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tralac’s Daily News selection: 23 July 2015
The selection: Thursday, 23 July
Launched in Windhoek: the Namibia Trade Information Portal
The portal is a web-based platform on which the Government of the Republic of Namibia will publish trade regulatory information from all government offices, ministries, and agencies that impose controls on Namibian trade. The portal will provide a single, authoritative source and will reduce the effort and time required for traders to access the information and documentation required for trade.
Developing a SA-Mozambique forestry value chain (CAJ News)
South Africa’s Department of Trade and Industry is hosting a delegation of government and private sector officials responsible for the forestry sector in Mozambique. “This is an important step in deepening regional integration and the development of agro-regional value chains thus improving the competitiveness of the region. The focus is on the development of Mozambique forestry value chain to foster a mutual relationship with South African companies,” says Minister Rob Davies. The mission follows a Memorandum of Understanding on Forestry Based Industries that was signed between Mozambique and South Africa in 2011, during the Presidential State Visit by President Jacob Zuma to Mozambique.
First SADC financial inclusion Indaba: speech by SA's Minister of Finance (Treasury)
As a result the majority of cross-border remittances between the SADC countries use informal means. South Africa is one of the destination countries for many in the SADC region looking for better opportunities. According to a 2012 study conducted by the Centre for Financial Regulation and Inclusion on behalf of FinMark Trust, the South Africa/SADC remittance market was estimated at R11.2 billion annually, of which an estimated R7.6bn (68% of total remittances) was sent via informal channels.
The use of informal remittance services has two major implications – the integrity of the formal remittance system is severely undermined, whilst particularly low-income migrants face both the high costs and the high risk of using informal means of remitting funds. While there have been notable efforts to improve the situation in the region, the efforts to reduce costs and make remittance services more accessible within the formal remittance market need to be taken a step further. In this context there is a need for a more graduated policy approach - that balances regulation and the risk of exclusion. We hope that this Indaba can take this important aspect forward.
Tanzania: New financial inclusion goal is set at 75% (Daily News)
Zambia: Barclays launches savings charter (Daily Mail)
Mozambique: National strategy for financial inclusion update (StarAfrica)
Time for action: concrete steps for IIA reforms (UNCTAD)
There is a pressing need for systematic reform of the International Investment Agreement regime. As is evident from the heated public debate and parliamentary hearing processes in many countries and regions, a shared view is emerging on the need for reform of the IIA regime to ensure that it works for all stakeholders. By now, IIA reform has become a “must”. Today, the question is not about whether to reform, but about the what, how and extent of such reform. Whatever option countries prefer, they need to bear in mind three challenges: [The author, James Zhan, is Director of the Investment and Enterprise Division]
South Africa: Trade and Industry Portfolio Committee workshop on trade, investment policy: Day 1, Day 2 (Parliament)
Winning Africa’s future: food security for all (International Policy Digest)
In a little less than 7 days, more than 1400 participants will gather in Nairobi on 30-31 July 2015 to discuss how Africa can win its future under the theme “Re-imagining Africa’s Food Security Now and into the Future under a Changing Climate.” Because the discussion occurs just before two big global conferences slated for 2015, it could set the pace for how Africa can catalyze a just future for all. [The programme]
EAC Food and Nutrition Security Policy implementation strategy: short-term assignment (EATH)
Commodity Markets Outlook (World Bank)
The World Bank is nudging up its 2015 forecast for crude oil prices from $53 in April to $57 per barrel after oil prices rose 17% in the Apr-Jun quarter, according to the Bank’s latest Commodity Markets Outlook, a quarterly update on the state of the international commodity markets. The Commodity Markets Outlook also provides detailed market analysis for major commodity groups, including energy, metals, agriculture, precious metals and fertilizers.
In a special feature assessing the roles played by China and India in global commodity consumption, the Outlook finds that demand from China and, to a lesser extent, India, over the last two decades significantly raised global demand for metals and energy—especially coal—but less so for food commodities.
WTO members raise record number of trade concerns on food safety, animal and plant health
The WTO committee dealing with food safety, animal and plant health, formally known as the Committee on Sanitary and Phytosanitary Measures, heard a record number of specific trade concerns when it met on 15–16 July 2015. Several members raised concerns about the European Union’s proposed amendment of its approval procedure for genetically modified food and feed, also known as biotech products. The United States said that the amendment would allow EU member states to restrict or ban the use of such products with no justified reasons. The Committee discussed China’s proposed regulatory change related to biotech products.
The meeting also discussed a few concerns that were raised at previous meetings of the SPS Committee, including the EU’s ongoing work on defining criteria for identifying endocrine disruptors, South Africa’s concern about EU measures on citrus black spot, import restrictions on Japanese food products following the nuclear power plant accident, and concerns expressed by Peru and a number of other countries regarding the application and modification of the EU regulation on novel foods.
Eliminate barriers in sugar exports (Zambia Daily Mail)
Sugar producers in Southern Africa have called on governments to eliminate non-traffic barriers introduced by some COMESA members affecting free movement of sugar within the regional market. Swaziland Sugar Association chief executive officer Mike Matsebula said under the COMESA free trade area, sugar is supposed to move freely within the region. “Instead of implementing zero-tariff obligation, some sugar producers have introduced NTBs to prevent the inflow of sugar. They have introduced derogations, non-transparent import licencing schemes and surcharges. It is a concern that FTA commitments are not complied with,” Dr Matsebula said this last week during a conference hosted by Zambian sugar producers.
KEBS meets importers over new quality marks (Daily Nation)
The Kenya Bureau of Standards has held a briefing for over 200 importers and clearing agents on the new Import Standardization Mark sticker set to take stage this August. According to a statement from Kebs, the new mark provides a levelled playing field for all players in the market as only genuine certified products will be allowed in the market. Importers and clearing agents now have less than 10 days to apply and acquire the new mark for their goods to be accepted into the country. Importers from the East African Community (EAC) member states dealing with goods from Partner States are not required to apply for the sticker, but goods imported from COMESA will require the mark.
Zimbabwe: IMF 2nd SMP review next month (NewsDay)
The International Monetary Fund mission will undertake the review of the second supervised economic reform programme on Zimbabwe next month amid indications the country has made progress under the plan. IMF resident representative in Zimbabwe Christian Beddies told NewsDay that the country made progress on the SMP under the first review held in March. Commenting on the performance of the economy during the first half of the year, Beddies said the economic situation remains difficult with the agricultural sector underperforming due to adverse weather conditions. “Mitigating factors include better performance in other sectors, most notably gold. One of the key tasks of the upcoming mission will be to reassess macroeconomic conditions and if need be revisit growth forecasts,” Beddies said.
Zimbabwe Investment Authority approves $971m FDI projects (New Zimbabwe)
Republic of Congo: IMF concludes 2015 Article IV Consultation
China grants loan to Mozambique for power transmission line (MacauHub)
China will grant a loan of US$400 million to Mozambique, the amount outstanding for the construction of a second power line for energy transmission from the centre to the north of the country, a government spokesman said Tuesday in Maputo. At the meeting the government of Mozambique ratified, among other things, the loan agreement concluded on 11 June, by which the Islamic Development Bank offered to provide US$200 million dollars for the transmission line that will link Chimuara, in Zambézia province, and Nacala, in Nampula province, over a route of just over 600 kilometres.
Chinese tourists to Zimbabwe sees 62% jump in Q1 (People's Daily)
Manufacturers sign financing MoU with DBN (The Namibian)
Namibian manufacturers have signed an agreement with the Development Bank of Namibia through which the Namibian Manufacturers Association will identify opportunities to promote development in manufacturing, primarily through financing of enterprises that are members of NMA.
Zambia: Kwacha to stabilise, assures Kalyalya (Daily Mail)
Kenya: CBK curbs banks’ daily forex trade to save the shilling (Business Daily)
Africa impact evaluation course: event notification (IPA, J-PAL)
SADC urges journalists to foster regional integration (Nyasa Times)
Kenya: The epicenter of the future of African entrepreneurship (CPI Financial)
We have very strong neighbours, we have Egypt in the north, we have the DRC and Mozambique on the side, Zambia as well and Somalia. This is a natural market for us; the average age is around 25 and when you look at that, the opportunity, these are very connected people. That is the space, with the demographics right, the innovation right, if I look at the innovation hubs, the ICT hubs, the technology labs in Nairobi today, the silicon savannah we talk about in Kenya; Technology is going to be a big frontier. Nairobi is bubbling globally for the innovation and technology. [The author, Joshua Oigara, is Chief Executive Officer of KCB Group]
Latin America/Caribbean: Promoting growth through effective policy (World Bank)
The conference, early in July, was jointly organized by the World Bank and the government of Peru, as a preparatory event for the 2015 Annual Meetings of the World Bank and the International Monetary Fund. The topics discussed included productivity improvement, job creation, infrastructure provision, and poverty alleviation. [Download the presentations]
Lin Songtian: 'China, Africa industrial capacity co-operation aims for win-win' (Capital FM)
China has accumulated successful experience in the process of its fast growth, and also paid a hard price for environment. As a sincere friend and reliable partner of Africa, we never want to see African countries follow the path of “pollution first and cleaning up later”. The Chinese government will give full support to African countries to set up industrial access standards and environmental threshold and will regulate Chinese businesses to abide by the four principles of industrial capacity cooperation. [The author is Secretary-General of the Chinese Follow-up Committee of Forum on China-Africa Cooperation]
Sylvia Mishra: 'How will the Trans-Pacific Partnership affect India?' (Observer Research Foundation)
Even though the magnitude of impact from trade diversion on India when the TPP is in place can be debated, it is certain that trade and investment diversions hurting the Indian economy is most likely to occur. Some of this impact may be mitigated due to a combination of inclusion in RCEP and other bi-lateral agreements. India should also re-engage the US in advancing BIT negotiations. However, a new 'trade order' is expected with much higher standards congruous to TPP standards and hence, efforts are required on the domestic front for India to acquire preparedness across industries to be able to compete globally.
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Increasing stockpile of trade-restrictive measures “a cause for concern”
The increasing stockpile of trade-restrictive measures introduced by WTO members remains a cause for concern, and continued vigilance is required, according to the latest report on trade-related developments presented on 23 July 2015 by WTO Director General Roberto Azevêdo.
On the positive side, an increasing number of trade-liberalizing measures, such as tariff-cutting measures, were adopted by WTO members during the period under review, 16 October 2014 to 15 May 2015.
The report confirms that WTO Members continue to show some restraint in introducing new trade-restrictive measures with the introduction of such measures (excluding trade remedies) relatively stable since 2012. During the period under review, 104 new trade-restrictive measures were put in place – an average of around 15 new measures per month.
Nevertheless, the slow pace of removal of previous restrictions means that the overall stock of restrictive measures is continuing to increase. Of the 2,416 restrictions (including trade remedies) recorded by the monitoring exercise since October 2008, only 588 have been removed. In other words, the total number of those restrictive measures still in place currently stands at 1,828 – up by over 12% compared to the last report. The addition of new restrictive measures, combined with a slow removal rate, remains a persistent concern. With the share of removals of total restrictive measures still under 25%, the longer-term trend in the number of trade-restrictive measures remains an area where continued vigilance is required.
More encouragingly, WTO Members continued to adopt measures aimed at facilitating trade, both temporary and permanent in nature. Members implemented 114 new trade-liberalizing measures during the period under review – an average of more than 16 measures per month. When counted without trade-remedy actions, WTO Members have adopted more liberalizing trade measures than restrictive measures since the end of 2013.
Also, in the area of trade remedies, a slight deceleration has been observed in the number of initiations of anti-dumping investigations during the period under review. Initiations of countervailing investigations and safeguard investigations have also declined recently.
The broader international economic context also supports the need for continuing vigilance and action. Trends in world trade and output have remained mixed since the last monitoring report, as merchandise trade volumes and GDP growth picked up in the second half of 2014 but appear to have slowed in the first quarter of 2015. Economic activity remained uneven across countries as the United States (US) and China slowed in Q1 while growth in the euro area and Japan picked up. Plunging oil prices and strong exchange rate fluctuations – including an appreciation of the U.S. dollar and a depreciation of the Euro – generated uncertainty to the economic outlook. Lower prices for oil and other primary commodities were expected to provide a boost to importing economies, but reduced export revenues weighed heavily on commodity exporters. In light of these developments, the Secretariat’s most recent forecast (14 April 2015) predicted a continued moderate expansion of trade in 2015 and 2016, although the pace of recovery was expected to remain below historical averages. According to this forecast, growth in the volume of world merchandise trade should increase from 2.8% in 2014 to 3.3% in 2015 and further to 4.0% in 2016.
This report shows that WTO Members introduced 75 new general economic support measures. The main beneficiaries were selected industries in the manufacturing sector, activities related to the agricultural sector and a number of programmes to assist SMEs. A variety of financial aid schemes appear by design to seek to encourage or boost exports while others identify conservation and the environment as overall objectives. A significant number of programmes which seek to eliminate or reduce subsidy schemes for gasoline and other fuels were identified during the period under review.
From transparency and systemic points of view, important developments took place in the WTO’s TBT and SPS Committees. The SPS Committee has witnessed a significant growth in notifications from developing countries leading to the highest number of notifications to date. An increase in the number of notifications does not, however, automatically imply greater use of measures taken for protectionist purposes. Another noteworthy development was a significant increase in the number of new specific trade concerns (STCs) raised in the TBT Committee.
A number of recent policy developments in services were recorded during the review period. These include reforms of the insurance and pension sectors and easing of the rules on foreign investment in the construction and railway transportation sectors in India, as well as the lifting of restrictions on foreign investment in several service sectors in China. Also noteworthy is the amendment of the Russian Law on Foreign Investment in Strategic Companies; several important reforms in the audio-visual and ICT sectors by Argentina, Belgium, Mexico, Madagascar, Myanmar, Poland, the Russian Federation, Sierra Leone and the United States (US); and also in financial services by China, India, Myanmar and the Philippines.
The overall assessment of this monitoring report is that the continuing increase in the stock of new trade-restrictive measures recorded since 2008 remains of concern in the context of an uncertain global economic outlook. WTO Members – individually and collectively – must show leadership and reinforced determination towards eliminating existing trade restrictions and refrain from implementing new ones.
The multilateral trading system has proven its usefulness in providing a predictable and transparent framework governing trade between nations and in helping Members resist protectionist pressures as a response to the global economic and financial crisis and thereafter. The role of the multilateral trading system in providing a stable, predictable and transparent trading environment should be kept in mind as Members prepare for the WTO’s MC10 in Nairobi in December. Decisive progress in eliminating remaining trade-restrictive measures combined with further multilateral trade liberalization would be a powerful policy response.
Key findings
104 new trade-restrictive measures (excluding trade remedy measures) were put in place in the reporting period 16 October 2014 to 15 May 2015 – an average of around 15 new measures per month.
This monthly rate has remained relatively stable since 2012, though the overall stock of measures nevertheless continues to rise.
Of the 2,416 measures recorded since October 2008, less than 25% have been removed, leaving the stock of restrictive measures still in place at 1,828. This represents an increase of 12% compared to the last report.
This remains a cause for concern and continued vigilance is required from WTO members.
More encouragingly, WTO Members have adopted more trade-liberalizing measures (excluding trade remedy actions) than trade-restrictive measures since the end of 2013. Continuing this trend, during the period under review, WTO Members implemented 114 new trade-liberalizing measures – an average of more than 16 measures per month.
The broader international economic context supports the need for vigilance and action with regard to trade-restrictive measures. According to the WTO’s most recent forecast (14 April 2015), growth in the volume of world merchandise trade should increase from 2.8% in 2014 to 3.3% in 2015 and further to 4.0% in 2016, but remaining below historical averages.
The multilateral trading system has proven its usefulness in providing a predictable and transparent framework governing trade between nations and in helping Members resist protectionist pressures as a response to the global economic and financial crisis and thereafter.
This role in providing a stable, predictable and transparent trading environment should be kept in mind as Members prepare for the WTO’s tenth Ministerial Conference in Nairobi in December.
Trade-restrictive measures, not including trade remedies (Average per month)
Trade-facilitating measures, not including trade remedies (Average per month)
Stockpile of restrictive measures1
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Commodity prices expected to remain weak in 2015 despite slight rebound in oil price
Special feature assesses how China and India play significant roles in world commodity markets
The World Bank is nudging up its 2015 forecast for crude oil prices from $53 in April to $57 per barrel after oil prices rose 17 percent in the Apr-Jun quarter, according to the Bank’s latest Commodity Markets Outlook, a quarterly update on the state of the international commodity markets.
The Bank reports that energy prices rose 12 percent in the quarter, with the surge in oil offset by declines in natural gas (down 13 percent) and coal prices (down 4 percent). However, the Bank expects energy prices to average 39 percent below 2014 levels. Natural gas prices are projected to decline across all three main markets – U.S., Europe, and Asia – and coal prices to fall 17 percent. Excluding energy, the World Bank reports a 2 percent decline in prices for the quarter, and forecasts that non-energy prices will average 12 percent below 2014 levels this year.
“Demand for crude oil was higher than expected in the second quarter. Despite the marginal increase in the price forecast for 2015, large inventories and rising output from OPEC members suggest prices will likely remain weak in the medium-term,” said John Baffes, Senior Economist and lead author of Commodity Markets Outlook.
Iran’s new nuclear agreement with the US and other leading governments, if ratified, will ease sanctions, including restrictions on oil exports from the Islamic Republic of Iran.
Downside risks to the forecast include higher-than-expected non-OPEC production (supported by falling production costs) and continuing gains in OPEC output. Possible upside pressures may come from closure of high-cost operations – the number of operational oil rigs in the US is down 60 percent since its November high, for example – and geopolitical tensions.
In a special feature assessing the roles played by China and India in global commodity consumption, the Outlook finds that demand from China and, to a lesser extent, India, over the last two decades significantly raised global demand for metals and energy – especially coal – but less so for food commodities.
China’s consumption of metals and coal surged to roughly 50 percent of world consumption, and India’s to a more modest 3 percent for metals, and 9 percent for coal. These patterns reflect different growth models and commodity consumption patterns in the two countries.
If the two countries catch up to OECD levels of per capita commodity consumption, or if India’s growth shifts towards industry, demand for metals, oil, and coal could remain strong. In contrast, given that the level of per capita consumption of food in China and India is already comparable with the world, pressures on food commodity prices are likely to ease as their population growth – one of the key determinants of food commodity demand – slows.
“China and India have played a significant role in driving global consumption of industrial commodities especially since the early 2000s. Going forward, while demand from India is likely to be a major factor in shaping consumption of industrial commodities, China will be important in driving global demand for energy given its efforts in rebalancing growth,”said Ayhan Kose, Director of the World Bank’s Development Prospects Group.
Commodity Markets Outlook also provides detailed market analysis for major commodity groups, including energy, metals, agriculture, precious metals and fertilizers.
Metals prices declined marginally in the quarter as most are still in surplus, particularly iron ore where prices are off two-thirds from their 2011 high. The World Bank projects metals prices to average 16 percent below 2014 levels this year, revised downward from 12 percent in April.
The largest decline is expected for iron ore (down 43 percent) due to new low-cost mining capacity coming online this year and next (mainly in Australia). Metals markets are adjusting by closures of high-cost operations and reduced investment. Markets will eventually tighten, in part due to large zinc mines closures, and as Indonesia’s ore export ban weighs on supplies, notably nickel.
Agricultural prices fell 2.6 percent in the quarter, due to large declines in food commodities – especially edible oils and grains – on further improvements of supply conditions and despite some adverse weather in North America and El Niño fears. The World Bank expects agriculture prices to average 11 percent below 2014 levels this year, revised downward from 9 percent in April.
Fertilizer prices, a key cost for most agricultural commodities, are likely to decline 5 percent on weaker demand and ample supply.
» Full forecast and historical data, and detailed market commentary, are available here.
Commodity price indices
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Nexit – Will Namibia be able to sustain rand parity?
Since 1993 when Namibia introduced its national currency, the Namibia dollar, the country has maintained a policy of strategic parity between the Namibian dollar and the rand.
This was done for a number of reasons but principally to reassure business at the time of independence that the conduct of policy in Namibia was in safe hands and that when they invested in the country they could take out their profits at a fixed exchange rate.
For over 20 years this has been at the heart of macroeconomic and exchange rate policy in Namibia but now it looks increasingly under pressure.
On 17 June, the Bank of Namibia announced that the nation’s foreign exchange reserves had fallen to N$12,1 billion – down from N$15,7 billion just two months earlier. With its regular but increasingly perfunctory comments, the Bank of Namibia’s Monetary Policy Committee (MPC) added its usual caveat that the reserves remain sufficient to sustain rand parity. But are they?
Certainly, Namibia has enough foreign exchange reserves to cover imports for a period of approximately seven weeks given the most recent decline but reserves are certainly moving in the wrong direction. In 2012, Namibia’s foreign exchange holdings were enough to cover four months of imports. By international standards anything above three months is considered reasonably adequate.
But by the end of last year the import cover had fallen to two months and the substantial decline of reserves in 2015 should be a wake-up call to policy makers that the country is on an unsustainable path of importing far more than it is exporting and that this, unless checked, will increase the country’s vulnerability to external shocks.
PRETTY
From the 1990s up until the global economic crisis of 2008, Namibia’s balance of trade was pretty much in balance with exports and imports of goods growing in tandem. Then with the beginning of the global economic crisis in 2008 imports started to balloon and, while export growth has been adequate, especially in 2014 when diamond earnings improved, it has not been enough to pay for the country’s growing appetite for imports.
The Bank of Namibia’s MPC puts the blame squarely on the country’s appetite for imported luxury goods, in particular expensive cars. The NSA data on imports of motor vehicles does show a rapid rise over the last few years but the figures are probably vastly underestimated given the growth of normally under-valued second-hand cars. In 2014 Namibia is said to have imported some N$12,4 billion up by N$3 billion or 37,4% from the year before.
There is a more benign interpretation of events in Namibia. Some argue that the decline in foreign exchange reserves is simply a result of imports of capital equipment for new mines such as the Huisab Uranium Mine and the B2Gold Mine and that once this is over the balance of payments will return to balance as exports of minerals will increase while imports will slow. But after five years of ever widening trade deficits such a view is now dangerously optimistic.
Namibia’s worsening trade situation is no doubt compounded by the government’s budget deficits over the last few years which is resulting in ever more imports.
None of the options for addressing the nation’s trade imbalance are pleasant for the government or for the Namibian people. The politically safe approach to an impending balance of payments crisis in most countries is to use monetary policy to restrict access to credit i.e. a credit squeeze.
BLAME
This puts less blame directly on government and shifts it to the Bank of Namibia. But a credit squeeze is a dull instrument that can often lead to the destruction of many an otherwise sound business. A similarly blunt instrument that the government has to restrict spending is the use of its fiscal policy to cut government spending and raise taxes. To say the least, this is a very unpopular approach to dealing with deficit problems – just ask the Greeks how much the people like this sort of approach.
So how should the government react? If the Bank of Namibia’s MPC is correct in its assertion that the purchase of luxury automobiles lies at the heart of the import surge, a number of more focused monetary policies to push the banks to limit access to credit in these sectors is in order.
But in an economy like Namibia where funds can flow in from South Africa with ease there are too many ways around credit restrictions to one sector or another.
The other option is to impose a new series of new taxes on automobiles coming into the country, especially the larger and more expensive ones. It is not possible to impose import duties on vehicles made in Sacu but it is certainly possible to impose higher excise tax and a large scrappage or environmental fee on all new and second-hand cars.
LUXURY
With luxury new cars costing from N$800 000 to well over a million, many Namibians are moving to second hand imports. Many of these, especially the older vehicles coming from Botswana, are massively undervalued and the government needs to stop the process of VAT collection based on fictitious valuations. Instead, taxes need to be imposed based on international ‘Blue Book’ values of second-hand cars.
Irrespective of what policy measures the government chooses to impose to deal with the unsustainable trade imbalance, it is slowly running out of both foreign exchange reserves and time. The time for government to act is now before the reserves fall to what is often seen as a critical minimum i.e. approximately four weeks import cover.
While four weeks is still enough to cover imports, it is commonly seen as the point at which investors will see the writing on the wall for the Namibian dollar – rand parity and start to move ever more foreign exchange out of the country. This exit of financial capital will only hasten a crisis.
Unless the optimistic and benign approach is taken then after five years of increasing trade deficits it is time to act and use both fiscal restraint as well as tax policy to assure that we do not have a ‘Nexit’ – an exit from Namibian dollar parity with the rand and a devaluation of the Namibian dollar.
The immediate impact of devaluation would be a rise in the price of imported goods. That would not only lower living standards across the board but in the long term it would weaken Namibia’s reputation as a safe place to invest. The longer policy makers wait to address the issue of the trade deficit the greater the pain will eventually be. As the old adage goes ‘a stitch in time still saves nine’.
Roman Grynberg is professor of economics at the University of Namibia. The views expressed are entirely his own.
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Africa is not a country – President Kaberuka advises on better ways of doing business on the continent
Africa is not a country but a continent of 54 states, which, in spite of many similarities, differ from one another in many respects, African Development Bank President, Donald Kaberuka told a development think-tank in Beijing on Monday, 20 July 2015.
Kaberuka said making this distinction had become necessary to ensure that potential business opportunities in African countries are not jeopardised by a single story line whereby negative issues in one country are attributed to all 54 countries on the continent. He was speaking at a round table discussion on “Investment Opportunities in Africa” organised by the Centre for China and Globalisation (CCG).
Citing the Ebola epidemic which hit three countries in West Africa, Kaberuka said it was improper to use this to scare potential businesses destined for other parts of the continent.
In the same way, he said, it was unfair to associate China’s business relationship with Africa in terms of natural resources. This is because it is varied and more sophisticated, dating back to the 1970s when the less endowed China at the time had begun to finance infrastructure projects in Africa.
Having realised the fastest industrialisation in history, China now has an opportunity to help Africa emulate its successes through new development vehicles that are sustainable and beneficial to both parties.
The world is changing and the traditional way of doings things are no longer working, Kaberuka said, noting that development actors were ill-equipped to cope with some aspects of globalisation.
“The institutions we have today for managing globalisation are lagging behind the process,” he said.
The AfDB is innovating and adapting to the changing dynamics, Kaberuka said, noting that the 2008 global financial crisis would have hit Africa much harder if the Bank did not adopt counter-cyclical measures to assuage the impact of the crisis on the regional member countries.
Furthermore, the situation would have been much worse if the emerging markets did not step in to avert the disaster.
Kaberuka said the AfDB would continue to partner with countries and institutions that devise more innovative approaches to development.
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EAC states’ great expectations of securing stronger trade ties with US
East African Community countries have presented a list of issues they hope the United States government will address to expand its trade partnership with the region.
Trade ministers from the five EAC partner states have made a formal request to the US government asking it to relax the stringent measures imposed on their agricultural exports to the US and also review the high tariffs on some agricultural products such as sugar and cotton.
They are in fact seeking removal of tariffs on all agricultural exports from East Africa as well as creation of more quotas, which they say would be consistent with US obligations under the UN Millennium Development Goals and would fulfil a key demand from these countries in the World Trade Organisation.
The economic and international trade officer in Kenya’s Ministry of Foreign Affairs, James Kiiru, said that the EAC also expects US President Barack Obama, who is visiting Kenya this week for the Global Entrepreneurship Summit, to address issues raised earlier “to pave the way for us to utilise the quota-free US market under the Africa Growth and Opportunity Act (Agoa).
“Of priority are the stringent measures imposed by the US on agriculture exports, especially the sanitary and phytosanitary measures that raise the cost of exports enough to offset any additional competitiveness gained through lower tariffs,” said Mr Kiiru.
The US has imposed stringent SPS measures for agricultural products such as fresh produce and beef, and the majority of East African producers are often unable to meet the standards.
“This has made it hard for the East African countries to lobby for even more products to be added on the Agoa list, since it takes a much longer time for approval,” Mr Kiiru added.
The East African states are also pushing for a prior renewal of another 10-year term that was last month reauthorised for renewal for 10 years by the US House of Congress. The Agoa pact will be renewed in October, immediately after the current agreement expires at the end of September.
President Obama, who will attend the Global Entrepreneurs Summit in Nairobi, is likely to address the trade partnership between the EAC and the US.
Earlier this month, the US Department of State said it was reviewing Burundi’s eligibility for the trade preferences available to it under the Agoa.
“We will be taking into consideration ongoing violence and instability and the government of Burundi’s lack of respect for the rule of law in determining their eligibility for these trade preferences moving forward,” said the US State Department statement.
Trade among the EAC countries and the US amounted to $2.8 billion in 2014: US exports to the EAC reached $2 billion while American imports from the region, which rose by 52 per cent from 2013, totalled $743 million.
The main exports of agricultural products to the US are cocoa paste and powder, citrus fruits, edible nuts, wine, unmanufactured tobacco, horticultural products and vegetables.
Most agricultural exports from sub-Saharan Africa already enter the US tariff-free. There are, however, a number of products where the US retains high tariffs, such as sugar and cotton, which, if reduced, would stimulate further trade. Except for imports of sugar and cotton, imports under Agoa that are in-quota enter the US at zero tariffs.
The US retains various trade barriers on a range of agriculture goods that, if reduced, would be likely to lead to increased exports.
Sugar, meat, dairy, vegetables, processed fruit and other processed goods such as dried garlic, apricots, shea butter, yoghurt, ghee, cashew nuts, sugarcane products, sugar-containing cocoa products, oil seeds, shrimp and prawns, bananas and other vegetables and fruit such as mangoes are products facing trade barriers in accessing the US markets.
“The US should also look to where it can streamline its import procedures, reducing costs and delays to market,” said Mr Kiiru.
The renewal and extension of the Agoa period is expected to give African countries ample time to build competitive capacity in the global market. It accords preferential market access system to 39 countries in sub-Saharan Africa, including all the East African countries, to develop their economies and create free markets.
Peter Njoroge, director of economics at Kenya’s Ministry of EAC Affairs, Commerce and Tourism, says that the East African countries have not been able to fully utilise the US quota-free market under Agoa because the agreement does not comply with the WTO’s framework for free trade agreements and has been relying on a 10-year conditional special exemption window that expires in September.
“Agoa is a short-lived initiative yet investments under Agoa need to be long-term, which does not attract investors,” said Mr Njoroge. “EAC partner states will lobby the US government to give Agoa a long-term lifespan so as to give investors predictability.”
He added that the five EAC countries are expected to push for a prior renewal of another 10-year term. Although the Act provides for about 6,000 products, Kenya has only been exporting textiles and apparel.
Unlike the EU market, Mr Njoroge said, transportation costs to the US market are high, caused by lack of direct flights and sea transport from the EAC countries to the US, affecting export of products such as cut flowers to the US.
“It is expected that Kenya will soon have direct flights to the US that will also be of benefit to the other EAC partners,” noted Mr Njoroge, adding that the provision on rules of origin has been proposed for revision under the Agoa reauthorisation.
Stringent rules of origin
Agoa rules of origin are based on those in the US GSP programme. To be eligible for Agoa benefits, products must be grown, produced or manufactured in one or more of the beneficiary countries and exported directly from an Agoa beneficiary country to the US.
“With these conditions, most of the products from eligible countries cannot access the US market,” said Mr Njoroge. “Moreover, unless ‘wholly obtained’ from a single Agoa country, goods are subject to a 35 per cent value-content rule.”
According to industry sources, in some sub-Saharan African countries, activities such as tuna processing have difficulty achieving the threshold and cannot therefore be exported to the US duty-free under Agoa.
The restrictive rules of origin also do not reflect the current market reality, given that African textile mills cannot in general produce yarns or fabric in sufficient variety and quantity to meet the needs of African apparel producers or the requirements of retailers in developed countries.
Despite the challenges and the high expectations by the EAC states from President Obama’s visit, efforts are under way to ensure that they fully exploit the US market as a region. They are working on a joint sustainable strategy to exploit the US preferential trade market.
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China, Africa industrial capacity co-operation aims for win-win
Recently, industrial capacity cooperation has become a catchword in China-Africa cooperation. Many African countries are eager to embrace the historic opportunity brought about by China’s economic transformation and upgrading, and become the first places to host Chinese investors, so as to add fuel to their own industrialization strategies.
There are mutual needs and complementarity between China and Africa to carry out industrial capacity cooperation and a rare historic opportunity has come for the two sides, which can help China and Africa to achieve win-win cooperation for common development, make the world more balanced, stable and prosperous, and benefit the people of China, Africa and around the world.
Industrial capacity cooperation between China and Africa is the urgent need for Africa to realize independent and sustainable development. Since the middle of the last century, African countries have achieved national independence one after another, and sought to promote economic development through international cooperation. However, some countries outside the region are only willing give Africa “fish” instead of “teaching Africa how to fish”. Many African countries still suffer from hunger and under-development.
It is impossible to realise real political independence without economic independence. By giving others fish, one might help to address the immediate needs of others. Only after “learning how to fish” can Africa sets up its own industrial system, move out of the disadvantage of exporting raw materials at a low price and importing expensive finished products, thus realizing independent and sustainable development and controlling their own destiny.
Industrial capacity cooperation is to “let African countries know how to fish”, helping Africa to get rid of the two persistent bottleneck constraints hindering its development and industrialization, i.e., insufficiency in infrastructure and talent. The Chinese government encourages Chinese businesses to invest in Africa, transfer their technologies bring more job opportunities, foreign exchange, tax revenue and added value of primary products to the local people, thus translating Africa’s abundant natural and human resources into real development results.
Industrial capacity cooperation between China and Africa is the natural trend of China’s economic transformation and upgrading. After more than 30 years of reform and opening up, China has developed a large number of leading industries which provide advanced equipments and products to the world, and numerous internationally competitive businesses have grown in China. At the same time, due to increase of labour cost, a large number of labour-intensive businesses in China need to move overseas for new development. China can and need to bring its industrial capacity overseas, and help other countries to develop while achieving China’s own development. This is also in line with the rule of world economic development. Japan and the four Asian tigers all realized economic takeoff after taking over industrial capacity from overseas, and later became source countries to export industrial capacity to overseas markets.
Africa has a population of close to 1.1 billion, which might reach 1.4 billion by 2025. The huge demographic dividend will make it one of the most ideal locations for investments from other parts of the world. In order to realize industrialization, Africa needs advantageous industrial capacity from countries such as China. The Chinese government is sincere in helping Africa to improve both “software” and “hardware” of investment, assisting them to “build a nest to attract phoenix”, and creating better environment for industrial capacity transfer. It is fair to say that China and Africa have respective advantages and mutual need for industrial capacity cooperation, helping Africa is helping China itself.
Industrial capacity cooperation between China and Africa is the objective need to safeguard world peace and prosperity. African refugees are flooding to Europe. Poverty and underdevelopment have always been the root causes of instability and unrest in Africa, which also provide the breeding ground for terrorism. Stability and development in Africa bear on sustained peace and prosperity of the world.
By investing in Africa and developing industrial capacity cooperation, especially helping African countries to develop labour-intensive industries, the Chinese businesses will create a large number of job opportunities for the local people, improve their living, and enable more African youth to go to factories, workshops, farms and office buildings to work. In that case, no one would move to the jungles to join terrorist organizations or leave their homelands to become refugees, thus Africa and the world will become more harmonious and stable.
Chinese leaders attach high importance to developing a new type of partnership with Africa featuring win-win cooperation. The essence of the policy of the new Chinese leadership is that China is willing to integrate its own development with independent and sustainable development of African countries, so as to realize common development and make the world more balanced, harmonious and prosperous.
Recently, Chinese Foreign Minister Wang Yi summarized the four principles China adheres to in international industrial capacity cooperation, which are “the right approach to righteousness and benefit, win-win cooperation, openness and inclusiveness, and market-based operation”. Wang Yi stressed that China’s industrial capacity cooperation with other countries will not come at the cost of environment and long-term interests of others. China will never take the old colonial path of looting and damaging others’ resources. So China says, so China does.
Ethiopia does not have rich oil and other energy resources, but China is committed to developing mutually beneficial cooperation with Ethiopia. In Ethiopia, the first city ring road, the first express way, the first city light rail, the first electrified railway, and the first wind power generation project are all financed by China, which have created good conditions for Ethiopia to attract foreign investment and the rapid growth of local industries and economy.
The Oriental Industrial Park built with private investment from China is the first industrial park in Ethiopia, which has attracted a host of Chinese investors. Among them, Huajian Group, a large shoe maker, with only 35 Chinese employees, offers more than 3500 jobs for local people, and contributes over US$10 million to Ethiopia every year.
China is Angola’s biggest crude oil exporting destination. Over the past 10 years and more, through the model of a package cooperation, China has helped Angola to build 39 hospitals, 78 schools, 14 power transformation stations, 20 water processing factories, 7,500 hectares of agricultural irrigation projects, upgrade 223 community networks, construct 1,343 kilometres of railway, 892 kilometres of roads, 736 kilometres of power transmission and transformation lines, making important contribution to Angola’s national reconstruction and economic development.
The oil and mineral resources of African countries like Nigeria and Chad are monopolized by western countries. It’s only natural to wonder whether western countries are also sincere in helping African countries to develop as China does for Angola and Ethiopia.
To help and support African countries to realize lasting peace and sustainable development is in line with the common interests of people across the world, and is a common responsibility of the international community. It is a pity that some countries still take Africa as their zone of influence or “back garden”, and try to rely on their traditional influence and practical deterrence to rudely interfere in Africa’s internal and external affairs, including with whom African countries should make friends and develop cooperation. They themselves are not sincere in helping African countries to develop, and try every means to disturb others’ cooperation with Africa.
While China-Africa industrial capacity cooperation is about to set sail, some western media, far away from Africa and with their eyes closed, claim that China will transfer unwanted industrial capacity and pollution to Africa. They appear to be concerned about the ecological environment of Africa, but actually are worried that Africa might advance its industrialization and realize real political and economic independence.
China has accumulated successful experience in the process of its fast growth, and also paid a hard price for environment. As a sincere friend and reliable partner of Africa, we never want to see African countries follow the path of “pollution first and cleaning up later”. The Chinese government will give full support to African countries to set up industrial access standards and environmental threshold and will regulate Chinese businesses to abide by the four principles of industrial capacity cooperation. Jidong Development, a company from China, takes the lead in applying cement surplus heat power generation technology in its cement factory in South Africa, which can save 17,000 tons of industrial coal consumption every year, thus setting the highest standard for the cement sector in South Africa. This also serves as the model for industrial capacity cooperation, which welcomes international oversight.
Tide rises and falls. Colonial time has ended and “zero-sum” mentality must be abandoned. Africa belongs to the African people, and is an important member of the international community. Only by giving up bias and selfishness and taking off “coloured glasses” can the international partners work in concert, African countries get more benefits and the world become better and more harmonious.
The author is Secretary-General of the Chinese Follow-up Committee of Forum on China-Africa Cooperation, Director-General of the African Department of the Ministry of Foreign Affairs of China, Former Chinese Ambassador to Liberia and Malawi.
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Winning Africa’s future: Food security for all
In a little less than 7 days, more than 1400 participants will gather in Nairobi on 30-31 July 2015 to discuss how Africa can win its future under the theme “Re-imagining Africa’s Food Security Now and into the Future under a Changing Climate.”
Because the discussion occurs just before two big global conferences slated for 2015, it could set the pace for how Africa can catalyze a just future for all. A future where there will be food and shelter for all – where images like those from the Mediterranean Sea showing Africa’s youth risking and often losing their lives in an attempt to flee the continent will be no more.
In September, New York will host the meeting on the new Sustainable Development Goals. Climate change will be the focus of the December conference in Paris. Taken together, these two conferences represent a once-in-a-generation opportunity for Africa’s development. As the African saying goes: “When the music changes, so does the dance.” To put all countries firmly on the path to a secured food system as well as inclusive growth, there needs to be a change in the music. A new approach is therefore urgently needed to build an inclusive food system that is robust enough to create jobs and wealth for all in Africa, including the youth.
The Years in Retrospect
Sometimes looking backwards serves to provide the impetus needed to leap forward. Africa has registered impressive milestones in its thousand mile journey towards sustainable inclusive growth. The 1990s marked the release of Nelson Mandela from prison, a continental icon who demonstrated the power of dogged perseverance to one’s course. Today’s course for each and every one of us is that of charting a sustainable food secured pathway where productivity, job creation and collective wellbeing for all are the norm and not the exception.
The 2000s marked the beginning of Africa’s decade of growth – averaging 5.1% beginning in the year 2000, and doubling the average growth rate of the 90’s. This spilled over to post 2010, with estimates pegging Africa’s GDP growth at approximately 6% annually, with 6 of the world’s 10 fastest growing economies being African, and a growing middle class with 20% of the population having daily incomes of over USD 10 as of 2012.
These improvements may well be from a very low base. However, the trajectory of Africa’s transformations is undeniable. The question that will be on the mind of every participant at this year’s 2nd Africa Ecosystem based Adaptation for Food Security (EBAFOSC 2) is how best to achieve Africa’s Food Security Future that is inclusive and works for all.
How do we create enough well-paying jobs for a billion people in less than 25 years when already about 60% of our youth are unemployed? How do we harness EBA-driven agriculture to stimulate job creation, growth, and value additional partnership in Africa? How do we catalyze investments and policy support for EBA-driven agriculture as well as incentivize private sector involvement in EBA-driven agriculture to bring in capital and enhance competitiveness? These are just some of the questions EBAFOSC2 conference will be discussing. Although registration for the conference has now closed, the proceedings can be followed on Twitter at #EBAFOSC.
Africa Food Security Policy Framework
The 2003 Maputo Declaration, marked the continent’s intentions to modernize agriculture resulting in the establishment of the Comprehensive Africa Agriculture Development Programme (CAADP). The most prominent decision of this declaration was the commitment by AU member states to allocate at least 10% of national budgetary resources to agriculture and rural development, a policy implementable within five years.
A decade into this declaration, 13 countries had met or surpassed the 10% target and average continental agriculture spending increased by over 7% annually in the period. In marking this decade, the AU launched “the year of agriculture and food security” in 2014, whose climax was the adoption of the Malabo Declaration by AU Heads of State and Government. The Malabo Declaration on Accelerated Agricultural Growth and Transformation for Shared Prosperity and Improved Livelihoods is a commitment by the AU Heads of State and governments to end hunger by 2025 and reduce post-harvest losses by 50%. To operationalize the Malabo Declaration, the AUC and NEPAD launched the implementation strategy and road map to achieve the 2025 vision on CAADP. EBA-driven agriculture is recognized as among priority mechanisms for delivering the 2025 Vision on CAADP, a remarkable milestone for EBA. However, this reported growth and declarations of good intent are amidst a plethora of challenges.
Turning Africa’s Challenges into Opportunities
About 240 million people in the continent go to bed hungry; over 200 million suffer the debilitating symptoms of chronic to severe malnutrition, which also contributes to over 50% of infant mortality on the continent. The region currently spends more than USD 35 billion annually on food imports while recorded annual productivity losses amount to USD 48 billion as postharvest losses, and a further 6.6 million tonnes as potential grain yields are lost due to degraded ecosystems: food enough to meet the annual calorific needs of approximately 30 million people. Exacerbating these challenges is rapid population growth projected to hit 1.5 billion by 2030 and 2.4 billion by 2050, youth unemployment currently at 60% with an additional estimated 350 million young people entering the labor market by 2035, and climate change expected to hit the crucial agriculture sector with 11-40% yield reductions on key staples.
While these grim statistics are a resounding call to action, the continent’s inherent agriculture potential is a source of solace…
Africa’s Abounding Solutions
Africa holds up to 65% of the world’s arable land and 10% of internal renewable fresh water sources. On incomes and poverty reduction, the World Bank reports that in Africa, a 10% increase in crop yields translates to approximately a 7% reduction in poverty. Neither the manufacturing nor service sectors can achieve an equivalent impact. Nevertheless, current sector productivity is low, contributing a lowly 25-34% of continental GDP. However, the agriculture sector which currently employs up to 60% of the continent’s labour can potentially ensure inclusive and sustainable growth if its value chain is optimized holistically, and productivity losses stemmed. It can create jobs for many of the 17 million youth entering the job market annually while feeding Africa. A climate proof agriculture sector based on EBA techniques that work with nature and augment farm productivity with value addition strategies to unlock income opportunities along the entire agro-value chain will potentially result in yield increases of 116-128% and accompanying farmer income increases, and be two to four times more effective in reducing poverty relative to other sectors.
A Call to Action
The EBAFOSC 2 builds on the findings of the continental task force report “Towards a Comprehensive Strategic Framework to Upscale and Out-scale EBA-driven Agriculture in Africa.” Based on the taskforce findings, EBA driven agriculture augmented with value addition along the agro-value chain can potentially ensure not only food security, but livelihood security, enhance community climate resilience hence climate adaptation, enhance ecosystem productivity and unleash numerous income and job opportunities along the value chain by linking supply and demand side value chains.
Given the central role agriculture plays in socio-economic development in Africa, this conference presents a golden opportunity to put the continent’s food systems on track, now and well into posterity, and thereby guarantee sustainable and inclusive growth going forward.
Jointly discussing Africa’s challenges and solutions will propel Africa into the shining city on a hill, where collective prosperity for all will no longer be an elusive dream. As the African saying goes, “If you want to go fast, go alone, if you want to go far, go together.” Let’s go together to catalyze a food secured Africa and guarantee sustainable and inclusive growth for the collective benefit of all.
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tralac’s Daily News selection: 22 July 2015
The selection: Wednesday, 22 July
Featured commentary: Nexit - will Namibia be able to sustain rand parity? (The Namibian)
Irrespective of what policy measures the government chooses to impose to deal with the unsustainable trade imbalance, it is slowly running out of both foreign exchange reserves and time. The time for government to act is now before the reserves fall to what is often seen as a critical minimum i.e. approximately four weeks import cover. While four weeks is still enough to cover imports, it is commonly seen as the point at which investors will see the writing on the wall for the Namibian dollar - rand parity and start to move ever more foreign exchange out of the country. This exit of financial capital will only hasten a crisis. Unless the optimistic and benign approach is taken then after five years of increasing trade deficits it is time to act and use both fiscal restraint as well as tax policy to assure that we do not have a 'Nexit'- an exit from Namibian dollar parity with the rand and a devaluation of the Namibian dollar. [The author: Roman Grynberg]
Govt gets 15% in diamond deal (The Namibian)
The Namibian government and De Beers company have agreed on a new 10-year sales agreement but the deal falls short of what the government was demanding. Last month, Cabinet said it wanted up to 30% of rough diamonds produced by Namdeb Holdings, to be supplied to local factories under the new sales agreement. Namdeb, which has land and sea operations, is owned 50/50 by the government and De Beers.
BoN sets daily limits for kwanza exchange at border towns (The Namibian)
A BIT far? Geography, investment agreements, and FDI (World Bank Blogs)
Despite hard times at home, emerging market multinationals (EMMs) continue their impressive rise in the global marketplace. In 2014, outward foreign direct investment (FDI) by developing and emerging economies increased by 23 percent, reaching a record level of $468 billion or 35 percent of global FDI flows. In little more than a decade, emerging market firms like India’s Tata Group, South Africa’s SABMiller, and China’s Haier, have established operations around the world, becoming global leaders in their respective products.
Yet, the fast and far-reaching geographic spread of these global giants is not the norm among this particular brand of multinationals. Our recent book “New Voices in Investment” where we surveyed over 700 firms from four emerging economies – Brazil, India, Korea, and South Africa—shows that, in fact, a large majority of EMMs look primarily within their regions when deciding where to invest. Although 40 percent of respondents claimed that market size and business opportunities were the main factors influencing their location decisions, their revealed preference seems to be for closer destinations. How does geography affect the investment decisions of emerging market multinationals? [The authors: Gonzalo Varela, Laura Gomez-Mera]
Is Africa’s growth sustainable in the face of climate change? (ICTSD)
So while GDP growth is laudable, its conversion to poverty reduction for the Base of Pyramid (BoP) has not always occurred. Consequently, African growth has not always been inclusive, and its long-run sustainability is therefore brought into question. Two critical concerns about Africa’s growth and future outlook are addressed in this article. Can the agriculture sector contribute toward enhancing inclusive growth and job creation on the continent? Considering the overriding threat of climate change to Africa’s growth, what is the continent’s likely position at the UN climate meeting this December in Paris, France? [The authors: Richard Munang, Robert Mgendi]
Africa: Sendai Framework starts moving (PreventionWeb)
First half of 2015 ‘hottest six months on record'- UN (WMO)
The objectives of this paper are, first, to identify how susceptible are the EAC economies to asymmetric shocks; second, to assess the value of the exchange rate as a shock absorber for these countries; and third, to review adjustment mechanisms that would help ensure a successful experience under a common currency-EAC. While the analysis draws on recent experience, backward-looking measures are imperfect for a forward-looking assessment. The paper thus also draws attention to likely further structural changes in the EAC economies (for example, large oil discoveries in some countries) as well as the intrinsic endogeneity of further integration to the currency union project itself. The paper main findings are as follows: [Download]
Integrating West African economies PPP-wise (World Bank Blogs)
What do Benin, Niger, Guinea-Bissau, Togo and Mali have in common? Apart from being members of the eight-country strong West African Economic and Monetary Union , they share a common status as low-income countries, faced with huge infrastructure needs and financing challenges. Furthermore, they have decided that one way to address these challenges and sustain their economic growth was to promote public-private partnerships through a regional framework and strategy. The issues we covered included the need to: [The author: Francois Bergere]
Over the past two days, we have had robust debate on matters close to our respective nations and how they affect our region. Politics, defence and security matters shape the development trajectory of our region. It is therefore imperative that we meet annually to take stock of the progress we are making, and if needs be re-adjust our strategies and goals, to address the security challenges of our times. While there have been remarkable developments in some areas where the region has experienced political and security challenges, there needs to be ongoing political and security engagement within the region.
Promoting peace, security and sustainable development in East Africa: GPF conference (IPPMedia)
Africa and the First Conference of States Parties to the Arms Trade Treaty: an update (ISS)
Feasibility study on the navigability of Shire-Zambezi Waterways (SADC)
From 14th to 17th July, 2015, the 14th meeting of the Joint Technical Committee (JTC) was held, at the SADC-Secretariat Headquarters in Gaborone, Botswana. The purpose of the meeting included: validating the navigability and technical investigations, transport economics and market surveys, environmental and social impact analysis, components of the Draft Final Study Report...
SADC China infrastructure investment seminar (SADC)
The main focus of the seminar (held in Beijing) was to showcase priority infrastructure projects contained in the Short Term Action Plan (STAP) 2012-2017 and in particular those in the Energy, Transport and Water Sectors. The objective of the Conference was to bring to the table, a number of bankable projects and those under preparation for consideration and possible funding. The estimated cost of the projects in the Five-Year Plan is about USD 64 billion, and it is expected that private sector will play its key role by financing some of these key projects. The Seminar was attended by major Chinese business community and other International Cooperating Partners, Investors, and Business Organizations.
Kaberuka shares his experiences with African diplomats in Beijing (AfDB)
China-Africa Entrepreneurs Forum in Pretoria: speech by Ambassador Tian Xuejun (MFA, China)
Expect more investors from China, World’s largest bank tells Kenya (Daily Nation)
3AGT: AUC, NEPAD charged on alternative sources of funding (Vanguard)
The African Union Commission and the NEPAD Planning and Coordinating Agency have been urged to facilitate the mobilisation of investment finances required for the operationalization of the Malabo Declaration on Accelerated African Agriculture Growth and Transformation (3AGT). The call was made by participants at the just concluded two-day Leadership Retreat for engagement with Permanent Secretaries /Heads of Ministries of Agriculture in AU Member States held in Nairobi, Kenya.
In a communiqué issued at the end of the retreat, the participants underscored the urgency of reviewing National Agricultural Investment Plans to align them and recommended the strengthening of CAADP activity coordination within countries to give greater impetus to the implementation of the Malabo Commitments. The Retreat also called upon Member States, that have not already done so, to fast track the development ofNational Agriculture Implementation Plans.
The updated and expanded 2015 edition of the Trade Capacity-Building Resource Guide includes profiles of 31 multilateral agencies and 37 bilateral donors. The trade-related services of 31 countries from the OECD and 16 G20 countries, some of which are also OECD members, are also reflected in the Guide. The Guide reveals that many of the OECD Development Assistance Committee (DAC) members support triangular cooperation, and other DAC members are considering introducing such support. All developing countries included in the Guide mention active participation in South-South cooperation, with Argentina, Brazil, China, Indonesia, Mexico and the Russian Federation being particularly engaged. The Guide highlights how both multilateral agencies and bilateral donors encourage and support South-South and triangular cooperation, and provides examples of projects and services for almost all multilateral and regional agencies.
Making USAID fit for purpose: a proposal for a top-to-bottom program review (Center for Global Development)
Kenya Budget 2015 guide and analysis (IEA)
UNCTAD and TradeMark East Africa strengthen collaboration
Egypt: Trade Ministry considers website for businessmen eyeing Africa (State Information Service)
Charles Brewer: 'Trade integration key to reduce poverty and support Africa’s growth' (New Times)
World Bank Group at the WTO's 5th Global Review of Aid for Trade
Pacific ACP seeks to conclude 11 years negotiation with EU (Matangi)
Work moves ahead on TPP trade pact, but nations still divided over deal (Pew Research Center)
Nigeria: World Bank to spend $2.1bn to rebuild North-east (Vanguard)
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Trade integration key to reduce poverty and support Africa’s growth
Africa continues to remain vastly unexplored, and making Africa’s most remote regions accessible for trade will not only promote prosperity in those regions, but also elevate the continent’s continued growth path, according to The Role of Trade in Ending Poverty report recently released by the World Bank Group and World Trade Organisation.
It is important that leaders on the continent understand the role that international trade plays in development and poverty reduction in Africa. The value of trade is measured by the extent to which it delivers better livelihoods, measured through higher incomes, greater variety of choice and a more sustainable future, among others, the report indicates.
While countries need to continue to establish better trade relations with international partners, enabling trade routes within the continent can yield numerous benefits for the region and its people.
Since 1978, when DHL entered the African market, there has been a degree of transformation both economically and socially, simply due to access to new services. If we look at Cape Verde, for instance, a small country consisting of 10 islands, the quickest and most reliable way of transporting goods to and from the country is by air.
Currently, there are three commercial airlines operating in the area and given that commercial airlines offer priority to passenger baggage, offloading of cargo from these planes was a regular occurrence. In order to better service the area, we introduced a DHL flight which operates between Senegal and Cape Verde weekly. This dedicated flight route provides various trade opportunities and greatly improves connectivity in the region.
So to effectively reduce poverty, growth needs to be inclusive, and poor people are not often located where growth takes place. The World Bank and the World Trade Organisation estimate that one billion 15 per cent of the world’s population remains in extreme poverty, and that of this number, 415 million are concentrated in sub-Saharan Africa. The report states that extreme poverty in many countries is predominately a rural phenomenon, and that an estimated 75 per cent of the extreme poor in Africa live in rural areas.
Dr Jim Yong Kim, the World Bank Group president, says that beyond expanding trade, more must be done, such as building roads that connect farmers to markets: “We must always connect the poorest to trade opportunities.”
That is why connecting rural areas to trade opportunities should be a key focus for any government and business on the continent. “We have made great progress in making the global market and the world at large more accessible and connected by increasing the number of points where customers can access DHL and our global network. We now have over 4,500 retail outlets across sub-Saharan Africa. This allows anyone - from a student to a small business – access over 220 countries and destinations that we serve.
The report paints trade as a key enabler of facilitating growth in developing countries and highlights that lower trade costs and fewer barriers between countries is vital to eliminating extreme poverty.
Dr Kim said trade plays an essential role in driving private sector-led growth and job-creation and can be a powerful force in reducing poverty and increasing incomes.
Therefore, there should be a collaborative effort between the public and private sector to work together to ease doing business across borders. We work very closely with the government and custom authorities in each country on solutions to make doing business easier. There is ongoing progress with a number of successful trade blocs in place focusing on better connecting the region, and we look forward to seeing Africa continue on its growth path in years to come.
The author is the managing director of DHL Express for sub-Saharan Africa.
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Is Africa’s growth sustainable in the face of climate change?
The “Africa rising” cliché, has generated a lot of views across the world. In the face of climate change, however, can Africa continue to grow?
Africa’s steady GDP growth sustained for over the last 10 years has generated significant positive reviews. African GDP has grown at about six percent per year and, over the past decade, six of the world’s ten fastest growing countries were African. The continent’s middle class is growing and 20 percent of the African population make a daily income of over US$10. Going forward, GDP growth in Sub Saharan Africa (SSA) is expected to rise to 5.5 percent in 2015, reversing a multi-decade pattern of low growth and instability.
Seen from a different angle, however, the picture is not as rosy. Aggregate poverty levels have hardly shifted and the World Bank reports that almost one in every two African lives in extreme poverty. As of 2014 Africa's growth was intangible for nearly half a billion women and men trapped in rural poverty. Looking ahead, it is estimated that under any plausible scenario, most of the world’s poor will be living in Africa by 2030.
On food security, the UN Food and Agriculture Organization (FAO) in 2010 found that nearly 240 million people, or one in every four persons in SSA lacks adequate food. On population, the World Bank also estimates that another half a billion people will be added to the continent by 2030, culminating in a total estimated population of two billion people by 2050. Youth make up 60 percent of the unemployed on the continent. Moreover, these millions of unemployed young people constitute an impending threat to stability in Africa, a possibility acknowledged by the African Union.
So while GDP growth is laudable, its conversion to poverty reduction for the Base of Pyramid (BoP) has not always occurred. Consequently, African growth has not always been inclusive, and its long-run sustainability is therefore brought into question.
Two critical concerns about Africa’s growth and future outlook are addressed in this article. Can the agriculture sector contribute toward enhancing inclusive growth and job creation on the continent? Considering the overriding threat of climate change to Africa’s growth, what is the continent’s likely position at the UN climate meeting this December in Paris, France?
African agriculture and inclusive growth
Africa needs to invest in economic sectors that are accessible to a majority of the population. The agriculture sector, which currently employs up to 60 percent of the labour force on the continent, holds significant value in this regard. Moreover, Africa holds 65 percent of the world’s arable land, and 10 percent of internal renewable fresh water sources. If harnessed properly, investment and trade in Africa’s agriculture sector has the potential to create incomes and jobs for many across the continent.
African food and beverage markets could be worth up to US$1 trillion by 2030. An agribusiness private sector working alongside governments could link farmers with consumers and create many jobs. Foreign direct investment (FDI) in African agriculture is projected to grow from less than US$10 billion in 2010 to more than US$45 billion in 2020.
In addition, growth in this sector could reduce poverty twice as fast as growth in other sectors. To realise this potential, the African Development Bank highlights the need to build the capacity of youth through entrepreneurship training, which will enable them to take advantage of agribusiness value-chains and create livelihoods.
Rwanda and Ethiopia provide classic, replicable, and scalable examples of non-resource rich countries that are achieving inclusive growth trends fuelled by agriculture. In Ethiopia, agriculture contributes nearly half of the country’s GDP and 50 percent of all employment in the country’s US$ 118.2 billion economy.
Rwanda has attracted a total of US$512 million in private investment in agriculture, covering 184 projects across the country between 2000-2013. A total of US$1.4 million worth of capital investment was made in 2013. This resulted in the creation of 296 direct agriculture jobs and over 1000 smallholders reached with vital agri-based value addition services.
Dismantling trade barriers
While Africa currently produces staple food worth US$50 billion annually, analyses shows that it could gain an extra US$20 billion if the region dismantles trade barriers in agriculture. Africa has the lowest share of intra-regional trade in total goods exports relative to other regions of the world, a mere 12 percent, compared to 65 percent in Western Europe, 45 percent in North America, and 25 percent in Southeast Asia.
Among the drags to intra-regional trade in Africa are production practices, where Africa produces what it does not consume, and consumes what it does not produce. In addition, policy measures and investments are focused on improving access to developed-country markets because of the high demand in those countries, while regional integration efforts on the continent are not fully implemented. As a result, many barriers between regional markets remain in place, yet another cause of low intra-Africa trade.
Another key barrier that needs to be addressed relates to the cost of trading across borders. Currently, costs associated with trading in sub-Saharan Africa are twice as high as those in East Asia and Organisation for Economic Cooperation and Development (OECD) countries.
By removing a range of non-tariff barriers to trade, including restrictive rules of origin, import and export bans, time consuming procedures and burdensome licensing, costs could be significantly reduced. For example, it currently takes an average of 38 days to import and 32 days to export goods across borders in SSA, two of the longest trade waiting times in the world.
Improving road and communications infrastructure in addition to eliminating non-tariff barriers will go a long way in reducing the time and inefficiency associated with intra-African trade. This will help ensure the region can benefit from its huge trade potential of trading in agricultural goods and, subsequently, incomes from agriculture, opportunity creation, and poverty reduction for the BoP.
Climate change reversing development
Climate change threatens to reverse all development gains made by Africa not least because its major economic sectors, particularly agriculture and food security, forestry, water resources, and social development, are highly climate sensitive.
The Intergovernmental Panel on Climate Change (IPCC)’s Fourth Assessment report (AR4) observed that Africa was among the most vulnerable regions, yet its emissions are small, with last year’s update confirming a similar picture. Under a below two degree Celsius global warming scenario from pre-industrial levels, the Africa Adaptation Gap Report 2 documents that Africa’s annual adaptation costs could hit US$50 billion by 2050 and rise to US$100 billion for a four degree Celsius or temperature rise by 2100.
Africa’s adaptation challenge coupled with its negligible emissions formed the basis of its position at the UN climate meet last December in Lima, Peru and will build towards this year’s conference in Paris, France. At the Twentieth Conference of the Parties (COP20) to the UN Framework Convention on Climate Change (UNFCCC), Africa’s position was that adaptation, climate finance, technology, and assistance needed to be given equal and balanced treatment in any universal deal designed to limit emissions.
Specific outcomes from COP 20 critical to Africa’s adaptation needs have been articulated by some commentators. These include finance, where additional pledges to the Green Climate Fund took its capitalisation beyond the initial target of USD10 billion; loss and damage, where in alignment to the polluter pays principle, developing countries vulnerable to extreme weather successfully won a mention of loss and damage in the meeting’s outcome text; and the National Adaptation Plans (NAPs), whererecognition that NAPs offer an important way of delivering climate resilience means they will now be made more visible via the UNFCCC website, which should improve the opportunities for receiving backing.
Towards Paris
Heading to Paris, Africa’s position is expected to focus on the region’s particular climate needs, primarily adaptation financing. Additionally, technology transfer and capacity development needs to catalyse a low emissions development pathway for the continent, are also likely to be pushed.
Findings from the Africa Adaptation Gap 2 report are expected to contribute to Africa’s position. The report observes that with soaring adaptation costs, and official development assistance (ODA) to the continent on the decline, Africa should also pursue a series of recommended strategies for domestic financing as a complement to upscaling international actions on financing and mitigation. From these the report concludes that the region can mobilise up to US$3 billion annually. Enhancing additional incomes from the agriculture sector – with an eye on climate resilience – through increased investment and trade will ensure economic growth and provide additional financing to buttress domestic climate financing.
Africa is also expected to support appropriate mitigation policy to limit emissions from its developed country partners in the negotiations. Indeed the imperative for mitigation is strong. Studies indicate that if current emissions trajectory is sustained, the limits for human and environmental adaptation are likely to be exceeded in many parts of the world by the end of the century. All this will reverse development gains, particularly in vulnerable regions like Africa. Ecosystem services upon which human livelihoods depend and which underpin key economic sectors in Africa would not be preserved. Specifically in agriculture, ecosystem services such as soil formation, water, nutrient recycling, off-and on-farm biodiversity, underlie food production. Destroying ecosystems would mean Africa’s key economic sector and potential contributor to inclusive growth would be severely hampered. Africa will likely take positions in Paris that balance both adaptation and mitigation actions. This will not only go a long way in protecting the region’s ecosystems, but also facilitate inclusive growth in the continent by enhancing performance of the region’s agriculture sector, which is highly climate-sensitive.
The views expressed here are those of the authors and do not necessarily represent those of the institution with which they are affiliated. This article is based on a longer version published in Bridges Africa, ICTSD’s regional focused publication on African trade and sustainable development.
Richard Munang is a Climate Change Development Policy Specialist and Expert, UN Environment Programme (UNEP). Robert Mgendi is an Ecosystem Based Adaptation and Development Specialist at UNEP.
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World Bank Group at the World Trade Organization’s 5th Global Review of Aid for Trade
On 30 June, WBG President Dr. Jim Yong Kim and WTO Director-General Roberto Azevêdo launched pdf The Role of Trade in Ending Poverty (2.26 MB) , a joint report which sets out an agenda for maximizing the contribution trade makes to poverty reduction.
Examining extreme poverty through the lens of four characteristics that hold the poor back from benefiting fully from trade opportunities – rural poverty; gender; fragility and conflict; and informality – the report provides a broad framework for deepening the poverty impact of trade integration.
Supporting this, Dr. Kim and WTO DG Azevêdo announced that the Aid for Trade initiative will be used in future to focus more intensely on the poverty impact of trade-related assistance. In a joint press release they also announced a new collaboration, led by the Bank Group and WTO, to develop better indicators for monitoring and reducing trade costs facing the extreme poor.
Opening High Level Session
President Kim also delivered an address to the opening plenary of the Global Review. The speech provided a strong statement on the importance of trade in achieving the Twin Goals, by lowering trade costs between countries, and doing more to connect the poor to market opportunities. President Kim made the case that evidence showed the greatest impact on poverty has been achieved in countries that connected their people to markets, while undertaking complementary reforms to ensure gains were widespread.
At the opening plenary, the WTO DG and OECD Secretary-General launched a pdf Aid for Trade at a Glance 2015 (4.31 MB) including a chapter from the WBG on the evolution and drivers of trade costs (Chapter 2: pdf How are trade costs evolving and why? (182 KB) ). The chapter – drawing on the WB-UNESCAP Trade Costs Database – shows that trade costs for low-income countries continue to be around three times higher than for advanced economies, and sets out the key reforms to be undertaken in order to reduce this gap.
WBG Trade and Competitiveness Global Practice Event
On 29 June T&C hosted an event on the role of the new global practice in helping developing countries build competitiveness and lower trade costs. The event demonstrated the ways in which the Global Practice can link the trade agenda with other drivers of competitiveness. For example, the Lesotho Minister of Trade and Industry talked about how the WBG’s support for building private sector competitiveness there, combined with efforts to lower trade costs, had contributed to private-sector led growth.
Similarly, Patricia Francis, the Chair of Jamaica’s Trade Facilitation Taskforce, outlined how WBG support for Jamaica’s goal of becoming a regional logistics hub, had helped drive improved coordination across government. Tekreth Kamrang, Cambodia’s Secretary of State for Commerce, talked about how Cambodia’s trade reform efforts, supported by the WBG, had helped improve the country’s Logistics Performance Index and Doing Business rankings.
IMF/WBG/WTO Research Conference
The fourth workshop organized jointly by the WTO, the WBG and the IMF took place at WTO headquarters in Geneva on 29 June. The event brought together trade experts from the three institutions to present cutting-edge research on trade and trade policy and to discuss current policy issues. The research part of the conference was organized in three sessions – “Global Value Chains, Growth, and Price Movements”, “Trade, Productivity and Growth,” and “Trading Firms, Uncertainties and Policies.”
The policy part of the conference featured a panel discussion on the “Value of the multilateral trading system at 20” including the WTO’s Chief Economist, Robert Koopman; the World Bank Group Senior Director for Trade & Competitiveness, Anabel Gonzalez; the IMF’s unit chief for trade and external policies, Martin Kaufman; and Professor Thomas Cottier from the University of Bern.
The discussion touched on the value of the multilateral trading system and how to properly measure it; how the rise of cross-border production is contributing not only to change the nature of trade but also the nature of trade agreements, with the increasing role of preferential arrangements; and, finally, what can be done to make sure that the WTO and preferential trade agreements coexists and to preserve the unity of the multilateral trading system.
Supporting Implementation of the Trade Facilitation Agreement (TFA)
On 30 June, Anabel González, the Senior Director for WBG T&C Global Practice, moderated a high-level plenary session on implementation of the WTO Trade Facilitation Agreement. Speakers included the Secretary-General of the World Customs Organization; Executive Secretary of UNESCAP; UK Secretary of State for International Development; and Minister of Trade of Senegal.
The session affirmed the importance of the pdf Trade Facilitation Agreement (150 KB) as part of a wider agenda to lower trade costs faced by developing countries. In the Asia-Pacific, for example, UNESCAP estimates that the TFA is already around 50% implemented, on average, and full implementation of the TFA would bring about average reductions by 16-17% in trade costs.
Effective Implementation of SPS Measures to Facilitate
Anabel González was also a panelist at a session on facilitating safe trade through the effective implementation of sanitary and phyto-sanitary standards. Other panelists included the Director-General of the Food and Agriculture Organization (FAO); the incoming Director-General of the World Organization for Animal Health (OIE); and speakers from Chile, COMESA, Thailand, and Cargill.
Ms. González set out the Bank Group’s experience in facilitating safe trade, showing that in our view there was no question of a choice between trade facilitation on the one hand, and addressing health and safety concerns on the other – the two needed to be done together. This was the approach taken through WBG projects, including those to implement the Trade Facilitation Agreement.
Lessons from Natural Disasters and Other Humanitarian Emergencies on the Role of Trade in Relief and Reconstruction
In addition to the WBG, the panel for this event included representatives from Nepal, Liberia, Vanuatu, Agility Logistics and IFRC to discuss the role trade plays in humanitarian relief and recovery. The WBG Special Representative to the UN and the WTO, Selina Jackson, presented findings from a forthcoming paper that indicates that trade policy has a strong impact – both positive and negative – on the ability of the international humanitarian community to provide relief to disaster affected countries. Border management (trade facilitation) issues were the most obvious and most often cited source of problems in moving humanitarian aid to disaster affected countries. The international community has recognized this and several attempts have been made by the World Customs Organization and others to develop emergency relief guidelines or best practices, but none of those efforts are binding.
The new Trade Facilitation Agreement, once implemented, provides a binding framework under which humanitarian organizations can operate with greater confidence and includes a number of relevant provisions. Other trade-related issues discussed were Agriculture (access to food aid), TRIPs (access to medicines), Goods (access to equipment) and the need for a strong and robust Services industry to adequately respond to crises. There was also a discussion about the impact of disaster on countries’ economies and the need to quickly reconnect to the global economy.
Reducing Cargo Costs in Air Transport – Giving the Bali TFA Deal Wings
The Global Express Association (GEA) and the International Air Transport Association (IATA) shared the results of recent research on the scope and scale of the air cargo industry were presented emphasizing the industry’s contribution to the economic development of many developing and least developed countries. During the panel discussion the WBG discussed the potential impact of the WTO Trade Facilitation Agreement and the need for countries to prioritize full and effective implementation of its provisions.
The Bank also outlined the broad range of trade facilitation support it is currently providing to developing countries and highlighted the specific programs it has deployed to assist countries to implement the WTO Agreement. The session also provided an opportunity to discuss recent international developments in the automation of air cargo procedures and pilot projects the Bank Group is currently developing focused on supporting business process simplification and automation of documentation in the air cargo industry.
Electronic Commerce and the Aid for Trade Initiative
Electronic commerce offers exciting possibilities for SMEs in developing countries to achieve global reach, participate in value chains and even export sophisticated business services. Entrepreneurs in the global South are doing amazing things with the Internet. But In many countries there are still significant impediments to achieving the full potential of e-commerce, ranging from availability and affordability of online access to entrepreneurial capacity to policy-induced problems with payments and delivery.
Landlocked Developing Countries
Klaus Tilmes, T&C Global Practice Director, presented at a session that focused on reducing trade costs in landlocked developing countries, along with the UN High Representative on the topic; and ministers and senior officials from Tajikistan, Mali, Lao PDR, and Uganda. Key themes of the discussion included the high logistics costs faced by LLDCs, export delays, higher costs, and links with other challenges like fragility. This underlines the importance of an agenda targeted at reducing trade costs for LLDCs, given the unique challenges they face. In this regard, the session focused on the importance of the 2014-2024 Vienna Programme of Action, in which the WBG is a key partner.
Motor Vehicle Agreement among Bangladesh, Bhutan, India, Nepal
The civil society think-tank CUTS International invited experts to reflect on a forward-looking agenda for the implementation of a sub-regional Motor Vehicles Agreement recently signed by Bangladesh, Bhutan, India, and Nepal. Signed on 15th June, 2015, the agreement seeks to facilitate easy cargo movement across their borders and is expected to significantly reduce trade transaction costs in this sub-region.
Rajesh Aggarwal, Chief of Business and Trade Policy at the International Trade Centre, who chaired the event, invited panelists representing governments, private sector, civil society and international organizations to share their views on “how can the potential for regional road trade connectivity be unlocked between these four countries?” While the breakthrough of signing this agreement was welcome, the panelists shared concerns with regard to its implementation pertaining to route earmarking, permits for trucks and vehicle operators, vehicle registration, inspections, insurance, local political issues and customs delays mitigating potential benefits.
NTMs and Trade Costs
This session focused on the link between non-tariff measures (NTMs) and sustainable development through trade. The objective was to discuss collaborative work and progress of different institutions in relation to NTM, in aspects such as trade costs, governance, coherence or convergence. Part of the discussion related to data availability and progress in the area of data collection. Some assessments using collected NTM data already indicate that NTMs are more important for trade costs than tariffs.
Panelists also shared their views on the need and ways to overcome other potential adverse effects on trade. There are some instruments at the multilateral level, for example, disciplines and dispute settlement mechanisms, especially on trade remedies or trade contingency measures. At the regional level, convergence between countries is considered convenient for lowering trade compliance costs, improving private companies’ competitiveness through harmonization and mutual recognition of NTMs. At the same time, unilaterally, countries may improve their performance by assuring coherence in their policy choices to attain desired development objectives.
Reducing Trade Costs in the Cotton Value Chain
Ministers of Trade and Industry from Benin, Burkina Faso, Chad, and Mali (‘Cotton 4’) discussed the challenges of developing their cotton industry in the face of high trade costs. Poor quality and high transport costs limit access to inputs and increase the costs of exports. These reflect both weak infrastructure and restrictive policies which result in limited competition in the transport sector.
Three of the ‘Cotton 4’ are landlocked and so cross-border cooperation is required to address these issues. Innovative approaches were discussed, including the WBG’s recently approved regional DPO that will support Cote D’Ivoire and Burkina Faso to implement policies that will transform transport along the Abidjan to Ouagadougou corridor to be modern and competitive. It was concluded that Aid for Trade activities must target the reduction of trade costs for export sectors that can drive poverty reduction.
Barriers Facing Women Traders in Africa: What are they and How Could Aid for Trade Help in Removing Them?
Women are important players in trade in Africa: they produce exportable products, transport goods and provide services across borders, manage and own trading firms or are employed to work in them. However, women’s potential in trade is often held back by the many gender specific constraints they face. In this session the World Bank’s report on pdf Women and Trade in Africa: Realizing the Potential (3.64 MB) was presented and discussed by a panel including Dorothy Tembo, Deputy Executive Director, ITC, Joakim Reiter, Deputy Secretary-General of UNCTAD and Marie Ottosson, Director for International Organizations and Policy Support at the Swedish International Development Cooperation Agency.
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Focus on South-South and triangular cooperation in UNIDO’s new Trade Capacity-Building Resource Guide
The new edition of the Trade Capacity-Building (TCB) Resource Guide, published by the United Nations Industrial Development Organization (UNIDO) has a special section dedicated to South-South and triangular cooperation.
According to the Trade Capacity-Building Branch at UNIDO, South-South and triangular cooperation have become increasingly important elements of development cooperation between countries. Traditional development cooperation and technical assistance are being complemented by expertise available in developing countries and emerging economies. A number of new donor countries, which are members of the G20 or the BRICS group (Brazil, Russia, India, China and South Africa), are offering technical assistance to developing countries. Also, UNIDO itself has established a specific service to coordinate and promote South-South and triangular industrial cooperation.
The updated and expanded 2015 edition of the Trade Capacity-Building Resource Guide includes profiles of 31 multilateral agencies and 37 bilateral donors. The trade-related services of 31 countries from the Organisation for Economic Co-operation and Development (OECD) and 16 G20 countries, some of which are also OECD members, are also reflected in the Guide.
The Guide reveals that many of the OECD Development Assistance Committee (DAC) members support triangular cooperation, and other DAC members are considering introducing such support. All developing countries included in the Guide mention active participation in South-South cooperation, with Argentina, Brazil, China, Indonesia, Mexico and the Russian Federation being particularly engaged.
The Guide highlights how both multilateral agencies and bilateral donors encourage and support South-South and triangular cooperation, and provides examples of projects and services for almost all multilateral and regional agencies.
The publication was launched during the Aid for Trade Global Review at the World Trade Organization (WTO) Headquarters in Geneva from 30 June to 2 July. It is, to-date, the most comprehensive compilation of major bilateral and multilateral technical assistance services, and makes a significant contribution to increasing the transparency and efficiency of trade-related technical assistance and its benefits for countries and peoples in their efforts to stimulate trade-led economic growth, increased employment and the creation of wealth.
The Guide was prepared by UNIDO under a mandate issued by the High-Level Committee on Programmes (HLCP) of the United Nations System Chief Executives Board (CEB) to coordinate an inter-agency mapping of trade capacity-building services and activities available to developing countries. The success of the first (2008) and second (2010) editions led to calls for an updated version from both bilateral and multilateral development partners.
» Trade Capacity Building Resource Guide (2015) Volume 1: Multilateral services (PDF, 6.53 MB)
» Trade Capacity Building Resource Guide (2015) Volume 2: Bilateral services (PDF, 6.47 MB)
Trade Capacity Building Resource Guide 2015: Background
It is widely recognized by both multilateral and bilateral development partners that enhancement of the capacity to participate in global trade is critical for economic growth in developing countries. This has put the need for trade-related technical assistance on the forefront of economic development.
Bilateral and multilateral development partners provide a wide range of services which often need to complement each other if they are to support national trade development needs and strategies in a coherent and efficient manner.In response to such needs, UNIDO has published the first edition of the Trade Capacity Building Inter-agency Resource Guide in 2008, followed by enhanced editions in 2010 and 2015.
The Guide has been welcomed by multilateral and bilateral development partners as well as policy-makers in developing countries as a useful and informative tool in the area of trade-capacity building. It has been acknowledged that the Resource Guide is a unique source of information for developing countries and donors for the development of technical assistance programmes, and serves to facilitate the coordination of trade capacity-building activities within the United Nations system, in particular through UN Resident Coordinator and UN Country Teams.
In response to growing demand, a new and further enhanced third edition has now been made available. The 2015 edition of the Trade Capacity Building Resource Guide further increases its relevance in the area of trade-related technical assistance by sharpening its focus on the emerging dynamic trends, in particular, on the costs of trading, adding a value chain perspective and South-South and triangular cooperation.
This so far most comprehensive compilation of the Resource Guide will significantly contribute to increasing the transparency and efficiency of trade-related technical assistance and its benefits for countries and peoples in their efforts to stimulate trade-led economic growth, increased employment and the creation of wealth.
In the spirit of the global development goals, the Guide represents a significant step forward in the journey towards a strong and meaningful global partnership, involving multilateral and bilateral development partners, for the reduction of poverty through trade-driven economic growth and wealth creation.
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Trade Ministry considers website for businessmen eyeing Africa
Minister of Industry and Trade Mounir Fakhri Abdel Nour has announced plans to launch a website serving the Egyptian businessmen who search for investment opportunities in Africa.
Chairman of the ministry’s Commercial Service Ali El-Leithy said the website will contain data on African markets of interest to Egyptian businessmen.
Outstanding companies, insurance opportunities, customs duties, shipping options and costs, and locations of Egyptian commercial representation offices will be available on the planned website, including tenders put up by African governments, according to Leithy.
The website may also feature market studies about goods and trading sectors within each African country, as well as a given country’s most important exports and imports and its trade agreements with Egypt. It will also announce exhibitions hosted by African countries.
It is worth mentioning that Egypt, in June, hosted the inking of a free trade agreement between Africa’s biggest economic blocs, the Common Market of Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the East African Community (EAC).
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Toward a Monetary Union in the East African Community: Asymmetric shocks, exchange rates, and risk-sharing mechanisms
In late 2013 the East African Community (EAC) countries (Burundi, Kenya, Rwanda, Tanzania, and Uganda) signed a joint protocol setting out the process and convergence criteria for an EAC monetary union. The signing of the protocol represents a further step toward regional economic integration. It follows ratification of the protocols for a customs union (2005) and the common market (2010). Envisaged in 2024 is the introduction of a common currency to replace the national currencies of member countries.
Economic integration offers numerous benefits; the path toward a common currency, however, will present significant challenges. Implementation of the protocols for the customs union and common market is still far from complete and the convergence criteria for monetary union are ambitious. The institutional framework to monitor and enforce convergence includes the East African Monetary Institute – to be set up by 2015, as a precursor to the East African Central Bank – East African Statistics Bureau and East African Surveillance, Compliance and Enforcement Commission.
Adopting a common currency will entail significant economic changes for the EAC countries. Member countries will benefit from closer integration, and related gains from lower transaction costs, price stabilization, more efficient resource allocation, and improved access to goods, labor, and financial markets – stimulating trade, investment, and economic growth. At the same time, relinquishing independent monetary policy implies having to accept a monetary policy tuned to EAC-area-wide rather than national conditions. The costs associated with this change will reflect the size, nature, and frequency of asymmetric shocks (“susceptibility”) as well as the ability of countries to adjust to shocks that are asymmetric with respect to the EAC area through other channels – fiscal policy, labor mobility, and wage and price flexibility (“adaptability”).
The objectives of this paper are, first, to identify how susceptible are the EAC economies to asymmetric shocks; second, to assess the value of the exchange rate as a shock absorber for these countries; and third, to review adjustment mechanisms that would help ensure a successful experience under a common currency-EAC. While the analysis draws on recent experience, backward-looking measures are imperfect for a forward-looking assessment. The paper thus also draws attention to likely further structural changes in the EAC economies (for example, large oil discoveries in some countries) as well as the intrinsic endogeneity of further integration to the currency union project itself.
The paper main findings are as follows:
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Despite some similarities in the structures of EAC economies, country-specific shocks have been prevalent in the last two decades with economies in the EAC remaining susceptible to asymmetric shocks.
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Evidence on lack of synchronicity of growth rates across countries suggests only limited economic convergence in the last decade, and cluster analysis would seem to suggest that – from an optimal currency area perspective – dissimilarities across the five EAC economies remain large.
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The exchange rates for the EAC appear to absorb real asymmetric shocks in all cases save that of Burundi, highlighting the need for additional tools to stabilize EAC economies once country-specific (nominal) exchange rates are no longer available as shock absorbers. Our results also indicate that, while exchange rate shocks do not seem materially to affect output, they are a source of disturbance to inflation, suggesting that EAC countries should press ahead on their journey to modernize their monetary policy frameworks.
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Against this background, it will be key for the EAC to continue to direct its efforts to design and establish adequate mechanisms that can help member countries adjust to future shocks once the monetary union is consolidated. This includes the usual levers to mitigate costs of common monetary policy such as labor and capital mobility, price and wage flexibility, as well as various risk sharing mechanisms, including fiscal. These levers should be agreed among member countries before the introduction of the single currency to reduce risks and signal early commitment to macroeconomic stability.
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tralac’s Daily News selection: 21 July 2015
The selection: Tuesday, 21 July
SADC, working towards agenda 2063 (The Herald)
The advent of Agenda 2063 is an opportune moment to attend to systemic capacity needs of AU institutions as we gear for its implementation which should connect RECs strategic plans post-2015, NEPAD and other priorities. Let us not lose sight of the fact that the overall capacity of Africa and the African Union’s institutions, including RECs, will ultimately determine the quality of regional integration that will be attainable. That the effective delivery of regional integration in Africa implies a strong, robust, learning and transformational network of both national and regional institutions and in particular the RECs, as the building blocs for Africa’s transformation. This fundamentally implies the dire need for effective RECs, as co-ordinating and facilitating institutions, whose own capacities are strong enough to drive regional integration, while also fostering the institutional reforms and development. [The author, Dr Stergomena Lawrence Tax, is SADC Executive Secretary]
SADC Financial Inclusion Indaba (FinMark Trust)
FinMark Trust, in partnership with the SADC Secretariat, South African National Treasury and the SADC Banking Association, will host an SADC Financial Inclusion Indaba from 23-24 July 2015, in Johannesburg, South Africa. The overall aim of the Indaba is to promote financial inclusion in the SADC region for the purpose of inclusive economic growth and poverty alleviation. The Indaba will provide a platform to take stock of the various policy initiatives at country level to promote financial inclusion and to assess the impact on the livelihoods of the most vulnerable sections of the population. It will also draw on the experience of South Africa, which has focussed on increasing financial inclusion over the last decade, with resultant successes and unintended consequences. The key objectives of the Indaba are: [Further details will be posted on FinMark Trust www]
Recent trends in banking in Sub-Saharan Africa: from financing to investment (European Investment Bank)
This study follows up on our 2013 study on “Banking in sub-Saharan Africa: Challenges and Opportunities”, with the aim of providing an update on the latest developments and trends in the banking sectors of sub-Saharan Africa. This year’s study discusses the challenges to – and opportunities for – further development of sub-Saharan Africa’s banking sectors, including those related to access to finance, mobile banking and pan-African banks. In this second edition, we also launch our first survey of pan-African banks to capture key strategic positioning and market perceptions by the banks best placed in the region to contribute to financial sector deepening, private sector development and regional integration. [Download]
EIB expands in Africa (Club of Mozambique)
The European Investment Bank plans to open offices in four more African cities as it strengthens its foothold on a continent looking for financing to build infrastructure, said a senior official with the lender. The EIB will open an office in Cameroon’s capital, Yaounde, later this year, followed by Abidjan in Ivory Coast, Zambia’s Lusaka, and Maputo, Mozambique in 2016, EIB Vice President Pim van Ballekom said in an interview.
Botswana: Making Access Possible report (Mmegi)
About 90% of Batswana earn not more than P10, 000 per month, a trend that has contributed to the low uptake of financial services such as mortgage finance, a diagnostic study on financial services provision shows. Results of the Making Access Possible (MAP) report released in Gaborone this week, show that a combination of high cost of land as well as low incomes has excluded the majority of the population from mortgage finance. The MAP study derived the income distribution figures from the 2015 Finscope survey, which was conducted between October and December last year sampling 1503 respondents from Botswana’s total population of 1.3 million adults.
Kenya: Treasury sees number of banks falling to 30 (Business Daily)
The Treasury expects the number of Kenyan commercial banks to drop from the current 44 to about 30 in three years as an outcome of mergers and acquisitions in the industry triggered by higher capital requirements. The minimum core capital requirement for banks is to be steadily raised from the current Sh1 billion to Sh5 billion by 2018, affecting 22 lenders that will be forced to raise funds, merge or sell stakes to comply with the law.
SADC energy ministers meet in Sandton this week (GCIS)
An unfinished agenda: the progress of US-backed economic development goals in Africa (Brookings)
The president’s departure for Kenya and Ethiopia later this week offers an important opportunity to assess where African countries have progressed on these Obama administration goals during the president’s two terms in office. A quick review of relevant indicators reveals that progress has been mixed, so presenting this data might also help both African and U.S. policymakers use this moment to address areas in need of attention and leverage successes to date. [The authors: Amadou Sy, Andrew Westbury]
Statement by President Kenyatta on Global Entrepreneurship Summit
Firms eye deals during Obama summit (Business Daily)
Tourism banks on global summit to reverse dwindling fortunes (Daily Nation)
EAC trade ministers ask US to relax measures on agricultural exports, reduce tariffs on sugar, cotton (The Citizen)
AGOA review could see SA lose on trade benefits (Business Day)
The scope of the review, to be announced by the office of the US Trade Representative in the Federal Register, is broader than that mandated by Congress when it extended Agoa for 10 years last month. The review will examine whether South Africa still qualifies for benefits under the US generalised system of preferences, eligibility for which is a precondition for enjoying Agoa preferences. The generalised system of preferences is the core programme under which developing countries get preferential access to the US market. It is governed by the 1974 Trade Act, whose section 502 requires exclusion of any country that "affords preferential treatment to the products of a developed country … which has, or is likely to have, a significant adverse effect on US commerce".
Five lessons of regional integration from Asia, America, and Africa (World Bank Blogs)
More than 50% of today’s international trade goes through regional trading arrangements. While trade is a critical component of regional integration, integration has several other dimensions including energy cooperation and intra-regional investment, to name a few. After carefully examining cases of regional integration in Southeast Asia, the Americas and Africa, we present five lessons for South Asia.
Louis Berger to support sub-Saharan Africa transportation sector development (Global News Wire)
Louis Berger, as part of a consortium led by NTU International A/S, has been hired to support the development of the transportation sector in the African, Caribbean and Pacific (A.C.P.) Group of States, with a focus on sub-Saharan Africa. This 2.3 euro million ($2.6 million USD) project aims to promote inclusive political, economic and social development through enhanced regional integration by strengthening African countries' ability to regulate, organize and finance better inter-regional and continental transportation infrastructure through safe transboundary transportation corridors and integrated transportation policies. The project also will support progress toward the Millennium Development Goals in A.C.P. countries.
Southern Africa Trade and Transport Facilitation Project: implementation status, results report (World Bank)
World Bank funding for Kenya-South Sudan road rehabilitation (Coast Week)
Namibia: Retail sector charter enters next round (New Era)
Stakeholders in the retail sector recently held a consultative meeting to further thrash out ideas on the proposed Namibia Retail Sector Charter, which is set to be implemented in September. The chairpersons of the three task teams – fast moving consumer goods, building materials/hardware and clothing/apparel – presented an overview of their activities since September 2014. Participants discussed the status of the proposed charter with emphasis on its aim, mechanics, stakeholders, project milestones and transformational principles. Challenges highlighted were definitional issues attributed to retailers’ different business models, which relate to product and supplier categories. Other significant issues raised were the non-participation of leading retailers, limited local decision-making capacity due to foreign ownership and control of retailers, and the fact that participation is voluntary.
Manufacturing in Namibia: what it really means (New Era)
Namdeb produced 431 000 carats in second quarter (The Namibian)
Uganda mines close as export ban hurts (East Africa Business Week)
Miners under their umbrella association, the Uganda Chamber of Mines and Petroleum (UCMP) have asked the government to remove the ban that was instituted on the exportation of unprocessed minerals. They argue that this will help to avoid more economic losses for investors, government and other sector players within the mining sector.
EU and Liberia sign deal on WTO accession
The Republic of Liberia applied for WTO membership in mid-2007. The accession talks started half a year later with the establishment of a dedicated Working Party made of interested WTO members. In order to join the WTO, Liberia must complete bilateral negotiations with each of them and obtain the endorsement of the entire Working Party.
From drift to deals: advancing the WTO agenda (Peterson Institute)
IGAD: first regional regulatory authority conference
The Federal Democratic Republic of Ethiopia, through the active role and engagement of its federal Ministry of Health and Ethiopian Food, Medicine and Health care Administration and Control Authority, initiated the advocacy and sensitization for the need to have a policy framework for regulatory system strengthening of pharmaceuticals and medical products, based on the declaration and recommendation made by the IGAD Member States, during the First IGAD International Scientific Conference on Health held in Addis Ababa, in December last year. The objectives of the Regional Conference are to:
Brazil aims to partner in sub-Saharan Africa (IT-Online)
A Brazilian trade delegation will head to South Africa next week, to seek new trade opportunities with sub-Saharan Africa. The group of leading Brazilian manufacturers and exporters, representing around 30 companies in the construction, food & beverage, home furnishing, electrical & electronics, agricultural and industrial equipment, catering, medical, transport and automotive sectors, will meet South African importers, distributors, agents, retailers and wholesalers.
What BRICS Summit achieved: an interview with Ambassador Tian Xuejun (IOL)
We need to build a partnership for common development. We should form a Brics community of shared interests. For the purpose of building a value chain of shared benefits and a big market of integrated interests, we should jointly build an even closer economic partnership.
BRICS bank launches in Shanghai, to work with AIIB (Reuters)
A new institutionalist analysis on emerging donorship (UNU-WIDER)
This study aims to provide a neo-institutional explanation of why South Korea increasingly intends to share its developmental experience with the rest of the world. South Korea’s knowledge sharing projects are the leading example of expansionary and self-defining efforts of its aid administration. By analysing the aid policy-making process, this paper explores the inside dynamics of an emerging donor government—pinpointing why aid bureaucracy stands at the centre of the rise of the knowledge dimension.
Transparency of aid agencies: are those high grades deserved? (Brookings)
World Bank launches recruitment drive for nationals of African countries
Enrique Mendizabal: 'The future of think tanks in Africa: trends to look out for' (on think tanks)
Germany donates EUR 1 million to help developing countries participate in Doha Round (WTO)
The government of Germany is contributing EUR 1 million (CHF 1,042,478) to the WTO’s Doha Development Agenda Global Trust Fund in 2015 to help developing countries and least developed countries improve their participation in the Doha Round, the latest round of trade negotiations among WTO members.
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BRICS bank launches in Shanghai, to work with AIIB
Officials from the world’s largest emerging nations launched the New Development Bank (NDB) on Tuesday, the second of two new policy banks heavily backed by Beijing that are being pitched as alternatives to existing institutions such as the World Bank.
Also known as the BRICS bank, it follows soon after the establishment of the China-led Asian Investment Infrastructure Bank (AIIB). The new bank will fund infrastructure and development projects in BRICS countries – Brazil, Russia, India, China and South Africa.
The ceremony on Tuesday concludes a lengthy wait since the NDB was first proposed in 2012. Disagreements over the bank’s funding, management and headquarters had slowed its launch.
“Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way,” NDB President Kundapur Vaman Kamath said.
He added that after a meeting with the AIIB in Beijing, the NDB had decided to set up a “hotline” with the AIIB to discuss issues, and to forge closer ties between “new institutions coming together with a completely different approach.”
The ceremony, held in Shanghai where the NDB’s headquarters are located, was relatively low-key in comparison to a June signing of the articles of agreement for the AIIB in Beijing, which was attended by delegates from 57 countries and President Xi Jinping.
The NDB has initial capital of $50 billion, which will be expanded to $100 billion within the next couple of years.
Kamath, a former executive with India’s largest private bank ICICI Bank, told Reuters earlier this month that the NDB plans to issue its first loans in April next year.
China has pledged to contribute $41 billion to the NDB, giving it the largest share of voting rights at 39.5 percent.
Brazil, India and Russia will each contribute $18 billion, while South Africa will contribute $5 billion.
World Bank Group welcomes launch of New Development Bank
The World Bank Group on 20 July issued the following statement by World Bank Group President Jim Yong Kim on the launch of the New Development Bank:
“We would like to congratulate Mr. K.V. Kamath, President of the New Development Bank, and the founding members – Brazil, Russia, India, China, and South Africa – on this important occasion.
The New Development Bank joins a growing number of multilateral institutions – including the Asian Infrastructure Investment Bank – that are working to address the world’s huge infrastructure needs. Emerging markets and low-income countries face an annual gap of $1 trillion to $1.5 trillion in infrastructure spending.
We are committed to working closely with the New Development Bank and other multilateral institutions, offering to share our knowledge and to co-finance infrastructure projects. These types of partnerships will be essential to reach our common goals to end extreme poverty by 2030, boost shared prosperity, and to reduce inequalities.”
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Five lessons of regional integration from Asia, America, and Africa
More than 50% of today’s international trade goes through regional trading arrangements. While trade is a critical component of regional integration, integration has several other dimensions including energy cooperation and intra-regional investment, to name a few. After carefully examining cases of regional integration in Southeast Asia, the Americas and Africa, we present five lessons for South Asia.
Lesson 1: Facilitate trade in goods and services
Despite falling tariffs, there is still a large gap between the price of the exported good and the price paid by the importer, largely arising from high costs of moving goods, especially in South and Central Asia. On a percentage basis, the potential gains to trade facilitation in South and Central Asia, at 8 percent of GDP, are almost twice as large as the global average. High trade costs have contributed to South Asia being the least integrated region in the world.
FIGURE 1: Intra-regional trade share (percent of total trade), 2012
In the ASEAN region, most countries have established either Trade Information Portals or Single Windows that have enhanced trade facilitation, reduced trade costs and enhanced intra-regional trade. A Trade Information Portal allows traders to electronically access all the documents they need to obtain approvals from the government. A Single Window (a system that enables international traders to submit regulatory documents at a single location and/or single entity) allows for the electronic submission of such documents. These single windows, using international open communication standards, facilitate trade both within the region and with other countries using similar standards.
In services, one barrier to trade involves the movement of skilled workers, accountants, engineers and consultants who may move from one country to another on a temporary basis. The Southern Common Market (Mercosur)’s Residence Agreement allows workers to reside and work for up to two years in a host country. This residence permit can be made permanent if the worker proves that they can support themselves and their family.
Lesson 2: Streamline Non-tariff Measures (NTMs)
Countries impose legitimate controls on imports to ensure the health and safety of their citizens; however, such NTMs can become more trade-restrictive than necessary, in which case they become a non-tariff barrier (NTB). A simple way is to think of NTBs as measures applied only to imports and not imposed on domestic production. To reduce the occurrence of NTBs, NTMs need to be streamlined.
The African Economic Communities (COMESA, EAC, and SADC) established an online Mechanism for Reporting, Monitoring and Eliminating NTBs. This mechanism collects complaints and helps resolve disputes transparently and in a multi-country setting, thus building trust between trading partners. So far, the Mechanism has addressed nearly 500 cases, of which more than 80 percent have been resolved, according to the website.
Lesson 3: Do not discriminate between investors
Promoting intra-regional investment is an important tool for promoting intra-regional trade, given that trade and investment go hand in hand. In South Asia, intra-regional investment is even lower than intra-regional trade, which means the investment to trade linkages – for example, the possible formation of regional value chains – are absent. One of the issues in South Asia is equal treatment of foreign and domestic investors.
In the case of ASEAN, intra-regional investment is over 17 percent of total FDI in the region. ASEAN is a favored destination for global investment. That’s partly because of the ASEAN Comprehensive Investment Agreement (ACIA) that protects investments made by non-ASEAN parties. These parties are guaranteed fair and equitable treatment, and ASEAN governments agree not to make arbitrary decisions. Foreign investors are also protected against unlawful expropriation, and, to the extent feasible, extended security in the event of civil unrest. Free transfer of funds into and out of ASEAN is also guaranteed to foreign investors.
The ASEAN experience suggests that in order to take full advantage of a regional investment framework, each South Asian country would have to undertake reforms to improve its respective investment climate.
Lesson 4: Take advantage of existing opportunities
Successful regional cooperation takes advantage of geography. It is natural, for example, for countries to share electricity with each other. Such sharing helps balance supply and demand and allows smaller countries exploit economies of scale, and it can also lead to more efficient load management.
In Central America, the Central American Electrical Interconnection System (SIEPAC) interconnects the grids of six Central American nations over 1,790 km of transmission lines extending from Guatemala to Panama (Figure 2). SIEPAC was financed by a variety of sources led by the Inter-American Development Bank, and is owned by a regional operations entity with public-private ownership. SIEPAC has been credited with helping Panama recover from an energy crisis and is expected to lower electricity rates throughout the region.
Similar geographical circumstances afford opportunities for energy cooperation in the South Asian region, where sharp differences in elevations make for untapped hydropower resources.
FIGURE 2: SIEPAC regional transmission line connects six countries
Lesson 5: Be patient.
Our final lesson is that regional integration is a long and incremental process. Regional agreements suffer from a gap between intentions and implementation. One way to address this would be to set up credible institutional to monitor compliance and outcomes, housed in regional secretariats such as COMESA, or, in the case of South Asia, SAARC.
Improved regional outcomes, such as higher trade volumes, price convergence, reduction in border crossing times, or an increase in energy trade, take time and patience, and require political will and institution-building. South Asia can capitalize on recent political momentum in the region and keep pushing on issues that have a strong developmental impact – energy sharing, reducing costs of trade, and encouraging intra-regional investment.
Find out more about the authors’ lessons in the document below.
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More collaboration needed in SA tourism – report
Greater collaboration between the private sector and SA Tourism is called for to increase SA’s global tourism market share, according to the latest SA Tourism Review.
This is one of the recommendations from a panel of experts appointed to review how SA Tourism is responding to the dynamics of the national and international tourism sector.
Minister of Tourism Derek Hanekom said in due course he will engage the SA Tourism board on the process for implementing recommendations that will enhance SA Tourism’s initiatives to market South Africa as a prime tourist destination.
He said he is satisfied that the review panel, which included tourism, governance and marketing experts, has achieved its objectives and fulfilled its mandate.
“The panel’s recommendations will help the country to grow its competitive edge in the global tourism marketplace, and will also promote domestic tourism,” said Hanekom.
Another key recommendation identified is the need to innovate and revitalise SA Tourism’s marketing campaigns to keep pace with a fast-changing marketplace. Marketing enhancements that are proposed include, amongst others, enhanced collaboration with Brand SA to collectively promote the country and a greater focus on domestic tourism.
The review found that a strengthened Department of Tourism is essential to facilitate effective inter-governmental coordination in support of tourism growth objectives.
Certain aspects of SA Tourism’s organisational development and design, including the country office model, are recommended for an in-depth review to enhance the effective delivery of the marketing mandate.
A new institutional home is proposed for the Tourism Grading Council of South Africa.
Greater resourcing of the research function and an increased focus on research insights, analytics and market intelligence is also recommended in the review.
“A fully optimised SA Tourism is essential for the transformation and sustainable growth of the sector, and for tourism to achieve the NDP target of creating 225 000 jobs by 2020,” said Hanekom.
“It is critical that the tourism sector maintains and grows its global competitiveness, enabling tourism to continue making its overall contribution of 9.5% of the country’s GDP and supporting 10% of total employment.”
He said he is confident that the expert advice provided by the panel will help the Department of Tourism to make the correct strategic decisions.
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EU and Liberia sign deal on WTO accession
The EU and Liberia on 16 July signed a deal concluding their bilateral negotiations on Liberia’s accession to the World Trade Organisation (WTO). Accession to the WTO is expected to make a lasting contribution to the process of economic reform and sustainable development in Liberia.
“Today’s signature is a milestone in Liberia’s WTO accession process and an important step towards fostering our economic relations,” said Angelos Pangratis, EU Ambassador to the WTO. “Against the background of the devastating public health challenge of Ebola Liberia has made remarkable progress in preparing for WTO entry and we are looking forward to rewarding Liberia's efforts and welcoming the country into the WTO family very soon.”
The bilateral deal – signed by EU Ambassador to the WTO Angelos Pangratis and Liberia’s Minister for Commerce and Industry Axel M. Addy – defines the level of market access that Liberia will grant to EU goods and services in the WTO. These commitments will be then embodied in the future Protocol of Accession of Liberia to the WTO.
The Republic of Liberia applied for WTO membership in mid-2007. The accession talks started half a year later with the establishment of a dedicated Working Party made of interested WTO members. In order to join the WTO, Liberia must complete bilateral negotiations with each of them and obtain the endorsement of the entire Working Party.
EU-Liberia trade in facts and figures
Trade flows between the EU and Liberia are small but balanced. From an EU perspective, trade with Liberia represents just 0.03 percent of its total trade value. The EU imports from Liberia, worth half a billion euros in 2013, amount, however, to as much as over 40% of Liberia’s total goods’ exports.
As a Least Developed Country, all Liberia’s products (except arms) enjoy duty-free and quota-free access to the EU market.
Trade between the EU and Liberia will be soon also governed by the Economic Partnership Agreement that the EU has initialed with 16 West African states last year.