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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.
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.
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New study: Illicit financial flows hit US$1.1 trillion in 2013
A December 2015 report from Global Financial Integrity finds that developing and emerging economies lost US$7.8 trillion in illicit financial flows from 2004 through 2013, with illicit outflows increasing at an average rate of 6.5 percent per year – nearly twice as fast as global GDP.
Illicit financial flows from developing and emerging economies surged to US$1.1 trillion in 2013, according to a study released on 8 December 2015 by Global Financial Integrity (GFI), a Washington, DC-based research and advisory organization. Authored by GFI Chief Economist Dev Kar and GFI Junior Economist Joseph Spanjers, the report pegs cumulative illicit outflows from developing economies at US$7.8 trillion between 2004 and 2013, the last year for which data are available.
Titled “Illicit Financial Flows from Developing Countries: 2004-2013”, the study reveals that illicit financial flows first surpassed US$1 trillion in 2011, and have grown to US$1.1 trillion in 2013 – marking a dramatic increase from 2004, when illicit outflows totaled just US$465.3 billion.
“This study clearly demonstrates that illicit financial flows are the most damaging economic problem faced by the world’s developing and emerging economies,” said GFI President Raymond Baker, a longtime authority on financial crime.
“This year at the U.N. the mantra of ‘trillions not billions’ was continuously used to indicate the amount of funds needed to reach the Sustainable Development Goals. Significantly curtailing illicit flows is central to that effort.”
This study is GFI’s 2015 annual global update on illicit financial flows from developing economies, and it is the sixth annual update of GFI’s groundbreaking 2008 report, “Illicit Financial Flows from Developing Countries 2002-2006.” This is the first report to include estimates of illicit financial flows from developing countries in 2013.
Primary Findings
US$1.1 trillion flowed illicitly out of developing and emerging economies in 2013, the latest year for which data is available. The illegal capital outflows stem from tax evasion, crime, corruption, and other illicit activity.
The report finds that from 2004 to 2013, developing countries lost US$7.8 trillion to illicit outflows. The outflows increased at an average inflation-adjusted rate of 6.5% per year over the decade – significantly outpacing GDP growth.
As a percentage of GDP, Sub-Saharan Africa suffered the biggest loss of illicit capital. Illicit outflows from the region averaged 6.1% of GDP annually. Globally, illicit financial outflows averaged 4.0% of GDP.
Trade Misinvoicing Dominant Channel
The fraudulent misinvoicing of trade transactions was revealed to be the largest component of illicit financial flows from developing countries, accounting for 83.4 percent of all illicit flows – highlighting that any effort to significantly curtail illicit financial flows must address trade misinvoicing.
Global Development Implications
The US$1.1 trillion that flowed illicitly out of developing countries in 2013 was greater than the combined total of foreign direct investment (FDI) and net official development assistance (ODA), which these economies received that year.
Illicit outflows were roughly 1.3 times the US$858 billion in total FDI, and they were 11.1 times the US$99.3 billion in ODA that these economies received in 2013.
Additional Findings
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Illicit financial flows averaged a staggering 4.0 percent of the developing world’s GDP.
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Sub-Saharan Africa suffered the largest illicit financial outflows – averaging 6.1 percent of GDP – followed by Developing Europe (5.9 percent), Asia (3.8 percent), the Western Hemisphere (3.6 percent), and the Middle East, North Africa, Afghanistan, and Pakistan (MENA+AP, 2.3 percent).
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In seven of the ten years studied global IFFs outpaced the total value of all foreign aid and foreign direct investment flowing into poor nations.
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The IFF growth rate from 2004-2013 was 8.6 percent in Asia and 7 percent in Developing Europe as well as in the MENA and Asia-Pacific regions.
Major Implications for Domestic Resource Mobilization and Sustainable Development
Goal 16.4 of the Sustainable Development Goals (SDGs) calls on countries to significantly reduce illicit financial flows by 2030. However, the international community has not yet agreed on goal indicators, the technical measurements to provide baselines and track progress made on underlying targets and, subsequently, the overall SDGs. These indicators will not be finalized until March 2016. The report calls on the IMF to conduct this annual assessment.
Country Rankings
The study ranks the countries by the volume of illicit outflows. According to the report, the 20 biggest exporters of illicit flows over the decade are:
By Largest Average Illicit Financial Flows: 2004-2013
(in millions of U.S. dollars, nominal)
Rank | Country | Average IFF |
1 | China | US$139.23bn |
2 | Russia | US$104.98bn |
3 | Mexico | US$52.84bn |
4 | India | US$51.03bn |
5 | Malaysia | US$41.85bn |
6 | Brazil | US$22.67bn |
7 | South Africa | US$20.92bn |
8 | Thailand | US$19.18bn |
9 | Indonesia | US$18.07bn |
10 | Nigeria | US$17.80bn |
11 | Kazakhstan | US$16.74bn |
12 | Turkey | US$15.45bn |
13 | Venezuela | US$12.39bn |
14 | Ukraine | US$11.68bn |
15 | Costa Rica | US$11.35bn |
16 | Iraq | US$10.50bn |
17 | Azerbaijan | US$9.50bn |
18 | Vietnam | US$9.29bn |
19 | Philippines | US$9.03bn |
20 | Poland | US$9.00bn |
Policy Recommendations
Illicit financial flows from developing countries are largely facilitated by continued opacity in the global financial system. This opacity reveals itself in many well-known ways: tax havens and secrecy jurisdictions, anonymous trusts and shell companies, bribery, and corruption. There are countless techniques to launder dirty money, including the misinvoicing of trade (TBML in this context), which is used to shift proceeds of criminal activity across national borders.
Though policy environments vary from country to country, there are best practices that all countries should adopt and promote at international and regional forums and institutions, including the G20, the G8, the United Nations, the World Bank, the IMF, the OECD, and the African Union. This section highlights those best practices and suggests further steps domestic and international regulators could take to curtail illicit financial flows.
Anti-Money Laundering
At a minimum, all countries should comply with the Financial Action Task Force Recommendations to combat money laundering and terrorist financing. The most recent update to those recommendations was released in 2012, introducing new priority areas on
corruption and tax crimes.
Despite good intentions and good policy, actually stopping money laundering often comes down to enforcement. Regulators and law enforcement officials must strongly enforce all anti-money laundering laws and regulations already on the books. This includes prosecuting criminal charges against and imposing appropriate penalties upon employees of financial intuitions who are culpable of allowing money laundering to occur.
Beneficial Ownership of Legal Entities
Countries and international institutions should require or support meaningful confirmation of beneficial ownership in all banking and securities accounts in order to address the problems posed by anonymous companies and other legal entities. Information on the ultimate, true, human owner(s) of all corporations and other legal entities should be disclosed upon formation, updated regularly, and made freely available to the public in central registries.
In 2015, the European Union adopted legislation requiring each EU Member State to create registers of beneficial ownership information by May 2017 that are freely accessible by law enforcement authorities and financial institutions, and available to third parties that can demonstrate a legitimate interest in the information. Nothing prevents EU Member states from creating entirely open registries, however, and a few countries both within and outside the EU have already committed to doing so, including the UK, Denmark, Norway and the Ukraine. However, progress by G20 countries towards meeting their High Level Principles on Beneficial Ownership Transparency (adopted by the G20 in November 2014) has been poor.
There are indications that other countries, especially those seeking the return of stolen assets, now recognize the negative impacts of anonymous companies as well. GFI urges countries to commit to the creation of public registries of corporate beneficial ownership information and to engage with countries already in the process of implementing public registers to learn from their challenges and successes.
Automatic Exchange of Financial Information
All countries should actively participate in the G20 and OECD-endorsed global movement toward the automatic exchange of financial information. Ninety-six countries have committed to implementing the OECD/G20 standard by the end of 2018, which represents some progress from this time last year, when 89 countries had committed. The OECD and G20 must ensure that developing countries, and especially the least developed countries, are able to participate in the process, even if that requires providing them with the necessary technical assistance.
Country-by-Country Reporting
All countries should require multinational corporations to publicly disclose their revenues, profits, losses, sales, taxes paid, subsidiaries, and staff levels on a country-by-country basis as a means of detecting and deterring abusive tax avoidance practices. As part of the Base Erosion and Profit Shifting (BEPS) initiative, the G20 countries and the OECD countries agreed in November 2015 to take the necessary measures to require their large, multinational companies to provide such reporting on a country-by-country basis. Unfortunately, the agreement only requires that the information be provided by the parent of the multinational company to its home tax authority. Other countries’ tax authorities will be able to access the information only through official treaty requests, and therefore only where such treaties are in place.
GFI strongly recommends that countries require their companies to provide public country-by-country reporting so that the information can be analyzed by legislators responsible for fixing the profit-shifting problems that such reporting will help identify. Since legislators alone will not have enough qualified people to adequately analyze the information necessary to make informed policy changes, publicly available country-by-country reporting will also allow experts from academia, civil society and the media to lend their analytical support to the problem.
Curtailing Trade Misinvoicing
Trade misinvoicing accounts for a substantial majority of illicit flows over the time period of this study, averaging 83.4 percent of IFFs or US$654.7 billion per year. Curbing trade misinvoicing must necessarily be a major focus for policymakers around the world.
Governments should significantly boost customs enforcement by providing appropriate training and equipment to better detect the intentional misinvoicing of trade transactions. One particularly important tool for stopping trade misinvoicing as it happens is access to realtime, commodity-level world market pricing information. This would allow customs officials to tell whether a good is significantly under- or over-priced in comparison to its prevailing world market norm price. This variance could then trigger an audit or another form of further review for the transaction.
Given the greater potential for abuse, trade transactions with secrecy jurisdictions should be treated with the highest level of scrutiny by customs, tax, and law enforcement officials. Brazil is an excellent example on this point, subjecting transactions with secrecy jurisdictions and tax havens to a higher tax rate.
UN Sustainable Development Goals/Addis Tax Initiative
While the SDG document is ambitious – it has 17 goals and 169 targets – the success of the illicit flows target may hinge on the indicator that is associated with it. The indicators, which will not be finalized until March 2016, are the underlying technical measurements that will show if progress is being made on the targets and, subsequently, toward the overall SDG goals.
A good indicator for 16.4 would be similar or identical to what GFI publishes each year in this annual update: a country-level estimate of illicit outflows related to misinvoiced trade and from other sources based on currently available data. Preferably, such an assessment would be conducted by the IMF in order to, in the first instance, create an IFF baseline for each country and then, over the longer-term, provide an indication of progress toward curtailing illicit flows. Without a baseline and annual assessments, it is unclear how it could be determined if the international community’s vision of significantly reduced illicit flows has been achieved. At the time of writing, the negotiations on this indicator have not reached a point where it can be determined if this level of tracking will be attempted or if it will be done so by a qualified international body.
The Addis Tax Initiative (ATI), another agreement reached in 2015, attempts to focus the political will of several countries to address the illicit flows menace. The ATI is the outcome of a side event at this year’s Financing for Development Conference agreed upon by over 30 countries and international organizations, and directly links illicit financial flows to domestic resource mobilization, and in turn, to sustainable development. Those governments and organizations have acknowledged that curbing illicit flows is crucial to achieving the SDGs.
Germany, the United States, the United Kingdom, and the Netherlands are among the developed nations taking part in the non-binding effort to seek ways to reduce IFFs. Ethiopia, Indonesia, the Philippines, and Tanzania, and other developing countries have said they will strive to curb their losses of revenue (due to IFFs). GFI strongly encourages other countries to sign on to the Addis Tax Initiative and has entered into discussions with many of these governments to determine how the aspiration of the Addis Action Agenda, the SDGs, and the ATI can move to implementation.
Methodology
To conduct the study, Dr. Kar and Mr. Spanjers analyzed discrepancies in balance of payments data and direction of trade statistics (DOTS), as reported to the IMF, in order to detect flows of capital that are illegally earned, transferred, and/or utilized. Since GFI’s 2014 annual update, the existing methodology has been refined to provide a more precise trade misinvoicing calculation for a greater number of countries, leading to a significant upward revision in illicit flow estimates for many of these economies as compared to previous GFI reports. Find out more ».
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IMF Executive Board 2015 Article IV Consultation with Swaziland
On December 9, 2015, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Swaziland.
Swaziland’s growth has been recovering since the 2010-11 fiscal crisis, albeit at a slower pace recently. Growth recovery following the fiscal crisis was broadly supported by the manufacturing and service sectors. In 2015, however, growth is expected to slow, owing to adverse weather conditions and a slowdown in tourism and transport sectors. Swaziland continues to face significant development challenges, with high unemployment and poverty, and prevalence of HIV. Inflation has stayed modest (4.5 percent in September 2015), reflecting low international commodity prices.
Fiscal policy has become expansionary in recent years. Domestic revenue collection improved with stepped-up administration efforts. Expenditures expanded even further since the crisis, owing to increased recurrent spending (with fast growth in public sector wages) and a revival of capital expenditures. Subsequently, after running surplus for two years, the fiscal balance turned into a deficit in 2014/15. The deficit is expected to further increase in 2015/16 to 5 percent of GDP due to lower Southern African Customs Union (SACU) revenues, wage adjustments, and the supplementary budget. As a result, public debt is projected to grow fast in 2015, with heavy reliance on short-term debt creating high rollover risks.
While international reserves have strengthened since the crisis, they have not reached an adequate level. A current account surplus was recorded in 2014, supported by robust SACU revenues and exports (e.g., wood pulp, textile); there were financial account outflows in light of limited domestic investment opportunities. International reserves stayed at 3½ months of imports in September 2015, below the authorities’ medium-term target of 5-7 months of imports.
Swaziland’s growth outlook is projected to remain subdued over the medium term, while it is clouded with downside risks. Growth is expected to slow in 2016/17, followed by a modest recovery in the following years. SACU revenues are expected to decline markedly in 2016/17, putting pressures on fiscal and external balance. Furthermore, tighter or more volatile global financial conditions and weaker growth in South Africa could have negative spillovers to Swaziland. The recent weakening of the South African economy, together with the expected revision to the revenue sharing formula, point to downside risks for SACU revenues.
IMF Staff Report: Key issues
Swaziland’s growth has been recovering since the 2010-11 fiscal crisis, albeit at a slower pace recently, and its significant development challenges continue, with high unemployment and poverty. Over the past three years, Swaziland has shifted toward an expansionary fiscal policy, while revenues from the Southern African Customs Union (SACU) have declined in percentage of GDP since 2013/14. Hence, after running surpluses for two years, fiscal balance turned into a deficit in 2014/15. International reserves stood at 3½ months of imports as of end-September 2015.
Emerging shock and risks
Swaziland’s economy faces new challenges. The recent weakening of the regional economic outlook is likely to have adverse impacts on Swaziland through trade and financial channels. The SACU revenues, in particular, are projected to decline significantly in the coming years, raising concerns for fiscal and external sustainability. These challenges, unless properly addressed, could weaken growth and adversely affect financial sector stability.
Strengthening international reserve buffer
Maintaining sufficient international reserves is important to ensure the confidence in the economy. To this end, fiscal consolidation is needed over the medium term, while protecting spending for critical social and development needs. Enhanced fiscal reforms – strengthening public financial (and investment) management and domestic revenue collection – are critical policy agendas.
Safeguarding financial stability
Financial soundness indicators point to generally sound banking system. A dominant size of the nonbank financial sector – which grew fast in recent years – calls for strengthening of supervision and regulation for the sector.
Raising inclusive growth
To address social and economic challenges, it is essential to raise Swaziland’s potential for inclusive growth, while the loss of the Africa Growth Opportunity Act (AGOA) eligibility points the importance of enhancing economic diversification and competitiveness. Stepped-up policy efforts in multiple areas are needed: including improving business climate and export diversification.
Past advice
There is broad agreement with the authorities on macroeconomic policies and structural reform priorities, but the implementation of past advice has been uneven. Specifically, although the authorities acknowledge the need to pursue a prudent fiscal policy stance and rein in current spending, there have been no major policy changes since the last consultation. Progress on structural reforms (including improving business climate and accelerating land reforms) has also been modest.
Selected Issues paper
Assessing Swaziland’s export diversification and quality
Swaziland’s exports are relatively diversified with good quality index compared with its peers. However, diversification and product quality have declined in recent years, while the expiration of the access to AGOA calls for enhanced efforts in this area. Improving education and training, strengthen institutional framework, and further developing the financial market will help improve export diversification and quality upgrading.
This note analyzes Swaziland’s export diversification and product quality. A more diversified export base would make export performance more resilient to idiosyncratic shocks. This is particularly important for small open economies such as Swaziland. IMF finds that higher diversification in exports and in domestic production and upgrading the quality of existing product have been conducive to faster economic growth and greater macroeconomic stability in developing countries.
Existing references on Swaziland’s export diversification point to somewhat conflicting conclusion. The Economic Recovery Strategy cites an undiversified export base as one of the factors contributing to Swaziland’s slow growth. On the other hand, the World Bank (2015) and Edwards et al. (2013) find that Swaziland’s export base is quite diversified relative to peers, as measured by the Herfindahl-Hirschman Index.
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 allimportant Coca-Cola concentrates). Relatedly, E.U.’s share of Swaziland’s exports has increased and the U.S. market’s share has declined. At the same time, the overall export-to-GDP ratio has declined from 56 percent in 2000 to 43 percent in 2014.
Macro-financial risks in Swaziland’s banking sector associated with the SACU revenue fall
The fall in the revenues from the Southern African Customs Union (SACU) could have serious macroeconomic consequences. In addition to adverse impacts on fiscal and external balances, financial sector would also be affected. This section focuses on the likely impacts of prospective SACU revenue shock on the financial sector. Specifically, staff analysis demonstrates that the SACU revenue fall would increase sovereign spread and reduce private credit growth, while the government itself may face liquidity problem and run arrears (as experienced in the 2010-11 fiscal crisis). These developments would also affect borrowers’ payment capacity and eventually worsen bank’s asset quality, possibly resulting in further negative feedback to the economy
Swaziland’s banking system currently functions well with sufficient capital buffer (Table 7 of the Article IV staff report), though it is vulnerable to exogenous shocks. Capital ratios of commercial banks are above the regulatory minimum, and their profitability is high. The banking sector, however, is highly exposed to exogenous shocks, reflecting the economy’s vulnerability (e.g., a small open economy and heavy reliance on the SACU revenues). Furthermore, the high level of concentration on the balance sheets and the almost unitary business model of three of the banks pose additional structural weaknesses which would augment the negative impact of various shocks (in particular, the high volatility in the SACU revenues).
In view of the expected fall in the SACU revenues in coming years, this note explores the impact (stress) of the prospective fiscal shock on the stability of the banking system and its feedback effect on the real economy.
The stress testing exercise is carried out in the following three stages:
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Exploring the macro-financial links from stress event (SACU revenue shock) to macroeconomic variables using a vector auto-regression (VAR) model,
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Mapping the macroeconomic shocks to banks’ asset quality (i.e., NPL ratio) using cross-country panel regression, accounting for the feedback effect of banks’ credit risk on the real economy, and
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Stress testing based on the calibrated NPL shock and the stress-testing model developed in the recent MCM TA (IMF, 2015), based on the standard macro stress-testing framework (Čihák, 2007).
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Outward Investment Agencies: Partners in promoting sustainable development
In its fourth issue of The Investment Promotion Agency Observer, UNCTAD examines to what extent outward investment agencies are facilitating foreign direct investment into the Sustainable Development Goals.
Outward investment agencies (OIAs) are institutions which carry out programmes to promote and service investment abroad. They include outward investment promotion agencies, development finance institutions, and investment guarantee schemes. For decades, OIAs have been catalyzing foreign direct investment to developing countries, often in challenging investment environments.
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, and the United States of America.
Highlights
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Outward investment agencies (OIAs) promote and service investment abroad – they include outward investment promotion agencies, development finance institutions, and investment guarantee schemes.
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UNCTAD reviewed 101 OIAs and found that 45% indicate on their websites that they provide some level of services particularly for investing in the Sustainable Development Goals (SDGs).
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Nearly all regional and multilateral OIAs provide SDG-related services, against two out of five OIAs in developed economies and one out of five OIAs in developing and transition economies.
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UNCTAD’s 2015 Investment Policy Framework for Sustainable Development defines a paradigm shift in investment policymaking and calls for action to prioritise investment promotion in SDGs.
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Partnerships between OIAs and investment promotion agencies can encourage and facilitate investment in SDGs through information sharing, technical cooperation, and marketing of SDG investment opportunities.
The IPA Observer series is prepared by the Investment Promotion Section of UNCTAD. Its objective is to show examples of strategic and operational best practice in investment promotion from agencies worldwide to practitioners and governments in developing countries, with a view to share lessons that are practical and replicable for their investment promotion agencies.
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tralac’s Daily News selection
The selection: Monday, 4 January 2016
AGOA: US set to reimpose tariffs on SA goods (Business Day)
US President Barack Obama is set to announce as early as Monday that he is suspending duty-free treatment of South African agricultural products under the African Growth and Opportunity Act. When the deadline expired at midnight on December 31, "outstanding issues" had not been resolved, Trevor Kincaid, spokesman for the office of the US Trade Representative, said. Talks had continued late into New Year’s Eve. [Industry experts say SA right not to back down (Business Day)]
Note: South Africa's trade, agriculture and health ministers will address a news conference at 1pm today
African Union Summit, 21-31 January: Declaration of 2016 as Africa Year of Human Rights
Extract from the concept note: The above human rights achievements and opportunities notwithstanding, the continent continues to face enormous challenges with regards to the respect, promotion, protection and enjoyment of human rights, which if not urgently and adequately addressed, may erase the human rights gains recorded over the preceding decades. These challenges include, but are not limited to:
inadequate allocation of resources to human rights institutions, lack of capacity, insufficient political will, unwillingness by States to surrender sovereignty to supranational monitoring bodies, unwillingness by some States to domesticate international human rights treaties, persistent violence across the continent which result in destruction of life, property and reverse human rights gains, widespread poverty, ignorance and lack of awareness, the effects of colonialism characterized by human rights unfriendly laws, bad governance, corruption and disregard for the rule of law.
It is clear that if human rights were to contribute to the AU agenda, and move the continent towards credible integration and development, urgent steps need to be taken by African leaders in this domain. Fortunately, developments over the past few decades provide enormous opportunities to be optimistic.
African Social Development Index in selected African countries (UNECA)
Initial results of the African Social Development Index for Southern Africa have confirmed that, notwithstanding the high levels of economic growth, countries are still coping with the challenge of making this growth more inclusive and equitable. The sub-national disaggregation and analysis of drivers of exclusion in particular, have highlighted important gaps between locations and population groups, which can guide Governments in designing more targeted and inclusive social policies. In this context, a policy-mapping framework has been developed by the Social Development Policy Division to identify and assess the effectiveness of social policies in reducing human exclusion over time. The framework has been piloted in Benin, and will soon be disseminated and shared with member States and other stakeholders. This exercise is a major step forward in using the African Social Development Index for improved policy targeting and development planning. [Note: this report was submitted to the recent UNECA meeting on SDGs in Africa: enhancing gender-responsive and social development policies]
NEPAD, Regional Integration and Trade Department: EOI to draft Business Plan and ADF Background Papers (AfDB)
The objective of the assignment is to provide timely technical inputs on issues related to the assignment and prepare (i) a business plan for the Regional Integration and Trade department; (ii) provide support to task teams in the preparation of the RISPs and the mainstreaming of regional dimensions in Bank operations and ensuring cross-pollination of lessons among RISP regions (iii) prepare background papers to inform ONRI’s contributions to Bank’s negotiations with ADF contributors, with specific emphasis on the ROE.
The Investor-State Dispute Resolution Forum under the SADC Protocol on Finance and Investment: challenges and opportunities for effective harmonisation (UWC)
At present, there exist major differences between the investment policies, laws and practices of SADC Member States. A case in point is the resolution of investment disputes, in respect of which the Protocol provides for the mandatory international arbitration of investment disputes after the exhaustion of local remedies. In 2012, the SADC introduced the Model Bilateral Investment Treaty Template, with a view to further foster the harmonisation of investment laws and practice. However, the FIP and the Model BIT differ significantly, with major implications for harmonisation. Probably due to this and other reasons, the FIP is in the process of being amended, although details around this are not yet final or public. [The authors: Lawrence Ngobeni, Babatunde Fagbayibo]
Mozambique: Economic Governance and Inclusive Growth Programme - appraisal report (AfDB)
Main lessons learned include the: (a) need to focus on high-priority measurable indicators closely aligned with the PAF; (b) importance of consolidating progress in PFM and stepping up efforts for private sector development; and (c) the need to have a streamlined harmonization framework and PAF focusing principally on the strategic objectives of General Budget Support. A recent evaluation of GBS in Mozambique suggests that budget support has been successful in achieving its objectives, although it recognized weaknesses in the use of the instrument, in particular in the quality of the policy dialogue. The G-19 and the Government are currently working on a design a new PAF and MOU that, starting in 2016, would better link policy actions with results sought and streamline the policy dialogue. Continuous budget support in 2016 is premised on two conditions:
Mozambique: World Bank support to Plano Quinquenal do Governo
Rwanda’s new companies: an overview of registrations, taxes, employment and exports (World Bank)
The Government of Rwanda has introduced several reforms since 2009 that have significantly improved the domestic business environment. One of the reforms is the one-stop shop for business registration. Making use of newly available administrative data sources such as tax and company registrations records, this paper sheds light on the effects of the introduction of the one-stop shop on company registrations, taxes, employment, and exports between 2008 and 2012. The paper finds sizable benefits to Rwanda's efforts, which are mostly driven by the registration of large and mid-sized companies, with a limited contribution from small and micro-sized ones. The use of a newly available data source highlights the potential uses of growing bodies of administrative data and their possible shortfalls.
Global value chains and south-south trade: economic cooperation and integration among developing countries (UNCTAD)
The study begins with an analysis of the links between trade, industrialization and the evolving international division of labour. Contrary to much recent analysis it emphasises the longstanding nature of the economic forces behind GVCs and the familiarity of the challenges they pose to policy makers in the South. This is followed by a discussion of some of the main changes in the global trading system over the past three decades, in particular the growing participation of developing countries in world trade, the shift in the composition of their trade from primary products to manufactures, and the rise of South-South trade both as a share of developing country and world trade.
Former spy boss Moe Shaik prefers his role in boosting continent’s infrastructure (Business Day)
MOE Shaik, a former top spy, is a changed man who speaks a different language today. Acronyms such as Return On Investment (ROI) and Return On Equity (ROE) roll off his tongue – signifying a huge change in a man who for most of his life engrossed himself in the spy underworld: as an underground African National Congress (ANC) operative and as head of democratic SA’s domestic intelligence division. He has been head of the state-owned Development Bank of Southern Africa’s international unit for three years. He says as a small bank, the DBSA has to "master the art of punching beyond our weight by leveraging the full spectrum of our comparative advantage" by drawing on the government’s links to other states on the continent. [The author: Sam Mkokeli]
A selection of recent commentaries on trade and geo-political issues:
Johnnie Carson: 'What Obama still owes Africa' (allAfrica)
Provide a status report on the results of the U.S.-Africa Leadership Summit: The US Africa Leadership Summit has been one of the high points in the Obama administration's engagements in Africa. 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.
Francis Fukuyama: 'Exporting the Chinese model of development' (Livemint/Project Syndicate)
As 2016 begins, a historic contest is underway over competing development models – that is, strategies to promote economic growth – between China, on the one hand, and the US and other Western countries on the other. Although this contest has been largely hidden from public view, the outcome will determine the fate of much of Eurasia for decades to come.
Shang-Jin Wei, Asian Development Bank chief economist: 'The big impact of China’s slowdown' (Livemint/Project Syndicate)
So, it’s not surprising that Bangladesh and Vietnam are now two of the region’s fastest-growing economies. But the gains to be had from China’s slowdown are not automatic. Because so many other countries are vying to pick up global market share that China is shedding, the region’s developing economies need to pursue a host of reforms and to invest in power, transport and urban infrastructure to make their overall investment climate competitive.
Peter Drysdale: 'ASEAN at court in Sunnylands' (East Asia Forum)
On the economic front, the major objective at the summit will be to woo ASEAN majors, such as Indonesia, towards participation in the Trans-Pacific Partnership (TPP) once it is implemented down the track. On the political front, the not-so-hidden agenda will be laying down some markers on how to deal with the rise of China. The political leaders are likely to be accompanied by an entourage of business heavies on both sides. Immediately after the summit, on 17 February, the US–ASEAN Business Council will sponsor a conference in San Francisco for visiting government and business leaders. One idea is that the Expanded Economic Engagement agenda between the United States and ASEAN put in place a couple of years ago might be transformed into something that provides a platform for active engagement of non-TPP ASEAN members in long-term participation. But the main focus should be the ASEAN Economic Community, the centrepiece of the 2016 ASEAN Summit, the occasion of Obama's last visit to Asia as president.
Justin Yifu Lin: 'China’s grand silk road vision' (Livemint/Project Syndicate)
While the world frets about China’s decelerating growth and downward corrections for equity prices and the exchange rate, the country is pressing ahead with an initiative that will bring untold benefits to the entire global economy. Beyond creating unparalleled opportunities for other developing countries, the ‘one belt, one road’ strategy will enable China to make better use of domestic and international markets and resources, thereby strengthening its capacity to remain an engine of global economic growth.
Shivshankar Menon, India’s former National Security Adviser: 'China’s rise and what it means for the world and India' (The Wire) Part 1, Part 2, Part 3
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South Africa Merchandise Trade Statistics for November 2015
The South African Revenue Service (SARS) has released trade statistics for November 2015 that recorded a trade surplus of R1.77 billion. This figure includes trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).
Including trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The R1.77 billion surplus for November 2015 is due to exports of R94.66 billion and imports of R92.89 billion. Exports increased from October 2015 to November 2015 by R8.86 billion (10.3%) and imports decreased from October 2015 to November 2015 by R14.51 billion (13.5%).
The R1.77 billion surplus is an improvement on the deficit recorded in November 2014 of R5.34 billion. Exports of R94.66 billion are 12.6% more than the exports recorded in November 2014 of R84.08 billion. Imports of R92.89 billion are 3.9% more than the imports recorded in November 2014 of R89.42 billion.
The cumulative deficit for 2015 of R58.18 billion is 42.1% less than the deficit for the comparable period in 2014 of R100.48 billion.
The month of October 2015 trade balance deficit was revised upwards by R0.21 billion from the previous month’s preliminary deficit of R21.39 billion to a revised deficit of R21.60 billion.
Trade highlights by category
The month-on-month export movements (R’ million):
Section: | Including BLNS: | |
Precious Metals & Stones | + R6 645 | + 51.7% |
Vehicle & Transport Equipment | + R1 827 | + 16.3% |
Chemical Products | + R 238 | + 4.0% |
Live Animals | + R 155 | + 14.6% |
Vegetable Products | - R 329 | - 10.0% |
The month-on-month import movements (R’ million):
Section: | Including BLNS: | |
Machinery & Electronics | - R 3 947 | - 13.8% |
Equipment Components | - R3 870 | - 45.1% |
Vehicle & Transport Equipment | - R2 820 | - 24.7% |
Chemical Products | - R2 171 | - 18.5% |
Vegetable Products | + R 803 | + 45.8% |
Trade highlights by world zone
The world zone results from October 2015 to November 2015 are given below.
Africa:
Trade surplus: R16 735 million – This is a 1.8% increase in comparison to the R16 445 million surplus recorded in October 2015.
America:
Trade surplus: R 94 million – This is an improvement in comparison to the R3 429 million deficit recorded in October 2015.
Asia:
Trade deficit: R16 833 million – This is a 29.1% decrease in comparison to the R23 754 million deficit recorded in October 2015.
Europe:
Trade deficit: R8 605 million – This is a 43.1% decrease in comparison to the R15 111 million deficit recorded in October 2015.
Oceania:
Trade deficit: R 49 million – This is a 75.6% decrease in comparison to the R 202 million deficit recorded in October 2015.
Excluding trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The trade data excluding BLNS for November 2015 recorded a trade deficit of R7.45 billion, a result of exports of R82.31 billion and imports of R89.76 billion.
Exports increased from October 2015 to November 2015 by R9.17 billion (12.5%) and imports decreased from October 2015 to November 2015 by R14.78 billion (14.1%).
The cumulative deficit for 2015 is R155.74 billion compared to R196.53 billion in 2014.
Trade highlights by category
The month-on-month export movements (R’ million):
Section: | Excluding BLNS: | |
Precious Metals & Stones | + R7 183 | + 58.4% |
Vehicle & Transport Equipment | + R1 522 | + 15.3% |
Mineral Products | + R 374 | + 2.4% |
Chemical Products | + R 250 | + 5.2% |
Vegetable Products | - R 380 | - 14.0% |
The month-on-month import movements (R’ million):
Section: | Excluding BLNS: | |
Machinery & Electronics | - R3 967 | - 14.0% |
Equipment Components | - R3 870 | - 45.1% |
Vehicle & Transport Equipment | - R2 862 | - 25.1% |
Chemical Products | - R2 344 | - 21.4% |
Vegetable Products | + R 797 | + 46.5% |
Trade highlights by world zone
The world zone results other than Africa from October 2015 to November 2015 are given above.
Africa:
Trade surplus: R7 513 million – This is a 13.0% increase in comparison to the R6 648 million surplus recorded in October 2015.
Botswana, Lesotho, Namibia and Swaziland (Only)
Trade Statistics with BLNS countries Trade statistics with the BLNS for November 2015 recorded a trade surplus of R9.22 billion, a result of exports of R12.35 billion and imports of R3.13 billion.
Exports decreased from October 2015 to November 2015 by R0.31 billion (2.4%) and imports increased from October 2015 to November 2015 by R0.27 billion (9.3%).
The cumulative surplus for 2015 is R97.56 billion compared to R96.06 billion in 2014.
Trade highlights by category
The month-on-month export movements (R’ million):
Section: | BLNS: | |
Precious Metals & Stones | - R 538 | - 95.0% |
Mineral Products | - R 230 | - 12.2% |
Vehicle & Transport Equipment | + R 304 | + 24.4% |
Plastics and Rubber | + R 68 | + 11.8% |
Vegetable Products | + R 52 | + 9.1% |
The month-on-month import movements (R’ million):
Section: | BLNS: | |
Chemical Products | + R 173 | + 23.4% |
Textiles | + R 55 | + 10.9% |
Prepared Foodstuff | + R 48 | + 10.8% |
Precious Metals & Stones | - R 95 | - 74.6% |
Live Animals | - R 54 | - 20.3% |
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The 26th African Union Summit: Declaration of 2016 as Africa Year of Human Rights
The year 2016 marks a veritable watershed in the continental human rights trajectory: 2016 marks the 35th Anniversary of the adoption of the African Charter in 1981; 2016 marks the 30th Anniversary of the entry into force of the African Charter in 1986; the year marks the 29th Anniversary of the operationalization of the Commission in 1987 (in 2016 the Commission will be just one year shy of its 30th anniversary); 2016 also marks the 10th Anniversary of the operationalization of the Court.
The adoption of the Protocol to the African Charter on Human and Peoples’ Rights on the Rights of Women in Africa (the Maputo Protocol) in 2003 ushered in a new thinking in addressing gender inequality and the rights of women in Africa. In 2016, the Maputo Protocol will be 13 years old. To reaffirm their commitment to gender equality, in 2004, the Assembly of Heads of State adopted, the Solemn Declaration on Gender Equality in Africa (SDGEA), and this commitment was reinforced with the adoption of the first-ever African Union Gender Policy in 2009 and Assembly Declaration of 2010-2020 as an African Women’s Decade and the launching of the Fund for African Women. The Assembly also committed itself to continue to expand and to accelerate efforts to promote gender equality at all levels, and the determination to build on the progress that have been achieved in addressing issues of major concern to the women of Africa.
It is for this reason that it was deemed necessary to declare this auspicious year (2016), the African Year of Human Rights with particular focus on the rights of women, to mark, commemorate and celebrate these significant milestones in Africa’s continental human rights progression. It is an opportunity to give Africans the chance to tell their story – not only to raise awareness about the great work that they have been doing to uplift their communities, but also to inspire future generations to emulate innovative and exciting approaches to making a difference through human rights based approaches. This, in the end, will showcase the African local human rights activities by Africans themselves to solidify local humanitarian dividends and ensure longer-term outcomes.
The declaration of 2016 as the Africa Year of Human Rights will provide further opportunity to consolidate the gains already made over the years, ensure better coordination of human rights bodies on the continent, and move towards the establishment of a true human rights culture on the continent.
Objectives of the Celebration
The 26th AU Summit is set to take place from the 21st to the 31st of January 2016, at the AU Headquarters in Addis Ababa, Ethiopia.
The general objective of the celebrations is to raise awareness on human and peoples’ rights on the continent, in particular, women’s rights and take stock of progress or efforts made, including major challenges and/or obstacles encountered.
The Specific Objectives for the celebration include:
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To evaluate the level of ratification, domestication and implementation of regional and major international human rights instruments into national legislation;
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evaluate the progress made in advancing the socio-economic and political rights of women; and best practices since the coming into force of the Maputo Protocol;
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Encourage Member States to develop policies, plans of actions and programmes on the promotion and protection of human and peoples’ rights, and specific programmes with the intention of integrating women in all spheres of life, so as to boost women’s empowerment in Africa;
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Encourage Member States to recommit to the promotion and protection of human rights;
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To encourage Member States of the African Union that have not already done so, to ratify the Protocol establishing the Court and make the declaration under Article 34(6) thereof, allowing individuals and NGOs direct access to the Court;
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Evaluate the work accomplished by various mechanisms in the promotion and protection of human rights, notably, the rights of women;
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Provide a platform for constructive debate on human rights with a view to putting human rights at the foundation of the AU framework.
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To popularize the Maputo Protocol with, information, education and communications strategies at grassroots women and men’s level to make them aware of the protocol
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To popularize the Maputo Protocol and other AU and UN instruments like the CEDAW, UN Resolutions on Women with simplified publication and also translated into local languages, and also through local media used by communities.
It is hoped that the celebration will initiate an advocacy and coordinating campaign that effectively reaches out to stakeholders and partners at all levels (political, institutional, civil society organizations, national and community levels), and give ownership to all key stakeholders, as well as the repositories/beneficiaries of the rights enshrined in the African Charter.
To ensure that the celebration achieves the objectives set out above, a series of activities have been planned to commence in 2015, spread across the entire year of 2016, to celebrate the human rights gains made so far, review the human rights situation on the continent, take stock of what still needs to be done to create a culture of human rights observance on the continent, and explore how best to address the remaining human rights challenges.
The activities seek to initiate an advocacy and coordinating campaign that generates increasing momentum, and reaches out to stakeholders and partners at all levels (political, institutional, civil society organizations, national and community levels), and give ownership to all key stakeholders, especially, the repositories/beneficiaries of the rights enshrined in the African Charter.
As part of the activities, a communication plan is proposed that involves partners and African celebrities as endorsers to advocate for human rights in Africa. The Plan proposes a clear message that links to the Strategic Plan of the AU. There is need in particular, to build a brand by engaging the media and using modern tools of communication, such as television and online tools to really relay the message of the Africa Human Rights Year. For example, a special web portal will be developed, as well as special tools and a year of human rights documentary.
Expected outcome of the Celebration
At the end of the celebrations:
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The population will be sensitized on human rights issues for a better understanding of national, regional and major international human rights mechanisms;
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Increased awareness, promotion and protection of the rights of women;
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Enhanced awareness of the African human rights system, including in particular, the human rights mechanisms established at national and continental levels;
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Increased domestication and implementation of regional and major international human rights instruments at the national level;
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Member States are sensitized of the need to ratify the Protocol establishing the Court and the Declaration;
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General improvement in the human rights situation in Africa;
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Increased involvement of states, civil society and individuals in the promotion and protection of human rights;
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renewed commitment by States to comply with their human rights obligations and adhere to the decisions taken by the different Organs of the African system;
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Effective integration of human rights in the operations of the African Union.
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Report on the Application of the African Social Development Index in select African countries
The fast and sustained economic growth in Africa over the past two decades has not yet translated into improved social outcomes in most countries. High levels of poverty and inequality persist, caused by differences in income, gender, ethnicity and age.
This is largely because the nature of growth is mainly capital-intensive, with limited job creation, and unfair redistribution of economic gains. That is, growth is not sufficiently inclusive and equitable, skewing development dynamics and excluding large segments of the population from development processes.
The excluded groups have limited access to social protection and economic opportunities, and are vulnerable to external shocks, which reduces their productive capacities and pushes them back or further into poverty. This in turn deters overall growth and development, and threatens the prospects of peace and stability.
Promoting more inclusive development in Africa is therefore an urgent priority and a pre-condition for building more sustainable and cohesive societies, and in the long term, towards Africa achieving the African Union’s Agenda 2063 and the 2030 Agenda for Sustainable Development.
African Social Development Index
African member States requested ECA, during the second session of the Committee on Human and Social Development 2011, in Addis Ababa, to develop an African-specific indicator for tracking progress on reducing human exclusion.
The African Social Development Index was developed in response to this request. It follows a life-cycle approach building on the premise that people can face different forms of exclusion at different stages of life, which are likely to have cumulative and adverse effects over their lifetimes. The focus is on the effects of policy interventions and contextual factors (social, economic, political and cultural) on human exclusion at different points in time.
Based on this framework, the African Social Development Index aims to estimate the levels of human exclusion in six key dimensions of well-being. Its disaggregation by gender and location (subgroup analysis), provinces (subnational analysis), and over time (longitudinal analysis), allows the Index to track exclusion within countries and over time.
Looking ahead
Initial results of the African Social Development Index for Southern Africa have confirmed that, notwithstanding the high levels of economic growth, countries are still coping with the challenge of making this growth more inclusive and equitable. The subnational disaggregation and analysis of drivers of exclusion in particular, have highlighted important gaps between locations and population groups, which can guide Governments in designing more targeted and inclusive social policies.
In this context, a policy-mapping framework has been developed by the Social Development Policy Division to identify and assess the effectiveness of social policies in reducing human exclusion over time. The framework has been piloted in Benin, and will soon be disseminated and shared with member States and other stakeholders. This exercise is a major step forward in using the African Social Development Index for improved policy targeting and development planning.
The outcomes of the African Social Development Index are also contributing to related activities and analytical work of the Division in the areas of nutrition, social protection and employment – including the Cost of Hunger Studies, the African Social Development Report on ‘Informality and Inequality in Africa’, and the Report on Urbanization in Africa, among others.
Global and regional frameworks, such as Agenda 2063 and the 2030 Agenda for Sustainable Development, offer an important window of opportunity to move beyond economic growth and place human and social dimensions at the centre of the development process.
Challenges and conclusion
Preliminary results of the African Social Development Index have pointed to the need for African countries to refocus their development priorities to tackle human exclusion more effectively, and deal with the structural drivers. Exclusion is a multidimensional phenomenon, and confronting it is a long-term process, particularly when its causes are rooted in historical and cultural norms. Policies that expand opportunities and human capital can ensure the effective integration of all individuals in the development process.
Achieving inclusive development is not simply about increasing the size of national economies, but also about expanding opportunities that take the rights of individuals and the issue of equity into consideration. The African Social Development Index provides an important tool for member States to identify policy gaps and formulate appropriate policy interventions to reduce human exclusion over time.
However, the application of the Index in select African countries has also highlighted a number of important challenges, including the limited availability of disaggregated data, particularly at the subnational level, that can hamper the effective use of the Index for policy planning. Furthermore, it is acknowledged that political buy-in does not always translate into sustained national commitment. It will therefore be critical to provide continued support to countries in improving data collection and closely monitoring the implementation of the African Social Development Index, to ensure that the Index is effectively mainstreamed in national and subnational development processes.
This report was submitted to the recent UNECA meeting of the Committee on Gender and Social Development on SDGs in Africa: enhancing gender-responsive and social development policies (17-18 December 2015).
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Global value chains and South-South trade: Economic cooperation and integration among developing countries
Introduction
The discussion on promoting South-South trade dates back to the 1940s, when the development of countries emerging from the colonial era began to gain importance as an international policy objective. Efforts to promote trade amongst developing countries surfaced during the drafting of the Charter of the International Trade Organisation (ITO), when participating developing countries pushed for a clause that would allow them to deviate from the principle of Most-Favoured Nation (MFN) in order to agree to preferential tariff rates with each other. These efforts ended with the collapse of the ITO in 1950, but the discussion picked up pace during the 1960s and 1970s as measures to rebalance the trading system in favour of developing countries were pursued more vigorously at the regional and multilateral levels.
Since the start of the millennium, the emergence of new growth poles in the South, along with a fledgling political architecture at the regional (such as UNASUR in Latin America and an expanding ASEAN in South East Asia) and cross regional (such as the BRICS, IBSA and the China-Africa Forum) levels, has helped rekindle interest in South-South cooperation. The global financial crisis in late 2008 added to this momentum. Advanced economies have found it difficult to shrug off the fallout from the crisis with growth prospects damaged, on some estimates, for a decade or more. By contrast the major economies in the South, in particular China and a number of dynamic medium-sized economies, bounced back quickly (though not fully) from the initial shock, further consolidating their position in the world economy.
As a result of these trends, the case for promoting South-South trade and investment as a means of maintaining growth momentum in developing countries has become a focus of the international development policy debate. Indeed, for the first time, policy makers in advanced countries have begun to see South-South cooperation in a more positive light, partly as a means to correct persistent global economic imbalances, but also as a way to shift some of the burden of global governance which is stretching budgets in these countries. However, the preferred policy agenda they attach to South-South cooperation owes little to the one outlined by Prebisch, Lewis and other early development pioneers and is instead heavily focussed on a further push towards market opening and private sector development through more rapid liberalization (often in the form of regional and bilateral agreements) and increased participation in global value chains (GVCs).
This agenda has been promoted as part of a “great economic transformation” in the global economy, away from a world in which trade took the form, primarily, of finished goods between countries towards a new “21st century world” involving the continuous, two-way flows of things, people, training, investment, and information within GVCs organised by transnational corporations (TNCs).
Analysis of these two-way flows and their impact has been hampered by data limitations from a reporting system designed at a time when countries were trading predominantly in final goods. UNCTAD offered a seminal analysis in its Trade and Development Report 2002, using revisions in the SITC statistics which made it possible to distinguish between trade in final goods and trade in parts and components for some sectors, notably machinery and transport equipment. However, parts and components are only one element of network trade associated with GVCs, which also includes final assembly and service activities. Moreover, the relative importance of these tasks varies among countries and over time in a given country, making it problematic to use data on the parts and components trade as the only indicator of the trends and evolving patterns of network trade over time and across countries. More recently, the WTO and the OECD have produced a dataset (for 57 countries, 18 industries and for selective years since 1995), to address some of these statistical weaknesses and anomalies by separating out the domestic and foreign value added contained in imports and exports.
These data issues, though important, are not, however, the real challenge when it comes to the discussion of GVCs, trade and development. The earlier UNCTAD research already showed that the success of many developing countries in expanding their manufacturing exports and improving their share in world trade, including in what appeared to be more sophisticated products, could not be taken at face value. This was because for many high and medium technology goods produced in GVCs, most developing countries were still only engaged in low-skilled labour intensive assembly activities. Thus the apparent technological "leapfrogging" by developing countries attributed to their participation in GVCs was largely a statistical mirage. That research also showed that the heavy reliance on imported inputs that accompanied that participation did not necessarily bolster value addition or incomes, and consequently that a country’s growing share in world manufacturing trade did not necessarily imply a corresponding increase in its share of world manufacturing output and income. Important differences amongst developing countries were also uncovered regarding the relation between manufacturing trade and value added, reflecting differences in how they had managed their integration into the global trading system. This was illustrated by a comparison of South Korea and Mexico, both of which experienced rapid growth of trade in manufactured goods (from the early 1980s and early 1990s respectively). In the former, however, growth was stronger for exports than imports and was accompanied by very strong growth in manufacturing value added. In the latter by contrast, growth in manufacturing value added was negligible compared with the surge in (particularly) imports and exports.
Building on previous UNCTAD research, this study examines trends and patterns of South-South trade over the last decade linked to GVCs. Its findings confirm much of the earlier analysis. However, there are some new, or at least more visible, trends that have emerged over the last decade and have impacted international production and South-South trade, including the growing influence of financial markets on the real economy (“financialization”), and the emergence of China as the world`s leading export economy. There has also been strong growth performance across the developing world, which began after the recovery from the dotcom crisis of 2000, and continued after the financial crisis of 2008, albeit at a slower rate than prior to the crisis.
The study begins with an analysis of the links between trade, industrialization and the evolving international division of labour. Contrary to much recent analysis it emphasises the longstanding nature of the economic forces behind GVCs and the familiarity of the challenges they pose to policy makers in the South. This is followed by a discussion of some of the main changes in the global trading system over the past three decades, in particular the growing participation of developing countries in world trade, the shift in the composition of their trade from primary products to manufactures, and the rise of South-South trade both as a share of developing country and world trade. These three features are connected, in no small part, through the spread of GVCs. The next three sections examine in turn recent trends in global production sharing, the value added by different countries in GVCs, the contribution of GVCs to rising South-South trade, and the role of FDI in spreading international production and its development impact. A final section summarizes the key findings and draws policy implications.
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Rwanda’s new companies: an overview of registrations, taxes, employment and exports
The Government of Rwanda has introduced a series of reforms to the domestic business environment since 2009 in a bid to reduce the administrative and financial burden of business registration. In 2009, the East African country enacted legislation entitled the Company Act, that was intended to strengthen investment protection and create a business registration one‐stop shop.
In the same year, it introduced other reforms, including: (i) the adoption of the Secured Transactions Law (increasing the number of collateralizable assets), (ii) the Insolvency Law (easing the process of bankruptcy), and (iii) the Mortgage Law (shortening the property registration process). Combined, these reforms left Rwanda with a substantially more business-friendly environment. A second package of reforms followed in 2010 with the introduction of online registration, the reduction of registration fees, changes to regulations on obtaining construction permits, and simplified procedures for exports and credits.
Cumulatively, these reforms have contributed to improving Rwanda’s business environment. Although it may take time before some of these measures trigger a private sector response, Gathani, Santini, and Stoelinga (2013) argue that the creation of the one-stop shop increased registrations almost immediately by more than 180 percent.
Utilizing business registration as a proxy for investor and entrepreneur interest in specific sectors, this paper reviews the trends in business registrations across various sectors and subsectors, and identifies drivers of recent growth. By linking business registrations to tax declarations, it is also possible to verify the level of activity of newly registered companies – measured as interactions with the revenue authority – and quantify additional revenue and employment accruing from newly registered companies by size, sector, and subsector.
This paper examines new registrations and tax records at the company level, with a focus on three specific questions:
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Of the large number of companies registered in recent years, how many are currently ‘formally’ active? Every formal business will have a footprint at the tax office. By checking declaration records from 2008–2012, it is possible to assess whether newly registered companies are formally active, how long they took to enter formal activity, and whether they have exited the tax net (either informally, or due to closure).
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Using the number of registered companies in a sector as proxy for interest for that sector, which sectors and subsectors have received the most attention from investors and entrepreneurs?
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What has been the contribution of newly registered businesses to the overall economy in terms of (a) taxes, (b) tax‐bearing employment, and (c) exports? How does this vary across sectors and subsectors?
This is useful both in assessing the impact of Rwanda’s effort to improve its business environment and promote investment and in understanding investors’ and entrepreneurs’ current interests.
Findings indicate the strong growth in registrations generated a large number of new companies, 40 percent of which recorded positive tax activity and contributed to the real economy. Registrations in the services sector dwarfed the other sectors, comprising 75 percent of the total. Within services, half of these registrations have been recorded in wholesale and retail trade.
Newly registered companies played a prominent role in increasing tax declarations and creating formal jobs, contributing to a 24 percent increase in tax declarations and a 16 percent increase in the number of formal jobs. In absolute terms, newly registered companies were responsible for 15 percent of tax declarations and 11 percent of formal jobs in 2012.
The impressive results appear to be in part due to the entry of a few large players into the market since 2008 – casting a positive light on Rwanda’s investment promotion efforts – as well as to the sizable contribution made by a large number of newly registered medium-sized companies. A series of privatizations in the tea and coffee sector are likely to have increased Rwanda’s commodity exports, while new entrants from across the region have significantly boosted non‐commodity exports.
The contribution of small firms, in contrast with their large number, appears conversely to be rather small. Reading across the technical findings, four messages appear salient. First, given the sizable impact of newly registered companies on taxes, formal employment and exports, Rwanda’s push to improve its business environment and promote investment appears to have paid off. Second, the limited contribution of small companies would suggest that targeted formalization efforts, beyond that of lowering the costs of registration, are unlikely to yield significant returns. Third, the large amount of churn in new companies should not per se be concerning, as churn is the process through which entrepreneurs acquire knowledge of the local market. Finally, shortfalls in the data underline the importance of program design. The objective of the one‐stop shop should be reflected in its data collection mechanisms so that its impact can be evaluated and improved as needed.
In this context, the paper’s findings are mollified by the difficulty in establishing the precise sector in which firms operate and in differentiating between new companies and companies that are formalizing or re-registering. The latter is likely a consequence of the introduction of the Company Law of 2010, which changed the definition of companies’ legal status and required re-registration, but could be addressed with little effort on the data collection side.
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Debt sustainability in Sub-Saharan Africa: unraveling country-specific risks
Sub-Saharan African countries as a group showed a considerable reduction in public and external indebtedness in the early 2000s as a result of debt relief programs, higher economic growth, and improved fiscal management for some countries. More recently, however, vulnerabilities in some countries are on the rise, including a few with very rapid debt accumulation.
This paper looks at the heterogeneous experiences across Sub-Saharan African countries and the detailed dynamics that have driven changes in public debt since the global financial crisis. Borrowing to support fiscal deficits since 2009, including through domestic markets and Eurobond issuance, has driven a net increase in public debt for all countries except oil exporters benefitting from buoyant commodity prices and fragile states receiving post-2008 Highly Indebted Poor Country relief. Current account deficits and foreign direct investment inflows drove the external debt dynamics, with balance of payments problems associated with very rapid external debt accumulation in some cases.
Pockets of increasing vulnerabilities of debt financing profiles and sensitivity of debt burden indicators to macro-fiscal shocks require close monitoring. Specific risks that policy makers in Sub-Saharan Africa need to pay attention to going forward include the recent fall in commodity prices, especially oil, the slowdown in China and the sluggish recovery in Europe, dependence on non-debt creating flows, and accounting for contingent liabilities.
Introduction
The fiscal and debt landscape has changed significantly for many Sub-Saharan African (SSA) countries since the onset of the global financial crisis in 2007-2008. Record low interest rates worldwide coupled with the lowest SSA debt levels in decades after successful HIPC and MDRI debt relief has led to increased access to new sources of finance, especially non-concessional. For some countries there has been a sharp rise in indebtedness within a short time period, which if unchecked can lead to debt overhang problems similar to the ones seen in past decades among LICs and MICs. Further, volatile and changing global economic and financial conditions warrant a close monitoring of country debt situations in SSA.
This paper moves beyond the aggregate picture to look at more detailed debt profiles and dynamics of SSA countries, and aims to unravel more country-specific risks. The paper is structured as follows. Section 1 notes important data and methodology considerations. Section 2 presents an update on debt patterns in SSA countries, covering public debt and external debt separately. Section 3 reports post-global financial crisis debt dynamics, analyzing the underlying driving forces behind recent changes in debt burdens and comparing these factors with earlier periods. Section 4 discusses key vulnerabilities to debt sustainability in SSA countries, and Section 5 provides concluding remarks.
This paper is a product of the Macroeconomics and Fiscal Management Global Practice Group. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org
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tralac’s Daily News selection: 21 December 2015
The selection: Monday, 21 December
MC10 outcomes: The Nairobi Package
The Nairobi Package contains a series of six Ministerial Decisions on agriculture, cotton and issues related to least-developed countries. These include a commitment to abolish export subsidies for farm exports, which Director-General Roberto Azevêdo hailed as the “most significant outcome on agriculture” in the organization’s 20-year history. The other agricultural decisions cover public stockholding for food security purposes, a special safeguard mechanism for developing countries, and measures related to cotton. Decisions were also made regarding preferential treatment for least developed countries in the area of services and the criteria for determining whether exports from LDCs may benefit from trade preferences. [Download the outcome documentation]
Bridges Daily Update #5: WTO Members clinch agriculture export competition deal, weigh next steps for negotiating future
Enhanced Integrated Framework fund to help poor states misses target by Sh23bn (Daily Nation)
Profiled commentaries on MC10:
From the African press: Amina declares victory but lobbies contest deal (Daily Nation), Doha masks small Kenya wins (The Herald), Developing countries 'bite the bullet' in Nairobi (IDN), Collins Odote: 'Does Africa have any impact in global talks?' (Business Daily), China, India, South Africa still classed as developing nations (The East African), With rebasing, Kenya loses World Trade Organisation funds (The Standard)
From the Indian press: Message from Nairobi (Livemint), India eclipsed at WTO ministerial (Livemint), Government to respond to WTO’s ‘Nairobi package’ in Parliament (The Hindu), WTO steps forward and one step back for global trade regime in the domain of agriculture (The Economic Times), Nothing at Nairobi: WTO ministerial leaves India and developing countries in the lurch (Firstpost)
Profiled African statements to the MC10 plenary (dated 18 December 2015):
South Africa: Africa has defined a developmental trajectory for itself that involves moving away from its current insertion in the global trading system as a producer and exporter of primary commodities and an importer of finished goods. In this regard Africa, has defined a very clear agenda to move up the value chain and industrialise through an ambitious developmental integration programme that combines market integration alongside infrastructure development and cooperation to develop regional industrial value chains. This ambitious work programme is contained in Africa’s Agenda 2063 and can be recognized as Africa’s “mega-regional”, one constructed to meet Africa’s specific challenges and objectives. Any outcome in Nairobi or in future in the WTO therefore must in our view support this vision and certainly, at a minimum not undermine or complicate its realization. African and other Developing Countries must be offered the necessary policy space to pursue their objectives of industrialization and transformation.
Lesotho: The multilateral Trading System is of utmost importance to small countries such as Lesotho. Lesotho joined the WTO in pursuit of a promise that the multilateral trading system will integrate our nascent economy into the system. Twenty years on, we are still chasing the promise. Regrettably, all indications point to disintegration of African LDCs from the system and less so integration into the system. The WTO 2015 Report clearly illustrates this disintegration, with the greatest share of African Countries in international trade dictated by growth in regional trade. Whereas trade growth may be perceived as positive the concern is that there is no commensurate level of growth in the direction of value added trade with global trading partners. This story line is quite simple. It will take reforms of the Uruguay Round outcomes as well as realization of disciplines foreseen by DDA negotiation mandates, to truly integrate LDCs into global trade. It is for this reason that Lesotho firmly believes that commitments made by Members, in as far as the architecture of the DDA is concerned, must be honoured.
Mauritius: As part of the Development Agenda, we are in favour of an LDC package that would help the LDC’s integrate the multilateral trading system. However, such a package must be assessed from the perspective of its impact on other vulnerable developing countries so that appropriate mitigation measures may be agreed upon. Mauritius would also like to see an acceleration of the work program for small economies and for the timely implementation of measures that would support their integration into the global economy. In addition the specific situation of Small Island Developing States needs recognition at the WTO. We also require a dedicated aid for trade envelope to support their development.
Egypt: The track record of the WTO over the past twenty years has been solid, to say the least, across all those functions except one. The negotiating function has obviously not been advancing very well and reached a point today where it became the biggest institutional challenge facing the WTO. Our biggest and most important question today, is how can we make the negotiating arm of the WTO operational once more. Our determination in establishing this system envisioned the WTO as a forum for continuing negotiations aiming at serving the interest of all its Members. Today, unfortunately, the reality is that this function has not performed anywhere close to our aspirations.
Namibia: Namibia still holds the view that development oriented modalities must have substantial outcomes in strengthening and consolidating the special and differential treatment elements in each negotiating area of the Doha Work Programme, including in agriculture, NAMA and services. We hold the view that agriculture accounts for the most trade-distorted elements of the international trading system and it remains the most important component of the DDA Programme. This is where a large part of our development gains will be derived from. Agriculture should also set the level of ambition for NAMA and Services.
Access the full text of the country plenary statements here
The Nairobi Ministerial Conference: documentation
ECOWAS Authority of Heads of State and Government: final communique
The Authority reiterates its resolute commitment to the on-going integration process as a collective response to the region’s development challenges. It undertakes, with an even firmer determination, to sustain its efforts in the political, economic and institutional fields with a view to meeting all the challenges related to the deepening of this process. The Authority urges all Member States to take full ownership and ensure the implementation of all Community acts and protocols with a view to fast-tracking the integration process.
The Authority stresses the need to step up the process for the establishment of the common market. To this end, it agrees on the need to increase the volume of intra-Community trade, make the free movement of persons and goods a reality and pay particular attention to strategic sectors such as agriculture, infrastructure, energy and human capital. In this context, the Authority calls on the Commission to pursue the harmonisation of sectoral policies and take all necessary measures to support the effective implementation of programmes under these different sectors.
West Africa: USAID pledges $241m (Daily Observer)
The change of guard at Nigerian-American Chamber of Commerce (ThisDay)
Mnangagwa chides African countries for blocking PAP protocol (NewsDay)
SADC’s Pan African Parliament caucus vice-chairperson, Auxilia Mnangagwa has accused most African countries of refusing to ratify the revised Protocol of the Consultative Act for fear of losing their territorial integrity. The revised protocol, enacted by Heads of State and government last year, has so far been ratified by two countries – Mali and Mauritania – whereas it can only become operational if at least 27 countries give it the nod. Speaking to NewsDay from Senegal, where she attended the PAP meeting, Mnangagwa said it appeared most member States were afraid of losing their territorial integrity, as the Act seeks to give the Pan African Parliament legislative powers on trade and movement, environment and infrastructure.
Tanzania’s seaports and transport corridors as development opportunity for east and southern Africa (AfDB)
Continued efforts to invest in transport interconnectivity also suggest the need for institutional and regulatory reform, and enhanced infrastructure investment planning. Neither of these is without cost. The first is largely a question of political will, while the second offers policy choices, but requires that external support can be mobilized for substantial financial investments to achieve results. The extent of external financing will in turn depend on its growth prospects, and further enhancements of its national and regional institutions. Other policy objectives are to provide an environment attractive to investors and facilitate regional coordination.
EA Business Council to search for investment in Northern Corridor (The East African)
Linking Indian and Chinese maritime initiatives: towards a symbiotic existence (ORF)
If Africa builds nests, will the birds come?: comparative study on Special Economic Zones in Africa and China (UNDP)
Nepad's infrastructure focus: NEPAD Infrastructure Project Preparation Facility meeting, Donors welcome improved performance of NEPAD-IPPF in project preparation, Islamic Development Bank signs MOU with NEPAD
Zimbabwe: CZI sees capacity utilisation reaching 65% by 2017 (The Standard)
The Confederation of Zimbabwe Industries says capacity utilisation will nearly double to 65% by 2017 on the back of stakeholder partnerships. Capacity utilisation has been on the decline, reaching 34,3% this year from a peak of 57,2% in 2011 and this has been attributed to the declining economy. CZI believes that to reverse the trend, partnerships with its members, value chain stakeholders, development partners, experts, government and policy makers are key to improving capacity utilisation. According to the industry’s State of the Manufacturing Sector magazine released last week, CZI will employ several strategies to achieve this. [Download: CZI's 2015 Manufacturing Sector Survey]
Uganda’s exports drop by 4.6% (Daily Monitor)
BoU says the decline in exports was as a result of a reduction in the prices which declined by 7% as opposed to volume that increased by 2.5% in the same period. “The decline in price index is reflective of the impact of the decline in global commodity prices. Indeed, compared to the quarter ended October 2014, coffee export earnings recorded in the quarter to October 2015, decreased by $2.4m from $87.2m,” says BoU in its highlight of monetary policy report. “However, the total volume of coffee exported during the current quarter increased by 125,083 (60 kg) bags compared to 705,394 (60 kg) bags exported in the same quarter during 2014,” BoU added.
Nigeria’s foreign trade drops by N338bm in third quarter (ThisDay)
India remained the country's major export partner, accounting for N408.2bn or 17.5% of total exports in the period in review. Others are Netherlands, Spain, United Kingdom and Brazil. China was Nigeria's major source of imports which accounted for 459.4bn or 27.2%. Other are United States, Belgium, Netherlands and India.
Extract: The total value of Nigeria’s merchandise trade at the end of Q3, 2015 was ₦4,021.4bn. This was 7.8% less than the value (₦4,359.5bn, revised) recorded in the preceding quarter. This development arose from a decrease of ₦320.6bn or 12.1%, in the value of exports combined with a marginal decline of ₦17.4bn or 1.0%, in the value of imports against the levels recorded in the preceding quarter. [Download the report: National Bureau of Statistics'Latest Releases']
Trade between Canada and Africa to grow by $10bn
Improving short-term macroeconomic data for southern African policymakers (IMF)
Dr Lehohla, Statistician General of Statistics South Africa, highlighted the challenges of measuring rapid changes in the economy and pointed to the importance of improving data sources for the compilation of national accounts statistics. Mr. Bahadoor, Acting Director of Statistics Mauritius, added that users’ demand for these statistics has increased since the 2008 global financial crisis which had illustrated the size of data gaps.
Mozambique: IMF concludes 2015 Article IV Consultation
Balance of payments pressures are increasing and the exchange rate has depreciated substantially. While the overall current account is improving due to a decline in import-intensive megaproject investments (given the end of the gas exploration phase), the non-megaproject current account has continued to worsen, intensifying pressures in the foreign exchange market.
Gender Equality Strategy (World Bank)
Informed by months of consultations in 22 countries, with governments, civil society organizations, the private sector, and others, our new strategy builds on robust evidence that persistent gaps between men and women impose real and significant costs globally that can be addressed. Our new gender strategy builds on four objectives, all of them indispensable to a more equal world: reducing maternal mortality and closing remaining health and education gaps; creating more and better jobs for women and for men; closing the gender gap in ownership and control of key assets such as land, housing, technology and finance; and enhancing women’s ability to make themselves heard and direct the course of their own lives.
China-Kenya conference on agriculture cooperation: update (Daily Nation)
Five Southern Africa countries to plug sugar deficit in Kenya (The East African)
Kenya, EU set to ratify trade partnership by next December (Business Daily)
Zimbabwe: 4 judges express interest in SADC Tribunal (NewsDay)
Cote d’Ivoire Economic Update (World Bank)
French group opens first African mall (IOL)
AfDB posts new Integrated Environmental and Social Impact Assessment guidance materials
US Congressional approval of 2010 Quota and Governance Reforms: Lagarde statement (IMF)
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Slowing global growth has varied effects on low-income countries
Low-income developing countries have seen weakened external conditions over the past eighteen months, but the net impact has varied significantly across these countries, according to a new study by the IMF.
While all of the 60 IMF member countries classified as low income countries have been affected by slowing global growth, the key shock has been the dramatic drop in commodity prices over the past eighteen months. The report says while commodity-dependent exporting countries (especially oil exporters) are being adversely affected, countries that are more diversified in their exports have benefited from lower prices and continue to record robust growth.
Macroeconomic Developments and Prospects in Low-Income Developing Countries: 2015, analyzes recent events and looks at the near-term prospects for this group of countries, almost all of which are eligible for concessional IMF financing.
“While the global economic environment has weakened, especially in regard to commodity prices, the effects on low-income countries has varied with differences in country-specific exposures and domestic policy conditions,” said Seán Nolan, Deputy Director of the IMF’s Strategy, Policy, and Review Department who oversaw the production of the report. “Policy responses need to be tailored to country circumstances,” Nolan emphasized.
Varied impact of falling commodity prices
Hardest hit by low commodity prices are commodity exporters, particularly oil exporters, with growth, on average, set to decline from 5.7 percent in 2014 to 3.0 percent in 2015. By contrast, countries less dependent on commodities for export revenues, and that have benefited from lower fuel bills, for example, are expected to see growth as high as 6 percent in 2014-15.
The study shows a diverse picture when looking at the net impact of commodity price movements, even within country subgroups. While countries like Cambodia, Nicaragua, and Senegal have benefited, terms-of-trade losses are disproportionally high for some large oil exporters like Nigeria, for example (Chart 1).
Rising vulnerabilities
The report says economic vulnerabilities in low-income developing countries have increased steadily over the past two years, with some 40 percent of countries now deemed to be highly vulnerable to growth shocks, up from 25-30 percent in recent years and the highest level recorded since the global financial crisis (Chart 2).
Key drivers are the drop in commodity prices, which has led to weaker fiscal and external balances, along with the gradual erosion of policy buffers over time. Diversified exporters have fared better than commodity exporters, but vulnerabilities are still rising in some cases.
The report emphasizes the need for commodity exporters to adjust to what is expected to be an extended period of relatively low commodity prices and to strengthen fiscal and external positions over time. Where growth has been strong but vulnerabilities have been rising, early action to rebuild policy buffers is now needed.
The report lists climate change as an additional risk for low-income developing countries in the longer term. These countries are already more vulnerable to natural disasters than are countries at higher income levels. They are also projected to suffer more over time from the effects of global warming, given their geographic location (typically in already hot climates) and the large share of GDP accounted for by the weather-sensitive agricultural sector.
“Low income developing countries will need significant external financial support for national programs to adapt to climate change – otherwise, attaining ambitious development objectives will be very difficult over the longer term,” said Seán Nolan.
Capital inflows continue
Capital inflows to low-income developing countries have increased sharply in recent years, the report says, especially portfolio inflows to frontier-market economies (Chart 3). These frontier markets have typically liberalized their capital accounts more quickly than other low-income countries, and many are now as open as emerging market economies.
Capital inflows have boosted domestic demand, with the use of external financing in consumption versus investment depending on national policy choices. In a few cases, the higher external financing of domestic spending has coincided with reduced public saving and increased public consumption.
Pointing to the tightening of financing conditions, the report sounds a cautionary message on tapping portfolio inflows. “Countries that are increasing their reliance on access to external funding thus face an additional risk – shifts in the external environment – and need to place a high premium on maintaining solid economic fundamentals, including strong public debt management capacity,” the study says.