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States delay East Africa competition body
Rwanda, Uganda and Burundi stand between the region and a competition authority that was to kick off in July, after they failed to submit names of commissioners to sit on the board.
“We have written to the three partner states to do so for approval by the EAC ministers in November, but so far none has responded,” said Denis Kabbale, EAC competition officer at the Secretariat.
The Competition Authority will be charged with enforcing laws that protect and promote free and fair competition among businesses with a cross-border presence.
It is expected to control or eliminate restrictive measures on companies seeking to invest in other partner states, and control mergers and acquisitions as well as the abuse of dominant positions of market power.
EAC trade ministers had in May directed partner states to confirm their nominees for the posts of commissioners by July 15.
The EAC Competition Authority has been structured to be headed by a board of commissioners one from each of the EAC partner states. It will however rely heavily on national competition authorities for effectiveness.
The EAC is evaluating whether the Competition Authority will be an independent institution operating under the EAC as in the European Union, or a full EAC institution.
However, Wang’ombe Kariuki, Director-General of the Competition Authority of Kenya, says the challenge is the existence of a parallel regional competitions authority — that of the Common Market for Eastern and Southern Africa (Comesa) — of which all the East African countries except Tanzania are members. For example, conflicting rules in resolving cross-border issues are likely to cause problems.
“The main problem with the Comesa Competitions Authority is the high merger fee set for companies in the region,” said Mr Kariuki.
The Comesa Secretariat last year revised its rules, which now require companies looking to expand through acquisitions, and having a combined turnover of $5 million, to pay a $500,000 fee.
“The EAC Competitions Authority should set the merger fee based on the cost and not be guided by revenue generation,” said Mr Kariuki.
Tania Begazo, senior economist at the competition policy cluster, trade & competitiveness in the World Bank Group said that for the Competition Authority to be successful, the EAC partner states should remove merger restrictions on the number of firms, tackle cartel agreements that raise the costs of key inputs and final products, eliminate controls on prices and other market variables that increase business risk.
The EAC has no specific mandate on pre-merger notification for all mergers. Decisions can be appealed at the Council and firms have the power to influence regulation, and champion competition reforms.
Also, the EAC Competition Act 2006 being implemented by the partner states includes provisions on subsidies, but no regulations on this area.
“The Act has to be amended to guarantee a level playing field and non-discriminatory treatment against certain firms, remove restrictions on choices or information available to market players and control state aid [subsidies] to avoid favouritism and ensure competitive neutrality,” said Ms Begazo.
In EAC, Tanzania and Kenya have the most advanced competition regimes in the region, with fully functioning, independent competition authorities. Tanzania, Rwanda, Burundi and Kenya have competition laws in place while Uganda has a draft law.
“Currently, many cross-border anti-competitive practices are going unchecked due to the absence of an overall regional regulator to deal with cross-border competition, leaving weaker market players and consumers exposed to unfair business conduct by dominant firms,” noted Ms Begazo.
She said that the EAC Competition Regulations were adopted in 2010 but certain government policies and practices encourage anti-competitive outcomes.
Also, the enactment of the EAC Competition Act 2006 as a foundation for a regional competition regime has been laid, but implementation of the EAC Competition Act has not seen much progress.
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tralac’s Daily News selection: 20 October 2015
The selection: Tuesday, 20 October
Featured tweet, @AMB_A_Mohammed: African countries must closely coordinate with and give timely guidance to negotiators in Geneva (one of a series of tweets following her ACP trade meeting yesterday)
ACP trade ministers convene to decide on a position for WTO MC10 (ACP)
The ACP trade ministers' meeting (19-21 October) will be preceded by a meeting of senior trade officials, including the Geneva-based Ambassadors of ACP countries, most of whom have responsibilities of coordination and focal points for various key WTO subjects. The ACP Group of States has among its membership 61 countries that are WTO members, 7 observers and 11 that are neither members nor observers. The ACP Group is an active participant and key player in the WTO, as was evident previous Ministerial Conferences, where the Group's participation has immensely contributed to the outcomes of the meetings.
The banking system in Africa: main facts and challenges (AfDB)
This brief presents a comparative review of the banking systems and regulations in Africa relative to other regions of the world. It compares indicators of the banking environment (including efficiency, depth, penetration, innovation, and competition), as well as regulation and supervision standards. The review suggests that while Africa’s banking environment is relatively shallow and less penetrated, it is as competitive as those in other developing and high income regions. The region has made improvements in banking technology and innovation, and in some cases, has leap-frogged ahead of other regions particularly in mobile banking.
Deloitte’s survey for Sub-Saharan Africa underscores CFO responses to tough economic challenges
This year’s SSA CFO Survey includes responses from West Africa for the first time, giving readers insight into the perceptions of CFOs in this rapidly growing region. Respondents from Southern Africa include CFOs in South Africa, Namibia, Botswana, Zimbabwe, Zambia, Mozambique and Malawi. East African respondents hail from Kenya, Uganda, Tanzania and Ethiopia and in West Africa from Nigeria and Ghana. The SSA CFO report reveals that CFOs in South and Southern Africa are anxious about the future and anticipate subdued economic growth over the next three years. This is in contrast to East and West Africa where CFOs are far more positive about their growth prospects. [Download the SSA report, the South Africa, Botswana reports]
Tony Elumelu on Africapitalism: 'A philosophy for the era of sustainable development' (Vanguard)
Featured infographic: @africaupdates: Why you can’t drive across the DR Congo, the world's most infrastructurally deficient country
Urban planners to draft EAC regional urban policy (East African Business Week)
Participants in the two day annual Kampala conference on urban and infrastructure development for the East African community have resolved to draft a regional urban policy document whose vision is to achieve productive, organised and resilient urban centres in the region. Subsequently, the draft urban policy document will be submitted to the EAC headquarters secretariat and the respective sector ministries for perusal, input and developing strategies for implementation.
Northern Corridor Integration Projects Summit: communiqué
Aviation industry players, private sector laud deal on open airspace in EAC (New Times)
Cash crunch hits ECOWAS as Nigeria insists other should pay their dues (Vanguard)
A cash crunch has hit the economic Community of West African States as one of its major financiers; Nigeria has insisted that other member nations who are in default in the payment of their dues meet their obligations before Nigeria makes further commitment in terms of payment of its dues. According to an official of the commission who spoke with weekend vanguard, the worst hit department of the commission by the cash crunch is the ECOWAS court of Justice which is struggling to cope with the payment of its workers salaries. It was gathered that an emergency meeting of the commission is being proposed for later next month to address the financial challenge facing the commission and to impress on the defaulting countries to pay up their dues.
Ghana: Foreign traders face uncertainty (Caj News)
A storm is brewing in Ghana where local traders have revived threats to eject traders from neighbouring Economic Community of West African States and other foreign nationals operating in the country's retail sector. At the centre of the storm is the Ghana Investment Promotion Centre (GIPC) Act 2013, which the Ghana Union of Traders' Association (GUTA) believes is being violated.
Nigeria: Stakeholders call for strengthening of border security to stop proliferation (ThisDay)
The Presidential Committee on Small Arms and Light Weapons and concerned stakeholders in the development and security sector have called for improved border security in order to reduce the illicit flow of weapons in the country. Also, the communique at the end of the training recommended amongst other things: Strengthening of ECOWAS Protocol on Free Movement of Persons, Goods, and Services to enhance regional integration and curtail trans-border criminalities; an Integrated border management approach that is collaborative and cooperative with emphasis on the centrality of communication and information exchange to reduce inter-agency rivalries, hoarding of information and entrench an all stake-holders border security management.
Indian Ocean Rim Association meetings begin Tuesday in Indonesia (BD News)
Before the main ministerial meeting, the Working Group on Trade and Investment, the Indian Ocean Rim Academic Group and the Committee of Senior Officials meetings will be held from Tuesday. These meetings will focus IORA’s six priority areas. These are maritime safety and security, disaster risk management, trade and investment facilitation, fisheries management, academic, science and technology cooperation, and tourism and cultural exchanges.
Southern Africa: UN agencies expand operations as poor harvests deepen food insecurity (FAO)
The Food and Agriculture Organization of the United Nations and the United Nations World Food Programme are expanding their operations in response to growing food insecurity as a result of poor harvests across much of southern Africa. There will be an estimated 27.4 million food-insecure people in the region during the next six months, according to the Southern African Development Community 2015 Vulnerability Assessments. The intensity of the El Niño is increasing towards a peak expected in late 2015, and may become one of the strongest such events on record. The region faces the risk of another poor rainfall season and harvest resulting in a “significant increase in food and nutrition insecurity in the region,” according to the latest update from the Southern Africa Food and Nutrition Working Group.
Railways strategic to regional development (The Herald)
Making travel and transport systems more efficient around the region should be seen as a top priority for SADC. The North-South transport corridor that links South Africa to the north is the busiest transport link in eastern and southern Africa. In 2009 there were 13 million tonnes of cross-border traffic in the SADC region. This is expected to increase to 50 million tonnes by 2030, and is projected to reach 148 million tonnes by 2040.
AGOA: Lawmakers press South Africa to open the market for US poultry (The Hill)
A bipartisan trio of senators on Monday called on the Obama administration to hold South Africa accountable for missing a deadline aimed at opening up that market for US poultry. Sens. Johnny Isakson (R-Ga.) and Delaware Democrats Tom Carper and Chris Coons expressed concern that South Africa missed an Oct. 15 deadline that would remove a 100-percent tariff on U.S. chicken implemented in 2000. "South Africa failed to finalize both the trade protocol and health certificate for U.S. poultry despite the administration’s intense engagement with South Africa over the past year to resolve these issues,” the senators said.
UK-SA Bilateral Ministerial Forum: communiqué (DIRCO)
Ministers reiterated their desire to see an investment regime that promotes South Africa as a location for business and investment, thereby assisting economic growth and job creation. They noted the introduction of the second draft of South Africa’s new investment Bill into Parliament which was made available for public comment. Specific opportunities for investment and job creation included within the National Development Plan; Blue Economy (Operation Phakisa); Special Economic Zones, Industrial Development Zones and relevant skills development; services; the Green Economy; and Manufacturing & Advanced Manufacturing.
'SA will pay for bilateral treaties blunder' (Business Day)
As the parliamentary committee on trade and industry resumes its analysis of the Promotion and Protection of Investment Bill on Tuesday, it is important to interrogate the rationale behind the legislation. A sober inquiry reveals a costly misstep by the Department of Trade and Industry in its treatment of SA’s bilateral investment treaties, which the bill is supposed to replace. [The author: Ben Winks]
Beer deal may face delays in SA (Business Report)
The world's two biggest brewers agreed last week to create a company that would make almost a third of the globe's beer. The Belgian company is by far the most profitable brewer, due to its austere operating culture and its controlling shareholders have a history of streamlining companies they take over. “Given AB InBev's propensity to cut costs down to the bone, job cuts appear to be inevitable,” said Nic Norman-Smith, a fund manager at Lentus Asset Management. But that might not be easy in South Africa, where the mandate for anti-trust authorities includes safe-guarding jobs.
Treasury offers tax deduction to SA firms in Africa (Business Day)
Zimbabwe: $1bn funding in pipeline (The Herald)
Zimbabwe will access about $1bn for infrastructure development from the African Trade Insurance Agency if the country pays its $15m subscription. Parliament also needs to immediately ratify a treaty that President Mugabe signed at the last Comesa meeting in Malawi in 2012 if the country is to promptly receive benefits. Being a member of the ATI will help the country attract investment and trade.
Uhuru summons KRA boss as tax revenue shortage bites (Business Daily)
Kenya Revenue Authority Commissioner-General John Njiraini was Monday summoned to State House to explain the agency’s failure to collect taxes that has left the Jubilee government without money to meet its financial obligations. Senior Treasury officials also attended the meeting with President Uhuru Kenyatta at State House where they were expected to agree on a common narrative ahead of Thursday’s appearance in Parliament.
Carbon Pricing Panel report (World Bank)
The report of the high level panel provides political momentum to complement the voices of government and industry leaders in the Carbon Pricing Leadership Coalition, a working coalition that is being formed on the back of support for carbon pricing from 74 countries and 1,000 companies, at the 20014 UN summit on climate change. Putting a price on carbon can be done in many ways: using an emissions trading system, like the one in Europe, or introducing carbon taxes and fees, like in Sweden and Norway. Most importantly, the “polluter pays” principle applies – those who are responsible for the pollution face the cost of it.
UN Commission on International Trade Law: debate summary (UN News Centre)
The provisional approval of the draft revised Notes on Organizing Arbitral Proceedings and parts of a model law on secured transactions were among key achievements during the United Nations Commission on International Trade Law’s (UNCITRAL) forty-eighth session, said its Chair as he presented that Commission’s report to the Sixth Committee (Legal) today.
Environmental rule of law critical to achieving inclusive, sustainable development in Africa (UNEP)
Over 160 representatives of Africa’s judiciary and law enforcement authorities agreed on 16 October 2015 to ensure the enforcement and practical implementation of environmental law, which they described as a precondition to achieving inclusive, sustainable development in the region. The agreement was made at the 1st Africa Colloquium on Environmental Rule of Law in Nairobi. The colloquium concluded with The Nairobi Statement, which called upon African countries to integrate mechanisms to ensure adequate access to information, public participation and justice in environmental matters through a regional process and framework.
Understanding China’s approaches to international development (IDS)
Does competititon kill or create jobs? background note by the Secretariat (Global Forum on Competition)
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Dissemination of technology essential in achieving equality, poverty eradication: Second Committee discusses globalization, interdependence
Economic stagnation and lacklustre recovery from the global economic crisis had revealed dysfunction in international organizations and the need to reform unequal power structures, the Second Committee (Economic and Financial) was told on 15 October as it took up consideration of “Globalization and interdependence”.
The representative of Bangladesh, speaking on behalf of the Group of Least Developed Countries, spoke of the disparity in development, noting that this morning for breakfast he had a banana from Ecuador, cereal from Canada and milk from the United States. Meanwhile, millions of people found themselves in the difficult situation of needing international assistance to cope with everyday life.
As global people living in a global village, “we feel ashamed of ourselves when we observe people dying from hunger and suffering from economic deprivation,” he said. That challenge would continue to grow as the youth in least developed countries were expected to increase by 34 per cent over the next 15 years.
Mexico’s delegate said that cooperation, in general, and dissemination of technology, in particular, was essential in achieving equality and poverty eradication. Bridging the digital divide required embracing the information society which was plural, transparent, decentralized, democratic and egalitarian.
He said that the 2008 financial crisis had demonstrated the fragility of middle‑income countries as well and expressed concern that indicators based on numerical averages did not accurately reflect the problems of middle‑income countries. Once States graduated from low‑income to middle‑income status they were no longer eligible for aid and that threatened much of their progress.
Poverty in middle‑income countries was multidimensional in nature and should be addressed as such, the representative Costa Rica stressed. The representative of Belarus, pointing out that 70 per cent of the world’s poor lived in middle-income countries, said it was unfortunate that the United Nations did not have a cohesive plan in dealing with those nations but was rather engaging with them on a piecemeal basis.
Also speaking on Thursday, Morocco’s delegate said the financial crisis had revealed dysfunction in international institutions. He urged institutional reform to ensure decision‑making was more equitable, democratic and responsive to the needs of all countries. That included integrating all States into financial markets, reforming the Bretton Woods institutions, and concluding the Doha Round of World Trade Organization (WTO) negotiations to make trade fairer.
Echoing that sentiment, the representative of India called for the reform of unequal power structures and outdated models. At various international financial institutions, even modest proposals for incremental reform remained buried under selective legal obscuration.
The role of science, technology and innovation in development was also highlighted throughout Thursday’s debate, with the delegate from Ethiopia pointing to how his country’s national policy had exploited science, technology and innovation to enhance production and productivity, as well as competitiveness in agriculture and manufacturing.
Earlier in the morning, reports were introduced to the Committee by the Chief of Science and Technology at the United Nations Conference on Trade and Development (UNCTAD) and two officials from the Department of Economic and Social Affairs.
Also speaking today was South Africa (on behalf of the “Group of 77” developing countries and China), the Philippines (on behalf of Association of Southeast Asian Nations), Ecuador (on behalf of the Community of Latin American and Caribbean States), Belarus, Singapore, Philippines (in her national capacity), Russian Federation, Brazil, Ukraine, Algeria, Malta, Cuba, Bahrain, Morocco, Costa Rica, Ethiopia, Botswana, Libya, Paraguay, Nepal, Jamaica (on behalf of the Caribbean Community), Peru, Zimbabwe, Thailand, Honduras, Azerbaijan, Guatemala and Cameroon.
Introduction of Reports and Statements
DONG WU, Chief of Science and Technology at the United Nations Conference on Trade and Development (UNCTAD), introduced the report of the Secretary-General on “Science and technology for development”. She focused on main areas and recommendations covered in the report. One major challenge common to developing countries, she said, was how to relate science, technology and innovation strategies to national development strategies. The innovative capacities of societies were critical in the transition to inclusive and sustainable pathways of development. Science, technology and innovation strategies were often not well integrated into sectoral development plans. That was often due to weak governance processes and a lack in the clear division of roles. The report also highlighted findings from the Conference’s recent research including innovative policy tools for inclusive development, global value chains, and gender sensitive science and technology policies.
JOOP THEUNISSEN, of the Office for Economic and Social Council Support and Coordination, Department of Economic and Social Affairs, introducing the report of the Secretary-General on the “Role of the United Nations in promoting development in the context of globalization and interdependence”, said that successful implementation of the 2030 Agenda for Sustainable Development would depend on the international community’s ability to manage globalization and revitalize the partnership for development. The report also identified economic, social and environmental challenges that could affect the success of the Agenda. Trends in globalization had caused expanding trade, but that growth was “uneven and unpredictable”. Youth unemployment and fragile labour markets must be tackled through a multidimensional approach that included social protection. Further, while globalization was often associated with lifestyle changes, an expanding middle-class increased the burden on the environment.
MATTHIAS KEMPF, Economic Affairs Officer, Department of Economic and Social Affairs, introducing the report of the Secretary-General on development coordination with middle-income countries, said that with 104 countries in that category, it was inherently difficult to speak of common trends. Nevertheless, certain features stood out, including the slowing of economic growth. The middle-income countries of Asia featured the strongest performance. The overall weak performance had a ripple effect on different economic areas. The employment situation, after solidly positive trends in the direct aftermath of the 2008 financial crisis, had also weakened with fewer jobs being generated. Such cyclical developments came on top of more structural problems such as large gaps in youth unemployment and the prevalence of informal work.
Ms. BALENI (South Africa), speaking on behalf of the “Group of 77” developing countries and China, said that although globalization could be a powerful and dynamic force for the implementation of the 2030 Agenda, its benefits remained elusive for developing countries. She underscored the importance of North-South, South-South, triangular, regional and international cooperation, as well as access to science and environmentally sound technologies for development. The United Nations must continue to provide strategic leadership and direction for modern science and technology in pursuit of development goals. Only through innovation could humanity address obstacles to sustainable development.
She said that her Group remained committed to promoting principles which underpinned South-South Cooperation. Developing countries needed to support one another in sharing best practices on science, technology and innovation policies. On culture, she said it was essential to human development as it represented a source of “identity innovation” and creativity for the individual and community. The 2030 Agenda stressed the need for international cooperation and relationship-building through inter-cultural understanding, tolerance and mutual respect. The United Nations remained an anchor in promoting such global dialogue.
ABULKALAM ABDUL MOMEN (Bangladesh), speaking on behalf of the Group of Least Developed Countries and associating himself with the Group of 77, noted that this morning, he was privileged to have a banana from Ecuador, cereal from Canada and milk from the United States, but saddened to observe the violence in Palestine and the Middle East. As a global people living in a global village, “we feel ashamed of ourselves when we observe people dying from hunger and suffering from economic deprivation.” Many people in the least developed countries found themselves in the difficult situation of needing international assistance to cope with everyday life.
With stagnation and low progress in poverty reduction observed in 16 of the least developed countries, he continued, it was clear the achievements of the Millennium Development Goals were highly uneven. Stressing the importance of adequate resources and technology transfer, he noted that the youth population in least developed countries would increase by 34 per cent over the next 15 years. That population with its high potential and keen learning spirit should find employment globally for a win-win situation, and the international community must follow the guidelines regarding migration in the 2030 Agenda. It was also important to help those countries merge into the global technology highway.
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Northern Corridor Integration Project countries set for expansion
The Nairobi summit of the Northern Corridor Integration Project countries, of host countries Kenya, Uganda, Rwanda, and South Sudan, discussed a range of issues regarding the implementation of the various infrastructure projects which are now under construction or in the final planning stages.
Launched in June 2013 in the town of Entebbe by host countries Uganda, Kenya, and Rwanda to fast-track a range of projects and objectives held captive by reluctant East African Community partners, the three over the past two years accomplished major progress, soon having South Sudan join the coalition.
While South Sudan struggled to make meaningful contributions to the partnership due to its internal strife, therefore, leaving the country largely at the level of intent rather than action, the three founder members have seen the advance of the construction of the new Standard Gauge Railway, which will, when complete, link the port of Mombasa with the Kenyan capital of Nairobi and beyond to the Ugandan border. From there, Uganda will then complete the link to Kampala plus a branch section to the northern town of Gulu, the springboard to South Sudan due to its relative closeness to the border.
The core countries of Uganda, Rwanda, and Kenya agreed on the integration of its airspaces to remove any remaining pending nontariff barriers for the aviation industry, effectively allowing the existing national airlines Kenya Airways and RwandAir to offer unlimited air access for domestic, regional, and international flights.
The launch of the common tourist visa was also a major step forward, giving tourist visitors a cheaper visa option when coming to the region, intent to travel within the three countries. Equally important, the lifting of visa requirements for duly-registered expatriates in the three countries holding residency or work permits, has been welcomed by the region’s tourism bodies as it allowed to tap into a major market segment which, due to the visa cost involved, in the past often opted to take short breaks in Dubai instead of flocking to Kenya’s beaches.
The announcement of the Democratic Republic of Congo that the country will formally join the NCIP cooperation at the next summit, shows the growing importance and economic impact and opportunities the fast-tracking of East African Community plans that have been accomplished in a short period of time.
Congo’s entire eastern region is more closely linked to the Indian Ocean port of Mombasa via East African neighbors Rwanda and Uganda than to Kinshasa and the Atlantic coast. A rail link joining the upcoming standard gauge railway, or even to link to the existing narrow gauge railway branch from Kampala to Kasese (this track is presently dormant but due for a re-opening) would greatly benefit imports to and exports from Eastern Congo. Importing refined fuel products from Uganda, once the new refinery is ready and has started production, will cut the cost of fuel at the pumps in Eastern Congo dramatically by removing the transport cost from the port to the consumer.
While neither South Sudan or Congo DR are expected to sign up to the common visa any time soon, Congo may, however, eye the aviation cooperation as another option to get better connected to the rest of the world.
Additional observers to the Nairobi summit, besides the delegation from Congo DR, came notably from Ethiopia, a country which has shown increasing interest to become a major player in the wider Eastern African region’s economic development.
The private sector was for the first time comprehensively represented at the summit, making good of past resolutions to promote a greater and more intense public-private partnership, especially for project components which require the private sector to assist in financing and implementation.
This sadly leaves Tanzania still out of the equation after the country opted to stay away from what was then promptly dubbed the “Coalition of the Willing,” relegating both Burundi and Tanzania in the eye of the media and wider public opinion across the East African Community to the level of a “Coalition of the Un-willing.”
With President Kikwete now winding up his presidency – him personally seen as the main brake-shoe in Eastern Africa due to his cool relationship with neighbor Kenya – hope has already been expressed that the newly-elected president will change course and bring Tanzania back into the core of the EAC, as a co-driver and not just a reluctant passenger.
Tourism and trade would no doubt benefit from a return to the days of the Mkapa presidency in Tanzania when bilateral relations with neighbors were at an all-time high, and investments from Kenya poured into Tanzania at a record pace.
It is clear from the major advances made by the NCIP member countries, in particular vis-a-vis tourism and aviation, that much more can be achieved by working together than working in isolation.
Download the Joint Communiqué issued following the Summit below.
UN Agencies respond to growing food insecurity in southern Africa
The Food and Agriculture Organization of the United Nations (FAO) and the United Nations World Food Programme (WFP) are expanding their operations in response to growing food insecurity as a result of poor harvests across much of southern Africa. There will be an estimated 27.4 million food-insecure people in the region during the next six months, according to the Southern African Development Community 2015 Vulnerability Assessments.*
WFP, FAO and other partners are meanwhile monitoring the El Niño weather phenomenon which could significantly impact southern Africa following a poor agricultural season in 2014/15. The intensity of the El Niño is increasing towards a peak expected in late 2015, and may become one of the strongest such events on record. The region faces the risk of another poor rainfall season and harvest resulting in a “significant increase in food and nutrition insecurity in the region,” according to the latest update from the Southern Africa Food and Nutrition Working Group.
Food insecurity means that people struggle to buy or produce enough nutritious food to lead a healthy life.
Poor Harvests
Most at threat from immediate food insecurity are Malawi, Zimbabwe and Madagascar which all suffered severe crop failure due to extended dry spells (combined, in Malawi, with extensive flooding and, in Madagascar, with the effects of strong tropical storms). There are also concerns about growing food insecurity in Lesotho and the southern parts of Angola and Mozambique. While Botswana and Namibia also suffered from extensive drought earlier this year, people in these countries are not considered as much at risk.
The poor harvest experienced by farmers across the region will negatively impact the capacity of vulnerable farmers to purchase seeds, fertilizer and other necessities for the current planting season.
Malawi: Worst Food Insecurity in a Decade
Malawi is experiencing the worst food insecurity in a decade, and 2.8 million people are reported to be food insecure. FAO and WFP are implementing various measures to alleviate the situation. WFP is planning to assist 2.4 million food-insecure people during the height of the lean season, the period prior to the next harvest when domestic food stocks become depleted. Lean season activities will combine food assistance with cash transfers in areas where market conditions allow. So far this year, WFP has already provided food assistance to one million people who have been affected by floods.
FAO has supported the Government of Malawi in preparing the agricultural section of the national food insecurity response plan. The agricultural needs have been estimated at US$44 million. The response will include provision of inputs, with an emphasis on drought-tolerant crops such as cassava, sweet potatoes, sorghum and millet and on supplementary irrigation in order to cope with potential prolonged dry spells.
Zimbabwe: Harvest Down by Half
It is estimated that at least 1.5 million people will be food insecure in Zimbabwe in coming months following a harvest that was down 50 percent on last year. FAO is working with the government to support resilience building approaches among vulnerable groups. Some 34 irrigation schemes in drought prone districts are being rehabilitated. As many as 127,000 smallholder farmers are receiving support to adopt climate smart technologies and increase their access to rural finance.
In the livestock sector, FAO is providing support to 40,000 smallholder households to engage in commercial livestock production. The organization is also responding to the foot and mouth disease outbreak in some parts of the country where 5.4 million doses of vaccines are still required. FAO has also prepared a drought mitigation programme, for which there is a financial gap of US$32 million, to support livestock and crop farmers with stock feed and seeds respectively, in the most affected parts of the country.
WFP is working with the government and partners to assist some 400,000 of the most vulnerable people, scaling up to reach 850,000 people at the height of the lean season. Assistance will be given in the form of both food and cash transfers.
Building Resilience
FAO continues to support the adoption of climate smart technologies for both livestock and crop production systems as a way to promote sustainable production and increased resilience among communities. WFP has started cash- and food-for-work projects whereby rural communities work on the refurbishment or construction of schemes such as water management systems, tree planting and terracing to prevent soil erosion.
Food Price Rises
FAO and WFP, together with other stakeholders, will consolidate efforts to help governments improve food price monitoring in their countries. Early indications point at market prices beginning to soar earlier than is normally the case. Such a development so early in the season is likely to cause further hardship for the poorest households.
Compounding the food insecurity situation are the region’s high levels of chronic malnutrition in children and of HIV prevalence in adults – both are among the highest in the world.
The UN agencies have expressed gratitude for the generous contributions made so far in support of the vulnerable people of the region. However, they are facing significant shortfalls and, unless more funding is forthcoming, it will not be possible to provide needed assistance to all those in need.
* This figures excludes Angola, Madagascar, Mauritius and the Seychelles.
Achieving food security for all is at the heart of FAO’s efforts – to make sure people have regular access to enough high-quality food to lead active, healthy lives. FAO’s three main goals are: the eradication of hunger, food insecurity and malnutrition; the elimination of poverty and the driving forward of economic and social progress for all; and, the sustainable management and utilization of natural resources, including land, water, air, climate and genetic resources for the benefit of present and future generations.
U.S. warns of fallout over South Africa chicken trade impasse
The United States vowed on Monday to press ahead with a review that could cut South Africa’s access to trade benefits after the country missed a key deadline for resuming US poultry imports.
South Africa has banned US poultry imports since last December after an outbreak of bird flu. The measure came on top of 15 years of punitive import duties on some US chicken products.
The two countries had set an October 15 deadline to agree on new animal health and food safety rules, which also affect US beef and pork exports and are estimated to cost the United States more than $80 million a year.
But a spokesman for the US Trade Representative said South Africa missed the deadline and Washington had no choice but to move on with a review of South Africa’s eligibility for trade benefits under the African Growth and Opportunity Act (AGOA).
Eliminating barriers to US trade and investment is one of the criteria for membership of AGOA, which provides duty-free access to goods from sub-Saharan African countries, ranging from crude oil to clothing.
“We have to complete a review of South Africa’s compliance and, if it is not meeting the eligibility requirements under AGOA, we must take action,” spokesman Trevor Kincaid said in an emailed statement.
“Accordingly, and taking into account the commitments that remain outstanding, we are proceeding to complete the review and determine the appropriate action in light of the results.”
Cutting access to AGOA could see South Africa lose as much as $1.7 billion of exports a year. There is no set deadline to complete the review.
Senators from the chicken-producing states of Delaware and Georgia said they were disappointed South Africa had failed to follow through on opening its markets after agreeing in June to drop anti-dumping duties on bone-in chicken.
“South Africa must take the necessary steps to resolve outstanding barriers to US poultry immediately if its AGOA benefits are to be preserved,” Democrats Tom Carper and Chris Coons and Republican Johnny Isakson said in a joint statement.
National Chicken Council president Mike Brown urged the administration to take the necessary action to get US chicken back in South African markets as soon as possible.
Many had expected the United States to become one of South Africa’s top poultry suppliers after the June agreement, hitting the shares of South African producers such as Astral Foods and Quantum Foods Holdings.
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Leaders unite in calling for a price on carbon ahead of Paris climate talks
For the first time, an unprecedented alliance of Heads of State, city and state leaders, with the support of heads of leading companies, have joined forces to urge countries and companies around the globe to put a price on carbon.
The call to price carbon comes from the Carbon Pricing Panel – a group convened by World Bank Group President Jim Yong Kim and IMF Managing Director Christine Lagarde – to spur further, faster action ahead of the Paris climate talks. They are joined in this effort by OECD Secretary General Angel Gurria.
The panel includes German Chancellor Angela Merkel, Chilean President Michelle Bachelet, French President François Hollande, Ethiopian Prime Minister Hailemariam Desalegn, Philippines President Benigno Aquino III, Mexican President Enrique Peña Nieto, Governor Jerry Brown of California, and Mayor Eduardo Paes of Rio de Janeiro.
These global leaders are calling on their peers to join them in pricing carbon to steer the global economy towards a low carbon, productive, competitive future without the dangerous levels of carbon pollution driving warming. Through strong public policy they are providing certainty and predictability to the private sector so they can make long-term investments in climate smart development.
Private sector support comes from US Institutional Investor CalPERS, ENGIE of France, Mahindra Group of India, and Netherlands-based Royal DSM, who will help link business needs with public policies through the Carbon Pricing Leadership Coalition, an action based platform that will be officially launched in Paris on November 30, 2015.
“There has never been a global movement to put a price on carbon at this level and with this degree of unison. It marks a turning point from the debate on the economic systems needed for low carbon growth to the implementation of policies and pricing mechanisms to deliver jobs, clean growth and prosperity,” World Bank Group President Jim Yong Kim said. ”The science is clear, the economics compelling and we now see political leadership emerging to take green investment to scale at a speed commensurate with the climate challenge.”
“Finance ministers need to think about reforms to fiscal systems in order to raise more revenue from taxes on carbon-intensive fuels and less revenue from other taxes that are detrimental to economic performance, such as taxes on labor and capital. They need to evaluate the carbon tax rates that will help them meet their mitigation pledges for Paris and accompanying measures to help low-income households vulnerable to higher energy prices,” said Christine Lagarde, Managing Director of the International Monetary Fund.
Around the world, about 40 nations and 23 cities, states and regions have implemented or are putting a price on carbon with programs and mechanisms covering about 12 percent of global greenhouse gas emissions. The number of implemented or scheduled carbon pricing instruments has nearly doubled since 2012, reaching an aggregate market value of about $50 billion.
And already more than 400 businesses around the world are using a voluntary, internal price on carbon as part of their investment strategies, with prices ranging from US$4 to over US$100 per ton of CO2. This is a tripling in the number of companies compared with last year reporting that they price their emissions.
Carbon pricing delivers a triple dividend.
Firstly, it is good for the environment and it reduces emissions – lowering social costs of health impacts on people, as well as tackling the global warming. A price on carbon can help alleviate health and environmental problems like premature deaths from exposure to outdoor air pollution. According to the World health Organization, an estimated 3.7 million people die prematurely from outdoor air pollution.
Secondly, carbon pricing is an essential part of getting prices right for the move to a low carbon more resilient growth. It raises revenue efficiently, making it possible to reduce more distortionary taxes, and it allows for targeted support for clean energy solutions rather than harmful subsidies that do little for poor people or the environment.
And thirdly, it drives innovation and critically needed investments in low-carbon solutions, boosting private sector investment in clean tech research and development, and offering the prospect of job creation in the sectors of the future.
Why is it important to act now on carbon pricing? Because strong public policy gives the private sector the certainty and predictability to make the necessary long-term investments in climate-smart development and prevent catastrophic impacts from climate change. Carbon pricing is the cornerstone of a package of policy measures designed to achieve emission reductions at lowest cost.
Today, countries and regions are learning from one another and creating a set of successful approaches to pricing carbon. This collective experience is providing us with the tools to take the vital step towards pricing carbon and is captured in FASTER principles developed by the World Bank Group and OECD, with input from the IMF. These principles are based on fairness; alignment of policies and objectives; stability and predictability; transparency; efficiency and cost-effectiveness; and reliability and environmental integrity.
Some examples include:
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The Canadian province of British Columbia was an early mover on carbon pricing, with the creation of a carbon tax in 2008, with the tax used to cut income taxes and fund tax credits. Also, British Columbia is home to a growing clean technology sector, with more than 150 firms in 2013, accounting for 22% of Canada’s clean tech presence in a province with only 12% of Canada’s GDP. Several experts attribute this growth to the carbon tax.
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California, Quebec and the European Union allocate a portion of their emissions trading scheme (ETS) auction revenues to designated green technology funds and innovation, to support sectors affected directly or indirectly by higher carbon costs.
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In Chile, the government has passed legislation on a carbon tax – effective as of 2017 – as part of a much larger tax reform package with the explicit aim of providing additional resources for education and other social protection programs.
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In Northeastern United States, the Regional Greenhouse Gas Initiative is expected to save people money on energy bills. The RGGI states have invested over $1 billion from ETS proceeds in energy-efficiency program, which are expected to return more than $2.3 billion in lifetime energy bills savings to 1.2 million participating households. Also, from 2008-2012, RGGI invested more than $130 million to help energy and electricity customers in need.
Quotes by the Carbon Pricing Panel
“Low carbon technologies are an element in the fight against worldwide climate change. With a price for carbon and a global carbon market, we promote investment in these climate friendly technologies. Many governments are already putting a price on carbon as part of their climate protection strategies. We should advance our effort along this path further so that we can actually reach our goal of maintaining the two degree upper limit,” said German Chancellor Angela Merkel.
“In Chile we believe in the polluter pays principle. We have enacted environmental taxes on our transportation and power sector. Both taxes will be instrumental in cleaner power, and more efficient cars, which will make our air cleaner, and our climate safer. And the revenue goes to fund our educational reform,” said Chilean President Michelle Bachelet.
“If we really want to send market signals to enable enterprises to make their decisions under optimal economic conditions, which may be optimal ecological conditions, then the issue of carbon prices inevitably arises as it is the most tangible signal that can be sent to all economic actors,” said French President François Hollande. ”I am aware of the fears created by this notion of carbon pricing, particularly among the most carbon- intensive industries, which have concerns, and rightly so, over their competitiveness. We must therefore act with resolve. Countries, big countries such as China, are already setting carbon prices. Europe already has a carbon market.”
“Like many nations, Ethiopia has much to gain from early action on climate change - and much to lose if we collectively fail to act. We are rapidly developing a diverse portfolio of renewable energy resources, have been generating results from large scale programs to rehabilitate landscapes for increased agricultural productivity, resilience and carbon storage, and have shown the world that carbon funds can be put to productive use cutting emissions by regenerating forest cover, and improving people’s lives and livelihoods. A carbon price can be a win-win, not just for nations like Ethiopia, but for the entire planet, provided that it is coordinated and its incidence does not unduly fall on the poor,” said Ethiopian Prime Minister Hailemariam Desalegn.
“Climate change is real. It threatens food and water security, and contributes to the occurrence of more frequent and more destructive storms. In our part of the world, whole South East Asian coastal communities are at a particular risk. They need to be relocated, given the threats of storm surges, rising sea levels, and even landslides. In our own country, we are indeed hard pressed to build back better our vulnerable communities, to support their way of life, and to provide safer, more sustainable livelihood. We are deeply sympathetic about the plight of island nations, particularly Kiribati and Tuvalu, which are likewise in danger due to worsening environmental conditions. Years of international research show that global greenhouse gas emissions are intensifying, consequently contributing to the factors that leave so many at risk. In this vein, developing a price on carbon sets in motion the shift towards cleaner investments for our peoples. The Philippines thus believes that this is a step we must all take part in, lest we collectively suffer the consequences of inaction,” said Philippines President Benigno S. Aquino III.
“The challenge of climate change compels us to rethink and transform the way we produce and consume. The international community must advance towards a low-carbon economy, by setting a price on carbon. In keeping with this goal, Mexico has strengthened its national policy towards green growth. Among other measures, we have established a fossil fuel tax which will foster clean technologies. This way we support international efforts in order to ensure that binding agreements – for both developed and developing countries – will be concluded at the upcoming COP 21, scheduled to be held in Paris,” said Mexican President Enrique Peña Nieto.
“We can’t stand idly by as billions of tons of carbon pollution spew into the atmosphere,” said California Governor Edmund G. Brown Jr. “California has put a price on carbon, but these efforts mean little unless the world’s government and business leaders join us – and go even further.”
“Rio de Janeiro, like most of Brazil, is already experiencing the impacts of climate change – and we’re already taking action,” said Rio de Janeiro, Brasil Mayor Eduardo Paes. “We’re investing heavily in climate-resilient infrastructure, and we’re also committed to slashing carbon emissions across our economy. Putting a price on carbon will serve to accelerate our efforts to build low-carbon urban prosperity – not just in Rio, but in fast-growing cities around the world.”
“Putting a price on carbon is key for ensuring we have credible, cost-effective action on climate mitigation that will get the world on the road to a zero net emissions future,” said Angel Gurría, Secretary-General of the OECD. “While COP21 will be important to set the overall framework for the path forward, it is domestic policies such as carbon pricing that will guide us collectively to that future. This Panel will help to provide the high level leadership that we need to generate greater momentum on carbon pricing up to and beyond COP21. The OECD is pleased to be engaged in the Panel and to work with the leaders and partner international organisations to expand the reach and uptake of carbon pricing. With so much positive upside to action, why would we not embrace the transition?”
“CalPERS supports a price on carbon because we are a financial institution grounded in economics and focused on the long-term. The market needs a transparent and consistent price that discourages carbon emissions, and stimulates low carbon investment opportunities. The goal is that pricing will catalyze a transition to a lower carbon economy,” said Anne Stausboll, CEO of CalPERS.
“Energy use is the main source of greenhouse gas emissions. Energy transition, key to keeping to a 2°C rise in temperature on the planet, has started, and ENGIE wants to lead. In addition to the 2 main pillars of its transition strategy – scaling up renewable and energy efficiency solutions and services Worldwide – ENGIE has decided to stop developing any new coal generation project (that has not already been legally engaged). ENGIE has put a price on carbon to drive its investment decisions: generalizing carbon pricing is crucial to drive and boost low carbon energy transition everywhere and preserve the planet,” said Gérard Mestrallet, CEO of ENGIE.
“Growth and Sustainability are complementary and not conflicting goals, both are necessary to achieve a reasonable quality of life for all. Emerging countries will need to leverage technology to follow a low carbon growth path while developed nations will need to reduce their carbon footprint,” said Anand Mahindra, Chairman and Managing Director of Mahindra Group of India.
“We need to prevent a global temperature rise above 2 degrees Celsius. A meaningful carbon price will provide an economic incentive to shift from fossil to (bio-) renewable energy and reduce GHG emissions. DSM enables a low carbon economy by, for example, increasing solar panel yields and converting crop residue into advanced biofuels. To help us take the right decisions from both an economic and environmental perspective, we use an internal carbon price of €50. Business has a responsibility to take care of the world for next generations,” said Feike Sijbesma, Chairman and CEO of Royal DSM.
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Africapitalism: A philosophy for the era of sustainable development
Tony Elumelu presented the following paper at a conference organised by Liberation newspapers for encouraging new thinking and perspectives about Africa at the Liberation Forum, held on 9-10 October 2015 in Libreville, Gabon.
2015 is an important year. It is the year when the Millennium Development Goals (MDGs), first announced in the year 2000, come to a close, focusing the world’s attention once again on Africa and global policy relating to our development. I am an African, a private sector leader and a father, so the business of African development is extremely important to me. Only two weeks ago, I had the privilege of travelling to New York at the invitation of the UN Secretary General to witness global leaders adopt a new set of 17 Sustainable Development Goals to build on the successes, as well as address the deficits, in achieving the MDGs. And from Libreville, this evening, I will travel on to Lima, Peru, to participate in discussions with top global economists, business and political leaders at the World Bank/IMF meetings on ‘Implementing the SDGs’ to give an African private sector perspective – a perspective which I will share with you first, this evening.
Working together, the world has recorded many successes relating to the MDGs, including:
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Providing more than 14 million people with access to life-saving treatment;
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91% of the world’s population having access to clean water; and
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43 million kids attending school for the very first time.
However, the painful truth is that with the exception of high performing countries like Ghana, Burkina Faso, Mozambique and Namibia, Africa is the region that has made the least progress in achieving the targets set forth in the MDGs. This means that in the era of the SDGs, more resources, more innovation and more scrutiny are required to ensure that our region delivers on the 17 Global Goals. It also means that Africa must decisively take charge of its own development. I am, therefore, proposing Africapitalism as one helpful approach to consider in achieving the SDGs.
Africa is a continent of 54 countries that have complex and varying dynamics, but in many cases, common challenges to which I believe there should be common solutions. I also believe that Africapitalism, a philosophy that centers around the private sector’s critical role in driving economic and social development, can be applied to all countries in Africa, and is even applicable well beyond our shores for the benefit of people in other regions of the world. The private sector has an imperative to be involved in the business of development because:
First, for decades African governments have strived to achieve developmental aspirations and put their countries on course to catch up with developed economies but they have not succeeded. Therefore, it will take more than the efforts of African and donor governments and multilateral agencies to achieve the expected outcome. It will take all of us – governments, civil society and, most importantly, the private sector working in A Common cause to create truly transformative change.
Secondly, the United Nations estimates that the SDGs will cost $170 trillion over 15 years. Current global GDP annually is only $73 trillion. That means each and every year 15 per cent of the world’s GDP may have to be dedicated to financing the SDGs, assuming this cost is accurate. African governments certainly don’t have that kind of money. Nobody but the private sector can help with mobilising the kind of huge resources which may be required. But let us not be pessimistic. Practically speaking, what these figures mean is that:
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We need to marshal massive amounts of resources – financial and otherwise;
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We need everyone to participate – and by “everyone” I mean the public sector, the private sector and the non-profit sector; and
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We need to innovate.
Since the majority of government revenues that will be allocated to achieving the SDGs will come from taxing the commercial activities of the private sector – it’s in the self-interest of governments to see their private sectors thrive.
Because the private sector holds most of global capital, and because it is the sector that has the greatest capacity for innovation, our governments must develop the enabling environments that help businesses in their countries to succeed.
Role of the private sector
But the good news is that the world is beginning to appreciate the role of the private sector in achieving these goals. The inclusion of the private sector in the consultations that led to the selection of the new Global Goals and the fact that I and a few other global private sector leaders were invited to witness their adoption alongside global political leaders, shows this realization.
In fact, at a private sector lunch during the just concluded United Nations General Assembly, even Bono, the world’s leading champion of foreign aid to Africa, conceded that the key to ending extreme poverty in the world is more private sector investments than aid.
Africapitalism as an approach to achieving the SDGs
Africapitalism is an economic philosophy that promotes longterm investment in strategic sectors that will create economic and social wealth. It includes financial returns for shareholders as well as development dividends for society. At the core of Africapitalism is development. Conventional development practice prioritizes the provision of basic health, feeding and education programs to poor and under-privileged people in the hopes that they will eventually have the tools to lift themselves out of poverty.
Economic opportunity
But, I believe that if we also help people make something of themselves by providing access to economic opportunity, they will be able to purchase food, healthcare, education, and clean water for themselves and their children. From my perspective, humanitarian aid and economic opportunity are two sides of the same development coin: international development assistance focuses primarily on helping the poor meet their basic needs, whereas Africapitalism promotes inclusive economic expansion in a way that creates new opportunities for people to help themselves.
Attributes of Africapitalism
Africapitalism is defined by a particular set of characteristics that are key to unleashing the potential of African countries to take charge of their own destiny and achieve their own development aspirations, specifically the SDGs. These characteristics include:
Shared Purpose: This is at the heart of fostering collaboration between government, business, and other stakeholders to achieve development ends. No single sector or entity can achieve the kind of transformative change we need in Africa on its own. A key feature of this is the creation of national plans and supporting policies around specific sectors and related targets where the private sector can step in with capital and expertise dedicated to achieving set targets. For instance, the Nigerian government set a target of achieving 40,000 MW watts of electricity by 2020 and in partnership with the private sector, enacted key reforms that made the sector attractive, and the private sector stepped up with billions of dollars of investment in power generation and distribution towards meeting that target. My company, Heirs Holdings, committed $2.5billion to invest in the power sector with a goal of generating 25% of the Nigerian government’s power generation target. That is “Shared Purpose” in working towards SDG 7 (Access to Affordable and Sustainable Energy).
Long-term Investments: Development is never a short-term project or goal and yet private sector capital, particularly in what is described as “frontier markets” or developing countries, tends to be very impatient, seeking rapid returns and quick exits.
Rapid returns
Long-term planning by governments and the deployment of patient capital by the private sector will together create greater and broader economic value as opposed to being merely focused on the extraction of resources. For too long African countries have benefited far too little from our own natural and human resources as global interests have extracted primary resources only to export them at a fraction of their eventual value.
Strategic Sectors: Government and business leaders need to define sectors where their countries have an inherent and unique competitive advantage and then jointly agree a strategy to capitalize on it. Government and business also need to be aligned in order to identify policies and regulations that unnecessarily, and perhaps unintentionally, stifle private sector growth.
In Africa, the universal strategic sectors are agriculture, natural resources and healthcare. However, each country has opportunities specific to it. In Nigeria for instance, the film industry or Nollywood is a strategic sector that has created millions of jobs and generated billions in revenue through production and distribution and this addresses for instance, SDG 8 (that is Sustained Economic Growth and Decent Work for All).
This makes the case for us Africans to take charge of our own development agenda because well-meaning donors tend to focus on life-saving assistance and are less likely to recognize, much less prioritize, the development potential of industries like entertainment, despite the fact that it is an important part of the Nigerian economy.
One need look no further than the U.S. state of California, which is the epicenter of the global film industry, and the industry’s role in making California the 8th largest economy in the world.
Value-Added Growth: A key feature influencing the under- development of the African continent is the manner in which natural resources are extracted at low cost and then processed outside of the continent where the vast majority of the value is realized. And in many cases, the finished product is reimported to the very African nation it came from and at much higher cost. This is particularly apparent across industries where we export crude and import petrol; export timber and import furniture; export cotton and import apparel and, of course, export cocoa, only to reimport it as chocolate.
This is costing us millions of jobs and billions of dollars in revenue that we could be putting towards the attainment of the SDGs. It has also cost us our self- esteem by creating dependency on compassionate capital that often comes with cumbersome or distasteful strings attached, although we are more than capable of generating much of that capital ourselves.
In a continent of young people that will require tens of millions of new jobs by the year 2020, we cannot afford to continue this practice. Africapitalism encourages companies to locally process raw materials and other inputs in order to create local value in Africa.
Competitiveness: Africa as a region ranks lowest in the World Bank’s “ease of doing business” report, with only South Africa and Rwanda showing up among the top 50 places globally. The agricultural sector is a good example to examine when looking at this thorny issue of a lack of competitiveness. Let me explain what I mean the key drivers of competitiveness in any modern economy especially for a sector like agriculture are: Access to markets; Infrastructure and by this I mean transport/power/storage facilities etc; Supportive and consistency of government policies; The nature of the government bureaucracy and the extent to which this is supportive of business. When you examine or dive deeply into each of these areas and ask how African economies compare with countries elsewhere, you begin to understand why it is possible for more farmers in developed countries to have commercially viable businesses whilst African farming is still largely at a subsistence level and most African countries like mine and indeed Gabon are net importers of food when both should be net exporters. I cite the example of Agriculture because 70% of our people are employed in this sector and it remains an area that can become an engine for job growth/creation, which is an urgent need right across the continent.
The concept of Africapitalism advocates that governments working in partnership with the private sector, create policies and the environment that improve our overall competitiveness
Entrepreneurship: While other regions of the world have aging populations, Africa’s youth dominates its populations. This means that Africa is poised to become the engine of global economic growth – but only if the jobs are available. Otherwise, this same young demographic will likely spell major political instability for us all as the youth becomes frustrated by a lack of access to economic opportunity. We know that governments and corporations alone cannot provide enough jobs for the more than 122 million young Africans entering the workforce by 2020. Therefore, one of the keys to winning the demographic dividend is entrepreneurship.
At the micro-level, entrepreneurship is a bottom up approach to economic growth and development that empowers the individual to find and pursue the best opportunities in their current environment to improve their own economic circumstances. It also drives the creation of home- grown solutions to local problems in core areas such as education, health, water and sanitation, etc., all of which are SDG targets, so entrepreneurs will have a significant impact in achieving other SDGs as well. At the macro-level, it is the expression of African solutions to African economic problems. Entrepreneurship means Africans have options for advancement that are not limited to just finding a job. They can create their own employment opportunity, as well as for others, and transform their communities, and even the continent. My belief in the inherent capacity of Africans to be successful entrepreneurs - if they have the right tools – is so resolute, that through the Tony Elumelu Entrepreneurship Programme (TEEP) I have committed $100 million over the next 10 years to identify, mentor, train and provide seed capital of $10,000 each to 10,000 African start-ups. In 2015, the first year of the Programme, we selected the best 1,000 ideas from the more than 20,000 applications we received from nearly all of Africa’s 54 countries, irrespective of their gender, nationality, level of education or sector.
All selectees needed was a transformative idea and the drive to succeed, and we gave them a chance. The first batch have already completed their training and received their first tranche of seed capital. And I’m proud to say that three of Gabon’s finest young people, a male and two females are part of the 2015 pioneer Tony Elumelu Entrepreneurs. I’m also delighted to announce today that, going forward, all TEEP applicants will be required to demonstrate how their idea will specifically help to advance one or more SDGs. As happy as they are to be in the program, it can’t compare to how it felt for me to stand on a stage, similar to this one, and look out upon the 1,000 excited faces that will fuel the transformation of our continent. With ideas for Apps and apparel, food and films, entertainment and education, and life-style and life-saving products, some among these African entrepreneurs could become the next Tony Elumelu, Bill Gates, or even Steve Jobs. And there are many, many more aspiring African entrepreneurs out there who also deserve a chance, if only their governments would prioritize supporting entrepreneurship. Let me commend President Ali Bongo for what I understand his government is doing to support young Gabonese Entrepreneurs.
Regional Integration and Connectivity: The lack of regional connectivity has been a key feature and cause of under-development on the continent. With the exception of a handful of countries, African economies are small markets and many countries are landlocked, making trade and movement difficult. Particularly unfortunate are the self-inflicted wounds of mutually-defensive tariffs and visa requirements that African countries continue to impose upon each other a relic of the colonial era that even historically warring European countries have long since abandoned.
For example, just to attend the TEEP training camp in Lagos this past July, virtually all non-Nigerian and non-ECOWAS attendees required a visa and some even transit visas as well. For those who were able to get a visa, many had to fly further away from Nigeria in order to get a flight connection into Lagos. TEEP is but a microcosm of the barriers faced by entrepreneurs and businesses across the continent. We will never know how many business ideas and relationships have been extinguished across Africa due to these barriers, but we do know how to change this and what the result will be: An increase in the volume and profitability of trade.
Africapitalism advocates regional approaches to physical infrastructure, such as regional highways and railways, power projects and the harmonization of policies and practices to enable seamless trade. The rich mosaic that is the African continent is at the heart of her strength. With 54 countries, more than 130 major ethnic groups, roughly 3,000 languages, and all major religions as well as many more traditional belief systems, Africa is arguably the most diverse region of the world. However, our cultural and geographic diversity should give rise to policies that bind rather than divide us. The world has come together to develop common goals to save and sustain mankind. Africapitalism provides us with a common, homegrown philosophy to achieve those goals, reclaim our self-reliance and fuel the continued transformation of Africa. As a businessman, I have spent my career taking over distressed businesses and turning them around. I firmly believe that we can turn this continent around. We can also turn our demographic dividends into development dividends. We can achieve the SDGs and we can make aid history, restoring Africa to its rightful place in the global arena.
Thank you.
Tony Elumelu is the Founder of The Tony Elumelu Foundation and Chairman of Heirs Holding.
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Environmental rule of law critical to achieving inclusive, sustainable development in Africa, concludes regional colloquium
Over 160 representatives of Africa’s judiciary and law enforcement authorities agreed on 16 October 2015 to ensure the enforcement and practical implementation of environmental law, which they described as a precondition to achieving inclusive, sustainable development in the region.
The agreement was made at the 1st Africa Colloquium on Environmental Rule of Law in Nairobi, organized by the United Nations Environment Programme (UNEP), the Office of the Chief Justice of Kenya, the Konrad Adenauer Foundation and the Judiciary Training Institute of Kenya (JTI).
Ibrahim Thiaw, Deputy Executive Director of UNEP said, “The success in the implementation of the Sustainable Development Goals and the ‘Africa We Want’ agenda hinges on our ability to harness Africa’s bountiful natural resources to power peaceful, inclusive and sustainable development.
“Guaranteeing citizens’ participation, access to justice and information in environmental matters, combating the illegal trade in wildlife and other forms of environmental crimes, and harmonizing legal frameworks between countries will create equal opportunities for all, help to eliminate poverty and ensure sound management of Africa’s ecosystems.”
The Chief Justice of Kenya, Hon. Willy Mutunga, in his welcoming remarks, invited participants to come up with recommendations on areas and priorities for action and formulate mechanisms for implementation. He expressed his delight that his office is partnering with UNEP and the Konrad Adenauer Foundation in this inaugural colloquium.
Delegates also called for the development of a roadmap that would lead to the full regional implementation of Principle 10 of the Rio de Janeiro Declaration and UNEP’s ‘Bali Guidelines’, which – with their pillars of access to information, access to justice and public participation – are essential to promoting peaceful and inclusive societies for sustainable development.
“A lot of progress has been made in both legislative reforms and judicial interventions in Africa. The way forward is to develop a roadmap for regional instruments on the implementation of Rio +10 and the Bali guidelines,” said Prof Muhammed Twafiq Ladan, from Zaria University, Nigeria.
The colloquium offered an opportunity to exchange information and share good practices in advancing environmental rule of law in Africa. These success stories highlighted the crucial role that the judiciary, prosecutors, auditors, government representatives, civil society and the private sector and other related enforcement officials play – individually and collectively – in advancing environmental rule of law in the region.
The colloquium concluded with The Nairobi Statement, which called upon African countries to integrate mechanisms to ensure adequate access to information, public participation and justice in environmental matters through a regional process and framework. The Statement further called for integration of environmental law into the curricula of judicial and other training institutes. It also emphasized the need for the establishment of a regional network on environmental rule of law to facilitate regular and continuous exchange of information, knowledge and experiences in the region.
The colloquium recognized the critical role of mutual legal assistance and urged all countries in the African region to enhance transboundary cooperation to combat the illegal wildlife trade and other environmental crimes.
Background
The importance of promoting the rule of law related to sustainable development and environmental sustainability has gained recognition in recent years, following the outcomes of the Rio+20 Conference and the UNEP World Congress on Advancing Justice, Governance and Law for Environmental Sustainability in 2012. In February 2013, UNEP’s Governing Council adopted the first internationally negotiated document to establish the term ‘environmental rule of law’ which was reinforced by Resolutions on illegal wildlife trade and access to justice in environmental matters at the first ever United Nations Environment Assembly (UNEA) in June 2014.
Promoting the rule of law requires measures to ensure adherence to the principles of supremacy of the law, equality before the law, accountability to the law, fairness in the application of the law, separation of powers, public participation in decision-making, access to information, access to justice, legal certainty, avoidance of arbitrariness, and procedural and legal transparency. The 1st Africa Colloquium on Environmental Rule of Law is organized to define and promote such measures in the field of the environment – including the application of Principle 10 of the Rio Declaration from 1992 – as well as to enhance the capacity of the legal and auditing communities to develop and implement environmental rule of law.
The Colloquium which is organized by UNEP in partnership with the Office of the Chief Justice of Kenya, Konrad Adenauer Foundation and the Judiciary Training Institute of Kenya (JTI) brings together judges, prosecutors, auditors, government representatives and other related authorities of the environmental, legal and enforcement community and the institutions they represent and representatives of Non-Governmental Organisations to this inaugural Colloquium to help develop and implement environmental rule of law and to define a new future for environmental justice, governance and law in the African Region and beyond.
Outcome of the Colloquium will be recommendations on areas and priorities for action to promote the development and implementation of environmental rule of law in the African Region and the establishment of a course of action for the implementation of these recommendations. This outcome may also include concrete proposals on how to go about implementing Principle 10 in Africa, including through regional and/or sub regional legal instruments as already developed in other regions of the world. The Colloquium will also lay the foundation for the design and development of guidance/knowledge tools to facilitate the development and implementation of environmental rule of law at the global and other levels.
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The power of policy and technology: Speech by UNEP Executive Director Achim Steiner at the Global Environmental Action International Conference 2015
Reaching agreement on the 17 sustainable development goals and climate change is just the beginning. They still have to be delivered and, until they are, we still have to adapt to the consequences.
Your Highness, Prime Minister, Excellencies, dear friends and colleagues, I am extremely honored to have been able to hear the remarks of His Imperial Highness and the Prime Minister at such a crucial juncture for both the global environment and the global economy. I would like to thank Juro Saito, the Chairman of Global Environmental Action, for making this possible at such a perfect moment in time.
Ahead of the historic Rio Earth Summit, almost 25 years ago (1991), the first “Eminent Persons’ Meeting on Financing Global Environment and Development” offered invaluable insight into how the world could fund environmental preservation and sustainable development.
Since then, this expertise flourished to become the GEA, which is so well known and respected today. At the same time, the world’s appreciation of the links between environment, economics and technology has also flourished, to create the historic 2030 Agenda laid down last month.
That is why, with the crucial climate change conference still ahead of us in Paris, I am delighted to be here. Having access to the experience of the GEA is as valuable to me today, as it was to Maurice Strong all those years ago. Because reaching agreement on the 17 goals and climate change is just the beginning. They still have to be delivered and, until they are, we still have to adapt to the consequences.
All of which will require a considerable redirection of existing finance and an injection of new investment, especially in core sectors with impact across multiple goals like clean energy, transport and disaster management, which I want to address today.
Let me start with clean energy. This is possibly the best example of a sector that really is integrated into the very fabric of the goals, offering some great opportunities to combine socio-economic growth with environmental protection.
We know now that most of the coal, oil, and gas thought of as reserves cannot be burned if we are to avoid potentially catastrophic climate warming
However, in recent years, progress in renewables has outstripped predictions.
In 2000, the International Energy Agency predicted that non-hydro renewable energy would comprise 3% of global energy by 2020. By 2008 that benchmark had been reached. By 2014 it had been tripled (9.1%). The net result of such progress is that Investment is going up, costs are coming down and ambitious, large-scale projects are being implemented around the world.
Here in Japan the Tokyo Metropolitan Government has committed to sourcing around a fifth of the city’s energy from renewables by 2024. The target of quadrupling photovoltaic energy is particularly impressive. And in South Africa the government invested $10 million in 2011, aiming to create the most comprehensive, private sector focused renewable energy policy in Africa. Within two years that had triggered $14 billion of mainly private investment and 4GW of new wind and solar power generation.
However, there is no point investing in more renewables if we continue to waste energy elsewhere. The International Energy Agency estimates that by the end of this decade, 70% of our potential CO2 reduction could actually come from energy efficiency measures.
Take a look at our cities – after all, nearly half the world’s population lives in urban areas. Today, our cities create 80% of GDP, but they also occupy 3% of the total land surface, produce 50% of global waste and consume 75% of natural resources. In fact, half of the energy consumed is used for heating and cooling. So, simply ensuring more efficient use of appliances can offer huge benefits for consumers, power companies and the environment.
Take something as simple as air conditioning. Ghana’s Electrical Appliance Labelling and Standards Programme was the first of its kind for sub-Saharan Africa. Their initiatives for air conditioning could save the country around $64 million per year and 2.8 million tonnes of CO2 over 30 years. While, in Southern Africa, similar air conditioning programmes could cut electricity use by 13% and bills by $3 billion per year, with reductions in greenhouse gas and carbon dioxide emissions equivalent to taking 8 million vehicles off the road every year.
Similar programmes are delivering equally strong efficiency improvements around the world. Notably, the Ecodesign Directive in Europe has cut electricity consumption by 16%, by systematically integrating environmental aspects at the earliest stage of product design. And, the Top Runner Programme here in Japan has already produced energy savings of 11% through 23 product categories identified for their high energy consumption, widespread use or substantial efficiency potential.
So, if we can produce more clean renewable energy and we can use it to power more efficient appliances, then we need to be just as careful with the infrastructure that connects the two.
If I stay with the theme of urbanization, modern district energy systems are a low-cost, low-carbon and climate resilient. By coordinating the local production and supply, they can cut the energy required to provide heat, cooling, domestic hot water and power to buildings by 80-90%, reduce greenhouse gas emissions by up to 40% and save over 35 giga-tonnes of CO2 by 2050.
Of course, projects like the Yokohama Smart City initiative take this thinking a step further. Using a public-private partnership approach that spans a variety of projects – from the introduction and management of renewable energy to next generation transportation systems – well reflects the holistic nature of the sustainable development goals.
That is an approach we can build on – literally – if we are to intertwine our daily activities with sustainable lifestyles. By incorporating sustainability in every stage of design and construction for future urban spaces; by raising awareness among consumers and building operators of how easily they can reduce waste and increase efficiency, wherever they are; and by understand the basic resource flows of urban spaces in terms of water, waste, food and, of course, mobility.
Which brings me to my second example: transport. This might be less obvious than energy as an example of a cross cutting sector. Nonetheless, not only is it just as integral to the success of goals for things like health, wellbeing, economic growth and partnerships, but it is also an opportunity to combine immediate action in the national interest with long term impact on global challenges like air quality and climate change.
There will be nearly three times as many cars on the road by 2050 as there were in 2010, with most of that growth occurring in developing countries where better transport is necessary for economic development.
However, this is an opportunity for developed countries to share the lessons learned from the high carbon, high impact choices that currently bottleneck so many transport networks, permitting the developing countries to leapfrog to something better and more sustainable.
Research from the Global Fuel Economy, of which UNEP is a partner, has shown that just by adopting existing fuel efficient technologies could save $2 trillion in un-used fuel in just the next decade and keep fuel demand steady by 2050, saving 8 billion barrels of oil a day and halving CO2 emissions from cars and light duty vehicles.
In fact, most OECD countries have already made significant progress. Since 2005, developed countries have cut average fuel burn from more than 8 liters per 100 km to less than 7. The EU has cut average CO2 emissions from 140 grams/km per vehicle to 120, and is on track to reach 90, while the US’s light-duty fuel economy standards are delivering savings of almost $12 billion per year, against costs of just over $3 billion.
In addition, we’ve seen a global move to eliminate lead from motor fuels, which saves $2.45 trillion per year. UNEP already works with the public-private Partnership for Clean Fuels and Vehicles to promote the reduction of air pollution from transport in developing and transitional countries. Since 2002, their work has catalyzed the phase out of leaded fuel in over 100 countries.
What we need to do now is spread that kind of best practice even further, which is why UNEP also supports nearly 60 countries in developing and implementing fuel economy policies. However, while democratizing established technologies can certainly offer significant improvements, we really need to switch up a gear to more disruptive technologies if we are going to seriously reduce overall emissions.
In particular, that means exploring the opportunities and challenges for scaling up new technologies such as hybrid and electric vehicles. Two and three wheel vehicles have been a growing part of city traffic around the world. But highly polluting two-stroke motorbikes are causing particular problems in some parts of Africa, where imports are on the up and they have become a leading source of urban pollution. In Nigeria, two-strokes are being replaced by four-stroke. In Uganda there has been 150% growth in the last 10 years. And in Kenya, bike imports have overtaken cars in just a couple of years.
However, the switch to electric is complex for cars, but not for bikes. In fact, most of China’s two-stroke bikes have already been replaced by 200 million electric bikes. It is widely accepted that not only is this is economically viable, but it has massive health and climate benefits that reach well beyond the borders of the countries involved. That means we have a choice: either we can let the fleets of 2-stroke bikes grow unchecked in these emerging markets or we can help them leapfrog directly to affordable, emission-free technology with equivalent costs. Both the market and the planet are ready. So, UNEP is tackling this on 2 fronts. Our Electric Mobility programme aims to support cities and countries keen to make the technology leap, while our work with Clean Air Asia aims to help phase out of 2-stroke two and three already operating.
But, there’s a long way to go. According to the IEA, three quarters of all vehicle sales by 2050 would need to be some type of plug-in electric vehicles to keep rising temperatures within the two-degree threshold. And while the switch electric cars will be more complex than for bikes, there are some good efforts under way. Look at the innovative thinking behind Toyota’s smart grid project. Their engineers believe that combining smart grid homes and plug-in cars could cut household energy consumption by 75%.
We have to encourage such efforts to scale up innovative solutions and optimize the connections between different elements of sustainable living. That connection between smart infrastructure and transport is vital. It can be about making transport more efficient, with a growing number of cities implementing preferential lanes for vehicles carrying more than one passenger. It can be about capitalizing on the new trends in mobile apps, by planning for areas to facilitate car sharing and bike sharing. Or on a bigger scale, it can be about a shift towards more integrated land and mobility planning, with growing provision for alternatives like buses, bikes, walking, rail and even inland waterways.
Now, I highlighted energy and transport because of their similarities in the possibilities offered by new technology, the opportunities for quick local wins to deliver lasting global benefits and the potential impact on multiple sustainable development goals.
Unfortunately, they have one other thing in common: serious consequences if they are not addressed – for climate change in particular. Normally I prefer to be optimistic when I talk about the sustainable development goals and climate change, because I believe that we can deliver them and I believe that they offer some amazing opportunities. But in the meantime, there are direct and difficult consequences arising from the current situation.
Regrettably, the people of Japan are more familiar than most with such issues. The images of the flooding and landslides caused by Typhoon Etau last month were shocking. I would like to take this opportunity to offer my condolences to the people of Kanto-Tohoku and my appreciation to the rescue teams that assisted.
The ability to turn such adversity into strength is rare. Yet Japan has a strong track record for doing exactly that. What’s more, by sharing your experience of responding to disasters, you have set many other nations on course for greater resilience, better equipping them to avoid disaster, to respond to it and, crucially, to recover from it. Indeed, your leadership and contribution to the Third World Conference on Disaster Risk Reduction in Sendai will not only protect the lives of millions of people far beyond Japan, but will also deliver much wider benefits.
As the Secretary-General said on the opening day of the Sendai Conference, “sustainability starts in Sendai”, because as well as adopting a crucial framework to reduce the risk of disaster and loss of lives and livelihoods, it opened a new era in sustainable development, laying the foundations for agreement on the sustainable development goals in New York.
One of the key Sendai outcomes is putting more focus on “building better” in the first place to prevent disasters - investing in resilience that is rooted in social, economic, environmental and cultural sustainability. Following the 2011 earthquake, Japan vigorously increased support for resource efficient renewables. It is testimony to the country’s extraordinary ability to turn things around that by 2014 the country was able to replace half its missing nuclear power capacity through energy efficiency, launch the first offshore floating wind turbine in Asia, and start work on what will be the world’s largest floating solar installation.
UNEP’s first Adaptation Report shows that coping with the consequences of climate change will cost between $150-500 billion per year until 2050. If we follow Japan’s example in turning adversity into advantage, that could mean helping the worst hit communities to live, not just to survive.
So Japan’s experience highlights why policy and technology can be a powerful force for change. Which takes me full circle - back to my earlier comments about clean energy and transport - and to the decisive factor on which all of sustainable development goals will stand or fall: finance, or more accurately, the transition to a more inclusive, green economy.
Achieving the shift in financial and investment mechanisms needed to deliver the goals will be as historic as the goals themselves. However, UNEP has been working with more than 200 global financial institutions for over 20 years to prepare the ground for an economy capable of funding the mitigation, impact and adaption to climate change and of underpinning the delivery of all 17 sustainable development goals.
Through the UNEP Finance Initiative and, more recently, the UNEP Inquiry we have been working to improve understanding of the links between environmental, social and financial performance, help individual states build decision frameworks around sustainable development, and maximize the return on public and private investment, at both the national and international level.
I was at a meeting with the Sustainable Stock Exchanges Initiative a few weeks ago and I can assure you that there is much cause for optimism. The financial community can see the opportunities as well as we can. For example, the International Energy Agency has shown that the uptake of more economically viable energy efficiency investments could boost cumulative economic output by $18 trillion in the next 20 years. That’s more than the combined economic output of the US, Canada and Mexico.
Those kinds of returns on investment are hard to ignore. That’s why, last year, global investment in renewable energy was up 17% and investment in developing countries was up by 36%. That’s good progress, but there is there is a long way to go to fill the $1 trillion gap in the annual funding required to keep global warming below 2 degrees.
However, there are some clear actions we can take to address it. First, we can redirect existing finance - by hitting the 2030 goals investment in fossil fuels can be cut by $6 trillion, which can in turn be reinvested in clean renewables. Second, we can ensure that public investment is used to trigger larger scale mobilization of private investment - as with the South African clean energy programme I mentioned earlier. And third, we can encourage the growing shift coming from within the finance sector itself. Such as the 365 leading financial organizations who are signatories to the Global Investor Statement on Climate Change, which is pushing for a controlled move away from fossil fuels towards renewable technologies; the Portfolio Decarbonisation Coalition, a group of pension funds and insurers who together have committed to decarbonize $65 billion of their holdings by shifting from browner to greener stocks within their investment portfolios; or the “green bond” market, which has grown ten-fold in the last four years and will issue over $60 billion in green bonds this year.
In Kenya, where the United Nations Environment Programme is headquartered, there is a proverb that says: “If a dead tree falls, it carries with it a live one.” The same can be said of the 17 sustainable development goals. If any one element fails, then it could take the others with it. Without quality education we cannot tackle climate change. Without gender equality we cannot have sustainable cities. And without decent work and economic growth we cannot have zero hunger or poverty.
Over the years, places like Kyoto, Aichi and Nagoya, have become synonymous with the ambition necessary for environmental progress. So, as climate change demands that we reinvent our economy, our technology and our even our sense of responsibility, what better place than Tokyo to gather our thoughts ahead of COP 21.
Again, I would like to offer my thanks to His Imperial Highness the Crown Prince, Prime Minister Abe and Chairman Saito and his colleagues at the GEA for making this possible.
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The Democratic Republic of the Congo scores high on growth, lags in poverty reduction
The Democratic Republic of the Congo exemplifies the difficulty that many developing countries have in transforming mineral wealth into inclusive growth.
The IMF’s latest annual economic assessment indicates that while growth rates for 2014 were as high as 9.2 percent, poverty rates in the DRC are still among the highest in the world. And while the report notes some social improvements, like better access to education, it’s unlikely the DRC will achieve any of the Millennium Development goals.
Key Issues
Despite DRC’s abundant natural resources and its robust growth and overall strong macroeconomic performance of the past five years, fiscal space remains limited and poverty widespread. While key social indicators improved, DRC will likely not achieve any of the Millennium Development Goals (MDGs) by 2015. Implementation of past policy recommendations was broadly satisfactory, but progress on critical structural reforms has stalled. DRC remains a fragile country with vulnerabilities on the rise.
Outlook and risks
The outlook is favorable but vulnerable to adverse developments in commodity prices and spending pressures in the period leading to the 2016 presidential elections. A low foreign exchange reserves cushion leaves the economy vulnerable to external shocks. In addition, continued delays in adopting some economic legislations and lingering insecurity in parts of the country are also sources of risk.
Key challenges
The main challenges in the short to medium term are to: (i) address competing demands given the limited budget resources in 2015-16, (ii) build more buffers to withstand possible shocks from both external and domestic sources, (iii) diversify the economy and make it more inclusive, and (iv) maximize the benefits to the population of natural resources exploitation.
Policy recommendations
The authorities are urged to move swiftly to meet these challenges in order to preserve the hard-won gains and address rising inequality. In particular, they need to: (i) step up domestic revenue mobilization, (ii) reinforce the de-dollarization process and accumulate more international reserves; (iii) remove bottlenecks to private sector activity, (iv) strengthen governance and enhance transparency in the management of natural resources, and (v) implement the measures identified in the 2014 Financial Sector Assessment Program (FSAP) aimed at promoting both the soundness and inclusiveness of the financial system.
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Angola and Mozambique among African countries with best growth prospects
Angola and Mozambique are on the list of African countries with better prospects for economic growth and business opportunities, according to a study by the Nielsen consultancy that surveyed executives in Africa.
In the first edition of the “Africa’s Prospects” study on the macroeconomic climate, business and consumer and retail indicators for the first quarter 2015, Mozambique is ranked in third place in terms of growth prospects and opportunities for companies, behind Ethiopia and Ivory Coast.
In the study of 26 African countries, Angola is in fifth place with a score of 6.3 (the same as Kenya and 0.1 percentage points below Mozambique) with the capacity for growth offset by “several operational challenges to be overcome by the companies.”
While economic growth in Mozambique is estimated at 7 percent, in Angola’s case the study includes an estimate of 4.4 percent, up from some of the latest downward revisions for the Angolan economy, due to prolonged low oil prices.
The Nielsen study said Angolan consumers were struggling with higher inflation rates, similarly to Ghanaians and Nigerians.
The consumer goods basket used by Nielsen puts Angola as the most expensive country, with a total cost of USD31.97, ahead of Ivory Coast and Ghana, while the list of the cheapest countries is topped by Uganda, Lesotho, Botswana and Swaziland.
The study stresses the growing importance of African economies, particularly in Southern Africa, which are growing faster than those of developed countries, and these countries as consumer markets, with a population increase above the global average.
Although the business climate is often difficult for companies, these countries have been making reforms, which is reflected in their rise in the business climate index prepared by the World Bank.
Angola and Mozambique have been attracting large international retail chains, with a study by AT Kearney placing them among the 15 most attractive African countries for this type of investment.
The consultancy puts Angola in third place among the most attractive African countries for international retail chains and Mozambique emerged as the 15th most attractive, taking into account factors such as the size of the urban population, enterprise efficiency and risk for investors.
Due to the sharp expansion of the population and increase in average income, Angola has attracted chains such as South Africa’s Spar, following the example of its compatriot Shoprite, after Brazil’s Odebrecht was called up by the government for a partnership for the logistics management of state chain Nosso Super.
The Chinese community is strongly represented in retail trade in Angola and Mozambique and has been investing in large stores.
In Mozambique there is a new hypermarket managed by the “Number One Supermarket, Lda” company and offers food, beverages, household appliances and others, an investment of US$2 million in the city of Quelimane, capital of Zambézia province.
Africa’s Prospects: Macro Environment, Business, Consumer and Retail Outlook Indicators
Prospects For Africa
Africa’s rise in prominence is part of an overall global trend that has seen a shift in economic opportunity from the developed to the developing world. In fact, 6 out of the 10 fastest growing economies in the world are in Africa. In particular, SSA is expected to remain one of the fasted growing regions, with 2014 GDP growth at 4.5%. This outstrips the levels delivered for high-income countries and most of the developing world, excluding China.
Added to this, many African countries feature highly amongst the largest ranked populations and population growth markets in the world. Currently there are an estimated 350 million middle class consumers on the sub-continent. With increasing scope and consumer spending potential, this places Africa firmly in the spotlight as the prominent environment for growth of global, regional and local companies.
Despite burdensome business regulations, Africa is also actively reforming. The ease of doing business is improving, evidenced by the fact that it is currently the region with the highest number of business reforms (World Bank 2015 Ease of Doing Business report). Combined with stabilizing political climates and increasing investment in infrastructure, Africa presents immense prospects.
Success in Africa will depend on many factors including agility and localization of strategy. Realizing the opportunities will also take time, as companies navigate complex political and regulatory environments and develop extended operational perimeters and local talent. The additional workload that comes with doing business in Africa includes managing auxiliary services such as power, water, transport and supplies, which cannot be taken for granted even in large cities. Addressing the shortage of local talent from the outset is also key. At an entry level, lack of training and literacy are issues while the shortage of managerial expertise results in competition for talent and high salaries. In addition, dealing with corruption is one of the many operational challenges faced by corporate executives.
The 26 countries detailed in this report account for 93% of Sub Saharan Africa’s economy and 85% of the population. More than half, or 15 of these countries, show GDP growth ahead of the SSA average of 4.5%.
Business Sentiment
During the first quarter of 2015 business executives across Africa, with single and multi-country responsibility, ranked the same 26 Sub Saharan Africa markets based on their view of growth opportunities. Business views incorporate sentiment for the countries overall economic growth as well as a company’s ability to execute on the ground and tap into consumer spending. The markets topping the list in terms of overall country growth expectations are: Ethiopia, Ivory Coast, Mozambique and Kenya. Angola ranks 5th on the list, however, companies do not recognize their growth opportunity as highly for Angola and Ethiopia, as they struggle to overcome various operational challenges within these markets. In addition, sentiment on both growth outlook for the country and their own business is less favorable versus a year ago in Nigeria, South Africa, Tanzania and Zambia.
Lower expectations for Nigeria echo the more moderate macroeconomic indicators. While South Africa ranks on the lower level of the list, businesses still view their opportunities to grow, ahead of the overall country expectations.
» Click here to find out more about the Africa’s Prospects report.
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tralac’s Daily News selection: 19 October 2015
The selection: Monday, 19 October
The 133rd IPU Assembly is underway in Geneva. Two profiled documents: Promoting child nutrition in the SADC region, Steering committee of the Parliamentary Conference on the WTO
Starting, tomorrow: 2nd International Conference on Tax in Africa
This year the ATAF membership will meet under the theme 'Tax compliance and limiting illicit financial flows'. The conference will bring together Heads and Senior Officials of African Tax Administrations and Ministries of Finance, representatives of international and continental organisations, development partners, the private sector as well as academics.
Trade ministers to meet on Oct 23 ahead of India-Africa Summit (Mint)
Trade ministers of 53 countries have been extended invitations to participate in the 4th IATMM, along with the Commissioner for Trade and Industry, African Union Commission, and Secretary Generals/Heads of 8 Regional Economic Communities in Africa which includes Arab Maghreb Union, Southern Africa Development Community and Common Market for Eastern and Southern Africa and Economic Community of West African States.
Why new order beckons in Africa, Middle East trade and investment ties (Business Daily)
When leaders and policymakers converge in Dubai next month for the third Africa Global Summit, top on the agenda will be how to sustain growth momentum in the wake of dwindling commodity prices. The Gulf is suffering the same fate as other resource-intensive economies like Angola, Africa second-largest oil producer, Botswana which mines diamond, gold and copper, and Nigeria whose oil accounts for 95% of exports. This dilemma over fluctuating commodity prices provides a common ground for Africa and member countries of the Gulf Cooperation Council ahead of the two-day summit in Dubai. Both sides are keen on finding long-term solutions to cutting dependence on commodities such as oil as the main drivers of their economies.
East Africa: What a troubled supermarket teaches us about integration (New Times)
The thing is, Uchumi has been limping both home and away and now the whole region is feeling the pinch. Stores have been closed, jobs lost, suppliers are counting losses, expansion put on hold and I am sure the shares have suffered as well given that it is listed on regional bourses. If there is ever a case for us to pay more attention to what happens in the region, then Uchumi is a classic lesson. [The author: Allan Brian Ssenyonga]
Northern Corridor Integration Projects Summit: selected updates
DR Congo joins Northern Corridor initiative projects (New Times)
The Democratic Republic of Congo has officially joined the Northern Corridor Integration Projects Initiative during the just concluded eleventh heads of state summit that was held in the Kenyan capital, Nairobi, yesterday. DR Congo’s Minister of Transport Justin Kalumba Mwana-Ngongo who attended the summit in Nairobi announced that his country was joining the hitherto, four-member alliance consisting of Rwanda, Uganda, Kenya and South Sudan. Monique Mukaruliza, Rwanda’s coordinator of the NCIP, confirmed the development in a statement to Sunday Times yesterday. “DRC has communicated that it has officially joined NCIP and will start with {being part of} the Standard Gauge Railway and other projects will follow,” Mukaruliza said in a statement.
East African leaders resolve to speed up infrastructure projects (Global Post), Private sector eyes 40% stake in multi-billion regional tenders (The Standard), Uganda: Government denies abandoning Kenya’s pipeline route (Daily Monitor), Regional power play in tussle over new route of Uganda oil pipeline (The East African)
New rail lifts Chinese exports to Kenya by 50% (Business Daily)
The building of the new railway has helped increase China’s exports to Kenya in the eight months to August by Sh69.8 billion as the appetite for US and India made goods dropped. Official data shows that Kenya's imports from China grew from Sh140 billion between January and August last year to Sh209.8 billion same period this year — accounting for a fifth of Kenya’s total imports. This marks a 49.8 per cent jump in Chinese exports to Kenya. Imports from the US dropped to Sh60.5 billion from Sh106 billion in the period to August, coming a distant third after India whose exports fell to Sh162.7 billion from Sh174.3 billion. [Economic Indicators August 2015]
DRC: High priority reopening and maintenance project: implementation status results report (World Bank)
The objective is to re-establish lasting access between provincial capitals and districts and territories in four provinces (Province Orientale, Katanga, Sud Kivu, and Equateur) in a way that is sustainable for people and the natural environment in the area of influence of the project.
Mozambique-Malawi Nacala rail and port project Summary of consolidated resettlement reports, ESIA summary (AfDB)
COMESA to collaborate with Japan Association of Corporate Executives
COMESA is set to sign a Memorandum of Understanding with the Japan Association of Corporate Executives referred to as Keizai Dyukai. This follows a meeting between the Chairman of the Keizai Dyukai Mr Mamoru Sekiyama and Secretary General Sindiso Ngwenya on the margins of the Africa Week at the UN Headquarters in New York. They agreed to embark on formalizing the cooperation through the signing of an MOU between COMESA Business Council and to prepare an Action Plan thereafter.
EALA concludes sitting in Nairobi (EAC)
EALA adjourned debate on the Forest Management and Protection Bill, 2015. The adjournment at Committee stage followed the successful Motion for the same tabled by the Chair of EAC Council of Ministers, Hon Dr Harrison Mwakyembe, seeking for more time to enable the United Republic of Tanzania to make input. Hon Dr Mwakyembe informed the House that the United Republic of Tanzania would go to the polls in the next few days and said it was necessary that the debate be put on hold until such time the incoming Government is in place to effectively enable the Partner State to make input. Though majority of Members rose up to support the Motion for adjournment, they however noted that the practice should not be encouraged.
General Assembly praises African Union’s Agenda 2063 (UN)
Ibrahim Assane Mayaki, NEPAD’s Chief Executive Officer, agreed, calling the Review Mechanism the “epicentre for deepening democracy” and the dissemination of best practices of African Union Member States. South Africa’s representative, speaking on behalf of the “Group of 77” developing countries and China, said there was a need for developed countries to fulfil commitments related to official development assistance, and also to provide genuine debt relief to least developed countries. Several speakers discussed their economic and trade partnerships with Africa.
Reports of the Secretary-General submitted to the UNGA debate: Causes of conflict and the promotion of durable peace and sustainable development in Africa, New Partnership for Africa’s Development: progress in implementation and international support
Poverty in a rising Africa (World Bank)
World Bank estimates show that the rate of extreme poverty fell in the region from 56% in 1990 to 43% in 2012. The continent’s population, however, increased at a fast pace, so there are actually more people – an estimated 63 million more – living in extreme poverty in Africa today than in 1990, as population growth outpaced the impressive economic and social forces that reduce extreme poverty. A new World Bank report, Poverty in a Rising Africa, shows that these numbers don’t tell the whole story of a region that has seen strong economic growth in the last couple of decades and made great progress despite many challenges. The report focuses on the quality of data to track well-being – finding that poverty might have fallen even below 43% by 2011 when data quality and comparability is taken into account. Data is sparse and inconsistent across the region and globally – 21 countries in Africa did not have at least two surveys with which to track poverty. [Downloads available]
Sharp increase in ratifications for Trade Facilitation Agreement (WTO)
The number of ratifications for the new Trade Facilitation Agreement has increased sharply since the middle of the year, WTO members were told 13 October at the final 2015 meeting of the Preparatory Committee on Trade Facilitation. Since the PCTF last met on 11 June, the number of acceptance instruments received has tripled, the WTO secretariat informed members. Taking account the fact that one of the ratifications – that of the European Union – covers 28 members, the total number of ratifications received now covers 49 WTO members, or around 45 per cent of the total needed to bring the TFA into force. Especially encouraging are the number of least developed countries that have now submitted their ratification instruments. [A repository of trade facilitation bodies (UNCTAD)]
Why expanding Africa’s port infrastructure is just a small part of the solution (Brookings)
Africa remains dark continent in eyes of NZ businesses (NZ Herald)
Services driving growth in Africa — and economists are worried (The East African)
Sub-Saharan Africa debt issuance down a third so far this year (Reuters)
What comes after the Atlanta deal on the Trans-Pacific Partnership? (East Asia Forum)
The effects of TTIP on developing countries (Cato Institute)
Jeffrey Sachs: 'The Japan syndrome could happen to China' (Korea Herald)
India warns of ‘endless’ legal challenges at WTO for pharma patent law regime (Mint)
South Africa – United Kingdom Bilateral Forum (GCIS)
South Africa - DRC Binational Commission communique (GCIS)
Nyusi off to South Africa on Wednesday (Club of Mozambique)
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Ending poverty in a rising Africa
The dramatic drop in global poverty over the last two decades has been called the “best news in the world today” by World Bank Group President Jim Yong Kim. But in sub-Saharan Africa, the story is mixed.
World Bank estimates show that the rate of extreme poverty fell in the region from 56% in 1990 to 43% in 2012. The continent’s population, however, increased at a fast pace, so there are actually more people – an estimated 63 million more – living in extreme poverty in Africa today than in 1990, as population growth outpaced the impressive economic and social forces that reduce extreme poverty.
A new World Bank report, “Poverty in a Rising Africa,” shows that these numbers don’t tell the whole story of a region that has seen strong economic growth in the last couple of decades and made great progress despite many challenges. The report focuses on the quality of data to track well-being – finding that poverty might have fallen even below 43% by 2011 when data quality and comparability is taken into account.
Data is sparse and inconsistent across the region and globally – 21 countries in Africa did not have at least two surveys with which to track poverty. It’s a situation that must change to improve the world’s ability to end extreme poverty by 2030, said Kim, in launching a new initiative to step up data collection in 78 of the world’s poorest countries.
The World Bank Group announced Oct. 4 that, for the first time, the number of extremely poor people is projected to drop below 10% of the world’s population in 2015 – to about 700 million people, down from about 900 million in 2012. The news bolsters efforts by the Bank Group and its 188 member countries to effectively end extreme poverty by 2030.
“We will not be able to reach our goal unless we have data to show whether people are actually lifting themselves out of poverty. Collecting good data is one of the most powerful tools to end extreme poverty,” said Kim, before visiting Ghana to recognize the country’s progress in tackling poverty just ahead of End Poverty Day on Oct. 17.
People still live without running water, toilets, electricity, and enough food to eat, even on the outskirts of one of Africa’s most modern and prosperous cities – Accra, Ghana. But here, as in many places in Africa, a social support system is emerging to help the poorest people cope.
Sarah Cofie, 48, and her 84-year-old mother receive bi-monthly cash payments from the national program to assist the country’s most vulnerable – the elderly, single mothers, and people with disabilities. It’s just enough to allow a household of seven to eat three meals a day, and for Cofie to set up a micro-business selling items from a cart in front of their home.
In the country’s impoverished north, small children often come to school with their older siblings for the hot meal given to students in a majority of Ghana’s government-funded primary schools, according to Victoria Kuma-Mintah, the deputy national coordinator for the Ghana School Feeding Program.
Ghana, a lower middle-income country of about 26 million people, cut poverty from 53% in 1991 to 21% in 2012. It is one of a handful of African countries that met the Millennium Development Goal of halving extreme poverty by 2015. Today, about 2.2 million people in Ghana are extremely poor – living on less than $1.90 a day.
Few countries in Africa can compare with Ghana’s successes in improving energy access and education, and reducing poverty and malnutrition, said Vasco Molini, senior economist for the Bank Group’s Poverty Global Practice. Ghana’s achievements are “really remarkable,” he said. “They’re not just an episode, but a long-term trend.” Some data points:
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Fertility – the number of children a woman gives birth to in her lifetime – has fallen from 6 to 4 in Ghana.
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The number of children who are “stunted” – below their potential for height and weight – declined from 28% percent in 2008 to 19% in 2014.
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About 75 percent of the country is connected to the national electricity grid. To put this into perspective: only one and three people in the region has access to electricity.
Ghana also has some of the best data in Africa – four national household surveys have been done since 1991, said Kathleen Beegle, lead author of the Rising Africa report.
Nat Amarteifio, the mayor of Accra from 1994 to 1998, said he witnessed the dawning of a new Ghana during his term, starting with the privatization of radio. Radio stations soon proliferated and citizens took the opportunity to raise their voices about city services, and the lack of them.
“This made a huge difference in how we ran the city. We had to become more inclusive,” said Amarteifio.
Nonetheless, many challenges remain.
One of the most pressing is the lack of consistent and reliable electricity. “Dum-sor” is a popular expression used when talking about the country’s routine power cuts. The blackouts have a tangible impact on businesses’ bottom lines across Ghana – a concern for a country that’s working toward a modern economy.
“We never know how many times the power will go off,” says Nora Bannerman-Abbott, who owns Sleek Garments in Accra. “There are never any warnings, and we’re trying to compete in international markets.”
In the past nine months, Blue Skies – a popular fresh-fruit company located outside of Accra – has incurred costs of more than 1.25 million cedis ($330,000) to run diesel generators during power shut-offs.
This is a challenge faced by manufacturing enterprises across the region, which experience power outages frequently. Countries in sub-Saharan Africa lose 2.1% of gross domestic product from blackouts alone.
This also affects young people who are working to become the next generation of innovators and entrepreneurs. “Studying is hard in low light,” says Nana Ama Koffiah Commey, a 20-year-old student at the University of Ghana.
Despite the challenges, Ghana is far ahead of the regional curve in increasing access to energy. Ghana has one of the highest electricity access rate in sub-Saharan Africa
Ghana is also developing a natural-gas project, Sankofa, which is expected to fuel up to 40% of the country’s currently installed generation capacity with cleaner, more affordable resources. The World Bank Group is providing $700 million in guarantees for this project, which will allow Ghana to reduce oil imports by 12 million barrels per year and carbon emissions by around 8 million tons over five years.
This won’t solve all of the country’s energy constraints, but improving the availability of clean-energy supply is one of many steps that the country is making to improve the opportunities for the poorest citizens, says Molini.
Ghana’s School Feeding Program has expanded since its launch in 2005, and now operates in 4,700 schools across the country, providing a nutritious lunch for 1.7 million young children.
“This is the best meal they receive all day,” says Kuma-Mintah. “Because of the program they are in school, learning, instead of running around looking for food.”
What’s clear across the country and across the socioeconomic spectrum is that Ghanaians are looking for more opportunities.
“People want to be entrepreneurs,” said Commey of her fellow students at the university. “They are interested in finding alternative ways to make a living.”
Molini says that Ghana has the potential to be an economic hub in the region, particularly given its strategic location on West Africa’s Gulf of Guinea, infrastructure, and educated workforce.
“What Africa needs is not just handouts and grants. We need stable employment,” says Alistair Djimatey, who heads public relations and corporate social responsibility at Blue Skies.
Says Fatahu Salifu, co-founder of Dignity-DTRT garments in Accra, “We are not a social story – yet. The will to do something is there. If people have the right opportunities, they will work hard.”
Background
Poverty in a Rising Africa, the first of two upcoming reports on poverty in Africa, documents the data challenges facing the region and reviews the status of Africa’s poverty and inequality, both monetary and nonmonetary, taking these data challenges into account.
The report concludes with a plea to strengthen Africa’s poverty data. While the availability, comparability and quality of data to track non-monetary poverty has improved, in 2012, 25 of Sub-Saharan Africa’s 48 countries had conducted at least two household surveys over the past decade to track monetary poverty, and many of these surveys are not comparable over time.
» Download: Poverty in a Rising Africa: Africa Poverty Report, Overview (PDF, 5.77 MB)
Why expanding Africa’s port infrastructure is just a small part of the solution
The infrastructure throughout sub-Saharan Africa requires additional investments of billions per year to be brought up to par. In particular, the region’s ports are a bottleneck and contribute to lengthy delays that significantly increase the cost of doing business across the continent. So wouldn’t it be sensible to invest in a massive extension of port facilities all over Africa? Probably not.
As my colleagues and I show in our recent paper, “Why Does Cargo Spend Weeks in Sub-Saharan African Ports?” it is actually the collusion between controlling agencies, port authorities, private terminal operators, logistics operators, and large shippers that poses the biggest challenge to the efficient handling of goods. It is the governance of the ports that matters most, not the large-scale investments in infrastructure.
Here are the facts: Cargo dwells in sub-Saharan ports unusually long – more than two weeks on average, compared to under a week in large ports in Asia, Europe, and Latin America. Excluding Durban and Mombasa, the average amount of time cargo dwells in sub-Saharan ports is close to 20 days. These long wait times hurt the efficiency of port operations and the economy in general.
Congestion and delays at sub-Saharan ports make the region’s manufacturing companies (who typically depend on sea transport) largely uncompetitive. Consumers lose also, as imports become more expensive. For manufacturing companies, if they need to wait for weeks to get their inputs, they need to stock large quantities, which in turn creates the need for large and extremely costly inventories. As a result, it is difficult for countries with long cargo wait times to attract foreign direct investment.
Reaching the highest international standard for such wait times (3-4 days) is difficult since it requires having private sector practices at par with excellent public practices.
There are three categories of ports in the world: (1) “unreformed” ports, where average “dwell time” is more than 15 days; (2) “partially reformed ports,” where dwell times average between 6 and 10 days; and (3) “world-class ports,” with average dwell times of around 3 days.
In sub-Saharan Africa, most ports are still “unreformed.” However, some ports – Dar es Salaam, Mombasa – have made the first step and reduced the average dwell time from 15-20 to 6-10 days. This first step in port reform typically entails new investment in equipment and infrastructure, some changes in storage tariffs, new traffic flows, and increased storage areas (usually including storage capacity outside the port area).
However, going the full distance to reach world-class port status has only been achieved in Durban. This lies with the fact that it requires a full revolution of incentives, behaviors, and processes that is extraordinarily difficult to achieve in most ports. The port needs to put pressure on the private sector to reduce delays. Durban took three steps that helped facilitate such a revolution:
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It levied prohibitive charges for storage.
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It strictly enforced storage limits.
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It offered the option of pre-clearing goods with customs before arriving at the port.
These measures, as well as strategies enacted by a public-private port committee, helped transform the Durban port.
The widespread assumption that funding additional port infrastructure will in turn translate into shorter dwell times does not hold in the medium to long term, especially when it comes to expanding existing ports.
The impact of demand and market structure is at least as important as the infrastructure bottlenecks and the inefficiency of clearance procedures. In fact, there have been noticeable improvements in both infrastructure provision (notably through increased participation of private sector) and customs clearance efficiency in recent years in most of Africa, but the time taken to clear cargo from ports remains inordinately high.
The market structure of the principal trade sectors, with longstanding, relatively unchallenged monopolies and oligopolies, is another explanation for high cargo dwell times in sub-Saharan Africa. It also explains why most industries that are not time-sensitive, such as those that export raw materials or minerals, prosper on the continent, and why time-sensitive ones that tend to add more value do not. This monopolistic market structure also illustrates why cargo dwell times have not declined in any substantive way for years: the pressure from the private sector is not genuine, in most cases the lengthy wait times enable some importers to remain market leaders and avoid competition.
In sum, building more terminals or purchasing new equipment is unlikely to bring Africa’s ports to world-class status alone. In a time when the demand for infrastructure in sub-Saharan Africa is so in demand, it is crucial to remember the complementary factors that have kept the region’s port wait times so long as well.
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Global accord demands new approach to hunger and nutrition in protracted crises
Framework for Action seeks coherent humanitarian and development efforts
The Committee on World Food Security (CFS) has approved the world’s first global agreement involving all stakeholder groups on coordinated action to combat hunger and undernutrition among people living in protracted crises.
The Framework for Action for Food Security and Nutrition in Protracted Crises is a voluntary agreement offering guidance to address food security and nutrition needs in these challenging contexts. It also outlines how to adapt to specific challenges in areas persistently wracked by natural calamity and civil conflict.
The Framework comprises 11 principles that recognize the need for coherent and integrated humanitarian and development efforts to address both the immediate and the longer-term food security and nutrition needs of people in protracted crises.
Protracted crises result in disrupted livelihoods and food systems, higher illness and mortality rates, increased displacements, hunger and severe undernutrition.
The prevalence of undernutrition is typically three times higher in protracted crisis situations than in the rest of the developing world.
Resilience is the key
“More comprehensive and effective policies and action will emerge as the result of the high-level political commitment the Framework mobilizes,” said Dominique Burgeon, FAO’s Strategic Programme Leader on Resilience.
“Building resilience is a critical element of the Framework for Action. Resilient communities have a greater capacity to absorb, prepare for and prevent crises and long-term stresses,” he said.
That’s a marked shift from focus on short-term solutions, often humanitarian funded, to address long-term problems.
“We need to ‘do business differently’ in order to help the most vulnerable and at-risk communities to improve their food security and nutrition,” Burgeon said.
Meeting immediate food and other basic needs must be accompanied by longer-term policies, action and investments to address the underlying causes of food insecurity and undernutrition, support local capacities and priorities, and build resilient livelihoods and food systems.
The Framework emphasizes women’s empowerment and the agricultural productivity of smallholders, noting that both are often neglected in responses to crisis situations. Over time, protracted crises reverse years of previously accumulated development gains, and undermine livelihoods, making the Sustainable Development Goal of eradicating hunger and poverty by 2030 harder to achieve.
The political consensus reached on the Framework for Action can be leveraged by FAO, the World Food Programme and the International Fund for Agricultural Development, key CFS stakeholders already working together to strengthen the resilience of vulnerable and at risk people. Working closely with the Rome-based Agencies, implementing the Framework for Action is a priority for FAO.
Strengthening resilience, in all contexts, is vital to achieve the 2030 Sustainable Development Agenda. And a key focus of the 2016 World Humanitarian Summit is the need for collective action by humanitarian, development and other partners to strengthen people’s resilience to crises.
The Framework for Action recognizes that all stakeholders need to work differently in protracted crises to improve food security and nutrition.
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DR Congo joins Northern Corridor initiative projects
The Democratic Republic of Congo (DRC) has officially joined the Northern Corridor Integration Projects Initiative (NCIPI) during the just concluded eleventh heads of state summit that was held in the Kenyan capital, Nairobi, on 17 October.
DR Congo’s Minister of Transport Justin Kalumba Mwana-Ngongo who attended the summit in Nairobi announced that his country was joining the hitherto, four-member alliance consisting of Rwanda, Uganda, Kenya and South Sudan.
Monique Mukaruliza, Rwanda’s coordinator of the NCIP, confirmed the development in a statement to Sunday Times yesterday.
“DRC has communicated that it has officially joined NCIP and will start with {being part of} the Standard Gauge Railway (SGR) and other projects will follow,” Mukaruliza said in a statement.
The NCIPI was established following a meeting on June 25, 2013, in Entebbe by three Presidents, Uganda’s Yoweri Museveni, Rwanda’s Paul Kagame and Kenya’s Uhuru Kenyatta, to discuss how to cooperate and speed up development in the region.
South Sudan joined the initiative shortly after the initiative’s establishment; yesterday’s summit in Nairobi was the 11th time the leaders are meeting.
Rwandan leaders who attended the Nairobi summit lauded DR Congo’s entry in the NCIP calling it a significant development that will lead to consolidation of resources to bankroll the region’s ambitious infrastructural projects.
The Nairobi summit was also attended by Ethiopia, Burundi and private sector members from the four principle partner-states {Rwanda, Uganda, Kenya and South Sudan}.
In a statement, Rwanda’s Mukaruliza also indicated that Ethiopian representatives at the summit announced that the country will join NCIP in the near future.
Rwanda has important bilateral trade ties with both DRC and Ethiopia; the former is a leading destination of Rwanda’s exports and re-exports while the latter recently reached an agreement to supply Rwanda with 400mw of electricity to address the country’s current energy problem.
DRC entry welcomed
Rwanda’s Permanent Secretary in the Ministry of Infrastructure, Christian Rwakunda, on phone from Nairobi, told Sunday Times yesterday that DRC’s joining is a major boost to the region’s efforts of collectively investing in infrastructure development to facilitate trade.
“The more the countries in NCIP the stronger the partnership and it’s all good for regional trade,” Rwakunda said.
DRC will reportedly be pushing for the SGR line to be extended to its territory from Uganda, a move that experts say will boost intra-regional trade.
In a tweet sent out on Friday, Rwanda’s Minister of foreign affairs, Louise Mushikiwabo described as ‘very good value addition’ the attendance of representatives of DRC and Ethiopia.
Meanwhile, John Bosco Kalisa, country director of TradeMark East Africa in South Sudan, said, “The most significant benefits will go to the citizens of this region, enhancing regional public goods such as roads through consolidation of resources for infrastructural development.”
Kalisa said DRC’s admittance into the initiative will also help strengthen governance, peace and security in the region. “Working together on development ventures helps unite countries, which will reduce conflicts in the region as countries can easily discuss and iron out their differences,” he said.
SGR on track
In his address at the summit, yesterday afternoon, President Kenyatta said the region must work towards forging closer partnerships with the aim of encouraging investment in some of the flagship projects such as the SGR.
“I'm impressed by the progress achieved so far however we must agree that measures instituted thus far are to a limited extent,” Kenyatta said.
During yesterday’s summit, Presidents of the four principle member states considered a report that was prepared by the NCIP ministerial committee regarding the progress of major projects.
The SGR remains the largest undertaking by the NCIP partners. The multi-billion dollar project will connect Mombasa to Malaba on the border with Uganda and continue to the Ugandan capital Kampala enroute to Kigali in Rwanda with a branch line to Juba in South Sudan.
According to the latest progress report on the project, it is on track and the entire line from Mombasa to Kigali is expected to be completed by 2018 and construction of the first leg from Mombasa to Malaba is underway.
Feasibility studies
The NCIP partner states are looking to, mainly China, to finance the multi-billion dollar SGR but previous meetings with Chinese officials have been hampered by the absence of completed feasibility studies of all sections of the project.
However, leaders heard at yesterday’s summit that ‘feasibility studies for all sections including Kampala-Kigali will be completed by December 2015’ which will pave way for more intensive negotiations with potential financiers of the project.
Earlier this year, in March, Uganda signed an Engineering Procurement and Construction (EPC) contract worth US$3.3billion, with a Chinese firm, China Harbor and Engineering Company (CHEC) for works on the Northern and Eastern routes.
CHEC which has also reportedly already submitted a bankable feasibility study for the Malaba-Kampala section of the SGR signed another deal with South Sudan for the engineering, procurement and construction of the Juba-Nimule section whose feasibility study is expected by December.
Public-Private partnership
For the first time since the NCIP summits begun, private sector representatives from the four principle partner states attended and actively contributed to the summit’s deliberations; leaders applauded their presence noting that it will boost private-public partnerships for the projects.
“I am delighted to note that our private sector has become an active player in the Northern Corridor Integration Projects,” said President Kenyatta who hosted the summit.
A day before the beginning of the summit, members of the Rwanda Private sector met and reached consensus on an agenda that they would collectively present to the leaders.
During their meeting, Benjamin Gasamagera, the chairman of Private Sector Federation noted that projects being implemented under the NCIP would ease trade within the region but called partner states to expedite their implementation.
The irony in Gasamagera’s call however is that, leaders of the partner states think, faster implementation of the projects require closer partnership and involvement of the private sector.
In a recent interview with Sunday Times, Dennis Karera, Chairman of the East African Business council said it’s encouraging to see that leaders have decided to bring the private sector on the same planning table to directly tap into their experience.
“This is commendable,” he said.
However, as a major challenge, and one that he hopes the NCIP partners can find a solution for, is the high cost of air transport in the region.
During their pre-summit meeting in Kigali, leaders of the private sector called on countries to work towards finding ways of bringing down the fairs to facilitate regional trade and boost integration.
But countries are already moving in that direction; recently, Kenya gave RwandAir fifth Freedom rights on the Entebbe-Nairobi-Entebbe route and similar rights on the Nairobi-Juba-Nairobi are currently under negotiations.
Under international commercial aviation, ‘fifth right’ refers to liberty to carry passengers from one's own country to a second country, and from that country to a third country.
The next NCIP summit will be held in Kigali during which partner states have agreed to officially sign the Bilateral Air services Agreements (BASA) that will liberalize international commercial air transport services between their territories.
General Assembly praises African Union’s Agenda 2063, post-2015 sustainable development goals as comprehensive blueprint for Africa’s advancement
Speakers praised the African Union’s ambitious 50-year “Agenda 2063”, which together with its first 10-year implementation plan, the Addis Ababa funding scheme, and the universal 2030 Agenda for Sustainable Development, was a holistic and coherent framework for advancing and following up on Africa’s development, the General Assembly heard on 16 October 2015 as it took up the New Partnership for Africa’s Development (NEPAD).
Mogens Lykketoft (Denmark), President of the General Assembly, said that from infrastructure development projects to agriculture and food security, commitment to health and primary education and human capital development, African States were demonstrating their resolve to fully implement that development blueprint.
As NEPAD’s flagship governance programme, the African Peer Review Mechanism, should be joined by all remaining African States, said the representative of Sierra Leone, speaking on behalf of the African Group. Thirty-six countries on the continent had voluntarily adhered to the Review Mechanism, and half of them had been reviewed already by their peers.
Ibrahim Assane Mayaki, NEPAD’s Chief Executive Officer, agreed, calling the Review Mechanism the “epicentre for deepening democracy” and the dissemination of best practices of African Union Member States.
South Africa’s representative, speaking on behalf of the “Group of 77” developing countries and China, said there was a need for developed countries to fulfil commitments related to official development assistance (ODA), and also to provide genuine debt relief to least developed countries.
Several speakers discussed their economic and trade partnerships with Africa. India’s representative, for its part, focused his statement on private-sector investments, noting that Indian companies’ growing investment in Africa now reached $30 to $35 billion in many sectors. Over the last decade, India’s Government had approved nearly $9 billion in concessional credit for nearly 140 projects in more than 40 African countries and nearly 60 projects had been completed.
Japan’s approach to economic issues facing the African continent was expressed through its regularly-held Tokyo International Conference on African Development, a partnership conference which focused on preserving and enhancing African ownership, and the agenda and programmes of the meeting were decided by listening to the voices of all African States, its delegate said.
Africa also needed foreign direct investment to maintain rapid economic growth, the delegate of Poland noted. He cited Poland’s technological support for modern agriculture and fisheries in Angola, Ethiopia, Nigeria, the United Republic of Tanzania and Togo, and the “Go Africa” joint economic initiative of Polish and African companies to build business partnerships and encourage trade and people-to-people contacts.
But, cautioned the delegation of Libya, with respect to the issue of peace and security in Africa, many on the continent were suffering from a deteriorating security situation, his country among them. There could be no development without security and vice versa.
Indeed, the most important prerequisite for Africa’s sustainable development was conflict prevention and resolution, the Russian Federation’s representative said in his statement. African countries should not be dictated to on how they should solve their own problems. The Security Council had an important role in Africa’s peace and stability, but Africans should solve their problems themselves as they were the most informed of conditions on the ground.
“African problems should be solved by Africa in an African way,” concurred the Chinese delegate, calling also for stronger cooperation with the African Union.
Security issues were also on the mind of the representative of the European Union, who mentioned the migration issue in his statement. More needed to be done to address the root causes that prompted migrants to leave their homes and families, agreed the delegation of Italy, a country on the forefront of the migration crisis currently affecting Europe.
Delegates also discussed progress on implementing the 2001-2010: Decade to Roll Back Malaria in Developing Countries, Particularly in Africa.
The United States’ representative noted that its investments in malaria prevention and control were positively impacting the lives of millions of children, pregnant women and families in Africa.
For its part, Zambia’s instituted preventive measures included three key steps – improving surveillance and reporting at health facility level; implementing mass screening and treatment campaigns; and using an active case detection system for community-level surveillance, according its representative. Thailand’s delegate also focused on malaria issues, noting that his country stood ready to share its strategies that led to a significant reduction in the number of malaria cases and the malaria-related deaths.
Also speaking on Friday were the representatives of Brunei Darussalam (on behalf of the Association of South-East Asian Nations), Algeria, Ethiopia, Thailand, Uganda, Sweden, Jamaica (on behalf of the Caribbean Community), Egypt, Rwanda, Kazakhstan, Norway, Turkey, Nigeria and Israel.
The General Assembly will meet again at 10 a.m. on Monday, October 19 to hold a joint debate on integrated and coordinated implementation of and follow-up to the outcomes of the major United Nations conferences and summits in the economic, social and related fields.
Statements
MOGENS LYKKETOFT (Denmark), President of the General Assembly, said that in 2015, the international community had witnessed the adoption of the African Union’s Agenda 2063 and its first 10-year implementation plan, the Addis Ababa Action Agenda, and the universal 2030 Agenda for Sustainable Development. Those agendas brought together global, continental, regional and national plans into one holistic and coherent framework for advancing and following up on Africa’s development. Today’s debate was an attempt to reflect on the international community’s collective efforts to partner with Africa and support the continent in its efforts to tackle challenges and maximize opportunities in the areas of peace and security, human rights and sustainable development.
Significant challenges remained, and those relating to malaria were linked to broader development challenges on the continent, he said. Progress in the implementation of NEPAD was therefore appropriate to consider today. From infrastructure development projects to agriculture and food security, commitment to health and primary education and human capital development, African States were demonstrating their resolve to fully implement that development blueprint. Commending the work of the Office of the Special Adviser on Africa, he added that as a new chapter in international cooperation began, the international community had to work together to complete the Millennium Development Goals and lay the foundations for peace, prosperity and sustainable development across the African continent.
RAYMOND THULANE NYEMBE (South Africa), speaking on behalf of the “Group of 77” developing countries and China, said that the main constraint facing Africa today was the lack of adequate resources. Challenges the continent continued to contend with included rising inequality, and those challenges needed global coordination and partnership to be adequately dealt with. Africa required more support in its development path. The Group of 77 was encouraged by the importance placed by Member States on the African Union Agenda 2063. There was a need for developed countries to fulfil commitments related to official development assistance (ODA), he said, and also to provide genuine debt relief to least developed countries. South-South cooperation and the private sector were complements rather than substitutes.
Expressing appreciation to all delegations for their constructive approach, he said there was an urgent need to continue developing African Union and institutional capacities, particularly in countries emerging from conflict. Ways to address emerging issues like terrorism must be found, and the commitment towards that goal by Member States was encouraging. Over the past 15 years, the world had seen tremendous progress on malaria control and prevention. Nine countries were on track to reduce malaria incidence by 77 per cent. Those results meant that child deaths had been averted in Africa. But many nations still faced challenges in rolling back malaria. There was a persistent need for the United Nations system, thereunder the World Health Organization (WHO), to address weak health systems.
EBUN STRASSER-KING (Sierra Leone), speaking on behalf of the African Group and aligning herself with the Group of 77, noted that 2015 was a pivotal year in Africa’s development, given the adoption of Agenda 2063. She commended the United Nations monitoring mechanism’s contribution to Africa’s development, and underscored the need for adequate and regular resources from the Organization’s regular budget to implement the United Nations-African Union Partnership on Africa’s Integration and Development Agenda. Agriculture remained at the heart of the continent’s development agenda. In that regard, African Governments sought to sustain the momentum of the Comprehensive Africa Agriculture Programme over the next decade, including by increasing financial investment in agriculture through domestic resource mobilization, and ending hunger and halving poverty by 2025 through inclusive agricultural growth. Turning to the African Peer Review Mechanism, NEPAD’s flagship governance programme, she encouraged all remaining African States to join the 36 countries on the continent that had voluntarily adhered to the Review Mechanism. Half of those 36 countries had been reviewed already by their peers.
Turning to security issues, she said that the continent was committed to addressing the root causes of conflict, including through the African Peace and Security Architecture. There could be no lasting security without inclusive development. In that regard, it was imperative that all partners, including the United Nations system, should support the “African Union Silencing the Guns by 2020” initiative. On health, she said that malaria remained a serious health concern and expressed concern that funding to fight it was inadequate to reach universal coverage of interventions. Developed countries and other partners must fulfil their commitments towards its eradication. Although the Ebola virus was largely under control, there was an urgent need to help African countries, especially those most affected by the deadly disease, to improve their health systems.
IBRAHIM ASSANE MAYAKI, Chief Executive Officer, NEPAD, said that NEPAD was central to the continent’s transformation and its role was ever more critical in the context of Agenda 2063 and the Sustainable Development Goals. Underscoring the importance of gender in Agenda 2063, he said that it was one of the most effective drivers of inclusive growth and the reduction of poverty. The NEPAD-Spanish Fund for African Women’s Empowerment had benefitted over half a million women since its inception in 2007. As Africa was the least integrated continent in the world, infrastructure development was a top priority. Bridging the infrastructure gap was vital for economic advancement and sustainable development and could only be achieved through regional and continental cooperation.
Turning to corruption, he said that the Report of the United Nations High-Level Panel on Illicit Financial Flows from Africa stated that the continent lost $50 billion through such flows. To implement the Report’s recommendations, NEPAD organized the first ever regional dialogue on capacity-building for tax and mining administration officers in the West and Central Africa region. The programme, designed for senior government officials, would contribute to improving tax policy design and better contract negotiation for extractive industries. NEPAD was fully involved in advancing the newly adopted Sustainable Development Goals and helping African countries meet their targets. It was important to maintain “coherence and alignment” of the 2030 Agenda with the Agenda 2063 and its 10-year implementation plan. Underscoring that the African Peer Review Mechanism was the “epicentre for deepening democracy” and the dissemination of best practices of African Union member States, he said that 35 members had voluntarily joined the Mechanism, 17 countries had been peer reviewed and a second-cycle review process was in the pipeline.
Annual Briefing to United Nations Member States and Entities
Reports of the Secretary-General, Discussions by the Economic Commision for Africa (ECA), and Presentations by the NEPAD Agency and the African Peer Review Mechanism (APRM)
This year’s annual briefing to Member States and UN System entities on 15 October featured two segments, co-chaired by H.E. Mr. Téte António, Permanent Observer of the African Union to the United Nations, and Ms. Cristina Gallach, Under-Secretary-General for Communications and Public Information.
In the first segment, Mr. Maged Abdelaziz, Under-Secretary-General and Special Adviser on Africa, presented two reports of the UN Secretary-General, namely the:
This presentation of OSAA’s mandated reports is aimed at raising awareness of and sharing in-depth analysis and policy recommendations concerning emerging issues related to development, peace, security and governance in Africa.
The second segment featured thematic presentations by:
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H.E. Dr. Ibrahim Assane Mayaki, CEO of the NEPAD Agency and Interim CEO of the APRM Secretariat, on “The Key Role of the New Partnership for Africa’s Development in Implementing Agenda 2063”, and
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H.E. Dr. Mustapha Mekideche, Chairperson of the African Peer Review Panel of Eminent Persons, on “The Role of the African Peer Review Mechanism in the Monitoring of Agenda 2063 and the 2030 Agenda for Sustainable Development.”
This segment aimed to provide a platform for Member States and UN System entities to gain insights from key entities in the implementation of Agenda 2063 and its First Ten-Year Implementation Plan.
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Sharp increase in ratifications for Trade Facilitation Agreement
The number of ratifications for the new Trade Facilitation Agreement (TFA) has increased sharply since the middle of the year, WTO members were told 13 October at the final 2015 meeting of the Preparatory Committee on Trade Facilitation (PCTF).
Since the PCTF last met on 11 June, the number of acceptance instruments received has tripled, the WTO secretariat informed members. Taking account the fact that one of the ratifications – that of the European Union – covers 28 members, the total number of ratifications received now covers 49 WTO members, or around 45 per cent of the total needed to bring the TFA into force.
Especially encouraging are the number of least developed countries (3) that have now submitted their ratification instruments.
Ambassador Esteban Conejos (Philippines), the chairman of the PCTF, described the increasing number of ratifications as a “very welcome development” and said that he expected to have a substantial number of new ratifications when the committee next meets in February 2016.
Two-thirds of the WTO’s membership will need to ratify the TFA in order for the agreement to take legal effect.
In addition to the EU, WTO members that have ratified the TFA are Hong Kong China, Singapore, the United States, Mauritius, Malaysia, Japan, Australia, Botswana, Trinidad and Tobago, the Republic of Korea, Nicaragua, Niger, Belize, Switzerland, Chinese Taipei, China, Liechtenstein, Lao PDR, New Zealand, Thailand and Togo.
Additional ratifications in the pipeline
Several WTO members informed the PCTF that they were close to completing their domestic acceptance procedures. Panama said its government was currently drafting a document that would allow it to deposit its TFA ratification instrument and that it expected to submit it well in advance of the WTO’s 10th Ministerial Conference (MC10) in Nairobi in December. Pakistan said it was in an advanced stage of its domestic procedures and that it expected the matter would be taken up by the government’s cabinet any day. Nigeria also outlined procedures under way to secure domestic acceptance and said that it expected to be able to submit its ratification instrument before December.
Montenegro said its parliament was in the final phase of ratifying the TFA and that it expected to submit its instrument before MC10, while Madagascar said ratification was well under way in its national parliament.
The TFA broke new ground for developing and least-developed countries in the way it will be implemented. For the first time in WTO history, the requirement to implement the Agreement was directly linked to the capacity of the country to do so. In addition, the Agreement states that assistance and support should be provided to help them achieve that capacity.
To benefit from this, developing and LDC Members must notify the WTO which provisions they will implement when the Agreement enters into force or, in the case of LDCs, within one year after entry into force (Category A commitments); which provisions they will implement after a transitional period following the entry into force of the Agreement (Category B); and which provisions they will implement on a date after a transitional period following the entry into force of the Agreement and that require the acquisition of assistance and support for capacity building (Category C).
Category A notifications
The number of Category A notifications submitted by developing and least developed country members continues to increase. Ambassador Conejos noted that, since the last PCTF meeting in June, the committee has received new Category A notifications from Trinidad and Tobago, Barbados, Uganda, Belize, Lao PRD, Saint Lucia and the Seychelles.
This brings the overall number of Category A notifications submitted to 72, he said, which already offers a good picture of members’ implementation plans in this field.
A number of members reported on their experiences in carrying out domestic reforms needed to meet the commitments under the TFA, their efforts to secure ratification of the agreement, and challenges they faced. China said it was committed to ensuring early implementation of the TFA and noted that implementation of one of the commitments – the establishment of a “single window” – would be carried out throughout the country next year. Senegal noted that it has initiated trade facilitation programs but cited constraints in transit and infrastructure, and called on its WTO partners to help it secure the financing needed to implement its TFA commitments. Madagascar said it would submit its Category A notification soon and welcomed the support it has received to prepare needs assessments and request assistance.
Background
Concluded at the WTO’s 2013 Bali Ministerial Conference, the Trade Facilitation Agreement contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.
The Protocol of Amendment inserting the TFA into Annex 1A of the WTO Agreement was subsequently adopted by the General Council on 27 November 2014. This in turn opened the door for members to formally accept the TFA through their domestic legislative procedures.
» Visit the Dedicated website for the Trade Facilitation Agreement Facility.
Related News
Responsible natural resources trade through supply chain due diligence
How best to ensure socially-responsible trade in the face of long and complex global value chains?
Supply-chain due diligence is increasingly becoming a business reality and a regulatory requirement. The most recent example for mandatory regulation is a proposal by the European Parliament to translate the Organisation for Economic Cooperation and Development’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas into law. The draft rule sheds light on a number of trade regulatory mechanics of supply chain due diligence. This article explores essential elements that assure due diligence’s effectiveness and coherence with existing trade regulation.
Risk-based due diligence has been enshrined in a number of national and regional laws ever since the UN confirmed the corporate obligation to respect human rights in its Guiding Principles on Business and Human Rights endorsed in 2011. Principles 13 and 17 specifically say that the corporate responsibility to protect also extends to adverse human rights impacts “directly linked to their operations, products, or services by their business relationships, even if they have not contributed to those impacts.” To fulfil this objective, the UN Guiding Principles demand the establishment and use of due diligence processes, defined as an “on-going management process that a reasonable and prudent enterprise needs to undertake, in the light of its circumstances to meet its responsibility […].” Understandings of “reasonable” and “prudent” depend on a company’s sector, operating context, size and position in the supply chain, among other similar factors.
Today the responsibility to systematically track and address human rights risks along the entire supply chain is reflected in a number of national and regional laws. The California Transparency in Supply Chains Act, the UK Modern Slavery Act, the France National Assembly’s Legislative Bill Relating to the Duty and Vigilance of Parent and Subcontracting Companies and section 1502 of the US Dodd-Frank Wall Street Reform and Consumer Protection Act are some examples.
On the one hand, these laws and the principles are based on the understanding that downstream companies, those closest to the consumer, possess the greatest leverage to generate change in the producing upstream industry where most human rights violations occur. On the other hand, they reflect the understanding that human rights assessments must be risk-based, in order to ensure targeted action that addresses the most context-specific and acute risks.
Upstream, downstream responsibilities
Some adverse human rights implications are understood to be so specific and paramount in a certain sector that the different actors along the supply chain would benefit from further detailed guidance. The OECD has been working towards tools to address specific risks within five selected sectors, namely the extractives and financial sectors, as well as agricultural, textile and garment, and minerals supply chains. The nearly 160-page OECD Due Diligence Guidance is by far the most developed among these. At the heart is a “Five-Step Framework for Risk-Based Supply Chain Due Diligence in the Mineral Supply Chain,” compelling for both its simplicity and comprehensiveness.
According to the framework, downstream and upstream companies are expected to establish strong company management systems; identify and assess risks in the supply chain; design and implement a strategy to respond to the identified risks; and publicly report on their supply chain policies and practices. Companies operating at a point in the supply chain identified as a “point of transformation and traceability,” also need to undertake a middle step by carrying out independent third-party audits and making these available to their business partners.
In the minerals sector smelters and refiners have these characteristics and responsibilities. Each mineral needs to pass through a smelter or refiner along its lifecycle, of which only a limited number operate globally, and these are usually the last point in the supply chain where the origin of a mineral and/or metal can be determined. Risks in the supply chain upstream to the smelters and refiners are thus primarily addressed and managed by these entities whereas companies further downstream can identify and address their risks by ensuring that they buy from smelters and refiners that act responsibly. This approach ensures coherence and coordination in the upstream sector and avoids double auditing. Audited companies are thus the pivotal point that connects the upstream with the downstream, effectively interlocking the downstream sector’s leverage over its supplying smelters and refiners, with the latter implementing power over the upstream sector.
It is important to note that this process is not static but, instead, is envisioned to be evolving. Lack of transparency and traceability and missing audits do not automatically result in a “blacklisting” of upstream companies. Instead, downstream and upstream companies are expected to jointly work towards responsible purchasing, and the audits play an important role.
Due diligence vs. certification
As a result due diligence fundamentally differs from other approaches. Whereas certificates, labels, and trade bans seek to generate full guarantees for individual products, due diligence is enforced at a company level, and on the basis of minimum standards for mitigation efforts. The difference is particularly clear when comparing the OECD Due Diligence Guidance with the “blood diamond” Kimberley Process Certification Scheme (KPCS).
The supply chains covered by the two systems are quite similar in some respects. They both relate to extractive industries. Artisanal miners and the informal economy play an important role in each. Crucial points of transformation and traceability can be identified. All covered supply chains have a well-documented history of financing armed conflicts in some of the poorest regions of the world. Breaking the link between trade in the concerned resources and the financing of conflict is the main objective.
But, on the other hand, these two systems designed to address risk derived from a natural resource trade could not be more different. Unlike the OECD Due Diligence Guidance and the national laws based on it, the Kimberley Process is essentially a state-to-state system, whereby states guarantee by means of a certificate that their rough diamonds were not financing rebel movements and agree to trade only with other participating countries that meet the same minimum requirements. In addition, the Kimberley Process is limited to trade in “rough diamonds used by rebel movements to finance wars against legitimate governments,” whereas the OECD Due Diligence Guidance concerns trade in minerals “associated with serious human rights abuses, direct or indirect support to non-state armed groups or public and private security forces, bribery and fraud, money laundering, [and irregularities in] payment of tax fees and royalties due to governments.”
This state-centred focus has not only kept the 81 participating countries representing approximately 99.8 percent of the global rough diamond production from updating the Kimberley Process (KP) mandate – for example, to also include situations of armed conflict and serious human rights violations – but has also often paralysed the organisation in cases of non-compliance. For instance, due to its limited focus on the financing of rebel movements the Kimberley Process allows for trade in diamonds from the Zimbabwean Marange diamond fields, despite the meticulous documentation of serious human rights violations by government forces in the region.[1]
Events in the Central African Republic (CAR) offer another recent example of the Kimberley Process’ inability to properly address the problem of blood diamonds. In May 2014, a shipment of 6634 carats of falsely certified diamonds was seized in Antwerp, Belgium with the Kimberley Process Working Group of Diamond Experts noting that it was highly probable that the diamonds had originated in CAR. Since its suspension from the process in May 2013, 140,000 diamond carats, worth around US$24 million US, are estimated to have been smuggled out of CAR.[2] The incident is by no means an isolated case and the industry is conscious of the risks associated with KP certificates. At the same time, the continuous high regard for the system in the international community has resulted in a situation where the downstream industry is largely discharged of its responsibility, with certificates cleaning a diamond’s status rather than certifying its clean status.
In contrast, supply chain due diligence places the responsibility to identify and mitigate risk on individual companies, demanding corporate action not only but especially where inter-state systems fail. In the case of conflict minerals, this effectively means that downstream companies are under an obligation to identify the risk of buying minerals or metals produced by smelters and refiners who do not conduct due diligence and who source irresponsibly, in particular from conflict-affected and high-risk areas. Smelters and refiners, on the other hand, may be operating with existing certificates, including those from inter-state systems and industry schemes, but are nonetheless under an obligation to conduct their own due diligence investigations into local realities.
Translating due diligence requirements into trade regulation
Translating the Kimberley Process Certification Scheme into a trade regulation was fairly straightforward as it prohibits trade in non-certified rough diamonds. The WTO granted a multi-year waiver for the scheme in February 2003 and this has been renewed numerous times since.
A first, though only partial, example of translating the OECD Due Diligence Guidance into law is section 1502 of the US Dodd Frank Act. Under the Act and subsequent rulings by the Securities and Exchange Commission (SEC), US listed companies are under an obligation to report on their mineral due diligence processes and to disclose the status of their products as ”DRC conflict-free” or “Not DRC conflict-free,” although the origin-disclosure requirement is currently postponed and subject to a pending legal challenge.
If upheld, the law goes beyond international standards, as it would require companies to trace the origin of the minerals used in individual product lines and to label the latter accordingly. As a consequence of this feature companies interpreting the law often ignore one of the most important features of risk-based due diligence, namely, the recognition that risk mitigation should be evolving and gradual. For other issues the law stays behind international standards. For example, with its exclusive focus on the African Great Lakes Region, the law assumes that risks are static. It places greater obligations on companies that are active in that region, despite the fact that similar risks already exist, and could emerge in other regions.
The EU has over the last year been engaged in a similar process of translating a risk-based due diligence standard for mineral supply chains into law. In March 2014 the EU Commission’s Directorate General for Trade proposed a first draft outlining a voluntary opt-in scheme under which approximately 21 European smelters and refiners could have chosen to voluntarily self-certify to be complying with the OECD Due Diligence Guidance. There was no provision for downstream companies. Instead the aim was to exclusively build on the notion of ‘crucial points of transformation and traceability’. After a lengthy process in the European Parliament, which culminated in a strong proposal by the plenary calling for a mandatory approach applying to the entire supply chain in accordance with the OECD Due Diligence Guidance, the draft law will soon be subject to final trialogue negotiations between the Commission, the Parliament, and the European Council.
During discussions in Parliament a number of alternative options were tabled with some aimed at finding a middle ground. These included one proposal to adopt the Commission’s approach on a mandatory basis and to complement it with a voluntary labelling component for manufacturing companies. Under that hybrid system, all raw materials entering the EU would have been captured by the due diligence obligations except those produced within the 28-nation bloc, while minerals entering as components of part or final products would have flown under the radar. Besides these potentially discriminatory and inefficiency aspects, there were great concerns that the system would create the opposite of a level playing field by singling out the 21 European smelters and refiners importing raw materials out of 450 globally, creating further incentives for European manufacturers to source from the non-European metals industry and to outsource their practices to import part-products instead. There was also a concern of subjecting human rights abuses as grave as those associated with armed conflict to a consumer-choice label.
By turning this the other way around and imposing obligations on all supply chain actors, the current Parliamentary proposal is expected to create a multiplier effect, whereby the non-European parts of the supply chain will be affected due to market pressure within the EU, giving security to both producers and consumers. The final Parliament outcome, however, is not particularly detailed regarding the obligations for downstream companies. Yet the text suggests that it is meant to apply to all European and non-European companies that first place products containing the covered minerals – for the moment tin, tantalum, tungsten, and gold – on the market, irrespective of their form. The draft law expects that these downstream companies would conduct due diligence by establishing an internal management system, identifying and mitigating the risk to be sourcing metals from a non-responsible smelter or refiner – based on a list of responsible smelters and refiners, audits, and other information – which may be done collectively through industry schemes. Finally, the Parliament’s proposal includes an obligation for public disclosure on company websites and in management reports, where available. All of these obligations would come in different degrees of strength to be “appropriate for a company’s individual circumstance, including its size, role and position in the supply chain.”
The system does not, however, foresee product tracking, labelling, or a certification mechanism for downstream companies under which companies are shown to be compliant. Enforcement relies instead on public disclosure and on ordinary non-compliance sanctions available under national civil and criminal law. This includes, in particular, sanctions for cases of fraudulent reporting or omissions and negligence in due diligence as they apply to other due diligence systems such as those on anti-money laundering in the finance sector.
In accordance with practice under other EU regulations, for instance in the areas of food and health standards, EU member states would be free to request domestic companies to register with local chambers of commerce or local authorities for the purpose of being included in a general register of qualifying entities. This would also aid random checks by authorities. On the other hand, foreign importers who fall within the scope of such regulation could register with the customs authorities, thereby declaring that they fall within the scope and will comply with the due diligence and public reporting requirements. No further action by the customs authority, however, would be expected as there is no product and hence import-component in the law.
Lessons for other sectors
Public discussions in Parliament indicate that two main convictions informed the outcome. First, the notion that each economic actor should not only be required, but should be able to participate and that such holistic action requires common but differentiated responsibilities tailored to a company’s size. There was a clear fear that a voluntary system would create inefficiencies working in favour of large companies subject to stronger market pressure, while small-and-medium sized enterprises would be excluded for cost reasons. The key word is now “burden sharing.”
Second, the concept that a system must be about addressing risks and generating change, but should not be blacklisting certain regions or industries or expecting full guarantees. The aim is to incentivise more responsible trade and not to ban trade that risks being irresponsible. Especially in the context of trade from conflict-affected and high-risk areas and in industries relying on artisanal miners, this is crucial, as international regulation should incentivise responsible purchasing that helps rebuild local economies. The aim should not be to “de-risk,” and have industries pull out from the region to purchase elsewhere, thereby destroying legitimate income opportunities. Risk-based due diligence can generate such change in supply chains by making a more responsible standard the norm, while avoiding shock situations that are usually created by trade bans. In order to achieve this, it is crucial that the gradual and evolving nature of due diligence is fully understood, and that it is not turned into a black-and-white labelling or certification system inserted.
Similar, if not identical, convictions should drive efforts in other areas and for other risks. Risk-based due diligence has the potential to properly address labour rights, environmental protection, carbon footprints, and many other challenges as it is based on the idea of addressing the most frequent risks and doing so in a joint, harmonised way while keeping the responsibility within individual companies. This holds true for the ongoing process of developing guidance for the apparel industry on the basis of the five-step due diligence framework, as well as for ongoing discussions to develop a specific supplement to the OECD Due Diligence Guidance regarding precious stones.
Marie Wilke is an Associate Lawyer, WTI Advisors; Advising a multi-stakeholder client on EU conflict minerals regulation. The views expressed in this article are the views of the author alone.
This article is published under BioRes, Volume 9 - Number 8, by the ICTSD.
[1] See the Zimbabwe Campaign of Global Witness. In response to the KPCS’ reaction to the Marange human rights violations, Global Witness resigned as one of the two formal Civil Society Observers to the KPSC in 2011.
[2] Bloomberg, “Smugglers Defy Conflict-Diamonds Ban in Central African Republic”, March 23 2015.