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Nigeria: Regional policy for accelerated infrastructure development
In recent articles we have been talking about many issues ranging from the need to create enabling environments for investment, the infrastructure challenge for Africa, the financing gap and government policy formulation process among other issues.
All the issues we have been discussing require solid policy frameworks. We discussed in the most recent article the government policy formulation process proposed by John Kingdon, Emeritus Professor at the University of Michigan, who reasoned that decision making in government follows three main streams: the problem stream, the policy stream and the political stream.
We often prefer to illustrate things with real life examples, and the most recent pdf SADC Industrialization Strategy and Roadmap, 2015-2063 (2.34 MB) is a good example. This was crafted in the context of existing national and regional policies and specifically the decision taken at August 2014 Summit at Victoria Falls which was held under the theme: “SADC Strategy for Economic Transformation: Leveraging the Region’s Diverse Resources for Sustainable Economic and Social Development through Beneficiation and Value Addition”.
Decision making streams in action
In developing the SADC strategy, first was identification of the problems hindering sustainable economic development and poverty reduction in the SADC region (the problem stream). This was then followed by the Victoria Falls summit decision and the strategy development process (the policy stream), and there was overwhelming political support (the political stream). The outcome was a resounding strategy document for SADC industrialization and regional integration to be implemented in 3 phases up to 2063. The first phase lasts until 2020 focusing on laying down the foundations for long term development. The second phase, covering 30 years to 2050, constitutes a period of heavy lifting development and establishing strong momentum for competitiveness. The final third phase, covering 13 years to 2063, builds up for the convergence with the African Union long term Agenda 2063 and crossing into a fully developed country stage.
Interesting in this SADC strategy is that it identifies that accelerated industrialization is being hampered by three binding constraints – inadequate and poor quality infrastructure, a severe deficit of the skills needed for industrial development and insufficient finance. So the issue of inadequate infrastructure and lack of finance always takes centre stage. We have always argued that skills can always be imported from global partners and local people up-skilled as long as the funding is there, with an enabling policy environment and with adequate political will.
Strategy on infrastructure development policy
On infrastructure, the SADC strategy notes that increased investment in new infrastructure, soft as well as hard, allied with improved management and additional spending on maintenance, are prerequisites for industrial take-off. We have been discussing these issues in this column over the past few months. The SADC strategy hits the nail on the head in identifying these issues, the challenge remains accelerating the implementation of the strategy. To quote the strategy, it notes that Efficient and affordable infrastructural services (consisting of transport, communications, ICT, energy and water supply) are critical inputs for reducing transaction costs for industry and trade, as well as for enhancing the economic and social wellbeing of society at large. Effective implementation of the strategy would indeed require the building and/or close coordination of these services in a timely and optimal manner. To this effect, the strategy calls for
(i) enhanced access to quality infrastructure;
(ii) timely and locational availability of services to reduce input and transaction costs;
(iii) addressing the infrastructural deficits at the national and regional levels;
(iv) provision of quality infrastructure for the implementation of the Industrial Upgrading and Modernization Programme; and
(v) upgrading the transport, energy, ICT and water supply infrastructure.
The strategy notes that in tackling the infrastructure deficit through increased investment in new facilities, extra attention should be paid to maintenance and quality, as it is not just the supply of infrastructure that is constraining economic development, but the failure to provide adequate resources for the upkeep and maintenance of existing infrastructure, while ensuring that due attention is paid to the quality of infrastructure provision. The strategy then advocates that (i) the current Regional Infrastructure Development Master Plan (RIDMP) should be fast-tracked and aligned to meet the varied needs of the industrialization strategy; (ii) a strategy for leveraging the RIDMP should be developed to catalyze industrial development and reduce current high costs of doing business; and (iii) the infrastructure support programme for industrialization should be planned and implemented as a continuum, extending beyond the medium term.
Strategy on financing policy
To overcome the severe constraints imposed by the infrastructure and skills deficits, the strategy notes that governments will need to re-order their public expenditure programmes to give greater priority to public and private investment in physical infrastructure and human capital development. In part this will depend on the willingness of governments and electorates to embrace the paradigm of change in the form of a switch from consumption-led economic growth to investment-driven expansion. This is a very important paradigm shift that requires careful planning and re-orientation of both the electorate and the civil service.On domestic sources of capital, the strategy notes that existing savings and investment levels in the SADC region fall well short of what will be needed to drive structural transformation, economic diversification and poverty reduction.
Given the present and likely future state of the global economy, SADC countries cannot afford to rely on foreign savings to make good shortfalls in domestic savings, hence the need to develop the domestic sources that includes the internal fiscus, the financial sector, the capital markets, the private equity funds, the public-private partnerships, SADC Development Fund, Sovereign Wealth Funds, remittances and institutional savings including Pension Funds. The strategy recognises that exploiting the potential of these sources will require deepened financial sector reforms, innovative mechanisms and effective frameworks to maximize and sustain the high level of resources necessary for industrialization.
Alongside this, we believe that foreign direct investment plays a critical role early in the process. We noted in the most recent article on government policy formulation process that Finance Ministers will need to work very closely with the global financial network to tap into both existing and new and innovative ways of financing for projects. It will be practically impossible for the SADC industrialsation strategy to succeed in its objectives within the envisaged timeframe without taping into the global financial resources. Initially, external funding will be needed to address the bottlenecks. Key to attracting this external capital is creating an enabling environment, a theme that we have always repeated.
The SADC strategy notes that Governments’ central roles is the creation of enabling policies and regulatory environments for accelerated industrialization with a particular focus on tackling the binding constraints of infrastructure, skills development and financing. Once again, the SADC strategy hits the nail on the head and political will should lead to accelerated infrastructure development to support industrialization.
Nigeria seems well placed to lead regional integration in West Africa starting with sorting out key policy issues at home.
Russell Duke is Chairman and Managing Principal at National Standard Finance, LLC. Michael Tichareva is Principal and Managing Director of Africa operations at National Standard Finance, LLC.
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Experts discuss new ways to use trade policy to protect the world’s fish and oceans
UNCTAD and the Commonwealth Secretariat gather leading experts to discuss options to further advance trade in sustainable fisheries.
A gathering of leading experts in sustainable fisheries met in Geneva on 29 September, the first meeting at this level since world leaders signed up to the aim of conserving life under the sea and using oceans, seas and marine resources sustainably by adopting Goal 14 of the Sustainable Development Goals.
UNCTAD Deputy Secretary-General, Mr. Reiter, emphasized the importance of oceans and ocean resources, like fish, for livelihoods of population, especially in developing countries. He stressed that “We can do much for fish conservation and trade but we have no luxury of time; time has run out, now we need concrete and strong actions to stop the depletion of fish.”
Fisheries, if sustainably managed, have the potential to become one of the main contributors towards poverty reduction and food security, especially in developing countries. According to the World Bank, around 350 million jobs are linked to fisheries, port management and related activities[1] and the livelihoods of 10-12 percent of the global population depend on the sector.
Fish is also one of the most traded food commodities worldwide. It represents about 10 percent of all agricultural exports and 1 percent of all merchandise trade in value terms. The importance of trade in fish and fish products has been steadily increasing in the past two decades. World trade flows in fish and fish products reached $264 billion in 2013, a 76 percent more in terms of trade value than the amount traded in 1995. Developing countries are the main exporters of fish (56 percent), while developed countries account for approximately 69 percent of global imports.
However, instead of protecting and ensuring the sustainability of this valuable resource, the fisheries sector is being threatened on many levels, including by an over-exploitation of its resources, destructive fishing practices, ecosystem degradation and declining biodiversity, climate change, ocean acidification and pollution. Currently, 87 percent of the world’s marine fish stocks are fully exploited, overexploited or depleted. In addition, the consumption of fish is growing as population expands at an increased rate, adding to the stress endured.
The Food and Agriculture Organization of the United Nations estimates that rebuilding overfished stocks could increase production by 16.5 million tons and annual rent by $32 billion. The benefits of re-building fisheries in general outweigh the costs.
Despite national, regional and multilateral efforts in the past 20 years, the attempts made still seem insufficient to reverse the decline of global fish stocks.
At the Geneva expert meeting, Mr. Deodat Maharaj, Deputy Secretary-General of the Commonwealth Secretariat, said that: “The achievement of targets such as the end of overfishing and destructive fishing practices and the implementation of science-based management plans to restore fish stocks by 2020 will be extremely difficult to achieve without coherent global action.”
UNCTAD and the Commonwealth Secretariat convened governments, international experts, businesses and other relevant stakeholders to discuss and identify possible approaches and options within the trade policy toolbox to mainstream sustainable fishing practices.
[1] World Bank (2012). Living oceans. See http://go.worldbank.org/A2MYFIUQM0
Trade policy negotiations should contribute to sustainable fisheries
Remarks by Commonwealth Deputy Secretary General Deodat Maharaj issued during the Commonwealth-UNCTAD Expert Group Meeting on Trade in Sustainable Fisheries, 29 September-1 October 2015
Many of our Commonwealth member states are small island developing states (SIDS) – 25 out of a total membership of 53 countries – and oceans and their evolution are central to their socio-economic development. Many have jurisdiction over significant ocean areas that far, far exceed the land area of the countries themselves.
For example, the exclusive economic zone of The Bahamas covers an area that is 50 times larger than its land territory. Similar characteristics prevail throughout the Commonwealth – in St Vincent and the Grenadines and St Kitts and Nevis in the Caribbean, in Seychelles and Mauritius in the Indian Ocean, and in the Cook Islands, Kiribati, Solomon Islands, Tuvalu and Vanuatu in the Pacific.
For all of these Commonwealth member countries, the management of such expansive areas of ocean space and the creation of an ocean economy creates many challenges. The management of fisheries forms an integral element of this challenge for many of our members and is integral to their efforts to achieve sustainable development.
The global ocean market is estimated to be valued at approximately US$1,345 billion per annum, contributing approximately two per cent to the world’s gross domestic product. Approximately 350 million jobs globally are linked to the use of ocean space and resources through fishing, aquaculture, coastal and marine tourism, shipping and research activity. In excess of one billion people depend on fish as their primary source of protein.
The increased reliance on the oceans coupled with mismanagement of ocean resources is placing the oceans under enormous pressure, with implications for humanity that we are only now beginning to fully appreciate.
We have known for some time that global fish stocks are over-exploited and that many fisheries are in a parlous state. The seriousness of the situation was highlighted in figures released only this month in the Living Blue Planet Report, which revealed for the first time that there has been a 50 per cent reduction in utilised fish stocks globally between 1970 and 2010. For fish stocks of particular importance to regional economies and livelihoods, the decline may be even more dramatic. This trend is echoed in the status of marine biodiversity generally.
This illustrates very clearly that there is an urgent need to better manage our ocean space and to focus more on the conservation and rebuilding of global fish stocks. Whilst a series of national, regional and multilateral efforts have been undertaken over the past two decades to address fish stock depletion with some success, much more work remains to be done to improve marine species conservation and the protection of related ecosystems.
This year, I highlighted the need for a collective effort to establish a fairer, more inclusive and sustainable future for all of humanity. This collective effort is equally pertinent as we look for feasible approaches and frameworks to ensure that multilateral and regional trade policy negotiations can, and should, contribute to.
As we all know, 2015 is a significant year for the international community. Last weekend world leaders adopted the Sustainable Development Goals (‘SDGs’), which replace the Millennium Development Goals. The SDGs include a specific goal on our oceans (Goal 14), which urges the international community to take action to “conserve and sustainably use the oceans, seas and marine resources for sustainable development”.
The level of ambition within the SDGs is commendable, and there are hopes that they may reinvigorate and build momentum at the multilateral level. However, the question of how to balance sustainable development and conservation remains, as does the challenge of translating the SDG goals into practical action by WTO members within the existing framework of multilateral trade rules.
The main difference between multilateral, regional and bilateral trade negotiations often boils down to the level of ambition in terms of the rule-setting. The speed at which bilateral and regional trade negotiations have been concluded relative to the respective rounds of negotiations under the multilateral trading system and the WTO are testimony to this. For example, 14 years of fisheries subsidies negotiations under the Doha Development Agenda have not yet produced an outcome. The Bali package agreed at the 9th WTO Ministerial is a pale reflection of what was originally envisaged in the Doha Development Agenda and round of negotiations, the first since the WTO inherited the multilateral trading system in 1995. In comparison, some 260 regional trade agreements have been notified to the WTO.
SDG Goal 14 builds upon many of the provisions for oceans and fisheries conservation contained in the Rio+20 outcome document, the Samoa Pathway and the Istanbul Programme of Action – an LDC-led initiative that expires in 2020. The focus on creating a coherent strategy for developing countries includes recognition of the need for special and differential treatment and technical co-operation (Goal 14.7) for SIDS and LDCs.
Because of the level of ambition within the SDGs, some critics have said that implementation is likely to be difficult. The achievement of targets such as the end of overfishing and destructive fishing practices and the implementation of science-based management plans, to restore fish stocks by 2020 (Goal 14.4) will indeed be extremely difficult to achieve without coherent global action.
To conclude, multilateral and regional trade policy negotiations can and should contribute to more sustainable fisheries. Aligning negotiation strategies in view of the stated objectives of the SDGs is important.
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Carbon pricing, divestment, and fossil fuel subsidy reform options for climate deal
A series of reports regarding the use of carbon markets as a central means for achieving international climate goals were released as the seventh annual multi-stakeholder New York Climate Week unfolded from 21-28 September in the US, just ahead of the adoption of the new “2030 Agenda for Sustainable Development” by the UN General Assembly at its headquarters.
While the number of carbon pricing schemes worldwide has increased over the past few years, nations must accelerate their deployment in order to achieve an internationally agreed upon goal of limiting temperature rise to no more than two degrees Celsius above pre-industrial levels, according to a report on the state and trends of carbon pricing released by the World Bank last week.
Several parties support the use of global carbon markets as an option to meet emissions reduction targets as part of a new climate deal under the UN Framework Convention on Climate Change (UNFCCC) to be inked in December in Paris, France. These players specifically call for the agreement to include reference to the use of international transfers of mitigation units. However, no consensus has formed as to whether, or to what extent, market mechanisms will be cited.
Some strong ideological opposition and practical hesitations abound among other countries and analysts over the use of market-based mechanisms to tackle climate change, ranging from a desire to avoid commodification of the environment, to fears such policies will not result in credible emissions reductions.
Despite a lack of certainty in the international sphere, the number of implemented or planned carbon pricing schemes has almost doubled since 2012 with some 40 nations and 23 cities, states, or regions using emissions trading schemes and carbon taxes. These schemes now cover some 12 percent of annual global greenhouse gas (GHG) emissions and are worth approximately US$50 billion.
Carbon market developments
Recent developments in this area include the launch of South Korea’s carbon market at the start of this year, the approval of a national carbon tax by the Chilean government that is set to come online in 2017, and China’s announcement of a proposed national scheme that once operational in 2017 would overtake the EU’s Emissions Trade System (ETS) to become the largest in the world.
The World Bank, together with the Organisation for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF), also published a series of principles last week designed to help governments craft and implement carbon-pricing policies.
The principles, shortened to the acronym “FASTER” for short, stands for Fairness; Alignment of policies and objectives; Stability and predictability; Transparency; Efficiency and cost effectiveness; and Reliability and environmental integrity.
Higher carbon price
Although not setting a specific target price, the World Bank’s carbon pricing state and trends report calls for more ambitious carbon prices in order to significantly incentivise a shift for investors away from carbon-intensive industries towards cleaner sources of energy.
The price of carbon in the schemes covered in the report range from less than US$1 a tonne of carbon dioxide equivalent (CO2e) in Mexico to US$130 a tonne in Sweden. More than 85 percent of the schemes have a carbon price lower than US$10 CO2e, and according to the study, these numbers are “considerably” lower than what is required to avoid the worst consequences of climate change.
In addition, the report emphasises the importance of cooperation and supports the linking of carbon pricing instruments across borders, suggesting that this could result in net annual flows of financial resources of up to US$400 billion by 2030 and up to US$2.2 trillion by 2050.
While many experts supportive of market-based mitigation policies have echoed the benefits of linking carbon markets, concrete progress on the ground towards cooperation, particularly between the EU ETS and other countries, remains slow.
It is likely that the EU may finalise plans to link schemes with Switzerland within the next year or so, however, experts do not expect any linking with either China’s proposed national carbon market or South Korea’s scheme before the end of the decade, as the schemes must first be aligned in many key areas.
International credits
In a bid to boost demand for international carbon offset credits, the UN launched the “Go Climate Neutral Now” initiative on 22 September, a new online platform to purchase carbon offsets generated by one of the UN’s emissions crediting programmes, the Clean Development Mechanism (CDM).
The platform aims to make the CDM competitive on the “voluntary market” – in other words, where greenhouse gas cuts are not mandated – and purchases of offsets through the online platform can be made by any individual, government, or company without commission fees normally expected by brokers. The offsets generate revenue for projects and programmes geared towards reducing emissions in over 107 developing countries.
However, a number of analysts do not think that the initiative will have a significant impact on the current glut of CDM credits, and some experts have voiced concerns that it could possibly jeopardise high quality emissions reductions. Recent reported trends in carbon markets reflect these apprehensions, players such as the EU that used to accept international credits from the CDM have now transitioned to accepting only domestic offsets.
Shifting investments
Some members of the international community last week also hailed progress in a shift of investments away from fossil fuels, particularly from the high-emitting coal industry.
Some 436 institutions and 2040 individuals across 43 countries and representing US$2.6 trillion in assets have committed to stop supporting fossil fuels, according to a report from Arabella Advisors, an investment research firm, also unveiled during the New York Climate Week.
These numbers showcase a 50-fold increase since Arabella’s last report, which found that 181 institutions and 656 individuals representing US$50 billion had committed to divest in 2014.
While the total value of the holdings that investors are selling is not known, an analyst at Arabella has reported that in a sample of just seven percent of the investors involved, they had sold or promised to sell about US$6 billion of fossil fuel investments.
As the world shifts towards decarbonisation to tackle climate change in the long-term, some analysts contend that profits from investing in high-emitting industries could plummet. A report from global consulting company Mercer released in June, for example, found that the average annual returns from the coal sub-sector could fall by anywhere between 18 percent and 74 percent for investors over the next 35 years.
This could be partially attributed to the growing number of carbon pricing schemes and other associated policies that place a greater emphasis on the “negative market externalities” generated by greenhouse gas emissions.
Reforming subsidies
Industrialised and key emerging economies are still spending some US$160 to US$200 billion a year on policies that support fossil fuel consumption and production, according to a report by the Paris-based OECD released last Monday. The report identifies close to 800 spending programmes and tax breaks used by 34 OECD countries and governments in Brazil, China, India, Indonesia, Russia, and South Africa.
“The time is ripe for countries to demonstrate they are serious about combating climate change, and reforming harmful fossil fuel support is a good place to start,” said Angel Gurría, OECD Secretary-General, with the report highlighting that around two-thirds of the fossil fuel support measures were introduced before the year 2000 under different economic and environmental contexts.
Countries have been pledging to phase out or reform inefficient fossil fuel subsidies for several years, with the latest commitment coming from the meet of G7 leaders in June, and in the recent post-2015 development agenda.
The report concludes that while it appears that global support for fossil fuel subsidies may have already peaked in 2008 and then again in 2011-2012, it estimates that global progress towards reform remains slow.
For example, the OECD has been locked in negotiations to phase out a form of coal subsidy that helps developed countries export technology linked to fossil fuel generation. Another round of negotiations held earlier in September stalled, however, and reports indicate that the talks on understanding the role of export credits in achieving climate goals will resume again in mid-November.
Some experts suggest a positive agreement among these developed countries on export credits and the reform of other fossil fuel subsidies would help the global economy shift financial resources towards greener sources of energy and possibly open up much needed financial pathways for climate finance to developing countries before the Paris meet.
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China’s economic slowdown: An opportunity to boost Indo-Africa ties
Compared to China, the Indian economy is expected to grow faster, at 7.5%, and offers a large consumer market
As China is confronting property market challenges, overcapacity in industries, debt burden and financial risks, the recent slowdown in the economy and the devaluation of the Chinese currency has heightened major concerns for the various economies across the globe, including Africa.
Over the past decades, China has been a major and the largest trading partner of Africa, with bilateral trade amounting to $220 billion in 2014. China imports a wide range of products – from copper to oil – from Africa and the continent has become an increasingly important source for feeding the appetite of the consumer-rich Chinese economy. However, the dramatic slowdown of the Chinese economy has left the African region looking vulnerable.
The past few months have seen a significant deterioration in Africa’s trade balance with China. In fact, the lower forecast growth rate of 3.1% of China depicts the fragile picture affecting the dynamics of Sino-African relationship.
So, what is the exact impact of the Chinese slowdown on African economies? According to researchers at IMF: “No region may be more affected by the financial meltdown in China than Africa. If China sneezes, Africa can now catch a cold.” China is highly dependent on Africa for its mineral resources, oil and cheap labour. Given the fact that exports to China from Africa accounted for 30% of the region’s total exports between 2005 and 2012, African resource exporters are going to suffer negative shock-waves to their industries. Lower demand from China will shrink the economies of Africa and eventually heightened the debt burden.
For the top five exporters – Angola, South Africa, the Republic of Congo, Equatorial Guinea and the Democratic Republic of Congo – a 1% decline in domestic investment growth would mean a 0.8 percentage point decline in the region’s growth. According to Fathom Consulting research, Zambia – which has the large community of Chinese immigrants, having established successful businesses in the retail and the construction industries, followed by South Africa – is most exposed to the Chinese economic slowdown. Last month, with the devaluation of the yuan, South African stock markets suffered from heavy losses with the fall in the value of the rand by almost 8%. In addition to the damage caused on the rand, analysts also noticed the impact of the slowdown on the South African steel industry, which found it difficult to compete against cheaper Chinese steel exports. Moreover, Chinese firms are finding themselves increasingly at odds with their African hosts over environmental and labour issues.
Additionally, the tourism sector of Africa may have to bear the burden of the slowdown. The favourable exchange rate and wildlife has attracted Chinese tourists to Africa. A devaluation of the yuan would lower spending from China and thereby impact tourism. In South Africa, the situation is compounded by new complex visa regulations. For that country, the global volatility would create a double jeopardy for the local tourism industry.
Given these developments, the slowdown may bring benefits to the Indian economy. The India-Africa Forum Summit (IAFS) in October will be a testing time for India to seek a proactive and meaningful engagement to make the best of the times. Though not as strong as China, India’s commerce with Africa has seen considerable progress over the years. In 2013, the trade between both the regions stood at $70 billion. Nigeria and Angola account for more than a quarter of India’s oil and gas imports. India’s private sector has established a significant presence in South Africa, Kenya, Tanzania and Mauritius, which has led to strong entrepreneurial ties in sectors such as retail services, mining and commodities trading.
In light of Africa’s increasing dependency on and trouble with Chinese actors, African leaders are beginning to look beyond China in an attempt to diversify. Considering that the demand for African resources will get affected from the Chinese slowdown, India and the long-standing presence of Indian businesses in the continent can help Africa deal with the losses. Compared to China, the Indian economy is expected to grow more rapidly, at 7.5%, and offers a large consumer market. With growing energy demands and Make-in-India, further engagement with Africa is possible. Moreover, India provides a useful model for democratic development. The learning experience from India can help Africa strengthen its judicial system. Additionally, India can be a useful partner to support Africa against terrorism.
The upcoming IAFS will be an occasion to harness this opportunity and a meaningful strategic engagement beneficial to both the countries.
The author is research assistant, Observer Research Foundation, Delhi, and researcher, Wikistrat
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tralac’s Daily News selection: 29 September 2015
The selection: Tuesday, 29 September
Starting, Wednesday: WTO’s 2015 Public Forum
India to host 53 African trade ministers (LiveMint)
The fourth India-Africa trade ministers’ meeting will be held on 23 October prior to the summit scheduled for 26-30 October. The industry department will also host the India-Africa business council meeting the same day. “It will be the largest meeting of trade ministers in India. It will give us an opportunity to review our status trade relation and take our engagement forward,” a government official said under condition of anonymity. On 26 October, India will host senior officials of the 54 countries, while on 27 October, foreign minister Sushma Swaraj will host her African counterparts. The official said India considers the tripatrite free trade agreement recently signed in June as an important milestone and is keenly watching the development. “We will keep ourselves engaged with the larger community that is emerging,” he added.
Dubai’s 2014 Africa trade (AME)
The value of Dubai’s foreign trade with Africa amounted to AED118 billion in 2014, according to figures released by Dubai Customs, where imports amounted to AED 60.8bn, exports AED13.7bn, and re-exports to AED44bn.
‘Mistrust’ hampering continental trade (IOL)
Ernst & Young tax partner Charles Makola said there has been an increase in bilateral and multilateral tax instruments intended to create harmony in the corporate tax base. However, in Africa tax is a political instrument. "This leads to an element of protectionism in each state with everyone looking inward and looking at what is best for the country."
SA’s investment in Africa is positive, should be celebrated, says Davies (Business Day)
Kenya’s exports to Uganda up for first time in 4 years (Business Daily)
Kenya’s exports to Uganda have grown for the first time in four years over the seven months to July amid a political storm over the countries’ bilateral trade. Data from the Kenya National Bureau of Statistics shows the country sold goods worth Sh36 billion to Uganda in the period to July, up from Sh27.7 billion in a similar period last year. Exports to Uganda — the largest buyer of Kenyan goods — have been declining since 2011 on what experts attributed to a vibrant manufacturing sector in Kampala and local firms opening shop in the neighbouring country. The drop defied the creation of the East African Community common market in 2010, which was expected to boost commerce among five member states, including Tanzania, Rwanda and Burundi. [Leading Economic Indicators July 2015]
Contribution of UNCTAD to the implementation of the Programme of Action for the Least Developed Countries for the Decade 2011-2020: 4th progress report
At its 62nd regular session, UNCTAD's Trade and Development Board reviewed progress in the implementation of the Istanbul Programme of Action for least developed countries for the decade 2011-2020. Since the 2008-2009 global financial crisis, the economies of the world's 48 least developed countries have remained weak, despite averaging 5.2% in growth per annum. This growth figure is short of the 7% agreed in the Istanbul Programme of Action as necessary to address underdevelopment and widespread poverty in these countries. At this rate, the goal of half of all least developed countries meeting the criteria to graduate from the category by 2020, which is an aspiration of the Istanbul Programme of Action, cannot be met.
The Africa Urban Agenda: Presidential Dialogue
In order to harness the benefits of intra-African regional trade and investment, African Heads of State and Government will need to invest in both national and sub-national urban planning as well as regional, cross-border territorial planning. This calls for coordinated collaboration across borders and hence the significant role of the concerted efforts of Heads of State, the African Union and the regional economic bodies. Global attention is currently on climate change and the Sustainable Development Goals. The need for Africa to take advantage of the window of opportunity created by the Sustainable Development Goal 11 cannot be over emphasized. Concrete decisions need to be made through a deliberate consolidation of commitments by African leaders to ensuring inclusive, safe, resilient and sustainable cities and human settlements across the region. [Aide Memoire], [Download: Sustainable Urban Development in Africa]
TICAD VI: selected updates
Japan to focus on African health system, extremism at 2016 summit: Abe (Japan Times)
Assessing progress in Africa toward the Millennium Development Goals (UNECA)
Having made encouraging progress on the Millennium Development Goals, African countries have the opportunity to use the newly launched Sustainable Development Goals to tackle remaining challenges and achieve a development breakthrough, according to a report released here today. Leadership, innovation and targeted investments in a number of social sectors have led to transformative interventions and in many cases revolutionized people’s lives, says an annual report produced jointly by the Economic Commission for Africa, the African Union, the African Development Bank and the United Nations Development Programme, called “Assessing Progress in Africa Toward the Millennium Development Goals”. [Download]
African leaders cite ‘remarkable’ progress on MDGs and urge commitment to post-2015 agenda (UN News Centre)
African leaders speaking at the UN General Assembly debate today noted that their countries were guided by the Millennium Development Goals over the last 15 years, and that the post-2015 development agenda and the new goals adopted last week, embody the collective ambition to transform the world by 2030. “Similarly to other countries, I believe, Mozambique has achieved remarkable progress in the implementation of the Millennium Development Goals,” said Filipe Jacinto Nyusi, the President of the southern African nation which recently celebrated 40 years of independence. Worth highlighting, he explained, is the expansion of access to education, gender balance in the access to primary education and compliance with the target on infant mortality reduction. “The commitment of Mozambique to the [post-2015 development agenda] is unequivocal and it has been expressed from the onset,” the President continued. “As you might be aware, Mozambique has been one of the 50 countries selected by the United Nations to host national consultations.”
Christine Lagarde: the Post-2015 Development Agenda (IMF), Roberto Azevêdo: Ending poverty and hunger (WTO)
United Nations taps African oil, mineral wealth to fight hunger (Reuters)
Four African countries have agreed to divert a portion of revenue from oil, gold and other resources to an innovative financing scheme that will tackle childhood hunger, the United Nations official behind the program said. Mali, the Republic of Congo, Guinea and Niger will each year contribute a portion of sales from gold, oil, phosphate and uranium from their state companies. The countries will pay 10 cents for every barrel of oil and 60 cents for every gram of gold into a fund managed by the U.N. children's agency UNICEF to buy nutritional supplements at a reduced price. [Background]
Conference alert: 'Towards a strategy for a strong agricultural sector in Africa' (AfDB)
Malawi’s farm subsidy benefits the poor but doesn’t come cheap (The Conversation)
Given the scale of the programme, there is, correctly, strong interest in its effectiveness and a number of evaluations have been conducted. In a recent paper, we present a comprehensive evaluation of the programme and its macroeconomic effects. While the statistical fog that characterises Malawi precludes definitive conclusions, the available evidence indicates that the programme has resulted in: [The authors: Channing Arndt, James Thurlow, Karl Pauw]
Dar set to produce 5,000 tractors yearly (Daily News)
Olam plans to go big on Africa coffee plantations (Staits Times)
Fairtrade Africa at 10: perspective by UK High Commissioner to Kenya (News Hour)
Zim, EU sign five financial agreements (The Herald)
Zimbabwe and the European Union have signed five financial agreements amounting to €89 million (about $97,9 million) and expect to add a further €40 million under the 11th European Development Fund 2014-2020 National Indicative Programme by year end. By the end of the year, the European Union expects to release more than two thirds of the €234 million under the NIP. Finance and Economic Development Minister Patrick Chinamasa, however, called for the complete removal of the political and trade embargoes for the normalisation of relations if Zimbabwe is to see foreign direct investment coming into the country. Minister Chinamasa said although the intervention by the EU is commendable, investors “remain standing on the fence” until political differences between the Zimbabwe and the bloc are resolved. [Govt consults EU to implement EPA, NewsDay]
EAC states pulls out of regional power pool for new, larger EAPP (The East African)
The EAC’s senior energy officer Peter Kinuthia said the EAC member states also belonged to the wider Eastern Africa Power Pool under which the EAC Power Pool falls. EAPP is meant to link up nine countries by 2018. The overlap would not make investment sense as member states are required to contribute to each initiative. This means that the five countries will have their power lines connected to the larger power pool, whose headquarters will be in Addis Ababa. Four other countries – Egypt, Ethiopia, Democratic Republic of Congo and Sudan – are members of the wider pool.
ECOWAS Energy Centre, UN women to establish 5m euro grant facility (StarAfrica)
Kenya now introduces special economic zones (The East African)
President Uhuru Kenyatta has signed into law the Finance Bill 2015, which spells out key measures to revamp activities in the special economic zones. The zones are currently undergoing a pilot programme in Mombasa, Lamu and Kisumu. Through the Act, the government exempted all supplies of goods and services to companies and developers in special economic zones from VAT and reduced the corporate tax rate for enterprises, developers and operators to 10 per cent for the first 10 years and 15 per cent for the next 10 years.
Kenya transport sector support project: implementation status results report (World Bank)
The project development objectives are to: (a) increase the efficiency of road transport along the Northern Corridor and the Tanzania-Kenya-Sudan road corridor; (b) enhance aviation safety and security to meet international standards; and (c) improve the institutional arrangements and capacity in the transport sector.
Tanzania: Call for aggressive AGOA strategy (Daily News)
Strengthening Nigeria-UK trade relations (The Guardian)
Buhari vows to address double taxation avoidance agreement (ThisDay)
Ease of biz: Govt pushes states to implement over 300 proposals (The Indian Express)
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After the MDGs, renewed commitment and financing required to spur Africa’s development
With advances made in their social indicators, African countries to focus on implementing the next generation of development goals
Having made encouraging progress on the Millennium Development Goals (MDGs), African countries have the opportunity to use the newly launched Sustainable Development Goals to tackle remaining challenges and achieve a development breakthrough, according to a report released in New York on Monday.
Leadership, innovation and targeted investments in a number of social sectors have led to transformative interventions and in many cases revolutionized people’s lives, says an annual report produced jointly by the Economic Commission for Africa (ECA), the African Union (AU), the African Development Bank (AfDB) and the United Nations Development Programme (UNDP), called “Assessing Progress in Africa Toward the Millennium Development Goals”.
Africa has seen an acceleration in economic growth, established ambitious social safety nets and designed policies for boosting education and tackling HIV and other diseases. It has also introduced women’s quotas in parliament, leading the way internationally on gender equality, and increased gender parity in primary schools.
Although overall poverty rates are still hovering around 48 percent, according to the most recent estimates, most countries have made progress on at least one goal. For instance, The Gambia reduced poverty by 32 percent between 1990 and 2010, while Ethiopia decreased its poverty rate by one third, focusing on agriculture and rural livelihoods.
Some policies and initiatives have been groundbreaking. For example, Niger’s School for Husbands has been successful in transforming men into allies in promoting women’s reproductive health, family planning and behavioral change towards gender equality. Cabo Verde increased its forest cover by more than 6 percentage points, with millions of trees planted in recent years.
Much more work lies ahead to ensure living standards improve for all African women and men. While economic growth has been relatively strong, it has not been rapid or inclusive enough to create jobs. Similarly, many countries have managed to achieve access to primary schooling however considerable issues of quality and equity need to be addressed. The continent’s new development priorities, as embodied in the African Union’s Agenda 2063 and the 17 Sustainable Development Goals, are both comprehensive and universal, while their implementation will entail mobilizing additional resources and partners, and putting in place more robust monitoring systems.
The Sustainable Development Goals replace the Millennium Development Goals (MDGs), which in September 2000 rallied the world around a common 15-year agenda to tackle the indignity of poverty.
“Africa’s regional strategy for sustained and inclusive development complemented by the global post 2015 development agenda provide an appropriate framework for sustainable development. Nevertheless, an important lesson of the MDGs is that success will hinge on a credible means of implementation,” say the authors of the report.
Poor implementation mechanisms and excessive reliance on development aid undermined the economic sustainability of several MDG interventions, the report adds. With official development assistance to Africa projected to remain low over the period 2015-2018, at an average of around US$47 billion annually, the focus should be on boosting and diversifying economies, mobilizing domestic resources and new partners, unleashing the economic potential of women and fighting illicit financial flows.
Achieving sustainable development will also be impossible unless African nations and communities are resilient, able to anticipate, shape and adapt to the many shocks and challenges they face, including climate-related disasters, health crises such as the Ebola epidemic in West Africa and conflict and instability. Investments now in prevention and preparedness will minimize risk and future costs.
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African leaders at UN cite ‘remarkable’ progress on MDGs and urge commitment to post-2015 agenda
African leaders speaking at the UN General Assembly debate on 28 September noted that their countries were guided by the Millennium Development Goals (MDGs) over the last 15 years, and that the post-2015 development agenda and the new goals adopted last week, embody the collective ambition to transform the world by 2030.
“Similarly to other countries, I believe, Mozambique has achieved remarkable progress in the implementation of the Millennium Development Goals,” said Filipe Jacinto Nyusi, the President of the southern African nation which recently celebrated 40 years of independence.
Worth highlighting, he explained, is the expansion of access to education, gender balance in the access to primary education and compliance with the target on infant mortality reduction.
“The commitment of Mozambique to the [post-2015 development agenda] is unequivocal and it has been expressed from the onset,” the President continued. “As you might be aware, Mozambique has been one of the 50 countries selected by the United Nations to host national consultations.”
The leader further underlined that in line with the theme of the 70th session of the General Assembly – “a commitment to action” – for Mozambique, this should include the adoption and implementation of effective structures for the prevention and management of conflicts, as well as the need to conclude a convention against terrorism.
“Emphasis should be on preventive diplomacy,” he stated. “The commitment to action we celebrate here should establish platforms for dialogue among cultures and civilizations as an essential tool to promoting tolerance, the culture of peace and a dignified and peaceful world.”
President Nyusi added that the celebration of the 70th anniversary of the United Nations is being shadowed by an unprecedented crisis at the international level.
“I am referring to the humanitarian crisis arising from the flow of refugees and migrants with no parallel in the recent history of the humanity,” he declared, urging leaders to redouble efforts. “This shocking situation is a manifestation of a succession of unresolved crisis or poorly settled situations in relation to which the international community had already forecast.”
Meanwhile, during his address to world leaders in New York, the Prime Minister of Ethiopia said his country never lost confidence in multilateralism and remained a staunch supporter of the principle of collective security embodied in the UN Charter.
“It is based on this conviction that Ethiopia has been actively contributing to the advancement of the principles and purposes of the United Nations, including by deploying its forces as part of the blue helmets since the early days of the UN,” said Hailemariam Dessalegn. “It gives us great satisfaction to note that Ethiopia is now the second largest contributor to UN Peacekeeping.”
He also underlined that despite the “many failures” of the Organization, the global community cannot afford to live without it.
“In spite of its shortcomings, the United Nations remains the only universal organization that we have – whether big or small, rich or poor – providing us with a unique platform to advance our common objectives and address those myriad problems we collectively face.”
Echoing the President of Mozambique, he noted that the reason for the remarkable progress Ethiopia has made over the past fifteen years, including in achieving most, if not all of the MDGs, is because the country took charge of its own destiny, devising its own development strategy and mobilizing domestic resources.
“But we also made the best use of development cooperation we have had with the United Nations and other partners,” the Minister added.
In his remarks, Yoweri Kaguta Museveni, President of Uganda, said that 70 years after the founding of the United Nations, inequalities among States persisted in defiance of the underlying messages of brotherhood and solidarity every religion preached. Underdeveloped countries are in their current state today because of various internal and external factors, which the world could no longer afford to debate.
“The adoption of the Sustainable Development Goals constitutes a landmark in humanity’s quest for peace and prosperity and was a prescription closely aligned with the national strategy Uganda has been following,” he said. For the first time, the Goals proclaim in bold letters the concept of universal prosperity, which would assist the prioritization of the use of scarce resources by international agencies.
In particular, the use of the word “transformation” in the Goals is most revealing, he said, stressing that the purpose of sustainable development was to ensure growth both qualitatively and quantitatively.
The President of Gabon, Ali Bongo Ondimba, expressed concern about the rising threat of terrorism in Africa and called on the international community to strengthen its action against groups such as Boko Haram and Al Shabaab.
He called on the international community to redouble efforts against terrorism, including by urging donors to devote more "supervision of financial circuits that power this phenomenon."
For greater efficiency in the fight against terrorism and to better address the other global challenges, Mr. Bongo also called for reform of the UN Security Council towards greater democratization of its operation. He thus called for better representation of the various regions of the world and a reform of the veto power.
The Gabonese head of State noted his concern about the delays in the negotiations prior to the holding of the climate summit in Paris in December, saying the process is still far from the required consensus on the overall deal that is ti be agreed in the French capital.
In his Assembly address, President Uhuru Kenyatta, of Kenya, said the just adopted 2030 Agenda was the culmination of more than three years intensive intergovernmental negotiation, which began with the UN Conference on Sustainable Development in Rio, Brazil in 2012.
“We are glad to note that the Agenda recognizes ending poverty in all its forms everywhere as its overarching goal. The goals and targets set by the Agenda are universal and will apply to all countries while recognizing different realities and capabilities,” he said.
Moreover, the new Agenda recognizes that sustainable development cannot be realized without peace and security; and peace and security will be at risk without sustainable development. This therefore calls for building peaceful, inclusive and well-governed societies with responsive institutions as the basis for shared prosperity.
“Fundamentally, the Agenda reckons that we cannot reach our development goals without addressing human rights and complex humanitarian issues at the same time” said President Kenyatta, adding that the new development framework “commits all of us to be responsible global citizens, caring for the less fortunate as well as for our planet's ecosystem and climate action on which all life depends.”
Also addressing the Assembly, Macky Sall, the President of Senegal, said that 70 years after the founding of the United Nations, peace, which is not simply the absence of war, continues to be threatened by poverty, disease hunger and environmental degradation. With that in mind, he hoped the upcoming climate change conference in Paris could set the world on a path towards a more sustainable and low-carbon future.
There could only be true peace when all nations realized that all peoples are connected and that only by working together, could real change be affected. “We can no longer have business as usual. Common sense requires that we change our vision of the present, as well as the future,” to ensure that the UN and its institutions better reflect modern realities. To that end, he called for reform of the UN Security Council in line with the African position; reform the global financial institutions, efforts to combat illicit financial flows; and measures to democratize business practices.
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Energizing Africa’s future, benefiting the world
African Development Bank Group (AfDB) President Akinwumi Adesina delivered an impassioned speech to high-level leaders Sunday morning about why putting all of Africa on the power grid is not only good for the continent, but also for the world.
“The private sector is frozen in time,” he said, and “the lack of energy has put the brakes on Africa’s industrialization.” That stunted internal development prevents the continent’s 54 resource-rich nations from attracting the external investment that would allow everyone to prosper.
He told the crowd that now is the time to push past the days when more than half a million people die each year simply because they have no access to clean cooking energy. He insisted that the era of factories lying dormant due to lack of electricity must come to an end.
“Africa cannot stand by with such massive energy resources and yet be known for the darkness, not the brightness, of its cities and rural areas,” Adesina said. “Africa is blessed with limitless potential for solar, wind, hydropower and geothermal energy resources. And, of course,” he added, its “abundant supply of natural gas and coal.”
Adesina delivered his remarks on the eve of the general debate of the 70th United Nations General Assembly (UNGA). He stressed the point that one of the most important components of the Sustainable Development Goals (SDGs), officially endorsed this week, is number 7, energy.
“Africa is simply tired of being in the dark,” he said. “That is why the African Development Bank has launched a ‘New Deal for Energy in Africa’, to fast-track universal access to power by 2025.” The goal: “Lighting up and powering Africa in 10 years, not 50.”
Adesina addressed leaders including World Bank Group President Jim Kim, United Nations Deputy Secretary General Jan Eliasson, UN General Assembly President Mogens Lykketoft, Liberia’s President Ellen Johnson Sirleaf, among others.
Jim Kim publicly congratulated Adesina on his new position as head of the AfDB, and commended his commitment to powering up the second-largest continent on the planet.
Adesina said the only way to do that is to band together with partner organizations and nations to raise expectations, aspirations and financing. So in back-to-back meetings Sunday afternoon he worked to spark the excitement needed to make that happen. He strategized on energy, job creation, industrialization and more with Ghana’s President, John Mahama, the UN Under Secretary General and Special Advisor on Africa, Maged Abdelaziz, and US Assistant Secretary of State for the Bureau of African Affairs, Linda Thomas-Greenfield. And for the first time in his tenure as AfDB President, Adesina met with Luis Moreno, President of the Inter-American Development Bank, Werner Hoyer, President of the European Investment Bank, and others leaders of multilateral development institutions around the globe.
A flourishing Africa is good for the world. So with a five-point plan in place, Adesina is making clear this week that he has a master plan to unlock Africa’s energy potential – both conventional and renewable.
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Helen Clark: Speech at the UN GA Side Event, “Towards TICAD VI: Africa’s Transformation through Industrial Development and Agenda 2063”
The TICAD VI High-Level pre-event was held on the margins of the 70th United Nations General Assembly in New York, USA, on 28 September 2015. The objective was to discuss Africa’s new strategic direction in addressing its development and integration agenda, as enshrined in AU Agenda 2063 and its First Ten Year Implementation Plan. It would also be an opportunity to launch a joint research report titled: “Industrial Policy and Economic Transformation in Africa”.
I am pleased to join you for this High Level Event to kick-start substantive discussions on TICAD VI. UNDP is proud to be a founding partner of the TICAD process.
Since its inception in 1993, guided by the dual principles of African “ownership” and “international partnership”, TICAD has been a driver of sustainable and people-centered development in Africa. It has consistently aimed at generating inclusive economic growth, which is backed by good governance which is important for creating the enabling environment for growth, and is made sustainable through investments in the productive capacities, health, and education of the people of Africa – the true wealth of the continent.
Now, as TICAD VI is being planned, I have no doubt that the new publication by Akbar Norman and Joseph Stiglitz of Columbia University, “Industrial Policy and Economic Transformation in Africa”, will make an important contribution to the agenda for TICAD VI.
Africa’s emerging opportunities and constraints for economic transformation
Africa’s quest for economic transformation is well reflected in Agenda 2063 adopted by the African Union – and it’s important that our work as development partners is aligned with that. Agenda 2063 aims to translate Africa’s robust growth into economic and social transformation. That growth has averaged over five per cent for the last ten years. Africa’s GDP growth rate is expected to be 4.5 per cent this year, and five per cent in 2016 .
The history of human development tells us, however, that it is the quality of economic growth which matters – and not just its speed. For maximum human development benefits, growth needs to be inclusive, sustainable, and job-rich. The manner of industrialization can support that.
TICAD V was supportive of:
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boosting economic growth;
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accelerating infrastructure and capacity development;
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empowering farmers as mainstream economic actors; and
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promoting inclusive, sustainable, and resilient growth.
TICAD V also aimed to reverse the declining share of added value manufacturing in Africa’s Gross Domestic Product (GDP) and in the share of manufacturing in its exports.
Already the Yokohama Plan of Action under TICAD V is helping to address infrastructure challenges, including transportation corridor development, urban transportation, provision of low-carbon energy and optimization of energy use, and ICT infrastructure.
The African Business Education (ABE) initiative is helping to strengthen the industrial skills base and technological capabilities on the continent, including by offering young people training opportunities.
Africa’s own African Productive Capacity Initiative and the Action Plan for Accelerated Industrial Development for Africa are promoting industrialisation and economic diversification.
Africa’s path to transformation will benefit from:
(1) Diversifying economies. Industrialization itself enables the rapid acquisition of new skills and technological capabilities. Japan and the TICAD process are relevant here; for example, the vocational and technical training center in Senegal, supported by JICA, has contributed to skills acquisition. As of 2013, it had around 2,300 alumni with a post-training employment rate exceeding eighty per cent.
Industrialization can support inclusive growth across the local economy. For example, adding value to the primary production of extractives and agriculture creates jobs and lifts national income.
(2) Mitigating the impact of external economic shocks. Economic diversification, including by adding value to primary commodities through industrialisation, also helps protect countries from external economic shocks, including the terms of trade shocks which are often associated with commodity trade.
UNDP’s Regional Bureau for Africa is currently finalizing a study on the booms and bursts of primary commodity prices in Africa. It is documenting African experiences with a view to sharing and advocating good practices in mitigating external shocks associated with the fall in primary commodity prices.
(3) Addressing inequalities. We see successes on the continent in this area; for example, Ethiopia succeeded in reducing income inequality by fifteen per cent between 1995 and 2010; and in a period of seven years (2006 and 2012), Rwanda reduced income inequality by 4.2 per cent. By actively targeting the reduction of inequalities, African countries will harness the full potential of women and marginalized groups. The agricultural sector in particular would be greatly boosted by gender equality measures which give women equal access to productive assets, inputs, and finance.
(4) Harnessing the potential of youth. Youth will energise Africa’s transformation – if countries invest in and create opportunities for them. Lifting education and skills levels and enabling youth entrepreneurship will reap big rewards.
(5) Improving jobs and livelihoods. Eighty per cent of Africa’s workers remain in low productivity jobs in agriculture, or in low-value service sector livelihoods with little or no income. This can change with industrialisation and smart strategies which upskill the workforce.
Conclusion
The alignment between TICAD V and Agenda 2063 on using industrialization as a strategy for economic transformation provides some insights into what could be the areas of focus for the next TICAD.
TICAD VI, the first TICAD summit to be held in Africa, can draw on experiences from Africa’s industrialization to date. Industrial policy needs to encompass development of the capabilities of people. Addressing infrastructure deficits and financing gaps is very important.
Against the backdrop of strong strategic collaboration with Japan, and with the African Union and other co-organizers of TICAD, UNDP looks forward to working closely with all stakeholders to advance substantive discussions on African development and a successful TICAD VI.
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India to host 53 African trade ministers
The fourth India-Africa trade ministers’ meeting will be held on 23 October prior to the summit scheduled for 26-30 October
With an eye to boost its trade relationship with African countries and fast-track long-pending trade agreements with groupings from that continent, India will host a meeting of 53 African trade ministers, the largest such congregation, in New Delhi next month ahead of the India-Africa Forum Summit.
The fourth India-Africa trade ministers’ meeting will be held on 23 October prior to the summit scheduled for 26-30 October. The industry department will also host the India-Africa business council meeting the same day. “It will be the largest meeting of trade ministers in India. It will give us an opportunity to review our status trade relation and take our engagement forward,” a government official said under condition of anonymity.
On 26 October, India will host senior officials of the 54 countries, while on 27 October, foreign minister Sushma Swaraj will host her African counterparts. The summit between the Indian government and African heads of state will take place on 29 October, with 30 October set aside for bilateral meetings between visiting heads of state and Prime Minister Narenda Modi.
India is currently engaged with various African groupings such as the Southern African Customs Union (SACU), the Economic Community of West African States (ECOWAS) and the Common Market for Eastern and Southern Africa (COMESA) for preferential trade agreements.
“As far as SACU and COMESA are concerned, negotiations are already in progress, but both the groupings are taking time to decide how to proceed further, while on ECOWAS, India has to make a move,” the official said. He added that progress on all these agreements will be reviewed during the meeting.
Established in 1910, SACU is the oldest customs union, comprising South Africa, Namibia, Botswana, Lesotho and Swaziland. India and SACU started negotiations on a preferential trade agreement in 2005 following the India-South Africa Joint Ministerial Commission. A so-called memorandum of understanding was signed between the two in 2008 to facilitate the negotiations. While India sought a tariff reduction in 30-50% of goods, the grouping is ready to offer only 10% of total traded goods.
The official said India considers the tripatrite free trade agreement (TFTA) recently signed in June as an important milestone and is keenly watching the development. “We will keep ourselves engaged with the larger community that is emerging,” he added.
TFTA is a proposed free trade agreement between COMESA, the Southern African Development Community and the East African Community, representing 26 African countries, worth $1 trillion and 600 million people.
Africa is considered the next growth frontier and is already an important trade partner for India. Trade with Africa increased from $39 billion in 2009-10 to $71.4 billion in 2014-15, with exports rising faster than imports.
India’s key export interests are in processed petroleum products, drugs and pharmaceuticals, and motor vehicles. Crude petroleum is the biggest imported item from Africa, followed by gold, coal and other mining products.
The official said India is already encouraging its industry to intensify its engagement with African nations. “We have supported several trade events for market access and market development initiatives. In 2015-16, 20 such events have been supported by the government in African countries,” he added.
The official said that all countries of Africa have their unique trade baskets and India is currently examining which countries are more important from its export perspective. “There is tremendous potential for India in engineering, textiles, pharmaceuticals, automobiles, processed food and vegetable products,” he added.
Biswajit Dhar, a professor of economics at Jawaharlal Nehru University, said India should engage with African nations at the bilateral and multilateral levels. “While we can push for the LDC (least developed country) agenda at the World Trade Organization (WTO), we can help individual African countries in capacity-building to help them export more,” he added.
India became the first developing country to extend a duty-free, quota-free facility to LDCs, which will benefit 21 such countries from Africa. It has also announced to provide preferential treatment in services trade to LDCs ahead of the Nairobi ministerial meet of WTO countries in December where the decision is expected to be notified.
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Kenya now introduces special economic zones
Kenya has introduced special incentives to attract more investments to the country, but they could sound the death knell for export processing zones.
Investors have expressed concern over controlled market access and the creation of special economic zones, whose investors will enjoy unlimited access to local and international markets.
Kenya plans to set up the special economic zones in key urban areas as part of its Vision 2030 goal to diversify manufacturing activities and create employment.
President Uhuru Kenyatta has signed into law the Finance Bill 2015, which spells out key measures to revamp activities in the special economic zones. The zones are currently undergoing a pilot programme in Mombasa, Lamu and Kisumu.
Through the Act, the government exempted all supplies of goods and services to companies and developers in special economic zones from VAT and reduced the corporate tax rate for enterprises, developers and operators to 10 per cent for the first 10 years and 15 per cent for the next 10 years.
Kenya also retained 150 per cent investment deduction allowance for investments of Ksh200 million ($1.86 million) or more outside the cities of Nairobi, Mombasa and Kisumu, which had been abolished by the Cabinet Secretary for the National Treasury Henry Rotich in the 2015/2016 budget.
The business community expressed fears that investors at the EPZ would pull out due to what they say is skewed treatment by the government.
Investors at EPZs are entitled to, among other things, a 10 year-corporate tax holiday and 25 per cent tax thereafter; a 10-year withholding tax holiday, stamp duty exemption, 100 per cent investment deduction on initial investment applied over 20 years and VAT exemption on industrial inputs.
But the EPZ investors who have been pushing for the enlargement of the domestic market to include the East African Community are restricted to selling only 20 per cent of their produce to the Kenyan market while 80 per cent is exported.
“You can’t have different incentives for EPZs and special economic zones. Investors at the EPZ have their own negotiated markets and the danger is that they are likely to move out,” Laban Onditi, vice national chairman of the Kenya National Chamber of Commerce and Industry told The EastAfrican.
According to Mr Onditi, tax incentives are not enough to boost activities in the economic zones unless infrastructural challenges and the overall business environment in the country is improved.
It is hoped that the certainty around tax exemption will encourage the setting up of industries in the specially designated zones, which should spur economic growth.
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EAC states pull out of regional power pool for new, larger EAPP
East African Community members have pulled out of a proposed regional power sharing pool to avoid duplicating the intentions of a bigger initiative.
The five EAC countries have since 2003 been interconnecting their power lines to improve supply, stabilise access and foster trading in electricity across national borders.
The EAC’s senior energy officer Peter Kinuthia said the EAC member states also belonged to the wider Eastern Africa Power Pool (EAPP) under which the EAC Power Pool falls. EAPP is meant to link up nine countries by 2018.
The overlap would not make investment sense as member states are required to contribute to each initiative.
This means that the five countries will have their power lines connected to the larger power pool, whose headquarters will be in Addis Ababa. Four other countries – Egypt, Ethiopia, Democratic Republic of Congo and Sudan – are members of the wider pool.
Mr Kinuthia said the experience of EAPP has shown that contributions from member states and member utilities are not sufficient to cover the recurrent and development budget. As a result, resources have to be mobilised from development partners. EACPP would face a similar scenario; besides, it would be approaching the same development partners currently supporting EAPP.
Under the Tripartite Free Trade arrangement, a regional power market linking EAPP and the Southern Africa Power Pool (SAPP) is envisaged. It is estimated that about a quarter of electricity generated in EAPP countries comes from hydropower with future investments creating a greater dependence on the resource.
“Linking up national grids would provide a bigger pool of resources and mean one state can tap idle supplies in another,” said Mr Kinuthia.
The power interconnections between Ethiopia, Kenya, Uganda, Rwanda and Tanzania are expected to be complete in three years.
Under the EAPP, a high-voltage line between Ethiopia and Kenya will be ready in 2017, a Kenya-Uganda link will be complete by the end of 2016, and a Kenya-Tanzania connection will be working in 2018.
The Kenya-Ethiopia link will be a 500 kilovolt (kV) line, while the lines to Uganda and Tanzania will be 400kV. The line to Uganda would then connect to Rwanda and Burundi.
Kenya, which relies heavily on hydropower, geothermal and other renewables, aims to expand installed capacity to 6,700MW by 2017, from about 2,500MW currently. Tanzania aims to double generation to 3,000MW by 2016.
Ethiopia aims to become a major power exporter through large new dams and other renewable energy projects. By 2020, it aims to add 12,000MW to its grid.
The EAPP is being supported by the US government, the World Bank, African Development Bank, and the region’s governments.
Power shortages are common across East Africa and businesses often complain that poor or erratic supplies deter investors and push up prices of local products, as many firms rely on costly generators.
Other African regions like West Africa have already connected up their grids. Southern Africa has a series of links between South Africa, Zambia, Zimbabwe and Mozambique, allowing the countries to trade power.
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Comprehensive policies are needed to address ‘growth paradox’ in the world’s poorest countries
Weak productive capacities and a lack of structural economic transformation continue to accentuate the “growth paradox” seen in least developed countries in which growth has little or no impact on reducing poverty, UNCTAD’s Trade and Development Board hears.
At its sixty-second regular session, UNCTAD’s Trade and Development Board reviewed progress in the implementation of the Istanbul Programme of Action for least developed countries for the decade 2011-2020.
Since the 2008-2009 global financial crisis, the economies of the world’s 48 least developed countries have remained weak, despite averaging 5.2 per cent in growth per annum.
This growth figure is short of the 7 per cent agreed in the Istanbul Programme of Action as necessary to address underdevelopment and widespread poverty in these countries.
At this rate, the goal of half of all least developed countries meeting the criteria to graduate from the category by 2020, which is an aspiration of the Istanbul Programme of Action, cannot be met.
Weak productive capacities and a lack of structural transformation in these economies are both causes and consequences of their underdevelopment. The combined effect of this continues to accentuate the “growth paradox” in least developed countries: jobless growth with little or no impact on reducing poverty.
Furthermore, growth in these countries remains in a narrow economic base and often the benefits are not widely shared or distributed. In this context, the Trade and Development Board emphasized the need for governments of least developed countries with the support of development partners to put comprehensive policies in place to address socio-economic stagnation, marginalization and underdevelopment.
The Trade and Development Board also encouraged UNCTAD, with the support of member States, to continue helping least developed countries to build their productive capacities in order to bring about the necessary structural transformation for achieving sustainable development.
Member States recognized the contribution that official development assistance, enhanced market access and foreign direct investment make in the development process of the poorest countries of the world.
The annual session of the Trade and Development Board reviewed progress in implementation of the Istanbul Programme of Action as part of its standing agenda item, on 18 September 2015.
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tralac’s Daily News selection: 28 September 2015
The selection: Monday, 28 September
Mozambique’s conformity with trade facilitation agreements: preliminary baseline assessment (SPEED)
The Mozambican government has called for more intensive research in the area of trade agreements. The preliminary Note below gauges progress towards meeting existing commitments related to trade facilitation documentation and procedures under the Trade Protocol of the Southern African Development Community, and future commitments related to the WTO’s Trade Facilitation Agreement and the East African Tripartite Free Trade Area. The author finds that Mozambique is in a unique position amongst its southern African neighbours as the only SADC country with no overlapping regional trade agreements. [Download]
Great Lakes Trade Facilitation Project: update (World Bank)
About 80000 traders and their families in Africa’s Great Lakes Region whose livelihoods depend on cross-border trade will benefit from greater food security, more jobs, and an overall increase in welfare as a result of the US$79 million International Development grant and credit approved by the World Bank Group’s Board of Executive Directors. The financing will support the Great Lakes Trade Facilitation Project which is designed to reduce the costs faced by traders, the majority of whom are small-scale and women traders, in the surrounding borders of the DRC, Rwanda and Uganda. It will help to develop regional markets near border crossings and facilities to handle an increased flow of goods, services, and people, as well as provide resources to strengthen government agencies at the border to deliver high quality and efficient services.
Maersk: Reliable trade lanes key for Africa's economy (News24)
Access to trade, particularly in landlocked countries such as Malawi, Zimbabwe and Zambia, will remain a logistical challenge in the foreseeable future for both South African and global businesses, according to Bruce Marshall, Maersk Line country manager: Zambia, Zimbabwe and Malawi. He said this is due to the continent’s lack of infrastructure and challenging customs procedures.
African Union to provide keynote at BORDERPOL Congress
SACU member states target illicit trade (New Era)
Recent joint risk management and enforcement operations by the Southern African Customs Union members states uncovered the smuggling of more than 9 million tobacco cigarettes and a total of 40 000 litres of un-denatured alcohol (100% alcohol with no additives) whereby 14 arrests were made across the region. The operations, codenamed Gryphon and TopLiq, also detected combined revenue loss of N$308 million comprised of customs duties, value added tax (VAT), and excise duties that would have been collected under legitimate declaration processes. [SACU drives trade facilitation (The Namibian)]
'Africa must industrialize': joint communique by AUC, OSAA, ECA, UNIDO
In particular, they called upon the private sector to recognize Africa’s export and domestic market potential, and invited foreign investors to substantively increase their commitments to the continent. They also called upon international organizations to provide industrial policy advice and technical cooperation programmes to enable African countries to implement their strategies and to forge stronger regional and inter-regional cooperation. They emphasized the urgency for all countries to promote structural transformation, technological change and innovation. Regional Economic integration, intra-African trade, increased foreign direct investment and official development assistance, and South-South and triangular cooperation will be fundamental pillars of this process. [AfDB speech]
WTO members tussle over size and shape of Nairobi package (Bridges, ICTSD)
Azevêdo’s call for members to refocus talks on a small package of less controversial measures was echoed by US Ambassador Michael Punke at an informal consultation on 17 September. “The United States continues to believe that we have a good possibility of achieving a package of meaningful outcomes for Nairobi and the DDA, centered around the export competition pillar of agriculture, meaningful steps forward on issues important to LDC members, and potentially some advances in transparency in several areas,” Punke told the meeting.
Africa trade ache cloud on meet (The Telegraph)
A sharp drop in trade with India over the past three years has triggered worries in Africa's biggest economies at a time New Delhi is plotting its biggest ever outreach to the continent through a grand summit in October, African and Indian officials have cautioned. But since the last summit, in Addis Ababa in 2011, India's bilateral trade with each of Nigeria, South Africa, Egypt, Algeria and Angola - Africa's five largest economies - has declined, in some cases steeply (see chart).
Indian investors must turn to Africa's agricultural sector (Business Standard)
Various opportunities for exporting to Africa, says Egypt's new Minister of Industry (Daily News)
Qabil also stressed on Egypt’s intention to fully benefit from its collaboration with the COMESA, with a meeting scheduled to take place next November to follow up on the progress of applying the mechanisms of the COMESA customs union, with the aim of reaching the common market phase. The amount of trade exchange between Egypt and the countries of the COMESA reached $2.6bn in 2014, whereby $1.9bn of this amount represented Egypt’s exports value, while $693m is the amount of imports received from the COMESA, Qabil said. Further effort should be exerted to encourage some member countries at the COMESA to take rapid action to apply the rules concerned with customs exemptions, namely Ethiopia, Eritrea and Congo, Qabil noted.
New vision to increase industrial growth rate by 1.5% annually (Daily News), Egyptian Agency of Partnership for Development (AfDB)
Japan-Africa RECs Summit: remarks by Akinwumi A. Adesina (AfDB)
Africa can never forget Prime Minister Abe's landmark announcement in January 2014 that Japan would provide $32bn of support for Africa under TICAD V, with a special focus on increased aid and support for infrastructure. And the African Development Bank was delighted by Prime Minister Abe's decision to double the amount of loans provided under the Enhanced Private Assistance for Africa program from $1bn to $2bn. I am pleased to inform you, Mr. Prime Minister, that EPSA II is well on track and the 2 billion dollars will be fully committed by the end of 2016. We look forward to EPSA III being renewed with an even greater level of support. [Today, the TICAD VI High Level pre-event: 'Africa’s Transformation through Industrial Development and Implementation of Agenda 2063']
JETRO’s 2014 survey on business conditions of Japanese-affiliated firms in Africa (JETRO)
Between September 15 and November 28, 2014, the Japan External Trade Organization conducted its latest survey on business operations of Japanese-affiliated firms in 24 countries in Africa including South Africa, Egypt, Morocco, Kenya, Nigeria and Cote d'Ivoire. We received 251 valid replies (a 69.3% response rate) from the 362 companies to whom we sent questionnaires. The question items covered areas such as future business outlook, management problems in Africa, challenges in business and more. Below is a summary of the results. Summary points:
Japan International Cooperation Agency delegation visits EAC headquarters (EAC), Kenya to host the first Japan development forum on Africa (Daily News)
How China decided to redraw the global financial map with new bank (The Citizen)
Plans for China’s new development bank, one of Beijing’s biggest global policy successes, were almost shelved two years ago due to doubts among senior Chinese policymakers. From worries it wouldn’t raise enough funds to concerns other nations wouldn’t back it, Beijing was plagued by self-doubt when it first considered setting up the Asian Infrastructure Investment Bank in early 2013, two sources with knowledge of internal discussions said. But promises by some Middle East governments to stump up cash and the support of key European nations - to Beijing’s surprise and despite US opposition - became a turning point in China’s plans to alter the global financial architecture.
Africa-South America Cooperation Forum (ASACOF) meets on Wednesday (African Union)
Today, in Windhoek: Promoting child nutrition in the Southern African Development Community region (IPU)
The SADC region suffers many forms of malnutrition including stunting, wasting, underweight and overweight. According to the 2013 World Health organization report, stunting rates are close to or above 30% in ten of the fifteen countries of the region. Despite the existence of regional and national nutrition promotion mechanisms, further efforts are still needed to address this issue effectively. The aim of the seminar would be to enhance the understanding of parliamentarians and their staff on issues related to malnutrition, stunting, and the deleterious effects they can have on their countries, and to boost their capacity to support action on nutrition. The seminar will focus on the powers (law-making, budgeting, oversight, and representation) parliamentarians can deploy to help reduce malnutrition rates.
Malawi facing worst food crisis in decade, requires $81 million in relief aid – UN agency (UN News Centre)
More than 2.8 million people will face hunger in the coming months in the worst food crisis in a decade in Malawi, where a staggering four out of every 10 children suffer from stunting, the United Nations World Food Programme has warned. “People in some affected districts have already started selling their livestock to make ends meet,” WFP said in a press release. “Women are also engaging in more firewood and charcoal selling, which degrades the environment and further aggravates the fragile climate.”
Africa Day for Food and Nutrition Security (FAO), Agriculture and nutrition session at Africa Open Data Conference: a summary (GODAN)
COMESA facing fertilizer shortfall (COMESA)
To address this problem, Mr Ngwenya said the COMESA Secretariat was working on setting up a Fertilizer Financing Facility to spur rural transformation through investments in Small and Medium Enterprises working along fertilizer value chains. “Although the growth of the agriculture sector depends on productivity and access to markets, fertilizer use among smallholder farmers in sub-Saharan Africa is still the lowest in the world with an average of 12 kg per hectare,” Mr Ngwenya said. He said this was far below the 2006 African Union Abuja declaration which called for fertilizer use of at least 50kg per hectare per year. The world average is 200 kg per hectare per year.
SADC parliamentary conference: Mobilizing domestic financing for climate change responses
The Conference was held from the 23rd to the 24th September 2015 in Victoria Falls, Zimbabwe and in attendance were the Members of the Parliaments of Angola, Botswana, Democratic Republic of Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Zambia and Zimbabwe.
Zimbabwe: Diaspora policy draft unveiled (The Herald)
Macro-Economic Planning and Investment Promotion permanent secretary Dr Desire Sibanda said the National Diaspora Policy is expected to play an important role in harnessing resources needed for economic revival. He said $1,8 billion currently being remitted is not enough compared to the Zimbabwean population currently living in the diaspora. He said the diaspora should also focus on investments in productive sectors of the economy rather than setting up properties as investments.
Kenyan govt targets to raise Sh100 bn in textile and apparels by 2017 (CCFGroup)
Industrialisation Cabinet Secretary Aden Mohamed has hired Mr Rajeev Arora , the Former African Cotton and Textile Industry Federation director to advise the ministry on reviving the sector. The Kenya government will now give tax incentives to 10 local and 11 multinationals, as well as reduced energy rates, to encourage them to set up shop. It also targets to raise Sh100 billion in textiles and apparels by 2017. Export firms will pay US cents 9/kwH, against the industry average of US cents 14/kwH, with a promise that the rate will be cut further to US cents 7/kwH in two years. The companies will also enjoy the benefits of export processing zones (EPZs) and will require only one licence from the county and national governments. Twenty one companies have expressed interest in cotton manufacturing. Other incentives include 10-year tax rebates and a 20-year period to amortize capital investments.
Lesotho: 11 new factories to offer 5000 jobs, says PM (StarAfrica)
Tanzania passes corruption index, set to receive $472.8m in MCC grant (IPPMedia)
What are the shortcomings of the World Bank's Doing Business index? (The Economist)
World Investment Prospects Survey 2014–2016 (UNCTAD)
Malusi Gigaba hits back at visa regulation critics (Mail and Guardian)
Kenya lobbies for CS Amina to be UN Secretary General (The Star)
SA wheat import duties climb to record as US prices drop (Business Day)
SA honey market opens for Zambia (Daily Mail)
Kibos set to pioneer industrial sugar milling in Comesa bloc (Business Daily)
The implications of CET for Nigerian products (Daily Times)
Africa Union launches its Learning and Development Strategy
Akinwumi Adesina: 'The fortunes of Africa will determine the success of the Sustainable Development Goals' (AfDB)
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Africa trade ache cloud on meet
Prime Minister Narendra Modi hopes to pull Africa into a tighter hug with India when he hosts the continent’s leaders next month. But some of his guests may for now settle for a return to the economic sheen their ties enjoyed three years ago.
A sharp drop in trade with India over the past three years has triggered worries in Africa’s biggest economies at a time New Delhi is plotting its biggest ever outreach to the continent through a grand summit in October, African and Indian officials have cautioned.
From October 26 to 29, India will serenade leaders from each of Africa’s 54 nations in the triennial summit former Prime Minister Manmohan Singh started in 2008 as it tries to match China’s influence in one of the world’s fastest growing economic regions. Never before has India invited all 54 African nations to the summit.
But since the last summit, in Addis Ababa in 2011, India’s bilateral trade with each of Nigeria, South Africa, Egypt, Algeria and Angola – Africa’s five largest economies – has declined, in some cases steeply (see chart).
For India, some of this decline carries a positive tinge, at least in the short run. India’s import bill from these countries has fallen sharply because of the drop in global prices of oil and commodities like gold, aluminium and other minerals that form the mainstay of New Delhi’s purchases from Africa.
But with Nigeria, Africa’s biggest economy, India’s exports too have dropped marginally since 2011-12, according to ministry of commerce statistics for 2014-15. The sharp decline in economic gains for the biggest – and most influential – African nations means their leaders may head to New Delhi with a focus starkly different from Modi’s. That focus will include concerns that Modi’s economic regime needs to improve too.
“Reviving the bilateral trade between India and South Africa to 2011-12 levels is a key challenge, and one we are focused on,” Stefanus Botes, minister counsellor (economic) at South Africa’s high commission here told The Telegraph. “Gold is of course a key component of our trade, but we need to, and are trying to, diversify.”
India is the world’s biggest purchaser of South Africa’s gold, but a series of import control duties imposed by then finance minister P. Chidambaram hit purchases of the metal in 2013. Some of those duties have been eased by the Modi government but South African officials argue that much more can be done.
From constituting over half of all South African exports to India, gold today makes up just over 30 per cent of what New Delhi purchases from that country. Coal, for long India’s second-biggest purchase from South Africa, has surpassed gold but South Africa’s total exports to India have dropped 40 per cent since the last India-Africa summit.
Nigeria and Angola are today among India’s top 10 sources of crude – and their export gains to India have dropped with falling world oil prices. In the short run, Indian companies investing in oil and gas projects in Africa have gained while entering the sector because of the price crash, said Ruchita Beri, senior research associate at the Institute for Defence Studies and Analyses, a Delhi-based think-tank.
“They (African nations) are trying very hard to woo us. They know ours is a rare major economy that is growing,” Beri said. “Low commodity prices are hurting them, though these prices are often cyclical.”
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Africa Must Industrialize – Joint Communiqué by the AUC, OSAA, ECA, and UNIDO
Participants at a high-level event held today at the United Nations headquarters in New York, voiced strong support for the industrialization of Africa as a way forward to implement the Sustainable Development Goals.
The organizers of the event, the African Union Commission (AUC), the Office of the Special Advisor to the UN Secretary-General on Africa (OSAA), the UN Economic Commission for Africa (UNECA), and the UN Industrial Development Organization (UNIDO), issued the following joint communiqué:
Africa Must Industrialize
Africa has seen remarkable economic growth since the turn of the millennium. It has become the second fastest growing region in the world and continues on this path despite the persistent global economic slowdown. There is still need to accelerate annual economic growth to more than 7% to effect real economic transformative growth. To be sustainable and inclusive, this progress must now be accompanied by structural transformation, which remains the only option to lift the people of Africa out of poverty. To fully benefit from its rich natural resources and to reap the benefits of the demographic dividend, Africa must industrialize. Heavily investing in the training and education of women and youth is indispensable. In order to achieve inclusive and sustainable industrialization, we must embark on a skills revolution particularly in the areas of science, technology, engineering and mathematics.
The 2030 Agenda for Sustainable Development and Sustainable Development Goal 9 recognize the centrality of inclusive and sustainable industrialization for development. African leaders made a bold statement towards inclusive growth and sustainable development in their own Common African Position on the post-2015 development agenda and the African Union’s 50th Anniversary Solemn Declaration, culminating in the Africa Agenda 2063, and its First Ten Year Implementation Plan. Many African countries have already proceeded to formulate national strategies to take advantage of the current global momentum for fostering inclusive and sustainable industrial development.
In this context, the African leaders attending the High-level event on “Operationalization of the 2030 Agenda for Africa’s Industrialization” called upon the international community to raise its financial support in line with Goal 9 of the 2030 Agenda for Sustainable Development, and to back industrial and infrastructural projects underpinning this development, especially as articulated under Aspiration 1 of the Africa’s Agenda 2063, which calls for a prosperous Africa based on inclusive growth and sustainable development. In particular, they called upon the private sector to recognize Africa’s export and domestic market potential, and invited foreign investors to substantively increase their commitments to the continent. They also called upon international organizations to provide industrial policy advice and technical cooperation programmes to enable African countries to implement their strategies and to forge stronger regional and inter-regional cooperation. They emphasized the urgency for all countries to promote structural transformation, technological change and innovation.
Regional Economic integration, intra-African trade, increased foreign direct investment and official development assistance, and South-South and triangular cooperation will be fundamental pillars of this process. UNIDO’s new Programmes for Country Partnership, the New Partnership for Africa's Development (NEPAD), the African Mining Vision and the Action Plan for the Accelerated Industrial Development of Africa (AIDA) are promising mechanisms for mobilizing multi-stakeholder coalitions to promote industrialization. As also witnessed during the Third International Conference on Financing for Development, and the adoption of the Addis Ababa Action Agenda, emphasis should continue to be placed on inclusive economic growth and sustainable industrial development.
Now that the world has adopted the 2030 Agenda, we invoke all stakeholders to join forces and form a new global partnership for its implementation, particularly for the most vulnerable countries in Africa, including for the LDCs, the LLDCs and the SIDs. We need to seize this historical moment and take substantial steps collectively to achieve the transformative agenda of inclusive and sustainable industrial development for the benefit of all countries and their populations on the continent. The AUC, OSAA, UNECA and UNIDO fully commit themselves to support Member States in their calling upon the General Assembly to pass in 2016 a resolution for a Decade of African Industrialization 2016-2025.
Nkosazana Dlamini Zuma - Chairperson of the African Union Commission
Maged Abdelaziz - Under-Secretary-General, Special Advisor on Africa
Carlos Lopes - Executive Secretary, UNECA
LI Yong - Director General, UNIDO
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Great Lakes Project to help African traders get their goods and services to market
Consider the fate of a small-scale trader in the Great Lakes region of Africa.
She – for it is likely to be a she – works a small-scale farm in a border region with her family. On her back, balanced on her head, or perhaps with the aid of a cart or a small vehicle, she transports produce to a border crossing in the hopes of selling her produce on the other side. She is all too familiar with what awaits her there.
Officials from a dozen or more local, regional, and national government agencies on both sides of the border will insist on inspecting her goods and, in some instances, inspecting her. Either overtly or by strong implication, she will understand that she must bribe one or more of these officers if she wants to get her goods to market.
A bribe might only consist of a few eggs or a bunch of bananas. (A few eggs from every trader who crosses the border adds up to a lot.) But if she resists in any way, or perhaps even if she doesn’t, she may be subject to verbal or physical harassment, including humiliating body searches conducted by men.
All the while the trader’s produce, the main source of her family’s meager income, is at risk of spoiling in the equatorial heat before ever getting to market. The dusty border crossing lacks warehouse facilities where traders can store goods while awaiting customs clearance. Even once they get across the border, assuming their goods are still marketable, they may face a long trek just to reach a market.
Those lucky enough to have only short distances to cover can cross and re-cross borders multiple times in a day, but in each crossing, they must navigate the financial and physical hazards that are part of life for traders in the region.
New project to streamline cross-border trading
Addressing these daily hazards and at the same time boosting a vital part of the region’s growing economy form the core idea behind an initiative launched by the World Bank and the governments of the Democratic Republic of Congo, Rwanda, and Uganda. Implemented in cooperation with the Common Market for Eastern and Southern Africa (COMESA), the Great Lakes Trade Facilitation Project aims to clear logistical and administrative logjams at busy border crossings, reduce corruption and the harassment of traders – particularly women – boost local and regional economies, and alleviate poverty.
“Regional approaches to trade facilitation are critical to leverage national efforts,” said Makhtar Diop, World Bank Group Vice President for the Africa Region. “The three Great Lakes countries included in this project share similar challenges that must be tackled through collective action, and borders are the solution provided they are safe and enable traders to do business in a conducive environment.”
The project will unfold in two phases, beginning with grants and credits totaling $79 million for the Democratic Republic of Congo, Rwanda, and Uganda, and a second phase totaling $61 million for the Democratic Republic of Congo, Burundi, Tanzania, and Zambia.
“The economic impact, particularly from the 20,000 to 30,000 small-scale traders that cross the border between the Democratic Republic of Congo and Rwanda each day, is crucial for the Great Lakes region,” said Paul Brenton, one of the World Bank’s Task Team Leaders for the project.
“Trade generates solidarity between communities and improves livelihoods, which in turn reduces the likelihood of conflict” added Shiho Nagaki, a fellow Team Leader.
The project will fuse both physical and logistical improvements in customs and border facilities with policy and procedural reforms and capacity building. For example, the project will fund construction of shelters for traders waiting at the border; automated turnstiles to facilitate more speedy passage through the border and less physical contact with, and therefore potential harassment from, border officials; gender sensitivity training for border officials; and the enshrinement of policies such as a requirement that inspections of female traders be conducted by female officials.
The goal is to improve the efficiency, capacity, and security of border operations at a number of key border crossings connecting the economies of these countries, thus improving the economic health of the region.
Trade is key as Great Lakes countries emerge from conflict
The Great Lakes Region of Africa, encompassing countries bordering on Lakes Albert, Edward, Kivu, Victoria, Tanganyika, and Nyasa, is emerging from years of conflict that aggravated extreme poverty and displaced millions of people.
Robust economic growth has followed the winding down of conflict and underscored the enormous economic potential of a region rich in mineral wealth, arable land, and breathtaking natural wonders. Rwanda’s economy, for example, grew at an annual rate of 8.2 percent between 2001 and 2011, with the percentage of people living in poverty declining from 59 to 45 percent. The districts with the strongest economic performance have been those bordering Uganda, the Democratic Republic of Congo, and Burundi. In Uganda, the proportion of the population living below the official poverty line fell from 56 percent in the early 1990s to 19 percent last year.
But inefficiency and corruption persist at border crossings, imposing a significant drag on the regional economy, particularly for small traders, 8 out of 10 of whom are women, according to one recent survey. At teeming border crossings such as Kasindi and Mpondwe, between the Democratic Republic of Congo and Uganda, or Goma and Rubavu, between the Democratic Republic of Congo and Rwanda, border officials are themselves seeking to survive on low monthly salaries.
“There is a lot of rudeness and harassment at the border,” said Maman Bahati, a Congolese trader. “The border agents only want money. You always have to discuss and negotiate. To cope with this, some women have no other choice but to cross illegally and sneak through the process.”
Not all of the corruption at the border is official. Mama Chantal, a Rwandan green bean trader, reflected on the brutality of unofficial agents, who routinely rough up traders.
“They walk the streets near the border and as soon as they see you trying to transport goods, they quickly grab you by your bag or your clothes and demand payment of the taxes,” Chantal said. “If you refuse to pay then they take you to the neighborhood and intimidate you.”
Most of the trade at these border crossings is small scale, usually involving individual traders on foot, and most of them trading in agricultural products. Most is “informal” trading – legal but not recorded in customs records. Thus the project, to be implemented over seven years, seeks to benefit some of the poorest and most vulnerable groups in the Great Lakes Region.
The means of improving circumstances for these traders can be as simple as ensuring that women inspectors handle the job of conducting searches of female traders; providing written receipts when customs dues are paid; and affording traders with a reliable organization that can receive and respond to complaints about harassment and corruption.
Success will be measured by collecting data on the average time it takes for a trader to get goods across a border, the value and volume of goods crossing borders, the incidence of harassment of small traders, particularly women, and the views of traders as to the quality of services provided by border agencies.
Collaboration with COMESA
The project will help COMESA implement regulations and procedures for the treatment of small-scale border traders, including a toll-free complaint hotline, simplified immigration- and health-related procedures, streamlined access to air freight, and duty-free entry for eligible goods. Implementation of these improvements, along with modernized facilities at borders and changes as simple as providing separate lines for pedestrians, will not only benefit traders; it will also benefit government by generating more revenue.
“The Great Lakes Trade Facilitation initiative is about unlocking the economic potential of small traders who are a vital part of a growing regional economy,” said COMESA Secretary General Sindiso Ngwenya. “Research has shown that over 30 percent of the cross border trade taking place along the project target areas is from informal small scale traders, especially women and the youth. This intervention is therefore crucial in facilitating and streamlining cross border trade. COMESA is confident that its partnership with the World Bank will yield significant and positive economic impact.”
Part of the project will entail developing regional markets near to border crossings, so that small traders, particularly those on foot, can quickly sell their goods, making possible more round trips per day and increased income for poor families.
“We’ll be really looking to see if circumstances improve for these women and men and if they’re able to get their goods to markets across the border in a shorter time and with few to no negative incidents,” said Charles Kunaka, the World Bank’s co-Team Leader of the project. “Ultimately, we’d like to see an increase in the daily volume of trade, rising profits and revenues for traders, and better revenue generation and control for governments.”
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SACU drives trade facilitation
The Southern African Customs Union (Sacu) executive secretary, Paulina Elago, this week said the trade landscape in Sacu shows that trade has been increasing with the volume of intra-Sacu trade valued at N$185,6 billion in 2014 compared to N$98,9 billion in 2009 – increasing on average by 12% in the last five years.
“Therefore the increase in the volume of trade compels countries, around the world, to create a conducive environment for trade to thrive unhindered,” she said during a Sacu trade facilitation dialogue breakfast session with the private sector held in Windhoek.
Elago said as a result, international competition has increased and therefore said competitiveness will be measured on the speed, efficiency and the ease with which products move from one country to the other. “This is at the core of trade facilitation in general and in Sacu in particular,” she said.
Elago said trade facilitation is all about simplifying and harmonising trade procedures at point of entry into a country and exit.
She said governments and the private sector stand to benefit from trade facilitation as efficient border controls reduce instances of fraud and illegal entry of unwanted goods, whilst business can become more competitive as fast clearances will improve the speed within which their products would reach the final consumer.
Doing business
The World Bank Doing Business Survey of 2014 shows that import procedures, for containerised cargo, in the Sacu countries take on average 26 days (Botswana-35, Lesotho-33, Namibia-20, South Africa-21, and Swaziland 23).
This includes document preparation, customs clearance and technical control, ports and terminal handling and inland transportation handling.
“It is clear that there is a lot more to be done in this area through a regionally coordinated approach,” Elago said.
Sacu is implementing a Customs Modernisation project, in collaboration with the World Customs Organisation (WCO) funded by the Swedish International Development Agency (SIDA).
Overhaul
In a paper delivered at the event, Namibia Customs and Excise commissioner Bevan Simataa said the commission has redeveloped and overhauled its customs management system to take into account modern system security, system scalability, system interoperability and connectivity, management and operational dashboard report, information and data exchange.
Simataa said the second component is commitment to make trade information available and accessible 24/7 notwithstanding the location or geography of a client, through establishing the Namibia Trade Information Portal.
The portal has among its key features the duty calculator, classifier tool and, import/export requirements, which allow the potential importer of products to Namibia to access information related to such product in a predictable manner.
Minister of finance Calle Schlettwein said in a speech read on his behalf by permanent secretary Ericah Shafudah there is need to elevate dialogue between the private sector and the government.
Namibia’s value of imports accounted for N$85,9 billion in 2014 compared to N$ 67,4 billion recorded in 2013, while the export value of goods accounted for only 49,3 billion in 2014.
“This underpins a stark imbalance between export and import products,” he said.
This has led the government to adopt the ‘Growth at Home strategy’ to stimulate growth of agriculture, mining, energy, manufacturing, construction, hospitality and tourism, transport and logistics, communications and financial services to enable Namibia to compete favourably globally and within the SACU region.
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Africa looks west once again
China’s slowing economy is making the US a more attractive investor
For the first time in more than 15 years, Zimbabwe’s 91-year-old president, Robert Mugabe, openly asked for western re-engagement in his ‘state of the nation’ address in August. A decade ago, Mugabe told a packed rally at the Chinese-built national sports stadium in Harare: ‘We have turned east, where the sun rises, and given our back to the west, where the sun sets.’ Angola’s equally long-serving president, José Eduardo dos Santos, has also encouraged better relations with the United States in 2015.
Why this sudden change of mind? The fall in commodity prices, brought about by cooling demand for oil and minerals from China, and an improving US economy partly explain it. China imports nearly 60 per cent of the world’s iron ore and about 30 per cent of the world’s copper. A slowdown in Chinese demand hits exporting countries such as Zambia and South Africa.
China is Angola’s main customer for crude oil and low prices together with Beijing’s cutting back on imports are hurting. The result has been a depreciation in the value of the Angolan kwanza, rising inflation and a growing liquidity crisis. Sonangol, the state oil company, has had to deny that it is short of cash, and the government has rejected reports by the Angolan state media that President dos Santos visited Beijing in June to ask for a repayment holiday on Chinese loans. Li Keqiang, the Chinese premier, acknowledged during his May 2014 visit to Angola that 260,000 Chinese were working in the country. China has backed up it oil imports with building loans and Chinese construction sites have spread across the country.
Low oil prices, high production costs and other management problems have forced Chinese national oil companies to reappraise their portfolios. This March auditors sent by China’s National Audit Office to screen financial statements of the state company Sinopec’s overseas investment arm found that billions of dollars of investments made in five Angolan oilfields had underperformed. Sinopec has suffered a net loss of $1.6 billion in three of these oil blocks and is trying to extricate itself from opaque joint-venture deals.
Chinese investment will continue to grow in several sectors such as construction, infrastructure and manufacturing, however. Some of this investment could slow down, but Ethiopia and Tanzania are expected to remain favoured investment targets. China is also seeking deeper involvement in Mozambique due to its gas reserves.
Imports of Chinese goods to Africa will continue, and more competition from Chinese manufacturers is expected as they benefit from a devalued renminbi.
Although developments in China are important, they should not be seen in isolation from other global events and the calculations of African policymakers. Currency volatility since mid-2014 is also linked to events in Europe and the US, and may get worse if US interest rates rise. That would put more pressure on some African governments’ liquidity.
The 2015 World Investment Report, issued by the UN Conference on Trade and Development, said in June that foreign direct investment in Africa remained flat at $54 billion, decreasing in North Africa and rising in sub-Saharan Africa to $42 billion. What this report illustrated and what African governments have increasingly appreciated is that the US, Britain and France remain leading sources of foreign direct investment. Private equity firms such as KKR of the US and fellow Caryle group in 2014 have also made their first sub-Saharan African investments and this trend will grow. Foreign investment is still highly concentrated in a few resource-rich countries such as South Africa and Nigeria but this too will change over time.
South Africa appears to be pulling in an opposite direction from its southern African neighbours of Angola and Zimbabwe despite the importance of western investment for its economy. South Africa is China’s largest trading partner in Africa and Pretoria seeks to deepen this partnership. This is partly ideological, cementing its position as a member of the BRICS – Brazil, Russia, India, China and South Africa. President Zuma visited Beijing in September and this December the sixth Forum on China-Africa Cooperation will be hosted in South Africa. As many African states try to widen their international choices, South Africa risks becoming trapped in its BRICS narrative. Membership of the BRICS has become important for the ruling African National Congress, and anti-US rhetoric is cooling relations with Washington.
This century may well be Asia’s, but the sun is not setting in the west as quickly as Mugabe predicted, while China is increasingly seeking good governance and probity for sustainable longer-term investment in Africa. Despite China’s official ‘non-interference’ policy, Beijing does engage in stability and peace-building in Africa. A greater realism is emerging from African governments which recognize that they too need diversified partnerships to navigate a changing world order. China remains part of this calculation but improving relations with the West is back in fashion. President Obama’s trip to Nairobi in July and his meeting with Nigerian President Buhari in Washington both highlight this, while Burundi, Togo, Guinea and Mauritania have all opened embassies in London over the past couple of years.
Today, it is far from being a zero-sum choice between the East or West and diversification of partnerships is the favoured strategy of many African governments.
Alex Vines is head of the Africa programme and Director for Area Studies and International Law at Chatham House.
This article was first published in The World Today, October & November 2015 (Volume 71, Number 5).
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Global environmental leaders explore policies to put world on inclusive sustainable growth path
High-level panel in New York seeks to build momentum for the 2030 Sustainable Development Agenda
Environment ministers and representatives from governments, international organizations, civil society and the finance sector met on 25 September to build momentum for new policies that will accelerate the transition to a more inclusive and sustainable world by supporting the 2030 Agenda.
The high-level meeting took place on the first day of the United Nations Sustainable Development Summit 2015 in New York, during which more than 150 world leaders will formally adopt an ambitious new development agenda that will serve as the launch pad for global action to promote shared prosperity and well-being.
The German Minister for Environment, Nature Conservation, Building and Nuclear Safety, H.E. Barbara Hendricks said, “The big challenge is to achieve, as quickly as possible, the paradigm shift to an economic development that finally respects the ecological boundaries of our planet and at the same time eliminates poverty and hunger. Only a profound transformation can shift economies worldwide onto a sustainable path, ensuring social inclusiveness and conservation of our natural resources.”
The event was organized by the United Nations Environment Programme (UNEP), the Government of Germany and the United Nations Development Programme (UNDP), with the support of the secretariat of the Partnership for Action on Green Economy (PAGE) and the Poverty-Environment Initiative (PEI).
The panel analyzed key policies and investment decisions needed for countries to move towards more sustainable economic growth that respects planetary boundaries and ensures equitable outcomes. It identified how to strengthen bilateral and multilateral advisory mechanisms, networks and partnerships to support countries.
Ministers noted that achieving the Sustainable Development Goals (SDGs) will require support mechanisms, such as the Partnership for Action on Green Economy (PAGE) and the Poverty-Environment Initiative to transform institutions and economies through innovative integrated approaches to policy making that promote macroeconomic reform and comprehensive intersectoral collaboration.
The event saw a call for expressions of interest from countries willing to receive support from PAGE to advance their transition to a green economy for achieving the SDGs. UNEP Executive Director, Achim Steiner, also launched “Uncovering Pathways Towards an Inclusive Green Economy: A Summary for Leaders”, a synthesis report built on UNEP’s earlier Green Economy work.
Mr. Steiner said, “An inclusive green economy sees growth in income and employment from investments that reduce carbon emissions and pollution. This report speaks to the multiple benefits – economic, health, security, social and environmental – that such an economic model can bring to humanity.
“At today’s event, we heard from countries transitioning to inclusive green economies with policies that benefit all of society and maintain the ecological foundations underpinning their economic development. These reforms work when there is collaboration across ministries and sectors. We need all hands on deck to achieve the SDGs, and the type of cooperation we see in PAGE exemplifies this type of partnership.”
During the event, the European Commission Deputy Director-General Klaus Rudischhauser, reiterated the commitment of the EC to supporting countries in the achievement of the SDGs. He underlined this support by announcing an allocation of EUR 8 million to PAGE. The Commission recently also contributed EUR 8 million to the UNEP-UNDP Poverty-Environment Initiative.
Other nations also highlighted the Green Economy policies already in place, which are providing multiple benefits to their national economies.
“South Africa has already embarked on its green economy transition by putting in place innovative policies for green funding and green jobs,” said South African Minister of Environmental Affairs, Bomo Edna Molewa. “The country has selected a number of sectors to advance its transition to an Inclusive Green Economy, including transportation, building, energy, waste management and agriculture.
“In the renewable energy sector, South Africa is working with independent power producers and to date, 64 projects have been awarded a combined total investment of about 14 billion Rand with a generation capacity of approximately 3,922MW”.
The event also saw the launch of the PAGE application package, which provides information about the application process and guidance for countries interested in becoming a PAGE partner.
“We’ve heard today several examples of how countries have made successful efforts to change the course of their development path. A variety of experiences, integrated approaches and ideas has emerged. In light of such evidence and faced with multiple economic, social and ecological challenges, the Post-2015 Agenda and the SDGs are generating new momentum,” said Magdy Martínez-Solimán, Director of the Bureau for Policy and Programme Support at UNDP.
The adoption of the 2030 Agenda for Sustainable Development, with its 17 goals, has the potential to encourage more sustainable practices that can both generate economic growth and protect the environment.
SDG 8 most prominently aspires to “promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”. However, most of the SDGs recognize that only a path of economic development that respects ecological boundaries, fosters social equity and equal access to common goods, and contributes to poverty eradication is destined to succeed.
The SDGs provide a set of integrated and universally applicable goals and targets – against which the progress towards a more holistic form of wealth, towards an Inclusive Sustainable Economy and related institutional transformation in its various shapes and forms, can be measured.
The event featured German Minister for Environment, Nature Conservation, Building and Nuclear Safety, H.E. Ms Barbara Hendricks; South African Minister of Environmental Affairs, Bomo Edna Molewa; Norwegian Minister for Climate and the Environment, Tine Sundtoft; Deputy Director-General for Policy and Thematic Coordination, Directorate-General for International Cooperation and Development, European Commission (EC), Klaus Rudishchhauser; Deputy Director-General for Field Operations and Partnerships, International Labour Organization, Gilbert Houngbo; and Executive Director, United Nations Environment Programme (UNEP), Achim Steiner. The discussion was moderated by Magdy Martínez-Solimán, Assistant Secretary-General, United Nations Development Programme (UNDP).