or the financial rout last week triggered by the stock market plunge in Shanghai!
An equally compelling reason why advanced economies should heed what is happening in the emerging world is the impact on growth. Our own estimates show that a slowdown of one percent in the emerging world would lower growth in advanced countries by at least about 0.2 percentage points.5 This is substantial given anemic growth rates, lack of employment, and increasing social tension in large parts of the advanced world.
Ladies and gentlemen, the 85 percent matter. The economic health of the emerging world is of first-order importance for the advanced economies.
3. A Stronger International Monetary System – The Case for a Global Policy Upgrade
With this, I would like to encourage you to think beyond the narrow policy debate we have been having so far.
I have many times called for economic policy upgrades in our member countries. But beyond putting individual countries’ houses in order, there is more that needs to be done. We need apolicy upgrade at the global level.
We need an international monetary system that helps emerging and developing economies preserve stability, achieve stronger, more sustainable growth, and embark on a path of convergence with advanced economies. A system that reduces spillovers that hurt everybody.
What do I mean by that? I mean a stronger global financial safety net, and a framework for safer capital flows. Let me take each in turn.
A stronger global financial safety net
There have been important strides in improving the global financial safety net since the onset of the crisis. For example, the IMF’s lending framework was expanded to include insurance and liquidity instruments such as the Flexible Credit Line (FCL) and the Precautionary and Liquidity Line (PLL).
Beyond the Fund, the safety net has also expanded in size and coverage. But it has also become more fragmented and asymmetric. And it has not been fully tested.
Consider for a moment the problem of asymmetry created by the existing system of swap lines between central banks of major advanced economies. Many emerging and developing economies do not have access to these swap lines. This makes the global safety net stronger for advanced countries than it is for emerging economies. Yet emerging economies critically depend on advanced-country currencies in their trade and finance.6
To date, little has been done to adapt the safety net to the new global realities. The insurance aspect must be strengthened. Rather than relying on a fragmented and incomplete system of regional and bilateral arrangements, we need a functioning international network of precautionary instruments that works for everyone.
The size of the safety net also needs to be reconsidered. The good news here is that the recent approval of the 2010 Quota and Governance Reforms will strengthen the role of the IMF in this safety net.
It will place the institution on a more sustainable footing financially, and enhance the representation of dynamic emerging and developing economies in our governance. This is crucially important.
Even so, emerging and developing economies are now receiving up to $1.5 trillion of capital inflows per year. And it has become more difficult to prevent liquidity shocks from doing serious harm to an economy.
Unless countries be tempted to accumulate even more reserves for self-insurance, we need to find ways to increase the resources that can be brought to bear in times of need.
At the IMF, we are looking into these issues from various angles. These include the speed and duration of our instruments, associated cost and stigma, and of course, the related aspects of moral hazard. These issues will be part of a broader agenda on the global safety net that we will be examining in the coming few months.
A framework for safer capital flows
In addition to an adequate safety net, a stronger international monetary system should include a framework for safer capital flows.
There is a growing recognition that the short-term nature and inherent volatility of global capital flows are part of the problem affecting emerging economies today. There is also an inherent debt bias embedded in the global tax system. More generally, the international monetary system would benefit from a higher share of equity compared with debt flows.
This can this be achieved by examining instruments that alter the composition and nature of international flows – away from short-term debt and toward longer-term equity flows.
In source countries, the supervisory framework may need to be adjusted to ensure that prudent levels of capital are held behind short-term debt creating flows.
Recipient countries may consider policies to enhance the resilience of their financial systems to capital flows. Both prudential and tax policies can play a useful role here. For example, the tax system could be structured to provide incentives to rely less on debt and more on direct investment and equity financing.
Overall, a global shift toward more long-term, equity based capital flows would alleviate concerns about reversals, and lessen the need for insurance. It would also reduce the size of financial buffers that emerging and developing countries need to maintain.
Conclusion
Let me conclude. According to some estimates, a successful convergence process in the emerging world could triple the size of the global economy in the next 25 or 30 years.7 The global community cannot afford the costs of stalled convergence. The 85 percent matter!
I would like to leave you with this thought from Milton Friedman:
“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”8
I have pointed to some “alternatives to existing policies” that can help restore momentum and convergence in emerging and developing countries. And I hope I have impressed on you the urgency of considering these alternatives.
Dear Christian, I hope that we continue this work in the spirit that has guided you during your time at the Banque de France. I am sure you agree with me, in a nutshell, that a global policy upgrade is not only desirable, it is essential!
Thank you.
1 Christian Noyer, “Spheres of Influence in the International Monetary System“ 21st Conference of Montreal, Montreal, 8 June 2015.
2 GDP measured at purchasing power parity.
3 The forthcoming April 2016 Global Financial Stability Report will examine the growing importance of financial spillovers from major emerging economies, including China.
4 Foreign exchange corporate debt of non-financial firms – including U.S. dollar but also euro- and yen-denominated debt – across major emerging economies is estimated at close to US$3 trillion in 2014, up from about US$1.8 trillion in 2010. Total corporate debt is much higher, estimated at over US$18 trillion in 2014 compared to just US$4 trillion in 2004. See Chapter 3 of the October 2015 Global Financial Stability Report.
5 See Chapter 2 of the 2014 Spillover Report and Chapter 1 of the October 2015 World Economic Outlook.
6 Maurice Obstfeld, 2013. “The International Monetary System: Living With Asymmetry” in Robert C. Feenstra and Alan M. Taylor, eds. Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, National Bureau of Economic Research.
7 See “Inclusiveness: Enabling and Adapting to Developing Economy Growth” by Michael Spence in Looming Ahead, Finance and Development, September 2014.
8 Milton Friedman, 1962. Capitalism and Freedom. University of Chicago Press.
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Trends in International Migrant Stock: The 2015 Revision
The number of international migrants has grown faster than the world’s population; 244 million international migrants living abroad worldwide, new UN statistics reveal
The number of international migrants – persons living in a country other than where they were born – reached 244 million in 2015 for the world as a whole, a 41 per cent increase compared to 2000, according to new data presented by the United Nations on Tuesday, 12 January 2016. This figure includes almost 20 million refugees.
In November, UN Secretary-General Ban Ki-moon announced a roadmap to address the issues on migrants and refugees. In response, the General Assembly decided to convene a high-level meeting on large movements of migrants and refugees on 19 September 2016. The Secretary-General has now appointed a Special Adviser to prepare the high-level meeting, Ms. Karen AbuZayd.
“The rise in the number of international migrants reflects the increasing importance of international migration, which has become an integral part of our economies and societies. Well-managed migration brings important benefits to countries of origin and destination, as well as to migrants and their families,” noted Mr. Wu Hongbo, UN Under-Secretary-General for Economic and Social Affairs, the importance of international migration.
The new UN dataset, “Trends in International Migrant Stock: The 2015 Revision,” shows that the number of international migrants has grown faster than the world’s population. As a result, the share of migrants in the global population reached 3.3 per cent in 2015, up from 2.8 per cent in 2000. There are, however, considerable differences between large regions of the world. In Europe, Northern America and Oceania, international migrants account for at least 10 per cent of the total population. By contrast, in Africa, Asia, and Latin America and the Caribbean, fewer than 2 per cent of the population are international migrants.
Rapid increase of migrants in Asia, with intra-regional migration dominating worldwide
In 2015, two out of three international migrants lived in Europe or Asia. Nearly half of all international migrants worldwide were born in Asia. Among major regions of the world, Northern America hosts the third largest number of international migrants, followed by Africa, Latin America and the Caribbean, and Oceania. Between 2000 and 2015, Asia added more international migrants than any other major region, or a total of 26 million additional migrants.
In many parts of the world, however, migration occurs primarily between countries located within the same geographic zone. In 2015, most international migrants living in Africa, or 87 per cent of the total, originated from another country of the same region. The equivalent value was 82 per cent for Asia, 66 per cent for Latin America and the Caribbean, and 53 per cent for Europe. In contrast, a substantial majority of international migrants living in Northern America (98 per cent) and Oceania (87 per cent) were born in a major region other than the one where they currently reside.
In 2015, two thirds of all international migrants were living in only 20 countries, starting with the USA, which hosted 19per cent of all migrants, followed by Germany, the Russian Federation, Saudi Arabia, the United Kingdom, and the United Arab Emirates.
India has the largest diaspora in the world, followed by Mexico and Russia
In 2015, 16 million people from India were living outside of their country, compared to 12 million from Mexico. Other countries with large diasporas included the Russian Federation, China, Bangladesh, Pakistan and Ukraine. Of the twenty countries with the largest number of international migrants living abroad, 11 were in Asia, 6 in Europe, and one each in Africa, Latin America and the Caribbean, and Northern America.
2030 Agenda for Sustainable Development
The 2030 Agenda for Sustainable Development, adopted by world leaders last September at the United Nations, stresses the multidimensional reality of migration. The Agenda calls on countries to implement planned and well-managed migration policies, eradicate human trafficking, respect the labour rights of migrant workers and reduce the transaction costs of migrant remittances. The Agenda also highlights the vulnerability of migrants, refugees and IDPs, and emphasises that forced displacement and related humanitarian crises threaten to reverse much of the development progress made in recent decades.
UN Deputy Secretary-General Jan Eliasson said migrants need to be protected: “We need to take greater responsibility for protecting the lives of many thousands of migrants – men, women and children – who are compelled to undertake dangerous and sometimes fatal journeys. Those forced to flee should never be denied safe haven or rescue. Migrants, as all people, deserve protection and empathy.”
About the dataset “Trends in International Migrant Stock: The 2015 Revision”
The Population Division of the UN Department of Economic and Social Affairs estimates the global number of international migrants at regular intervals, monitors levels, trends and policies related to international migration, and collects and analyses information on the relationship between international migration and development. The dataset represents the most recent information available on numbers of international migrants for all countries or areas of the world.
» Download: International Migration Wall Chart 2015 (PDF, 6.79 MB)
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Time to fundamentally rethink ACP-EU relations
The partnership between the European Union (EU) and the African, Caribbean and Pacific (ACP) Group needs to change to remain relevant after 2020.
The European Centre for Development Policy Management (ECDPM) has released an independent political economy analysis study looking at the partnership that links 79 ACP countries with the EU, and mobilizes a large development budget of 30.5 billion euros.
The current partnership is over 40 years old, and is underpinned by the legally binding Cotonou Partnership Agreement (CPA), which will expire in 2020.
“Discussions on the future of the EU-ACP partnership beyond 2020 are currently in full swing, and the stakes are high. However, the relevance and the effectiveness of the partnership is being questioned,” explained Ewald Wermuth, Director at ECDPM.
ECDPM initiated this study with a view to promote an open and well-informed discussion.
The study found the current Cotonou Partnership Agreement’s framework is not well suited to cope with the new global development agenda, and has a limited track record on delivering on several of its core commitments.
“Rethinking the ACP-EU is no time for business as usual. When this partnership was set up 40 years ago, it was groundbreaking. However, the real challenge now is to be as innovative as they were then, and find new arrangements that generate benefits for all parties that can hold for the next 20 years,” added Wermuth.
“What is lacking in this debate is solid evidence on the concrete practice of ACP-EU cooperation. A political economy analysis can help to address this gap, as it does not look at what is desirable, but at how things work out in practice and why,” explained Geert Laporte, Deputy Director of ECDPM.
The political economy analysis found:
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The ACP-EU Partnership has over time lost traction and the Cotonou Partnership Agreement (CPA) is now primarily an aid delivery mechanism with limited political and trade value.
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The overall performance of the ACP-EU partnership (beyond aid) has remained below expectations, and subsequent revisions have not been able to address a major implementation gap between the laudable ambitions and actual practices.
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Globalisation and regionalisation dynamics have severely affected the scope and capacity for collective action between the ACP and the EU.
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The added value of the ACP Group and the Cotonou Agreement vis-à-vis other key players (African Union and Regional Economic Communities) and political partnerships is increasingly unclear. ACP countries tend to ‘go regional’ to address their most pressing challenges.
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The ACP-EU framework is not suitable to effectively and efficiently address the universal 2030 Agenda, and the UN Sustainable Development Goals.
As a result, it is doubtful that technical fixes, aimed at improving the implementation of the Cotonou Partnership Agreement, will suffice to revitalise ACP-EU cooperation. The relevance of the framework itself is the core issue – geographically, politically and institutionally.
Rather than following the path of least resistance and focusing on a limited reformulation of the existing agreement, the ECDPM study suggests that it might be in the interest of all parties in the EU and the ACP to jointly explore alternative options.
This could lead to more legitimate and solid arrangements, aligned to regionalisation dynamics and adapted to the international cooperation challenges of the 21st century.
About
ECDPM as an independent think and do tank was created in 1986, primarily with a view to promote effective cooperation between the ACP and the EU. Over nearly 30 years, the Centre has worked closely with institutional partners and other stakeholders on a wide range of ACP-EU topics, including trade, development cooperation and political dialogue.
The Centre has produced substantial analysis on various aspects of the ACP-EU partnership and has been an open platform for dialogue on the periodic renewal of the Partnership.
The study is based on analytical evidence and interviews with EU and ACP stakeholders.
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New report: Why Africans don’t pay taxes, including a place where it takes over a month just to get them done
On average in Africa, it takes about 313 hours to sort out your taxes, and there are 36.6 payments to be made – the highest in the world
Every year Africa loses $50 billion in illicit outflows. These are linked to commercial activities and include hiding wealth; dodging customs, domestic levies and aggressively avoiding taxes.
Nobody likes to pay taxes, yet this form of revenue is important in fighting poverty and promoting sustainable economic growth. After all, taxes are what help a country tick on – building up institutions, markets and democracy through making the state accountable to its taxpayers.
“Paying Taxes” is a joint report that has just been released by PwC and the World Bank Group that investigates and compares tax regimes across 189 economies, ranking them according to the relative ease of paying taxes.
It shows the yearly costs of all taxes that are borne by a medium-sized company (the Total Tax Rate) which is expressed as a share of the commercial profit, the time required to comply with tax obligations, and the number of tax payments made.
Highest “number of payments”
According to the recent PwC and World Bank Paying Taxes report, on average Africa has a total tax rate of 46.9%, a time to comply of 313 hours and there are 36.6 payments to be made – the highest “number of payments” indicator in the world.
When comparing Africa to the rest of the world, global averages show an average of 261 hours to comply with 25.6 payments with a total tax rate of 40.8%.
What this reveals is that while the region shows the greatest overall drop worldwide in the “costs” (or Total Tax Rate) since 2004, it is still relatively very difficult to pay taxes because the time needed to pay the them and the number of payments is high. This means that there is a higher risk of taxes not getting paid.
New taxes
There are several factors that contribute to the difficulties in paying taxes. For one, an inability to keep up with the increasing number of payments due to the introduction of more labour taxes, social security contributions, corporate income taxes and property taxes.
Introducing new taxes, in some ways, can be seen as being a good thing. It helps to link clearly in the public mind a new public benefit or to show clearly how funds will be raised for a new government item.
One example is how Nigeria is currently debating the introduction of a security tax which would require registered companies operating in Nigeria to pay up to 5% of their profits towards the tax – a reaction to the cost of the insurgencies by jihadist rebel group Boko Haram that the country has grappled to deal with for nearly seven years now. If passed into law, the funds raised would be distributed between the Nigerian police force, civil defence corps, Department of State Services, prisons and fire service.
Not thinking about the future
However, introducing new taxes can make the process more complicated and lengthy. In an interview with CNBC, Taiwo Oyedele, the Head of Tax at PwC Nigeria, explained that many governments in Africa still don’t “have a clear policy around taxation” and that most still tend to do what fits at the time without thinking about sustainability and the future.
So that even though Africa’s “time to comply” is declining – in large part attributed to significant improvements in the use of electronic methods in filing and making payments for taxes – keeping up with new tax payments is a big headache.
But these difficulties associated with paying them – are not the only reason why people do not pay them – ie. are tax compliant.
Another factor affecting tax compliance, is that tax policies are uncertain and citizens want to see real benefits before they pay taxes – a bit of a Catch-22 for governments looking to collect them to create these services.
Lack of services
Taiwo described how in a recent stakeholder meeting in Nigeria the number one reason why people in attendance said they don’t pay taxes was because they don’t see social services being provided. Also, that even when they pay their taxes they still have to spend their money to fix roads, provide water and get electricity.
He explains that many governments in Africa need to recognise that taxpayers’ money is taxpayers’ money and when it is spent, it must be judiciously. People must see the results of the taxes, and they shouldn’t act like they’re doing them a favour when they provide social services.
Shocking findings
However, these statements are generalised and Africa is a truly mixed bag – with some star performers in certain sub-indicators and worrying trends in others.
So which countries are nightmares in terms of the ease of paying taxes? Some pretty shocking findings…
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In Comoros the total tax rate is 216.5% – due to its cascading sales tax
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It takes 908 hours, over one month, to comply with tax regulations in Nigeria
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In Cote d’Ivoire 63 payments are expected to be made
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India could edge out China from top growth spot in 2016
Asia’s third-largest economy steals the limelight from a slowing China, according to economists. Could this be India’s year to shine?
With China’s growth targets in doubt, India will stand out for being the only economy in the world to expand more than 7 percent, according to surveys of Bloomberg economists. China, on the other hand, is enduring the slowest growth in a quarter century and is forecast to expand 6.5 percent this year.
While many of 2016’s economic underachievers will cluster in Latin America and Europe, we now look to Asia and Africa as the motor for global growth this year, accounting for 12 of the 20 best performers. The largest of these – China, India and Indonesia – combined make up more than 17 percent of global gross domestic product and 40 percent of the world’s population.
Chindia
The world’s two most populous nations are in a constant tussle for supremacy. With an economy nearly five times larger than India’s, China remains the true heavyweight. Yet after a rotten start to the year, economists are increasingly zeroing in on its South Asian rival’s growth potential.
Prime Minister Narendra Modi’s goal is to transform India into a more pro-business economy by slashing red tape and boosting manufacturing. To spur investment, Reserve Bank of India Governor Raghuram Rajan cut borrowing costs four times last year. Though competitors, China is also India’s largest trade partner, so a slowdown there would hurt exports.
African Promise
For impressive growth, look to Africa with four countries making the cut: Uganda, Nigeria, Kenya and Ghana. Among the 10 African nations surveyed, Uganda emerged as the continent’s best performer with expected growth of 5.6 percent this year. This in spite of a volatile political landscape ahead of February elections.
Best of the Rest
Ireland is the only euro economy to make the list with growth of 4.1 percent expected this year. After years of austerity and a bailout, the Celtic Tiger is set to roar again while many of its European peers still struggle.
Meanwhile, on the other side of the Atlantic, the U.S. is forecast to grow 2.5 percent in 2016, placing the world’s biggest economy near the top of the field compared to its developed market peers.
Current forecasts are the median estimate from each country’s latest survey conducted between Oct. and Dec. 2015, bringing the total number of economies surveyed to 93.
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tralac’s Daily News selection
The selection: Tuesday, 12 January 2016
New AGOA deadline set as Obama announces SA suspension date (Fin24)
South Africa has until March 15 to fully comply with the US import of poultry as well as other meat. This is the new deadline that has been set for South Africa, after US President Barack Obama on Monday ordered the suspension of duty-free treatment to all AGOA-eligible goods in the agricultural sector from South Africa, effective on March 15. The suspension will be revoked should South Africa comply with the requirements to ensure the imports are on SA shelves, sources said. It is in effect another 60-day deadline for South Africa, after it concluded negotiations over health issues last week. That could happen within a month, but does put added pressure on the country to comply. [EFF statement on AGOA]
Supporting export competitiveness through port and rail network reforms: a case study of South Africa (World Bank)
The paper draws on interviews with a wide range of exporters along with secondary research to examine South Africa's port and rail network, and explores the underlying factors contributing to these constraints, including chronic underinvestment, an inadequate regulatory environment, insufficient private sector participation, and weak regional integration. The paper concludes with a review of the reforms needed to deliver a more broadly accessible and competitive rail and port sector based on international case examples. [Download]
Extract: The virtual collapse of the regional rail services prompted governments to take action with renewed focus on regional railways supported by interest from large and resourceful private sector investors. Significant improvements have taken place over the past 2 to 3 years, with transit times becoming more predictable and costs declining. Although locomotive changes still take place on the borders (a major cause of delay in the past), it is now more coordinated. Among the most important improvements in recent years was the establishment of a Joint Operating Centre (JOC) in Bulawayo to control and monitor the railway operation on the north‐south corridor (a similar JOC has been operating successfully on the Maputo Corridor). [The authors: Martin Odendaal, Andre Steenkamp, Duncan Pieterse, Thomas Farole]
Beira port expansion lags behind expanded Sena rail capacity (Zitamar News)
The long-running rehabilitation of the Sena railway line from coal-rich Moatize to the port of Beira is set to be completed by June 2016, according to a government official, allowing 20 million tonnes of coal to travel down the line each year. However Beira port will not be able to handle even half of that capacity until at least 2020.
Botswana: MTI issues trade facilitation paper (Daily News)
The Ministry of Trade and Industry has issued a paper that disseminates information on the concept of trade facilitation, its importance and developments around the subject. On how the WTO agreement on trade facilitation will benefit traders, it notes that the ATF has potential benefits to traders which include the provision on publication of information, which will benefit traders by ensuring availability of information and encouraging transparency. It also says duplication of customs controls between border agencies will be decreased thereby reducing the costs for traders. It notes that it will lead to reduced costs to consumers and exporters thus assisting exporters of agricultural goods. The agreement calls on member countries to establish or maintain a single window, a trade facilitation tool which connects border agencies within a country through a single electronic data information exchange platform.
Seychelles ratifies Trade Facilitation Agreement (WTO)
Mozambique: CTA to restart business environment monitoring forums (Club of Mozambique)
The Confederation of Business Associations of Mozambique (CTA), which celebrates its 20th anniversary in 2016, has announced that it will resume the monitoring of the business environment at central and provincial level this year. The CTA also plans to complete the implementation by June of this year of the reform agenda outlined in the memorandum signed in August 2015 between the government and the private sector. In 2015, Mozambique fell six places from 127 to 133 in the international Doing Business ranking, an important indicator of Mozambique’s image among foreign investors. The decline, coupled with the current economic climate, will only exacerbate investor uncertainty regarding Mozambique.
Kenya: Why businesses should pay attention to new commercial laws (Business Daily)
Kenya has undergone major legislative changes in the past 10 years. New laws geared towards making the country the region’s trading hub have been enacted and implementation is expected to begin in earnest. The changes represent the largest reform of commercial law the country has ever seen. And although much of the concepts of the repealed Acts will remain the same, some significant changes have been introduced, many of which are designed to open up ways to operate a corporate business in Kenya. The business fraternity has welcomed this robust move that will seek to revolutionise commercial practice. This is more so because the old regimes, albeit having served us for over half a century, had many lapses. [The author: Nicholas Kokita]
Banks in EA pin hopes on technology and partnerships to catalyse growth (The East African)
Namibia: New agricultural policy launched (Namibia Economist)
New developments within the agricultural sector, which include new bilateral, regional and multi-lateral agreements as well as the current and expected impacts of climate change and agricultural land reform have prompted the revision of the National Agricultural Policy which has been in existence since 1995. The new policy was launched in December by the Minister of Agriculture, Water and Forestry, John Mutorwa. The Namibia Agriculture Policy is the overarching policy and will serve as a base for drafting new as well as aligning existing policies, law and regulations. The policy presents a framework for the design of programmes and projects that will steer the performance of the sector. According to Mutorwa, countries belonging to the Southern African Customs Union have also initiated a process for the harmonisation of agricultural and related policies.
Related: Eddie Cross: 'The outlook for agriculture in Southern Africa' (Southern Times), Africa takes fresh look at GMO crops as drought blights continent (Reuters)
Mauritius waits on a second economic miracle (African Arguments)
Construction of the first of eight ‘smart cities’, announced by Jugnauth last June, will also begin shortly. The idea is to build on the success of the 2001 government-initiated ‘Cyber City’ (also known as Ebene) to create (with private sector finance) sustainable business, entertainment and residential hubs that will boost both the number and quality of jobs open to the ever-growing number of well-educated young people. Increasingly, this demographic is looking for jobs not on the basis of kinship or political patronage but on merit – meritocracy is something of a buzzword in Mauritius these days. In addition, there are plans to regenerate existing urban areas such as Curepipe, Goodlands and Quatre Bornes. [The author: Seán Carey]
Rwanda's increasing import bill is short-term, experts say (New Times)
Rwanda recorded a 0.3% trade deficit over the third quarter of last year, spending $481.1m (Rwf370.4bn) on imports compared to $96.14m (Rwf74bn) from exports. Total exports decreased by 26.07% during the period. On the other hand, the import bill increased by 12.5% from $427.75m during the same period in 2014, and rose by 2.23% compared to the second quarter of 2015. Switzerland, Kenya, the DRC, the USA and the United Arab Emirates remained Rwanda’s top five markets for the country’s exports, accounting for 65.7% share of total value of domestic exports, valued at $63.2m (Rwf48.7bn). [Download Q3 export trade report]
IGAD bloc kicks off celebrating 30 years of progress (Coastweek)
The Inter-Governmental Authority on Development which was established to address issues of drought and mitigate against the effects of desertification in the greater Horn of Africa said it will celebrate the achievements on 16 January. "At the end of the first decade, the organization was revitalized taking up broader mandates that included economic cooperation and social development, peace building and human security, as well as environmental protection and food security," IGAD said in a statement issued in Nairobi. The regional bloc has lined up a panel discussion which will be attended by three former executive secretaries to share their experiences and views on the prospects and challenges of peace, security, economic development and integration in the region, as well as how best IGAD can position itself for higher impact.
West African traders ignore ECOWAS market (Footprint to Africa)
“Intra-regional trade in ECOWAS is still consistently low at about 12%,” said Kalilou Traore, ECOWAS commissioner for industry and private sector promotion, while announcing plans to establish ECOWAS Business Houses (EBH). “Our expectation is that within the first five years of establishment of the regional EBH, apart from boosting the Gross Domestic Product (GDP) in the regional economies, made in ECOWAS States product will be viable and visibly present for business in the regional market and companies to reap the gains from international trade,” Traore said.
West Africa counts economic cost as Ebola outbreak ends (AFP/Daily Nation)
Gabon signs loans for port and major highway development (Africa Report)
South Africa: Festive season traveller statistics (Home Affairs)
From 1 December 2015 to 7 January 2016, a total number of 5,390,856 travellers went through our borders, much higher than the total earlier reported for 1 December 2015 to 3 January 2016, that is, 4,798,183. Of the 5,390,856, 1,487,148 were citizens, with 3,903,708 being foreign nationals. The top nationalities arriving in SA over this period were from Lesotho, Zimbabwe, Mozambique, Swaziland, Botswana, United Kingdom, Germany, USA and Namibia.
Taking AfDB’s development impact to scale in fragile situations (AfDB)
In recent years, we have witnessed many cases of political instability that resulted in the advent of transitory governments. This poses challenges to our traditional business model to which we need to adapt, making better use of our country presence and partnerships. We recognize the importance of the private sector in promoting economic growth and generating much-needed jobs in these moments. However, engaging with the private sector in such environments calls for better risk mitigation mechanisms and appropriate instruments. The Bank has been called to play a leading role around issues of fragility in Africa and also think “out of the box” to find solutions. This study analyses constraints and opportunities in the Bank’s business model to deliver in fragile situations. The report identifies seven dimensions that have the potential to significantly strengthen the footprint of the AfDB in these settings: [Download]
Burundi: EALA to hold public hearing workshop (EAC)
The EALA Regional Affairs and Conflict Resolution Committee has called for the public hearing workshop that is intended to review the petition by the Pan African Lawyers Union submitted to EALA in November 2015 on the subject matter. The Committee on Regional Affairs and Conflict Resolution is set to establish the facts of humanitarian atrocities as reported in the petition and to make recommendations to the House during the next Sitting scheduled to commence on January 24th, 2016 in Arusha. Participants are expected from the Committee Membership, government officials from the Republic of Burundi, Civil Society Organisation representatives from Burundi, representatives from the country’s Political Parties and the petitioners.
Implementing the Mali Peace Agreement: UNSC briefing (UN)
Tokyo takes on Beijing in Africa, claiming quality over speed (Financial Times)
China Railway Construction Corp to modernise Senegal-Mali railway (IRJ)
Jamaica to Chair Group of 77 in Geneva in 2016 (UNCTAD)
The shock of widowhood: marital status and poverty in Africa (World Bank Blogs)
ProSavana advances but strategy should be reviewed - Notícias (Club of Mozambique)
New UBS report highlights the high cost of climate change to global middle class (UBS)
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New UBS report highlights the high cost of climate change to global middle class
Consumption patterns change significantly of those living in cities most at risk for climate change
UBS Group AG launched “Climate change: a risk to the global middle class” on 11 January 2016 – its first report measuring the impact of climate change and its effects on the global middle class. Estimated at around one billion people worldwide, and with substantial assets and political influence, the middle class is key to social order and economic growth. Given the group’s size, spending power and dynamism, the erosion of middle-class wealth through climate change threatens both economic and sociopolitical stability. At the same time, the middle class also represents the greatest opportunity for change.
To examine the impact of climate change on the middle class, UBS looked at middle-class consumption in 215 cities around the world and compared consumption patterns to the level of climate-change risk in those cities. The study found that in cities most at risk from climate change, such as Los Angeles, Tokyo and Shanghai, spending priorities are noticeably different, with the middle class spending between 0.6 and 0.8 percent more on housing when compared to the respective national average. In the US, middle class residents of high climate-change risk cities spend between USD 800 and USD 1,600 more annually on housing compared to a lower risk city. To compensate, middle-class households spend proportionately less on luxuries, entertainment and durable goods.
The world's largest global cities contain nearly a quarter of the global population and generate around half of global GDP. The concentration of both people and wealth in urban centers means cities are crucial not just to national economies, but also to global companies and their investors. Most of the global middle class lives in Southeast Asia, the region that has experienced the fastest urban population growth in recent years.
Commenting on the report, Caroline Anstey, Group Managing Director, UBS, and Global Head, UBS and Society, said: “Climate change is already having a real and significant impact on the global population, and conditions are only predicted to worsen over time. UBS is committed to combating the effects of climate change for the good of the global community and economy.”
Paul Donovan, Global Economist, Managing Director, UBS Investment Bank, added: “The middle class has two important qualities that make them critically important to the conversation about climate change: substantial assets and political influence. If the effects of climate change significantly hurt the middle class, the inevitable reaction should in turn elicit a strong response from policy makers. It is a big reason why the latest United Nations Framework Convention on Climate Change (UNFCCC) agreement in Paris was signed by all 196 participating countries – the threat is real.”
Key findings from “Climate change: a risk to the global middle class” include:
The added cost of climate change
The financial costs of climate-related events for both governments and taxpayers are already apparent. Despite the increased threat of natural disasters, the global middle class is not well insured. In the US, which has the highest level of insurance penetration in our study sample, 32 percent of weather-related losses remain uninsured. Those without access to coverage are subsequently reliant on the safety net provided by the US government, which in turn has economic consequences for US taxpayers: between 2011 and 2013, the cost of US federal disaster relief for hurricanes, floods and droughts totaled USD 136 billion, equating to USD 400 annually per household.
In less developed and newly industrialized nations, the middle class is typically underinsured, with emerging markets showing very low insurance penetration relative to property value (e.g. 0.12% for China and 0.07% for India).
Desperate times lead to desperate measures
In 2000, nearly half of the global population of 6 billion people lived in cities; the United Nations expects this figure to rise to 60 percent by 2025. Such climate-driven population shifts have the potential to create and exacerbate conflict.
The US Department of Defense argues that in already volatile situations climate change can act as a “threat multiplier,” intensifying existent hostility and tensions. For example, while news coverage focuses on Syrians fleeing war and economic collapse for Europe, the fact that Syria suffered an unprecedented drought from 2006 to 2011 is rarely mentioned. In the course of five years, Syria lost 85 percent of its livestock and saw crop production plummet, child malnutrition worsen and the subsequent migration of 1.5 million residents from rural to urban areas. These conditions led to protests, which ultimately escalated into civil war.
Too hot to handle?
Research has shown that as temperatures rise beyond 30 degrees Celsius (86 degrees Fahrenheit), humans can struggle to adapt to their surroundings, and mortality rates rise. As of 2015, nearly 25 percent of the cities analyzed already have median annual temperatures above 20 degrees Celsius (68 degrees Fahrenheit).
A study of 15 European cities over a 10-year period estimated that even a 1 degree Celsius (1.8 degrees Fahrenheit) increase above the respective average summer temperature threshold resulted in a two to three percent increase in mortality.
In the longer term, temperatures are predicted to rise to a level that will not only endanger human health, but may also stress physical infrastructure to breaking point. Given global interconnectedness, even localized climate-related events have the potential to undermine the world economy.
From analysis to action
Nevertheless, the report concludes that the global middle class is increasingly aware of and adapting to climate change, albeit modestly and sporadically. In view of the middle class's political and social importance, growing economic vulnerability may well translate into pressure for innovative policy making. Whether investment and ingenuity are enough to preserve middle-class wealth and status, however, remains to be seen.
Methodology
This UBS study leverages the most recent scientific data on temperature-related mortality and flood risk in global cities. Using this data, combined with a bespoke database of middle-class household economic behavior, we evaluated the exposure of the middle class to climate-change risk and the extent to which it is adapting. The sample referenced in this report includes 215 cities across 15 countries at different stages of economic development.
About UBS’s climate change commitment
UBS believes that climate change is one of the most significant challenges of our time. The world’s key environmental and social challenges – such as population growth, energy security, loss of biodiversity and access to drinking water and food – are all closely intertwined with climate change. This makes the transition to a low-carbon economy vital. UBS supports this transition through a comprehensive climate change strategy.
UBS is determined to support its clients in preparing for success in an increasingly carbon-constrained world. As a leading global financial services provider, UBS focuses its climate change strategy on risk management, investments, financing, research and its own operations.
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New Agoa deadline set as Obama announces SA suspension date
South Africa has until March 15 to fully comply with the US import of poultry as well as other meat.
This is the new deadline that has been set for South Africa, after US President Barack Obama on Monday ordered the suspension of duty-free treatment to all Agoa-eligible goods in the agricultural sector from South Africa, effective on March 15.
The suspension will be revoked should South Africa comply with the requirements to ensure the imports are on SA shelves, sources said. It is in effect another 60-day deadline for South Africa, after it concluded negotiations over health issues last week. That could happen within a month, but does put added pressure on the country to comply.
Obama was expected to make this announcement last Tuesday, after South Africa failed to meet a previous 60-day deadline set by him to finalise negotiations around US meat imports, failing which he said he would suspend certain duty free tariffs on goods that benefit from the African Growth Opportunity Act (Agoa).
The act, renewed by US lawmakers in June, eliminates import levies on more than 7 000 products ranging from textiles to manufactured items and benefits 39 sub-Saharan African nations.
“I have determined that South Africa is not meeting the requirements described in section 506A(a)(1) of the 1974 Act and that suspending the application of duty-free treatment to certain goods would be more effective in promoting compliance by South Africa with such requirements than terminating the designation of South Africa as a beneficiary sub-Saharan African country,” Obama said in a proclamation released on Monday.
“Accordingly, I have decided to suspend the application of duty-free treatment for all Agoa-eligible goods in the agricultural sector from South Africa for purposes of section 506A of the 1974 Act, effective on March 15, 2016.”
While Minister of Trade and Industry Rob Davies announced on January 7 that the countries had completed negotiations on the various meat imports, US Ambassador Michael Froman warned there were more hurdles for SA.
“While we celebrate the progress we have made in resolving the outstanding technical issues, the true test of our success will be based on the ability of South African consumers to buy American product in local stores,” he said on January 8.
“We will be working to ensure that this final benchmark of entry of poultry is achieved so that South Africa continues to have the advantage of full Agoa benefits, including by working with the US and South African industries to expedite the shipment of eligible product as soon as possible.
“Our goal is to complete this effort so that South Africa can maintain the full and continued enjoyment of Agoa’s benefits.”
Sidwell Medupe, Department of Trade and Industry spokesperson, told Fin24 on Tuesday that the department will issue a statement later in the day, responding to this announcement.
Davies announced that after the negotiations over the salmonella issue were concluded on January 7, South Africa was immediately open to 65 000 tonnes of US poultry imports. The agreement means SA will rebate the US on any anti-dumping duties on the meat.
Asked how long it would take for shipments of US chicken to start reaching South Africa, Mike Brown, president of the US National Chicken Council, told Business Day newspaper that it was “just a matter of the South African government issuing import certificates for South African importers and the US government’s food safety and inspection service issuing paperwork to US exporters. I would hazard a guess that we could be in country within… 30 or so days by boat.”
New 60-day deadline
The National Security Council in Washington told SABC on Tuesday that it was not suspending South Africa’s Agoa benefits, but rather setting a new 60 day deadline for South Africa to comply.
“The office of the US trade representative says if the remaining benchmark – the entry of US poultry into South Africa under the agreed-upon conditions – is met before 15 March, the president will be able to consider a revocation of the proclamation before suspension takes effect,” SABC reported.
Obama can also reinstate full Agoa benefits after a suspension takes place.
“It seems that although the US is happy that the technical barriers were resolved last week, they are not prepared to let up the pressure on South Africa, and the implicit threat of removing the benefits of Agoa remain.”
Presidential Proclamation – To Take Certain Actions Under the African Growth and Opportunity Act
January 11, 2016
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In Proclamation 7350 of October 2, 2000, the President designated the Republic of South Africa (South Africa) as a beneficiary sub-Saharan African country for purposes of section 506A(a)(1) of the Trade Act of 1974 (the “1974 Act”) (19 U.S.C. 2466a(a)(1)), as added by section 111(a) of the African Growth and Opportunity Act (title I of Public Law 106-200) (AGOA).
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Sections 506A(d)(4)(C) (19 U.S.C. 2466a(d)(4)(C)) and 506A(c)(1) (19 U.S.C. 2466a(c)(1)) of the 1974 Act authorize the President to suspend the application of duty-free treatment provided for any article described in section 506A(b)(1) of the 1974 Act (19 U.S.C. 2466a(b)(1)) or 19 U.S.C. 3721 with respect to a beneficiary sub-Saharan African country if he determines that the beneficiary country is not meeting the requirements described in section 506A(a)(1) of the 1974 Act and that suspending such duty-free treatment would be more effective in promoting compliance by the country with those requirements than terminating the designation of the country as a beneficiary sub-Saharan African country for purposes of section 506A of the 1974 Act.
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Pursuant to section 506A(c)(1) of the 1974 Act, I have determined that South Africa is not meeting the requirements described in section 506A(a)(1) of the 1974 Act and that suspending the application of duty-free treatment to certain goods would be more effective in promoting compliance by South Africa with such requirements than terminating the designation of South Africa as a beneficiary sub-Saharan African country. Accordingly, I have decided to suspend the application of duty-free treatment for all AGOA-eligible goods in the agricultural sector from South Africa for purposes of section 506A of the 1974 Act, effective on March 15, 2016.
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Section 604 of the 1974 Act (19 U.S.C. 2483) authorizes the President to embody in the Harmonized Tariff Schedule of the United States (HTS) the substance of the relevant provisions of that Act, and of other Acts affecting import treatment, and actions thereunder, including removal, modification, continuance, or imposition of any rate of duty or other import restriction.
NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States of America, including but not limited to sections 506A(d)(4)(C), 506A(c)(1), and 604 of the 1974 Act, do proclaim that:
(1) The application of duty-free treatment for all AGOA-eligible goods in the agricultural sector from South Africa is suspended for purposes of section 506A of the 1974 Act, effective on March 15, 2016.
(2) In order to reflect in the HTS that beginning on March 15, 2016, the application of duty-free treatment for all AGOA-eligible goods in the agricultural sector from South Africa shall be suspended, the HTS is modified as set forth in the Annex to this proclamation.
(3) Any provisions of previous proclamations and Executive Orders that are inconsistent with the actions taken in this proclamation are superseded to the extent of such inconsistency.
IN WITNESS WHEREOF, I have hereunto set my hand this eleventh day of January, in the year of our Lord two thousand sixteen, and of the Independence of the United States of America the two hundred and fortieth.
BARACK OBAMA