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BRICS leaders adopt final declaration at summit in Russia’s Ufa
The declaration gives assessment on the current global political and economic situation and reflects the common approaches of the BRICS countries on the most topical issues of multilateral cooperation
Leaders of BRICS countries (Brazil, Russia, India, China and South Africa) have adopted the Ufa declaration, the final document of the summit in the capital of Russia's Volga republic of Bashkiria.
The ceremony of signing this and a range of other documents was held after the working session in an expanded format.
The declaration gives assessment on the current global political and economic situation and reflects the common approaches of the BRICS countries on the most topical issues of multilateral cooperation.
The leaders of Brazil, Russia, India, China and South Africa also adopted an Action Plan that details the work of the group for the upcoming year and also includes the new promising areas of cooperation.
Another final document approved at Russia’s initiative is the Strategy of Economic Partnership of BRICS countries up to 2020. It is aimed at expanding multilateral business cooperation with the goal of stepping up social and economic development and increasing the competitiveness of BRICS countries in the global economy.
Besides, a range of other documents were signed with the presence of the leaders, namely the Memorandum on mutual understanding between foreign policy agencies of the BRICS countries on creating a joint Internet website – a virtual secretariat of the group.
“This means that we start being institutionalized and turning into an organization with formal rules,” Russia’s first deputy economic development minister, Alexey Likhachev, earlier told TASS.
The sides have also signed an agreement between the governments of BRICS countries on cooperation in culture and a memorandum of intent on cooperation with the New Development Bank between the National Bank of Social and Economic Development of Brazil, Russia’s Vnesheconombank (VEB), Export Import Bank of India, China Development Bank and Development Bank of South Africa.
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The EiB: An effective implementing partner for European Development Policy
Over the decades, the EU’s development policies have been anchored in its partnership agreements with the African, Caribbean and Pacific (ACP) group of countries. These agreements defined the European Investment Bank’s lending policies to Africa.
Specifically, under the first Yaoundé convention of 1964-1975, the EIB focused on manufacturing and transport infrastructure. Under the 1975-2000 Lome agreement, the EIB targeted infrastructure for water and sustainable energy. The current Cotonou agreement, set to last until 2020, prioritises growth and poverty reduction through private sector development.
From modest beginnings, the EIB has become the world’s largest multilateral lender. Being the ‘EU Bank’, about 90% of its loans are concentrated in member states, but the EIB has also expanded its activities in Africa. In 2014, it provided more than €2.5bn for long-term investments in energy, water, transport and education, and supported private sector development across Africa. Besides funds, the EIB contributes expertise for project evaluation, especially in innovative financing.
Achievements
As the only multilateral development bank (MDB) extending loans to both EU and African countries, the EIB is uniquely positioned to implement EU development policy in the area of investment. Financed by the European Development Fund, member state budgets and, equally importantly, EIB resources raised on international capital markets, the EIB in Africa – often in cooperation with the African Development Bank (AfDB) – focuses on growth and poverty reduction through private sector development as well as intra- and inter-regional infrastructure.
In Kenya, the Lake Turkana Wind Power project, a 365-turbine wind farm aiming to transform the supply of renewable energy in East Africa, is receiving €200m in EIB support – making it the single largest financier of the project. The African Development Bank is co-financing the project, which is the largest renewable energy project ever undertaken in sub-Saharan Africa, and expected to eventually generate around 20% of Kenya’s power.
In 2014, the EIB also provided support for upgrading energy infrastructure in Guinea. The EIB financed about 40% of the project, with additional funds coming from the government, the African Development Bank, the Islamic Development Bank and the World Bank. The investment plan aims at the re-development of four hydropower plants, raising Guinea’s electricity generation capacity from 75MW to 122MW. Distribution in some parts of the country will be also upgraded. The project is expected to positively impact medical treatment activities, though will not extend to the areas most affected by Ebola.
Besides large infrastructure projects, the EIB prioritises financial inclusion and supports entrepreneurship through the creation of regional micro-finance facilities such as the East African Community (EAC) Microfinance Global Authorisation. Similar to the AfDB, the EIB provides long-term local currency loans that allow financial intermediaries to on-lend to SMEs. In Kenya, for example, the EIB extended 15,000 long-term loans totalling €8m to entrepreneurs, almost half of whom were women, creating about 30,000 jobs.
Moving Forward, Deepening EIB-AfDB Cooperation
The EIB is currently launching new initiatives to address Europe’s stubbornly high youth unemployment. One of the main instruments of this initiative is the ‘youth guarantee’, which aims to provide those aged 25 and under with a high-quality offer for employment, continued education, an apprenticeship or traineeship within four months of leaving school or becoming unemployed. Loans to SMEs will complement this instrument. There will also be a focus on soft expenditures, supporting training, education for teachers and job search assistance.
Given Africa’s youthful population and the major challenge that youth unemployment presents for the continent, the AfDB and EIB could form a strategic partnership to share experiences and conduct joint investments in Africa. The initiative could, on a pilot basis, also facilitate the free flow of labour between Africa and Europe to encourage the circulation of knowledge and ideas.
The AfDB and EIB may also benefit from cooperating in support of innovation and technology. The EIB’s flagship initiative for financing innovators, InnovFin, which offers financing options tailored to both European SMEs and larger enterprises, could be a good starting point for this joint endeavour. Africa also has its own experiences to share, with East Africa a global leader in mobile banking and the uptake of mobile technologies more broadly.
Africa is facing major financing and human capital gaps, which constrain it from reaching its full potential. Given the continent’s rapid growth and the fiscal challenges faced by advanced economies, official development assistance can no longer effectively address Africa’s needs alone. New and innovative sources of financing, increasingly involving the private sector or at least public-private partnerships (PPPs), will need to be found and incentivised for investing in Africa. The actions of MDBs such as the EIB and the AfDB, especially if in partnership, can facilitate private sector funding by providing seed funds and mitigating risks through partial credit or risk guarantees. While investing in Africa is indeed riskier than in advanced economies, perceptions that deter potential investors often far exceed the reality.
Donald Kaberuka is the outgoing President of the African Development Bank Group.
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$100 billion BRICS lender more keen on risk than World Bank
New Development Bank, formed by five of the world’s bigger emerging markets, is seeking to tackle more riskier and challenging projects than traditional global finance institutions such as the World Bank.
The bank is aiming to be operational by the first quarter of next year, Tito Mboweni, a non-executive director of the lender and a former governor of South Africa’s central bank, said in an interview with Bloomberg TV’s Manus Cranny on Friday.
Leaders from Brazil, Russia, India, China and South Africa formally started New Development Bank at a summit in Russia this week to boost financial and economic ties between the emerging-markets bloc. The lender, which will have initial capital of $50 billion and aim to raise that to $100 billion over time, provides an alternative funding source to the World Bank and the International Monetary Fund.
“We do need another development bank but of a different kind,” Mboweni said. The BRICS nations, who are all members of the World Bank, “have nevertheless also found that there are problems with the World Bank group. We want to take on the riskier infrastructure projects and other development projects, but there may be cases where we have to work together.”
GDP Contribution
The BRICS countries account for more than a quarter of the world’s economic output, according to the bank’s website. The lender will be based in Shanghai and its first president is Kundapur Vaman Kamath, chairman of India’s largest private sector lender, ICICI Bank Ltd.
Mboweni, 56, said the BRICS bank will also have a regional headquarters for sub-Saharan Africa, based in Johannesburg. The lender plans to partner with institutions such as the Development Bank of Southern Africa to invest in infrastructure projects, he said.
“This is not a substitute for the World Bank, the Latin American Development Bank or any other developmental financial institution,” Mboweni said. “This is an additional source of funding, but we do want to do things differently.”
While it’s still too early to provide details on deals that will be financed, funding required by South Africa’s state-owned power utility, Eskom Holdings SOC Ltd., “falls squarely within the mandate of the bank,” Mboweni said.
Eskom has a cashflow shortfall of 225 billion rand ($18 billion) in the five years through 2018 as it builds power plants to expand capacity. The utility has implemented regular rolling blackouts this year as it struggles to meet demand, curbing economic growth.
Investor Holdings
Investors are cutting back holdings in emerging-market assets as global risk aversion rises. The Brazilian real has depreciated 17 percent against the dollar this year, the most among 24 emerging-market currencies tracked by Bloomberg, while South Africa’s rand has declined 6.9 percent.
South Africa’s economic fundamentals are still intact, despite a weakening in the economy and currency, Mboweni said.
“I would expect the South African economy to weather this storm fairly well. I expect the currency to find an appropriate level,” he said. “The quicker this Greek thing is sorted out the better for everybody because no matter how good our fundamentals may be, if there’s a disturbance somewhere in the world which is seen to affect emerging markets, we are always blamed.”
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World needs more development banks like BRICS’, not ‘mindless austerity’ – minister
BRICS is gaining momentum as an increasingly effective organization and its New Development Bank is likely to become new source of funding for the current infrastructure gap, South Africa’s Trade and Industry Minister Rob Davies told RT.
There’s a need for more development banks in the world involved in more developmental finance, the minister said on the sidelines of BRICS/SOC summits in Ufa. And there’s a need to try to tap into more sources of capital while there’s an infrastructure funding gap.
“I believe we will not be guided by mindless austerity which is causing enormous difficulties in some parts of the developed world,” he said.
Speaking about trade and cooperation, the minister claimed BRICS are very interested in moving away from third countries’ currencies as the need to convert into a third currency creates extra costs. The process of switching to domestic currencies involves discussions at central bank level, it’s already happening and the member states are very interested in it, he added.
Trade between Russia and South Africa tripled between 2010 and 2014, but Western anti-Russia sanctions and the price of oil have definitely influenced trade, according to Davies. However, South Africa sees a lot of opportunities for growth and the possibility of important investment projects with Russia as well as with other BRICS nations.
The country never supported the Western sanctions imposed against Russia, and doesn’t believe they are justified, according to Davies. Sanctions have a “negative impact both on Russia and the imposers of those sanctions.”
“During the World Economic Forum in Davos I heard a number of prominent European citizens also decrying the negative impact of the sanctions and the lack of justification for them,” Davies said.
Strengthening ties with Russia will take place regardless of sanctions. South Africa is a fruit and food exporting country and while there is currently demand for such products in Russia, “exporters are ready to step up to the plate.”
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World Bank and the IMF launch joint initiative to support developing countries in strengthening tax systems
Will help to bring developing countries interests further into international dialogue
The World Bank and IMF are launching a new initiative to help developing countries strengthen their tax systems. Analysis suggests that many lower-income countries have the potential to increase their tax ratios by at least 2-4 percent of GDP, without compromising fairness or growth. Raising additional revenues will allow developing countries to fill financing gaps and to promote development.
The announcement comes ahead of the “Financing for Development” conference in Addis, Ethiopia, at which heads of state, CSOs, multilateral institutions and private sector representatives will discuss how to scale up finances to meet the Sustainable Development Goals (SDGs).
“A strong revenue base is imperative if developing countries are to be able to finance the spending they need on public services, social support and infrastructure,” said IMF Managing Director Christine Lagarde. “But experience shows that with well-targeted external technical support and sufficient political will, it can be done.”
“We very much want to help developing countries raise more revenues through taxes because this can lead to more children receiving a good education and more families having access to quality health care,” said World Bank Group President Jim Yong Kim. “If everyone pays their fair share developing countries can close their financing gaps and promote inclusive growth.”
Responding to country demands, the IMF/World Bank initiative has two pillars: deepening the dialogue with developing countries on international tax issues, aiming to help increase their voice in the international debate on tax rules and cooperation; and developing improved diagnostic tools to help member countries evaluate and strengthen their tax policies. This builds on the Bank’s current tax programs in over 48 developing countries and the Fund’s tax related technical assistance projects in over 120 countries.
By further leveraging their collective expertise, the Bank and Fund aim to play a fuller role in helping all of their member countries achieve the ambitious goals that the world will be setting for itself later this year in New York.
Bringing the voice and interests of developing countries, particularly those too small to play a role at the G-20 level, more fully into the debate on international tax policy issues is a key priority for the Bank and the Fund. The initiative will deepen the institutions’ ongoing collaboration with developing countries to identify key international tax policy concerns and potential solutions, both at the country level and in the context of the continuing international dialogue.
The institutions also plan to strengthen their diagnostic tools, developing new methodologies where needed, to enable member countries to identify priority tax reforms and design the requisite support for their implementation. This effort would complement the launch of the Tax Administration Diagnostic Assessment Tool (TADAT) in November.
The Bank and the Fund will continue to work in close collaboration with other development partners, including the OECD, in expanding their work in the tax area.
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tralac’s Daily News selection: 10 July 2015
The selection: Friday, 10 July
Featured tweet, @AMB_A_Mohammed: Africa’s fundamental commitment is to Trade Multilateralism; For Africa, for us, it is Multilateralism first and last.
Better leveraging of services trade in Africa could yield major employment and growth benefits, the UNCTAD Economic Development in Africa Report 2015 argues, while ongoing negotiations towards a continental free trade agreement offer a unique opportunity to align national and regional policies on services trade to that end. The report also argues that building continent-wide policy coherence in financial services would boost economic productivity and help reduce poverty.
“Africa must bridge the policy disconnect of services trade in order to unlock the sector’s potential for the continent’s growth and economic transformation,” UNCTAD Secretary-General Mukhisa Kituyi said. “Furthermore, the impact of a continent-wide free trade area will only be meaningful for Africa if services are opened up in parallel with trade in goods. This is because services, such as transport and storage services, are necessary components of trade in goods.”
The establishment of a continental free trade agreement, most recently on the agenda at an African Union summit in June 2015, is in itself a unique opportunity for African countries to align their existing national, regional and global policies on services trade, the report argues. The report finds that many national development plans mention services trade as a vehicle for development but fail to link it to existing regional plans or regulation on services in the context of their regional economic communities.
Economic Development in Africa Report 2015: table of contents [Download]
Chapter 1: The services sector in Africa - emerging trends
Chapter 2: Making regulation work for services in Africa
Chapter 3: Addressing the policy disconnect in Africa’s services trade
Chapter 4: Unlocking financial services potential in Africa through cross-border banking
Chapter 5: Main findings and recommendations
Lesotho: Shoprite money transfer cross-border remittances facility (FinMark Trust)
The Shoprite Money Transfer cross-border remittances facility will be officially launched today in Maseru by the Minister of Finance Dr Mamphono Khaketla. The purpose of this initiative is to assist Basotho who are legally working and residing in South Africa to send money home through an affordable, convenient, safe and real-time channel using a chain of Shoprite, U-save and Checkers stores across South Africa. This service is targeting the unbanked workers who have been using informal ways and most often than not; high risk and high cost channels to send money home to their families.
Airtel introduces cross-border money transfers in Niger (IT News Africa)
EAC guidelines for joint trade negotiations with global partners in the offing (New Times)
The East African Community has drafted a negotiation framework to guide its trade negotiations with third parties, including the US, the European Union and China, which are some of its main trade partners. The proposed policy is awaiting validation by the five member states. “The draft has been circulated and is now undergoing national consultations before we can have a harmonised framework, hopefully by end of the year,” James Kiiru, an official in Kenya’s Ministry for Foreign Affairs and International Trade economic and international trade directorate, said on Tuesday. The region has previously struggled to attain a common position while negotiating for trade pacts with other blocs.
Djibouti Corridor Authority to be established (COMESA)
The Ministers of Transport from the Djibouti Corridor states have agreed to the establishment of the Djibouti Corridor Authority (DCA) to improve the coordination, efficiency and management of corridor activities. The agreement was reached during the first ever meeting of Djibouti Corridor Member States convened in Addis Ababa, Ethiopia last month. The Ministers also approved a work programme and funding mechanism for the DCA to be signed by 01 September 2015. The Corridor connects Djibouti, Ethiopia, South Sudan and Sudan. Funding of the DCA will be through blending of three major sources including contributions by Member States, user levy and support from co-operating partners, especially in the area of programme implementation.
World Tourism Barometer (UNWTO)
In Africa, demand weakened in 2014 after years of solid growth, affected mainly by the Ebola outbreak among other challenges. Limited data currently available for January-April 2015 points to a 6% decline, as African destinations struggle to recover from the misperceptions affecting the continent.
Home affairs won't back down on child visas - minister (Fin24)
Resolve SA-Kenya visa row amicably (editorial comment, Business Daily)
Ad Hoc Joint Committee on Probing Violence against Foreign Nationals: update I, update II (RSA Parliament)
As the Heads of State will be meeting in Botswana for the 2015 Heads of State and Government Summit, the ordinary peoples of Southern Africa will also converge at the Big Five in Gaborone, Botswana from 15th – 16th August, 2015, under the auspices of the Southern Africa Peoples Solidarity Network. The theme: Reclaiming SADC for People’s Development: SADC Resources for SADC People
SADC: Ministerial meeting on disaster preparedness and response
World crop prospects positive in 2015; but food insecurity hotspots pose concern (FAO)
In Africa, the overall 2015 production outlook points to a decline from last year's high level, with all regions expecting reduced harvests, except Central and North Africa. In Southern Africa, aggregate cereal production is projected to decrease by 17%, mainly due to irregular seasonal rains and an extended dry spell. Aggregate maize production - which accounts for the bulk of the subregion's cereal output - is forecast at 20.6 million tonnes, 26% below the bumper 2014 output.
Accounting for the bulk of the decrease, South Africa's maize production is estimated at 10.5 million tonnes, a steep 30% reduction versus the high level of last year. Zambia and Malawi's 2015 maize harvests are estimated to be 21% and 26% below 2014, and rainfall deficits have severely impacted maize production in the import-dependent countries of Lesotho, Namibia, Botswana and Swaziland, with declines ranging from 13% to 43%.
Strategies for addressing smallholder agriculture and facilitating structural transformation (OECD)
This report aims to identify the main constraints that limit smallholders in emerging countries from accessing markets. It also looks at different current policy instruments used in five countries (Brazil, Chile, Indonesia, Mexico and South Africa) that contribute to the integration of smallholders into commercial structures and to their development.
Using national statistics to increase transparency of large land acquisition: evidence from Ethiopia (World Bank)
AGOA: advancing the role of agriculture in US-Africa trade (AgriPulse)
WEO update: growth slows in emerging markets, picks up in advanced economies (IMF)
General evolutions are unfolding very much as forecast in April, said Olivier Blanchard, IMF Economic Counselor and Director of Research, “namely, an improving recovery in advanced economies and a slowdown in underlying growth in emerging markets and developing economies.” Forecasts for the world economy are for 3.3 percent this year, marginally lower than in 2014, and 3.8 percent next year. [Download]
Levelling Up: ensuring a fairer share of corporate tax for developing countries (ActionAid)
The status quo in international corporate taxation is broken and archaic and current attempts to fix it are tinkering around the edges. We need a new approach: countries acting for themselves to boost their own corporate tax revenues, and in the long term a new global agreement to curb tax competition and tackle tax avoidance. This will benefit all countries, but especially developing countries, which currently lose out the most. [Download]
The G20’s Development Working Group has invited four International Organizations (IMF, OECD, UN and World Bank) to write a report on options for low income countries’ effective and efficient use of tax incentives for investment. The underlying concern of the DWG is that low-income countries often face acute pressures to attract investment by offering tax incentives, which then erode the countries’ tax bases with little demonstrable benefit in terms of increased investment. We are seeking your input on the question:
Global launch next week in Addis: Tax Inspectors Without Borders (OECD)
Zim to host Sino-Zim investment conference (The Herald)
Addressing an investment seminar attended by over 150 business people and investors in Qingdao yesterday, Vice President Emmerson Mnangagwa said the exact dates of the conference would be announced soon. “This international conference will aim at attracting more Chinese investors to Zimbabwe,” he said. “It will also aim at addressing any problems retarding growth and trade between the two countries.” VP Mnangagwa told delegates that as the person assigned by President Mugabe to lead Zimbabwe’s economic recovery, he was driving Cabinet ministers “military style” as he chaired several inter-ministerial committees geared towards turning around the economy.
Japanese companies eye high table of Kenya’s big business (Business Daily)
Japanese companies have increased their presence in key sectors of the economy, stepping up competition for Chinese and European firms that have long dominated Kenya’s big business. Trade data shows that the list of Japanese firms opening shop in the country has risen sharply over the past five years, gaining a foothold in infrastructure development and the consumer goods business. President Uhuru Kenyatta recently pitched Kenya as a lucrative investment destination for Japanese firms during a visit to Tokyo, urging the more than 100 big companies present at a forum to consider setting up shop in Nairobi.
Kenya: Standard gauge rail material supplies earn local firms Sh23.5bn (Business Daily)
BRICS Business Council: address by Jacob Zuma (The Presidency)
Hints of a recovery in South Africa’s manufactured goods trade balance (Engineering News)
Manufacturing production in SA decreased by 1,4% in May 2015 (Statistics SA)
Nigeria's external reserves now $31.89bn (ThisDay)
We dont have power to ban imported goods – CBN (Vanguard)
West African regulators move to improve capital markets (ThisDay)
Greece contagion reaches East Africa as Tanzania delays loan (Bloomberg)
Somalia snubs out-of-court talks in Kenya border dispute (Business Daily)
Common Principles for Climate Change Adaptation Finance Tracking (World Bank)
This week in the news
Catch up on tralac’s daily news selections for the past week:
The selection: Thursday, 9 July 2015
The selection: Wednesday, 8 July 2015
The selection: Tuesday, 7 July 2015
The selection: Monday, 6 July 2015
SUBSCRIBE: To receive the link to tralac’s Daily News Selection via email, please »click here to subscribe«.
This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to over 300 recipients across Africa and internationally, serving in the AU, RECS, national government trade departments and research and development agencies. Your feedback is most welcome. Any suggestions that our recipients might have of items for inclusion are most welcome. Richard Humphries (Email: This email address is being protected from spambots. You need JavaScript enabled to view it.; Twitter: @richardhumphri1)
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Improved infrastructure services regulation is needed to tap the potential of Africa’s services sector, UNCTAD report says
Regulatory and policy shortcomings stifle Africa’s capacity to capitalize on the potential of its services sector, the UNCTAD Economic Development in Africa Report 2015 argues.
The report, subtitled “Unlocking the Potential of Africa’s Services Trade for Growth and Development”, argues that because Africa’s infrastructure provision remains suboptimal and costly, the services sector, though a dynamic driver of growth in Africa in recent years (see figure 1), has not been able to deliver the kind of structural transformation required to address the continent’s development needs.
Infrastructure services are critical to achieving the sustainable development goals being set by the United Nations for 2016-2030 and creating a platform for broad-based growth in Africa, the report argues, adding that some infrastructure services such as water and sanitation are directly linked to sustainable development goals targets central to achieving social development outcomes. In addition, while services such as electricity, telecommunications and transport contribute to productivity, they also determine the competitiveness of African firms.
“Africa accounts for 15 per cent of the world’s population but only 2.2 per cent of global services exports, indicating tremendous untapped potential for the sector,” UNCTAD Secretary-General Mukhisa Kituyi said. “The Economic Development in Africa Report 2015 underscores the need for African countries to tackle various regulatory and policy shortcomings, which explain these inefficiencies and impede Africa’s capacity to fully capitalize on the potential of its services sector.”
The report notes that during 2009-2012 the services sector in Africa grew at a rate of 4.6 per cent, compared to 5.4 per cent in the developing world. The fastest growing services subsectors were transport, storage and communications. Africa’s services sector propelled gross domestic product growth in 30 out of 54 countries during 2009-2012. Of the 45 countries where the share of services in output rose, 30 experienced a contraction in manufacturing from the period 2001-2004 to the period 2009-2012.
Some African economies have developed their services industries with relative success and are even sourcing services to African markets, the report notes. Examples include the financial and banking services industries of countries such as Mauritius and Nigeria, the commercial and cargo air transport industry in Ethiopia, Kenya and South Africa, the educational services industries of Uganda, the telecommunications services of Egypt, as well as the port services industries of Djibouti and Kenya.
Illustrative is the case of Ethiopian Airlines, the fastest growing, largest and most profitable airline in Africa, growing by an average rate of 20 to 25 per cent per year since 2005. The company is a $2.3 billion African powerhouse, with a reported net income of $228 million in 2013/14, making it the most profitable carrier in Africa.
However, African countries continue to grapple with building the necessary infrastructure to enable industrialization and economic growth. It is necessary to put in place clear and consistent regulatory and compliance frameworks to achieve efficient services. Infrastructure services regulation is also critical as a guarantor of interconnected factors such as access, affordability, investment requirements and quality control. The latter is significant in Africa, where networks are often quite limited in range and poorly maintained, but private providers may be reluctant to expand and upgrade.
However, with the trend towards greater regional liberalization of trade in services and deeper economic integration in Africa, it may become easier to prioritize the service sector and necessary policies to enhance its contribution to growth.
The report argues that the need for effective infrastructure services regulation is critical for three reasons:
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First, to achieve post-2015 sustainable development goals related to social welfare, water and sanitation and health-related indicators, greater emphasis is placed on regulation that protects consumers, attracts investors and enables Governments to achieve policy objectives.
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Second, Africa’s infrastructure services, in particular road freight, are more expensive and of lower quality than in any other region of the world. UNCTAD has estimated that African users in 2012 faced transport costs at 7.7 per cent of the delivered value of exports, more than twice as high as the world average of 3.7 per cent. Transaction costs are higher for intra-African trade than for trade with the rest of the world. Not only have high transport costs raised the cost of doing business, impeding private investment, but they serve as an additional barrier to African countries’ benefiting from the rapid growth in world trade.
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Third, access to reliable sources of energy is low across Africa and the amount of electricity being generated, reliably and consistently, is too low to meet rising demand. For example, securing investment and delivering large capital projects will be a key challenge for Africa’s energy utilities as the infrastructure investment needs of the sector are unprecedented; 74 per cent of the continent’s population is without access to electricity, and closing the existing energy gap by 2030 would cost an estimated $93 billion per year.
Most African States rank low in regulatory independence across all sectors and standard international models of infrastructure regulation are not regularly employed in Africa. Most African regulatory bodies are at an early stage of development, have modest budgets and often lack qualified staff members. In Africa the high cost and lack of access to capital, aging networks, a weak public sector and few independent regulatory institutions represent serious challenges to possible entrants into infrastructure service markets.
Although the State remains a major player in the provision of infrastructure services in Africa, regulatory independence is an important element of effective infrastructure services provision. The type of ownership – whether State, private, public–private partnership or joint venture – may vary, as long as it contributes to a Government’s development objectives.
“For African firms to effectively exploit growing opportunities for expanded trade through global services value chains, major investments in transport, logistics and energy infrastructure are required,” Dr. Kituyi said. “Also, as the utilities sector transforms, so too must its regulation and traditional business model of supply and operation move towards being capable of adapting to new technological and consumer demands.”
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Levelling Up: Ensuring a fairer share of corporate tax for developing countries
This new ActionAid report explores how developing countries collect much less corporate tax than they could as a result or corporate tax avoidance – revenue that could help to pay for public services and the fight against poverty.
The status quo in international corporate taxation is broken and archaic and current attempts to fix it are tinkering around the edges. We need a new approach: countries acting for themselves to boost their own corporate tax revenues, and in the long term a new global agreement to curb tax competition and tackle tax avoidance. This will benefit all countries, but especially developing countries, which currently lose out the most.
Corporate tax avoidance scandals around the world have underlined the extent to which some multinational companies have been able to slash their tax contributions, sometimes close to zero. Developing countries, where most of the world’s poorest people live, are particularly vulnerable to corporate tax dodging; yet they badly need tax revenues to provide public services and are more dependent on corporate taxes than developed countries.
International corporate taxation is governed by a multitude of rules and treaties between countries, some of whose underlying principles date back nearly a hundred years. Some multinationals have become skilled at legally exploiting them – often in conjunction with tax breaks offered by governments – so as to pay less tax. Tax rules are also commonly shaped by lobbying from big business. In addition, the network of tax treaties tends to favour the residence countries of multinationals over the source countries where they invest, which include most developing countries.
The result of all these problems is that developing countries collect much less corporate tax than they otherwise could – revenue that could help to pay for public services and the fight against poverty. Foreign direct investment stock in low-income countries has more than doubled since the 1990s as a share of GDP but corporate tax revenues have not kept up. The United Nations Conference on Trade and Development (UNCTAD) has estimated that the amount of tax avoided in developing countries may be equal to nearly half of the amount of corporate income tax revenue collected.
Against a backdrop of public anger, governments have recognised that the status quo is deeply flawed, but the official response, as embodied in the Base Erosion and Profit Shifting (BEPS) Project run by the Organisation for Economic Cooperation and Development (OECD), falls far short of what is needed.
It is even possible that current efforts to crack down on tax dodging could have some success, yet could still fail to ensure that effective tax rates paid by multinationals are higher in the long run than they are at present, because of new tax cuts and tax breaks granted by governments around the world. Tax competition is a global problem: the proliferation of tax holidays and other incentives across developing countries has its counterpart in the spread of tax breaks, notably for intellectual property, in many higher-income OECD countries. The OECD cannot meaningfully address this problem, however, given that the tax-cutting practices of some of its member countries are a major cause of it.
Key messages
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International corporate taxation is broken and archaic and it harms all countries, especially developing countries.
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The Base Erosion and Profit Shifting (BEPS) Project will not solve tax-dodging and is not addressing the deeper problems associated with tax rules and treaties which harm poorer countries.
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Developing countries can’t wait for global agreement. Some have taken action to protect their corporate tax revenues. Others could do the same.
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In the long term, a new global deal is needed to curb tax competition between countries and tackle tax avoidance.
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Intra-trade among Comesa countries still weak – Official
The intra-trade among partner states of the Common Market for the Eastern and Southern Africa (Comesa) is still weak compared to the business potential the region has, an official has said.
Thierry Mutombo Kalonji, the director of investment promotion and private sector development at Comesa was speaking during a two-day sanitary and phytosanitary strategy workshop in Kigali recently.
He said there is a huge business potential among Comesa member states in terms of intra-trade which has not yet been fully exploited by the partner states.
“The intra-trade in the Comesa region is still weak compared to what we have in terms of potential for example the trade component of the agriculture commodities represents only 30% of the entire volume of exports within the Comesa region and yet agriculture offers a lot of potential. We can indeed do better than we are doing,” Mutombo said.
He added that Comesa partner states are also facing the challenge of lack of harmonized policies and regulations which, he says, affects intra-trade among them.
He said that in order to address such challenges, Comesa has put in place a number of trade facilitation instruments, mainly the sanitary and phytosanitary that are expected to facilitate movement of agriculture commodities across the Comesa countries.
“The rules and regulations in Comesa partner states are different but similar in substance. This is why we need to sit together, discuss and agree on commonalities that can unify us more.”
He added that intra-trade among Comesa is at a very low level and needs to be increased so as to enable the region become more vibrant economically and to develop in all aspects.
“The reason why we are here is to come up with various measures towards the promotion of trade facilitation in Comesa and to agree with all the countries within the bloc on what direction we should take,” Mutombo said.
He noted that partner states are planning to put in place a five-year development plan (2016-2020) that will go a long way in enabling them achieve their intra-trade goals.
“The rules and regulations in Comesa partner states are different but similar in substance. This is why we need to sit together, discuss and agree on commonalities that can unify us more. It is the major aim of this workshop,” Mutombo added.
He encouraged policymakers, in the Comesa region, to always consult technocrats before making any decision because they are the ones who are on the ground and who clearly know what is needed to foster intra-trade in the region.
“We are also trying to make sure that whatever we are doing in the area of technical regulations is harmonized among ourselves as members of Comesa so that if we speak the same language and head in the same direction, I think we will be able to move at the same pace in terms of doing business among ourselves,” he added.
Comesa’s vision is to be a fully integrated, internationally competitive regional economic bloc with high standards of living for all its people ready to merge into an African Economic Community.
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Financing for Development: IMF’s Role in the Post-2015 Agenda
The IMF approved a package of proposals to enhance financial support and intensify its policy advice, technical assistance and capacity building in strategic areas to better assist developing countries in their pursuit of the post-2015 Sustainable Development Goals.
The measures were outlined in a speech by IMF Managing Director Christine Lagarde at the Brookings Institution on July 8, and will be discussed further next week in Addis Ababa during the Third International Conference on Financing for Development (FfD).
Many of the key issues under discussion at the conference are already at the core of the IMF’s mandate. These include national policy issues such as domestic revenue mobilization, expenditure efficiency and effectiveness, attracting and managing capital flows, prudent expansion of public investment and international policy issues such as maintaining global financial stability and international tax cooperation.
The IMF Executive Board on July 1 also approved the following changes to further bolster the IMF’s commitment to low-income countries:
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Expanding access to all of its concessional facilities by 50 percent, which means making more money available for eligible low-income countries;
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Targeting that concessional financing further towards the poorest and most vulnerable countries; and
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Setting the interest rate at zero for all loans extended under the Rapid Credit Facility, which is targeted at countries hit by natural disasters and fragile/post-conflict states.
“We have the opportunity to make a positive difference in the lives of billions of people in the world, especially the poorest,” said IMF Deputy Managing Director Min Zhu, who is overseeing the Fund’s work on Financing for Development. “To achieve this, the IMF is delivering enhanced technical assistance, surveillance and lending.”
The 2015 Global Development Agenda
The Financing for Development Conference is one of three major international events – including the Sustainable Development Goals summit in New York in September, and the United Nations Conference on Climate Change in Paris in December – that collectively make 2015 a pivotal year for global development.
The FfD Conference is intended to produce a shared understanding on how the financing needed to achieve the Sustainable Development Goals (SDGs) will be mobilized. The SDGs, set to be formally adopted at the summit in September, replace the Millennium Development Goals which expire this year. The SDGs now include 17 distinct goals focused on ending poverty, transforming all lives and protecting the planet by 2030.
The first United Nations Financing for Development Conference took place in 2002 in Monterrey, Mexico; the concluding document of that conference is known as the Monterrey Consensus. As in 2002, the Fund is expected to play a key role in contributing to this year’s conference.
“The IMF, with its global membership and mandate to promote economic growth and stability, is well positioned to contribute to the post-2015 development agenda,” said Sean Nolan, Deputy Director of the IMF’s Strategy, Policy and Review Department and the lead author of this effort. “We have looked at our loan facilities and our advisory and capacity-building services through the lens of the post-2015 development agenda and identified a number of areas where we believe that we can enhance our current contribution. Our Board has approved the proposed initiatives, including the increased access to IMF resources for low-income countries.”
Helping low-income countries build economic resilience
Beyond offering increased access and extended concessional terms for low-income countries, one of the biggest contributions the IMF will make will be in the form of increased policy advice, technical assistance and capacity building to help countries build economic resilience and meet their individual responsibilities for financing their development and achieving the Sustainable Development Goals.
Expanded policy advice and analytical work will include issues related to poverty, equity and inclusion, where macro-economically relevant, with the aim of integrating this into IMF operational work, and collaborating across the membership and drawing on the expertise and experience of other relevant international institutions.
The IMF will also continue its work on energy pricing and environmental tax issues and will seek to provide technical assistance to help developing countries design easy-to-administer carbon pricing schemes.
As part of its Financing for Development initiatives, the IMF will expand its support for developing countries seeking to build domestic capacity in tax policy and administration, while also increasing engagement on international tax issues of special relevance for developing countries.
The IMF already allocates one-fifth of capacity building efforts to providing tax policy and tax administration assistance, and further resources will be allocated under the new measures.
The IMF also plans to help countries address large infrastructure gaps more efficiently and sustainably by providing advice and technical assistance in key areas of public investment management needed for effective infrastructure spending. The IMF is to deepen its analysis of the relationships between public investment, growth and debt sustainability to help identify the appropriate pace for scaling up infrastructure spending.
Fragile and conflict-affected states
The IMF will intensify its engagement with fragile and conflict-affected states, both in terms of operational work and in supporting capacity building over the medium term. Work on capacity building will need to be embedded in a strategy that is closely coordinated with lead development partners and aligned with the government’s own priorities. IMF concessional financing will also target the poorest countries, and the IMF will maintain the zero percent interest rate for loans under the Rapid Credit Facility.
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Growth slows in emerging markets, picks up in advanced economies
Moderate growth continues, with global growth forecast to be slightly down for 2015, reflecting an unexpected setback to economic activity in the first quarter of 2015, mostly in North America, says the IMF’s latest update on the World Economic Outlook.
General evolutions are unfolding very much as forecast in April, said Olivier Blanchard, IMF Economic Counselor and Director of Research, “namely, an improving recovery in advanced economies and a slowdown in underlying growth in emerging markets and developing economies.” Forecasts for the world economy are for 3.3 percent this year, marginally lower than in 2014, and 3.8 percent next year.
“As dramatic as the events in Greece are,” Blanchard said, “effects on the rest of the world economy from the further suffering of the Greek economy are likely to be limited.” Of course, he said, “we continue to hope for and work toward a positive solution by which Greece remains in the Eurozone.”
As for other developments, the WEO Update says that oil prices rebounded during the second quarter of 2015, the risk of deflation decreased, and financial conditions for corporate and household borrowers in most advanced economies remained broadly favorable.
Advanced economies are improving
The increase in global growth in 2015 will be driven by stronger growth in advanced economies. Growth in these economies is forecast to increase from 1.8 percent in 2014 to 2.1 percent in 2015 (falling about 0.3 percentage points short of the forecast in April), and 2.4 percent in 2016. The report notes that the unexpected weakness in North America in early 2015, which accounts for most of the growth forecast revision for 2015, will likely prove to be a temporary setback. The underlying drivers for consumption and investment in the United States – wage growth, labor market conditions, easy financial conditions, lower fuel prices, and a strengthening housing market – remain intact.
The economic recovery in the euro area is more solidly anchored, with signs of increase in both domestic demand and inflation. Growth projections were revised up for many euro area economies (e.g., Spain, Italy), but in Greece, unfolding developments are likely to take a much heavier toll on activity relative to previous expectations.
Japan saw a stronger than expected growth in the first quarter of 2015, but much of the surprise reflected inventory accumulation. With weaker underlying momentum in real wages and consumption, the pickup in growth in 2015 is now projected to be more modest.
Emerging and developing economies are slowing
Growth in emerging market and developing economies is projected to slow from 4.6 percent in 2014 to 4.2 percent in 2015. The slowdown reflects the dampening impact of lower commodity prices and tighter external financial conditions – particularly in Latin America (e.g., Brazil) and oil exporters.
Other factors include rebalancing in China, structural bottlenecks, and economic distress related to geopolitical factors – particularly in the Commonwealth of Independent States and some countries in the Middle East and North Africa.
In 2016, growth in emerging market and developing economies is expected to pick up to 4.7 percent, largely on account of the projected improvement in economic conditions in a number of distressed economies, including Russia and some economies in the Middle East and North Africa.
Risks to the outlook
Given the distribution of risks to the near-term outlook, global growth is more likely to fall short of expectations than to surprise on the upside. The boost from lower oil prices, especially in advanced economies, however, may still offer potential gains.
Developments in Greece have, so far, not produced strong ripples. And while timely policy action should help in managing potential contagion, some risks of a reemergence of financial stress remain.
More generally, disruptive shifts in asset prices and increased financial market volatility remain important risks, also because of the associated risks of capital flow reversals in emerging market economies. Furthermore, U.S. dollar appreciation poses balance sheet and funding risks for dollar debtors, especially in some emerging market economies.
Other risks include low medium-term growth or a slow return to full employment amid very low inflation and crisis legacies in advanced economies, a sharper-than-expected slowdown in China, and spillovers to economic activity from increased geopolitical tensions in Ukraine, the Middle East, or parts of Africa.
Preventing the low growth trap
In this setting, without the expected pickup in global growth, the IMF emphasizes that the economic policy priority must remain raising actual and potential output through a combination of demand support and structural reforms.
In many advanced economies, this means that accommodative monetary policy should continue to support economic activity and lift inflation back to target. There is also a strong case for increasing infrastructure investment in some economies and for implementing structural reforms – such as labor market reforms (to reduce youth unemployment for example) and product market reforms (such as removing barriers to entry) to tackle legacies of the crisis and boost potential output.
In many emerging market and developing economies fiscal policy can be a tool to boost demand and longer-run growth through tax reform and prioritizing spending. Structural reforms to raise productivity and remove bottlenecks to production are urgently needed in many economies.
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World crop prospects positive in 2015; but food insecurity hotspots pose concern
Global Food Price Index falls in June, cereal production is forecast to be strong despite El Niño fears
Favorable worldwide conditions for cereal crops will lead to better-than-expected production this growing season at the global level, despite continuing apprehension over El Niño. But concerns are growing over a sharp shortfall in maize grown in sub-Saharan Africa as well as poor production in other food insecure hotspot areas.
According to the latest release of the monthly FAO Food Price Index (FPI) and the new edition of the quarterly Crop Prospects and Food Situation report, both issued on Thursday, world cereal production this year should amount to 2 527 million tonnes.
That represents a 1.1 percent decline from the record level in 2014, but an improvement from projections made last month.
Meanwhile, the FPI declined 0.9 percent in June compared to May. At 165.1 points, the index is now down 21 percent compared to a year ago and at its lowest level since September 2009.
The decline in the FAO FPI mainly came as a result of a drop of 6.6 percent in the price of sugar and of 4.1 percent in the prices of dairy products, which more than offset a rebound in palm oil and wheat quotations. Increasing worldwide demand for livestock feed, especially in Brazil, China and the United States, is supporting prices for coarse grains, including maize.
But those global price trends and favourable prospects for world cereal production mask localized hotspots of food insecurity, the report also cautioned.
Some 34 countries worldwide, including 28 in Africa – many hosting large numbers of refugees – are in need of external assistance for food, it says.
Multiple points of concern in Africa
In Africa, the overall 2015 production outlook points to a decline from last year’s high level, with all regions expecting reduced harvests, except Central and North Africa.
In Southern Africa, aggregate cereal production is projected to decrease by 17 percent, mainly due to irregular seasonal rains and an extended dry spell. Aggregate maize production – which accounts for the bulk of the subregion’s cereal output – is forecast at 20.6 million tonnes, 26 percent below the bumper 2014 output.
Accounting for the bulk of the decrease, South Africa’s maize production is estimated at 10.5 million tonnes, a steep 30 percent reduction versus the high level of last year.
Zambia and Malawi’s 2015 maize harvests are estimated to be 21 and 26 percent below 2014, and rainfall deficits have severely impacted maize production in the import-dependent countries of Lesotho, Namibia, Botswana and Swaziland, with declines ranging from 13 to 43 percent.
These trends are expected to negatively impact on availability of cereal exports to cereal deficit neighbouring countries such as Zimbabwe, where maize output is expected to fall by half. Compared to the low level of the previous year, the number of people in need of assistance for food is set to increase.
In West Africa, last year’s overall good production in the Sahel region obscures local food security issues, Thursday’s report adds.
The latest estimates put the 2014 aggregate cereal production in the nine Sahelian countries at 21 million tonnes, about 7 percent higher than the five-year average, thanks to solid outputs in Mali and other coastal countries.
However, a significant drop in production has been recorded in large parts of the Sahel belt, notably in the countries located in western parts of the subregion, due to poor weather. Cereal production there, compared to the five‑year average, is estimated to have dropped in 2014 by 83 percent in Cabo Verde, 28 percent in the Gambia, 33 percent in Guinea-Bissau and 17 percent in Senegal. Large areas of Chad, Mauritania and Niger were also affected.
In Central Africa, despite favorable weather conditions in the Central African Republic, continuing civil insecurity is expected to negatively affect the current cropping season. Strife in the eastern Democratic Republic of Congo is also cause for concern, it notes.
In East Africa, late and erratic rains since the start of the cropping season in March impaired the production outlook.
Thursday’s report in particular highlights “alarming” food security conditions in conflict-affected areas of South Sudan, where the number of severely food insecure people has almost doubled to an estimated 4.6 million since the beginning of 2015.
Despite better prospects, the Near East faces an escalating humanitarian crisis
2015 cereal production in the Near East is expected to recover from last year’s drought, driven by a projected 18 percent increase in output in Turkey. But conflicts continue to “severely” impact on agriculture and Iraq, Yemen and Syria continue to face an “escalating humanitarian crisis,” according to the report.
Yemen in particular stands out, where of 12.9 million food insecure people about 6.1 million are in “Emergency” Phase, while 6.8 million are in “Crisis” Phase, representing a 21 percent increase over the previous year.
Asia – record crops in China and Pakistan, but problems persist
In Asia, a record crop in China and Pakistan is expected to offset declines elsewhere – mainly in India as a result of a poor wheat harvest.
Nepal has seen drops in food production due to earthquake damage, and in the Democratic Republic of Korea, a severe dry spell is expected to result in reduced cereal production in 2015.
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Development Banks agree common approach to measure climate finance
Common principles for tracking finance for adaptation to climate change
The world’s leading development finance institutions have taken an important step forward in tracking more consistently the flows of finance that help countries and people deal with the effects of climate change.
The six large multilateral development banks (MDBs) and the International Development Finance Club (IDFC), a network of national, regional and international development banks, have agreed on a common set of principles to track financial commitments that help countries prepare for and build resilience to the impacts of climate change.
The ability to track systematically the flows of finance that support climate adaptation makes an important contribution to helping societies deal more effectively with the negative effects of climate change
Labelled, the Common Principles for Climate Change Adaptation Finance Tracking, the initiative builds on a similar agreement earlier this year to define and track mitigation finance, the funding aimed at combatting climate change.
By increasing transparency of climate finance flows, the agreement on the two common principles for tracking climate finance will help to build confidence that money is flowing to help deal with this major global challenge.
It is an important signal ahead of this year’s COP21 conference in Paris that aims to deliver a global agreement on climate.
The multilateral banks include the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank (IDB) and the World Bank Group.
“This represents a significant milestone in global climate action. It brings development finance institutions together on how we track finance flowing to countries, as they adapt to the impacts of climate change. The agreement paves the way for greater transparency in financial flows and hopefully will help underpin greater commitment in Paris,” said World Bank Group Vice President and Special Envoy for Climate Change, Rachel Kyte.
”This worldwide cooperation between national and international financial institutions brings a unique value to address the development needs of vulnerable countries” – International Development Finance Club.
The document is aimed at achieving a common understanding of what to count as climate adaptation finance. Knowing how the money is flowing is critical for reaching areas of opportunity and need, because what gets measured gets managed.
Last month, the MDBs said that they had delivered US$ 5 billion in financing last year to help developing countries and emerging economies adapt to the challenges of climate change. Similarly, IDFC members reported in their last green finance mapping report a contribution of US$ 15.8 billion to adaptation projects in developing countries in 2013.
Nonetheless, IDFC and MDBs agree that increased support for more climate resilient infrastructure, natural ecosystem and other adaptation measures is urgently needed.
According to the newly agreed common principles document, “the MDBs and IDFC are fully committed to promoting and supporting climate resilient development as an essential element of the sustainability of their investments.” They plan to do this, the document says “by integrating climate resilience and adaption into their investments, operations and initiatives.”
The purpose of the principles is to set out an agreed approach for tracking adaptation finance. The principles are voluntary and set common definitions and guidelines. The implementation, reporting and quality control are each institution’s responsibility. In addition, IDFC and MDBs have committed to further develop their cooperation in the future and will continue to share practices and knowledge on climate finance.
About the International Development Finance Club
The 22 Members of the International Development Finance Club (IDFC) share a similar background and vision regarding the promotion of low carbon climate resilient development pathways. IDFC unites global expertise and innovation with in-depth local know-how and total assets of more than 2.1 trillion USD. For more information: www.idfc.org
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COMESA develops Livestock Policy to spur investments
COMESA has finalized the development of a draft livestock policy for the region aimed at stimulating public and private investments in the sector in its Member States. The Draft COMESA Regional Livestock Policy Framework was presented to Experts in livestock agriculture workshop in Lusaka, Zambia, 8-9 July 2015. They included Directors of Veterinary Services and Animal Production from COMESA Member States.
Professor Ahmed El-Sawalhy the Director of the Inter-African Bureau for Animal Resources at the African Union (AU-IBAR) told the delegates that a crisis loomed of supply over demand for livestock and livestock products due to the increase in human population in urban areas and rising affluence.
“Current trends demonstrate that in order to satisfy the increased demand for livestock and livestock products in the next 15 to 20 years, most of the Member States will have to import these products, thereby exporting jobs, losing the vital foreign exchange and running the risk of being a perpetual recipient of livestock products,” Prof. El Sawalhy cautioned.
It is estimated that about 300 million Africans depended on the sector for food security, livelihoods, employment and income generation.
He said it was pertinent that Africa takes steps to correct this situation by strategizing on how to increase local production of these products rather than import them. It was for this reason that AU-IBAR in collaboration with COMESA and other Regional Economic Communities embarked on the formulation of Livestock Development Strategy.
“While the continent is experiencing interesting changes in many sectors of the economy, the Livestock Sector remains one of the sectors that have recorded low performance, largely because it is poorly funded both from the public sector as well as from the private sector,” Prof. Sawalhy noted.
The development of Harmonized Livestock Policy Framework, he said was a step forward in facilitating the implementation of the AU Livestock Development Strategy across all its Member states and congratulated COMESA for taking the lead.
The Draft COMESA Livestock Framework acknowledges that if the current low level of public and private investments and low growth in the livestock sector is maintained, the increase in demand will not be matched by a corresponding increase in production.
“This will lead to a critical shortfall in the supply of quality proteins of animal origin, with negative impacts on the food and nutritional security of many households in Africa,” says the Policy report.
In her remarks, COMESA Assistant Secretary General Ambassador Nagla El Hussainy informed the meeting that since 2012, COMESA has been partnering with AU-IBAR in implementing the Reinforcing Veterinary Governance (VET-GOV) program.
“Since then important milestones have been achieved both at national and regional level including the development of harmonized livestock policy framework which is expected to pave the way for accelerated private and public investments in the livestock sector in our region,” she said.
The COMESA Livestock Policy Framework will therefore act as a guide for the Member States and the region to:
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Facilitate secured access to basic production inputs in order to engage in productive use of livestock assets.
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Support coordinated and harmonized control of Trans-boundary Animal Diseases (TADS) and ensure resilience to risks and shocks to secure livestock assets.
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Support harmonized registration and control over veterinary medicinal products import and distribution
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Facilitate support to enhance livestock and livestock product trade among COMESA member countries and beyond.
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Ensure sustainable livestock production, productivity and competitiveness in order to be responsive and adaptable to changing market conditions and consumer demands.
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tralac’s Daily News selection: 9 July 2015
The selection: Thursday, 9 July
Azevêdo: members must consider best path to success in Nairobi (WTO)
“Considering everything I have heard from members over the last three weeks, I see very little prospect of delivering a detailed and substantive work programme by the end of July. Nevertheless, we must keep working. Whether we can deliver a work programme is in the hands of the members and their ability to bring forward new proposals in the coming days which will pave the way to find consensus.”
EAC urged to speak against farm subsidies (Business Daily)
Agriculture experts have urged the government to use the World Trade Organisation forum to be held in Nairobi to rally developing countries against price support and export subsidies that rich nations offer their farmers. “The subsidy distorts the market and there is need to relook at this policy to address the matter,” said Jamie Morrison, a senior economist with the Food and Agriculture Organisation Kenya. Mr Morrison made the remarks on Wednesday during a two-day workshop aimed at coming up with recommendations to be submitted at the conference.
Delays along key SADC trade corridors costing ‘billions’ in trade – study (Engineering News)
A reduction in delays along Southern Africa’s three busiest trade corridors – the Trans-Kalahari Corridor, between Namibia, Botswana and South Africa; the North–South corridor, between Tanzania and South Africa; and the Maputo Corridor, between Mozambique and South Africa – would significantly boost overland fleet capacity and potentially lift the value of trade between the frontier markets by “billions”, a recent [CBRTA] study found. Based on hypothetical interventions to reduce delays on only the South African portion of each of the regional corridors, the Maputo Corridor would realise the most dramatic return-on-investment, with the implementation of interventions along the South African portion of this corridor expected to increase the trade value through the Lebombo border post by about five times.
What is the future of Tripartite FTA negotiations on movement of business persons? (tralac)
Whereto from here for negotiations on movement of business persons? Article 45 allows Members to conclude protocols “in any other trade-related matters”, which could then also include movement of business persons. However, seeing that such an arrangement is no longer required for the conclusion of Phases I and II of the negotiations, Members may now decide to address issues relating to the liberalisation of movement of business persons as part of the negotiations on trade in services. It also means that the focus of the separate legal instrument on measures facilitating movement business persons will be limited to measures such as relaxation of visa and permit procedures and requirements. [The author: JB Cronje]
Scheduled to take place from 7 – 9 July 2015 in Victoria Falls, Zimbabwe, the Migration Dialogue for Southern Africa conference will convene Ministers and senior government officials responsible for Home Affairs in the 15 SADC Member States as part of regional efforts to improve the capacity of SADC Member States in systematically addressing mixed and irregular migration. Themed “Addressing Mixed and Irregular Migration in the SADC Region: Protection of the Unaccompanied Migrant Child”, the 2015 MIDSA Conference will apprise Member States on the current trends on mixed and irregular migration in the region, especially that of unaccompanied migrant children, as well update stakeholders on the contents and status of the Draft Regional Action Plan drawn up to address mixed and irregular migration in the region.
Scrap visa requirements, Mzembi urges Zimbabwe (The Herald)
Zimbabwe should scratch entry visa requirements if it is to meaningfully achieve its $5 billion income from the tourism industry, Tourism and Hospitality Industry Minister Walter Mzembi told Parliament yesterday. “If we are to meet the $5 billion economy, we have to review the aspect of regulation of entry through visas. What we dream for Africa, if vision 2063 is to succeed, it is free movement of people. If you enter Cape (Town), you should have entered Cairo,” said Minister Mzembi. His dream, said Minister Mzembi was to have an electronic passport and visa by 2020. A pilot project, he said, had since started in Zambia and would cascade to selected SADC countries.
Kenya, SA in bid to end visa rules row (Business Daily)
South Africa’s top immigration officials are expected in Nairobi in the next three weeks to review bilateral visa rules that could pave the way for issuance of free passes at major airports from September. Foreign Affairs secretary Amina Mohamed said the South African team would be in Kenya between August 3 and 5. “We are going to discuss whether they (South Africans) will be affected by the regulations or we have a special regime with them,” Ms Mohamed told the Business Daily in an interview on Wednesday. “But this must be on reciprocity basis. We have already made our position known to them. There is no way we are going to pay for visa and wait for a week,” she said.
Ahead of next week's Addis FFD conference: a collection of updates
IMF: Revisiting the Monterrey Consensus
IDS: Trust is key to building tax capacity for future development financing
Brookings: Empowering families to finance development with remittances and diaspora savings
Final draft of the outcome document for the UN Summit to adopt the Post-2015 Development Agenda
ECOSOC: ministers commit to ‘people-centred’ post-2015 development agenda
East African currency updates:
Tanzania: Is dollarisation a monster that has defied BoT? (The Citizen)
Here is why the Uganda Shilling is weakening (Daily Monitor)
Steep price rises loom as shilling defies CBK action (Business Daily)
Ethiopia: Overcoming constraints in Ethiopia’s manufacturing sector (World Bank)
The Ethiopian economy has continued a remarkable expansion with the gross domestic product (GDP) growing by an average 10.9% in the past decade, compared to a 5.4% average throughout Sub-Saharan Africa. Yet with 75% of jobs in labor-intensive agriculture, this growth is not reaching everyone. Addressing the challenges to a flourishing manufacturing industry will expand benefits to more Ethiopians, and support the government’s plans to become a manufacturing powerhouse, according to the new Ethiopia Economic Update, Overcoming Constraints in Ethiopia’s Manufacturing Sector. The update’s focus on addressing barriers to expanding the manufacturing sector and creating jobs comes amid challenges to diversifying the economy. Several constraints such as limited access to credit and land, and unreliable electricity make it difficult for entrepreneurs in Ethiopia to start new companies. The country’s complicated tax requirements and burdensome customs and trade-related regulations drive up costs for small and large companies alike and discourage foreign investors, according to the report. [Download]
The depreciation of the exchange rate and its implications for manufacturing industry (Bank of Uganda)
Unfortunately there is little prospect for substantial improvement in the external economic environment in 2015/16. Global economic growth is forecast to remain weak and there is no immediate prospect of a recovery in demand from South Sudan, which is our largest export market. Nevertheless, I expect a modest improvement in the BOP in this fiscal year for two reasons. [The author: Prof Emmanuel Tumusiime-Mutebile is the Governor of the Bank of Uganda]
Global manufacturing sustains low growth amid further slowdown in China (UNIDO)
World manufacturing sustained low growth during the first quarter of 2015 as a further slowdown in manufacturing output was observed in key emerging industrial economies, especially in China. Global manufacturing output rose by 2.8%, according to a report released by UNIDO. The repercussions of low growth in Europe were apparent in Africa, which relies heavily on exporting to Europe. The manufacturing output of the Africa continent in the first quarter grew by a mere 2.1 percent. In Morocco, it rose by the modest rate of 2.3%, in Senegal by 1.3% and in South Africa by 0.8%. [Download]
Despite poverty’s plunge, middle-class status remains out of reach for many (Pew Research Centre)
Africa is the poorest region overall, with more than nine-in-ten people who are poor or low income in almost all 30 countries studied. Only in Seychelles, Tunisia, South Africa, Morocco and Egypt were one-in-five people or more either middle income or better off in 2011. And only Tunisia and Morocco experienced notable growth in the shares of their middle-income population from 2001 to 2011, from 17% to 27% in Tunisia and from 11% to 19% in Morocco. In Egypt, the share of middle-income people increased from 17% in 2001 to 21% in 2011, and in South Africa the share rose from 11% to 14%.
Regional livestock policy framework developed (COMESA)
The COMESA Secretariat in collaboration with the African Union – Interafrican Bureau for Animal Resources (AU-IBAR) is holding a two day regional workshop in Lusaka, Zambia for the validation of the COMESA Livestock Policy Framework. The COMESA Secretariat has been requested by the Fifth Joint Ministerial meeting for agriculture and natural resources to produce and implement a livestock policy framework that will help and guide the Member States to raise livestock production and productivity to a level that meets the projected demands. The COMESA Livestock Policy Framework will therefore act as a guide for the Member States and the region to:
Textilers want Chinese products banned (NewsDay)
The Zimbabwe Textile Manufacturers, Association (ZITMA) wants a complete ban on polyester knitted fabric and finished blankets entering the country to protect the textile industry from collapse. The move comes as cheap imports, mainly from China, were flooding the market establish suffocating local industries. “With immediate effect the tariff codes that carry duty of 10% should be aligned with the tariffs codes that carry duty of 40% plus $2,50 per kg or we request a complete ban on polyester knitted fabric and finished blankets entering Zimbabwe,” the association told the Parliamentary Portfolio Committee on Industry and Commerce yesterday.
Cooking oil producers fend off imports (Financial Gazette)
Zimbabwean cooking oil producers have stepped up production and reviewed prices, warding off competition from imports, an official with an industrial body has said. Confederation of Zimbabwe Industries (CZI) vice president, Henry Nemaire said local cooking oil producers had gained a significant market share, and were now highly competitive.
Imports ruin local drugs firms (Financial Gazette)
Maersk sees 10% East African freight growth as harbors develop (Bloomberg)
Cotton farmer numbers in Sofala province on the decline (Club of Mozambique)
Investment protection in Southern Africa (WilmerHale)
Rural smallholder farmers have big potential to reduce agriculture's carbon footprint (IFAD)
African Peace Facility: annual report 2014 (EU)
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Addis Ababa Action Agenda: Updated Draft Outcome document for the Third International Conference on Financing for Development
An updated draft of the outcome document for the Third International Conference on Financing for Development was released on 7 July 2015 following the consultations of the plenary. The co-facilitators have proposed this draft be transmitted to the Conference for further consideration. Extracts from this document are presented below.
I. A global framework for financing development post-2015
We, the Heads of State and Government and High Representatives, gathered in Addis Ababa, Ethiopia, from 13 to 16 July 2015, affirm our strong political commitment to address the challenge of financing and create an enabling environment at all levels for sustainable development in the spirit of global partnership and solidarity. We reaffirm and build on the 2002 Monterrey Consensus and the 2008 Doha Declaration. Our goal is to end poverty and hunger, and to achieve sustainable development in its three dimensions through promoting inclusive economic growth, protecting the environment, and promoting social inclusion. We commit to respect all human rights, including the right to development. We will ensure gender equality and women’s and girls’ empowerment. We will promote peaceful and inclusive societies and advance fully towards an equitable global economic system where no country or person is left behind, enabling decent work and productive livelihoods for all, while preserving the planet for our children and future generations.
In September of this year, the United Nations will host a Summit to adopt an ambitious and transformative post-2015 development agenda, including Sustainable Development Goals (SDGs). This agenda must be underpinned by equally ambitious and credible means of implementation. We have come together to establish a holistic and forward-looking framework and to commit to concrete actions to deliver on the promise of this agenda. Our task is threefold: to follow-up on commitments and assess the progress made in the implementation of the Monterrey Consensus and Doha Declaration; to further strengthen the framework to finance sustainable development and the means of implementation for the universal post-2015 development agenda; and to reinvigorate and strengthen the Financing for Development follow-up process to ensure that the actions to which we commit are implemented and reviewed in an appropriate, inclusive, timely and transparent manner.
We recognize that since the adoption of the Monterrey Consensus the world has made significant overall progress. Globally, economic activity and financing flows have increased substantially. We have made great progress in mobilizing financial and technical resources for development from an increased number of actors. Advances in science, technology and innovation (STI) have enhanced the potential to achieve our development goals. Many countries, including developing countries, have implemented policy frameworks that have contributed to increased mobilization of domestic resources and higher levels of economic growth and social progress. Developing countries’ share in world trade has increased, and while debt burdens remain, they have been reduced in many poor countries. These advances have contributed to a substantial reduction in the number of people living in extreme poverty and to notable progress towards the achievement of the Millennium Development Goals (MDGs).
Despite these gains, many countries, particularly developing countries, still face considerable challenges, and some have fallen further behind. Inequalities within many countries have increased dramatically. Women, representing half of the world’s population, as well as indigenous peoples and the vulnerable continue to be excluded from participating fully in the economy. While the Monterrey agenda has not yet been fully implemented, new challenges have arisen, and enormous unmet needs remain for the achievement of sustainable development. The 2008 world financial and economic crisis exposed risks and vulnerabilities in the international financial and economic system. Global growth rates are now below pre-crisis levels. Shocks from financial and economic crises, conflict, natural disasters, and disease outbreaks spread rapidly in our highly interconnected world. Environmental degradation, climate change, and other environmental risks threaten to undermine past successes and future prospects. We need to ensure that our development efforts enhance resilience in the face of these threats.
Solutions can be found, including through strengthening public policies, regulatory frameworks and finance at all levels, unlocking the transformative potential of people and the private sector, and incentivizing changes in financing as well as consumption and production patterns to support sustainable development. We recognize that appropriate incentives, strengthening national and international policy environments and regulatory frameworks and their coherence, harnessing the potential of STI, closing technology gaps and scaling up capacity-building at all levels are essential for the shift towards sustainable development and poverty eradication. We reaffirm the importance of freedom, human rights, and national sovereignty, good governance, rule of law, peace and security, combatting corruption at all levels and in all its forms, and effective, accountable, and inclusive democratic institutions at the sub-national, national and international levels as central to enable the effective, efficient and transparent mobilization and use of resources. We also reaffirm all the principles of the Rio Declaration on Environment and Development.
The enhanced and revitalized global partnership for sustainable development, led by governments, will be a vehicle for strengthening international cooperation for implementation of the post-2015 development agenda. Multi-stakeholder partnerships and the resources, knowledge and ingenuity of the private sector, civil society, the scientific community, academia, philanthropy and foundations, parliaments, local authorities, volunteers and other stakeholders will be important to mobilize and share knowledge, expertise, technology and financial resources, complement the efforts of governments, and support the achievement of the SDGs, in particular in developing countries. This global partnership should reflect that the post-2015 development agenda, including the SDGs are global in nature and universally applicable to all countries while taking into account different national realities, capacities, needs and levels of development and respecting national policies and priorities. We will work with all partners to ensure a sustainable, equitable, inclusive, peaceful and prosperous future for all. We will all be held accountable by future generations for the success and delivery of commitments we make today.
II. Action Areas
B. Domestic and international private business and finance
Private business activity, investment, and innovation are major drivers of productivity, inclusive economic growth, and job creation. We acknowledge the diversity of the private sector, ranging from micro-enterprises to cooperatives to multinationals. We call on all businesses to apply their creativity and innovation toward solving sustainable development challenges. We invite them to engage as partners in the development process, to invest in areas critical to sustainable development, and to shift to more sustainable consumption and production patterns. We welcome the significant growth in domestic private activity and international investment since Monterrey. Private international capital flows, particularly foreign direct investment (FDI), along with a stable international financial system, are vital complements to national development efforts. Nonetheless, we note that there are investment gaps in key sectors for sustainable development. FDI is concentrated in a few sectors in many developing countries and often bypasses countries most in need, and international capital flows are often shortterm oriented.
We will develop policies and, where appropriate, strengthen regulatory frameworks to better align private sector incentives with public goals, including incentivizing the private sector to adopt sustainable practices, and foster long-term quality investment. Public policy is needed to create the enabling environment at all levels and a regulatory framework necessary to encourage entrepreneurship and a vibrant domestic business sector. Monterrey tasked us to build transparent, stable and predictable investment climates, with proper contract enforcement and respect for property rights, embedded in sound macroeconomic policies and institutions. Many countries have made great strides in this area. We will continue to promote and create enabling domestic and international conditions for inclusive and sustainable private sector investment, with transparent and stable rules and standards and free and fair competition, conducive to achieving national development policies.
We will foster a dynamic and well-functioning business sector, while protecting labour rights and environmental and health standards in accordance with relevant international standards and agreements, such as the UN Guiding Principles on Business and Human Rights and the labour standards of the ILO, the UN Convention on the Rights of the Child and key multilateral environmental agreements, for parties to these agreements. We welcome the growing number of businesses that embrace a core business model that takes account of the environmental, social and governance impacts of their activities, and urge all others to do so. We encourage impact investing, which combines a return on investment with non-financial impacts. We will promote sustainable corporate practices, including integrating environmental, social, and governance factors into company reporting as appropriate, with countries deciding on the appropriate balance of voluntary and mandatory rules. We encourage businesses to adopt principles for responsible business and investing, and we support the work of the United Nations Global Compact in this regard. We will work towards harmonizing the various initiatives on sustainable business and financing, identifying gaps, including in relation to gender equality, and strengthening the mechanisms and incentives for compliance.
We acknowledge the importance of robust risk-based regulatory frameworks for all financial intermediation, from microfinance to international banking. We acknowledge that some risk-mitigating measures could potentially have unintended consequences, such as making it more difficult for MSMEs to access financial services. We will work to ensure that our policy and regulatory environment supports financial market stability and promote financial inclusion in a balanced manner, and with appropriate consumer protection. We will endeavor to design policies, including capital market regulations where appropriate, that promote incentives along the investment chain that are aligned with long-term performance and sustainability indicators, and that reduce excess volatility.
Many people, especially women, still lack access to financial services, as well as financial literacy, which is a key for social inclusion. We will work towards full and equal access to formal financial services for all. We will adopt or review our financial inclusion strategies, in consultation with relevant stakeholders, and will consider including financial inclusion as a policy objective in financial regulation, in accordance with national priorities and legislation. We will encourage our commercial banking systems to serve all, including those who currently face barriers to access financial services and information. We will also support microfinance institutions, development banks, agricultural banks, mobile network operators, agent networks, cooperatives, postal banks and savings banks as appropriate. We encourage the use of innovative tools, including mobile banking, payment platforms and digitalized payments. We will expand peer learning and experience sharing among countries and regions, including through the Alliance for Financial Inclusion and regional organizations. We commit to strengthen capacity development for developing countries, including through the UN development system, and encourage mutual cooperation and collaboration between financial inclusion initiatives.
We recognize the positive contribution of migrants for inclusive growth and sustainable development in countries of origin, transit and destination countries. Remittances from migrant workers, half of whom are women, are typically wages transferred to families, primarily to meet part of the needs of the recipient households. They cannot be equated to other international financial flows, such as FDI, ODA or other public sources of financing for development. We will work to ensure that adequate and affordable financial services are available to migrants and their families in both home and host countries. We will work towards reducing the average transaction cost of migrant remittances by 2030 to less than 3 per cent of the amount transferred. We are particularly concerned with the cost of remittances in certain low volume and high cost corridors. We will work to ensure that no remittance corridor requires charges higher than 5 per cent by 2030, mindful of the need to maintain adequate service coverage, especially for those most in need. We will support national authorities to address the most significant obstacles to the continued flow of remittances, such as the trend of banks withdrawing services, to work towards access to remittance transfer services across borders. We will increase coordination among national regulatory authorities to remove obstacles to non-bank remittance service providers accessing payment system infrastructure, and promote conditions for cheaper, faster and safer transfer of remittances in both source of origin and recipient countries, including by promoting competitive and transparent market conditions. We will exploit new technologies, promote financial literacy and inclusion, and improve data collection. We recognize that MSMEs, particularly women-owned MSMEs, often have difficulty in obtaining financing. To encourage increased lending to MSMEs, financial regulations can permit the use of collateral substitutes, create appropriate exceptions to capital requirements, reduce entry and exit costs to encourage competition and allow micro-finance institutions to mobilize savings by receiving deposits. We will work to strengthen the capacity of financial institutions to undertake cost-effective credit evaluation, including through public training programmes, and through establishing credit bureaus where appropriate. National development banks, credit unions, and other domestic financial institutions can play a vital role providing access to financial services. We encourage both international and domestic development banks to promote MSME finance, including in industrial transformation, through the creation of credit lines targeting MSMEs, as well as technical assistance. We welcome the work of the International Finance Corporation and other initiatives in this area, and encourage increased capacity building and knowledge sharing and at the regional and global levels. We also recognize the potential of new investment vehicles, such as development-oriented venture capital funds, potentially with public partners, blended finance, risk mitigation instruments, and innovative debt funding structures with appropriate risk management and regulatory frameworks. We will also enhance capacity building in these areas.
To meet longer-term financing needs, we will work towards developing domestic capital markets, particularly long-term bond and insurance markets where appropriate, including crop insurance on nondistortive terms. We will also work to strengthen supervision, clearing, settlement and risk management. We underline that regional markets are an effective way to achieve scale and depth not attainable when individual markets are small. We welcome the increase in lending in domestic currencies by MDBs, and encourage further growth in this area. We encourage development banks to make use of all risk management tools, including through diversification. We recognize that the nature of international portfolio investment has evolved over the past 15 years, and that foreign investors now play a significant role in some developing countries’ capital markets, and the importance of managing volatility associated with these. We will enhance international support in developing domestic capital markets in developing countries, in particular in LDCs, LLDCs and SIDS. We will work to strengthen capacity-building in this area, including through regional, inter-regional and global fora for knowledge sharing, technical assistance and data sharing.
We recognize the important contribution that direct investment, including FDI, can make to sustainable development, particularly when projects are aligned with national and regional sustainable development strategies. Government policies can strengthen positive spillovers from FDI, such as know-how and technology, including through establishing linkages with domestic suppliers, as well as encouraging the integration of local enterprises, in particular MSMEs from developing countries, into regional and global value chains. We will encourage investment promotion and other relevant agencies to focus on project preparation. We will prioritize projects with the greatest potential for promoting full and productive employment and decent work for all, sustainable patterns of production and consumption, structural transformation and sustainable industrialization, productive diversification and agriculture.
D. International trade as an engine for development
International trade is an engine for inclusive economic growth and poverty reduction, and contributes to the promotion of sustainable development. We will continue to promote a universal, rules-based, open, transparent, predictable, inclusive, non-discriminatory and equitable multilateral trading system under the World Trade Organization (WTO), as well as meaningful trade liberalization. Such a trading system encourages long-term investment in productive capacities. With appropriate supporting policies, infrastructure and an educated work force, trade can also help promote productive employment and decent work, women’s empowerment, and food security, as well as a reduction in inequality and contribute to achieving the SDGs.
We recognize that the multilateral trade negotiations in the WTO require more effort, although we regard the approval of the Bali Package in 2013 as an important achievement. We reaffirm our commitment to strengthening the multilateral system. We call on members of the WTO to fully and expeditiously implement all the decisions of the Bali Package, including the decisions taken in favour of LDCs, the decision on public stockholding for food security purposes, and the Work Programme on Small Economies, and to expeditiously ratify the Agreement on Trade Facilitation. WTO members declaring themselves in a position to do so should notify commercially meaningful preferences for LDC services and service suppliers in accordance with the 2011 and 2013 Bali decision on the operationalization of the LDCs services waiver and in response to the LDCs collective request.
We acknowledge that lack of access to trade finance can limit a country’s trading potential, and result in missed opportunities to use trade as an engine for development. We welcome the work carried out by the WTO Expert Group on Trade Financing, and commit to explore ways to use market-oriented incentives to expand WTO-compatible trade finance and the availability of trade credit, guarantees, insurance, factoring, letters of credit and innovative financial instruments, including for MSMEs in developing countries. We call on the development banks to provide and increase market-oriented trade finance and to examine ways to address market failures associated with trade finance.
Whereas, since Monterrey, exports of many developing countries have increased significantly, LDCs, LLDCs, SIDS’ and Africa’s participation in world trade in goods and services remains low and world trade seems challenged to return to the buoyant growth rates seen before the global financial crisis. We will endeavour to significantly increase world trade in a manner consistent with the SDGs, including exports from developing countries, in particular from LDCs with a view towards doubling their share of global exports by 2020 as stated in the Istanbul Programme of Action. We will integrate sustainable development into trade policy at all levels. Given the unique and particular vulnerabilities in SIDS, we strongly support their engagement in trade and economic agreements. We will also support the fuller integration of small, vulnerable economies in regional and world markets.
As a means of fostering growth in global trade, we call on WTO members to redouble their efforts to promptly conclude the negotiations on the Doha Development Agenda and reiterate that development concerns form an integral part of the Doha Development Agenda, which places the needs and interests of developing countries, including LDCs, at the heart of the Doha Work Programme. In that context enhanced market access, balanced rules, and well targeted, sustainably financed technical assistance and capacity-building programmes have important roles to play. We commit to combat protectionism in all its forms. In accordance with one element of the mandate of the Doha Development Agenda, we call on WTO Members to correct and prevent trade restrictions and distortions in world agricultural markets, including through the parallel elimination of all forms of agricultural export subsidies and disciplines on all export measures with equivalent effect. We call on WTO Members to also commit to strengthen disciplines on subsidies in the fisheries sector, including through the prohibition of certain forms of subsidies that contribute to over-capacity and overfishing in accordance with the mandate of the Doha Development Agenda and the Hong Kong Ministerial Declaration. We urge WTO members to commit to continuing efforts to accelerate the accession of all developing countries engaged in negotiations for WTO membership and welcome the 2012 strengthening, streamlining and operationalising of the guidelines for the accession of LDCs to the WTO.
Members of the WTO will continue to implement the provisions of special and differential treatment (S&D) for developing countries, in particular LDCs, in accordance with WTO agreements. We welcome the establishment of the monitoring mechanism to analyse and review all aspects of the implementation of S&D provisions, as agreed in Bali, with a view to strengthening them and making them more precise, effective and operational as well as facilitating integration of developing and least-developed WTO members into the multilateral trading system.
We call on developed country WTO members and developing country WTO members declaring themselves in a position to do so to realize timely implementation of duty-free and quota-free market access on a lasting basis for all products originating from all LDCs, consistent with WTO decisions. We call on them to also take steps to facilitate market access for LDC products including by developing simple and transparent rules of origins applicable to imports from LDCs, in accordance with the guidelines adopted by WTO members at the Bali ministerial conference in 2013.
We reaffirm the right of WTO members to take advantage of the flexibilities in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and reaffirm that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. To this end, we would urge all WTO Members that have not yet accepted the amendment of the WTO TRIPS Agreement allowing improved access to affordable medicines for developing countries to do so by the deadline of the end of the year. We welcome the June 2013 decision to extend the transition period for all LDCs. We invite the General Council to consider how the WTO can contribute to sustainable development.
We recognize the significant potential of regional economic integration and interconnectivity to promote inclusive growth and sustainable development, and commit to strengthen regional cooperation and regional trade agreements. We will strengthen coherence and consistency among bilateral and regional trade and investment agreements, and to ensure they are compatible with WTO rules. Regional integration can also be an important catalyst to reduce trade barriers, implement policy reforms and enable companies, including MSMEs, to integrate into regional and global value chains. We underline the contribution trade facilitation measures can make to this end. We urge the international community, including international financial institutions and multilateral and regional development banks, to increase its support to projects and cooperation frameworks that foster regional and subregional integration, with special attention to Africa, and that enhance participation and integration of small-scale industrial and other enterprises, particularly from developing countries, into global value chains and markets. We encourage MDBs, including regional banks, in collaboration with other stakeholders, to address gaps in trade, transport and transit related regional infrastructure, including completing missing links connecting LLDCs, LDCs and SIDS within regional networks.
Recognizing that international trade and investment offers opportunities but also requires complementary actions at the national level, we will strengthen domestic enabling environments and implement sound domestic policies and reforms conducive to realising the potential of trade for inclusive growth and sustainable development. We further recognize the need for value addition by developing countries and for further integration of MSMEs into value chains. We reiterate and will strengthen the important role of the United Nations Conference on Trade and Development (UNCTAD) as the focal point within the United Nations system for the integrated treatment of trade and development and interrelated issues in the areas of finance, technology, investment and sustainable development.
We endorse the efforts and initiatives of the United Nations Commission on International Trade Law, as the core legal body within the United Nations system in the field of international trade law, aimed at increasing coordination of and cooperation on legal activities of international and regional organizations active in the field of international trade law and at promoting the rule of law at the national and international levels in this field.
Aid for Trade can play a major role. We will focus Aid for Trade on developing countries, in particular LDCs, including through the Enhanced Integrated Framework for Trade-Related Technical Assistance to LDCs. We will strive to allocate an increasing proportion of Aid for Trade going to LDCs, provided according to development cooperation effectiveness principles. We also welcome additional cooperation among developing countries to this end. Recognizing the critical role of women as producers and traders, we will address their specific challenges in order to facilitate women's equal and active participation in domestic, regional and international trade. Technical assistance and improvement of trade- and transit-related logistics are crucial in enabling LLDCs to fully participate in and benefit from multilateral trade negotiations, effectively implement policies and regulations aimed at facilitating transport and trade, and diversify their export base.
The goal of protecting and encouraging investment should not affect our ability to pursue public policy objectives. We will endeavour to craft trade and investment agreements with appropriate safeguards so as not to constrain domestic policies and regulation in the public interest. We will implement such agreements in a transparent manner. We commit to support capacity building including through bilateral and multilateral channels, in particular to LDCs, in order to benefit from opportunities in international trade and investment agreements. We request UNCTAD to continue its existing programme of meetings and consultations with Member States on investment agreements.
We also recognize that illegal wildlife trade, illegal unreported and unregulated fishing, illegal logging, and illegal mining are a challenge for many countries. Such activities can create substantial damage, including lost revenue and corruption. We resolve to enhance global support for efforts to combat poaching and trafficking of protected species, trafficking in hazardous waste, and trafficking in minerals, including by strengthening both national regulation and international cooperation, and increasing the capacity of local communities to pursue sustainable livelihood opportunities. We will also enhance capacity for monitoring, control and surveillance of fishing vessels so as to effectively prevent, deter and eliminate illegal, unreported and unregulated fishing, including through institutional capacity building.
» Download the previous Revised Draft Outcome of 6 May 2015 here.
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South Africa and others should use increasing influence to set tone for FfD
With BRICS Summit just days before the Financing for Development Conference, emerging country leaders have unique opportunity
In keeping with their commitment to reform the international financial system, the BRICS group of nations have the opportunity to use their summit this week as a precursor to ensuring that tangible results emerge from the Financing for Development (FfD) Conference in Addis Ababa, Ethiopia.
“In representing some of the world’s most dynamic economies, the leaders of Brazil, Russia, India, China and South Africa should utilize their growing influence to push for an outcome in Addis that includes equitable changes to the international financial system,” said Pooja Rangaprasad, Policy Coordinator for the Financial Transparency Coalition.
One of the key proposals on the table at the FfD Conference will be the creation of an intergovernmental commission on tax matters under the UN. This body would ensure that all countries have a say when reforming global tax rules.
“The OECD has taken ownership of the agenda to crack down on tax dodging and illicit financial flows, which means that a club of 34 wealthy countries is rewriting rules for a financial system in which nearly 200 countries operate,” said Alvin Mosioma, Executive Director of the Tax Justice Network Africa. “While developing countries have been belatedly brought into the fold, their participation has lacked one key feature: a vote in the process.”
“As Chair of the G77, South Africa has the opportunity to act as a bridge between developed and developing countries, and ensure that reforms encompass a global perspective, not just the countries with the most influence,” Mr. Mosioma added.
The template below (available to freely download and adapt) urges the BRICS countries to play a leadership role at the negotiations in Addis Ababa, using this opportunity to positively impact the trajectory of the current international tax regime and cooperation.
The Financial Transparency Coalition is a global network that works to curtail illicit financial flows through the promotion of a transparent, accountable, and sustainable financial system that works for everyone. Tax Justice Network – Africa is a pan-African initiative promoting socially just, democratic, and progressive taxation systems in Africa.
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EAC guidelines for joint trade negotiations with global partners in the offing
The East African Community has drafted a negotiation framework to guide its trade negotiations with third parties, including the US, the European Union and China, which are some of its main trade partners.
The proposed policy is awaiting validation by the five member states.
“The draft has been circulated and is now undergoing national consultations before we can have a harmonised framework... hopefully by end of the year,” James Kiiru, an official in Kenya’s Ministry for Foreign Affairs and International Trade economic and international trade directorate, said on Tuesday.
The region has previously struggled to attain a common position while negotiating for trade pacts with other blocs.
The economic partnership agreement for quota and duty free access to the EU, for example, missed the September 2014 deadline, only to be hurriedly signed a month later. It is yet to be ratified.
“The process of pushing a policy through EAC is that you have to subject it to national consultations and then merge the views of the five member states. After this, you have to seek approval from the various stakeholders within the various structures of the EAC,” Kiiru explained.
He was speaking in Nairobi during a meeting organised by Institute of Economic Affairs to examine the impact of Africa Growth Opportunity Act that enabled duty free access to the US market.
The AGOA pact does not comply with World Trade Organisation’s framework for Free Trade Agreements and has been relying on a 10-year conditional special exemption window which expires in September.
Kiiru said Kenya will use its position as host nation for WTO’s Ministerial Conference between December 15 and 18 to also push for another 10 years of a waiver on AGOA which was renewed for another 10 years by US’s Congress on June 11.
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Ethiopia Economic Update: A flourishing manufacturing industry will help more Ethiopians
The Ethiopian economy has continued a remarkable expansion with the gross domestic product (GDP) growing by an average 10.9% in the past decade, compared to a 5.4% average throughout Sub-Saharan Africa. Yet with 75% of jobs in labor-intensive agriculture, this growth is not reaching everyone.
Addressing the challenges to a flourishing manufacturing industry will expand benefits to more Ethiopians, and support the government’s plans to become a manufacturing powerhouse, according to the new Ethiopia Economic Update, Overcoming Constraints in Ethiopia’s Manufacturing Sector.
In addition to providing a short and a long-term view of the country’s economic growth, the report examines the challenges for building a strong, diversified manufacturing industry that will accelerate a structural transformation of the economy and provide benefits to many more Ethiopians.
“Ethiopia’s goal is to transform the country to an industrialized economy and increase the per capita income of its citizens to middle-income levels by 2025,” said Lars Christian Moller, lead economist and program leader. “Although great progress has been achieved the country must make changes to its burdensome tax, trade, and financing rules and improve basic services such as electricity to support local business and attract new investment.”
The update’s focus on addressing barriers to expanding the manufacturing sector and creating jobs comes amid challenges to diversifying the economy. Several constraints such as limited access to credit and land, and unreliable electricity make it difficult for entrepreneurs in Ethiopia to start new companies. The country’s complicated tax requirements and burdensome customs and trade-related regulations drive up costs for small and large companies alike and discourage foreign investors, according to the report.
“For Ethiopia, a country graduating through the early stages of economic development, industrial sector expansion is essential for sustained long-term growth and poverty reduction,” said Michael Geiger, World Bank senior country economist. “Improving education and training for men and women combined with job creation by expanding light industry can positively impact equity and spread benefits to many more Ethiopians, especially the poor.”
To support the Ethiopian Government in developing the manufacturing sector, preparing its men and women for manufacturing jobs and developing a business climate welcoming to new investors, the report includes seven policy recommendations for both small and medium size businesses and large investors:
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Focus on skills development for men and women, which is vital for increasing firm productivity. A more literate and trainable labor force would not only increase productivity in Ethiopia, but also make the country more attractive to international firms seeking to invest in Africa.
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Implement measures to improve access to finance for firms especially “the missing middle,” or small and medium sized enterprises. The majority of these companies are fully credit constrained.
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Address constraints related to access to land and to electricity. By upgrading the grid network and reinforcing existing (and adding new) transmission and distribution lines will provide access to industrial areas as well as promote electricity exports.
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Improve tax administration and advance the simplification of the tax system for micro, small and medium size enterprises. Managers in manufacturing firms spend a significant amount of time dealing with tax administration and a quarter of firms report tax administration as a major problem faced in their day-to-day operations.
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Improve trade logistics, customs procedures and trade regulations, which primarily impacts large exporting firms and Foreign Direct Investment.
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Simplify business related regulations and processes to facilitate the smooth entry and exit of firms that will support a dynamic and thriving business sector.
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Use a strategic and phased approach for industrial park development that is in line with international experience. The government is supporting industrial parks for light manufacturers such as textiles and agro-processing and is emulating the path of the East Asian countries that have successfully managed to use industrial parks as a platform to catalyze investments.
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Final draft of the outcome document for the UN Summit to adopt the Post-2015 Development Agenda
On the 8th of July, the co-facilitators of the post-2015 intergovernmental negotiations released the final draft of the outcome document of the post-2015 development agenda which will be adopted during the UN Summit in September.
A reaction has been prepared by the Beyond 2015 Rapid Response Task Force. Extracts from the draft text are provided below.
Transforming Our World: The 2030 Agenda for Global Action
Preamble
This Agenda is a plan of action for people, planet and prosperity that also seeks to strengthen universal peace in larger freedom. All countries acting in collaborative partnership will implement the plan. We are resolved to free the human race from the tyranny of poverty and want and to heal and secure our planet for present and future generations. We are determined to take the bold and transformative steps needed to shift the world on to a sustainable path. As we embark on this collective journey, we pledge that no one will be left behind.
The 17 Sustainable Development Goals and 169 targets which we are announcing demonstrate the scale and ambition of the new Agenda. They will stimulate action over the next fifteen years in the following areas of critical importance for humanity and the planet:
People
We want to ensure that all human beings can fulfil their potential. We want to end poverty in all its forms; end hunger and malnutrition; promote human dignity; combat inequalities in and between countries; achieve gender equality and empower all women and girls; ensure quality education, water and sanitation and a healthy life for all; and secure the participation of all people and groups, including children, in the realization of the new Goals and targets.
Planet
We must respect and safeguard our common home. We want to protect the planet so that it can support the needs of present and future generations. We will conserve and sustainably use our oceans and seas; fight climate change; protect and restore ecosystems; combat desertification, land degradation and biodiversity loss; promote safe and inclusive cities and human settlements; and promote disaster risk reduction.
Prosperity
We want all human beings to enjoy the fruits of economic, social and technological progress and live productive and fulfilling lives. We want to ensure sustained, inclusive and sustainable economic growth; promote decent work and employment for all; foster shared prosperity and sustainable lifestyles worldwide; promote sustainable industrialization, agriculture and infrastructure; and ensure access to affordable modern energy services.
Peace
All people yearn to live in peaceful and harmonious societies, free from fear and violence. We want to foster peaceful, safe and inclusive societies; to strengthen governance and institutions at all levels; to ensure equal access to justice; and to protect the human rights of all men, women, boys and girls.
Partnership
We want to create an effective Global Partnership for Sustainable Development which will embrace all countries and stakeholders. The Global Partnership will mobilize the means required for implementation of the Agenda, acting in a spirit of strengthened global solidarity and supporting, in particular, the needs of the poorest and most vulnerable.
If we realize our ambitions in these areas and across the full extent of the new Agenda, the lives of millions of human beings will be profoundly altered and our world will be transformed for the better.
The new Agenda
We are announcing today 17 Sustainable Development Goals with 169 associated targets which are integrated and indivisible. Never before have world leaders pledged common action and endeavour across such a broad and universal policy agenda. We are setting out together on the path towards sustainable development, devoting ourselves collectively to the pursuit of global development and of “win-win” cooperation which can bring huge gains to all countries and all parts of the world. We will implement the Agenda for the full benefit of all, for today’s generation and for future generations. In doing so, we reaffirm our commitment to international law and emphasize that the Agenda is to be implemented in a manner that is consistent with the rights and obligations of states under international law.
This is an Agenda which encompasses all human rights. It will work to ensure that human rights and fundamental freedoms are enjoyed by all without discrimination on grounds of race, colour, sex, age, language, religion, culture, migratory status, political or other opinion, national or social origin, economic situation, birth, disability or other status.
Working for gender equality and the empowerment of women and girls will make a crucial contribution to progress across all the goals and targets. The achievement of full human potential and of sustainable development is not possible if one half of humanity continues to be denied its full human rights and opportunities. Women and girls must enjoy equal access to education, economic resources and political participation as well as equal opportunities with men and boys for employment and leadership. All forms of gender inequality, discrimination and violence against women and children, both boys and girls, will be combatted.
The new goals and targets will come into effect on 1 January 2016 and will guide the decisions we take over the next fifteen years. All of us will work to implement the Agenda within our own countries and at the regional and global levels. We will at the same time take into account different national realities, capacities and levels of development. We will respect national policies and priorities and provide adequate policy space for economic growth, in particular for developing states. We acknowledge also the importance of the regional and sub-regional dimensions: regional and sub-regional frameworks can facilitate the effective translation of sustainable development policies into concrete action at national level.
Each country faces specific challenges in its pursuit of sustainable development. The most vulnerable countries and, in particular, African countries, least developed countries, landlocked developing countries and small island developing states deserve special attention, as do countries in situations of conflict. There are also serious challenges within many middle-income countries.
Vulnerable sections of the population who must be empowered, and whose needs are reflected in the goals and targets, include children, youth, persons with disabilities and older persons; the needs of others who are vulnerable, such as migrants and indigenous peoples, are also reflected. People living in areas affected by conflict, terrorism and complex humanitarian emergencies are also experiencing severe challenges.
We commit to providing quality education at all levels – early childhood, primary, secondary and tertiary. All people irrespective of gender, age, race or ethnicity, including persons with disabilities, indigenous peoples, children and youth in vulnerable situations, should have access to learning that helps them acquire the knowledge and skills needed to exploit opportunities and to participate fully in society. We will strive to provide children and youth with a nurturing environment for the full realization of their rights and capabilities, including through supportive families, schools and stronger communities.
To extend healthy life expectancy for all, we must achieve universal health coverage. No one must be left behind. We commit to accelerating the progress made to date in reducing infant, child and maternal mortality by ending all preventable deaths of infants, children and pregnant women by 2030. We are committed to ensuring universal access to sexual and reproductive health care services, including for family planning, information and education. We will equally accelerate the pace of progress made in fighting malaria, HIV/AIDS, tuberculosis, hepatitis and other communicable diseases and epidemics. At the same time we are committed to devoting greater effort to tackling non-communicable diseases.
We will seek to build strong economic foundations for all our countries. Sustained, inclusive and sustainable economic growth is essential for prosperity. This will only be possible if wealth is shared through progressive policies aimed at redistribution. We will work to build dynamic, sustainable and people-centred economies, promoting youth employment in particular and decent work for all. All countries stand to benefit from having a healthy and well-educated workforce with the knowledge and skills needed for productive and fulfilling work and full participation in society. We will therefore adopt policies which increase productivity and productive employment, financial inclusion, agricultural and industrial development, sustainable transport systems and modern energy provision and which build resilient infrastructure.
We commit to making fundamental changes in the way that our societies produce and consume goods and services. Governments, international organizations, the business sector, other non-state actors and individuals must contribute to changing unsustainable consumption and production patterns. We commit to implement the 10-Year Framework of Programmes on Sustainable Consumption and Production. All countries should take action, with developed countries taking the lead, taking into account the development and capabilities of developing countries, through mobilization, from all sources, of financial and technical assistance and capacity-building for developing countries.
We will address decisively the threat posed by climate change and environmental degradation. The global nature of climate change calls for the widest possible international cooperation aimed at accelerating the reduction of global greenhouse gas emissions. Looking ahead to the COP 21 conference in Paris in December, we underscore the responsibility of all States to work for a meaningful and universal climate agreement which will stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.
We are determined also to conserve and sustainably use oceans and seas, protect biodiversity, ecosystems and wildlife, promote sustainable tourism, tackle water scarcity, desertification, land degradation and drought and promote resilience and disaster risk reduction.
We recognize that sustainable urban development and management are crucial to the quality of life of our people. We will work with local authorities and communities to renew and plan our cities and human settlements so as to foster community cohesion and personal security and to stimulate innovation and employment. We will reduce the negative impacts of urban activities, including through the safe management and use of chemicals, the reduction and recycling of waste and more efficient use of water and energy. And we will work to minimize the impact of cities on the global climate system. We will also take account of population trends and projections in our national, rural and urban development strategies and policies.
Sustainable development cannot be realized without peace; and peace will be at risk without sustainable development. The new Agenda recognizes the need to build peaceful, just and inclusive societies that provide access to justice and that are based on respect for human rights (including the right to development), on effective rule of law and on effective and accountable institutions. Factors which give rise to violence, insecurity and injustice, such as corruption, poor governance and illicit financial and arms flows, are addressed in the Agenda. We must redouble our efforts to resolve or prevent conflict and to support countries emerging from conflict situations. We commit to remove the obstacles to the full realization of the right of self-determination of peoples living under colonial and foreign occupation, which continue to adversely affect their economic and social development as well as their environment.
We pledge to foster inter-cultural understanding, tolerance, mutual respect and an ethic of global citizenship and shared responsibility. We acknowledge the natural and cultural diversity of the world and recognize that all cultures and civilizations can contribute to sustainable development. We recognize the growing contribution of sport to the realization of development and peace. In its promotion of tolerance and respect and the contributions it makes to the empowerment of individuals and communities as well as to health, education and social inclusion objectives, sport is an important enabler of sustainable development.
Sustainable Development Goals and targets
Following an inclusive process of intergovernmental negotiations, and based on the Proposal of the Open Working Group on Sustainable Development Goals, the following are the Goals and targets which we have agreed.
The SDGs and targets are integrated and indivisible, global in nature and universally applicable, taking into account different national realities, capacities and levels of development and respecting national policies and priorities. Targets are defined as aspirational and global, with each government setting its own national targets guided by the global level of ambition but taking into account national circumstances.
It is important to recognize the link between sustainable development and other relevant ongoing processes such as the United Nations Framework Convention on Climate Change, the Convention on Biological Diversity, the United Nations Convention to Combat Desertification in Countries Experiencing Serious Drought and/or Desertification, Particularly in Africa, the Sendai Framework for Disaster Risk Reduction 2015-2030 and the United Nations Forum on Forests.
We encourage ongoing efforts by states in other fora to address key issues which pose potential challenges to the implementation of our Agenda; and we respect the independent mandates of those processes. We intend that the Agenda and its implementation would support, and be without prejudice to, those other processes and the decisions taken therein.
Sustainable Development Goals
Goal 1. End poverty in all its forms everywhere
Goal 2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
Goal 3. Ensure healthy lives and promote well-being for all at all ages
Goal 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
Goal 5. Achieve gender equality and empower all women and girls
Goal 6. Ensure availability and sustainable management of water and sanitation for all
Goal 7. Ensure access to affordable, reliable, sustainable and modern energy for all
Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
Goal 10. Reduce inequality within and among countries
Goal 11. Make cities and human settlements inclusive, safe, resilient and sustainable
Goal 12. Ensure sustainable consumption and production patterns
Goal 13. Take urgent action to combat climate change and its impacts*
Goal 14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development
Goal 15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
Goal 17. Strengthen the means of implementation and revitalize the global partnership for sustainable development
* Acknowledging that the United Nations Framework Convention on Climate Change is the primary international, intergovernmental forum for negotiating the global response to climate change.