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2015: A new era of comprehensive development of China-Africa cooperation
The year 2015 has witnessed China-Africa relations recording the most splendid chapter in the history of international relations.
Fruitful achievements have been made in the recently concluded Johannesburg Summit of FOCAC, which ushered in a new era of win-win cooperation and common development between China and Africa and brought China-Africa relations onto a new journey with broad prospects.
History will always remember the year 2015.
The Johannesburg Summit is indeed a milestone in China-Africa relations, which sent a strong signal to the world – China and Africa will join hands for win-win cooperation and common development and promote comprehensive development of their relations.
From proposing to strengthen and consolidate the “five major pillars” of China-Africa relations to announcing “ten major cooperation initiatives” with Africa in the following three years supported by US$60 billion for their smooth implementation; from initiating five proposals on China-Africa friendly cooperation to emphasizing the principle that four things will never change in its relations with Africa… China has made solemn commitment and taken real actions to keep up to date its policy of developing relations with African countries with sincerity, real results, affinity and good faith and approach of upholding principles and pursuing interests
The year 2015 is a year of fully deepening and upgrading China-Africa relations. Leaders of China and African countries all agree at the summit to upgrade their new type of strategic partnership into comprehensive strategic cooperative partnership, thus realizing another leap of China-Africa relations.
Such a new positioning will fully expand China-Africa relations and open up broad prospects of their mutually beneficial cooperation at a larger scope, wider field and higher level, which is of strategic importance for both sides. China is now working hard to realize the Chinese dream of great rejuvenation of the Chinese nation, for which the CPC Central Committee adopted the Suggestion on the 13th Five-Year Plan at its Fifth Plenary Session, while the AU also adopted Agenda 2063 early this year, mapping out the development vision for the following 50 years. A series of new measures for matching the development strategies of China and Africa will promote comprehensive upgrading of China-Africa cooperation.
To strengthen and consolidate the “five major pillars” of China-Africa relations, namely political equality and mutual trust, economic win-win cooperation, cultural exchange and mutual learning, mutual support in security, and solidarity and collaboration in international affairs, will offer strong support and guarantee for comprehensive development of China-Africa friendly cooperation.
Having gone through several hundred years of ups and downs, China and Africa now define their relations as comprehensive cooperative partnership, which starts a brand new era. South African President Zuma said full of expectation that with the strong support of China, upheaval changes will happen in the African continent. Zimbabwean President Mugabe could not help to show his excitement at the Summit and expressed “most sincere and profound gratitude” to China. Leaders of African countries are full of joy for the real measures and sincere commitment of China to help Africa.
The year 2015 is a crucial year in the history of China-Africa relations. It marks the 15thanniversary of the establishment of FOCAC. The past 15 years have witnessed robust development of China-Africa relations with their cooperation making great headway in various fields, yielding fruitful results.
Politically, there has been frequent exchange of high-level visits, making their political mutual trust more solid. China and Africa have rendered each other mutual support and cooperation in international affairs, and shown mutual understanding and support on issues concerning each other’s core interests and major concerns.
Economically, China has maintained Africa’s biggest trading partner for the sixth consecutive year. China-Africa trade stood at US$220 billion in 2014, which is 22 times that of the year 2000 when FOCAC was inaugurated. China’s total investment to Africa has exceeded US$30 billion, which is 60 times that of 2000, up by 20% annually in average.
In the field of production capacity cooperation, China is committed to helping Africa to address the problem of underdevelopment in infrastructure which hinders its development. By September 2015, through China’s assistance and financing, the total railway lines completed and under construction by China in Africa were 5675 kilometers, and that of highways 4507 kilometers. The internal combustion bullet trains, locomotives, passenger trains, freight trains, and urban rail of the CRRC have covered 29 African countries, providing nearly 10,000 railway vehicles to Africa.
People-to-people and cultural exchanges between China and Africa have also been deepened and expanded. China has helped to build schools and offers government scholarships to African countries, and organizes multilateral and bilateral training programmes on technical management as well as workshops for senior officials of African countries. Moreover, more and more Chinese people prefer to travel to Africa, and many of them have chosen to settle down there, leaving many touching “love stories”.
China and Africa need and complement each other in their cooperation, and are faced with unprecedented historic opportunities.
Africa now is in the initial period of industrialization, while China has accumulated rich experience in the field of industrialization, and can offer its development experience to African countries for reference. China-Africa cooperation is timely and appropriate.
China has proposed “ten major cooperation initiatives” including industrialization, agricultural modernization, infrastructure and green development, covering various aspects of Africa’s development, which can help Africa to overcome bottleneck constraint against its development, thus to achieve independent and sustained development. The initiatives aim at promoting matching of development strategies of the two sides.
China has always been a firm participant, supporter and promoter for Africa’ s development. President Zuma said passionately that when China came to Africa to cooperate with them, he was for the first time full of hope for Africa’s future, which is something he could not dare to imagine in the old times when western countries colonized Africa.
“The beginning of all stings is small.” China-Africa traditional friendship has laid a solid foundation for China-Africa relations to embark on a new journey.
The year 2015 is the first year for China-Africa relations to embark on a new journey. In the coming year of 2016, under the guidance of the policy of developing relations with African countries with sincerity, real results, affinity and good faith and the principle of “proposed, agreed upon and led by Africa”, we will work to strengthen and consolidate “five major pillars” of China-Africa relations based on the needs and reality in Africa. There will be a new future of China-Africa cooperation.
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Agoa row: Big losers, but also winners if SA gets boot
If South Africa loses its beneficial status in terms of the Africa Growth and Opportunities Act (Agoa), there will be some winners and some losers in the local agriculture and agribusiness industry, according to John Purchase, CEO of Agbiz.
Conflicting interests between different value chains in the broader agro-food system makes it important for the outcome of SA’s current Agoa negotiations to result in a good balance, he told Fin24 on Wednesday.
Agoa has enabled duty free, trade access preferences for SA’s agricultural products. SA did, however, not meet a December 31 deadline to remove barriers on beef and chicken imports from the US, placing it at risk of losing these US trade preferences.
“If SA is kicked out of Agoa the SA industries that would be the big losers would primarily be fruit (including juice), wine and nuts. The winners would be the SA poultry and pork industries,” said Purchase.
“Our position is clear: SA’s current Agoa negotiations must aim to bring about a balanced situation where the country’s duty free access to the US for its fruit, wines and nuts are maintained, and where SA, in turn, allows certain imports of US broiler meat, pork and beef under certain and strict conditions, both from a tariff quota, sanitary and phyto-sanitary (SPS), and food safety point of view. The process is, however, now out of our hands,” said Purchase.
He added that the SA’s current situation regarding the Agoa process is a complex issue, which requires a balancing act by government and agribusinesses in general.
“SA’s geo-political positioning is, of course, adding to the complexity of the current Agoa trade negotiations and related issues. The geo-political impact cannot be divorced from these types of negotiations,” explained Purchase.
Agbiz represents about 80 companies and associations involved in various agro-food value chains, including fruit, nuts, wine, poultry, red meat and grains. It looks at cross-cutting issues which affect various industries and it engages with government on policy and legislation as well as trade matters.
In September 2015 the Department of Trade and Industry (dti) did invite Agbiz to provide some guidance and perspective as part of what Purchase calls “this very tricky” Agoa situation.
“We asked for a balanced situation, which was basically what the dti and government adopted. We even called for partial equilibrium models to be run as some industries would win and some would lose,” said Purchase.
These are agro-economic models to determine what the benefits would be and what the losses would be in specific industries. The Bureau for Food and Agricultural Policy (BFAP) was asked to develop and run such models and, according to Purchase, came to the same conclusion as government on where one would have to settle in the negotiations.
Certain sanitary and food safety issues regarding poultry imports from the US have since been resolved and as far as Purchase is aware the only issue left relates to SA’s concern about the so-called salmonella food safety issue.
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Scaling up climate and disaster resilience for the world’s most vulnerable
Natural disasters can cause unthinkable tolls and continue to disproportionately affect the poorest and most vulnerable.
When the category five Cyclone Pam barreled down on Vanuatu in March, the destruction was unprecedented. The largest cyclone to make landfall in the Pacific in recorded history, the storm struck 22 of Vanuatu’s 83 islands, with tides sweeping away entire villages, swallowing infrastructure, and destroying hundreds of acres of crops. With over two-thirds of the population affected, the country’s finance minister described the storm’s impact as “catastrophic – destroying years of development and investments.”
Drivers of climate and disaster risk are making scenarios like this more common. Climate change threatens to worsen extreme weather events like droughts, floods, storms, and heatwaves. Rapid urbanization and unplanned development are putting more people in harm’s way than ever before – more than one million people a week are moving into cities, with 90 percent of urban growth taking place in Africa and Asia. These trends will continue to increase the number and severity of disaster events. In the last decade, there were nearly twice the number of climate-related disasters alone than in the 1980’s.
Fortunately, it’s possible to empower countries like Vanuatu and others to become more resilient. Through technical assistance, capacity building, and knowledge sharing activities, the Global Facility for Disaster Reduction and Recovery (GFDRR) helps vulnerable countries reduce disaster and climate risks and build resilience. In Vanuatu, the GFDRR-supported Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) provided a $1.9 million cash injection within 10 days of the disaster to help with immediate recovery needs.
Managed by the World Bank, GFDRR is a global partnership funded by 22 donor partners with a mission help developing countries better understand and reduce their vulnerabilities to natural hazards and adapt to climate change.
During the past fiscal year, GFDRR provided nearly $80 million in grants that address these challenges in over 89 countries. This work has enabled vulnerable countries to leverage significant additional funding in resilience – including more than $3 billion from the World Bank alone in FY15.The impact of GFDRR’s growing program this past fiscal year included:
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Supporting a post-disaster needs assessment (PDNA) and further recovery efforts after two high-magnitude earthquakes struck Nepal’s Kathmandu Valley in April and May. This assessment helped lead to $4.4 billion in donor pledges, including $500 million from the World Bank.
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Training over 11,000 people in disaster risk management (DRM) topics, including in Indonesia where a GFDRR-supported initiative focused on capacity building has trained over 750 local DRM practitioners from 53 districts.
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Strengthening available risk information in Malawi through community mapping and open-source platforms. This data was used after the country suffered its worst flooding on record in January 2015. GFDRR has supported recovery efforts, including a PDNA and a disaster recovery framework.
GFDRR also scaled up DRM through its innovative thematic initiatives. The Safer Schools Program is helping to make students and schools safer through better construction practices. For example, it is working in Nepal to improve the safety and quality of the country’s education facilities as it builds back after the April and May 2015 earthquakes. Another program, the Small Island States Resilience Initiative (SISRI), supports highly vulnerable countries in reducing climate and disaster risks to their communities, economies, and ecosystems.
This past year has been historic for the global resilience agenda, marking the adoption of the Sendai Framework for Disaster Reduction and Recovery (SFDRR), which will help guide GFDRR and the global community’s DRM efforts through 2030, as well as the landmark climate agreement in Paris and the Sustainable Development Goals.
“This has been a monumental year for the development community,” said Francis Ghesquiere, Head, GFDRR Secretariat. “As we work toward helping countries realize the Sendai Framework, the Paris agreement, and other accords, the work of GFDRR will be central to help build resilience.”
2016 will bring other important conversations around the resilience agenda, especially international milestones like the World Humanitarian Summit and Habitat III. GFDRR will work to inform and implement these larger frameworks, and ensure the needs of those most vulnerable to disaster and climate risk remain at the forefront of the post-2015 development agenda.
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World Bank issues ‘perfect storm’ warning for 2016
Simultaneous slowdown in Brics economies would jeopardise chances of pick-up in global growth this year, report says
The risk of the global economy being battered by a “perfect storm” in 2016 has been highlighted by the World Bank in a flagship report that warns that a synchronised slowdown in the biggest emerging markets could be intensified by a fresh bout of financial turmoil.
The Bank said the possibility that Brazil, Russia, India, China and South Africa – the so-called Brics economies – could all face problems simultaneously would put in jeopardy the chances of a pick-up in growth in the coming year.
It added that the impact would be heightened by severe financial market stress of the sort triggered in 2013 by the announcement by the Federal Reserve that it was considering reducing the stimulus it was then providing to the US economy.
Launching its annual Global Economic Prospects, the Bank said activity in 2015 had failed to live up to its expectations – the fifth year in a row that growth has undershot the forecasts made by the Washington-based institution, which lends to the world’s poorest countries.
The Bank said growth had slowed to 2.4% in 2015, from 2.6% in 2014, but added that a stronger performance in developed countries should lead to 2.9% growth this year.
“Downside risks dominate and have become increasingly centred on emerging and developing countries,” it said.
The Bank is predicting that recessions in Brazil and Russia will bottom out in 2016, that China will experience only a modest growth slowdown from 6.9% to 6.7% and that India will continue to expand at a robust pace.
The report said that, in a development unmatched since the 1980s, most of the largest emerging market economies were slowing at the same time. Sharp declines in commodity prices, subdued global trade, weaker capital flows and currency pressures had combined last year to create a “particularly challenging external environment for commodity exporters”, where most of the growth slowdown had occurred.
The Bank has estimated that growth in developing countries reached a post-crisis low of 4.2% in 2015, down from 4.9% in 2014, and warned that 2016 could be another difficult year.
In the event that growth in the Brics economies fell one percentage point short of expectations, the Bank said this would knock 0.8 points off growth in other emerging markets and reduce growth in the global economy by 0.4%.
But the Bank also highlighted the risks of what it called a perfect storm. “Spillovers could be considerably larger if the Brics growth slowdown were combined with financial market stress.
“If, in 2016, Brics growth slows further, by as much as the average growth disappointment over 2010-14, growth in other emerging markets could fall short of expectations by about one percentage point and global growth by 0.7 percentage points.
“If such a Brics growth decline scenario were to be combined with financial sector turbulence, emerging market growth could slow by an additional 0.5 percentage points and global growth by an additional 0.4 percentage points.”
Jim Yong Kim, the Bank’s president, said: “More than 40% of the world’s poor live in the developing countries where growth slowed in 2015. Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies.”
The Bank said it expected the growth rate in the Middle East and North Africa region to more than double as a result of the ending of sanctions against Iran and an end to declining oil prices. “Growth is forecast to accelerate to 5.1 percent in 2016 from 2.5 percent in the year just ended, as the expected suspension or removal of economic sanctions against the Islamic Republic of Iran will allow that country to play a larger role in global energy markets. Growth is expected to pick up in other oil exporters as well, predominantly on the assumption that oil prices will stabilize.”
More stable commodity prices should also help Africa, the Bank added, predicting growth to pick up from 3.4% in 2015 to 4.2% in 2016.
» Read more: Global Economic Prospects: Spillovers amid Weak Growth | January 2016
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International e-commerce in Africa: The way forward
E-commerce has great potential to become a significant part of the economic activity of countries throughout Africa. Increasing digital literacy and unprecedented new demand are occurring at the same time as breakthrough developments in infrastructure and technology.
News of successful investment rounds for local e-commerce platforms, the increasing adoption of mobile money, and the reach of Internet connectivity to a significant percentage of the population all suggest a dynamic continent that is developing new ways of conducting business digitally. Innovations abound as African entrepreneurs devise solutions to low consumer trust and limited access to formal banking.
There are, however, a number of barriers to the fulfilment of this potential. This paper examines the reasons for these barriers, using insights provided by e-commerce entrepreneurs in several African countries. It then suggests avenues for reducing the obstacles and facilitating international e-commerce on the continent. Although the focus is on Africa, the paper’s findings can apply to the many practical challenges to digital trade for small and medium-sized enterprises (SMEs) in developing countries more generally. Africa is extremely diverse, and examples of local successes are presented such as Nigeria, which is seen by many as a leader in regional e-commerce, alongside examples which illustrate the challenges to replicating such successes elsewhere on the continent.
The paper, launched to coincide with the 10th Ministerial Conference of the World Trade Organization (WTO), draws on the growing body of work in this area, including UNCTAD’s Information Economy Report 2015 and an ITC survey of Tunisian SMEs, along with ITC interviews and case studies.
Domestic e-business thrives: International e-commerce remains marginal
There are two competing stories in Africa: vibrant domestic digital businesses, and feeble development of international e-commerce. Several domestic e-commerce businesses in large African countries (such as Nigeria, Kenya and South Africa) are strong and growing, even if similar platforms are currently absent from smaller countries. While considerable innovation is applied to serving local markets, international digital entrepreneurialism in Africa would appear to be blocked. This paper identifies six main issues, which also represent the greatest obstacles to international trade more generally:
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Difficulties with international banking transactions. Some African countries place domestic restrictions on the amount of money that can be transferred across borders. Furthermore, a number of countries in the region may only receive payments from foreign credit card holders through costly intermediaries, because the domestic banking system lacks the necessary international links. Although global e-commerce platform providers offer integrated payment solutions, many African companies cannot actually use them because they lack the requisite foreign bank account or subsidiary. Compliance with banking regulations and related private-sector rules are yet another challenge, as are trust and perceived security issues.
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Exclusion from international e-marketplaces. Negative risk/return calculations, and negative perceptions about doing business in Africa, mean that the SMEs of many African countries are blocked from listing their products on international marketplaces. This only compounds the banking barriers, since even if their goods were listed and sold, the companies would be unable to be paid for them.
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Infrastructure deficit. Poor domestic and regional physical infrastructure, such as roads, ports and air transportation as well as the reliability of electricity supply are serious obstacles to e-commerce in much of Africa. While this can be overcome to some extent by local solutions, such as motorbike delivery, international logistics are far more complicated and costly, which puts many African companies at a particular disadvantage when competing globally.
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Inexperience with sales tax and import duties. It is a common mistake for inexperienced African SMEs to export through e-commerce channels without accounting for sales tax or import duties, and few local transportation partners can offer Delivered Duty Paid services. The consequences can be a costly return shipment or a loss of business.
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Sociopolitical barriers. Many governments and local institutions are not doing enough to create local services and structures in support of small businesses. And companies themselves are often challenged by the cultural requirements of doing business abroad, such as foreign language skills and customer service orientation.
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The remaining digital divide. Internet connectivity in Africa continues to lag behind other regions, although the gap is closing rapidly thanks to mobile Internet. ITC’s SME Competitiveness Outlook 2015 found that limited access to broadband widens an already significant digital divide and noted that this gap deprives many businesses of economic development opportunities, such as business process outsourcing services. The ultimate digital divide for e-commerce may be a lack of awareness and understanding on the part of small enterprises.
E-commerce platforms have emerged as an equalizing force between large and small companies and offer the tantalizing potential for enterprises from Africa to reach profitable segments in international markets. For the reasons identified in this paper, these opportunities remain difficult and costly to access and have effectively stifled the growth of international e-commerce originating in Africa.
A substantial amount of work is under way at the international level to simplify customs and tax arrangements and deal with trade restrictions and network security, as described in this paper. The paper also outlines ongoing efforts at both the national and international level to build bandwidth and reduce the digital divide. However, all of these efforts are for the long term, and even when they have been completed, they will not address the more practical challenge faced by small African enterprises to increasing their competitiveness. In the meantime, players from outside the continent are building their market positions in international e-marketplaces, including Africa itself. What is the best strategy?
The new digital era calls for new approaches, as proposed in the concluding chapter. New types of partnerships, involving governments, local institutions and competing companies, are needed, and should be involved in a series of well-targeted practical initiatives to develop international e-commerce from Africa:
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Working with policymakers: Useful public-private sector initiatives include enabling laws for the creation of e-commerce cooperatives, reviewing currency exchange controls on digital trade, adopting the Model Law on Electronic Signatures and promoting a conducive environment for ecommerce.
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Institutional capacity-building: Traditional business associations need to support the collective access of small enterprises to international e-commerce, by operating marketplaces, sharing ownership of technologies and pooling promotional budgets. They should help local enterprises comply with international fiscal transparency requirements and work with international specialists to create “e-trust” and enable electronic transactions.
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Enterprise capacity-building: Enterprises need training on the potential opportunities of ecommerce and how to overcome barriers. They need to know how to package, market and serve customers for international e-commerce, and how to comply with developed countries’ trading requirements.
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Corporate structure-sharing: SMEs can set up collective representative structures abroad to handle import duties and sales taxes and provide access to finance and banking facilities in international markets.
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Technology-sharing: Groups of local enterprises can, with the support of international partners, create locally owned and managed platforms and use open source software libraries and other technologies to list their products on international sites.
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Improved access to international transport and logistics: Logistics partners in developed countries can develop optimized transport and logistics solutions, including e-commerce-enabled storage and handling (“e-fulfilment”) in international markets. Such solutions should be tailor-made to the type of goods and marketing strategies of the African firms.
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Malawi: Tackling inflation key to sustainable growth
Reducing inflation is the most important policy issue for Malawi in the near term, the IMF said in its recent review of the country’s economy.
The report shows currency depreciation and uncertainty about the future direction of policies have kept inflation above 20 percent on average. The economy, heavily dependent on aid flows, is still feeling the effects of the large-scale theft of public funds uncovered in 2013.
The scandal, known as “cashgate,” prompted donors to suspend all budget support, forcing the government to print money to cover the deficit. A poor maize harvest caused by heavy floods and drought in early 2015 has exacerbated the problem by raising food prices and pushing inflation up further.
“If left unaddressed, inflation will become entrenched, continue to hurt investment and growth, and worsen living conditions, especially for the poor,” the study said.
Economic reforms bear fruit
But despite Malawi’s challenges, the report lauded bold economic reforms undertaken in mid-2012 that greatly improved the economy’s resilience. Devaluing the Kwacha, adopting a floating exchange rate regime, the liberalization of the foreign exchange market, and the introduction of an automatic fuel price adjustment mechanism have helped increase the country’s foreign exchange reserves from one month of import cover to over 3 months.
The report also acknowledged significant progress in the social sector such as achieving gender parity in primary school enrollment, improving access to water, and further lowering infant mortality, which has been below the average for sub-Saharan Africa since 2004.
The report noted, however, that high inflation is hampering real GDP growth, which averaged only 4 percent during 2012-15 and significantly below the 7 percent targeted under Malawi’s Growth and Development Strategy.
Fiscal, financial sectors interlinked
Inadequate fiscal adjustment following the “cashgate” scandal affected the financial sector through several channels, the report said. Non-performing loans, for one, increased due to the accumulation of domestic payment arrears to private suppliers who experienced difficulties in servicing loans. Credit risk has since emerged as the most significant threat to the banking sector.
Financing the deficit through increased recourse to domestic financing crowded out bank lending to the private sector, and stubbornly high inflation contributed to higher interest rates and greater exchange rate volatility. These factors, according to the report, have in turn impacted Malawi’s budget and increased the cost of servicing its domestic debt.
The report found that while financial sector depth and inclusion increased steadily through 2012, they have since stagnated in the face of the persistently high inflation and multiple structural obstacles such as limited access to credit, unreliable electricity supply, and high transportation costs. Furthermore, half of the people living in the rural areas do not have access to financial services, as these services are mainly available in urban areas. The report said alleviating these structural barriers would bring substantial benefits to the economy in terms of reducing poverty and attaining sustainable and inclusive growth.
Given Malawi’s dependence on a narrow commodity export base dominated by tobacco and the economy’s exposure to large shocks, the report emphasized the importance of restoring macroeconomic stability in the near term through the pursuit of tighter fiscal and monetary policies geared toward placing inflation on a declining trend.
The report also encouraged the authorities to implement structural reforms to remove supply bottlenecks, increase agricultural productivity, and improve the business environment.
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Lesotho and Georgia, two additional ratifications for the Trade Facilitation Agreement
Lesotho and Georgia are the two new members that have ratified the Trade Facilitation Agreement (TFA). The WTO Secretariat received the countries’ instruments of acceptance on January 4th. These two ratifications bring to 65 the number of WTO members that have formally accepted the TFA. Several ratifications were submitted by ministers during the organization’s Tenth Ministerial Conference in Nairobi.
Concluded at the WTO’s 2013 Bali Ministerial Conference, the TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.
The TFA will enter into force once two-thirds of the WTO membership has formally accepted the Agreement.
In addition to Lesotho and Georgia the following WTO members have already accepted the TFA: Myanmar, Norway, Viet Nam, Brunei, Zambia, Ukraine, Hong Kong China, Singapore, the United States, Mauritius, Malaysia, Japan, Australia, Botswana, Trinidad and Tobago, the Republic of Korea, Nicaragua, Niger, Belize, Switzerland, Chinese Taipei, China, Liechtenstein, Lao PDR, New Zealand, Togo, Thailand, the European Union (on behalf of its 28 member states), the former Yugoslav Republic of Macedonia, Pakistan, Panama, Guyana, Côte d’Ivoire, Grenada, Saint Lucia and Kenya.
The TFA broke new ground for developing and least-developed countries in the way it will be implemented. For the first time in WTO history, the requirement to implement the Agreement was directly linked to the capacity of the country to do so. In addition, the Agreement states that assistance and support should be provided to help them achieve that capacity.
A Trade Facilitation Agreement Facility (TFAF) was also created at the request of developing and least-developed country members to help ensure that they receive the assistance needed to reap the full benefits of the TFA and to support the ultimate goal of full implementation of the new agreement by all members.
Implementation of the WTO Trade Facilitation Agreement (TFA) has the potential to increase global merchandise exports by up to $1 trillion per annum, according to the WTO’s flagship World Trade Report released on 26 October. Significantly, the Report also found that developing countries will benefit significantly from the TFA, capturing more than half of the available gains.
More information on trade facilitation and the TFA can be found at www.wto.org/tradefacilitation.
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tralac’s Daily News selection
The selection: Wednesday, 6 January 2016
Selected WTO Trade Policy Reviews: Malawi (27, 29 April), DRC (15, 17 June), Zambia (21, 23 June)
Recently launched: the UNEP Environment and Trade Hub
By working through a network of national, regional, and international partners, the Hub is able to offer interdisciplinary services that are tailored to local needs and circumstances while being delivered in an effective and demand-oriented manner. The specific objectives of the Hub are to: enhance capacity of countries to design and implement trade policies that foster environmental sustainability and human well-being; assist countries in the realization of trade opportunities arising from a transition to greener economies; strengthen the sustainability aspects of cross-border trade and investment agreements in bilateral, plurilateral and multilateral negotiations; realize a shift of trade practices and trends to more sustainable patterns.
Foresight Africa: Top priorities for the continent in 2016 (Brookings)
In this year’s Foresight Africa, the Africa Growth Initiative and its colleagues discuss six overarching themes that place Africa at this tipping point and give their view on what they perceive to be key areas for intervention to keep Africa on its current rising trajectory. This year’s format is different from years past, encompassing viewpoints from high-level policymakers, academics, and practitioners, as well as utilizing visuals to better illustrate the paths behind and now in front of Africa.
The chapters:
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Managing economic shocks: African prospects in the evolving external environment
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Sustaining domestic growth: structural transformation depends on jobs, industry, and SMEs
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Supporting human development: triumphs and challenges on the continent
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Capitalizing on urbanization: the importance of planning, infrastructure, and finance for Africa’s growing cities
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Maintaining governance gains: the national and regional agendas
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Expanding African trade: creating a comparative advantage and strengthening regional partnerships
Towards a regional gender trade index: EOI (AfDB)
The following deliverables are expected from the Junior Consultant: a report with key findings of primary research which should include mapping tariff and non-tariff barriers as well as opportunities for supporting cross-border traders along the North-South corridors and opportunities to better facilitate trade at border post; a report on the feasibility of a gender trade index and stakeholder/partnership mapping.
Master's programme in African regional integration (WAI)
The effective implementation of the regional integration agenda in West Africa requires highly skilled and trained experts in order to consolidate and improve the integration process. Also Individuals working in the field need to have a well-rounded understanding of the multi-dimensional complexities of integration in order to successfully manage the challenges and utilize the opportunities provided by integration. With a strong will to meet these critical needs, WAI and UNI-CV in cooperation with ZEI and with its network of scholars across Africa have taken the next step to implement the Master in African Regional Integration which is meant to support the targeted capacity-building efforts of WAI. In addition to the training of the new generations of elites in the sub regions the Master Program also includes comparative aspects. To this end, comprehensive and innovative training programs have been developed to strengthen the analytical capacity needed to understand the implications of regional integration, the ability to handle complex processes and appreciate the different dimensions of regional integration; including economic, social, legal and political.
SADC: developing harmonised regional guidelines on use and disposal of agrochemicals and fertilisers
Kenya: Small traders smell death in new import rule (Daily Nation)
Traders who import goods in small quantities are likely to be hard hit by a new rule by the Kenya Bureau of Standards requiring all cargo to be accompanied by a certificate of conformity. On Tuesday, traders claimed it would be difficult to bring into the country goods that are imported in small quantities, with manufacturers preferring to deal with those buying in bulk. “Items such as sewing machines are not consumed in huge quantities in the country. I import them from China and the manufacturers there are not ready to be subjected to such requirements for low value exports,” said an importer who declined to be named for fear that his identity would compromise his relations with KRA.
SA-AGOA: selected updates
AGOA row about a deeper discord (editorial comment, Business Day)
Just as the dispute over chicken imports from the US was not really about chickens, so is SA’s likely suspension from the benefits of the African Growth and Opportunity Act (Agoa) not entirely about trade. Rather it is a case of the US saying to SA that it cannot have it both ways. Pretoria cannot line up with the Brics (Brazil, Russia, India, China) bloc on foreign policy issues and bad-mouth Washington — while still demanding privileged access to US markets. It cannot take measures that frustrate trade and investment flows from the US and Europe — but still expect special favours from these regions. Most of all, if SA cannot get its act together to meet the deadlines in a trade dispute, it should not be surprised if it is punished for its incompetence, or perhaps arrogance.
Related: South African farmers see pain as US trade deal unravels (Bloomberg), Agriculture fears loss of benefits from AGOA (Business Day), Ayabonga Cawe: 'AGOA: What are the real issues?' (Daily Maverick), SA poultry slammed for 'protectionism' (Fin24)
India chomping at the BIT (Politico)
India quietly published the final version of its model bilateral investment treaty over the holiday week, setting the stage for the Asian country of roughly 1.3 billion to get negotiations back on track with the U.S. and craft a deal that would dramatically stabilize the investment climate in one of the world’s most dynamic economies. But don’t expect the talks to conclude under this administration.
Zimbabwe: Government engages expert for Beitbridge border post (NewsDay)
Finance minister Patrick Chinamasa said the government was in the process of upgrading the border post to international standards, but it was necessary to put in place interim measures to alleviate the current challenges and also take advantage of the strategic position of the border post. “Government will engage an independent border post expert to reorganise Beitbridge and the expert will work in collaboration Zimbabwe Revenue Authority officials and report to the chairperson of the Zimra board. This measure will be implemented during the first quarter of 2016,” he said. [Moyo appointed CEO for BBR (NewsDay)]
Mozambique: INE household survey shows widening gap between rich and poor (Club of Mozambique)
The survey [conducted by Mozambique’s National Statistics Institute] shows an across the board improvement in living standards since the previous survey, held in 2008-09, but the gains are much sharper for the richer strata of the population than for the poorer. At current prices, average monthly household expenditure per capita rose from 324 meticais in 2002/3 to 721 meticais in 2008/9 to 1,408 meticais (31.3 US dollars at current exchange rates) in 2014/15. The full report breaks this down into fifths (quintiles). The richest quintile saw its monthly per capita expenditure rise from 1,487 meticais in 2008/09 to 5,812 meticais now. This is more than the other four quintiles put together.
Mozambique economy stimulated by infrastructure financed by China (MacauHub)
The focus of Mozambique’s foreign policy, said the same source, is “to connect to new partners” such as China, India and Brazil, “with the long-term goal of reducing the weight of external aid with more investment revenues in the energy and mines sectors.” The interest from major Chinese state-owned enterprises, such as China Three Gorges and China State Grid, in Mozambique’s big hydroelectric projects has been widely publicised.
US eyes Kenya crude pipeline amid China dominance (Business Daily)
The US has shown interest in Kenya’s planned crude oil pipeline as it seeks a piece of the East African country’s mega infrastructure deals dominated by Chinese contractors. The pipeline linking Kenya and Uganda’s newly found oil fields to the Coast was one of the issues discussed between US ambassador Robert Godec and new Energy secretary Charles Keter on Tuesday. “We also discussed the question of an oil pipeline in the northern part of Kenya to help extract Kenya’s oil,” Mr Godec told the Press after meeting top Energy ministry officials, including principal secretary Joseph Njoroge.
Record energy production at Cahora Bassa (Club of Mozambique)
According to a press release from Hidroelectrica de Cahora Bassa, the company that operates the dam, total production last year was slightly more than 16,978 gigawatt-hours. This is the largest amount of electricity produced since commercial operations began at Cahora Bassa in 1977. The previous record was in 2009, when production reached 16,574 gigawatt-hours.
West Africa Power Pool: first phase update (World Bank)
The development objective of the WAPP program is to establish a well-functioning, cooperative, power pooling mechanism for West Africa, as a means to increase access of the citizens of ECOWAS to stable and reliable electricity at affordable costs. The WAPP APL program would help the ECOWAS Member States to develop a robust platform for WAPP, comprising five (5) distinct but mutually reinforcing sub-regional infrastructure development projects.
Eskom: No secrecy around Zim power deal (NewsDay)
Eskom has confirmed the sale of electricity to Zimbabwe, but denied that the power supply agreement with its Zimbabwean counterpart the Zimbabwe Electricity Supply Authority (Zesa) is secret. Eskom is part of the Southern African Power Pool (Sapp), and so is Zesa, where member utilities sell surplus electricity to each other depending on the need, Eskom said.
Addis Ababa: Enhancing urban resilience (World Bank)
A CityStrength Diagnostic was conducted in Addis Ababa, Ethiopia, in February 2015 at the request of the city. The city currently faces potential shocks and stresses related to its unprecedented rapid urbanization including urban flooding, fire, earthquakes, water scarcity, unemployment and social vulnerability. The Diagnostic found that enhancing resilience in Addis Ababa requires actions and investments oriented toward implementing existing plans and regulations, establishing clear and capacitated leadership on risk management topics, and investing in infrastructure that meets existing and future needs. Priority actions include: [Download]
Kaduna State: rural access and mobility project update (World Bank)
The small entrepreneur in fragile and conflict-affected situations (World Bank Blogs)
A recent World Bank report 'The small entrepreneur in fragile and conflict-affected situations’ looked into the motives and challenges of small entrepreneurs in FCS countries [including some in SSA] and made a number of interesting discoveries. They found that compared to entrepreneurs elsewhere, entrepreneurs in FCS have different characteristics and face significantly different challenges. FCS enterprises tend to be small, informal and to be engaged in sectors that are trade and service oriented. Three other things they found are illustrated in the charts below. These findings came as quite a surprise to us.
Access to finance and enterprise growth: evidence from an experiment in Uganda (ILO)
American Economic Association: access the conference papers
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Foresight Africa: Top priorities for the continent in 2016
Africa is at a tipping point in 2016. Despite all the success the continent has achieved in recent years, new and old dangers – economic, political, and security-related – threaten to derail its progress. With sound policymaking, effective leadership, and enough foresight, however – Africa can meet and defeat these challenges as well as the many more to come.
In this year’s Foresight Africa, the Africa Growth Initiative and its colleagues discuss six overarching themes that place Africa at this tipping point and give their view on what they perceive to be key areas for intervention to keep Africa on its current rising trajectory. This year’s format is different from years past, encompassing viewpoints from high-level policymakers, academics, and practitioners, as well as utilizing visuals to better illustrate the paths behind and now in front of Africa.
In the first chapter, the authors cover the adverse effects of recent external economic shocks on Africa’s already slowing economic growth. While threats like the economic slowdown in PREFACE China and falling commodity prices may sound menacing to African economies, they actually provide opportunities in 2016 for implementing sound (and often innovative) policies for maintaining future growth.
Domestic growth and structural transformation is the theme of the second chapter, where the authors discuss jobs and the changing face of Africa’s economies. Despite Asia’s experience with industry as a driver of sustained growth, Africa’s growth is centered on the services sector – which raises a red flag for some experts. With the Sustainable Development Goals’ new emphasis on industry and jobs, 2016 is the perfect time to jump-start industrialization in Africa.
Human development in recent years has seen a myriad of successes and disappointments: Poverty rates continue to fall, but the number of poor in sub-Saharan Africa is actually rising. Malawi, Uganda, and others finally have agricultural sectors strong enough to support savings and investment by farmers, but the five countries with the highest food and nutrition security needs in the world are also in the region. Contributors in the third chapter cover these issues (as well as inequality, fragile states, women’s empowerment, and climate resilience) and what to do about them in 2016.
As Africa rapidly transforms both demographically and geographically, successful planning for urbanization must be on the agenda in 2016. The African population’s rapid move to cities is quickly creating megacities and huge population growth in intermediate cities before officials have the chance to implement good policies or finance robust infrastructure to support their inhabitants. In fact, the majority of urban residents in Africa live in slums, and access to electricity, sanitation, and clean water is not adequate.
2016 also brings a number of complex political and governance challenges, following on from the year before. While 2015 did see many successes (Nigeria peacefully transitioned to a new regime and the Tripartite Free Trade Agreement was signed), it also experienced upheavals (the civil wars in the Central African Republic and South Sudan raged on and the Nile riparian states continued their heated dispute). As the upcoming year could see a continuation of these trends, the fifth chapter covers how leaders might address the continuing obstacles to peace, prosperity, and good governance at both the national and regional levels in 2016.
With the signing of the Trans-Pacific Partnership Agreement, trade relationships the world over will drastically change in 2016 – just as African countries are taking major steps towards regional economic integration and enacting their own export-oriented policies. The sixth and final chapter explores the changes in and implications of the shifting global trade environment on Africa’s prospects for enhancing its own competitiveness and trade performance.
With our sixth annual Foresight Africa, we aim to capture the top priorities for Africa in 2016, offering recommendations for African and international stakeholders for creating and supporting a strong, sustainable, and successful Africa. In doing so, we hope that Foresight Africa 2016 will promote a dialogue on the key issues influencing economic development in Africa in 2016 and ultimately provide sound strategies for sustaining and expanding the benefits of economic growth to all people of Africa in the years ahead.
Over the course of the year, we will incorporate the feedback we will get from our readers and continue the debate on Africa’s priorities through a series of events, research reports, and blog posts. We look forward to this important conversation on how Africa might best flourish in 2016.
Chapter highlights
Ch 1. Managing Economic Shocks: African Prospects in the Evolving External Environment
In this chapter, Amadou Sy explores the recent external economic shocks to African economies – including the economic slowdown in China, declines in commodity prices, and the likely continued U.S. Federal Reserve interest rate hikes – that have affected and will continue to affect growth trajectories in the region. With growth slowing across the continent in 2016, policymakers must take this opportunity to discuss and enact economic policy reform for both the short and long terms.
Ch 2. Sustaining Domestic Growth: Structural Transformation Depends on Jobs, Industry, and SMEs
Growth in Asia and elsewhere has shown that industrialization is crucial to job creation, a value that is enshrined in the new Sustainable Development Goals. In this chapter, John Page provides recommendations on how African governments and their international partners can revitalize the region’s stagnating industrial development and spur structural transformation.
Ch 3. Supporting Human Development: Triumphs and Challenges on the Continent
The region has witnessed remarkable improvements in poverty reduction in recent years, but persistent challenges in inequality, education, health, and violence, among others, still plague it. As the first year of the Sustainable Development Goals, 2016 provides the opportunity to be a jumping-off point for strong policies and efforts to accomplish these goals. In this chapter, Kathleen G. Beegle and Luc Christiaensen cover the assortment of opportunities 2016 provides for supporting human development efforts and argues for the central role that better data plays in addressing them.
Ch 4. Capitalizing on Urbanization: The Importance of Planning, Infrastructure, and Finance for Africa’s Growing Cities
With Habitat III in 2016, Jérôme Chenal takes the opportunity in this chapter to explore the consequences of Africa’s rapid urbanization. Africa is the second-fastest urbanizing region in the world, which historically has facilitated other regions' transition from a reliance on agriculture to industry and jobs. However, without strong policies to deliver services, finance and build infrastructure, and support the urban poor, Africa’s rapidly growing megacities and intermediate cities cannot deliver on their potential.
Ch 5. Maintaining Governance Gains: The National and Regional Agendas
2016 sees a number of governance milestones and obstacles, including elections across the continent (particularly in Uganda, in the Democratic Republic of the Congo, and for the African Union chairperson), as well as increasing regional integration and a seemingly stalled march towards good governance. In this chapter, Richard Joseph reflects on the region’s growth-governance puzzle and the complex institutional changes necessary to move from economic growth to economic transformation.
Ch 6. Expanding African Trade: Creating a Comparative Advantage and Strengthening Regional Partnerships
In this chapter, Joshua P. Meltzer explores the impacts on Africa of the changing global trade environment. In particular, the Trans-Pacific Partnership Agreement will transform global trade architecture, likely to the disadvantage of Africa. However, our viewpoint contributors believe that, if African countries can successfully leverage regional integration and better utilize the African Growth and Opportunity Act, they might be able to maintain global competitiveness.
The Foresight Africa project is a series of reports, commentaries and events that aim to help policymakers and Africa watchers stay ahead of the trends and developments impacting the continent. Since 2011, the Brookings Africa Growth Initiative has used the occasion of the new year to assess Africa’s top priorities for the year.
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South African farmers see pain as U.S. trade deal unravels
South African fruit, wine and nut farmers are bracing for hardship as the U.S. looks set to rescind their duty-free access to the world’s largest market at a time when they’re already facing the worst drought in more than two decades and rising input costs.
South Africa missed a Dec. 31 deadline to remove barriers on beef and chicken imports from the U.S., placing it at risk of losing trade preferences for its agricultural goods under the Africa Growth and Opportunities Act, or AGOA. South Africa exported $154 million worth of farm goods under the program in the first nine months of last year, according to the Trade Law Centre, which is based in Stellenbosch, near Cape Town.
“The U.S. is the crown jewel of our markets,” Piet Smit, a citrus farmer in the southwestern town of Citrusdal, said by telephone on Tuesday. “If we lose the AGOA benefits there will be extra costs that the farmers will have to swallow.”
Adopted in 2000, AGOA eliminates U.S. import levies on more than 7,000 products ranging from textiles to manufactured items from 39 African nations. To remain beneficiaries, countries are required to cut barriers to U.S. trade and investment, operate a market-based economy, protect workers’ rights and implement economic policies to reduce poverty.
Agricultural goods accounted for about 14 percent of total South African exports under AGOA in the first nine months of last year, according to the Trade Law Centre. The bulk of its shipments were vehicles and car parts.
Deal Possible
South Africa has made substantial progress in addressing outstanding issues and a deal may still be reached to avoid a loss of the trade preferences, Trade Minister Rob Davies told reporters in the capital, Pretoria, on Monday.
If the negotiations collapse, the hardest hit will be farmers in the Western Cape province, which exports 78 percent of the South African agricultural goods shipped to the U.S. under AGOA.
“The province’s wine and citrus industries benefit substantially from duty-free access to the U.S. market via AGOA,” Tim Harris, the chief executive officer of trade and investment promotion agency Wesgro, said by e-mail. “We are extremely concerned that these industries will be collateral damage if these benefits are not retained.”
Drought has already curbed farming in South Africa, extending a recession in the industry into the third quarter as output contracted an annualized 12.6 percent. South Africa is the world’s second-biggest exporter of oranges and the top producer of macadamia nuts.
Wine, Citrus
South Africa sold 10.7 million liters (2.8 million gallons) of wine to the U.S. last year, or 2.5 percent of its total wine exports, according to Wines of South Africa, an industry body. The wine industry employs 289,000 people nationally, and job losses are likely if the trade preferences are lost, said Andre Morganthal, the group’s spokesman.
South Africa is the world’s seventh-biggest wine producer and its largest international customers include the U.K., Germany and the Netherlands.
“The U.S. is the last great hope for South African wine exporters,” Etienne Heyns, global sales executive for Graham Beck Wines, said by phone from Franschhoek, near Cape Town. “Should wine be excluded from AGOA benefits it will add about five rand ($0.32) extra to every bottle.”
South Africa’s export volumes of citrus climbed 11 percent in 2014, the Citrus Growers Association said in its 2015 annual report. About 6 percent of the country’s soft citrus and 3 percent of its oranges was shipped to the U.S. that year, the CGA said.
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IMF chief welcomes Nigeria anti-corruption drive, urges flexible naira
The head of the International Monetary Fund endorsed Nigeria’s efforts to tackle corruption on Tuesday while saying it needed to reduce its reliance on oil, sharp falls in the price of which have crippled its economy.
After meeting President Muhammadu Buhari, IMF managing director Christine Lagarde also called for greater flexibility in Nigeria’s exchange rate regime, fuelling speculation that a devaluation of the naira may be imminent.
The central bank has resisted calls by investors to devalue the naira, which has been allowed to fall about 20 percent since the start of 2014.
Measures imposed by the central bank to restrict access to foreign exchange have been backed by Buhari. But they have proved to be unpopular with investors and highlighted Nigeria’s dependence on crude oil exports, which account for more than half of state revenues.
The IMF head, who said she was not in Nigeria to negotiate a loan, backed what she called Buhari’s “very important” fight against corruption and said the president’s reform push could have a positive impact across West Africa.
“His determination to bring about transparency and accountability at all levels of the economy were very important agenda items,” Lagarde told reporters at the presidential villa in the capital Abuja.
Buhari was elected in March after campaigning on a promise to clamp down on the endemic corruption that has left many in Africa’s biggest economy mired in poverty despite its enormous energy wealth.
In December he announced a record budget for 2016, forecasting a doubling of the deficit to 2.2 trillion naira ($11 billion) and a tripling of capital expenditure intended to help the country adjust to the downturn in oil, which has lost around two-thirds of its value since mid-2014.
Falling oil price
Lagarde, who said a team of IMF economists would visit Nigeria next week to assess whether its borrowing costs were sustainable, told reporters she and Buhari discussed the challenges posed by the falling oil price and the need for fiscal discipline.
“The short-term fiscal situation... requires that revenue sources be identified in order to compensate the shortfall resulting from the oil price decline,” the IMF head added.
Buhari’s spokesman, Femi Adesina, later said the president’s administration would “enforce regulations to stop financial leakages” and “adopt global best practices in generating more revenue” to mitigate the effects of dwindling oil prices.
“President Buhari said the federal government will welcome the technical support and expertise of the IMF for its plans to diversify the Nigerian economy and further unleash its growth potentials,” said Adesina.
Lagarde also urged more flexibility in monetary policy to allow the country to use its foreign reserves to support the population as the oil price sags.
“Clearly the authorities should not deplete the reserves of the country simply because of rules that would be exceedingly rigid,” she said.
The central bank spent billions of dollars last year defending the naira, failing to halt its slide against the dollar as plunging oil prices weighed on the currency and the broader economy.
Razia Khan, head of Africa research for Standard Chartered bank, said Lagarde’s comments on the naira regime echoed remarks by Buhari last month, and market players were now anticipating a change, potentially at the bank’s next monetary policy committee meeting.
A research note from brokerage Exotix predicted a devaluation of the naira by around 25 percent was imminent.
» Read: Nigeria: Act with resolve, build resilience, and exercise restraint – Speech by Christine Lagarde
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What Obama still owes Africa
After seven years in office, President Barack Obama has already engaged more broadly on Africa than any previous American president, but with one year remaining in the White House, there are still a few things he should do before he leaves, writes Johnnie Carson, the United States’ top policy-maker on Africa in the first Obama administration.
President Obama has significantly elevated and transformed America’s engagement with Africa, traveling widely across the continent, championing the renewal of several old programs and launching a series of highly focused new initiatives that could help speed-up Africa’s economic development.
He has been particularly active in promoting economic and development issues.
He fought successfully for the renewal and extension of the African Growth and Opportunity Act (AGOA), America’s most important trade legislation with Africa; he hosted the first U.S.-Africa Leadership Summit, attended by 37 heads of state; and he has established several important new economic programs, including “Power Africa” – to expand significantly electrical access across the continent; “Feed the Future” – to increase household food production and to generate a green revolution throughout Africa, and “Trade Africa” – to expand substantially trade between Africa and the United States.
Recognizing the growing role of the continent’s next generation of young leaders, President Obama established YALI – the Young African Leaders Initiative, a program that will bring 500 young African entrepreneurs, professionals and community organizers to the U.S. each year for the next several years for five weeks of leadership, organization and management training.
But what next?
Despite his rather impressive list of accomplishments, here are ten things the president should do before he leaves office in January 2017:
Visit Nigeria: President Obama has traveled to Africa five times during his presidency – but he has not visited Nigeria, the continent’s economic, political, communications and petroleum giant, and its most important state. It is the continent’s largest economy – almost twice the size of South Africa’s and a third larger than that of Egypt.
It is also the continent’s most populous state, with 180 million people, its largest Muslim country, and its largest democracy.
The president has visited every major country on the continent except Nigeria, and it would be a mistake for him to leave the White House without a stop in Lagos or Abuja.
Some have suggested that security may be a concern because of Boko Haram, but if the president can travel safely to Nairobi, where al Shabaab has carried out high profile attacks in the center of the city, he should be able to travel safely to Abuja or Lagos. He is bound to make one more trip to Europe, and a stop in Nigeria – similar to his 2009 visit to Ghana – would not be a major diversion.
Co-host a regional summit on democracy in west Africa: Strengthening democracy institutions, promoting good governance and supporting free and fair elections has been a major priority for the Obama administration in Africa.
During his first official visit to the continent as president in July 2009, President Obama spoke eloquently before the Ghanaian Parliament about the importance of democracy and good governance and the need to create “more strong institutions, not more strong men.” With a growing number of African leaders attempting to extend their terms of office, democracy remains fragile across the continent. The president could give democracy in Africa a boost and reaffirm America’s strong commitment to Africa’s political progress by hosting a conference in West Africa with the democratically-elected leaders of Benin, Burkina Faso, Cape Verde, Liberia, Niger, Nigeria, Mali, Mauritania, Senegal, Sierra Leone and Togo.
Support Nigeria’s permanent membership in the G20: President Obama has said that he wants to ensure that Africa has a place at the table to participate in the deliberations concerning major global political and economic issues. One way to accomplish that is to expand or reorganize the G20 group of nations to include Nigeria as a permanent member of this important global organization.
Nigeria is already more important than several of the current G20 members, notably Argentina and South Africa, and over the next two decades it will become one of the world’s mega states, eclipsing several other G20 members in the size of its economy, population and regional influence. It would also be one of the G20’s largest democracies. The administration should make the inclusion of Nigeria a priority over the next 12 months.
Press for the passage of the Electrify Africa legislation: Power Africa is one of President Obama’s most important signature initiatives. In the world’s most energy deficient and starved continent, it is intended to increase Africa’s power output by 30,000 megawatts over the next decade or two.
But like a number of recent White House initiatives, Power Africa is not backed by any legislative mandate and could be easily brushed aside after the Obama administration leaves office. The program enjoys bi-partisan support in the Congress and the administration needs to work with congressional leaders to prioritize the passage of the Electrify Africa legislation. At the same time, the administration needs to create a senior level “Power Africa czar” to manage the program and consider moving interagency responsibility for oversight from USAID to a cabinet level department.
Instruct USAID to establish a permanent democracy fund: If democracy promotion is an important priority, it should be funded adequately and on a long-term basis. Today that is not the case. Funding for democracy has declined sharply during Obama’s second term despite the president’s recent speeches in Nairobi and Addis Ababa, and at the 70th session of the United Nations General Assembly in New York.
Dedicated and hard-to-reprogram funds should be allocated to strengthen African judiciaries and legislatures, to promote civil society groups and the media, to assist women’s organizations and youth groups and to support domestic and international election monitoring. Funds should also be made available to assist local organizations to undertake parallel vote counts, to aid local election commissions and to prevent pre- and post-election violence.
Invite Tanzania’s newly elected President John Magufuli to the White House: Tanzania is the most populous state and the largest democracy in East Africa. It is also one of the largest recipients of U.S. development assistance and a participant in all of Washington’s major economic initiatives.
In late October, Tanzania held presidential and parliamentary elections. The elections on the mainland went well, but those on the island of Zanzibar were disputed. President John Pombe Magufuli, a reform-minded academic-turned-politician, was elected without dispute, making him Tanzania’s fifth democratically-elected president in a row. Although the Zanzibar election remains unresolved, it is important to reach out to Tanzania’s new president early in his tenure to continue to foster the strong relationship between Dar es Salaam and Washington.
This is particularly important since President Magufuli does not have any major ties with the United States. Tanzania also has a critical role to play in East African peace-building issues, particularly in Burundi and the eastern Congo. Early political consultations with President Magufuli and his new foreign minister, Dr. Augustine Mahiga, could prove valuable in promoting stability in the Great Lakes region.
Send Secretary of State John Kerry to Rwanda, Burundi, the Democratic Republic of Congo (DRC), Uganda and the Republic of the Congo: The Great Lakes Region of Central Africa is one of the most volatile and unstable regions in Africa, with daily political and ethnic violence in Burundi, and with the leaders of Rwanda, the DRC and the Congo threatening to extend themselves in office in violation of their constitutions.
Although time is running out, there is still an opportunity to prevent further democratic backsliding and the serious instability and violence that will almost certainly be unleashed – as we are already seeing in Burundi. High level engagement with the leaders in the region is required.
An extended visit by Secretary Kerry to the DRC, Uganda, Rwanda and Burundi would be a strong signal of Washington’s deep concern and interest in the region’s negative political and security trajectory. Without serious engagement with the leaders on the ground, there will be no meaningful progress.
Open a U.S. consulate in northern Nigeria and a full embassy in Mogadishu: The establishment of a consulate in northern Nigeria is long overdue. More than half of Nigeria’s 180 million people live in the northern part of the country, an area of serious political and security concern. It is also the largest Muslim region in Africa and the largest Muslim region in the world where there is no full-time U.S. diplomatic presence.
A U.S. diplomatic mission would advance long-term political, economic and security interests in the region and help Nigeria to deal with the economic, social and security challenges it faces there. A consulate in Kaduna, which once had one, or Kano would convey a strong signal to the Muslim community that Washington genuinely cares about the people in the region.
Once the global poster child of a failed state, Somalia has made significant progress over the past seven years. In recognition of the progress, the U.S. re-established formal diplomatic relations with the Somali government in Mogadishu in January 2013.
Before he leaves office, President Obama should take one more step. He should reaffirm Washington’s commitment to Somalia and recognize the country’s continuing progress by appointing a Senate-approved ambassador and opening a small, secure diplomatic embassy compound in downtown Mogadishu.
Elevate U.S. diplomatic relations with Sudan: Relations between Washington and Khartoum have been prickly and frequently difficult for over two decades and the U.S. has not had a fully accredited, Senate-approved ambassador in Sudan since 1997.
The Khartoum government has not been a good international actor. (Nor have Cuba, Myanmar or Iran.) The regime in Sudan has carried out mass atrocities in Darfur, prevented UN organizations from delivering food aid and humanitarian assistance to those in need and meddled in the affairs of several of its neighbors.
But U.S.-imposed comprehensive sanctions on Khartoum have not isolated the country nor weakened its government. The U.S. should review its current policies toward Khartoum, and consider elevating its diplomatic relationship to full ambassadorial status in order to expand America’s dialogue and probe for new openings to resolve some of the country’s domestic and regional issues. The U.S. can do this while maintaining its sanctions regime on the government and its demands that President Omar al-Bashir address the serious human rights charges against him.
Provide a status report on the results of the U.S.-Africa Leadership Summit: The U.S. Africa Leadership Summit has been one of the high points in the Obama administration’s engagements in Africa.
Leaders from 50 different countries participated in this first-of-a-kind gathering in Washington. A number of new programs were announced and a major business conference associated with the summit brought dozens of senior American business leaders into direct contact – many for the very first time – with African heads of state and prominent business leaders from the continent.
The administration has never released a comprehensive report on the summit or a one-year progress report on the implementation of summit agreements. The issuance of some type of status report would be a useful vehicle for identifying summit objectives and initiatives as well as tracking the progress of the administration’s efforts. The administration should do everything it can to sustain the goodwill and policy initiatives that emerged from the summit to help ensure that it does not become a one-off event.
The administration should be applauded for its continuing efforts to promote greater American trade and commerce with Africa. The president has already announced that he plans to host another U.S.-Africa Business Summit similar to the day-long event his administration hosted during the 2014 Leadership Summit. The Business Summit is important, but it should not be the only thing on President Obama’s Africa agenda for 2016. He has time to do more, and he should. Twelve months is a long time in the life of an administration and his foreign policy team should be building a more robust African agenda for his last year in office.
Ambassador Carson was the U.S. Assistant Secretary of State for African Affairs from 2009 to 2012. He is currently a Senior Advisor at the United States Institute of Peace.
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The climate integration challenge
Resilience is a process, a way of thinking and acting – not just an end state.
And as leaders from 195 nations reached a landmark agreement in Paris on a framework to stop global climate change, we challenge nations to integrate climate resilience into development agendas.
Resilience building involves strengthening diverse connections and relationships – between people, communities, and the systems that support them – that enable communities to plan, prepare, and manage for change in times of increasingly complex and dynamic crises.
Operationalizing resilience in a context-specific and measurable way means evolving development programming design and implementation. Consideration of climate-induced shocks and stresses – along with shocks that are social, economic or ecological by nature – is essential.
Confronting the challenges
One major challenge development actors face when attempting to operationalize resilience is effectively integrating climate adaptation strategies into broader development programming. Many of the people we target engage in livelihood strategies that are dependent on natural resources, often in arid and degraded environments. This limits their productivity and makes them even more vulnerable to shifts in climate and erratic weather patterns.
Such populations often have an extremely low capacity to prepare for and manage climate shocks and stresses, in part because governments are often unable to plan, adequately fund, or implement adaptation measures. Climate-induced hazards – including shorter or nonexistent seasonal rains, groundwater salinization and depletion, and humanitarian disasters – have a grave impact on already vulnerable communities. These hazards magnify existing development barriers and degrade development legacies; development professionals and the communities they work with have witnessed extreme and often unpredictable weather patterns on all continents.
These patterns damage social, economic, and ecological systems at multiple scales and give rise to new hazards. The increased frequency and intensity of weather-induced hazards exacerbate drivers of fragility, limit development, and drive involuntary migration and conflict across the least developed and most crisis-affected nations.
By threatening essential inputs for economic prosperity and human well-being, climate instability challenges our assumptions about security and livelihoods, especially for vulnerable communities at the center of development work. While it is increasingly clear that climate and related ecological factors are among the root causes of complex social and economic challenges, the development community struggles to address these drivers effectively.
7 lessons for practitioners designing climate-resilient approaches
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Incorporate climate change adaptation strategies across outcomes. Effective CRD programs integrate CCA across development strategies, rather than creating an isolated CCA program pillar. This ensures climate information informs all program strategies, and in turn, all outcomes.
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Seek long-term strategies. Integration of climate adaptation within development strategies leads to larger scale and longer-term programs that bring together various organizations and partners across social, ecological and economic systems. Working within and around existing funding cycles requires sequencing and layering of projects so that they contribute to and build toward goals beyond the time-scale of any one activity.
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Build a systemic understanding of climate challenges. Assessments and analysis conducted at the program design stage should be multidisciplinary and focused on how climate and nonclimate factors influence desired development outcomes. Siloed, sector-specific assessments are less effective for designing multiscale CRD programs.
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Facilitate mainstreaming. The role of implementation agencies is to facilitate a process of learning, network-building and advocacy that supports and enables the mainstreaming of climate considerations into policy and planning. Mainstreaming climate within local systems, not programs, is the ultimate goal of CRD. This requires carefully targeted strategies aimed at growing and supporting the systems needed for climate resilience as opposed to providing services directly.
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Enhance the capacity and knowledge of decision-makers. The ability of decision makers to understand climate risk and learn and adapt to new information is fundamental to CRD. Vulnerability assessments, adaptation planning, and pilot project development provide opportunities to build capacity and engagement among decision makers at multiple scales in government, civil society, and business sectors.
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Target climate information dissemination. To integrate CCA strategies effectively, decision-makers – including government and market actors, community members, and project teams – must be able to access and interpret climate information quickly and easily. Climate and weather information must be user specific, time appropriate, accessible and targeted to identified needs.
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Monitor climate information from design to evaluation. Climate vulnerability assessments are essential tools for informing program design and understanding the impacts of climate shocks and stresses. Analysis of climate disturbances should extend beyond design phases to monitoring and evaluation efforts.
A development-first approach?
Climate change is often perceived as too long-term a challenge, distinct from shorter-term project-based approaches to development outcomes, such as improved health, economic prosperity, agricultural productivity, and inclusive governance. Yet, allocating comparatively limited resources toward climate-related development programming and failing to integrate this programming across development efforts will dramatically hinder long-term achievement and return on investment.
Many practitioners and donors now advocate for a “development-first” approach that aims to build climate resilience through strategies that reduce poverty, including measures aimed at increasing food security, enhancing social cohesion, and strengthening governance inclusive of those now marginalized and impoverished. However, little on-the-ground experience on how to do this effectively currently exists.
As part of our broader Resilience Initiative, Mercy Corps conducted a series of case studies of programs attempting to integrate climate considerations to explore the approaches and experience to date. These case studies feature programming in partnership with a range of organizations, including CARE, the Caucasus Environmental NGO Network, and the Institute for Social and Environmental Transition.
Looking ahead to the next climate talks in 2016 and beyond, we challenge humanitarian and development donors and implementers to increase the commitments to integrating climate risk analysis and adaptation objectives across all investments. Climate change can no longer be isolated from other drivers of poverty and development challenges; we should ensure all future development outcomes are climate resilient.
David Nicholson is director of Mercy Corps' technical support unit for environment, energy and climate and the co-lead for their Global Resilience Initiative.
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Can Kenya’s security keep up with trade?
As economic stakes are raised, terrorism and nonproliferation require political focus and follow-through. Fortunately there are signs that promote hope for the future, and Kenya is not alone in the process. Cameron Evers provides this guest analysis.
On 17th December 2015, Kenyan President Uhuru Kenyatta announced that the country will host the second convening of the Global Partnership for Effective Development Cooperation. The meeting, slated for November of next year, aims to align development goals between governments.
On the same day, militants ambushed a police vehicle in the northern city of Lamu, killing two civilians in the process. Al-Shabaab, a Somali terrorist organization, claimed responsibility for the attack.
Two narratives are unfolding out of the country: one of growth opportunity attractive to foreign investors, and another of terrorism and the Kenyan government grappling with its fight against the Somali jihadis.The benefits of Kenyan economic growth are at risk of the fallout over continued terrorism, raising the stakes for how the Kenyans proceed in their national defense measures.
Broad international efforts to assist in Kenya’s nonproliferation and counter-terrorism are ongoing, but require necessary final steps in implementation by the Kenyans themselves.
The First East African ‘Tiger’ Economy Harnesses the Power of Trade
Kenya is a regional trading power on its way to becoming a critical component of African economic resurgence. The liberalization of Kenyan trade policy during the 1980s and 1990s has narrowed the trade deficit overall and exports increased from $500 million in 2000 to $1.25 Billion in 2010.
Manufacturing is the third largest sector of the economy and makes up 11% of GDP. The sector’s performance is likely to contribute to Kenya becoming one of the ‘post-China 16’ manufacturers. Moreover, with the annual GDP growth rate of 5.7%, the nation is facing an overall positive economic outlook. According to the International Monetary Fund, this rate will hit 6% by 2016.
Mombasa, “the city of merchants,” is the largest seaport of Kenya, and is a key driver of Kenya’s economy. Government initiatives towards infrastructure modernization have maintained the city’s status as a trading hub for East Africa as well as parts of Central Africa. Mombasa’s strategic location, halfway between the Gulf of Aden and South Africa, has made the city a regional gateway: it sees roughly five million tons of goods coming through its harbors a year, handling 80% of the region’s trade. Mombasa is directly connected, via shipping routes, to over 80 ports around the world and is connected inland via a railway that runs to Uganda and Tanzania.
Within Kenya, the port is also connected by rail to two inland container ports, at Nairobi and Kisumu. A larger East African rail-line is planned, beginning in Mombasa and eventually extending to Uganda, South Sudan, and Burundi. The planning of this rail-line is part of a greater project also including the constructionof a port and three international airports.
The Threat from the North
The positive factors of growing trade and manufacturing capabilities underscore the impact of security challenges on further growth and the potential for terrorists to exploit Kenya. Since 2011, when the Kenyan Defense Forces entered into the Somali conflict on behalf of the African Union, al-Shabaab has sought retribution by conducting a well-orchestrated near-weekly terror campaign across the country.
Al-Shabaab has organized car-bombings, targeted assassinations, kidnappings, and shootings. The slaughtering of hundreds of civilians in the Westgate Mall attack in September 2013, and the Garissa University College attack in April 2015, were Kenya’s largest incidents of terrorism since the 1998 Al-Qaeda bombing of the US embassy.
In 2014, al-Shabaab suffered major setbacks. “Operation Indian Ocean” clamped down on rebels throughout Somalia’s countryside and shortly thereafter, a US airstrike in Somalia killed al-Shabaab’s top leader, Moktar Ali Zubeyr (nom de guerre “Godane”). This was followed by a pledge from the European Union to train 1,200 Somali soldiers, enabling the Somali government to conduct incursions against al-Shabaab.
Yet, the worsening scenario for al-Shabaab inside Somalia has encouraged the organization to spread its terror franchise into Kenya. As the situation worsened for al-Shabaab in Somalia, its attacks intensified further south.
Beyond Kenya’s internal security issues lies regional instability in East Africa. Decades of war have left scores of armed groups roaming the frontiers and hinterlands. Both South Sudan and Somalia share borders with Kenya, making transshipment and border control issues critical. Small arms and explosives proliferation from Somalia into Kenya is presently a major security challenge facing Kenyan officials, along with smuggling from South Sudan and Ethiopia.
Alarmingly, Kenya’s first report to the United Nations’ 1540 Committee (nonproliferation committee) revealed incidents of nuclear smuggling and noted the potential risk that Kenyan territory could be used to illegally transfer WMD-related materials.
The proximity of one of the world’s most able terror organizations to Kenya’s trade infrastructure, coupled with East African instability at large, raises serious concerns about the security of the growing supply chains that connect the Kenyan economy together.
As former Director of the Center for International Trade and Security (CITS), Dr. William Keller, noted in 2012: “The potential exists [in Kenya] at any time for violence or sabotage, perhaps perpetrated by sub-state groups located near the borders with Somalia or Ethiopia.”
Robust International Efforts Signal Resolve, but Require Follow-Through
There are currently several cooperative international efforts underway. The US State Department, in conjunction with CITS, hosted several training sessions with key Kenyan delegates regarding strategic trade controls in Nairobi and Washington DC.
Many governmental, non-governmental, and private sector chemical and biological organizations have likewise cooperated with Kenya to further the creation of a strategic trade control system. Such a regime would require the involvement of a network of government ministries and trained government officials, supported by a comprehensive legal framework.
On the counterterrorism front, similar efforts have been required, but met by both Kenya and its partners in much more tangible ways. American military and counter-terror assistance programs are currently in effect, mandated to train, arm, and advise Kenyan counter-terrorism.
According to the Security Assistance Monitor, a project of the US-based think-tank the Center for International Policy, Kenya received $42.5 Million in military aid, $23.2 Million in weapons transfers, and the instruction for 264 trainees in 2014 and 2015.
The end-game is in favor of Nairobi, owing to the wearing down of Al-Shabaab which contrasts with the continued, strengthened international support delivered to Kenya. Moreover, while Kenyan institutional effectiveness will be tested and challenged by Al-Shabaab in the next years, the setbacks faced by the core structure of Al-Shabaab indicate a shorter lifespan for the insurgents than for the resilient Kenyan economy.
The effectiveness of assistance efforts will ultimately depend upon Kenya’s political will and institutional capability to maintain these initiatives long after international partners have returned home.
Cameron Evers is a journalist and analyst covering defense and politics on the African continent. He formerly served as the North Africa correspondent for the Africa Conflict Monitor, and is currently a contributor for War is Boring.
This article was published as part of the GRI Guest Post Series. GRI guest posts come from leading experts in business, government, and academia. The series strives to bring a diverse range of perspectives on the critical issues of our time. The views expressed in this article are solely that of the author and do not necessarily represent the views or opinions of GRI.
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Addis Ababa, Ethiopia: Enhancing urban resilience
The World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR) conducted a CityStrength Diagnostic in Addis Ababa, Ethiopia, in February 2015 at the request of the city.
A team of specialists from the World Bank Group worked with local officials, technical staff, and stakeholders to identify priorities for investment and appropriate areas for action to help build resilience in Addis Ababa.
The city currently faces potential shocks and stresses related to its unprecedented rapid urbanization including urban flooding, fire, earthquakes, water scarcity, unemployment and social vulnerability.
The Diagnostic found that enhancing resilience in Addis Ababa requires actions and investments oriented toward implementing existing plans and regulations, establishing clear and capacitated leadership on risk management topics, and investing in infrastructure that meets existing and future needs.
The following actions and investments could have a transformational impact on the resilience of the city as a collection of initiatives implemented by Addis Ababa with more effectively coordinated support from development partners.
Priority actions include:
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Addressing unprecedented urban growth by quickly focusing on the implementation of the new Integrated Development Plan for the city
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Establishing a disaster risk management and climate change adaptation coordination unit under the Mayor to strengthen, promote, and mainstream risk management initiatives across municipal agencies
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Addressing localized flooding due to surface water run-off by developing a stormwater drainage master plan and supporting the Addis Ababa City Roads Authority (AACRA) in assuming its new mandate to manage drainage in the city
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Performing an extensive study of the most vulnerable groups with special attention to existing social service programs and access to housing and inform a possible integrated strategy to address the needs of the different vulnerable groups
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Strengthening citizen engagement efforts using disaster risk management and climate change adaptation as a point of entry
Priority investments include:
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Addressing water scarcity by focusing on improved efficiency and protection of the existing supply system and exploration of additional water sources
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Piloting urban densification using a transit oriented development and integrated municipal management approach
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Better managing river catchments and related network of secondary drainage, stabilizing eroding river banks and preventing encroachment in flood-prone areas
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Upgrading drainage on the ring road, expanding stormwater drainage systems in low-lying areas of the city, and installing water retention ponds
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Upgrading and expanding existing electricity substations
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Introducing an effectively targeted, productive safety net to support vulnerable groups and households impacted by shocks
There is a strong commitment from the Addis Ababa City Government to strengthen the resilience of the city. The Government of Ethiopia and the City of Addis Ababa have requested support from the World Bank and other development partners in preparing and implementing two major activities related to building resilience: a $300 million project on urban land use and transport, and a $550 million project on urban safety nets. In addition, a national-level urban-wide risk assessment is planned to better address at-risk communities, buildings and infrastructure, and promote planning and investments that contribute to resilience-building in the future.
Speaking at the recent Understanding Risk Conference in November 2015 in Ethiopia, the Mayor of Addis Ababa Deriba Kuma said that “Addis is growing fast and we have to focus on resilience to mitigate and quickly recover from the risks and disasters that threaten it, and in doing so, ensure the revitalization of the city’s development process.”
He added that “the city agrees with the recommendations made by the World Bank experts and we will search for finance in the future to implement those very important actions and investments”.
» Download: Addis Ababa, Ethiopia: Enhancing urban resilience (PDF, 7.44 MB)
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tralac’s Daily News selection
The selection: Tuesday, 5 January 2016
The Brookings Africa Growth Initiative’s Foresight Africa 2016: review
Sub-Saharan Africa will fall behind for many reasons. First, the preferential access offered through the TPP will lead to relatively higher tariffs for trade with Africa. A second reason is, as Meltzer argues in his brief, new, tougher labour, environment, and health and safety standards enshrined in the TPP will become de facto global standards, and African businesses may struggle to meet them. African trade may also suffer because of its growing dependence on the services sector and new rules around global supply chains, on which Meltzer elaborates in Foresight Africa this year. These changes will happen despite the fact that the African Growth and Opportunity Act was reauthorized in 2015 and extended to 2025.
Yes, AGOA is the cornerstone of the US-African trade relationship, but in this evolving trade environment and the so-far “underutilization” of AGOA, sub-Saharan African will still fall behind. In fact, Foresight Africa viewpoint contributor Africa Growth Initiative Non-resident Fellow Witney Schneidman describes the legislation as an “underutilized resource,” as the legislation provides duty-free access to many manufactured goods – notably textiles. Indeed, this underutilization also hurts manufacturing jobs, the percentage of which lies around 6%, a figure that has remained unchanged in decades. Without country-led efforts to create AGOA strategies, beneficiary countries won’t be able to truly capitalize on the advantages the legislation offers.
Rick Rowden: 'Africa’s boom is over' (Foreign Policy)
Given this situation, the logical conclusion is still seldom spoken in polite company: African leaders who are serious about pursuing industrialization will have to back-track, renegotiate, and re-design their previous international trade commitments, and refuse to sign new ones that put them at a disadvantage. Offending more powerful trading partners and big foreign investors would likely invite serious short-term consequences, including lawsuits, threats to cut off foreign aid and trade preferences, and possibly lower foreign investment. But the longer-term consequences of not doing so may be far worse. In Johannesburg, I recently asked the Chairperson of the African Union, Nkosazana Clarice Dlamini-Zuma, how Africa could expect to industrialize if it signs on to the European Union’s Economic Partnership Agreements. Her reply: “We’re going to have to renegotiate some of them.”
J Peter Pham: 'Looking out for Africa in 2016' (The Hill)
AGOA: South Africa may lose US trade benefit after target missed (Bloomberg)
About 78% of South Africa’s agricultural exports to the US under AGOA come from the Western Cape, the only one of the nine provinces not controlled by the country’s ruling African National Congress. “The agricultural issues are vital for us and the sector is already under enormous pressure,” Alan Winde, the province’s economic development minister, said by phone. “I am angry that the Department of Trade and Industry has not concluded these negotiations.”
Related: South Africa on outstanding AGOA issues (the dti), SA tries to avert trade own goal in extra time (Business Day), US baffled at lack of progress in removing poultry barriers (Business Day)
Swaziland: 2015 Article IV Consultation (IMF)
Swaziland’s export structure has experienced sizable changes over the past 15 years. The share of textile exports has halved, and the expiration of trade benefits under AGOA implies that the share of textile exports would decline further. In contrast, the importance of sugar exports have increased substantially, and also (though to a lesser extent) for miscellaneous edibles (which includes the all important Coca-Cola concentrates). Relatedly, EU’s share of Swaziland’s exports has increased and the US market’s share has declined. At the same time, the overall export-to-GDP ratio has declined from 56% in 2000 to 43% in 2014.
El Niño lowers early production outlook in Southern Africa (FAO)
Wholesale maize prices are up 50% from a year earlier in South Africa, while retail maize prices have doubled in Malawi and Mozambique. As households are already reeling from the previous poor harvest devote more income to basic needs, their access to critical farm inputs – such as seeds and fertilizers – is jeopardized. Beyond southern Africa, GIEWS analysis of El Niño-related conditions also points to agricultural stress in northern Australia, parts of Indonesia and a wide swathe of Central America and Brazil. El Niño’s effect is also being felt elsewhere in Africa, with FAO field officers in Ethiopia reporting serious crop and livestock losses among farmers and pastoralists. [Downloads]
Ressano Garcia border crossings hit record levels over festive season (Club of Mozambique)
According to figures released by the National Migration Service, the Ressano Garcia border post recorded 333045 persons entering and leaving the country in the period from December 11 to last Sunday. The borders at Machipanda and Cuchamano in Manica and Tete with Zimbabwe registered 22172 and 16581 crossings respectively. The border with Malawi at Zóbwè in Tete recorded 10222, while Maputo International Airport had 18481.
Zambia’s economic tumble offers important lessons for East Africa (Daily Monitor)
Many African counties have continuously negated the agricultural sector through dismal budget allocations and little support towards value addition. If Zambia had a vibrant agricultural sector as a fallback position, perhaps the economic impact from the crush of copper prices could have been cushioned. Uganda, like the rest of African countries, needs to support local investors. What we continuously see is favouritism of foreign investors at the expense of local manufacturers and producers. We need to create a special window to support local business people with great potential to build strong enterprises. Perhaps a return to some protectionism for certain sectors would help build local capacity, encourage healthy competition and build truly national businesses. [The author, Nathan Were, manages a large-scale financial inclusion program for Sub-Saharan Africa]
Nigeria: New cars importation declines 67% on auto policy, falling Naira (ThisDay)
TNL said 15,031 new vehicles were imported into the country by various dealers in 2015 as against 45,618 new cars imported in 2014. Giving an insight into the figures, Head of Marketing, Toyota Nigeria Limited, Mr Andrew Ajuyah attributed the drop to the federal government’s full implementation of the automotive policy and the free fall in the value of the naira against international currencies, especially the US dollar. The federal government had in the last quarter of 2013 introduced the Nigerian Automotive Industry Development Plan, which raised the import tariff on cars to 70% from 22% and on buses and other commercial vehicles to 35%.
Kenya: GDP and balance of payments Third Quarter 2015 (KNBS)
In the money market, the Kenyan Shilling strengthened against the Euro, Yen, South African Rand, Ugandan Shilling and the Tanzanian Shilling but weakened against the US Dollar and the Sterling Pound during the third quarter of 2015 compared to a similar period in 2014.
Related: Rottok Chesaina: 'Has shilling finally outsmarted rand in the currency race?' (Business Daily), Lower oil prices set to ease Kenya’s import bill in 2016 (Business Daily), Balance of payments boost cuts the shilling’s exposure to shocks (Business Daily), Kenya urged to focus on security as trade rises (Daily Nation)
Nigeria: 'Transport sector’s 1.41% contribution to GDP unacceptable' (ThisDay)
The Minister of Transport, Mr. Rotimi Amaechi, has said 1.41% aggregate contribution of the sector to Nigeria’s GDP is unacceptable. He admitted however that the maritime sector’s contribution could be appreciable but its potential had been largely untapped. “Among the bills that is ready for legislative action is the National Transport Commission Bill - an act to provide for the establishment of a National Transport Commission as an independent multi-modal economic regulator and other related matters. He said the bill among others have been approved by the Federal Executive Council in March 2014.”
Direct flights from Kenya to the US to begin by May (Daily Nation),
Air France-KLM eyes Mozambique route (Club of Mozambique)
DRC/Burundi/Rwanda: Ruzizi III hydropower project appraisal report (AfDB)
The Ruzizi III Hydropower Plant Project which is part of the Programme for the Development of Infrastructure in Africa concerns Burundi, the Democratic Republic of Congo and Rwanda. It entails the construction of a run-of-river dam (on the Ruzizi River between DRC and Rwanda downstream from the Ruzizi II hydropower dam), a 147 MW power plant and a distribution station. Burundi’s current total capacity will double, while Rwanda’s will increase by half. DRC’s share will contribute to raising supply in the Eastern region currently not connected to the interconnected network, while also significantly reducing the percentage of energy of thermal origin.
Industrial parks and globalization: experience sharing between China and Africa (NexGen Global Forum)
On 18 December, NexGen Global Forum worked with Tsinghua University and the UNDP to co-host a symposium on industrial park development in Africa. The purpose of the symposium was twofold: to facilitate knowledge sharing between policy makers, zone developers, investors and researchers from China, Africa and other parts of the world; and to examine issues and challenges during the construction of industrial parks in Africa and other developing countries. [Download]
Outward investment agencies: partners in promoting sustainable development (UNCTAD)
The Investment Promotion Agency Observer, No 4 describes how partnerships between OIAs in home countries and inward investment promotion agencies in host countries could be beneficial to both institutions in the promotion and facilitation of SDG investment projects. The document includes case studies from OIAs in the Netherlands, South Africa (the DBSA), and the United States of America.
Institutional and policy adjustments to implement Free Trade Agreements with the EU: a developing country perspective
This report reviews the international experiences with institutional and policy adjustments needed to implement FTAs with the EU, as seen from a developing country perspective. It focuses on three issues: investment, competitiveness, and competition, including state-owned enterprise reform. [The author: Kenneth Baltzer]
Egypt's BoP deficit hit $3.7bn in Jul-Sept 2015: CBE (Ahram)
Angola's kwanza pain continues: falls most since 2001 to record in devaluation (M&G Africa)
Tanzania’s Human Development Report 2017: concept note - 'Social policy in the context of economic transformation' (ESRF)
Mozambique: Regular transport of coal to Nacala-a-Velha this month (Club of Mozambique)
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South Africa may lose U.S. trade benefit after target missed
Health authorities to meet to resolve outstanding issues; U.S. may exclude South African farming goods from AGOA benefit
South Africa said it missed a Dec. 31 deadline set by the U.S. to resolve a trade dispute between the two countries, putting it at risk of losing duty-free access on its agricultural exports to the world’s largest economy.
Health authorities from the two nations have yet to reach agreement on safety standards related to chicken and beef imports from the U.S., Trade Minister Rob Davies said. U.S. President Barack Obama will now decide whether South African farming goods will be excluded from a preferential trade agreement known as the African Growth and Opportunity Act, or AGOA.
The U.S. has accused South Africa of imposing several longstanding barriers to American exports and gave the nation 60 days from Nov. 6 to resolve concerns or face suspension of trade preferences on products such as citrus fruit, macadamian nuts and avocados under AGOA.
“We are recognizing that we are in extra time,” Davies told reporters in Pretoria. “The whistle hasn’t at this moment been blown and we are hoping that the whistle will not be blown to give the authorities on both sides an opportunity to engage again. We are committed to finding a solution.”
The trade accord between the U.S. and 39 African countries eliminates import levies on more than 7,000 products ranging from textiles to manufactured items. To remain beneficiaries, countries are required to eliminate barriers to U.S. trade and investment, operate a market-based economy, protect workers’ rights and implement economic policies to reduce poverty.
The trade program has helped South Africa more than double its exports to the U.S. since 2000. South African agricultural exports to the U.S. under AGOA amounted to $154 million in the first nine months of last year, according to the Trade Law Centre, which is based in Stellenbosch, near Cape Town. Total two-way trade between the two nations was about $14 billion in 2014.
The process has “dented South Africa’s relationship with the U.S., especially because President Obama was such a big supporter of South Africa’s inclusion in the renewed AGOA program while a lot of people opposed it,” Cyril Prinsloo, a researcher at the Johannesburg-based South African Institute of International Affairs, said in an interview in Pretoria. “Trade negotiations always take long, it’s always an extended process. The fact that after the 6O days all the issues are still not resolved is somewhat disappointing.”
Veterinary authorities from the two nations will meet on Jan. 6, according to Davies. If it loses some trade benefits, South Africa can reapply for full AGOA access once the dispute is resolved and preferences can be speedily restored, he said.
Wine Exports
“We are continuing to work with South Africa to remove the barriers that block American poultry, beef and pork,” Trevor Kincaid, a spokesman for the office of the U.S. Trade representative in Washington, said in an e-mailed response to questions on Monday. “As of today’s deadline, outstanding issues have not been resolved.”
The U.S. will determine which South Africans goods can be excluded from AGOA. Davies said he was unsure whether wine exports may be affected.
“South African wine accounts for about 1 percent of consumption in the U.S., yet they are our fifth-biggest export market,” Jonathen Ralph, general manager for the Americas at KWV Holdings Ltd., one of the country’s biggest wine and spirit companies, said by phone from Paarl, near Cape Town. “It’s going to be very detrimental to the wine industry” if exports are excluded.
About 78 percent of South Africa’s agricultural exports to the U.S under AGOA come from the Western Cape, the only one of the nine provinces not controlled by the country’s ruling African National Congress.
“The agricultural issues are vital for us and the sector is already under enormous pressure,” Alan Winde, the province’s economic development minister, said by phone. “I am angry that the Department of Trade and Industry has not concluded these negotiations.”
A deal is still likely to be struck, according to Faizel Ismail, South Africa’s special envoy to AGOA.
“It’s the last part of the marathon,” he said in an interview in Cape Town. “Both parties have a deep interest in finalizing the last 5 percent. You can’t give up at this stage on either side. We both have much to lose.”
» Read: South Africa on outstanding AGOA issues | Media statement, 4 January 2016
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El Niño lowers early production outlook in Southern Africa
FAO actions aim to minimize impact on agriculture
Crop and livestock production prospects in Southern Africa have been weakened by the El Niño weather phenomenon that has lowered rains and increased temperatures.
A reduced agricultural output would follow on 2014’s disappointing season, which has already contributed to higher food prices and “could acutely impact the food security situation in 2016,” according to a special alert released on 22 December 2015 by FAO’s Global Information and Early Warning System (GIEWS).
The season for planting maize in Southern Africa has already experienced delays, while crops sown stand to be negatively affected due to inadequate rains and higher temperatures. “It’s the sixth week of the cropping season now and there’s not enough moisture in the soil,” said Shukri Ahmed, FAO Deputy Strategic Programme Leader – Resilience.
The region’s small-scale farmers are almost entirely dependent on rain, rendering their output highly susceptible to its variations. While El Niño’s impact depends highly on location and season – the impact of El Niño on agricultural production appears more muted in northern areas – past strong episodes have been associated with reduced production in several countries, including South Africa, which is the largest cereal producer in the sub-region and typically exports maize to neighbouring countries.
FAO had already warned in March that the current El Niño would be strong – and it now appears to be the strongest episode in 18 years. It will peak at the start of 2016, before the usual harvest time for farmers in Southern Africa.
“Weather forecasts indicate a higher probability of a continuation of below-normal rains between December and March across most countries,” according to the GIEWS alert.
South Africa has already declared drought status for five provinces, its main cereal producing regions, while Lesotho has issued a drought mitigation plan and Swaziland has implemented water restrictions as reservoir levels have become low.
Increasing prices intensify risks
The likelihood of another poor season is troublesome as it comes on the heels of a poor one that has already depleted inventories, tightened supplies and pushed up local prices. The Subregional maize production fell by 27 percent in 2015, triggering a sharp increase in the number of people already vulnerable to food insecurity in the region.
“Maize prices in southern Africa are really getting high,” said Shukri Ahmed. “Moreover, currencies in the sub-region are very weak, which together can exacerbate the situation.”
While the drought affects many crops, including legumes, which are an important contributor to local nutrition, maize is grown by 80 percent of the subsistence farmers in the subregion.
Wholesale maize prices are up 50 percent from a year earlier in South Africa, while retail maize prices have doubled in Malawi and Mozambique. As households are already reeling from the previous poor harvest devote more income to basic needs, their access to critical farm inputs – such as seeds and fertilizers – is jeopardized.
Beyond southern Africa, GIEWS analysis of El Niño-related conditions also points to agricultural stress in northern Australia, parts of Indonesia and a wide swathe of Central America and Brazil.
El Niño’s effect is also being felt elsewhere in Africa, with FAO field officers in Ethiopia reporting serious crop and livestock losses among farmers and pastoralists.
Last month, FAO also issued a warning that there is an increased risk of Rift Valley fever (RVF), especially in East Africa. Outbreaks of RVF, which primarily affects sheep, goats, cattle, camels, buffaloes and antelopes, but can also be lethal to humans, are closely associated with periods of El Niño-linked heavy rainfall, which bolster habitats for the mosquitoes that carry the disease. The options to counter the possible human and animal disease threats include the use of insect repellents in households and vaccination of animals in target areas, but quality vaccines are needed as well as teams to be sent to the field immediately.
Action Plan for Southern Africa
To reduce the adverse effects of El Niño, FAO has already triggered several interventions across southern Africa that are also building on existing programmes following last season’s reduced production.
“FAO is working on a twin track approach with governments and other partners across the subregion to address both the immediate and longer term needs. Appropriate crop and livestock interventions intended to minimize the effects are already being up-scaled,” said David Phiri, FAO Subregional Coordinator for Southern Africa.
The focus of immediate interventions includes supporting farmers by providing drought tolerant crops, seeds and livestock feed and carrying out vaccinations. The Organization is also supporting longer-term resilience-building approaches among vulnerable groups, including the rehabilitation of irrigation systems, improving farmers’ access to rural finance, and supporting wider use of climate-smart agricultural technologies. Several countries have already produced national plans that address the impact of El Niño on agriculture.
Innovative interventions implemented in southern Africa in recent years have been particularly successful. Many of these good practices, including the rapid expansion of market-based interventions, non-conditional cash transfers and vouchers, adoption of climate smart technologies for both livestock and crop production systems, have been used to good effect in other crises.
“We are grateful for the contributions made by the development partners so far, but there are still significant funding shortfalls. We will need to rapidly adopt and scale up the innovations that have proved successful in the past,” said Phiri.
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The Brookings Africa Growth Initiative’s Foresight Africa 2016: Preview
The launch of Foresight Africa: Top priorities for the continent in 2016 is on the horizon. In anticipation of this year’s report, the Africa Growth Initiative team offers a preview of two of the major topics covered.
Free trade agreements and the implications for Africa
Much of the world is entering into mega-regional free trade areas (FTAs). Indeed, October 5, 2015 marked the ratification of the Trans-Pacific Partnership (TPP), the most significant trade agreement in recent years. Now, the United States is currently negotiating with the European Union toward the establishment of the Transatlantic Trade and Investment Partnership (TTIP). When combined, the TPP and the TTIP will cover 60 percent of global GDP.
But where does that leave sub-Saharan Africa, as no country in the region is party to these agreements? According to Foresight Africa issue brief author, Brookings Global Economy and Development Senior Fellow Joshua P. Meltzer, these exclusions will impede African businesses’ ability to compete on a global scale.
The TPP and sub-Saharan Africa
The 12 TPP countries, which represent 40 percent of global GDP, 25 percent of global exports, and 30 percent of global imports, clearly are set to dominate global trade in upcoming years and likely to move much trade away from Africa – trade that was not very large in the first place. For example, the value in U.S. dollars of exports from the United States to other TPP countries is 29 times the value of U.S. exports towards all of sub-Saharan Africa.
Sub-Saharan Africa will fall behind for many reasons. First, the preferential access offered through the TPP will lead to relatively higher tariffs for trade with Africa. A second reason is, as Meltzer argues in his brief, new, tougher labor, environment, and health and safety standards enshrined in the TPP will become de facto global standards, and African businesses may struggle to meet them. African trade may also suffer because of its growing dependence on the services sector and new rules around global supply chains, on which Meltzer elaborates in Foresight Africa this year.
These changes will happen despite the fact that the African Growth and Opportunity Act (AGOA) was reauthorized in 2015 and extended to 2025. Yes, AGOA is the cornerstone of the U.S.-African trade relationship, but in this evolving trade environment and the so-far “underutilization” of AGOA, sub-Saharan African will still fall behind. In fact, Foresight Africa viewpoint contributor Africa Growth Initiative Nonresident Fellow Witney Schneidman describes the legislation as an “underutilized resource,” as the legislation provides duty-free access to many manufactured goods – notably textiles.
Indeed, this underutilization also hurts manufacturing jobs, the percentage of which lies around 6 percent, a figure that has remained unchanged in decades. Without country-led efforts to create AGOA strategies, beneficiary countries won’t be able to truly capitalize on the advantages the legislation offers.
Urbanization in the African context
Historically, urbanization was a sign of economic prosperity. As a country underwent structural transformation, and its economy shifted from agriculture to manufacturing and industry, the composition of the population of the country shifted from being predominantly rural to predominantly urban. However, urbanization in the African context displays different characteristics from the ones witnessed in Asia and Latin America. Rather, African cities are seeing fast growth, engendering the emergence of megacities, without the structural transformation urbanization has been compiled with in the Asian and Latin American context.
Fast urbanization, slow structural transformation
As chapter three of this year’s Foresight Africa shows, with an average annual rate of 1.4 percent between 2010-2015, Africa is the second-fastest urbanizing continent, second only to Asia. Despite the substantial urban growth experienced in the last decade, however, Africa is and will remain the least urbanized region: By 2050, Africa’s urban population will only represent 55 percent of the country’s total population, compared to 64 percent and 86 percent in Asia and Latin America, respectively. While fast and uncontrolled urbanization presents several challenges – such as housing informality, poor sanitation, crime – a low urban population can impede economic prosperity.
As our viewpoint authors, Brookings Metropolitan Policy research associate, Joseph Parilla, and senior fellow and deputy director, Alan Berube, note, “There are no wealthy countries that are not urbanized, but there are plenty of urbanized countries that are not wealthy.” In other words, urbanization is a necessary, but not sufficient, condition for economic prosperity. African countries must now strive to capitalize on urbanization and strive to become high-income urbanized nations.
The growth of the African megacity and the importance of financing urban infrastructure
Shown below are nine of the 10 biggest cities in Africa (Abidjan not shown). Right now, three of them – Lagos, Cairo, and Kinshasa can be considered “megacities,” in that they have 10 million people or more. Within the next few decades, many other sub-Saharan and North African cities – for example, Johannesburg, Nairobi, Dar-es-Salaam, Khartoum, Casablanca, and others – will reach that 10 million person threshold. Unsurprisingly, then, the total number of individuals living in Africa’s urban areas is expected to rise from 400 million in 2010 to 1.26 billion in 2050.
This growth demonstrates a great need for better urban management and institution building, especially because over 60 percent of African urban residents live in slums. Thus, if managed properly, the megacity can engender several economic opportunities as cities offer economies of scale, which can be conducive to sustainable economic prosperity and improved human development.
Still, “urban management and planning” should not be confined to megacities, says Jérôme Chenal, senior scientist at the Urban and Regional Planning Community at Ecole Polytechnique de Lausanne, in his Foresight issue brief. Chenal stresses the importance of managing intermediate cities, i.e., cities where population lies below 10 million people, as urban growth in said cities is most pronounced.
In that light, viewpoint author and mayor of the city of Dakar, Senegal, Khalifa Sall, stresses the importance of municipal finance for urban development for his citizens and all African cities. In fact, the city of Dakar – population lies between 3 million and 5 million people – is presently working towards establishing the region’s first municipal bond in order to fund urban infrastructure projects.
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South Africa on outstanding AGOA issues
SA confident outstanding AGOA issues will be resolved
South African government officials have been engaged with their US counterparts during the festive season to finalise all the outstanding technical issues to allow for safe imports of poultry, pork and beef products from the US, as a requirement for South Africa’s continued participation in AGOA Agriculture trade benefits.
Since the negotiations began South Africa has made significant progress on opening its market for the three US meats. This includes an agreement on a quota for bone-in-chicken pieces and a poultry trade protocol on Avian Flu. All matters that were on the table for conclusion by 11 November 2015 were concluded, only outstanding issues relate to issues brought to the negotiating table after the 11th November 2015.
During the past few weeks, pork health certificates have been negotiated and only requires signature by both sides.
Much progress has been made on beef with a few issues that can be finalised quickly.
On Salmonella too, a great deal of progress has been made on a side-letter with some technical issues still to be finalised.
While the 31st December deadline has passed, both sides are committed to continue the negotiations. South Africa believes that with some flexibility from both sides the final touches to the agreement on which 95 percent of the work has been done can be completed with some extra-time.