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Signed Agreement Establishing a Tripartite Free Trade Area Among COMESA, the EAC and SADC
The Heads of State and Government of the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and Southern African Development Community (SADC) met on 10 June, 2015 in Sharm El Sheikh, Egypt at the Third Tripartite Summit to officially launch the COMESA-EAC-SADC Tripartite Free Trade Area (TFTA).
Twenty four Member/Partner States have signed the Sharm El Sheikh Declaration launching the TFTA; only Libya and Eritrea have not signed. The TFTA Agreement has been signed by the following 16 member countries: Angola, Burundi, Comoros, Democratic Republic of Congo (DRC), Djibouti, Egypt, Kenya, Malawi, Namibia, Rwanda, Seychelles, Sudan, Tanzania, Uganda, Swaziland, and Zimbabwe.
Documents from the Third Tripartite Summit and the text of the final TFTA Agreement are available in the four official languages – English, Arabic, French and Portuguese – here.
Agreement Establishing a Tripartite Free Trade Area Among the Common Market for Eastern and Southern Africa, the East African Community and the Southern African Development Community*
Preamble
WE, the Member States of the Common Market for Eastern and Southern Africa, the Partner States of the East African Community, and the Member States of the Southern African Development Community, hereinafter referred to as “Tripartite Member/Partner States”:
RECALLING AND AFFIRMING the strong and indissoluble bonds of history, freedom, liberation struggles, friendship, solidarity, commerce, trade, shared natural resources, and culture among the people and Governments of the Member/Partner States of the Common Market for Eastern and Southern Africa, the East African Community, and the Southern African Development Community;
RECOGNISING the Kampala Communiqué of the Tripartite Summit of 22 October 2008 under which the Heads of State and Government representing the three regional economic communities agreed, inter alia, to establish a single Customs Union beginning with a Free Trade Area;
FURTHER RECOGNISING the Declaration Launching the Negotiations for the Establishment of the Tripartite Free Trade Area of Johannesburg, South Africa, 12 June 2011;
RECALLING the Tripartite Memorandum of Understanding signed on 19 January, 2011 and its provisions on the establishment of the Tripartite Free Trade Area;
COMMITED to championing and expediting the continental integration process under the Treaty establishing the African Economic Community and the Constitutive Act of the African Union through regional initiatives;
COGNISANT of the provisions establishing free trade areas in the Common Market of Eastern and Southern Africa Treaty, Treaty for the Establishment of the East African Community and the Southern African Development Community Protocol on Trade;
DETERMINED to build upon the success and best practices achieved in trade liberalisation within the three Regional Economic Communities;
COMMITTED to resolving the challenges of overlapping memberships of the Tripartite Member/Partner States to the three Regional Economic Communities;
CONSIDERING that trade in goods and services, infrastructure, cross-border investment, industrial development and movement of business persons should be major areas of co-operation;
DETERMINED to take the necessary measures for reducing the cost of doing business and creating a conducive environment for private sector development;
MINDFUL of the important role of micro, small and medium enterprises in job creation and income generation for the majority of the people in the Tripartite Member/Partner States;
RECOGNISING the significant contribution of trade in goods and services to national incomes of the Member/Partner States;
DETERMINED to progressively liberalise trade in goods and services, promote industrial development, facilitate movement of business persons, support the strengthening of infrastructure, promote competitiveness, build the capacity of micro, small and medium scale enterprises, and contribute to the deepening of integration in the Tripartite Member/Partner States;
RECOGNISING that the development of trade and investment is essential to the economic integration of the Region and will create new opportunities for a dynamic business sector;
CONVINCED that a framework of trade co-operation among Tripartite Member/Partner States based on equality, fair competition and mutual benefit will contribute to the creation of a viable development community;
MINDFUL of the different levels of economic development and geographic specificities of the Tripartite Member/Partner States and the need to share equitably the benefits of regional economic integration;
COMMITED to improving the competitiveness of Tripartite Member/Partner States at enterprise, industrial and regional levels so as to fully derive benefits from regional and global trade opportunities;
RECOGNISING the progress achieved in the elimination of import duties and other trade barriers within the three regional economic communities;
RECOGNISING the initiatives undertaken by the regional economic communities in establishing themselves as single investment areas and building on this progress; and
RECOGNISING our international obligations under the existing agreements;
HEREBY AGREE as follows:
PART I
INTERPRETATION, ESTABLISHMENT, OBJECTIVES AND PRINCIPLES
Article 2
Establishment of the Tripartite Free Trade Area
A Free Trade Area among the Member/Partner States of COMESA, EAC and SADC is hereby established.
Article 3
Scope and Coverage
This Agreement shall, without derogating from the purpose already outlined herein comprise of:
a) Trade in goods;
b) Trade in services; and
c) Other trade-related matters.
Article 4
General Objectives
The general objectives of the Tripartite Free Trade Area shall be to:
a) promote economic and social development of the Region;
b) create a large single market with free movement of goods and services to promote intra-regional trade;
c) enhance the regional and continental integration processes; and
d) build a strong Tripartite Free Trade Area for the benefit of the people of the Region.
Article 5
Specific Objectives
For purposes of fulfilling and realising the objectives set out in Article 4 of this Agreement, Tripartite Member/Partner States shall:
a) progressively eliminate tariffs and Non-Tariff Barriers to trade in goods;
b) liberalise trade in services;
c) cooperate on customs matters and implementation of trade facilitation measures;
d) establish and promote cooperation in all trade-related areas among Tripartite Member/Partner States; and
e) establish and maintain an institutional framework for implementation and administration of the Tripartite Free Trade Area.
PART III
LIBERALISATION OF TRADE IN GOODS
Article 9
Elimination of Import Duties
-
Tripartite Member/Partner States shall not impose new import duties or charges of equivalent effect except as provided for under this Agreement.
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The provisions of paragraph 1 shall not apply to goods that are not subject to liberalisation.
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The Tripartite Member/Partner States shall progressively eliminate import duties in accordance with schedules contained in Annex I on Elimination of Import Duties.
Article 10
Non-Tariff-Barriers
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Tripartite Member/Partner States shall eliminate all existing Non-Tariff-Barriers to trade with each other and shall not impose any new ones in line with Annex III on Non-Tariff Barriers.
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Tripartite Member/Partner States recognise the existing reporting, monitoring and elimination mechanisms on Non-Tariff-Barriers established by the three RECs and undertake to harmonise them into a single mechanism as provided for in Annex III.
Article 11
Elimination of Quantitative Restrictions
Tripartite Member/Partner States shall not impose quantitative restrictions on imports or exports in trade with other Tripartite Member/Partner States except as otherwise provided for in Article XI.2 of GATT1994, the WTO Agreement on Safeguards and Articles 17 and 18 and Annex II on Trade Remedies of this Agreement.
Article 12
Rules of Origin
Goods shall be eligible for preferential treatment under this Agreement if they are originating goods in any of the Tripartite Member/Partner States in accordance with the criteria and conditions set out in Annex 4 on Rules of Origin.
PART IV
CUSTOMS COOPERATION AND TRADE FACILITATION
Article 13
Customs Cooperation
Tripartite Member/Partner States shall take appropriate measures including arrangements regarding customs cooperation and mutual administrative assistance to ensure that the provisions of this Agreement are effectively applied in accordance with Annex 5 on Customs Cooperation and Mutual Administrative Assistance.
Article 14
Trade Facilitation
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Tripartite Member/Partner States agree to design and standardise their trade and customs documentation and information in accordance with internationally accepted standards, taking into account the use of electronic data processing systems.
-
Tripartite Member/Partner States shall ensure an efficient and effective application of this Article in accordance with Annex VI on Trade Facilitation.
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Tripartite Member/Partner States undertake to initiate trade facilitation programmes in accordance with Annex VI on Trade Facilitation aimed at:
a) reducing the cost of processing documents and volume of paper work required in respect of trade among Tripartite Member/Partner States;
b) ensuring that the nature and volume of information required in respect of trade within the Tripartite Free Trade Area does not adversely affect the economic development of, or trade among, the Tripartite Member/Partner States;
c) adopting common standards of trade procedures within the Tripartite Free Trade Area where international requirements do not suit the conditions prevailing among Tripartite Member/Partner States;
d) ensuring adequate coordination between trade and transport facilitation within the Tripartite Free Trade Area;
e) keeping under review procedures adopted in international trade and transport with a view to simplifying and adopting them;
f) collecting and disseminating information on international development regarding trade facilitation;
g) promoting the development and adoption of common solutions to problems in trade facilitation instruments;
h) initiating and promoting the establishment of joint programmes, for the training of personnel engaged in trade facilitation; and
i) establishing and promoting one-stop border posts.
Article 15
Transit
Tripartite Member/Partner States agree to facilitate the movement of goods and means of transport in transit to other Tripartite Member/Partner States in accordance with Annex VII on Transit Trade and Transit Facilitation.
* Only extracts from the Agreement are reproduced here.
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Agency heads cite importance of reducing trade costs to support growth and development
Reducing trade costs through initiatives such as the WTO’s Trade Facilitation Agreement (TFA) will go a long way towards helping businesses and consumers in poorer countries reap the benefits of the global trading system, the heads of major international agencies agreed on 30 June at the Fifth Global Review of Aid for Trade.
In opening the Fifth Global Review, WTO Director-General Roberto Azevêdo said high costs arising from delays at the border and other obstacles “suffocate trade. They limit the gains from trade. Worse, the burden of high trade costs falls heaviest on the poorest countries, the smallest firms and the lowest income consumers.”
“High trade costs disconnect the economy from international flows of goods and services,” he continued. “They therefore stifle creativity – the motor behind productivity that drives economic growth. We must find ways to further cut trade costs, lower trade barriers, reduce distortive subsidies, and increase people’s capacity to trade, so that the poorest can access more of the benefits that trade can provide.”
World Bank President Jim Kim said that despite some scepticism that trade helps the poor, “our best evidence suggests that, when countries are effectively integrated into regional and global markets, their poorest citizens can reap substantial benefits.” He cited China, Viet Nam and Cambodia as examples where targeted reforms and openness to trade have boosted exports and substantially reduced the number of extreme poor.
More than 1,000 participants from around the world are taking part in the Fifth Global Review, which is examining actions being taken to reduce trade costs so that developing countries, and in particular least-developed countries (LDCs), can participate more effectively in global trade.
New study underlines benefits from reducing trade costs
As part of the Fifth Global Review, the WTO and the Organisation for Economic Cooperation and Development (OECD) launched a new joint report highlighting the importance for developing countries and LDCs in reducing trade costs in order to benefit from the market opportunities the multilateral trading system creates.
The report contends that cumbersome and time-consuming border procedures, obsolete or ill-adapted infrastructure, limited access to trade finance, and the complexity and cost of meeting an ever broader array of standards “all serve to price too many countries out of international trade”. It calls for a redoubling of efforts to tackle trade costs which continue to marginalise many of the world’s poorest and most fragile economies, and cites the TFA as an important step towards achieving this goal.
DG Azevêdo said implementation of the TFA would represent a “leap forward” in cutting trade costs. He cited Cambodia, Guatemala, Kenya, Lesotho, Peru, Tajikistan and Togo as examples where border modernization efforts have already led to faster clearance times, higher customs revenues and savings for traders.
OECD Secretary-General Angel Gurría said the joint WTO/OECD report “clearly shows that while producers in low-income countries are often competitive at the farm and factory gate, they are priced out of the international market”.
“This is because of cumbersome border procedures, poor infrastructure, lack of finance, and complex standards,” Mr. Gurría continued. The TFA “creates a significant opportunity to reduce trade costs and enhance participation in the global value chains”.
Donor support increasing
The WTO/OECD report notes that donors have already disbursed some USD 1.9 billion in aid for trade facilitation since 2005. Annual commitments now stand at USD 668 million, an eight-fold increase in donor support since 2005, with many donors indicating they intend to increase their support over the next five years.
Takehito Nakao, President of the Asian Development Bank, said his agency was increasing support for trade facilitation efforts in various parts of Asia, where more than 500 million people still live in extreme poverty. He highlighted a three-pronged approach to aid for trade including infrastructure investment, trade facilitation and trade finance in Asia and the Pacific
Joakim Reiter, Deputy Secretary-General for the United Nations Conference on Trade and Development, said high trade costs act as a double-edged sword.
“These costs squeeze citizens through lower wages in the export sector. At the same time, they lead to higher prices on imported consumer goods and deter investment.”
The Fifth Global Review will continue up to 2 July. More information on the meeting, including the full programme, news items, photos and background details are available here on the WTO website.
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South Africa: Merchandise Trade Statistics for May 2015
The South African Revenue Service (SARS) has released trade statistics for May 2015 that recorded a trade surplus of R4.99 billion. This figure includes trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).
Including BLNS
The R4.99 billion surplus for May 2015 is due to exports of R88.94 billion and imports of R83.95 billion. Exports increased from April 2015 to May 2015 by R3.94 billion (4.6%) and imports decreased from April 2015 to May 2015 by R2.49 billion (2.9%). The cumulative deficit for 2015 is R29.85 billion compared to R46.95 billion in 2014.
Trade highlights by category
The month-on-month export movements:
R’ million
|
|
|
Section:
|
Including BLNS:
|
|
Vehicle & Transport Equipment
|
+ R1 852
|
+ 19.7%
|
Vegetable Products
|
+ R 961
|
+ 27.4%
|
Mineral Products
|
+ R 949
|
+ 5.1%
|
Precious Metals & Stones
|
- R 934
|
- 5.4%
|
Chemical Products
|
- R 852
|
- 13.5%
|
The month-on-month import movements:
R’ million
|
|
|
Section:
|
Including BLNS:
|
|
Machinery & Electronics
|
- R1 680
|
- 7.4%
|
Vehicle & Transport Equipment
|
- R 476
|
- 5.3%
|
Plastics and Rubber
|
- R 289
|
- 8.1%
|
Mineral Products
|
+ R 654
|
+ 4.6%
|
Vegetable Products
|
+ R 241
|
+ 13.9%
|
Trade highlights by world zone
The world zone results from April 2015 to May 2015 are given below.
Africa:
Exports: R24 965 million – this is a decrease of R 529 million from April 2015
Imports: R8 179 million – this is a decrease of R19 million from April 2015
Trade surplus: R16 786 million.
This is a 2.9% decrease in comparison to the R17 295 million surplus recorded in April 2015
America:
Exports: R8 333 million – this is a decrease of R 129 million from April 2015
Imports: R9 819 million – this is an increase of R1 337 million from April 2015
Trade deficit: R1 486 million
This is a decrease in comparison to the R 20 million deficit recorded in April 2015
Asia:
Exports: R27 235 million – this is an increase of R3 390 million from April 2015
Imports: R37 626 million – this is a decrease of R1 650 million from April 2015
Trade deficit: R10 391 million
This is a 32.7% decrease in comparison to the R15 432 million deficit recorded in April 2015
Europe:
Exports: R19 808 million – this is an increase of R1 242 million from April 2015
Imports: R26 737 million – this is a decrease of R2 292 million from April 2015
Trade deficit: R6 928 million
This is a 33.8% decrease in comparison to the R10 463 million deficit recorded in April 2015
Oceania:
Exports: R1 070 million – this is an increase of R 88 million from April 2015
Imports: R1 390 million – this is an increase of R 137 million from April 2015
Trade deficit: R 320 million
This is an 18% increase compared to the R 271 million deficit recorded in April 2015
Excluding BLNS
The trade data excluding BLNS for May 2015 recorded a trade deficit of R4.11 billion. This is as a result of exports of R77.69 billion and imports of R81.81 billion. Exports increased from April 2015 to May 2015 by R3.44 billion (4.6%) and imports decreased from April 2015 to May 2015 by R2.47 billion (2.9%). The cumulative deficit for 2015 is R72.04 billion compared to R88.46 billion in 2014.
Trade highlights by category
The month-on-month export movements:
R’ million | ||
Section: | Excluding BLNS: | |
Vehicles & Transport Equipment | + R1 699 | + 20.6% |
Vegetable Products | + R1 018 | + 34.7% |
Mineral Products | + R 916 | + 5.6% |
Precious Metals & Stones | - R1 234 | - 7.3% |
Chemical Products | - R 855 | - 15.9% |
The month-on-month import movements:
R’ million | ||
Section: | Excluding BLNS: | |
Machinery & Electronics | - R1 691 | - 7.5% |
Vehicles & Transport Equipment | - R 461 | - 5.2% |
Plastics and Rubber | - R 294 | - 8.3% |
Prepared Foodstuff | - R 261 | - 12.8% |
Mineral Products | + R 657 | + 4.6% |
Trade highlights by world zone
The world zone results from April 2015 to May 2015 are given below.
Africa:
Exports: R13 722 million – this is a decrease of R1 029 million from April 2015
Imports: R6 037 million – this is a decrease of R 8 million from April 2015
Trade surplus: R7 685 million
This is an 11.7% decrease in comparison to the R8 706 million surplus recorded in April 2015.
BLNS (Only)
Trade statistics with the BLNS for May 2015 recorded a trade surplus of R9.10 billion. This is as a result of exports of R11.24 billion and imports of R2.14 billion.Exports increased from April 2015 to May 2015 by R0.50 billion (4.7%) and imports decreased from April 2015 to May 2015 by R0.01 billion (0.5%). The cumulative surplus for 2015 is R42.19 billion compared to R41.50 billion in 2014.
Trade Highlights by Category
The month-on-month export movements:
R’ million | ||
Section: | BLNS: | |
Precious Metals & Stones | + R 299 | + 69.6% |
Vehicles & Transport Equipment | + R 152 | + 13.1% |
Articles of Stones and Plaster | + R 73 | + 52.7% |
Miscellaneous Manufactured Articles | + R 55 | + 21.2% |
Vegetable Products | - R 57 | - 9.9% |
The month-on-month import movements:
R’ million | ||
Section: | BLNS: | |
Precious Metals & Stones | - R 198 | - 95.1% |
Vehicles & Transport Equipment | - R 16 | - 38.5% |
Prepared Foodstuff | + R 91 | + 26.8% |
Chemical Products | + R 62 | + 15.7% |
Wood and articles thereof | + R 13 | + 18.3% |
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AIIB nears completion but China’s ‘global leader’ status remains in question
The China-led Asian Infrastructure Investment Bank seems on track to begin full operations early next year.
This week, 50 of the bank’s founding members signed the articles of agreement formally establishing the world’s newest multilateral financial institution. Held in Beijing, where the bank’s headquarters will also be established, the ceremony wrapped up nearly two years of contentious negotiations, brainstorming and justifications over the need for a new multilateral bank to help address the region’s growing infrastructure demands. Asia-Pacific is said to need almost $800 billion in infrastructure investments annually over the next decade – an amount that even the combined resources of the world’s multilateral institutions cannot yet fill.
As expected, the international community welcomed news of the completion of AIIB’s articles of agreement. World Bank President Jim Yong Kim and Asian Development Bank President Takehiko Nakao agree the Beijing-based bank is a welcome addition to the legion of institutions committed to ending poverty and uplifting people’s lives. Yet both bank chiefs have also strongly asserted the need for AIIB to adhere to international standards.
For some development experts, AIIB’s rise underscores two things: China is serious in its attempt to legitimately gain global leadership status, and the international development landscape is steadily evolving.
“This signifies the start of a new chapter in the evolution of international development – a multilateral institution, global in membership, whose agenda is not predominantly determined by the U.S. and its Western allies,” Alexander Cooley, director ofColumbia University‘s Harriman Institute, told Devex.
He also said that China’s ascent as a global leader “should not be surprising” given the rising profile of emerging donors in the international development scene. Last year, the economic group comprising Brazil, Russia, India, China and South Africa established the New Development Bank.
“[AIIB’s near completion] also signifies China’s willingness to join the global development cause and lead on exploring new development solutions by international standards,” Mengke Liang, a Chinese independent consultant and founder of InterDev China Consulting, told Devex. But she also noted that Beijing has a long way to go as it “still needs to withstand real world challenges,” particularly transparency and corruption issues.
While 50 nations signed the articles, seven prospective founding members – Denmark, Kuwait, Malaysia, the Philippines, Poland, South Africa and Thailand – have asked for more time to assess the agreement. They have until December 2015 to sign on.
China’s de facto veto power
The articles of agreement laid out the purpose of the bank, membership rules, capital share, voting power, governance structure and other general considerations regarding AIIB’s adherence to international standards.
Built to “foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia” while promoting “regional cooperation and partnership in addressing development challenges,” AIIB will have a $100 billion startup capital – $20 billion in paid-in capital and the rest will come in the form of callable shares.
Among the provisions in the 34-page document is a shareholder clause opening up only 25 percent of stocks to nonregional members. Shi Yaobin, China’s deputy finance minister, explained that while the shareholding ration may change later on, the stocks of regional members cannot fall below 70 percent to “preserve the regional character bank.”
This 70:30 ratio eschews traditional shareholding breakdowns at other multilateral institutions. At ADB, for instance, nonregional members can hold as much as 36 percent of capital shares and 34 percent of voting shares – something that China has criticized in the past.
Strikingly, China seems set to dominate capital and voting shares at the Beijing-based institution. Its $29.78 billion paid-in capital gives it as much as 30 percent in shareholdings and over 26 percent in voting shares. India is the second-biggest shareholder with $8.37 billion in paid-in capital, with Russia – which the AIIB Secretariat classified as a regional member – comes in third with $6.5 billion. The largest nonregional member in terms of capital shares is Germany with $4.84 billion.
The institutional design laid out for AIIB “effectively gives China a veto,” according to Cooley. But this is “hardly surprising given that the organization was born of Chinese initiative.” The Columbia University professor also explained that this is not very different in the case of the U.S. – the largest shareholder at the World Bank.
In an attempt to gain the trust of traditional donor countries, China has said that it will forego its veto power at the bank. But its voting share alone already gives it de facto veto power. As stated in the articles of agreement, a 75 percent vote is needed for major operational and financial decisions once the bank is fully running.
Yaobin has been quick to dismiss concerns about China’s automatic veto power, saying the bank’s development is still in its early stages. He also said that as new members are admitted later on, “the proportion of voting shares of China and the other founding members can be gradually diluted.”
Evolution in practice needed
Curtis Chin, former U.S. ambassador to ADB, explained that the country’s past actions at other multilateral organizations “underscore why there is legitimate concern over China’s future behavior at this newest of international financial institutions.”
Chin said he saw firsthand how “China’s domestic and international political agenda forced ADB to change course on a project or even in one case to retreat in its efforts to ensure compliance with bank social safeguards.”
There are general provisions on adhering to international standards in AIIB’s article of agreements, but implementing them will test China’s capability to manage AIIB effectively and efficiently. IDCC’s Liang explained that it is “very important for China to recognize the environment and social impact on outward infrastructure investment projects.” One way to go about it is to hire environmental and community development experts and make sure these perspectives are always “visible, meaning they are heard, considered and adopted.”
Cooley meanwhile explained that there should be a shift in how China – as the leading voice and hand in establishing AIIB – should look at how it administers its development assistance. China is best known for its principle of noninterference when giving aid, but the professor shared that in running AIIB, an evolution in practice should happen.
“This will require robust systems of monitoring and, for the enforcement of these standards, some sort of aid conditionality,” Cooley said. “Officials understand that adopting international standards are important for AIIB’s international legitimacy.”
Lastly, China should give assurance that AIIB will not be used as a vehicle to advance its own political and economic interests. The Columbia University professor said China has to have no room for error.
“The first year will be critical for the bank’s legitimacy and global perceptions about Beijing’s intentions,” Cooley concluded. “Should the bank find itself embroiled in problematic, graft-ridden or politically controversial projects, it will give its critics a platform to continue criticizing China’s commitment to international development standards.”
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Better science needed to guide policy decisions for sustainable development – UN report
A new United Nations flagship report launched on 30 June 2015 finds that solutions to the challenges to people and planet must build on clear scientific findings in order to be sustainable.
“The successful implementation of the new sustainable development agenda requires a strong scientific foundation that is understood by policymakers,” said Wu Hongbo, UN Under-Secretary-General of Economic and Social Affairs, referring to the proposed 17 sustainable development goals, scheduled for adoption in September in New York.
The 2015 Global Sustainable Development Report, an intergovernmental-mandated report on the science-policy interface for sustainable development, was presented to UN Member States at the High Level Political Forum, the new body that is expected to be tasked with the monitoring the implementation of the new sustainable development agenda.
“This report shows us how we must sharpen our collective scientific understanding and presentation so that we can make informed decisions that improve people’s lives,” stressed Mr. Hongbo.
It provides a survey of scientific findings that includes oceans and livelihoods, natural disasters, industrialization, sustainable consumption and production, and use of “big data” in Africa.
On the state of the science on oceans, seas and marine resources, for example, the report finds that while 3 billion people depend on these resources for their livelihoods, they are increasingly threatened, degraded or destroyed by human activities.
Although there are estimates that the global oceans-based economy is estimated at between 3 and 6 trillion dollars a year, experts say there is a real lack of scientific information on how improvements in human well-being can reduce further ocean degradation.
They suggest that further research needs to be undertaken on the effects of changes in lifestyle, such as reductions in consumptions, on the sustainability of marine resource use.
Effective disaster risk reduction measures will need to play a key role for disaster-prone countries in implementation of the post-2015 development agenda in order to prevent hard won development gains from being eroded. The problem is all too real, since the year 2000, natural disasters have caused the loss of life of over 1.1 million and affected another 2.7 billion people, warns the report.
Using crowd sourcing techniques within the scientific community, the Report attempted to identify new and emerging issues, based on scientific evidence that policymakers need to be aware of. In the present exercise, energy topped the list, followed by natural resource management, governance and climate change.
New ways to get health and livelihood data supports a range of question types, and enables quick analysis and geographical mapping of the data, as the Drought Early Warning Program in southern Ethiopia proves it, adds the report: women use Android smartphones and tablets to collect data on water, health, food security, and livelihoods indicators every month from their communities using an app that captures audio, photos and GPS data.
Cell phone records have also helped to estimate population flows and design targeted policies against Ebola, notes the report. As the virus spread rapidly via local and regional travel, the data collected allowed modelers to assess the likely travel routes of infected individuals, so as to identify where new outbreaks or increased local transmission might occur.
» Global Sustainable Development Report 2015 (Advance Unedited Version) (PDF, 5.23 MB)
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Breaking ‘silo’ approach key in toppling barriers to merging three pillars of sustainable development, speaker tells High-level Political Forum
A major obstacle to the integration of the social, economic and environmental dimensions of sustainable development was a “silo” mentality among stakeholders, especially among politicians and institutions, a panellist told the High-level Political Forum on Sustainable Development on 30 June as it continued its 2015 annual session with two panels that explored policymaking in the post-2015 era.
Breaking silos and helping stakeholders to see their contributions to particular goals in an integrated manner was important, said Patrick Birungi, Director of National Planning Authority at the Ministry of Planning, Finance and Economic Development of Uganda, during a panel discussion titled “Changing approaches to policy making: the role of the sustainable development goals”.
The discussion explored the best ways to integrate sustainable development policymaking at all levels. It also examined the opportunities for or barriers to integrating the three dimensions of sustainable development.
In his country, Mr. Birungi said, institutions were set up in silos with their own mandates and “territories” and were resistant to change. A coordinated mechanism for implementation and monitoring was needed, but unfortunately it was difficult to change the mind-set of political leadership.
Karel J.G. van Oosterom (Netherlands), speaking on behalf of the Chair of the sixty-sixth session of the Economic Commission for Europe, stressed the crucial role of youth, as they were both the main beneficiaries and actors in implementing the post-2015 agenda.
Jaroslava Jermanová, Vice-President of the Czech Republic Parliament, underscored the importance of a proper assessment of future development strategies and effective practical actions.
In the afternoon, the Forum held a panel on “Regional support to national action”, in which policy experts from Africa, Asia and La Francophonie noted that once the new agenda was adopted, national reviews of implementation in developed and developing countries, as well as thematic reviews, would be carried out starting in 2016. They explored ways for regional platforms to support national implementation of the sustainable development goals, notably as forums for exchanging national experiences and lessons learned, as well as discussing broader regional trends, cross-border concerns and policy coherence.
The Forum, established by a decision in the outcome document of the 2012 United Nations Conference on Sustainable Development, also heard opinions from the floor, with several representatives of Member States and major stakeholder groups noting a lack of disaggregated data, national legislation, financial resources, governmental capacity and adequate indicators as obstacles to integrating the three dimensions of sustainable development.
High-level Political Forum on Sustainable Development 2015
The High-level Political Forum on Sustainable Development under the auspices of ECOSOC is meeting from Friday, 26 June through Wednesday, 8 July 2015. The ministerial segment will be from Monday, 6 July, through Wednesday, 8 July 2015. The forum will debate the theme: “Strengthening integration, implementation and review – the HLPF after 2015”.
A major focus will thus be the role of the forum and ways to implement its functions in following up on and reviewing the implementation of the post-2015 development agenda.
The meeting will occur at a time when the negotiations on the post-2015 development agenda will be reaching their final stage. It takes particular significance as sustainable development goals will be at the heart of the post-2015 development agenda. The forum will thus be able to advance the discussions on how best to review progress towards the Sustainable Development Goals (SDGs) and the overall agenda, and its important role in this regard.
The meeting will also reflect on integrated policies to move towards more sustainable development paths. Also on the forum’s agenda are the overall follow up to Rio+20 and the Samoa Conference on SIDS, sustainable consumption and production, strengthening the science-policy interface, countries in special situations, and regional dimensions.
The discussions will draw from the Global Sustainable Development Report (GSDR). In the 2015 edition, scientists will bring some new issues to the attention of policy makers. They will also assess whether the SDGs are appropriately covered by models and international assessments.
The meeting will allow a debate between Governments, UN system and other organizations, scientists, major groups and other stakeholders of civil society.
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Africa still poised to become the next great investment destination
The commodities boom may be over, but sub-Saharan Africa is still experiencing growth, a remarkable fact considering that the continent is a net exporter of primary commodities. By adopting sound macroeconomic policies over the past two decades and sector reforms, many African economies have already shown that they can sustain a trajectory of economic growth and beat the “resource curse.”
Despite considerable external challenges, African countries are now seeking to demonstrate that they can weather the end of the commodity super-cycle and achieve more sustainable and inclusive growth by diversifying their economies, boosting productivity and adopting policies that aid the poor. Five African countries were among the top ten improvers globally in the 2015 Doing Business rankings for 2013/14. Overall, Africa accounted for the largest number of regulatory reforms – 75 o f the 230 worldwide.
The continent has become the second most attractive investment destination in the world – ranking just behind North America – as investors are looking beyond the more established markets of South Africa, Nigeria and Kenya. Increased investment and industrialization will help to unlock the potential for job creation and poverty reduction in African countries.
Foreign direct investment (FDI) in the region has hit a record $60 billion, five times its 2000 level. For example, Chinese FDI to Africa rose to $3.5 billion in 2013, and nearly all African countries are benefiting from China’s participation today. In Ethiopia, total FDI inflows in 2013 accounted for 2 percent of GDP. Intra-African investment is also on the rise, creating a virtuous circle that encourages greater foreign investment. Investors in Africa nearly tripled their share of FDI projects over the last decade, from 8 percent in 2003 to 22.8 percent in 2013.
The reason for this trend is simple. The world’s eyes are turned toward Africa’s market of one billion people, including a growing middle class. Investors also see significant opportunities to invest in Africa’s non-commodities sectors: financial services, construction and manufacturing now account for 50 percent of Chinese FDI in Africa. And while to date relocation of manufacturing is relatively limited, the potential is significant.
With rising production costs in Asia, manufacturers have been looking at countries such as Ethiopia, Kenya and Rwanda. Today, China, Turkey and India are the top three job creators in Africa’s manufacturing sector. In an industrial zone outside Addis Ababa, the Chinese-owned Huajian factory – which opened in 2012 and became profitable in its first year of operation – reportedly plans to expand its workforce to 30,000 as part of a $2-billion investment, one more indication that “made in Ethiopia” could become the next “made in China.” But can Africa become a global outsourcing hub? Only if the right conditions are in place.
Africa needs a skilled labor force
The sub-Saharan region will see more people joining the labor force in the next 20 years than the rest of the world combined. How will Africa reap the benefits of this demographic transition? The burgeoning working-age population will need to be gainfully employed, and significant investments must be made to support education and provide this “youth bulge” with the necessary skills to meet market demands.
To that end, African countries and institutions are stepping up efforts to close the skills gap and capitalize on growing FDI flows to build greater technological capability, enroll more students in science and technology disciplines, and strengthen science and mathematics education at all levels. The ratio of scientists and researchers in sub-Saharan Africa stands at just 79 per million population, compared to a world average of 1,081 per million. Similarly, only 22 percent of African university graduates are emerging with degrees in the “STEM” disciplines, compared with a 40 percent ratio in China.
To equip young people with the skills needed to sustain Africa’s decade of economic growth, 19 regional Centers of Excellence have been created in Western and Central Africa with World Bank support, and more are on the way. And this month, the Governments of Senegal, Rwanda and Ethiopia have partnered with business leaders to launch a regional innovation fund that will support 10,000 scientists. Vocational education geared to the demands of the private sector, another strategic priority, could also be addressed by establishing “school-based factories” and “factory-based schools.”
Africa still needs a more conducive investment climate
This will require not only lowering transport and energy costs, but also eliminating formal and informal barriers to trade; increasing the flexibility of labor markets; and ensuring effective competition policies. By improving its regulatory structure for business, Rwanda – a country lacking natural resources – has seen its FDI increased more than threefold in the past five years. Increasingly sophisticated regional and global manufacturing supply chains demand cross-border predictability, transparency, reliability and accountability.
Sub-Saharan Africa’s activity stands at 2 percent of total world trade, even though trade flows have expanded by 10 percent per year since 2000. The African Union’s Comprehensive Free Trade Agreement and single air-transport market, both to be in effect by 2017, place regional integration and trade at the center of the continent’s progress. The good news? Africa is one of the most integrated regions in the world, ranking behind only Europe and Southeast Asia for economic integration.
Africa needs infrastructure
Although Africa is considered the next frontier for investors, future growth will depend on productivity increases and higher private investment to bridge the infrastructure gap. Sub-Saharan Africa, where infrastructure financing needs are estimated at $93 billion a year for the next decade, won’t be able to compete with other regions without roads and universal access to electricity, as well as enhanced ICT. In a region with limited participation in global trade, road freight moves no faster than a horse-drawn cart, and major ports are chronically choked due to lack of capacity. As trade volumes increase, demand for container traffic will increase by an average of 6 to 8 percent over the next 30 years according to the African Development Bank. Inadequate power supply remains the most serious infrastructure challenge. Regular power outages cost the African economy as a whole between 1 and 4 percentage points of GDP. Further, only one in three Africans has access to electricity, and those with power access typically pay up to seven times more than consumers elsewhere.
It is estimated that China’s investment in its own physical capital may account for 50 percent of China’s growth over the past few decades. Today, two-thirds of roads in China are paved, compared with one-third in Senegal and just 7 percent in Kenya.
At present, the concentration of investments in relatively short-term maturities reflects investors’ reluctance to engage in sectors such as infrastructure, where the returns are spread over a longer time frame, yet the rate of return on foreign investment is higher in Africa than in any other developing region. Right now, all the multilateral development banks together make up about 5 to 10 percent of the overall annual spending in infrastructure.
Africa needs agribusiness
It is also time to accelerate the continent’s progress in boosting agriculture productivity and promoting growth in the places and sectors where the poor live and work. Agriculture still employs 60 to 70 percent of the workforce but accounts for less than 20 percent of total value-added. Despite substantial policy commitments, productivity in the agriculture sector remains disappointing. Supporting smallholders through investments in improved technologies, rural financial services and better access to markets is vital. Agriculture and agribusiness are expected to become a $1-trillion industry by 2030. Kenya is now the third-largest exporter of cut flowers in the world, with the industry employing more than 500,000 people. According to the Kenya National Bureau of Statistics, the floriculture industry exported 136,601 tons of product in 2014 and now accounts for 1.3 percent of the country’s GDP. But Kenya is adding more than half a million people to the labor force every year, so massive job creation is required.
To boost responsible investment on the continent, the government of Ethiopia, China Development Bank (CDB), the World Bank Group (WBG), and the United Nations Industrial Development Organization (UNIDO) have joined forces to host the “Investing in Africa Forum,” in Addis Ababa on June 30 and July 1. Policy makers, development partners, and foreign and local private investors will discuss what it will take to make Africa the next great investment destination.
The bottom line? It will take partnerships between governments and the private sector, between African countries and their neighbors, between Africa and non-neighbor countries, and between Africa and its development partners. Africa has a unique opportunity to attract strategic, job-creating investment. The time for action is now.
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National policies and regional integration in the Southern African Development Community
This paper focuses on the relationship between regional integration in the Southern African Development Community and national policies. Review of trade, industrial, agricultural, labour, and related policy areas, indicates that national policies can and do run counter to the regional integration initiatives that are formalized in the legal instruments of this southern African regional economic community.
Regional integration is being pursued as an overarching continental development strategy by member states of the African Union (AU). However, despite the multiplicity of regional integration arrangements in Africa and concerted efforts to harmonize various initiatives of the regional economic communities (RECs), the African market remains highly fragmented (World Bank 2012). Notwithstanding progress made by some RECs to eliminate tariffs on intra-REC trade in line with the Abuja Treaty (1991), there is general consensus that the African market remains fragmented by a range of non-tariff and regulatory barriers to the movement of goods, services, people, and capital across borders. Renewed interest is, however, emerging from recent initiatives such as the Tripartite free trade agreement negotiations, which were launched in June 2011, and the decision of the AU Summit in January 2012 to fast-track the establishment of an African continental free trade area (FTA) by 2017.
Many reasons have been advanced to explain Africa’s poor performance with regional integration arrangements. This paper seeks to provide some insights on the failure of national policies and regulations to support regional integration efforts in Africa. It presents a general analysis of the Southern African Development Community (SADC) market integration experience with respect to select national policies and regulatory frameworks of member states. The selected areas relate to national trade, industrial, agricultural, competition, and labour policies. The paper concludes that most of these policies are underpinned by restrictive measures arising from inadequate implementation of the adopted protocols and policy frameworks at national levels, thereby hindering progress on regional integration in SADC.
Effective mechanisms for strategy development, planning, and especially for monitoring and evaluation of protocols and other core policies, are urgently required in SADC. Such mechanisms need to be underpinned by a rules-based institutional framework that enhances compliance by member states. The current institutional mechanisms remain inadequate to foster greater policy and regulatory convergence among member states.
An emerging debate in analytical work on SADC’s regional integration relates to the nature of the approach to regional integration. The approach adopted at the continental level through the Abuja Treaty (1991), is premised on a linear integration model, as in the case of European integration, with consecutive stages of integration, starting with a free trade area, customs union, common market, monetary union, and economic union with a single currency.
It is vital that the regional integration agenda should pay attention to microeconomic policies that used to be considered the exclusive domain of national economic policy. This approach seeks greater policy and regulatory ‘harmonization’ and adoption of best practices that will not only reduce diversity in the region but also improve the general business environment across borders by reducing costs and levelling the playing field for economic operators.
This debate towards an alternative approach to regional integration in Africa, and in SADC in particular, is urgent. Analytical work to understand how national policies and regulations relate to the regional integration process can assist in building a bottom-up approach to regional integration. This is also likely to generate alternative approaches to tackling on-the-ground policy and regulatory constraints within member states that limit the flow of goods, services, capital, and workers across borders within the region.
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tralac’s Daily News selection: 30 June 2015
The selection: Tuesday, 30 June
Global Review of Aid for Trade starts today
The Fifth Global Review of Aid for Trade gets under way at the WTO’s headquarters on 30 June 2015. The three-day event will bring together over 1,000 participants from around the world to review actions being taken to reduce trade costs so that developing countries, and in particular least-developed countries, can participate more effectively in global trade. A theme running through the three-day event will be the significant contribution that implementation of the WTO’s Trade Facilitation Agreement can make to the objective of reducing trade costs. Over the course of the three days, 17 high-level plenary sessions and 28 side events organized by WTO members and other Aid-for-Trade partners will be held. [Download the programme]
Fifth Global Review of Aid for Trade: UNCTAD participation, World Bank participation, OECD commentary
Released today: The role of trade in ending poverty (WTO)
A greater and more sustained effort to deepen the integration of developing countries into the global trading system through lower trade costs and fewer barriers between countries is essential to eliminating extreme poverty, according to a joint World Bank Group and World Trade Organization report released today. The report highlights three main messages: [Download]
The ACP at 40 – Repositioning as a global player (Inter Press Service)
The ACP has social and organisational capital accumulated from a rich experience on trade negotiations with the world’s largest bloc of Europe and its 500 million inhabitants. Undoubtedly marked by contentious issues on trade provisions to satisfy the WTO’s non-discriminatory behaviour among its member States, ACP-EU relations reveal the persistent battle of poor versus rich with a view to finding common ground on issues of mutual interest. The 40th anniversary celebration by the ACP Group at a High-Level Inter-regional Symposium on June 4 and 5 witnessed reflections on achievements and failures, as well as limitations in the performance of the ACP Group, in itself as a group and among its member states, as well as in its partnership with the European Union and the wider global arena. [The author, Patrick I. Gomes, is the Secretary-General of the ACP Group of States]
The AIIB was launched yesterday: a collection of links on its structure
Articles of Agreement (Government of China)
A breakdown per country of shares, votes in China-led AIIB
Initial subscriptions to the authorized capital stock (South Africa 0.60%, Egypt 0.66%)
How voting rights in AIIB reflect Beijing's leading role (South China Morning Post)
Philippa Brant: 'Four observations about the AIIB's Articles of Agreement' (Lowy Institute)
Can new AIIB learn from both BRICS & Western development experiences? (IDS Rising Powers)
Kenya needs to invest Sh1.7trn yearly to hit 10pc GDP growth: Rotich (Daily Nation)
Kenya needs to make investments worth Sh1.7 trillion each year if the country is to attain growth rates of over 10 per cent annually, National Treasury Cabinet Secretary, Henry Rotich has said. Such investments, equivalent to 32 per cent of the country’s GDP would be channelled to critical sectors in energy and infrastructure development.
Motivated by the relative lack of research on international procurement, we used World Bank contracts data to examine the linkages between countries’ economic development trajectories and their domestic firms’ competitiveness in our recent paper, 'Aid procurement and the development of local industry: a question for Africa'. Here are four key points we uncovered: [The authors: Jeffrey Gutman, Christine Zhang]
US trade mission to Sub-Saharan Africa concludes in Kenya (US Department of Transportation)
In Johannesburg, Secretary Foxx and his counterpart, South African Transportation Minister Dipuo Peters, signed a Memorandum of Cooperation to work together on important issues related to roads, rail, transit, air and maritime transport, including skills and workforce development. An important element of the agreement is a mutual commitment to bring more women into the transportation field. Secretary Foxx and Minister Peters immediately launched the “Tomorrow’s Transportation Leaders” initiative, a capacity-building program for Sub-Saharan Africa.
Ambassador Michael Froman: statement on Congressional Passage of TPA, AGOA, and Preference Package (USTR)
On trade, here’s what the President signed into law (The White House)
What they’re saying on the trade package (TradewWinds)
Nairobi Convention COP: speech by Achim Steiner (UNEP)
Then we face urbanization pressures, most markedly in main centres such as Mombasa, Dar es Salaam, Maputo and Durban. Consequently, pollution in some key areas is degrading water and sediment quality, resulting in a loss of biological diversity, problems for human health and a reduction in fish stocks. And we have likely yet to see the worst impacts. With the exception of Kenya, it is estimated that by 2020, 50 per cent of the populations of the Western Indian Ocean's mainland countries will live within the coastal zone. Economic activities are also expected to intensify, particularly in the areas of maritime trade, mineral extraction from the coast, oil and gas exploration, coastal tourism and bio-prospecting. While these sectors present enormous economic opportunities, the potential impacts may reduce natural capital. Then, of course, we have the specific climate challenges faced by Small Island Developing States (SIDS), such as our gracious host today. [Climate change strategy for the Nairobi Convention Area]
India begins first seabed exploration for gold and other mineral deposits in Indian Ocean (Economic Times)
UNSG: Failure to constrain climate change will create ‘climate chaos’ (Common African Platform)
BASIC Ministerial: statement on climate change (Common African Platform)
Ministers expressed disappointment over the continued lack of any clear roadmap for developed countries to provide USD 100 billion per year by 2020, as well as on substantially scaling up financial support after 2020. They urged developed countries to honor their obligations to provide new, additional and predictable financial support to developing countries in a measurable, reportable and verifiable manner. They reiterated that public financial sources should be the mainstay of climate finance and that private finance could only be expected to play a supplementary role.
Statement on political and security developments in the Kingdom of Lesotho (GCIS)
After receiving the report of the Fact Finding Mission, President Zuma has become more concerned about the apparent explosive security situation in Lesotho. In this regard, President Zuma has decided to urgently dispatch Deputy President Cyril Ramaphosa, who is the SADC Facilitator on Lesotho, to consult with Right Honourable Prime Minister Pakalitha Mosisili. Further, President Zuma is sending a Special Envoy to the Chair of SADC, HE Robert Mugabe, President of the Republic of Zimbabwe to share his deep concerns about the security situation in Lesotho as contained in the Ministerial Fact Finding Mission.
Lesotho: Second private sector competitiveness and economic diversification project (World Bank)
TFTA’s opportunity requires bold decisions – PM (New Era)
The tripartite agreement that incorporates Africa’s major trade blocs into a concerted effort to boost the continent’s trade power must be seen as an opportunity for Namibia to grow its economy at a rate that can rapidly reduce unemployment and poverty. However, Prime Minister Saara Kuugongelwa-Amadhila warned that this would require bold decisions to improve the country’s competitiveness and innovation capacity in a fast-changing world.
International migration paradigm for South Africa - remarks by Home Affairs Minister Malusi Gigaba
We often get severely criticized for the choice of balance we strike and, consequently, this balance cannot be arbitrary on our part, it must be guided by a clear, futuristic and balanced policy paradigm that seeks to harness the good and take advantage of the positives whilst it minimises the risks both through the policy guide and administrative processes and capacity.
One of our most important international obligations is to the region. South Africa has committed itself to African and regional integration, to progressively weaken colonially imposed borders and make it easier for SADC and African citizens to move without restriction. Because of our relative economic strength, our terms of trade with some of our neighbours are often balanced in our favour. So while we may have concerns about the impact of mixed migration on our domestic labour market, we must balance this with regional solidarity and enlightened self-interest, as South Africa will benefit in the long-term from a more integrated, more prosperous region and continent.
COMESA High Level Cyber Security Forum: 2-3 July 2015 (COMESA)
COMESA has developed and adopted cyber security policy and legislation. Extensive work has been done on the public key infrastructure protection. An assessment of the current situation of cyber security report will be presented to the forum in addition to regional cooperation agreement, cyber security board establishment. The main objective of the Forum is to contribute to harmonization, consolidation and support for the regional and national efforts in strengthening the safety, security and resilience of COMESA Cyberspace. The specific objectives are:
Is Uganda becoming a dollar economy? (Daily Monitor)
As of November, foreign currency deposits stood at Shs4 trillion, according to the central bank. However, as the central bank agrees, economists say it is hard to tell the actual amount of dollars in circulation due to black market trade of the unit. “It is not possible to establish the exact amount of foreign currency in circulation partly because of the informal trading,” Alupo says. But Ggoobi believes there has been a steady growth of dollar transactions, especially at times when the shilling is much volatile.
Exiting dollarisation won’t be easy: UN official (The Herald)
No country has ever been able to reintroduce its domestic currency in the history of dollarisation due to the costs associated with such a decision and Zimbabwe may not be able to do so at least in the next five years, a United Nations Development Programme senior official has said. UNDP senior economic advisor in Zimbabwe Mr Amarakoon Bandara told a Zimbabwe National Chamber of Commerce annual congress in Victoria Falls that Zimbabwe was not ready for reintroduction of local currency, even under a different name as the fundamentals were not there yet. The growing informal sector and rising imports, instead of savings, were also indications the economy is a long way from the desired destination.
Tanzania: Shilling finally gains after freefall spree (The Citizen)
Better cross-border trade key to EA growth (Business Daily)
The Kenya Private Sector Alliance and the Government of Kenya have been involved in proposals to expedite regional integration so as to facilitate cross-border trade with neighbouring countries as well as improve Kenya’s overall investment climate. One key reform is the National Electronic Single Window System (NESWS), which has drastically reduced cost of tax compliance and facilitates cross-border trade within the EAC. [The author, Carole Kariuki is the CEO, Kenya Private Sector Alliance]
South Sudan to sensitize citizens before joining EAC (Daily News)
South Sudan, the newest but troubled African State which had also applied to join the Arusha-pivoted, East African Community has announced that, the country will need five more years to sensitize its citizens before becoming the sixth member of the EAC. Official reports from the East African Community Secretariat in Arusha are to the effect that South Sudan’s council of ministers approved the country’s bid to join the EAC, but insisted its government needed five years to sensitise citizens on the benefits and risks of becoming a member.
Optimism high as Holili/ Taveta OSBP opens (Daily News)
Aviation: the next infrastructure growth frontier for Africa (AfDB)
Eastern African power organizations to advance power system integration (EAC)
Kenya–Tanzania power interconnection project: EOI (AfDB)
IMF extends support for Senegal’s plan to be emerging economy (IMF)
EU, India aim to resume stalled FTA talks in August (LiveMint)
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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Lower trade barriers, stronger global trading system can help end extreme poverty
A greater and more sustained effort to deepen the integration of developing countries into the global trading system through lower trade costs and fewer barriers between countries is essential to eliminating extreme poverty, according to a joint World Bank Group and World Trade Organization report released today.
The report, “The Role of Trade in Ending Poverty,” points to trade as a key enabler of developing country growth, but says that efforts to lower trade barriers will need to be complemented by efforts to maximize gains for the poor in order to ensure that the benefits reach the world’s poorest and most vulnerable people.
“Trade plays an essential role in driving private sector-led growth and job creation and can be a powerful force in reducing poverty and increasing incomes,” said World Bank Group President Jim Yong Kim. “But we must do more than expand trade. We must also build roads that connect farmers to markets, and empower women to be full participants in the labor market. We must always connect the poorest to trade opportunities.”
“By supporting growth and development around the world, trade has proved to be an essential tool in tackling poverty. This report is a blueprint to enhance this role so that trade can do even more to improve the lives of the poorest and most vulnerable,” said World Trade Organization Director-General Roberto Azevêdo.
“A combination of the right practical support and domestic policies can make a big difference here. By helping the poor to help themselves we can better ensure that developing countries more actively participate in the global trading system and reap the benefits that trade has delivered to so many in the recent past.”
Dr Kim, and Director-General Azevêdo launched the report today (30 June) at the 5th Global Review of Aid for Trade taking place from 30 June to 2 July at the WTO’s Headquarters in Geneva, Switzerland.
Since 1990, 1 billion people have been lifted out of poverty. Trade has played a key role, helping to lift growth in developing countries. To further harness the power of trade in helping the nearly 1 billion people still living on $1.25 per day, a sustained effort is needed to address the key constraints that limit the poor from benefiting from wider economic gains.
Among the key strategies for extending the benefits of trade to the poor are lowering trade costs through such means as the WTO’s pdf Trade Facilitation Agreement (150 KB) and through policies which make markets more accessible for poor people, especially those in rural and conflict-affected areas, making it easier for them to take advantage of trade opportunities.
The report highlights three main messages:
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A sustained effort to deepen economic integration and further lower trade costs is essential for ending poverty. Strong growth in developing countries will be needed to achieve the end of poverty, and trade is a critical enabler of growth, facilitating opportunities for new and better work for the poor. Although great progress has been made in reducing trade costs and integrating low-income countries into the global economy, more needs to be done.
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Lowering tariffs and non-tariff barriers between countries are essential elements of this agenda, but this must form part of a wider approach that recognizes the specific constraints facing the extreme poor – and for many, their disconnection from markets – if they are to benefit from trade. This includes challenges facing women, the rural poor, those in the informal economy, and those in fragile and conflict affected states. For trade to generate the maximum impact and contribute most productively to ending poverty, trade policy must be complemented by other areas of policy. This entails deeper cooperation across sectoral lines, government agencies, and a wider range of stakeholders.
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The WTO and World Bank Group have made substantial contributions to trade and poverty reduction. However, a great deal more remains to be done to end poverty, and both institutions and other partners must constantly review their activities in support of poverty reduction to ensure they adapt most effectively to a rapidly changing world.
During the Global Review meetings, the two institutions announced an effort to address information gaps on trade and poverty by establishing improved indicators for the tracking of trade costs that most affect the poor. Dr Kim and DG Azevêdo also announced that the Aid for Trade Initiative, coordinated by the WTO, will focus more in future on amplifying the opportunities for the poorest to benefit from trade. The Aid for Trade Global Review is held every two years and serves to monitor the extent to which progress is being made.
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Colloquium on a new International Migration paradigm for South Africa: Introductory remarks by Home Affairs Minister Malusi Gigaba
Introductory remarks by the Minister of Home Affairs, Malusi Gigaba MP, on the occasion of the Colloquium on a new International Migration paradigm for South Africa in Pretoria on June 30th, 2015
It is my special privilege to welcome you all to this, the “Colloquium on a new International Migration paradigm for South Africa.”
We thank you for setting aside many of the important you would rather be doing in order to join us as we try to shape up and refashion our international migration perspectives and forge a new paradigm.
Quite clearly, we have summoned you all here because we believe you are important stakeholders in that effort, because we believe your opinions count.
From the outset, we make the bold presumption that South Africa needs a new “International Migration paradigm” and the one we are currently overseeing and implementing has reached the end of its shelf-life.
Accordingly, the question that arises is: What type of international migration policy does an ambitious, developing, democratic country such as South Africa require?
Secondly, what must we seek to do with this policy?
In other means, what should be the objectives and benefits of this policy for the country?
The Department of Home Affairs is in the process of updating the country’s international migration policy, which was last articulated in the form of a white paper, in 1999.
As you no doubt are aware, the landscape has changed considerably since then.
International migration has emerged as a major phenomenon, posing both significant opportunities, as well as unique and complex challenges for governments and societies around the world.
Even for us as a country, it is a recurring debate in many radio talk-shows, newspaper articles, and even discussions among friends and family around dinner tables because of the impact it is having in our society.
It is particularly important that a developing country such as South Africa thoughtfully navigates the opportunities and challenges presented by international migration.
We are a 21-year old, vibrant, raucous democracy, in the process of developing a national identity and cohesive society.
We are a developing economy, attempting to transform itself from an extremely unequal, exclusive, deindustrialised economy based on the export of natural resources to an inclusive, dynamic and labour-absorbing industrial economy, as spelt out in our National Development Plan: Vision 2030.
We are, at the same time, committed to realizing the Africa Union’s Agenda 2063 and contributing to the upliftment of the SADC region and the continent as a whole, through regional economic integration and intra-African trade.
Therefore, the fundamental question we are trying to answer through the new Green Paper on International Migration must be:
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What international migration policy is required to achieve our developmental objectives?,
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How can we maximize our ability to reap the potential benefits of international migration?
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How can we mitigate the risks presented by international migration?
We are at an exciting stage in the policy development process.
We have purposely convened a series of roundtables on various aspects of international migration policy to solicit views from outside of our department and many of you have participated in these dialogues, engagement we have thus far found very insightful and empowering for us.
Throughout this process, and continuing today, we have been very much in listening and learning mode.
After the Colloquium, we will digest the contributions you have made, through papers and the discussions over the next two days, and then begin to deliberate on policy positions, which we will subsequently take through the Cabinet process.
We will then come back with a draft Green Paper which we will test with yourselves and many other stakeholders.
There are only a few things I wish to say with certainty right now.
Firstly, immigrants make a huge contribution to our society and development, and can contribute even more under an improved policy framework.
As investors, business owners, traders and buyers of goods, holders of critical skills, professionals, scientists, doctors, nurses, teachers, artists, relatives and spouses, they are an integral part of South Africa.
Often public discourse in our country focuses on the negative impact of international migration in our society in the form of brain-drain, the pressure of immigrants on social services in poor areas, the impact of economic migrants on the job situation in the country and even the impact of cross-border crimes and those that commit them.
Often neglected in this narrative is the positive social and economic impact that both our expatriates as well as immigrants have in our society.
Their positive contribution in the economy, enhancing national security, the forging of social cohesion and concept of nationhood as well as in integrating South Africa into Africa and the worldwide community of nations remains largely ignored in political and social circles except as matters of academic curiosity.
The new policy will advocate a whole-of-government, whole-of-society approach to managing international migration proceeding from the premise that international migration is not something which can, or should be, managed by Home Affairs alone.
It requires a
- government-wide approach,
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collaborations across all the three tiers government,
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collaborations between government as a whole and society, communities and the public, as well as
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collaborations between South Africa and her neighbours at both bilateral and multilateral levels.
The policy must be part of a new discourse on international migration which engages all South Africans.
It must directly engage the average man or woman on the street, and address their values, aspirations, needs and concerns.
It is ordinary South Africans all over the country who live alongside immigrants and must integrate them into their communities.
By way of context, I will now share a few further guiding principles, and pose a few more questions.
Home Affairs is mandated by government to manage international migration in a way which balances our development, security and international obligations.
This balancing role is absolutely critical.
While other stakeholders can focus on their individual interest, we must look at the whole picture and seek to strike a balance.
This balance is not always easy to strike, but striking it fairly is our mandate.
Those stakeholders in the private sector may only be interested in making it as easy as possible for tourists, investors, and skilled workers to enter South Africa.
This is understandable.
We are also charged with making sure that the rules and procedures which ease their entry do not, at the same time, also ease the entry of fraudsters, terrorists, organized crime syndicates and human traffickers.
Those in the security cluster, who deal with the human cost and corrosive influence of these criminal elements, and are tasked with combating them, want more preventative measures, even if they mean some inconvenience for legitimate visitors.
We then have to balance between the risk and impact of a potential breach and the potential benefits of the visitation from a tourist, investor or skilled worker; and we must bear into consideration the potential negative impact of security measures on legitimate travel and trade.
What is the right balance may be a matter of parochial interests to the different parties; and yet to us as the Department of Home Affairs, it is at the very centre of discharging our mandate as we manage immigration.
We often get severely criticized for the choice of balance we strike and, consequently, this balance cannot be arbitrary on our part, it must be guided by a clear, futuristic and balanced policy paradigm that seeks to harness the good and take advantage of the positives whilst it minimises the risks both through the policy guide and administrative processes and capacity.
One of our most important international obligations is to the region.
South Africa has committed itself to African and regional integration, to progressively weaken colonially imposed borders and make it easier for SADC and African citizens to move without restriction.
Because of our relative economic strength, our terms of trade with some of our neighbours are often balanced in our favour.
So while we may have concerns about the impact of mixed migration on our domestic labour market, we must balance this with regional solidarity and enlightened self-interest, as South Africa will benefit in the long-term from a more integrated, more prosperous region and continent.
As we have said it above, our international migration policy must be futuristic and dynamic enough to adapt to changing circumstances and take on board new realities, challenges, opportunities and risks.
Some of the key questions we must answer clearly emerge:
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What principles should underpin a new South African international migration policy?
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Increasingly, countries around the world seek to attract and ease entry of highly sought-after types of travellers and migrants – tourists, investors, businesspeople and skilled workers – while limiting immigration by job seekers and low-skilled workers who do not respond to an identified labour gap. Is this an appropriate approach for South Africa?;
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How can we discourage and dis-incentivize irregular immigration, in a way which is effective and humane?;
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How can we build understanding of, and support for, international migration throughout society?; and
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How can we improve available data and information on the number of immigrants in society, their characteristics and needs?
These are merely some of the issues and questions which arise, as we consider international migration for development.
Many more will emerge over the course of our engagement over the next two days.
I very much look forward to hearing and engaging with your views, research and experiences.
I thank you.
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Global Review of Aid for Trade kicks off on 30 June
The Fifth Global Review of Aid for Trade gets under way at the WTO’s headquarters on 30 June 2015. The three-day event will bring together over 1,000 participants from around the world to review actions being taken to reduce trade costs so that developing countries, and in particular least-developed countries, can participate more effectively in global trade.
A theme running through the three-day event will be the significant contribution that implementation of the WTO’s Trade Facilitation Agreement can make to the objective of reducing trade costs.
The Global Review will see the launch of the joint OECD-WTO flagship publication “Aid for Trade at a Glance”, published this year in collaboration with the Enhanced Integrated Framework, the International Trade Centre, the United Nations Conference on Trade and Development, the World Bank Group, and the World Economic Forum. The publication looks at how further, concerted action to reduce trade costs would help contribute to the realisation of the Sustainable Development Goals as part of the UN’s Post-2015 Development Agenda.
Over the course of the three days, 17 high-level plenary sessions and 28 side events organized by WTO members and other Aid-for-Trade partners will be held. The full programme is available here.
Background
High trade costs act as a brake on the trade integration of many developing countries, and in particular least-developed countries. To release the brake and deliver the inclusive, sustainable growth envisioned by the emerging UN’s Post-2015 Development Agenda, concerted action is needed. This year’s Global Review will analyse actions already undertaken by developing countries, regional communities and their development partners to reduce trade costs and survey the extent of the challenge remaining, and how it can be addressed in the context of the proposed Sustainable Development Goals.
One specific action that the trade and development community can take to address high trade costs is to ensure the timely implementation of the WTO Trade Facilitation Agreement (TFA). OECD figures suggest that support for trade facilitation is growing and more funding is becoming available. Many developing countries, however, remain concerned that they will not be able to access support to implement the TFA. The Review will survey in detail lessons from past and on-going support for border and customs modernization efforts, with the aim of ensuring that support for the TFA is effective and sustained, including the support provided through the WTO’s Trade Facilitation Agreement Facility.
The 5th Global Review high-level meeting offers the opportunity to recommit the trade and development community to continued action by developing countries and their development partners to reduce trade costs and support other Aid-for-Trade objectives, so affirming the role of trade in the Sustainable Development Goals and Financing for Development.
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‘Journey towards bold climate action is at a critical moment,’ UN General Assembly told
Development cannot be sustainable if it does not address the challenge of climate change, United Nations Secretary-General Ban Ki-moon told Member States on Monday as he opened a High-Level Event on Climate Change convened in New York by the President of the UN General Assembly, Sam Kutesa.
“Let us always remember that climate change and sustainable development are two sides of the same coin, with two mutually reinforcing agendas,” the UN chief explained to delegations gathered for the event.
Just months ahead of the next Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC), which will take place in Paris, today’s event has been convened in support to the process that will ultimately result in an agreement intended to succeed to the landmark Kyoto Protocol on reducing greenhouse gas emissions.
Among the participants, Academy Award-winning actor and long-time conservationist Robert Redford, and 15-year-old indigenous climate activist Xiuhtezcatl Roske-Martinez, are expected to join the broad call for action to energize multilateral cooperation on climate change. Raised in the Aztec tradition, Mr. Roske-Martinez is Youth Director of a non-profit organization called Earth Guardians.
Keynote speakers are expected to include, Anote Tong, President of Kiribati, Mogens Lykketoft, Speaker of the Parliament of Denmark and President- elect of the 70th session of the General Assembly, Manuel Pulgar-Vidal, Minister of the Environment of Peru, President of COP20, and Laurent Fabius, Minister of Foreign Affairs of France, President of COP21.
“Adoption of a transformative post-2015 development agenda in September, achieving a successful outcome from the upcoming Third International Conference on Financing for Development and concluding a global climate change agreement will be monumental milestones towards improving the livelihoods of people around the world,” Assembly President Kutesa summarized.
But a climate change agreement in Paris will not be the end point, observed the Secretary-General: “it must be a turning point in how the world collectively responds to the defining challenge of our time,” he stressed.
“Today, we have come together to take stock of what we have pledged, what we have delivered, and what else we must do to ensure that world leaders and their governments adopt an ambitious, universal agreement in December.”
Journey towards bold climate action is therefore at a “critical moment”, he stated.
The Secretary-General welcomed a number of recent achievements, such as the fact that the world’s three biggest economies – China, the European Union and the United States – have “placed their bets” on low-carbon, climate-resilient growth, while the two biggest emitters of greenhouse gases announced ambitious climate actions. And other major economies in the G7 and G20 made clear their intention to act, he rejoiced.
“Nevertheless, these pledges cover only a portion of total global emissions. We must seize today’s opportunity to make a strong call to all Parties to submit their Intended Nationally Determined Contributions (INDCS), bearing in mind the urgent need for concrete actions by all,” advised the President of the General Assembly.
Another cause for satisfaction, pointed out the Secretary-General, is the dramatic fall in prices of renewable energy sources, which in some places has reached parity with fossil fuels. “The world is now using more renewable electric power each year than it is from coal, natural gas and oil put together,” Member States were told.
Moreover, he went on to say, investors and insurers are starting to integrate climate risk into their decision-making, while citizens, civil society and faith leaders, most recently Pope Francis, are pushing for action.
However, the pace of the UNFCCC negotiations is far too slow, said Mr. Ban, underscoring that the key political issues are still on the table. “With only ten negotiating days remaining before Paris, governments must accelerate their efforts.”
That recommendation was echoed by the President of the General Assembly, who emphasized how much negotiations launched earlier this month in Bonn must make “substantive progress.”
Highlighting what a “meaningful” agreement in Paris should include, the Secretary-General said that first, it “must” provide a strong signal to governments and markets that the world is committed to building a low-carbon future, “and that there is no going back.”
“Second, an agreement must be durable so that it provides the private sector with the predictability and policy frameworks it needs to invest in clean energy and climate-resilient approaches.”
Third, Mr. Ban continued, it must be flexible so that it can incentivize and incorporate more ambitious, “science-based nationally determined targets over time.” While urging countries that did not submit yet their INDCs to do so as soon as possible, he reminded delegations that these targets “will not be sufficient to place us on a less-than-2-degree pathway.”
“An agreement must therefore enable countries to regularly review progress towards this goal, and encourage more ambitious, nationally determined targets to meet it.”
Such agreement must also uphold the principle of equity, support the adaptation needs of developing countries, and demonstrate solidarity with the poorest and most vulnerable countries through a focused package of assistance. Finally, “it must have clear mechanisms for measuring, monitoring and reporting progress on a full range of actions.”
Noting that credible climate financing is essential, the Secretary-General urged developed countries to provide a politically credible trajectory for “mobilizing $100 billion per year by 2020” to support developing countries in curbing emissions and strengthening their resilience.
“It is also important to ensure that effective platforms for developing and sharing technologies and innovative research are enhanced”, added the Assembly President in his remarks. “Barriers” to the transfer of green technologies, including intellectual property protection issues, need to be urgently addressed, he said.
“I will proactively engage with leaders from both the global north and south to make sure this goal is met and is considered credible by all,” the Secretary-General assured. “I pledge to you that I will spare no effort to ensure that the world leaders who are responsible for an ambitious agreement in Paris – and the financing needed to implement it – are directly engaged.”
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IMF extends support for Senegal’s plan to be emerging economy
The IMF’s Executive Board renewed its support for Senegal’s economic and financial policies by approving a third straight endorsement of the West African nation’s policy program.
The authorities’ new three-year program underpins Senegal’s longer-term goal of attaining emerging-economy status by 2035.
The IMF Board approved on June 24 a new three-year Policy Support Instrument for Senegal. The Policy Support Instrument supports low-income countries that do not want – or need – IMF financial assistance but seek to consolidate their economic performance with IMF monitoring and support.
The instrument helps countries design effective economic programs that, once approved by the IMF Board, deliver clear signals to donors, multilateral development banks, and markets of the IMF's endorsement of the strength of a member country's policies.
Senegal’s new economic program is designed to help achieve the goals of the country’s overarching plan for the future. The “Plan Sénégal Emergent” is the authorities’ blueprint to help Senegal exit the trap of low growth and high poverty of past years. It intends to make Senegal a hub for West Africa by achieving high rates of equitably shared economic growth.
Ambitious yet realistic program
The authorities’ goals of sustained growth rates of more than 7 percent (see Chart 1) and of making Senegal a regional hub, underpinned by reforms envisaged by the plan, are achievable provided reforms are successfully implemented.
Hitting the plan’s growth targets would allow appreciable progress in improving living standards and reducing poverty. Early signs indicate positive momentum toward plan goals, thanks to progress in reform implementation and favorable external factors. However, more remains to be done to solidify this momentum, IMF staff said in its recent report on Senegal’s economy.
The Policy Support Instrument approved by the IMF has the overriding goal of macroeconomic stability through accelerated and sustained growth aimed at reaching higher living standards and thus reducing poverty. The instrument also meshes with the authorities’ objectives of
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Achieving high, sustainable, and inclusive growth;
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Preserving macroeconomic stability through prudent fiscal policy;
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Strengthening institutions and reforming the state;
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Improving the business climate and governance; and
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Building human capital and social protection.
In 2015, Senegal’s fiscal deficit will be contained to 4.7 percent of GDP. Sustained efforts to scale back current spending and to improve mobilization of tax revenues would allow reducing the budget deficit to 3.6 percent by 2017 (see Chart 2).
Fiscal deficit goal
The authorities’ goal is to achieve the West African Economic and Monetary Union convergence criterion of a fiscal deficit of 3 percent of GDP by 2018. Public debt would not exceed 56 percent of GDP during the program period in the long run, which is consistent with a low risk of debt distress.
Key structural reforms aim at creating the fiscal space of investment related to the national plan, making delivery of public services more efficient, improving the impact of public spending through public financial management reforms, containing public consumption to generate the fiscal space for investment in human capital and public infrastructure, and strengthening social safety nets.
The three-year program also aims at improving the business climate, and at structural reforms to attract foreign investment and increase private investment. It also calls for constraining public consumption and increasing public savings to generate fiscal space for higher public investment in human capital and public infrastructure.
New elements
The new program supported by the Policy Support Instrument is the third of its kind. Two previous programs, implemented in 2010–14 and 2008–10, broadly achieved their macroeconomic objectives and helped preserve macroeconomic stability, but structural reforms lagged behind and weighed heavily on growth.
Four elements stand out in making the new program different from its predecessors.
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Strong ownership and national traction. The Plan Sénégal Emergent is firmly owned by the government – the president and finance minister were personally involved in its design – and shares broad popular support in the country. Strengthened ownership and improved accountability would contribute to improved outcomes. The Policy Support Instrument will help achieve the goals of the authorities’ development strategy.
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Innovative policy instruments. The program requires a good feasibility study before budgetary funds are released for new investment and this should improve investment efficiency – which is critical for growth. The debt anchor fixes debt accumulation to a preannounced five-year path and requires, in cases of deviation, that the path is regained within the next four years. This would help preserve debt suitability.
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Modern program design. The macroeconomic framework underlying the program will be based on the most advanced standard of presentation of fiscal accounts. Key assessment criteria will be calculated and monitored based on this new internationally accepted standard, for the first time in any West African country. This is an important step toward greater transparency and accountability and will strengthen investor confidence.
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Program support through peer learning. With full clarity on what needs to be done, the authorities have taken an unconventional step to learn how to implement the needed reforms. With help from the IMF, they organized a series of peer learning events with senior officials from Cape Verde, Mauritius, and Seychelles who have themselves implemented the reforms needed in Senegal. Such peer learning provides new form of hands-on assistance on key reforms. The next workshop will focus on public-private partnerships and involve South Africa and Mauritius, among other countries. Another workshop on delivery units, with the World Bank and the possible involvement of the United Kingdom, Malaysia, Mauritius, and South Africa will follow.
Navigating the risks
The ambitious goals enshrined in Senegal’s national plan are achievable if the reforms are successfully implemented. The risks to the new Policy Support Instrument program are significant but manageable.
Slower-than-envisaged implementation of reforms to curb unproductive public consumption and delays in raising expenditure efficiency may endanger the planned fiscal consolidation. Failure of tax reform aimed at improving incentives may lead to revenue shortfalls with excessive borrowing, and compromise debt sustainability. Delays in structural reforms, in particular in public financial management and in the energy sector and banking sectors, may reduce growth.
The risks to the program are not only home based. Continued volatility in oil prices may affect revenue targets and subsidies. Spillovers from regional shocks, including Ebola and extremism, may become more pronounced. Weather conditions can affect agriculture, and slower growth in trading-partner countries may reduce demand for Senegal’s exports.
The authorities intend to mitigate these risks and navigate the headwinds with sound macroeconomic policies, including the use of a debt anchor and the expansion of precautionary reserves; guidance from peers; and continued policy advice from the IMF.
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tralac’s Daily News selection: 29 June 2015
The selection: Monday, 29 June
Featured tweet, @SAbynumbers: Composition of South African imports 1995-2012
This week, in Geneva: Expert meeting on promoting economic integration and cooperation (UNCTAD)
This session of the Multi-year Expert Meeting will explore the conditions under which trade might become an engine of growth in a process of regional integration. The meeting will also discuss productive integration as the basis of development-oriented regional integration, given that the issue of infrastructure continues to be pivotal among the issues to be addressed for deeper regional productive integration. The potential role of regional value chains in development-oriented regional integration will also be highlighted.
The SADC Trade Related Facility: implementation issues (SADC)
The Trade Related Facility (TRF) programme is established through a Contribution Agreement between the European Union (EU) and the Southern African Development Community (SADC), which was signed in July 2014. The major aim of the TRF is to strengthen the process of regional integration in SADC, enhance trade with the EU and strengthen the region’s trade competitiveness globally. Funded under the 10th EDF, the TRF consists of two financing windows... Indicative nominal allocations have been determined for eligible SADC Member States as follows... [Download]
SADC ministers agree to set up disaster response fund (StarAfrica)
Ministers responsible for disaster risk management and finance in southern Africa on Friday resolved to create an emergency fund to respond to the challenges posed by disasters in the region. Meeting in Harare, the ministers from the 15-member SADC agreed that a dedicated regional disaster risk management fund was necessary in the face of the increasing danger of disasters such as floods and drought in the region.
The impact of investment climate reform in Africa: how has 'Doing Business' reform promoted broader competitiveness? (World Bank Blogs)
So, if Doing Business is a starting point and is used as such, is there evidence to support the assumption that it triggers wider and deeper private sector reform? Or is movement on Doing Businesses a starting point and, unintentionally, an ending point too? [The authors: Aref Adamali, David Bridgman]
Regional State of the Coast: Western Indian Ocean (UNEP)
Urbanization and unsustainable fishing and extraction practices are driving the depletion of natural resources and a decline in biodiversity in the region, affecting livelihoods, says the Regional State of the Coast: Western Indian Ocean. Stretching from Somalia to South Africa, the Western Indian Ocean coastal area is home to over 60m people, largely dependent on marine ecosystems for food and jobs. The region's ecosystems are one of the world's richest in terms of biodiversity, with over 2,200 species of fish and over 350 species of corals, and provide a wealth of goods and services to the population. The report, launched at the 8th Conference of Parties to the Nairobi Convention, examines the environmental threats in the region and calls for stronger transboundary cooperation, integrated coastal management, and a surge in marine conservation areas to protect its pristine ecosystems. [Decisions adopted during the 8th COP for the Nairobi Convention, Report downloads]
Is the hyped free movement of people across African economic blocs a farce? (The EastAfrican)
Countries on the continent are never short of declarations and protocols announced or signed with fanfare at the African Union summits. Over the past two months alone, I have attended a number of conferences discussing the protocols on the free movement of people, labour, goods, capital and services within the continent’s RECs. As I study the free movement protocols, five questions have preoccupied my mind, answers to which demand future research. [The author: John Oucho]
South Africa: Home Affairs hosts immigration policy colloquium (GCIS)
The Department of Home Affairs will host a two-day colloquium to undertake a comprehensive review of the International Migration Policy. In 2014, the Department began a total review of the outdated 1999 White Paper on International Migration including a series of roundtable discussions with key stakeholders. The Green Paper will be finalized by March 2016, leading to a White paper and a comprehensive overhaul of legislation.
South African visa application centre opens in Port Harcourt (ThisDay)
South Africa starts wooing Kenyans to visit with visa deal (Daily Nation)
Fewer Mozambicans employed on South African mines due to legislative/technological changes (Club of Mozambique)
[TEBA's] Carimo said only 32000 Mozambicans are still working on the South African mines. Their remittances pump about R750m into the Mozambican economy annually. Carimo estimated that some 8% of the remaining Mozambican jobs in the mines are being lost every year, and there is no prospect of new recruitment. He predicted that in 20 years there will be no Mozambican miners at all in South Africa - or indeed miners from any other neighbouring country. He foresaw a mining industry exclusively staffed by South African nationals.
Diasporan remittances boost economy (The Herald)
Zimbabwe has received a cumulative $3,5bn since 2009 from its nationals in the Diaspora who now account for about 25% of liquidity in the domestic economy, with authorities now working to optimise the inflows, a senior official said. In fact, remittances from the Diaspora have outperformed inflows from portfolio ($1,08) billion) and foreign investments ($2 billion) during the five-year period (2009-2014), demonstrating availability of a huge liquidity pool Zimbabwe can exploit. “The largest part of our remittances come from South Africa (33%), United Kingdom (24%) and United States (7%) and you can see that about half of our remittances actually come from (only) two countries (SA and UK),” Dr Mlambo said.
Zimbabwe: South Africa to deport every fortnight (The Herald)
EAC states impose common external tariffs to protect paddy farmers (IPPMedia)
The East Africa Community partner states have imposed Common External Tariff to help traders and farmers in the community to benefit from what they grow and protect rice smuggling that destroy small scale farmers engaged in paddy production in the region. A report from Rice Council of Tanzania issued by the Rice Council Executive Director, Winnie Bashagi say that the EAC has decided to imposed the common external tariffs after it identified that right now Tanzania and other EAC rice industry is under the threat of imported rice from Thailand and Pakistan. “If the government wants to reach its Big Results Now and National Rice Development Strategy goals of doubling rice production for food security and regional export by 2018,” said Council Chairman Wambura, “The first step is to put an end, once and for all, to the large-scale organised rice smuggling. Otherwise, the rice industry will not go forward but backward.”
Finally, region is officially a Common Market (The EastAfrican)
The East African Community will formally become a Common Market on July 1 despite the aspirations of free movement of goods, services and labour being far from being achieved. The Common Market Protocol, ratified in 2010, had a five-year transition period, which the business community says focused more on regulatory reforms as non-tariff barriers and national considerations that are frustrating efforts that would bring home the benefits of integration to the citizens of the five member states
Uganda legislator queries EAC free trade pacts (East Africa Business Week)
India, Mauritius officials to revisit tax treaty on Monday (LiveMint)
Indian and Mauritian officials will hold talks starting Monday on proposed amendments to their bilateral tax treaty. The changes to the more than three-decade old treaty have been hanging fire amid apprehensions of the Indian side that Mauritius, one of the largest sources of foreign direct investment (FDI), is being used to route unaccounted money. Investments from Mauritius to India have totalled $87.55 billion since April 2000.
Kenya: Mumias Sugar hires 8 managers to drive turnaround (Business Daily)
Mumias Sugar Company is mulling extending the term of its CEO Coutts Otolo even as it hired eight managers to replace those sacked last year in a corruption purge. In a recent recruitment exercise, the cane miller failed to get a candidate who met the requirements for the position of CEO, with the management saying the applicants were not suitable to the needs of the company.
Changes in beef market regulations open opportunities in southern Africa (Zimbabweland)
Last month at the OIE (World Animal Health Organisation) Assembly in Paris, changes to international regulatory standards around Foot and Mouth Disease were adopted. This has long been argued for, and will make a big difference to livestock producers across southern Africa. The updated OIE Terrestrial Animal Health Code makes it possible for African countries with wild species like buffalo that naturally harbour foot and mouth disease (FMD) viruses to be able to trade beef without necessarily requiring the physical separation of wildlife and livestock through the extensive veterinary cordon fencing that has characterized animal disease management in southern Africa since the colonial era. [Zimbabweland wins a prize!]
South Africa: Minister Rob Davies on agro-processing (GCIS)
The Department of Trade and Industry has contributed R1,2 billion in incentives to the Agri-food sector between 2009 – 2013, to support the industry. “In value added, the sector contributes 11% of total manufacturing while in employment terms, the sector contributes 15% of total manufacturing employment. Agro-processing has great significance for the South African government and the unity of the industry is important,” said Minister Davies
Zimbabwe: Car imports down (The Herald)
The volume of imported second hand vehicles passing through Chirundu border post has significantly declined in recent months amid concerns over high duty charged and some related costs. The high cost of importation particularly Zimra duty calculations and revaluation of the cost of the vehicle have seen cars piling up at Zimra yard at Chirundu post as people fail to raise the amounts required.
Tanzania: Limited staff delays single stop inspection scheme (IPPMedia)
Inadequate staff fueled by expertise to operate equipment installed at the Kenya-Tanzania Holili border offices has been said as among the drawbacks holding back the pace of One-Stop-Border-Post initiatives. Tanzania Revenue Authority revenue collection in-charge Aden said although the establishment of One Stop Border Post , a joint investment programme between the two countries is picking up, facilitators of the system from the two countries are faced with challenges that need to be addressed to enable smooth operations.
Govt endorses One Stop Border Posts Act, 2015 (IPPMedia)
Uganda: SGR project finally kicks off (Daily Monitor)
The preliminary geo-technical investigations and survey work on the $3.3 billion (about Shs10.6 trillion) new standard gauge railway project has finally been flagged off. Prime Minister Ruhakana Rugunda said the SGR will provide 150,000 jobs during construction and more than one million more jobs will be created by industries that will spring up immediately after construction.
Ports regulation: Cargo tracking as an instrument of trade facilitation (ThisDay)
There is increasing optimism among shipping stakeholders that the Cargo Tracking Scheme to be managed by the Nigerian Shippers’ Council will further improve efficiency at the ports and cut cost borne by shippers as part of the efforts of the federal government to facilitate trade (writes Francis Ugwoke).
Ship repair company looking to conquer Africa (The Namibian)
EBH Namibia, the ship repair company based at Walvis Bay, is looking to expand its services to the larger African market, given that few countries on the west coast of Africa offer repair services. The company has just launched its new Panamax size third dock at the coast. EBH Namibia was established in 2007. The Namibian government, via Namport, is the majority shareholder while the South African DCD Group is the minority shareholder.
Kenya ranked among top 5 gainers of population growth (Business Daily)
Kenya is among the economies that are poised to reap the highest dividends from a rapidly growing population in the next 35 years, London-based Economist magazine says in its latest assessment of long-term growth prospects for countries worldwide. The Economist Intelligence Unit says Kenya’s labour force will nearly triple to 48m by 2050 from the current 18m, offering the economy a unique potential to speed up growth.
AfDB Knowledge Management Strategy (2015-2020) approved
AUC participates in the Mining On Top Africa conference (AU)
Tanzania: Traders scout for Sh5 billion capital to establish own bank (The Citizen)
Kenya: Manufacturers protest excise stamp demand (Business Daily)
AU Chairperson reiterates the AU’s 'deep concern' on Burundi
Reviewing implementation of the post-2015 Agenda: UN HLPF debate (Common African Platform)
East Asia Forum Quarterly: 'Leadership in the region'
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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Ports regulation: Cargo tracking as an instrument of trade facilitation
There is increasing optimism among shipping stakeholders that the Cargo Tracking Scheme to be managed by the Nigerian Shippers’ Council (NSC) will further improve efficiency at the ports and cut cost borne by shippers as part of the efforts of the federal government to facilitate trade, writes Francis Ugwoke.
The nation’s shipping industry is a revenue spinner at all times as far as Nigeria remains a keen participant in global trade. With rising cargo volume which as at last year stood at 86,603,903 metric tons (mt) as against 76,886,997 (mt) in the previous year, the shipping sector will continue to contribute so much to the national economy at this time of low returns from oil trade. It is already being estimated that the sector can comfortably contribute as much as N7 trillion annually to the national economy if the potential is developed.
It is perhaps in realisation of this that every effort is being made by the federal government to reposition the sector to be more efficient in every aspect of operations. In what is seen as part of this move is the federal government’s recent decision to reintroduce the cargo tracking system or cargo tracking note (CTN) under the management of the Nigerian Shippers’ Council (NSC). Industry stakeholders see this as part of government’s commitment to improve on trade facilitation. As a regulator, the Council has been making efforts to achieve efficiency at the ports as essential part of trade facilitation. According to the Executive Secretary, Shippers’ Council, Mr. Hassan Bello, the CTN will be important in the efforts to facilitate trade. Among others, is the data that will be made available in the process.
Ports Regulator and CTN
The cargo tracking system is a global initiative to monitor and verify cargo on transit. It has the blessings of the International Maritime Organisation (IMO) and World Customs Organisation (WCO) which Nigeria is a member. It has a lot of security and safety value for shippers and indeed agencies of government. The idea came up in 2007 but introduced in 2009 in Nigeria, but had to be dropped following protest by shipping industry stakeholders as a result of the high charges imposed on shippers. It was then under the management of the Nigerian Ports Authority (NPA). However, under the current dispensation, the cargo tracking regime will now be managed by the Shippers’ Council as the ports regulator. When fully in force, every shipper, including importers and exporters will have to follow the laid down procedures to be announced by the ports regulator. Sources close to the Council said penalties may be imposed on those who fail to follow the rule. Part of the policy, a source close to the Shippers’ Council said is for the shipping companies to make available every cargo information on both export or import goods in advance to the Ports Regulator. Its adoption will attract a minimal fee on all imports and exports as against what was introduced when it was under the NPA. This is a departure from what was charged before it was suspended. Then, the sum of $55 was collected as administrative fee, including USD$205.00 for shipments from other continents and USD$8.50 on conventional shipments. The costs were then built into the bill of lading.
Benefits
One good thing about cargo tracking system is that it will check fraudulent practices by importers and their accomplices. It will check under-declaration or outright concealment which are common issues in the ports. The federal government loses a lot of revenue as a result of these trade crimes. Even when the Customs Service tries to check the problem, its officers are compromised as they issue Debit Notes (DNs) that are far below what the shipper should pay. This is done when settlement has exchanged hands. The other benefits include safety of cargo and security of every cargo coming into the country. With a lot of focus on goods on transit that will carry certificate of origin to destination, nature, freight and weight, unscrupulous importers may be weary of involvement in any trade crime. When introduced, it is expected to reduce delay in cargo shipment. It is also envisaged that it will reduce cost as importers will no longer suffer payment of extra cost for freight after the initial payment of the “professional cost under Cost, Insurance and Freight (CIF) obligation to shipping lines”. This is one issue that the ports regulator has been bitter about. Shippers’ Council boss, Bello, had cried out against such payment, saying it was only in Nigeria that shippers pay more after the obligation of CIF payment to bring cargo into the country.
How CTN Will Facilitate Trade
On how the cargo tracking system will facilitate trade, Bello described it as a very important source of information. He said, “International trade thrives on information- credible data. And that is what the cargo tracking system does. We will know at the point of loading of the ship which cargo is coming to Nigeria. The advantage is that we will know the trade pattern and there are also security issues involved, which we will be able to determine. This is data that will be shared with very important institutions like the Central Bank of Nigeria, NPA, Customs and NNPC. Even more important, if we have advance knowledge of information, Shippers Council will have to share this information with terminal operators, the shipping companies and customs as well as other relevant institutions. This will cut drastically delays in vessel resumption and also cargo clearing procedure because if you have information even before the ship sails- that certain ship is carrying a particular tonnage, certain type of goods is arriving this time, customs will be ready to receive it, port concessionaires are ready, the shipping companies must have prepared. So, all the delays will be minimised, if I may call it, and it is what the stakeholders have been calling for when we had our meetings and this is what we are delivering.
He added, “If we have this, it is extremely important for regulation. Information about the cargo, information about international trade, security issues and it will also stop pilferages, leakages and hemorrhages going on in port operations because if we have to have the revenue from the port operations, we have to stop all this. Advanced Cargo Information System will be able to curb these malpractices that we see. It is transparent, it is going to be shared with everybody so you cannot even cut corners with this information.
It is very important for clarity, it is very important for internationalisation of cargo clearance procedure. Nigeria will be at par with many countries, you cannot under-declare even for the shippers, sometimes when they are not compliant, they will import tyres and say it’s something else. But with this we have clarity, everything is clear and things will be processed with procedures and we will not have delays in Nigerian ports. This will add to the competitive edge over other ports; we should not forget that we are in competition with other ports”. On the cost that will be charged under the regime, he said, this will be minimal to cover administrative cost. Bello said, “it will not cost much; it will just be barely administrative cost”.
Stakeholders’ Views on CTN
Shipping industry stakeholders apparently aware of the remodeled cargo tracking system to be managed by the ports regulator said it is a good development. Nigerian shippers are particularly happy that the new policy will cut cost of shipping instead of having to pay more as was the case before. But perhaps, more important to them is the fact that the ports regulator is the one managing the scheme. Maritime lawyer, Mr Emmanuel Ofomata, who opined that it was wrong to subject importers to high cost of importation in the country, adding that the involvement of the NSC has rekindled the optimism of many shippers on the project. He said it was a cheering news that the return of CTN will this time lead to cost reduction in import and export business instead of shippers having to pay more. He urged the ports regulator to keep to its promise and ensure that Nigerian importers do not have to pay more under the new trade scheme because of the implication on the national economy.
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Uganda legislator queries EAC free trade pacts
The governments of the East African Community (EAC) have been asked to amend ratification free trade agreements signed between themselves and other nations under the Private Partnership arrangement.
He said EAC member states have opened their doors wide for competitive trade with their counterparts globally, but some of the signatory countries under these agreement are blocking EAC goods in their markets using non-tariff barriers (NTBs).
Ugandan legislator, John Ssimbwa, was speaking during a breakfast dialogue on revenue mobilization measures in the 2015/16 Uganda budget organized by SEATINI.
The Southern and Eastern African Trade, Information and Negotiations Institute (SEATINI) is a regional Non-Governmental Organization founded in 1996 soon after the WTO Singapore Ministerial Conference. This was after it was realized that Third World countries in general and Africa in particular, were marginalized in the WTO negotiations and other global processes.
Ssimbwa said there were procurement laws and quality laws outside the spirit of SADC, COMESA and EAC despite the signing of non-tariff barriers protocols under PPP. Some member countries cannot sanction entrance of products outside their home countries to enter unless those products are levied tax on them.
He said, “This was a contentious issue during the recently concluded Regional Workshop for African Parliamentarians and Members of the Indian Ocean Commission and the East African Community, organised by the World Trade Organisation in port Louis Mauritius.
‘The aim is to sensitise participants on the implementation of the WTO Trade Facilitation Agreement ratification,’ he said.
Simbwa said heads of state regularly meet to discuss trade and markets in relation to non-tariff barriers products, but up to now Uganda needs permist to market its goods and products in Kenya. He cited Ugandan products like cables which he claimed cannot access the Kenyan market.
He cautioned with the creation of a bigger free trade areas, there will be an influx of goods from leading African developed member states like Egypt and South Africa whose goods can kill off local production.
The Chairperson of Uganda’s parliamentary committee on Budget, Amos Lugoloobi, said it was urgent for the government to streamline the tax regime and not favour foreign investors as opposed to local countrparts.
The government should focus on supporting the local investors to produce for export in order to compete favorably and fund export promotion council to fulfill its mandate of searching for markets in Uganda and beyond.
The SEATINI Country Director Jane Nalunga said tax mobilization would be welcome as stipulated in the budget speech, but provided the tax payer in turn receives the basic necessities of life like free health, education and other services as the case in Ghana where tax collectors are accountable to the public by displaying on billboards projects their tax was used for at a time and provision of free services in gazette sectors.
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Finally, region is officially a Common Market
The East African Community will formally become a Common Market on July 1 despite the aspirations of free movement of goods, services and labour being far from being achieved.
The Common Market Protocol, ratified in 2010, had a five-year transition period, which the business community says focused more on regulatory reforms as non-tariff barriers and national considerations that are frustrating efforts that would bring home the benefits of integration to the citizens of the five member states.
East African Business Council chairman Denis Karera said administrative barriers across the region have held back progress on the exchange of services and labour.
“Very little has been achieved since the protocol came into effect five years ago. The bigger challenge is that not all the partner states are committed to fully implementing it,” said Mr Karera.
A recent study by the East African Legislative Assembly indicated that in terms of movement of capital, only two – external borrowing and repatriation of proceeds from sale of assets – out of 20 capital operations are free of restrictions in all the partner states.
The EALA study further showed that partner states are implementing the protocol at a slow pace, especially in harmonising their national laws to conform with it.
But the major challenge has been the lack of a provision for sanctions for non-compliance.
The pending issues noted in the report revolve around linking and delinking of the schedules on free movement of workers and services. The EALA report noted 43 non-conformity issues, out of which 17 were attributed to Tanzania, 16 to Kenya, nine to Burundi, and one to Rwanda.
Under the key obligations on the free movement of goods, most partner states were found compliant, though non-tariff barriers remain a challenge.
“None of the partner states has moved to establish statutory regulatory bodies to handle issues related to professional services,” said Mr Karera.
Peter Mathuki, a Kenyan member of EALA and chair of the Committee on Legal, Rules and Privileges, said that the states do not co-operate on harmonising policies and sharing information on markets regulation.
Kenya Private Sector Alliance chairman Vimal Shah said that the big stumbling block is the disparity in infrastructure in the member states, which increases transportation costs between the countries.
“The success and appeal of the internal market will be determined by freedom and ease of movement of goods and people across the region. East Africa needs to channel more resources and more investments towards infrastructural development in order to ensure all countries are at par,” said Mr Shah.
“Trade facilitation at border points is still a major issue. Border controls affect the clearance of goods. It is important to synchronise the time schedules at the borders of each partner states and harmonise the domestic taxes in order to facilitate the movement of goods across the region,” said Sachen Gudka, vice chairman of the trade and tax committee at Kenya Association of Manufacturers.
“All the partner states waive work permits for EAC citizens,” he added.
He said Kenya is finalising drafting the Miscellaneous Amendment Bill that aims to re-align 27 pieces of legislation with the EAC Common Market Protocol. Rwanda is also working on the same, and it is expected Uganda and Tanzania will follow suit soon.
“This is a good move in implementing the protocol, but there is a need for the provision of adequate regulatory frameworks at a regional level for trade in services,” said Mr Gudka.
The other impediment to the success of the Protocol is the harmonisation of domestic tax and investment regimes in the region.
“The different VAT and excise regimes in the countries act as barriers to cross-border transactions and have a bearing on trade facilitation. In most cases, extra time and resources are spent on complying with different tax regimes,” said Mr Shah.
“The overall effects are high transaction costs, high compliance costs and smuggling across the border. It is really ironical that small scale traders are forced to engage in smuggling of duty free goods because of such needless barriers. In order to provide a level playing field, there is need to harmonise domestic tax regimes in the EAC. The Governments should also finalise on the elimination of double taxation.”
He said that the absence of mutual recognition of products bearing a mark of quality is still a major problem.
“Products from member states are still subjected to further tests and certification in the importing country despite the fact that they already possess certification marks from the countries of origin, a practice that hurts business,” said Mr Shah, adding that the non-compliance with CET continues to deny market access to companies that made investments on the promise of an expanded internal market.
“There should be increased mutual trust between the partner states in order to ensure the implementation of the Mutual Recognition Principle, which is key. Each state should recognise products bearing the standard marks issued by standards bodies of the partners.
Although the EAC has a formal dispute resolution system under the Treaty, businesses have been reluctant to use them. The system is perceived to be slow and unreliable and the costs are borne by companies that are victims of violations.
“There should be political will and commitment by all partner states towards ensuring the success of the Common Market protocol,” said Mr Mathuki.
“States who fail to obey the decisions of the Summit and Council should be made to account by the Secretariat, which should have powers of protection of the union and the common market aspirations.”
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Kenya ranked among top 5 gainers of population growth
Kenya is among the economies that are poised to reap the highest dividends from a rapidly growing population in the next 35 years, London-based Economist magazine says in its latest assessment of long-term growth prospects for countries worldwide.
The Economist Intelligence Unit (EIU), the research arm of the magazine, says Kenya’s labour force will nearly triple to 48 million by 2050 from the current 18 million, offering the economy a unique potential to speed up growth.
The EIU says a large base of economically active people should enable Kenya to sustain an average annual gross domestic product (GDP) growth rate of nearly 4.7 per cent over the 35 years.
The army of young workers should contribute approximately 1.7 per cent of the GDP growth, the EIU says, with the balance coming from capital and factors like technological advancements (referred to as total factor productivity).
“For countries with favourable demographics, our forecasts assume that growth-friendly policies are pursued and are successful in providing jobs for a growing workforce to ensure longer-term growth,” says the report titled Long-term macroeconomic forecasts.
Kenya’s demographic dividend is third in Africa behind Nigeria (1.9 per cent of a 4.9 per cent GDP growth) and Angola (two per cent of a 4.3 per cent GDP growth).
The workforce in the two countries is expected to increase from nine million to 28 million in Angola and 56 million to 161 million in Nigeria, giving them an edge in terms of the absolute labour force by 2050.
Globally, Nigeria tops the demographic dividend list followed by Pakistan with 119 million (an increase from the current 60 million), Philippines with 78 million (from the current 40 million) and Kenya with 48 million.
“These economies will primarily benefit from favourable demographics in the forecast period, with higher birth rates supporting a healthy supply of workers,” EIU analysts say.
“The contribution to growth from changes to the labour force for these economies will be positive and represent a larger driver of growth than capital and TFP.”
The report flies in the face of previous ones that have sought to highlight a bulging population as an impediment to economic advancement in Kenya and the continent.
In Kenya, for instance, it has been argued that a large population piles pressure on the limited economic resources in a country where nearly 50 per cent of the population is living below the poverty line.
Concern over the population’s effect on the economy, which is shared by many economists, stems from the fact that Kenya’s economic growth increases by about one per cent yearly while her population grows at a rate of three per cent annually.
To be in a healthy position economic growth needs to outpace population growth, allowing the government to plan and put structures in place for investing in human capital.
It is for this reason that the Ministry of Health has spent billions of shillings in tax and donor funds to promote family planning through a string of campaigns in the past five years, efforts that have so far registered little success.
Jacqueline Mugo, the Federation of Kenya Employers executive director, says a growing population can be beneficial to an economy but warns that Kenya has an “oversupply of labour” and that family planning efforts need to be supported.
“The issue with the Kenyan labour force is not in their numbers, but the inadequate skill that people possess,” Ms Mugo told the Business Daily in a telephone interview.
“The government is stretched to some extent as it is unable to keep up with the population growth. In some sectors such as education, the interventions have not yielded much fruit especially in rural areas due to underfunding.”
But some economists, including those who authored the EIU report, support high population growth, saying it could positively impact GDP as more people would get employed.
Wolfgang Fengler, a lead economist with the World Bank, shares this view. Through a blog post on the World Bank website, he argues that one key indicator of rich and high-income countries is urbanization, which is partly driven by population growth.
“Population growth increases density and, together with rural-urban migration, creates higher urban agglomeration,” said Mr Fengler.
“This is critical to achieving sustained growth because large urban centres allow for innovation and increase economies of scale.” Mr Fengler states that Kenya’s growing population has benefited companies, giving them access to a large customer base “at the bottom of the pyramid” represented by lower- and middle-income groups.
Some of the factors the EIU analysts used to develop their projections include the level of an educated workforce, the economy’s openness to trade and the quality of institutions, including the legal framework and bureaucracy.
Fiscal policies such as the degree of government regulation and movements in the population of working age relative to the overall population as well as the income gap between a country and the United States are also included.
The analysts, however, reckon that for their 35-year forecasts to ring true, governments need to implement policies that positively impact the growth factors, something Mr Fengler also emphasises.
“For countries with favourable demographics, our forecasts assume that growth-friendly policies are pursued and are successful in providing jobs for a growing workforce and ensuring longer-term growth,” the EIU report states.
“Failure to achieve this will lead to a growing number of potential workers unable to find employment, resulting in a source of political instability and a missed opportunity of seizing an advantage offered by favourable demographics.”
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The SADC Trade Related Facility: Implementation Issues
The Trade Related Facility (TRF) programme is established through a Contribution Agreement between the European Union (EU) and the Southern African Development Community (SADC), which was signed in July 2014.
The major aim of the TRF is to strengthen the process of regional integration in SADC, enhance trade with the EU and strengthen the region’s trade competitiveness globally.
Funded under the 10th EDF, the TRF consists of two financing windows:
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the STP Window which seeks to ensure a higher level of compliance and implementation of commitments undertaken by SADC Member States under the Protocol on Trade; and
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the EPA Window which facilitates effective implementation and monitoring of the SADC-EU EPA with a view to enhance its potential benefits, particularly in terms of improved market access.
Indicative nominal allocations have been determined for eligible SADC Member States as follows:
To benefit from the STP Window, a Member State must, among other criteria, have signed and ratified the SADC Protocol on Trade, at the time the programme was formulated, and for the EPA Window, a Member State must have signed the SADC-EU EPA.
The nominal allocations indicated above provide an indication of the maximum funds that a country can access. This may be reallocated following the midterm reviews to be carried out in late 2016. The Steering Committee can also decide on a reallocation of funds between the two windows in case of under-utilisation of one window and over-utilisation of the other window, following the recommendations of the Mid-Term Evaluation referred to above.
New eligible Member States can also be considered for inclusion at the time of the mid-term review of the programme.
Main activities eligible for funding
The STP Window deals with interventions that can enhance a higher level of compliance and implementation of Member States’ commitments under the SADC Protocol on Trade. The main activities identified to achieve this result deal with the removal of non-tariff barriers (NTBs) to trade in goods and services, including:
(i) enhancing customs cooperation;
(ii) technical barriers to trade (TBT);
(iii) sanitary and phyto-sanitary (SPS) measures;
(iv) rules of origin;
(v) trade facilitation;
(vi) industrial development;
(vii) trade promotion and development; and
(viii) trade in services.
The EPA Window is concerned with interventions that can prepare SADC EPA States to effectively implement and monitor the EPA and benefit from it, particularly in terms of improved market access. In addition to supporting activities similar to those carried out under the STP Window, the EPA Window can fund the following additional areas:
(i) trade defence instruments;
(ii) trade related adjustment; and
(iii) competition policy.
Possible TRF interventions to address implementation deficits
TRF Interventions should be focused on addressing implementation challenges and deficits regarding the region’s economic integration initiatives, in the context of the SADC Protocol on Trade and/ or enhancing potential benefits from the SADC-EPA, particularly in terms of improved market access through its effective implementation and monitoring. With regard to the Protocol on Trade (STP), an Action Plan Matrix for the Consolidation of the SADC FTA was adopted by the Committee of Ministers responsible for trade (CMT) in 2010, to address outstanding implementation issues. SADC has also adopted a trade monitoring, reporting and evaluation (MRE) system, with a matrix of indicators for assessing Member States implementation of the STP. This matrix links directly to the commitments agreed to by Member States in the STP. The SADC Secretariat has also recently conducted a baseline assessment of the implementation status of the various commitments made by Member States under the Protocol on Trade.
Such information is therefore useful in the process of identifying possible TRF interventions towards effective implementation of trade commitments. The SADC-EU Economic Partnership Agreement was signed by the EU and SADC EPA Group on the 15 July 2014. As part of the negotiation process, the SADC EPA States have identified medium term assistance needs requirements for the effective implementation of the EPA. These needs have informed the provisions on development cooperation contained in the SADC-EU EPA, and are also useful in the process of identifying possible TRF interventions under the EPA Window.
Enhancing customs cooperation
Part three of the SADC Protocol on Trade relates to customs procedures and the documentation requirements for import and export trade in Member States, resulting into a number of customs-related obligations. These commitments largely relate to the need to implement customs reforms and modernisation programmes based on international best practice. Four pillars are particularly vital in this area – enhancing transparency, predictability, simplification and cooperation on customs documentation and procedures under Annex II and III of the STP in order to reduce the cost of trading across borders.
In 2011, SADC conducted a Customs Audit to assess the status of implementation of the various regional and international customs conventions/instruments in Member States. This Audit highlighted key gaps in implementation and priority areas for intervention, particularly relating to transit, customs legislations, customs procedures and documentation, including computerisation and IT connectivity issues. Both the Customs Audit and the existing NTB mechanism indicate that most non-tariff barriers being reported on the on-line system fall largely under the lengthy and costly customs processes. This reflects poor implementation of the provisions of the STP and its Annexes as well as international instruments of the World Customs Organisation (WCO), particularly the revised Kyoto Convention.
Trade facilitation
Investing in trade facilitation provides a path for deepening regional integration. Under Article 5 of Annex III, Member States have undertaken to initiate trade facilitation programmes, and in particular, to ensure adequate coordination between trade and transport facilitation within SADC. A One-Stop Border (OSBP) model and the SADC Coordinated Border Management (CBM) Guidelines have been adopted. The SADC Regional Infrastructure Development Master Plan (RIDMP) adopted in 2012 also emphasizes the need for improved coordination between trade and transport facilitation.
The Ministerial Task Force on Regional Economic Integration decided in 2012 to address a number of “quick wins” related to enhancing border efficiencies and trade facilitation at selected borders as well as the development of a comprehensive trade facilitation programme for the region. The “quick wins” identified are:
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Harmonization of operating hours at all adjacent borders with different operating hours;
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A review of border hours of operation in order to cater for high traffic volumes and meet the requirements of trade at other border posts;
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A proactive implementation of the one-stop border post programmes;
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Facilitation of a pilot Coordinated Border Management (CBM) Programme in countries ready to adopt and implement this framework; and
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Addressing impediments to movement of goods across the region covering but not limited to accession to and implementation of the WCO Revised Kyoto Convention, data exchange and interconnectivity amongst customs administrations; implementation of the electronic certificate of origin in SADC; and improvements to infrastructure at major border posts.
The development of a SADC trade facilitation programme is in progress and its implementation at national and regional levels is likely to require effective support interventions. TRF resources can assist SADC Member States to initiate trade facilitation programmes, especially to implement agreed regional frameworks and instruments, such as coordinated border management and one-stop border posts. The simplification and harmonization measures in the WTO Agreement on Trade Facilitation (TFA) adopted in December 2013 can expedite the movement, release and clearance of import, export and transit goods. The TRF is, therefore, an important avenue to facilitate the phased adoption and implementation of the TFA and crowding in the required technical assistance and capacity building.
Rules of Origin
Annex 1 to the SADC Protocol on Trade deals with the rules of origin, which spells out criteria on originating goods eligible for SADC preferential treatment. Rules of origin were one of the most controversial aspects of the STP negotiations and have also become a thorny issue in the implementation of the STP. The restrictive nature of the SADC rules of origin has been well documented in the Mid-Term Review of the STP conducted in 2004, which recommended some reforms. Subsequently some changes have been made but the reform of the SADC rules of origin remains an unfinished business, especially on the rules of origin for garments which requires a double stage transformation to qualify as originating goods as well as on some processed food items such as blended teas, coffee and mixtures of spices.
It is reported that some SADC rules of origin prevent smaller SADC economies to expand their production capacity and enhance their trade performance, particularly the development of efficient regional/global production networks and value chains. This may require Member States to assess impact of some sector/product specific rules on their trade and industrial development. There are also challenges related to implementation of rules of origin at national levels and the need to improve administrative systems through measures such as electronic certification and development of national registers of approved exporters.
Technical barriers to trade
Article 17 of the SADC Protocol on Trade obliges Member States to use relevant international standards as a basis for their standards-related measures. Member States should also accept each others technical regulations as equivalents, even if such regulations differ from their own, provided that they adequately fulfil their regulatory objectives. A TBT Annex to the STP seeks to facilitate the harmonization of standards and technical regulations and their concomitant conformity assessment regimes. However, recent on the implementation of the Annex suggests that technical regulation development and implementation remains ad hoc, fragmented and TBT Annex non-compliant. In particular, national policy, legislative and administrative processes are not adequate to facilitate full implementation of the TBT Annex.
Complementing work being undertaken under the REIS programme, TRF support can be directed at interventions aimed at domestication of the TBT Annex in national regulatory framework and supporting specific activities aimed at improving the standards and quality infrastructure within Member States.
Sanitary and phyto-sanitary measures
Article 16 of the SADC Protocol on Trade commits Member States to base their sanitary and phytosanitary measures on international standards, guidelines and recommendations, and that they work towards mutual recognition of equivalence for specific SPS measures in accordance with WTO SPS Agreement.
The SPS Annex provides that, where appropriate, Member States should work towards harmonization of their respective mandatory requirements taking into account relevant international standards, guidelines or recommendations. Recent assessment on the implementation of the SPS Annex suggests that there are critical gaps in the implementation of a number of provisions on transparency of SPS related laws, regulations and procedures; equivalence and risk assessment and determination of acceptable levels of protection.
Industrial development
Article 4(2) of the SADC Protocol on Trade provides that the process of tariff liberalization should be accompanied by an industrialization strategy to improve the competitiveness of Member States.
A SADC Industrial Upgrading and Modernisation Programme (IUMP), which was adopted by Ministers of Trade and Industry in 2009, has identified nine (9) strategic sectors for upgrading and modernisation interventions, namely: agro-food processing; processing/beneficiation of minerals; chemicals and pharmaceuticals; textiles and garments; leather and leather products; forestry; fisheries, machinery and equipment; and services. SADC Member States were encouraged to use the IUMP as a basis to develop and implement their national upgrading and modernisation programmes.
A SADC Industrial Development Policy Framework was also adopted in 2012, which recognizes that industrial policy and development is primarily a national prerogative and that industrial policies will have to be country/circumstance-specific. In addition, the framework calls for a regional strategy anchored on the promotion of value chains and production network linkages across borders.
In April 2015, an Extra-Ordinary Summit adopted a regional industrialisation strategy and roadmap; which may require policy and regulatory reforms at national levels so as to ensure regional coherence. TRF interventions can support implementation of such adopted regional frameworks and strategies at national levels.
Trade promotion and development
Article 26 of the SADC Protocol on Trade commits SADC Member States to adopt comprehensive trade development measures aimed at promoting trade within the Community. Annex V states that trade development is an important tool in the regional integration process and that trade promotion measures can provide access to a wider regional and international market.
Supporting Member States to adopt comprehensive trade development measures aimed at promoting intra-SADC and international trade, including taking advantage of the improved market access due to trade agreements such as the EPAs, is necessary. This can be done through interventions aimed at promoting the participation of the business community in SADC trade fairs and exhibitions as well as trade missions.
Trade in services
Article 23 of the SADC Protocol on Trade commits SADC Member States to “adopt policies and implement measures in accordance with their obligations in terms of the WTO GATS, with a view to liberalizing their services sector within the Community”. The SADC Protocol on Trade in Services adopted in August 2012, seeks to progressively liberalize intra-regional trade in services. The first round of SADC trade in service negotiations on schedules of commitments covering six (6) priority sectors, namely communication, construction, energyrelated services, financial, tourism, and transport services is on-going but at slow pace. This is largely because capacity constraints across sector/line Ministries.
Looking beyond trade in goods, there are significant barriers to trade and investment in services in the region. This not only hampers trade and competitiveness in key services sectors, but also frustrates the development of value chains in the productive sector of the economy.
TRF interventions can support Member States to implement progressive liberalization of intra-regional trade in services as part of the commitments they have made. This will largely require domestic regulatory reforms. In addition, these interventions will also better prepare Member States to participate effectively in other trade in services negotiations such as those under the comprehensive EPA, Tripartite and Continental FTA negotiations.