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Namibia cannot stop foreign products
Being part of the global trading community and a participant in the trade liberalisation processes, Namibia cannot stop foreign products from entering the local market.
“The only effective defence we can deploy to mitigate economic marginalisation is by proving to our consumers that Namibian industries do produce good, safe, high quality, cost effective and thus competitive products,” minister of industrialisation, trade and small and medium enterprises (SME) development Immanuel Ngatjizeko said.
Ngatjizeko, who was speaking at the Team Namibia annual general meeting (AGM) in Windhoek this week called on businesses to make use of and support vehicles like Team Namibia to educate the nation on what Namibia produces and promote local procurement and consumption to grow the national economy further.
He said the ministry has prioritised the promotion and development of a robust local industry with special emphasis on SMEs, local value-addition, manufacturing and the creation of larger market space for Namibian products, which is achievable through the negotiation of preferential market access arrangements.
The minister explained that the problem, which has undermined market access for locally produced goods and services to date, particularly in the retail sector, is that the economy requires structural reform.
“Poor links between manufacturers, distributors and retailers is one of the striking constraints to growing production capacity and the subsequent consumption of locally-manufactured goods,” he said.
As to the retail sector, Ngatjizeko said, it is clear that the fourth National Development Plan (NDP4) has aspirations for growth in that sector and targets a 20% increase in the shelving of Namibian products on local retail shelves.
Namibia is a net food-importing country of most consumer and industrial goods, with a sparsely distributed population that has access to a diverse array of goods and services, efficient distribution networks with vertically integrated operations, and convenient shopping malls in most of the urban towns.
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tralac’s Daily News selection: 26 June 2015
The selection: Friday, 26 June
The AU Summit declarations and resolutions have been published in Addis: some highlights
AU Declaration on 2015 Year of Women’s Empowerment and Development Towards Africa’s Agenda 2063
The full set of outcomes from the Sandton Summit
Launch of the Continental Free Trade Area: new prospects for African trade? (Bridges Africa)
These developments make clear that without locking in preferential trade arrangements among themselves, African countries participating in different RECs could offer better terms to external partners than they offer each other. For example, Senegal in ECOWAS trades on MFN terms with Kenya in the EAC but each country is committed to offering Europe preferential access when their respective EPA arrangements are fully implemented. Aside from the political momentum to keep the mileposts of the Abuja Treaty on track, the implications of the MRTAs and the changing trade landscape provide the context that have made the conclusion of a CFTA all the more urgent. [The authors: David Luke, Babajide Sodipo]
Why the TFTA is significant for Kenya (Institute of Economic Affairs)
Perhaps the statistics of Kenya’s trade between 2010 and 2014 could indicate what opportunities and challenges exist for Kenya in the TFTA. Although the nominal values of trade with other African countries increased from KSh 300 billion to KSh 390 billion, the proportion of that value to total trade declined from 22.4% to 18%. The statistics on the value of trade with EAC and COMESA partners also show a decline in the amount of trade with those partners as a proportion of total trade. Between 2011 and 2014, the balance of trade with COMESA and EAC partners decreased from KSh 126 billion to KSh 110 billion, and 110 billion to 89 billion respectively. [The author: Leon Ong'onge]
Cairo to Cape Town: new free trade 'super bloc' is huge for African economy (Belfer Center)
Because of the small size of domestic markets, there has previously been pressure to protect local industries from products imported from other African countries. This results in higher penalties for intra-African imports than for goods coming from outside the region. On average, products being sold within Africa attract a tariff of 8.7 percent, whereas similar goods coming from outside the region have a tariff of 2.5 percent.
There are also large imbalances in the application of tariffs between North Africa and sub-Saharan Africa. For example, Tunisian exports to Ethiopia attract a 15 percent tariff protection, while the opposite flow is given a tax of 50.4 percent. A Moroccan exporting to Nigeria pays almost four times as much as a Nigerian exporting to Morocco. [The authors: Calestous Juma, Francis Mangeni]
Counting the costs of tariff evasion in Tunisia (World Bank)
In the interim, though, researchers have had a field day sifting through the archive. Their investigations reveal that almost one third of the 662 or so firms owned by the Ben Ali clan were import-export firms, and that they were likely to have been among the largest, most economically relevant of his companies. Researchers then looked at the ‘evasion gap’ between the value of goods that countries said they had exported to Tunisia, and the value that firms connected to Ben Ali reported they had received. The resulting sample comprised 1,386 products and 16 countries, and covered of 69.75% of all the exports and 61.03% of all the imports declared in Tunisia. [Download]
From 2014: 'Regional integration - uniting to compete' (Mo Ibrahim Foundation)
Immigration ministers to decide on visa relaxation (COMESA)
Ministers in charge of immigration from COMESA Member States are expected to make a policy decision regarding the slow progress on the full implementation of the Protocol on Gradual Relaxation and Eventually Elimination of Visa Requirements (Visa Protocol). The Protocol is contained in the COMESA Treaty and all Member States have ratified it. However, it has faced difficulties in implementation. Additionally, the Protocol on Free Movement of Persons, Services, Labour and the Right of Establishment and Residence also referred as Free Movement Protocol faces similar difficulties. The VISA Protocol has existed since 1984 and has not yet achieved full implemented in the region while the Free Movement Protocol, adopted in 2001 has so far only been ratified by Burundi and signed by Rwanda, Kenya and Zimbabwe.
European Union (EU) Head of Delegation in Zambia and Special Representative to COMESA Mr. Gilles Hervio told the Ministers that 85 million Euros would be available to COMESA in the coming six years to support initiatives to enhance the free movement of business persons and professionals. The funds have been provided by the EU under the 11th European Development Fund (EDF). They will also be used to support regulatory reforms to facilitate trade in key selected service sectors building on the momentum generated by the Tripartite and continental trade negotiation processes. An additional 25 Million Euros will also be available to build capacities in the Eastern and Southern Africa and Indian Ocean regions mainly to support the improvement of migration governance and facilitate legal migration. It will also support initiatives for refugees and displaced people with a specific focus on the horn of Africa.
Implementation of immigration regulations: briefing by Home Affairs (GCIS)
Our concern has always been on promoting national security, which has a far-reaching impact on tourism as well. This I must reiterate: Our policy has never been tourism by any means possible. Even the UN World Tourism Organisation has noted that tourism can be manipulated for criminal activities. It is in our best interest as a democratic state to work towards reducing levels of crime even in this area if our economy is to grow and if we are to succeed in building a united, democratic, non-racial, non-sexist and prosperous society. The DHA presentation on latest statistics on traveller movement will assist our analysis of arrival patterns for June 2013, June 2014 and June 2015. [Download]
US-Africa trade gets a boost with renewal of AGOA (Wall Street Journal)
The U.S. Congress has renewed a 15-year-old law that allows made-in-Africa goods to sail into the U.S. duty-free. That makes Africa the latest continent wrapped up in a spree of trade legislation clearing through Congress. AGOA’s renewal is as good as certain: President Obama promised on Thursday afternoon to sign it into law it as soon as it reaches his desk.
Hub plans to facilitate $100m in new investments (CoastWeek)
Kenya’s investment authority has signed an agreement with a regional trade promotion firm to boost foreign investments in the EAC). Kenya Investment Authority signed the Memorandum of Understanding with the East Africa Trade and Investment Hub to join efforts to increase investment and trade in the EAC. KenInvest Managing Director Moses Ikiara said under the partnership, the Hub plans to facilitate 100 million U.S. dollars in new investments and create 10,000 jobs over the next five years.
Eight global hotel chains target Kenyan entry (Business Daily)
Enhancing integration, unlocking investment in West Africa (World Bank)
At a mid-June event in Dakar, a regional public-private dialogue framework was launched to jointly identify regional and national investment constraints, facilitate investment-policy improvements, and enhance integration in the region. Preliminary national investment policy reform agendas were developed for each country that are part of the Economic Community of West African States (ECOWAS).
CBN denies rice, cement importers access to forex (BusinessDay)
Godwin Emefiele, the Governor of the Central Bank of Nigeria, says importers of rice, cement and other products will no longer access Foreign Exchange from CBN, banks and bureau de change for such importation. Speaking to newsmen on Wednesday, Emiefiele said the measure would prevent further depletion of the country’s foreign reserve. He said the country was spending huge amount to import things that could be produced locally.
Ban on textiles, furniture out as Customs begin implementation of ECOWAS CET (BusinessDay)
The Federal Government yesterday in Lagos said it has lifted the ban on the importation of textiles and furniture commodities following the commencement of the implementation of the much awaited ECOWAS Common External Tariff (CET). Textiles, furniture and others have become dutiable, as both commodities have been removed from the Import Prohibition Lists and it is going to be implemented. However, to protect the nation’s local industries, import levies have been developed on these commodities to avoid making Nigeria a dumping ground for the above mentioned cargoes, said Abdullahi Dikko, Comptroller General of the Nigeria Customs Service (NCS) at the official launch of the implementation of ECOWAS CET.
First Bank CEO calls for naira devaluation after curbs (ThisDay)
Managing Director and Chief Executive Officer of First Bank of Nigeria Limited, Mr. Bisi Onasanya, has disclosed that Nigeria needs to let the naira devalue as foreign-exchange trading restrictions used to keep the currency stable are starting to harm growth in Africa’s largest economy. According to Onasanya who spoke during an interview at a Bloomberg conference at the Nigerian Stock Exchange in Lagos yesterday, “People just don’t believe the Central Bank of Nigeria (CBN) has what it takes to sustain the exchange rate at the present level. “The market needs to reopen. You cannot peg the naira at a level that the whole world knows is unrealistic.”
Naira falls on parallel market after forex control (ThisDay)
Changes to Angola customs regulations – payment, fraud and product shortage concerns (tralac)
In June 2015 the Angolan General Tax Administration, which includes customs, adopted a new ruling that is causing concern for many exporters. According to the new ruling, the consignee (buyer or importer) no longer needs to present the original Bill of Lading (B/L) to ensure the release of cargo from the port of arrival. This has raised concerns regarding the risk of non-payment and the potential for fraudulent claims. [The author: Willemien Viljoen]
South Africa: statement on the cabinet meeting, 24 June 2015 - selected trade, economy highlights (GCIS)
Cabinet approved the introduction of the revised Promotion and Protection of Investment Bill, 2015 into Parliament. The Bill reaffirms that South Africa remains open to foreign investment, provides adequate security and protection to all investors, and preserves the sovereign right of the South African Government to pursue developmental and transformational public policy objectives.
Kenya has highest informal jobs in Africa (Business Daily)
Kenya has the highest informal sector employment among nine countries covered in a new report by the United Nations’ Economic Commission for Africa. Employment in the sector stands at 77.9% of the total ahead of Rwanda’s 73.4%, Uganda’s 59.2 and Tanzania’s 8.5%. In Egypt, Liberia, Madagascar, Mauritius and South Africa, the sector offers jobs to 51.2, 49.5, 51.8, 9.3 and 17.8% of workers, respectively.
Counting Africa’s rural entrepreneurs (World Bank Blogs)
We conclude that the non-farm enterprise sector is not equally important across African countries and that their contribution to total household income is proportionately lower in rural than in urban areas, as expected. Great heterogeneity in the non-farm enterprise sector may also reflect different motivations for enterprise operation, as well as different country contexts and economic geographies. Although governments and development agencies support rural entrepreneurship for a number of reasons, more action is needed if the sector is to make a significant contribution to rural development.
Transitioning from the MDGs to the SDGs: accountability for the post-2015 era (and other recent resources from the Committee for Development Policy)
Alex Vines: '40 Years of Mozambican independence – time for inclusive politics' (eNCA)
The Central Sahel: a perfect sandstorm (International Crisis Group)
Senior government officials meeting on the Arms Trade Treaty (AU)
This week in the news
Follow the links below to read tralac’s daily news selections for the past week:
The selection: Thursday, 25 June 2015
The selection: Wednesday, 24 June 2015
The selection: Tuesday, 23 June 2015
The selection: Monday, 22 June 2015
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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Statement on the Cabinet Meeting of 24 June 2015: Highlights
Implementation of Key Government Programmes
Cabinet welcomed the resolutions adopted at the 25th African Union (AU) Summit which places Africa on a new path of development and growth that will enable the continent to take its rightful place in global affairs.
Resolutions included a united and functioning single military by the end of the year. Leaders pledged to accelerate the operationalisation of the African Standby Force (ASF).
Cabinet applauded the initiative by the AU towards greater regional integration and trade through the launch of negotiations for the establishment of a continental free trade area that will forge stronger ties between African economies.
Cabinet also welcomed the meeting of the African Union Ministers Responsible for Gender and Women’s Affairs held their meeting on the 12th of June 2015, following the 2nd AU High Level Panel on Gender Equality and Women’s Empowerment (HLP) which was held from the 10th-12th of June 2015 at the margins of the 25th Ordinary Session of the AU Assembly, under the Theme: “Make it Happen Through the Financial Inclusion of Women in the Agribusiness Sector”.
The outcome of the 2 meetings was a Declaration and a Call for Action on Financial Inclusion in Agribusiness. The Call for Action calls Member States to among others
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Implement women’s right to access, control, ownership and benefit from financial resources, including access to public procurement processes in Education, information and skills development, innovative technologies and practices, to capacitate and develop women’s economic empowerment in agribusiness;
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Intensify initiatives to create a conducive environment for women to conduct agribusiness and the agricultural value chain through prevention and responding to conflict on the Continent, addressing, adapting and mitigating climate change impacts, and addressing the impact of epidemics and natural disasters.
- Facilitate the development of agribusiness and agricultural value chains through mechanization, technological innovation and skills development for women
Key Cabinet decisions
Cabinet ratified the decision to designate the Maluti-A-Phofung Industrial Development Zone (MAP IDZ) at Tshiame (Industriqwa-1A), Harrismith, Free State Province. It also approved the granting of Operator Permit for this zone to the Free State Development Corporation.
The MAP IDZ designation will establish a logistics-orientated platform (Logistics Hub) 10 kilometers outside of Harrismith (the old Industriqwa site), primarily to service the automotive, light manufacturing, agro-processing and distribution/logistics sectors.
Cabinet approved that South Africa joins the Asian Infrastructure Investment Bank. The Bank focuses on Asian and Oceanic Region in supporting the infrastructure investments.
South Africa’s participation will strengthen its growing business relationships with the region and will also demonstrate solidarity with the region’s development aspirations.
Cabinet approved submission of the Additional Protocol to the Trade, Development and Cooperation Agreement between the European Community and its Members States to Parliament for ratification.
The Additional Protocol takes into account the accession of the Republic of Croatia to the European Union (EU) which join later into the Protocol. The enlargement of the EU will improve SA’s market access into the EU, which will lead to creation of job opportunities, fostering economic growth, and improve consumer choices. This is in line with the National Development Plan vision of creating employment, growing the economy and promotion of exports.
Cabinet approved that the relevant international standards and other scientific measures be implemented with a view to ensuring adequate risk management is applied when importing cattle and bovine products. This alignment of South Africa’s import requirements with international scientific guidelines, will strengthen the county’s position in international trade. This will broaden access to sufficient, safe and nutritious food for people and animals through strategic sourcing and will increase job creation through importation of beef products intended for further processing in South Africa.
Bills
Cabinet approved the introduction of the revised Promotion and Protection of Investment Bill, 2015 into Parliament.
The Bill reaffirms that South Africa remains open to foreign investment, provides adequate security and protection to all investors, and preserves the sovereign right of the South African Government to pursue developmental and transformational public policy objectives.
This is in support of the National Development Plan’s (NDP) objective of promoting investment and export growth to stimulate sustainable growth and development in South Africa.
Cabinet approved publication of the Copyright Amendment Bill, 2015 in the Government Gazette for wider consultation.
The Bill amends the Copyright Act, No 98 of 1978 and the Performers Protection Act, No 11 of 1967, which are outdated as they do not consider developments at multi-lateral level nor do they have provisions that deal with digital issues.
The Bill addresses the licensing of copyright work/material in relation to commissioned work to prevent commercial exploitation. This will help government to address the plight of musicians and performers by ensuring that royalties are paid on time by recording companies and broadcasters as most of them are dying as paupers.
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Counting the costs of tariff evasion in Tunisia
Dodging custom duties or ‘tariffs’ in Tunisia led to huge losses to state revenue and substantial inequality, as politically connected entrepreneurs were especially likely to profit from evading high tariffs.
When Tunisia’s former president, Zine El Abidine Ben Ali, fell from power at the start of the Arab Spring in 2011, the Tunisian authorities found themselves in possession of a rare archive of financial mischief – a unique paper trail of the lengths to which people (in power) will go to use their clout to make more money than they should the easy way, by bending the rules in their favor. First, we learned that companies linked to the president, his relatives and in-laws deviously cornered a disproportionate share of the country’s private sector profits. Now, we learn that – in pursuit of not just more profits but higher profits – they evaded high customs duties too. Why is this important?
As public prosecutors the world over know, believing that companies are flouting the rules and proving that they are, are two very different things. Sifting through Ben Ali’s vast portfolio is a case in point: after he fled, the Tunisian state confiscated the commercial assets of no less than 114 individuals linked to him. But this month in response to an appeal – apparently by one of Ben Ali’s wife’s relatives – a Tunisian court annulled the decree allowing the state to do so, leaving the ownership of his Tunisian-based assets for the time being, unclear.
In the interim, though, researchers have had a field day sifting through the archive. Their investigations reveal that almost one third of the 662 or so firms owned by the Ben Ali clan were import-export firms, and that they were likely to have been among the largest, most economically relevant of his companies. Researchers then looked at the ‘evasion gap’ between the value of goods that countries said they had exported to Tunisia, and the value that firms connected to Ben Ali reported they had received. The resulting sample comprised 1,386 products and 16 countries, and covered of 69.75% of all the exports and 61.03% of all the imports declared in Tunisia.
The researchers paid special attention to countries with reputations for good record-keeping, such as Germany, the Netherlands, and Belgium. They found that the declared value of imports by Ben Ali firms exceeded that of the average firm by 18%, and their declared import quantities were 21% higher than the average. In other words, they were importing more than most of their competitors. Yet, especially for goods subject to high tariffs – such as cars from Europe and electronic goods from China – the unit price or value they gave each item was on average 8.1% lower than those reported by another firm, a slip of the pen (or keyboard) that meant they paid less duty.
Ben Ali’s firms used undervaluation as a strategy more often than other Tunisian firms. These also dodged duties, though mostly by underreporting the quantities of their imports or misclassifying them. Morality and legal scruples aside, these tax dodges added up, and today it’s estimated that between 2002 and 2009, underreporting by ‘politically connected entrepreneurs’ lost the Tunisian government at least US$1.2 billion in import taxes – US$1.2 billion more than the government was losing anyway from all the other firms that avoided paying their import duties in full.
The reason this matters is that this was money that could have been used for the public good in Tunisia’s general population of about 11 million. Instead, it contributed greatly to socio-economic inequality by feathering the nests of elite groups of people, many of them already wealthy.
All this evidence of skirting state import (and export) duties resonates widely in the many developing countries where revenues collected by customs usually account for over a third of all state revenues. Customs officials elsewhere in the world will find it all too easy to identify with the Tunisian officials who told researchers that fraud by Ben Ali firms was less likely to be reported to the authorities because doing so might jeopardize their careers or prompt retaliation against their families. Tunisian customs officials also said that politically connected entrepreneurs kept on top of new rules as they were introduced, and proved themselves adept at circumventing new anti-fraud measures by adapting to them.
Tunisian customs authorities are considered among the most corrupted of all government institutions by Tunisia’s citizens and companies. While the Tunisian customs code is consistent with best practices, the combination of a bewildering complexity of import regimes and very weak administrative and IT control, render effective enforcement challenging. A World Bank Export Development Project is supporting customs reforms by simplifying import policy and also by improving the IT system and modernizing systems of recruitment, or Human Resources. All of this should reduce the amount of individual discretion involved in customs procedures, as well as increasing the competiveness of Tunisian exports by improving logistics.
How people go about making profits unfairly offers all sorts of insights into how you can stop them, or others like them. In Tunisia, though, these lessons are yet to be put into effect, for although the privileges enjoyed by the former president’s family appear to have been drastically curtailed, tariff evasion in Tunisia as a whole appears to have escalated – informal, cross-border trade now accounting for more than half Tunisia’s trade with one of its two neighbors, Libya, and more than its official trade with the other, Algeria, from where roughly 25% of the fuel consumed in Tunisia originates.
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Historic launch of largest integrated market in Africa
The historic launch of the largest integrated market covering 26 countries in eastern and southern Africa, is a bold move by Africa to reform internal trade.
The current economic landscape is structured in such a way that African countries, who possess the bulk of natural resources trade more with the outside world than among themselves.
This trade imbalance is caused by various factors including poor infrastructure built during the colonial era to disallow any smooth movement of goods, services and people between African countries, as well as the imposing of non-tariff barriers between African countries.
Another major factor is the lack of a vibrant industrialized sector that weans Africa from being a source of cheap raw materials for other countries in the west.
The long-awaited launch of an enlarged market in Africa is expected to change the economic landscape by boosting intra-regional trade in Africa and deepening regional integration through improved infrastructure development, investment flows and enhanced competition.
Commonly known as the Tripartite Free Trade Area (TFTA), the integrated market comprising the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC) was launched on 10 June in Sharm El Sheik, Egypt.
The TFTA creates a combined population of some 600 million people covering half of the member states of the African Union (AU) and a Gross Domestic Product (GDP) of about US$1 trillion.
The enlarged market aims to promote the smooth movement of goods and services across borders, as well as allowing member countries to harmonize regional trade policies to promote equal competition.
The harmonization of trade policies, and removal of non-tariff barriers and other trade barriers such as huge export and import fees would enable countries to increase their earnings, penetrate new markets and contribute towards their national development.
According to a communiqué released soon after the launch, the three regional economic communities pledged to prioritise industrial and infrastructure development to ensure that the tripartite arrangement is a great success.
Speaking at the launch of the “Grand” FTA, the chairperson of the AU, President Robert Mugabe of Zimbabwe, said Africa has come a long way and it is now time for the continent to take its rightful position on the international scene.
However, for this to happen, countries should intensify efforts to improve other enablers for socio-economic development such as industrialization, infrastructure and energy development.
“Our shared experiences have demonstrated that competitive production of goods and services for an FTA that delivers jobs, economic growth and prosperity cannot be achieved without enabling infrastructure, energy and industrialization,” said Mugabe, who is also the outgoing COMESA-EAC-SADC chair.
“We need to pursue robust industrialization policies and create jobs for our people and curb the migration that has seen our men, women and children die in their thousands in the Mediterranean Sea as they search for jobs.”
The new COMESA-EAC-SADC chair, Ethiopian Prime Minister Hailemariam Desalegn concurred, and urged countries to ensure a quick and speedy implementation of all integration programmes, as well as speedy completion of negotiations in the tripartite arrangement.
Negotiations for the TFTA have been conducted in three different phases – preparatory phase, phase one and phase two.
The preparatory phase mainly covered the exchange of all relevant information including tariffs including applied national tariffs as well as trade data and measures.
Phase one of negotiations covered core FTA issues of tariff liberalization, customs procedures and simplification of customs documentation, transit procedures among other issues.
Facilitating movement of business persons within the region was negotiated in parallel with the first phase.
The last stage of negotiations, which is phase two, deals with trade in services and trade related issues including intellectual property rights and trade development, cooperation in trade and development and competitiveness. Negotiations are still to be finalized on some of the issues.
At the 3rd Tripartite Summit held in Egypt to launch the “Grand” FTA, a total of 15 countries signed the agreement. These are Angola, Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Kenya, Malawi, Namibia, Rwanda, Seychelles, Sudan, the United Republic of Tanzania, Uganda and Zimbabwe.
Swaziland became the 16th country on 15 June to sign the agreement, meaning that eight of the 15 SADC Member States have signed the agreement.
The remaining countries requested more time to complete their internal processes before signing the document.
However, all countries are expected to have signed the agreement within a period of one year.
They will then initiate the ratification process through their legislative assemblies or other local procedures, and the agreement will come into force once ratification is attained by two-thirds of the 26 member states.
The process of ratification advances the regional law from being a stated intention to actual application.
The establishment of the Tripartite FTA is a decisive step to achieve the African vision of establishing the African Economic Community as envisioned in the Lagos Plan of Action and the Final Act of Lagos of 1980, Abuja Treaty of 1991 as well as the Resolution of the African Union Summit held in Banjul, the Gambia in 2006.
Africa aims to launch a Continental FTA by 2017 to promote the smooth movement of goods, services and people across the continent.
Negotiations for this enlarged market began in June, and the Continental FTA is expected to evolve from the existing FTAs in sub-regional economic blocs, eventually creating a continental bloc in excess of more than one billion people and combined GDP of more than US$3.4 trillion.
Such a development will set the stage for African countries to increase trade among themselves and reconstruct the global economic landscape.
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AU Declaration on Migration
We the Heads of State and Government of the African Union, meeting at the 25th Ordinary Session of our Assembly in Johannesburg in the Republic of South Africa from 14-15 June 2015, under theme “Year of Women Empowerment and Development towards Africa’s Agenda 2063”.
Following our discussion on the strategic issue of Migration, hereby individually and collectively reaffirm our previous commitments aimed at accelerating mobility and integration on the continent, migration in development while addressing regular and irregular migration; we commit to undertake the following actions:
i) Speed up the implementation of continent-wide visa free regimes including issuance of visas at ports of entry for Africans and based on the principle of reciprocity where those countries that offer free movement should receive same;
ii) Offer all Africans the same opportunities accorded to the citizens of countries within our respective Regional Economic Communities (RECs) by 2018;
iii) Expedite the operationalization of the African Passport that would, as a start facilitate free movement of persons that will be issued by Member States;
iv) Establish a harmonized mechanism to ensure that higher education in Africa is compatible, comparable, with acceptability and enable recognition of credentials that will facilitate transferability of knowledge, skills and expertise;
v) Establish a mechanism on practical modalities for the empowerment of African women and youth in education and, encourage their sustained growth in knowledge acquisition; and to include exchange programmes and self-employment in the education curriculum;
vi) Strengthen efforts to combat human trafficking and smuggling of migrants through the implementation of the provisions of the UN Convention on Transnational Organized Crime and its supplementing Protocols against Trafficking in Persons and Smuggling of Migrants by improving legislation, provision of victim support enhanced international cooperation and training;
vii) Assist in the stabilization of the elected government of Libya.
1. REQUEST the Commission to urgently organize a retreat of the Executive Council to consider:
i) the issue of Mobility and Free Movement of people in Africa;
ii) the development of a common position for Africa before the Malta conference on Migration with the European Union in November 2015;
iii) the development of a Protocol on Free Movement of Persons;
iv) in collaboration with Member States engage in the process of developing capacity to manage migration flows within the continent.
2. ENDORSE the Horn of Africa Initiative on Human Trafficking and Smuggling by the AU Commission and the outcomes of the Regional Conference on Human Trafficking and Smuggling held in Khartoum, Sudan from 13-16 October 2014 including the TOR, Declaration, Strategy and Plan of Action; and REQUEST the Commission to report regularly to the Executive Council on the Initiative;
3. DECIDE to remain seized with the matter and REQUEST the Commission to report to the Assembly on the implementation of this Declaration in January 2016.
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AU Declaration on 2015 Year of Women’s Empowerment and Development Towards Africa’s Agenda 2063
We, the Heads of State and Government of the African Union, having met at our Twenty Fifth Ordinary Session of the Assembly of the Union in Johannesburg, South Africa, from 14 to 15 June 2015, on the 2015 Theme “Year of Women’s Empowerment towards Africa’s Agenda 2063”;
Recalling our previous Decisions and Declarations on Gender Equality and Women’s Empowerment in particular the Protocol on the African Charter on Human and People’s Rights on the Rights of Women in Africa in 2003 (Assembly AU/Dec.19(II)), the Solemn Declaration on Gender Equality in Africa in 2004 (Assembly AU/Dec.12 (III)), the African Women’s Decade (2010-2020) (Assembly AU/Dec. 229 (XII)), the Fund for African Women (Assembly AU/Dec. 277(XIV)), Malabo Decision on Theme for 2015 Year (Assembly AU/Dec. 539 (XXIII)) and all global policies, namely the Convention on Elimination of all forms of Discriminations against Women (CEDAW), and the UN Security Council Resolution Number 1325, among others;
Acknowledging the persistent efforts made in implementation of the AU Gender Architecture above-mentioned at national, regional and continental levels, and the positive and visible results of implementation of gender equality and women’s empowerment made by our continent since Beijing 1995;
Also acknowledging the challenges faced in the implementation of many of those Decisions and Declarations, in particular on progress made in attaining the minimum targets of gender equality and women’s empowerment in women’s socio-economic and political life that should demonstrate Africa’s willingness, leadership and commitment to the achievement of goals as enshrined in the 2003 Maputo Protocol on Women’s Rights in Africa;
Noting with Concern that despite positive achievements registered recently in decision-making, women, the largest proportion of our population, still remain at-risk and impoverished due to the challenges caused by social, economic and political marginalization, gender-based violence and discrimination against women; and reiterating our resolve to ending violence against women and girls, and improving access to, and control of, finances, land, education, health, sciences and technology and decision-making in political governance and business enterprises, consistent with our Declaration on Agenda 2063 and our continental Gender Architecture and our commitments on global initiatives;
Reaffirming our resolve towards ensuring that all categories of our populations, in particular women and young girls, must participate and benefit directly from the growth and transformation opportunities to improve their lives and livelihoods, with continued positive impact on the lives of our citizenry in rural and urban areas, through deliberate and targeted public support;
Reiterating our commitment to the Addis Ababa Declaration on Accelerating the Implementation of the Beijing Platform for Action – Towards a Transformational Change for Women and Girls in Africa, adopted during the Ninth African Regional Conference on Women in November 2014;
Reflecting that hunger and malnutrition are major causes of risk, impoverishment, and persistent underdevelopment in Africa and causes of poor health, low levels of energy, and mental impairment, all leading to low productivity and low educational attainment, all of which can in turn lead to even greater hunger and malnutrition, and increased economic costs, thereby creating a vicious cycle;
Noting the progress made towards alignment, harmonization and coordination of initiatives and activities of stakeholders and partners with our priorities as defined in the Beijing and Dakar Platforms of Action and stressing on the significance of accelerating this momentum;
Recognizing the importance of multi-sectoral engagement and co-ownership of this societal and economic transformation agenda within our public sectors, including agriculture, science and technology, health, peace and security, infrastructure, energy, finance, trade, industry, hence the importance of putting in place a coherent inter-sectoral coordination of the efforts and initiatives in cabinet and other national and regional governance frameworks, for optimizing resource access and control, synergy and maximizing positive outcomes and greater impact;
Further recognizing the complementary roles and responsibilities that should be enhanced among relevant stakeholders, including public sectors, private enterprises – especially with African headquarters, civil society with African leadership, academia, African think-tanks, grassroots and business women, in all formal and informal sectors in driving our shared continental development Agenda 2063;
Reiterating its support to the mandate of the AUC Chairperson’s Special Envoy on Women, Peace and Security to promote the rights of women during conflict, their participation in the prevention and resolution of conflict, and their protection from sexual and gender-based violence;
Welcoming the Recommendations of the Stakeholder’s Consultation with AU Ministers of Gender and Women’s Affairs, GIMAC (Gender is my Agenda Campaign) network of civil society organizations, Regional Economic Communities (RECs) and UN System, held in Addis Ababa, Ethiopia from 20th to 23rd January 2015 at the AUC Headquarters, and in particular their recommendations calling for our Assembly to consider adopting commitments along specific and concrete priorities.
We hereby adopt the following Declaration:
I. COMMITMENT TO ENHANCING WOMEN’S CONTRIBUTION, AND BENEFIT FROM FORMAL AGRICULTURE/AGRIBUSINESS VALUE CHAINS
We commit to enhance women’s access and full inclusion in agriculture and agribusiness, as contributors and beneficiaries; and to this end, we resolve
a) AU Member States to continuously orient policy and decision makers to understand the important role that women play in development, and specifically in agribusiness, agricultural value chain, food security, nutrition, and care, by putting in place mechanisms for the empowerment of women;
b) AU Member States to implement women’s right to access, control, ownership and benefit from financial resources, including access to public procurement processes in agribusiness, productive assets, including land, enabling basic infrastructure, education, information and skills development, innovative technologies and practices, to capacitate and develop women’s economic empowerment in agribusiness;
c) AU Member States to intensify initiatives to create a conducive environment for women to conduct agribusiness and the agricultural value chain through prevention and responding to conflict on the Continent, addressing, adapting and mitigating climate change impacts, and addressing the impact of epidemics and natural disasters;
d) AU Member States to facilitate the development of agribusiness and agricultural value chains through mechanisation, technological innovation and skills development for women;
e) AU Member States to reintroduce agriculture as a field of study, including agribusiness and agricultural value chain, of the education curriculum;
f) AU Member States and the Commission to ensure that the Continental Free Trade Area (CFTA) promotes the empowerment of women in agribusiness/agricultural value chains;
g) AU Member States to integrate gender responsive indicators in the Comprehensive Africa Agriculture Development Programme (CAADP) Results Framework of the Malabo Declaration on Accelerated Agricultural Growth and Transformation for Shared Prosperity and Improved Livelihoods
II. COMMITMENT TO ENHANCING WOMEN’S ACCESS TO HEALTH
We commit to enhance women’s access to health; and to this end, we resolve:
a) To take into account women sensitive issues to emerging threats such as Ebola and other impediments to Africa’s development, which disproportionately have a negative impact on women and girls;
b) To establish mechanisms to identify survivors of sexual and genderbased abuses and provide psycho-social and economic care during conflict and post-conflict situations;
c) To ensure that Sexual and Reproductive Health and Reproductive Rights of African women are implemented and mutually accounted for in the existing commitments to women’s reproductive health and rights, as adopted by African Heads of State in the AU Protocol on the Rights of Women (Maputo Protocol) in 2003, and the Maputo Plan of Action on Sexual and Reproductive Health Rights in 2006; and
d) To ensure ending of the AIDS Epidemic by 2030, as part of the Agenda 2063, has an inclusive, human rights approach that leaves no-one behind; including children, adolescents, women of child bearing age, female key populations, such as women and girls in conflict and postconflict settings.
III. COMMITMENT TO PUSHING FORWARD WOMEN’S ECONOMIC EMPOWERMENT
We commit to empower women at all economic levels, including women at-risk and impoverished located in rural and urban areas, with access to, and control of, finances; and to this end, we resolve:
a) AU Heads of State and Government to place the Gender Agenda at the centre of their Development Agenda, which should match allocation of adequate resources, based on a fixed percentage of the budget, with the elevated location of the Ministry responsible for Gender and Women’s Affairs in order to enable Ministers responsible for Gender and Women’s Affairs to drive the programmes of gender equality and women’s empowerment; and
b) AU Member States, as we move towards the adoption of the Post 2015 Development Agenda and the Sustainable Development Goals, to create and mainstream mechanisms to ensure women’s access to finances, financial and entrepreneurial skills development, to move away from limited ring fenced women’s funds, and to challenge the financial institutions to have minimum quota of 50% to finance women for them to grow from micro to macro business.
IV. COMMITMENT TO ENHANCING THE AGENDA ON WOMEN PEACE AND SECURITY
We commit to push forward the women’s full and effective participation in conflict prevention, management, peace-building, reconstruction and negotiation; and to this end, we resolve:
a) To develop, implement and report on National and Regional Action Plans on UNSRC 1325 to accelerate the Women, Peace and Security Agenda;
b) To develop and implement a Plan of Action towards Silencing the Guns by 2020 for promoting women’s participation in conflict prevention, resolution and post-conflict rebuilding;
c) To establish mechanisms to identify survivors of sexual and genderbased abuses and provide psycho-social and economic care during conflict and post-conflict situations;
d) To eliminate impunity on all forms of violence against women and girls;
e) To facilitate access to justice, rehabilitation and recovery, especially for child soldiers, and survivors of sexual and gender-based violence; and
f) To install a monument at the Africa Union Headquarters honouring women who have contributed to the African anti-colonial and antiapartheid liberation movements, and the resolution of conflicts on the continent.
V. COMMITMENT TO ENHANCING WOMEN’S PARTICIPATION IN GOVERNANCE
We commit to implement all AU policies on gender parity and participation of women in judicial processes and institutions, especially in governance and at decisionmaking levels, such as the Supreme Court, Constitutional Courts, and Regional Courts; and to this end, we resolve:
a) To ensure that women are part of the electoral machinery, including Institutions that address violence before, during, and after elections.
VI. COMMITMENT TO ENHANCING WOMEN AND GIRLS’ ACCESS TO EDUCATION, SCIENCE AND TECHNOLOGY
We commit to enhance women’s and girls’ access to education, science and technology and to this end we resolve;
a) To increase education and training investment in institutions/enterprises, accredited for quality, in science and technology (S&T), information and communications technology (ICT), engineering, mathematics, agriculture and agribusiness, nutrition, and law with focus on women and innovation; and
b) To end child marriage, also referred to as defilement, in Africa through adoption of the Common African Position on Ending Child Marriage, develop and implement comprehensive action plans as an indicator for monitoring Agenda 2063 for girls’ empowerment and well-being.
VII. COMMITMENT TO MUTUAL ACCOUNTABILITY TO ACTIONS AND RESULTS
We commit to systematic data gathering, regular review, and progress monitoring of implementation of Agenda 2063 and its 10-Year Action Plan using the Solemn Declaration Index (SDI), developed by the GIMAC and United Nations Economic Commission for Africa (UNECA); and to this end, we resolve
a) To conduct the five year progress review of the Africa Women’s Decade that involves tracking, monitoring and reporting on progress;
b) To foster alignment, harmonization and coordination among multisectorial efforts and multi-institutional platforms for peer review, mutual learning and mutual accountability;
c) To strengthen national and regional institutional capacities, including technology software, equipment and uninterruptible power supply (UPS) for data collection, analysis, generation, and management and knowledge generation and dissemination, that supports evidence based planning, implementation, monitoring and evaluation; and,
d) To share high-impact best practices and solutions with a focus on scalability/technology divisibility and replicability to improve the lives of women in the diverse settings of Africa.
VIII. STRENGTHENING THE AFRICAN UNION COMMISSION TO SUPPORT DELIVERY ON THESE COMMITMENTS
We will strengthen the capacity of the African Union Commission to help it fulfil the growing roles and mandates that we have ascribed through this Declaration, as well as other relevant previous Declarations and Decisions; and to this end we invite the Chairperson of the Commission to submit a proposal with a view to enhancing the institutional capacity of the lead Department as well as other relevant units, for consideration and approval by the July 2015 Ordinary Session of the Executive Council.
IX. A CALL FOR ACTION
We commit to an expedient process of translation of these economic, transformational commitments into results; and to this end, we call upon:
a) The AUC to work closely with Member States and RECs to enhance the implementation of the call to action, and to develop an implementation strategy and roadmap to facilitate translation of the seven (7) aspirations of Agenda 2063’s vision and goals of the African Women’s Decade (2010-2020) and the Addis Ababa Declaration on Accelerating the Implementation of the Beijing Platform for Action – Towards a Transformational Change for Women and Girls in Africa (Beijing+20), and the Communiqué of the Stakeholders’ Consultation on AU 2015 Theme “Year of Women’s Empowerment and Development Towards Africa’s Agenda 2063” as well as the Johannesburg Declaration and Call for Action on Financial Inclusion of Women in Agribusiness adopted by the Ministers responsible for Gender and Women Affairs on 12 June 2015;
b) AU Member States to review and evaluate the implementation of the call to action every 2 years and to link it to other reporting mechanisms.
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tralac’s Daily News selection: 25 June 2015
The selection: Thursday, 25 June
UNCTAD’s Trade and Development Board (Africa) is in session in Geneva: the documentation [Profiled paper: Revisiting debt sustainability in Africa]
18th ACP Ministerial Trade Committee: opening speech by Dr. Patrick I. Gomes
The objective of the next, 13th Meeting of the JMTC, which will take place on Friday afternoon, is first and foremost, to address issues related to ACP-EU trade relations. These include progress on the negotiations and implementation of Economic Partnership Agreements (EPAs), as well as other pertinent issues arising from the current ACP-EU trade arrangements.
The Senior Officials received reports from all the regional EPA configurations on the progress made in the negotiations as well as the implementation by the Caribbean and those countries in the Pacific and Eastern and Southern Africa (ESA) that are implementing interim EPAs
A more serious development relates to the rise of the so-called mega regional trading arrangements. The negotiations between the EU and United States of the Transatlantic Trade and Investment Partnership is causing consternation to the ACP Group. We believe that if agreed, TTIP will have the effect of trade diversion resulting from removal of market entry barriers among the Parties at the expense of previous suppliers from third countries. ACP States will no doubt be affected.
Global trade, in graphics (The Economist)
Foreign direct investment inflows to Africa remained stable in 2014, UN Report says
Foreign direct investment inflows to Africa as a whole remained stable at $54 billion in 2014, with decreases in North Africa being offset by rises in Sub-Saharan Africa, UNCTAD’s World Investment Report 2015 has revealed.
North Africa saw its FDI flows decline by 15 per cent to $11.5 billion.
FDI flows to West Africa declined by 10 per cent to $12.8 billion.
East Africa saw its FDI flows increasing by 11 per cent to $6.8 billion.
Central Africa received $12.1 billion of FDI in 2014, up 33 per cent from 2013.
Southern Africa received $10.8 billion of FDI in 2014, down 2.4 per cent from 2013.
[Download Chapter II - Africa and Landlocked Developing Countries]
World Investment Report 2015 (UNCTAD)
The number of new international investment agreements continued to slow down in 2014, following a steady trend since the end of the 1990s. The report also reviews international investment agreements concluded in 2014 and finds that they include provisions geared towards safeguarding the right to regulate for the public interest, including for sustainable development objectives. Also, the report reveals that in 2014, investors initiated 42 known investor-State dispute settlement cases pursuant to international investment agreements (figure 3), representing an important drop from the level initiated in the three previous years and more on a par with the average number of disputes in the years 2003-2009. [Downloads]
Tanzania: Gas boom spurs Dar to EA ‘first’ (Daily News)
Huge natural gas discoveries in Tanzania have enabled the nation to record an increment of 14.5% in Foreign Direct Investment inflows, making the country the leader in attracting investments in the EAC.
World trade registers modest growth in first quarter of 2015 (WTO)
The volume of world merchandise trade increased modestly in the first quarter of 2015, with growth in both exports and imports registering slower growth than over the previous six months. According to preliminary estimates issued on 24 June by the WTO and the United Nations Conference on Trade and Development (UNCTAD), world trade as measured by the average of exports and imports grew 0.7 per cent in the first three months of 2015, based on seasonally adjusted data.
US goods inflow to sub-Saharan Africa rises by 6% in 2014 (World Stage)
Trade volume between the United States and the sub-Saharan Africa increased by 6% to a record $25.4 billion in 2014, according to US Assistant Secretary of Commerce for Global Markets, Arun Kumar. On the barriers to trading, Kumar said, "you know in Africa we find two or three major areas to focus on. One is creating regional integration. We believe that the more regional integration that occurs, the better it is going to be for all the countries in the region as well as for the U.S. trade with Africa. Second would be infrastructure, which is both hard and soft."
South Africa: Full Quarterly Bulletin (SA Reserve Bank)
Despite the moderation in global economic growth, the volume of South African exports advanced further in the first quarter of 2015, albeit at a somewhat slower pace than previously. The value of exports, however, was weighed down by a significant deterioration in the prices of South African export commodities. Growth in import volumes accelerated in the first quarter of 2015. As a result of these developments and a simultaneous smaller shortfall on the services, income and current transfer account, the deficit on the current account of South Africa’s balance of payments decreased slightly to 4,8 per cent of gross domestic product in the first quarter of 2015. The deficit was financed by inflows of portfolio and other investment capital as direct investment registered a net outflow over the period.
Hillary Joffe: ‘How investors are deserting South Africa’ (RDM)
Namibia: Regional cooperation on exchange control policies – what is it all about? (New Era)
The exchange control measures in Namibia are based on the Currency and Exchanges Act and on the Exchange Control Regulations. However, other legislation such as the Investment Act that is currently being finalised by the Ministry of Industrialisation, Trade and SME Development will also have an impact on fund transfers if certain requirements for these transfers are stipulated. [The author, Festus Nghifenwa, is the SADC FIP Implementation Coordinator at the Ministry of Finance, Namibia]
Zimbabwe: Competitiveness Bill approved (The Herald)
Cabinet has approved principles of the National Competitiveness Bill and the draft document for the new legislation will be presented to the Attorney-General’s Office next week, Industry and Commerce Minister Mike Bimha has said. Presenting his official opening speech at the Zimbabwe National Chamber of Commerce annual congress, Minister Bimha said several initiatives were underway to improve the competitiveness of local producers, retailers and the general domestic economy.
SA deports 800 more Zimbabweans (The Herald)
The second batch of 800 Zimbabweans deported from South Africa is expected to arrive in the country by train tomorrow morning, an official has said. The deportees were rounded up for violating South Africa’s immigration laws. The first group of 796 (all male) arrived in the country via Beitbridge Border Post on June 3. This brings to 8 750 the total number of people who have been deported from South Africa since the beginning of the year.
New campaign to boost tax compliance in Africa (New Times)
A new campaign to stop Africa from ‘bleeding’ is to be launched today in Nairobi by the Tax Justice Network-Africa (TJN-A), a coalition of researchers and activists focused on the harmful impacts of tax avoidance, tax competition and tax havens. The launch was preceded by a two-day training of journalists from over 10 countries in the Eastern and Southern African region on tax, illicit financial flows and domestic resource mobilisation.
Alvin Mosioma: 'Tax incentives denying Kenya money it needs to improve livelihoods' (Business Daily)
Many studies, including those by the African Department of the International Monetary Fund (IMF), focusing on East Africa, have found that “investment incentives — particularly tax incentives — are not an important factor in attracting foreign investment”. A separate study recently found that foreign companies mainly invest in Kenya for access to local and regional markets, political and economic stability and favourable bilateral trade agreements. Only one per cent of the firms surveyed mentioned fiscal concessions offered to those operating in the EPZs as reason for setting shop in Kenya. They are an expense the country can do without. [The author is executive director of Tax Justice Network-Africa]
Kigali: Scrap trade barriers on agric products, experts say (New Times)
Member states of the Common Market for Eastern and Southern Africa must expedite the removal of all barriers hindering trade of agricultural produce within the region. Thierry Mutombo Kalonji, COMESA’s director of investment promotion and private sector development, said this yesterday during the closing ceremony of a three day sanitary and phytosanitary (SPS) strategy workshop in Kigali.
Abuja: Agriculture should be driven by standards – ARSO (Leadership)
As the African Organisation for Standardisation Presidents’ Forum drew to a close yesterday, participants have suggested that the Afrifood system should be driven by standards, hence the need for standards bodies to strengthen the continent’s agriculture value chains. Commenting on the theme of the conference, “The Role of Standards in Promoting Sustainable Agriculture and Food Security in Africa,” they stated that Africa was yet to meet its ever rising demand for food products due to poor conformity assessment which has made it lag behind in the agro-world stage even though it remains a primary producer of cash crops and raw materials.
India-Africa Summit: Special envoys to invite heads of government (Business Standard)
With just four months left, preparations are in top gear for one of India's most ambitious diplomatic engagement to date - the Third India-Africa Forum Summit (IAFS) here in October that is likely to see the heads of all the 54 countries of the African Union attending with their entourages. In early July, a dozen "special envoys" will take off for Africa to extend an invite to each of the 54 African heads of state or government for the October 26-30 event, with the actual summit being held on October 29.
With TPA in hand the US seeks to push Vietnam to reduce reliance on Chinese fabric (Vietnam Briefing)
The United States Senate has recently passed a Trade Promotion Authority (TPA) bill that will greatly expand President Obama’s trade negotiating authority on trade agreements such as the Trans-Pacific Partnership (TPP). The TPA, also referred to as “fast-track”, will allow the President to negotiate free trade agreements and then submit them to Congress with no amendments or filibusters allowed, with only an up or down vote on the entirety of the trade deal. It is hoped that this measure will speed up the progress of the TPP. Despite this progress, potential stumbling blocks remain, chief among these is the debate over rules of origin, particularly as relates to China. American trade negotiators are currently pushing Vietnam to drastically reduce its imports of textiles from China (which is not a part of the TPP).
Uncertain future for global diamond trade as profits vanish (Reuters)
Drought resilience and sustainable livelihoods programme in the Horn of Africa - Djibouti, Sudan (AfDB)
SADC law on child marriages on cards (New Era)
Home Affairs refutes tourism drop claims (Business Day)
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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AU Declaration on the Launch of the Negotiations for the Establishment of the Continental Free Trade Area (CFTA)
We, the Heads of State and Government of the African Union, meeting at the 25th Ordinary Session of our Assembly in Johannesburg, South Africa, from 14 to 15 June 2015;
Recalling our Assembly Decision (Assembly/AU/Dec.394 (XVIII)) adopted in January 2012 Summit on the establishment of the Continental Free Trade Area to be operationalized by an indicative date of 2017;
Also Recalling our Assembly Decision (Assembly/AU/11(XXIV)) of January 2015 reaffirming our commitment to launch the CFTA Negotiations in June 2015.
Reaffirming our commitment to increase intra-African trade through the establishment of a CFTA that will foster economic growth, equitable development, and support integration through trade liberalization, industrialization and infrastructure development towards the full implementation of the Abuja Treaty Establishing the African Economic Community;
Emphasizing the importance of building the CFTA on existing regional free trade areas in order to broaden and deepen continental integration;
Reiterating that the establishment of a functional CFTA that integrates African economies is a fundamental milestone in the implementation of Agenda 2063 and the Common African Position on the Post-2015 Development Agenda will play a major role in fostering the structural transformation of the Continent;
Reiterating the importance of implementing the Action Plan on Boosting Intra African Trade (BIAT) prioritising work on industrialisation, infrastructure development and free movement of people to ensure maximisation of benefits of establishing the CFTA;
Noting the importance of relevant flanking policies and reforms at the continental, regional and national levels to maximise the benefits of establishing the continental free trade area;
Recognizing the need for technical assistance in order to facilitate the effective participation of all Member States in the entire process leading to the establishment of the CFTA;
Aware of the importance of constructive participation of the private sector, parliamentarians and other relevant stakeholders in the CFTA Negotiations through appropriate mechanisms;
Taking Note of the Report the AU Ministers of Trade Meeting that was held in Addis Ababa, Ethiopia on 14-15 May 2015;
Now therefore,
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LAUNCH negotiations for the establishment of the Continental Free Trade Area aimed at integrating Africa’s markets in line with the objectives and principles enunciated in the Abuja Treaty Establishing the African Economic Community;
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URGE all Regional Economic Communities and Member States to participate effectively in the CFTA negotiations;
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CALL UPON the Commission, United Nations Economic Commission for Africa, African Development Bank, African Export-Import Bank (Afreximbank) and other development partners to provide analytical support, technical assistance and to carry out a comprehensive capacity building program targeted at Member States and RECS in order to strengthen their capacity to effectively engage in the negotiations;
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COMMEND the Commission and the Continental Task Force on the CFTA for the work done in preparation for the launch of the CFTA negotiations.
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Measures to promote foreign direct investment increased in 2014, UNCTAD Report says
An increase in measures taken by Governments to liberalize foreign direct investment, combined with a fall in restrictions, led to enhanced conditions for foreign direct investment promotion in 2014 according to the UNCTAD World Investment Report 2015.
Thirty-seven countries and economies adopted at least 63 policy measures – of these, 47 were related to liberalization, promotion and facilitation of investment while just 9 introduced new restrictions or regulations on investment (mostly related to national security concerns and strategic industries). The share of liberalization and promotion increased from 73 per cent in 2013 to 84 per cent in 2014 (figure 1).
“In 2014, more than 80 per cent of investment policy measures were aimed at improving entry conditions and reducing restrictions, with the focus on investment facilitation and sector-specific liberalization,” UNCTAD Secretary-General Mukhisa Kituyi said. “However, UNCTAD notes that relatively few measures – 8 per cent since 2010 – were specifically targeted at increasing private sector participation in key sustainable development sectors such as infrastructure, health, education and climate change mitigation.”
Developing countries were particularly active as regards investment liberalization. For example, Ethiopia opened the electricity generation and distribution sector to private investment, India liberalized foreign investment in railway infrastructure and raised the foreign direct investment cap in the defence sector, and Indonesia increased the foreign investment cap in several industries including for pharmaceuticals, venture capital operations and power plant projects. As regards new investment restrictions or regulations, for example, France, Italy and the Russian Federation amended their security-related review mechanisms.
With the addition of 31 international investment agreements in 2014, the international investment agreement regime comprised a total of 3,267 treaties of which 2,923 were bilateral investment treaties and 345 were other types of international investment agreements (figure 2).
The number of new international investment agreements continued to slow down in 2014, following a steady trend since the end of the 1990s. The report also reviews international investment agreements concluded in 2014 and finds that they include provisions geared towards safeguarding the right to regulate for the public interest, including for sustainable development objectives. For example, the new agreements tend to incorporate general exceptions, clarifications to key protection standards, clauses that explicitly recognize that the parties should not relax health, safety or environmental standards in order to attract investment, limits on the scope of treaties and carefully crafted investor-State dispute settlement provisions. All these provisions are important elements in the current debate over international investment agreement reform.
Also, the report reveals that in 2014, investors initiated 42 known investor-State dispute settlement cases pursuant to international investment agreements (figure 3), representing an important drop from the level initiated in the three previous years and more on a par with the average number of disputes in the years 2003-2009. In 2014, investors challenged, among other things, government measures in utilities, energy and renewables such as the revocation of licences for the supply of electricity and gas, the regulation of energy and water tariffs, and the cancellation of investment incentives schemes in solar energy.
World Investment Report 2015: Reforming International Investment Governance
This year’s World Investment Report, the 25th in the series, aims to inform global debates on the future of the international policy environment for cross-border investment.
Following recent lackluster growth in the global economy, this year’s Report shows that Foreign Direct Investment (FDI) inflows in 2014 declined 16 per cent to $1.2 trillion. However, recovery is in sight in 2015 and beyond. FDI flows today account for more than 40 per cent of external development finance to developing and transition economies.
This year’s Report is particularly timely in light of the Third International Conference on Financing for Development in Addis Ababa – and the many vital discussions underscoring the importance of FDI, international investment policy making and fiscal regimes to the implementation of the new development agenda and progress towards the future sustainable development goals.
The World Investment Report tackles the key challenges in international investment protection and promotion, including the right to regulate, investor-state dispute settlement, and investor responsibility. Furthermore, it examines the fiscal treatment of international investment, including contributions of multinational corporations in developing countries, fiscal leakage through tax avoidance, and the role of offshore investment links.
The Report offers a menu of options for the reform of the international investment treaties regime, together with a roadmap to guide policymakers at the national, bilateral, regional and multilateral levels. It also proposes a set of principles and guidelines to ensure coherence between international tax and investment policies.
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Foreign direct investment inflows to Africa remained stable in 2014, UN Report says
Foreign direct investment (FDI) inflows to Africa as a whole remained stable at $54 billion in 2014, with decreases in North Africa being offset by rises in Sub-Saharan Africa, UNCTAD’s World Investment Report 2015 has revealed.
North Africa saw its FDI flows decline by 15 per cent to $11.5 billion. FDI fell overall in the region because of tension and conflict in some countries, despite significant inflows to others. FDI into Egypt grew by 14 per cent to $4.8 billion, and flows into Morocco by 9 per cent to $3.6 billion.
In Sub-Saharan Africa, where investments from abroad rose by 5 per cent, there is variance by sub-region. FDI flows to West Africa declined by 10 per cent to $12.8 billion, as the Ebola outbreak, security issues and falling commodity prices negatively affected several countries.
East Africa saw its FDI flows increasing by 11 per cent to $6.8 billion. FDI rose in the gas sector in the United Republic of Tanzania, and Ethiopia is becoming a hub for multinational enterprises producing garments and textiles.
Central Africa received $12.1 billion of FDI in 2014, up 33 per cent from 2013. FDI inflows to the Republic of the Congo almost doubled, reaching $5.5 billion so that it became the second largest recipient country in Africa (Figure 1) with foreign investors undeterred despite falling commodity prices. The Democratic Republic of the Congo continued to attract notable flows.
Southern Africa received $10.8 billion of FDI in 2014, down 2.4 per cent from 2013. While South Africa remained the country that receives the most foreign investment in the region as well as on the continent ($5.7 billion, down 31 per cent from 2013), Mozambique – the recipient of the third largest amount of FDI in Africa – also played a significant role in attracting $4.9 billion.
Foreign investment into Africa is increasingly being made by developing-country multinational enterprises, such as firms from China and India. Meanwhile, a number of firms from developed countries (in particular France, the United States and the United Kingdom) were large net divestors from Africa during 2014. Demand from developing-economy investors for these divested assets was significant. As a result, African mergers and acquisitions increased by 32 per cent from $3.8 billion in 2013 to $5.1 billion in 2014, especially in the finance and oil and gas sectors.
Services account for the largest portion of Africa’s stock of inward FDI, although the share is lower than in other regions, and concentrated in a relatively small number of countries, including Morocco, Nigeria and South Africa. Services FDI nonetheless accounted for 48 per cent of Africa’s total stock of FDI, more than twice the share of manufacturing (21 per cent) and significantly more than the primary sector (31 per cent) (Figure 2).
Finance accounts for the largest portion of Africa’s stock of services FDI; by 2012 more than half of Africa’s services FDI stock was held in finance (56 per cent), followed by transport, storage and communications (21 per cent) and business activities (9 per cent).
FDI into infrastructure and other services is becoming increasingly important. The stock of FDI into the transport, storage and communications industries grew more than four-fold between 2001 and 2012, from $8 billion to $34 billion. Although FDI accounts for a small portion of total infrastructure financing and development in Africa because of the wide use of non-equity modes of operation by multinational enterprises, FDI is increasingly visible in, for instance, the growing information and communications technology network as investors look to capture expanding consumer markets.
FDI in services is important in supporting the participation of African economies in global value chains, as an increasing part of value added in trade consists of services. It is also important in the context of financing progress towards the sustainable development goals.
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World trade registers modest growth in first quarter of 2015
The volume of world merchandise trade increased modestly in the first quarter of 2015, with growth in both exports and imports registering slower growth than over the previous six months. According to preliminary estimates issued on 24 June by the WTO and the United Nations Conference on Trade and Development (UNCTAD), world trade as measured by the average of exports and imports grew 0.7 per cent in the first three months of 2015, based on seasonally adjusted data.
World exports increased by 0.4 per cent in the first quarter of this year, down from the 2.1 per cent growth registered in the previous quarter. Imports grew by 0.9 per cent in the same period, down from 1.5 per cent in the previous quarter.
Exports from developing and emerging economies rose 1.5 per cent in the first quarter, with all regions except Asia registering growth of 3 per cent or greater. In contrast, exports from developed countries fell by 0.5 per cent in the same period, with US exports decelerating by 4.5 per cent.
Developing and emerging economies increased their imports by 0.6 per cent in the first quarter, with South and Central America and the Caribbean registering strong import growth at 6.8 per cent. Developed economies increased their imports by 1.3 per cent, led by stronger import growth in Europe and North America.
The quarterly merchandise trade volume indices are published simultaneously by both the WTO and UNCTAD at the WTO Statistics Web Portal and UNCTADStat.
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18th ACP Ministerial Trade Committee: Opening statement by ACP Secretary General Dr. Patrick Gomes
Opening statement of the ACP Secretary General at the 18th ACP Ministerial Trade Committee, 24 June 2015, Brussels
It gives me great pleasure to welcome you all to ACP House, your house.
I am particularly pleased that many Ministers responsible for trade issues coming from as far as the Pacific, the Caribbean and different parts of Africa have been able to come to Brussels to participate in the two meetings that are ahead of us – namely the 18th ACP Ministerial and the 13th Joint ACP-EU Ministerial Trade Committee. You have made it here despite your busy schedules, and for some, very difficult travel connections.
Your presence here is clear testimony to the seriousness and importance that your countries attach to ACP. For this, I want to assure you of my own and the Secretariat’s continued commitment, to serve you diligently, so that the partnership amongst our States and the agreement between the ACP and the EU, and with other partners, will effectively serve the interests of our countries for the benefit of the ACP peoples.
I extend a special welcome to two distinguished guests, Dr Mukhisa KITUYI – Secretary-General of UNCTAD and Dr Kunio MIKURIYA – Secretary-General of the World Customs Organization, who have accepted our invitation to grace this occasion and exchange views on important topical trade issues with our gathering.
A key objective of your meeting here today and tomorrow is to prepare for an engagement with our European Partners. Article 38 of the Cotonou Partnership Agreement establishes the ACP-EU Joint Ministerial Trade Committee (JMTC) and provides for it to meet at least once a year. Unfortunately, the Committee did not meet last year owing to changes that were taking place within the entire European Union leadership, namely the European Commission, the European Parliament and the European Council. The European side requested that the meeting be postponed until this year.
When the Cotonou Agreement was revised for the second time in 2010, it enhanced the mandate of the JMTC to enable it to address any trade related issues of concern or interest to the ACP States, including, most importantly, the monitoring of Economic Partnership Agreements (EPAs). The ACP-EU consultation process was clearly defined, with the JMTC having a key role in addressing or resolving difficult issues.
One of the difficult issues that has recently arisen is the publication of a Communication by the European Commission on a “Fair and Efficient Corporate Tax System in the European Union” which has listed 30 countries purported to be non-cooperative tax jurisdictions. Of these, 15 Island states, some of them ACP States have been blacklisted. These countries were not consulted ahead of the publication of the list by the European Commission. There is no doubt that such publication will cause damage to the financial sectors of these ACP States, most of which are service- dependent economies. This is a serious issue and there is need for appropriate consultations on this subject with our European Partners. Ministers, you will address this very seriously in your meeting tomorrow.
The objective of the next, 13th Meeting of the JMTC, which will take place on Friday afternoon, is first and foremost, to address issues related to ACP-EU trade relations. These include progress on the negotiations and implementation of Economic Partnership Agreements (EPAs), as well as other pertinent issues arising from the current ACP-EU trade arrangements. As we move ahead with EPA negotiations for the remaining ACP States and regions, and as 49 of our states start or continue to implement the EPAs, the importance of the present meeting of the JMTC cannot be over-emphasized.
Ministers will also be called upon to address the issues before the multilateral trading system of the World Trade Organization. The preparations for the Tenth WTO Ministerial Conference that will be held in Nairobi, Kenya in December this year will feature prominently in the discussions. We are proud that for the first time in the history of the WTO, the meeting will take place in an ACP State. We congratulate Kenya on its hosting of this important event and encourage all ACP States that are Members and Observers to the WTO to attend the Conference and make it a great success.
The Senior Trade Officials who have met here for the last three days have worked most efficiently to prepare for your meeting.
The Senior Officials received reports from all the regional EPA configurations on the progress made in the negotiations as well as the implementation by the Caribbean and those countries in the Pacific and Eastern and Southern Africa (ESA) that are implementing interim EPAs. I am happy to learn and report that interesting progress has been recorded.
Reports from the various regional configurations are in the draft report. Specific attention was drawn to the fact that the European Commission has proposed to the Pacific region to carry out reforms to its fisheries management systems as a prelude to completion of the negotiations for a comprehensive EPA. Aware of the demand for its fisheries resources and the need for their sustainability, the region does not believe the 3-year suspension of negotiations is acceptable. We support the Pacific region which is keen to resume negotiations as soon as possible.
Another subject Ministers will consider and later discuss with the EU side touches on EC’s negotiation with third countries. The ACP States’ major concern has been the fact that preferences granted under the Economic Partnership Agreements are being continually eroded by the conclusion of free trade agreements with third countries. It will soon reach a point where tariff advantages under the EPAs are completely wiped out because of concessions granted to third parties.
A more serious development relates to the rise of the so-called mega regional trading arrangements. The negotiations between the European Union and United States of the Transatlantic Trade and Investment Partnership (TTIP) is causing consternation to the ACP Group.
We believe that if agreed, TTIP will have the effect of trade diversion resulting from removal of market entry barriers among the Parties at the expense of previous suppliers from third countries. ACP States will no doubt be affected. Furthermore, the challenges of complying with the higher standards that will be harmonized between the EU and the US will increase. The likelihood of these mega RTAs undermining the multilateral process in the World Trade Organization cannot be underestimated. Therefore, the ACP Group needs to keep a close watch on developments in these negotiations. If outcomes tend to negatively affect our countries, we will respond and engage with the European Union in accordance with the relevant provisions of our Partnership Agreement.
The ACP has recently witnessed positive developments in relation to regional integration. The launch of the Tripartite Free Trade Area in Sharm el Sheik, Egypt on 10 June 2015 by the Heads of State and Government of member countries of COMESA, SADC and EAC, and the launch of the negotiations of the Continental Free Trade Area by the African Union Summit in Johannesburg on 15 June 2015, are welcome events. We believe that the time is now ripe to engage in concerted efforts to prepare for an all-ACP trade framework that has so far eluded us. I will aim to pursue this agenda with vigour with a view to enhancing intra-ACP trade and economic relations. This will be done in parallel with our new direction of fostering south-south cooperation in trade and investment. The timely report of UNCTAD is a significant resource in this regard.
Another key issue before Ministers relates to the adoption of the Draft Agreement on Customs Cooperation to facilitate cumulation in the rules of origin. At its 101st Session that concluded on 29 May 2015, the ACP Council of Ministers mandated your Committee to finalize the consideration of the Draft Agreement. I am happy to report that after taking and incorporating views from nearly all the EPA regions, there was consensus at the Senior Officials meeting that the Draft Agreement should now be adopted. It will be placed before you for consideration.
Other issues brought to your consideration relate to Non-Tariff Measures, rules of origin, utilization of the EU Generalised Scheme of Preferences, including Sanitary and Phytosanitary measures as well as commodities. Support in the area of trade related capacity building will also be discussed.
On all these topics, the Senior Officials report is rich with recommendations which you will be invited to deliberate on and come up with appropriate recommendations.
I would like to conclude with the call that the Ministerial Trade Committee platform be reinstated as an ACP framework for dialogue which helps us to identify the necessary areas for action and the allies needed to achieve the objectives we set for ourselves for trade and development.
Thank you for your kind attention.
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UNCTAD Trade and Development Board: 61st Executive Session (Africa)
The UNCTAD Trade and Development Board is holding its 61st Executive Session (Africa) from 24-26 June 2015 in Geneva. Key issues on the agenda include:
Activities undertaken by UNCTAD in support of Africa
A report on UNCTAD’s activities in support of Africa is prepared every year and presented to an executive session of the Trade and Development Board. The report provides an overview of research and analysis being undertaken by UNCTAD with regard to African development, as well as a summary of specific activities, including advisory services and technical cooperation, in each sector that falls under UNCTAD’s mandate.
Revisiting debt sustainability in Africa
The theme of the executive session is particularly important, given that the sovereign debt of several African countries has increased in recent years and is becoming a source of concern to policymakers, analysts and multilateral financial institutions.
While the continent’s current debt ratios are manageable, the fact that debt levels are growing rapidly in several countries is worrisome and requires action to avoid a repeat of the African debt crisis of the 1980s.
Against a backdrop of falling commodity prices, a resurgent dollar and forecasts of higher global interest rates, the dangers of a new debt trap in Africa should not be ignored.
It is UNCTAD’s contention that there are important lessons to be learned for African Governments in trying to balance the competing objectives of financing development spending and avoiding a new round of debt crises.
The main role of the panel will be to lay the ground for a broader discussion by participants on revisiting debt sustainability in Africa.
Questions to be addressed:
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How should African countries balance the competing objectives of financing development spending and avoiding a new round of debt crises?
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What lessons from Africa’s past debt crises are of relevance to the current context?
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What specific measures as part of the financing for development agenda to enhance debt sustainability should Africa and the international community adopt?
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Given the changing composition of debt, what should African Governments, multilateral development banks and development partners do to avert the risk of another debt crisis?
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tralac’s Daily News selection: 24 June 2015
The selection: Wednesday, 24 June
Featured tweets, @DonatBagula: 4 member states - Djibouti, Ethiopia, Sudan, South Sudan - to establish the corridor management institution; Delighted to notice that Northern Corridor agreement is used as benchmark
TFTA Legal Texts and Policy Documents: documents from the Summit and the text of the final TFTA Agreement are now available in the four official languages - English, Arabic, French and Portuguese
Tripartite has secured $4.5m for infrastructure (COMESA)
The COMESA-EAC-SADC Tripartite has secured an USD 4.5m grant from the NEPAD – Infrastructure Project Preparation Facility. Out of this facility, USD 1.7m will go to Botswana to implement infrastructure projects that will strengthen trade between COMESA and SADC. Secretary General of COMESA Sindiso Ngwenya said the COMESA-EAC-SADC Tripartite Project Preparation and Implementation Unit (PPIU) hosted in the COMESA Secretariat was collaborating with Ministry of Transport and Communications in Botswana for the improvements of two roads sections on the North South Corridor that will further strengthen the trade exchange between Tripartite RECs and Botswana.
COMESA immigration chiefs meet (COMESA)
Heads of Immigration from COMESA Member States are meeting in Lusaka today for a two day meeting to address the implementation of the COMESA Protocol on free movement of people and the right to establishment. This is their ninth meeting and will focus on three things and consider a report of a Task force that conducted a study on the implementation of the protocol in eight selected countries in the region. "Whereas many countries have signed and ratified Free Trade Area for goods, they have not done the same for the movement of business people who are the owners of these goods," Mr Ngwenya noted.
Industrialists in Mombasa seek access to new regional market (Coast Week)
Kenya’s manufacturers have called for the opening up of markets as industry consolidates its market position as a leading industrial hub in East Africa. Kenya Association of Manufacturers (KAM) CEO Designate Phyllis Wakiaga said international trade plays a great role in growing the manufacturing sector and the economy as a whole, and needs to be increased. "The trend on Kenya’s export in the EAC market and in the region is mainly attributed to various trade hindrances, such as charging full Common External Tariff duty rates by customs authorities from other Partner States and various Non Tariff Barriers," Wakiaga said. Over the last two years, statistics from the Kenya National Bureau of Statistics have shown that Kenya’s exports to the region have been declining by about 7%.
South Africa: Impact of the new immigration regulations on the travel and tourism industry (Tourism Business Council)
In 2014, South Africa's tourism industry lost direct spend of R886 million due to the changed immigration regulations. This spend figure only includes what the tourists would have spent whilst in South Africa and excludes spend in the generating country before departure. The total direct, indirect and induced impact on the South African economy in 2014 was a negative R2,6 billion and a potential loss of more than 5 800 jobs. In 2015, the number of lost foreign tourists due to changes in the immigration regulations is likely to increase to 100 000, with a direct tourism spend of R1,4 billion and the total net loss to the South African GDP of around R4,1 billion and a loss of 9 300 jobs.
South Africa tourism eyes East Africa market (Daily Monitor)
Number of Chinese visitors increases (The Namibian)
The Namibia Tourism Board said the number of Chinese tourists who visited Namibia has increased from 9 910 in 2013 to 11 583 in 2014.
Chinese airline to launch Nairobi route (The Standard)
Kenya: US visa applicants hit by delays over biometric data hitch (Business Daily)
Draft laws to boost aviation, says lobby (Daily Nation)
Africa has been urged to learn from the mistakes made by the European Union and the US in terms of aviation laws that curtailed, instead of boosting, the sector. This, an official has said, can be achieved by developing smarter regulation using best practice principles such as full consultation, consideration of unintended consequences, and a proportional approach. Speaking at an aviation day ceremony in Nairobi, Iata Director General Tony Tyler regretted that there were some instances when African countries have not been following smarter regulation principles.
Key statistics and trends in trade policy 2014 (UNCTAD)
International trade is increasingly regulated and influenced by a wide array of policies and instruments reaching beyond tariffs. As of 2013, technical measures and requirements regulate about two-thirds of world trade, while various forms of sanitary and phytosanitary measures (SPS) are applied to almost the totality of agricultural trade. Non-technical measures such as quantity and price measures still affect almost 30 per cent of trade flows, often in economic sectors of importance for developing countries. The past few years have also seen an increase in the use of trade defence measures within the WTO framework.
External evaluation of UNCTAD Peer Reviews on Competition Policy
Six countries were chosen for in-depth study. These are: Serbia, Nicaragua, Indonesia and the three countries in Africa under the tripartite review, namely Tanzania, Zambia and Zimbabwe. [UNCTAD peer review mechanism for competition law: 10 years of existence]
Currency deal to drive trade (Southern Times)
The business community at the once thriving northern border town of Oshikango says the currency exchange agreement between Angola and Namibia is a welcome relief, which is likely to rescue their businesses that had been teetering on the brink of collapse during the past six months. But they remain unsure about how the Currency Conversion Agreement is going to be implemented in the long run from its inception on Thursday.
Tanzania, Zambia sign key road transport agreement (Daily News)
Tanzania and Zambia have signed bilateral agreements on road transport services aimed at promoting trade between the two countries by removing non-tariff barriers to trade. Tanzania's Minister for Finance, Ms Saada Mkuya Salum and Zambia Minister for Transport, Works, Supply and Communications, Mr Yamfwa Mukanga, signed here a bilateral agreement on regulation of cross border trade and another on passengers road transport. The agreements would also put in a mechanism for promoting acceptance of harmonised vehicle and driver qualification standards and road traffic safety and improving the efficiency of permit issuance, border control procedures and operation and maintenance of transport and trade data bases.
Tanzania: Govt set to reopen blocked wildlife corridors, inks USD14 million pact (The Citizen)
Kenya: How cargo clearance will change from July 1 (Business Daily)
After nearly five years of planning, the Kenya Tradenet System, the electronic platform for lodging trade documents and making payments becomes fully operational next Wednesday. The system that is in use in Singapore, Korea, Malaysia, Mauritius, Tunisia and Ghana is expected to boost transparency in cargo clearance, and at the same time improve revenue collection. KenTrade, an agency formed in 2011 to implement the system, says cross-border trade is headed for a radical shift. Sandra Chao-Blasto talked to KenTrade acting chief executive Amos Wangora on uptake of the electronic system and its benefits.
South Africa: concluding statement of an IMF Staff Visit (IMF)
The structural primary balance is projected to improve by 1% of GDP over three years. This, coupled with GDP rebasing, a better-than-anticipated FY14/15 outcome, and lower budgeted transfers to the Southern African Customs Union (SACU) countries, should stabilize debt at about 50% of GDP by FY19/20 (lower than the 56% of GDP projected in the 2014 Article IV and close to the 2015 Budget). But the planned sharp deceleration in spending growth in FY16/17 and the use of the contingency reserve to accommodate higher public wages makes achieving the authorities’ targets a tall order.
Namibia, De Beers ready to sign new diamond deal (The Namibian)
The government and De Beers are ready to sign a new sales agreement, President Hage Geingob and CEO of De Beers Group, Philippe Mellier said yesterday. Geingob said the government was 'happy' with its relationship with De Beers but refused to say when the two parties will sign the agreement. Mellier said the current diamond deal was 'working well' for both parties. “We have dozens of years of production left at sea,” he said on marine-based operations in the Atlantic Ocean. “It's a good business for all of us,” he added. By his estimation, marine diamond mining could last for up to 50 years.
Nigeria eyes over $25.5bn revenue from industrial revolution plan (StarAfrica)
The Permanent Secretary in Nigeria’s Federal Ministry of Industry, Trade and Investment, Abdulkadir Musa, has said that the Nigeria’s Industrial Revolution Plan (NIRP) is targeting to generate about N5 trillion (about $25.5bn) as revenue from the manufacturing sector over the next three to five years. Speaking at the Chief Executive Officers’ Roundtable of the African Organisation for Standardisation (ARSO) President’s Forum in Abuja on Monday, Musa explained that NIRP was the Federal Government’s strategy for meeting the emergent challenge of unemployment as well as a roadmap for Nigeria’s real sector industrialisation.
SON, ARSO and African trade facilitation (ThisDay)
Zimbabwe: CZI: 'Speed up business corrective measures' (The Herald)
Western Cape trade mission to strengthen ties with Ghana (JacarandaFM)
SAA increases Maputo flights (IOL)
Kenya: Experts warn of rough times for the shilling (Daily Nation)
Tanzania: House passes Budget as shilling falls further (The Citizen)
Spanish billionaire targets West African Banks (ThisDay)
The Peace, Security and Cooperation Framework for the DRC: 'Why we need to think about peace and security' (New Times)
'Tanzania borrowing page from Ethiopia on Commodity Exchange Market' (IPPMedia)
Tanzania: World Bank mobilizes US$100 million to promote transparency and open governance reforms
Budget reform before and after the global financial crisis (OECD)
This paper aims to contribute to the reconfiguration of the budgeting reform agenda to meet the needs of the challenging post-GFC environment. To this end, it reviews major themes of the reform agenda inherited from the past and assesses their continuing relevance. It also examines some of the emerging responses to the new context in which governments and their MOFs are now operating. Selected key issues and directions for future reforms are identified. The structure of the paper is as follows:
Senator Elizabeth Warren: 'Trade agreements should not benefit industry only' (Boston Globe)
Recently Hillary Clinton joined Nancy Pelosi and many others in Congress to call on the president to reorient our trade policy so that it produces a good deal for all Americans — not just for a handful of big corporations. Here’s a realistic starting point: Fix the way we enforce trade agreements to ensure a level playing field for everyone. Many of our close allies — major trading partners like Australia, Germany, France, India, South Africa, and Brazil — are already moving in this direction. American negotiators should stop fighting those efforts and start leading them.
BRICS business forum for enhanced partnerships (Russia and India Report)
The BRICS Business Forum met for the first time as part of the 19th St. Petersburg International Economic Forum (SPIEF), in the run-up to the BRICS Summit that will take place in Ufa next month. Chaired by Sergei Katyrin, president of the Russian Chamber of Commerce and Industry, the session saw an exciting discussion on the future of BRICS as a political and economic platform, given the bloc’s rising share in the world economy. Russia’s roadmap includes 50 projects that may be implemented on a multilateral basis.
The First Inter-regional Forum of Small and Mid-Sized Businesses of the SCO and BRICS will be held at Ufa in October, 2015. The countries have agreed to create a BRICS regional Council. All institutions created within BRICS will aim to remove existing administrative barriers, including customs, registration, certification and technical regulation, insurance, visa regulations and other issues.
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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Key Statistics and Trends in Trade Policy 2014
During the last decade international trade has been characterized by a progressive shift in the use of trade policy instruments.
While tariff protection remains an important instrument only in certain sectors and/or for a limited number of countries, the use of other, non-tariff trade restrictive, measures has become more widespread. The years after the latest global economic and financial crisis have also been characterized by volatile exchange rates and episodes of competitive devaluation, which have had important repercussions on international trade flows.
As of 2013, around one-third of world trade was free under most-favoured-nation (MFN) regimes, with an additional third exempt from tariffs due to preferential access. Still, despite a significant portion of international trade being duty-free, the remaining share is often subject to substantial tariffs. Tariffs remain relatively high and tariff peaks continue to affect important sectors, including some of key interest to low income countries such as agriculture, apparel, textiles and leather products. Tariffs also remain quite restrictive for most South-South trade. Tariff escalation continues to be a common practice in many tariff regimes, with possible implications for developing countries’ value-added activities and export diversification. Moreover, the process of tariff liberalization of the last decades has considerably slowed down in the years following the economic crisis, especially on an MFN basis.
In spite of the economic crisis, the process of deeper economic integration has remained strong at a regional and bilateral level, with an increasing number of preferential trade agreements (PTAs) being negotiated and implemented, especially on a regional and North-South basis. PTAs increasingly address not only goods but also services and often deal with rules beyond reciprocal tariff concessions to cover a wide range of behind the border issues. Still, South-South economic integration remains weak and often limited to a regional scale.
One effect of the proliferation of PTAs is that they distort international competitiveness by providing different trading partners with different market access conditions. This has repercussions for many lower income countries as their preferential margins erode and their competitiveness in international markets declines. PTA commitments also add to countries' legal WTO obligations in terms of trade policy, and specifically on the ability of member countries to raise tariffs. While this may be an issue for middle and high income countries, many low income countries have retained large policy space allowing an increase in import protection, both because of large WTO tariff overhang and their limited commitments to PTAs.
International trade is increasingly regulated and influenced by a wide array of policies and instruments reaching beyond tariffs. As of 2013, technical measures and requirements regulate about two-thirds of world trade, while various forms of sanitary and phytosanitary measures (SPS) are applied to almost the totality of agricultural trade. Non-technical measures such as quantity and price measures still affect almost 30 per cent of trade flows, often in economic sectors of importance for developing countries. The past few years have also seen an increase in the use of trade defence measures within the WTO framework.
The economic turbulence of recent years has been reflected in exchange rate markets, both for developing and developed countries’ currencies. Exchange rate movements and volatility have played an important role in shaping international trade in the post crisis period, as they have influenced countries’ external competitiveness.
Some Stylized Facts:
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Although tariff liberalization has continued during the last decade, it considerably slowed down in the years after the recent world economic crisis. As of 2013, tariff restrictiveness remained relatively high in developing countries, adding about 5 per cent to the cost of traded goods. On average, developed countries maintained a more liberal tariff regimes.
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International trade occurs for the largest part duty-free; but tariffs applied to the remainder of international trade can be relatively high. Trade subject to duties still faces an average tariff of about 7 per cent in manufacturing and about 18 per cent in agriculture. In this regard, preferential access and bilateral agreements continue to provide substantial advantages, especially for agricultural market access.
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Amidst generally low tariffs, there are an significant number of product sectors where tariffs continue to be relatively high. Tariff peaks tend to be concentrated in sectors of interest to low income countries such as agriculture, but also apparel, textiles and tanning. Tariff escalation remains a feature of the tariff structure of both developed and developing countries.
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South-South trade remains subject to relatively higher tariffs, especially in the case of inter-regional trade. Owing to the fact that trade agreements are often regional, the system of preferences tends to favour intra rather than inter-regional South-South trade, sometimes quite substantially. This trend is also reflected in LDCs, with their exports often facing high tariff barriers when entering many developing country markets.
- As of 2013, there were more than 250 PTAs in force, about half of which also covered services. As a result almost half of world trade was taking place between countries that had signed a PTA and almost one-third was regulated under deep trade agreements. Still, the bulk of world trade remained between countries that were not part of a common PTA.
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The use of trade defence measures spiked in 2013 with more than 300 new investigations initiated at the WTO. Cumulatively there were about 1,500 cases for which trade defence measures were in effect in 2013.
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Trade defence measures have largely been aimed at protecting specific sectors (in particular, chemicals, basic metals and textiles, but also agriculture) against imports from selected countries, in particular China, the United States and European Union countries.
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Turbulence in currency markets increased substantially during the financial crisis of 2008 and was sustained until 2012. Only during 2013 did currency misalignments as well as short term volatility subside
The study is organized in several sections. The first part presents statistics related to tariffs. The second section illustrates selected statistics linked to preferential trade agreements. The third segment presents data on non-tariff measures, and it is followed by a section on trade defence measures. The final section presents statistics on exchange rates.
» Download: Key Statistics and Trends in Trade Policy 2014 (PDF, 6.64 MB)
Key Statistics and Trends in Trade Policy 2014 is a second annual edition of the study initiated in 2013. It is a product of the Trade Analysis Branch (TAB), Division on International Trade in Goods and Services, and Commodities (DITC), UNCTAD Secretariat. This study is part of a larger effort by UNCTAD to analyze trade-related issues of particular importance to developing countries, as requested by the Doha Mandate of UNCTAD XIII. This study was prepared by Alessandro Nicita and Alain McLaren.
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Reshaping the future of global trade for universal economic growth
Landmark events taking place this year have the potential to reshape the future of Commonwealth trade. Officials and experts will meet in South Africa to consider how international trade can be made more inclusive to support sustainable development.
The Commonwealth Trade Symposium will provide participants with a unique opportunity to share perspectives and review trade-related topics in one forum. The symposium will take place in Johannesburg, South Africa from 23-24 June 2015.
Bringing together member countries with diverse economic characteristics, the conference aims to highlight issues critical to creating a trade system that supports sustainable development. Experts will provide the latest thinking on areas such as trade challenges of developing countries, aid for trade, and engaging the private sector.
“The purpose of this conference is to support member countries to achieve their development objectives as the trade landscape evolves”, said the Commonwealth Deputy Secretary-General Deodat Maharaj.
Mr Maharaj added: “As the world is close to agreeing the new development targets, it is vital we take every opportunity to promote a global trade agenda which accelerates economic growth the world over. We believe that effective participation in global trade is an essential prerequisite for sustainable development. It is good for jobs, it is good for growth and good for our Commonwealth.”
“The Commonwealth has taken a leading role in promoting a rules-based, transparent, free and fair multilateral trading system. We will continue to strengthen the trading capacity of all our member states by supporting regional trading arrangements which complement a multilateral system and by exploring the potential of intra-Commonwealth trade.”
The year 2015 is a pivotal year for development. The global trading landscape will be transformed by a number of milestone events: the post-Bali work programme; the WTO’s 10th Ministerial Meeting; the UN adoption of the new sustainable development goals, which include targets on trade; the fifth Global Aid for Trade Review; and a new international agreement on climate change.
Global trade is increasingly characterised by global and regional production networks. Research shows that less developed countries have not been able to participate in these networks in such a way that promotes sustainable inclusive growth.
Discussions during the conference will consider how trade, a cross-cutting issue in the new development goals, can support sustainable economic growth across the Commonwealth. Participants will explore issues related to South-South trade and small states with a view to increasing participation of the South in emerging and evolving production networks.
Commonwealth Heads of Government issued a stand-alone statement on trade at their last meeting in 2013, the Kotte Statement on International Trade and Investment. They reaffirmed their commitment to a fair and transparent multilateral system while taking into account the requirements of capacity-constrained countries such as small states, least developed countries and Sub-Saharan Africa.
Commonwealth Trade Symposium: “Shaping a Global Trade Agenda for Development”
Background
Trade policy issues have always attracted huge attention from Commonwealth Members. Commonwealth Heads in their last meeting (CHOGM) in 2013 issued a standalone statement on trade. In what has come to be known as the Kotte Statement on International Trade and Investment, Commonwealth Heads reaffirmed their strong commitment to a rules-based, transparent, free and fair multilateral trading system while taking into account the special requirements of capacity constrained countriessuch as Small States, LDCs and Sub-Saharan Africa. They also expressed their support for regional trading arrangements that complement the multilateral trading system. Amongst others, they called for increased trade capacity support, and recognised the potential for intra-Commonwealth Trade. Previously at 2005 CHOGM as well, the Heads issued the Valletta Statement on Multilateral Trade in expressing their unequivocal support for the global trading system to promote effective participation of developing countries.
The Commonwealth Trade Symposium provides a platform for officials, experts, the private sector and other stakeholders to meet and review emerging and long-standing trade related issues. Its objective is to contribute to global policy discourse by highlighting issues and perspectives that are critical in order to ensure an inclusive global trade support architecture for development. The space provided by the Commonwealth Secretariat is unique in the sense that brings together States with diverse economic characteristics thatshare a development vision, to discuss all major topical trade topicsin one forum. This should facilitate a better understanding of interlinked issues; as well as support the sharing of country perspectives on the process of achieving trade development objectives and setting global priorities. As the future challenges faced by member states must be situated within the broader context of fundamental changes taking place within the global trading landscape, 2015 is a pivotal year in view of the following major events:
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The 5th Global Aid for Trade review (30th July-2nd July 2015) with a focus on reducing trade costs for sustainable development,
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The UN adoption of the Post-2015 agenda (25-27th September 2015) and shift from the Millennium Development Goals (MDGs) to the Sustainable Development Goals (SDGs), which includes trade as a cross-cutting thematic issue and a key driver of structural economic change,
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Negotiations for a new international climate change deal under the auspices of the UNFCCC,
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The Post-Bali work program will be addressed at WTO’s 10th Ministerial Meeting, to be held in Nairobi, Kenya.
The Symposium will enable officials and other stakeholders to evaluate current processes and developments, and where appropriate, help prepare and adapt in the run up to these events. It will also help stakeholders prepare for further engagements on trade and development issues by identifying gaps and deficits in global support architecture and coming up with ways and means of dealing with them.
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South Africa: Concluding Statement of an IMF Staff Visit
An International Monetary Fund (IMF) team visited South Africa from 1-9 June, 2015 to discuss the outlook, risks, and policy challenges facing the South African economy.
The main themes, which are broadly similar to those of the 2014 Article IV Consultation, are:
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The growth and jobs outlook remains lackluster, with growth projected at 2 percent in 2015-16.
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The improvement in the terms of trade has temporarily lowered inflation and somewhat reduced external vulnerability.
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Downside risks persist, mainly stemming from electricity shortages, policy uncertainty, volatility in global financial markets, and global growth.
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Reducing electricity shortages is the utmost priority. Other long-standing structural reform recommendations remain essential to boost growth and jobs.
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The 2015 Budget rightly adjusts to lower potential growth. But there are fiscal risks, especially from state-owned enterprises (SOEs), that need attention.
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Monetary policy can remain accommodative unless the inflation outlook worsens or external financing conditions deteriorate.
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Building external buffers and strengthening the financial safety net remains important to increase resilience.
The outlook
Lackluster growth and job prospects
Real GDP growth hit a post-crisis low of 1.5 percent in 2014, entailing no improvement in per capita income, due to protracted strikes and electricity constraints. South Africa continued to underperform peer Emerging Markets (EMs), and the gap with trading partners widened. As the electricity crisis has deepened, only a muted recovery to 2 percent growth is expected in 2015-16 mainly due to the anticipation of fewer days lost to strikes. Lower oil prices have improved the terms of trade, but are expected to have a negligible impact on growth as highly-leveraged consumers may not spend much of the extra income and electricity constraints hinder domestic production expansion. Headwinds to growth also stem from the needed fiscal consolidation, high policy uncertainty, and tighter financial conditions. The improvement in growth over the medium term to about 2.8 percent is predicated on increased energy availability. Unemployment is expected to remain above 25 percent, unless major policy changes are implemented.
Somewhat improved external position and inflation
A positive terms of trade shock in 2015 – lower oil prices more than offsetting softer export commodity prices – is anticipated to reduce the current account deficit to 4.8 percent of GDP. The projected improvement in the current account balance (of 0.6 percentage point of GDP) is expected to be greater than most emerging markets and persist in outer years reflecting some trade volume adjustment. A lower current account deficit, coupled with the relative resilience of South African balance sheets to dollar appreciation, has translated into somewhat lower relative external vulnerability, as shown by the nominal effective exchange rate being broadly stable since mid-2014. However, the current account is expected to remain weaker than the norm (estimated at about -2 percent of GDP) throughout the medium term as competitiveness remains weak. Gross external financing requirements are projected to remain elevated and the balance of payments would continue to rely mainly on non-foreign direct investment (FDI) flows. After declining to 5 percent in 2015 on lower oil prices, inflation is projected to rebound to 6.1 percent in 2016.
Downside risks continue to prevail
The main risks include: on the domestic front, further delays in easing electricity shortages, policy and regulatory uncertainties, and renewed labor tensions; on the external front, a surge in global financial volatility, and a protracted period of slower global growth. On the upside, the electricity situation could improve faster than anticipated and global growth could benefit more than expected from lower oil prices.
Policies
With potential growth estimated to have declined to 2-2.5 percent, alleviating electricity bottlenecks and implementing structural reforms are key to reviving growth and creating more jobs. Global growth will improve only modestly and the expected increase in U.S. interest rates could renew external financing pressures. Also, there is limited room for demand management policies.
Structural Reforms
Solving the electricity crisis is the utmost priority
Severe electricity shortages, the worst since 2008, have become the greatest obstacle to growth, reducing economic activity, sapping confidence, and discouraging investment. Moody’s and S&P have downgraded Eskom to speculative grade despite the sovereign uplift and its spread over the sovereign has risen substantially in recent months and is large by EM standards. Measures taken, including establishment of an electricity “War Room” under the Deputy President to improve coordination and remove bottlenecks, the new management strategy, and the renewed emphasis on independent power producers and cogeneration are welcome. Higher electricity tariffs and the envisaged government support are necessary to make Eskom financially sustainable, but should be complemented by cost containment (including through improved procurement practices), efficiency enhancements, and governance improvements to minimize the impact on consumers and business costs. At the same time, consideration should be given to further private participation to increase capacity and reduce the cost of generation. Addressing other infrastructure bottlenecks, e.g. in transport, is important; the planned rail expansion is a step in the right direction.
Product and labor market reforms, and addressing skill mismatch
Some recent measures – for example, new regulation for visas for certain skilled workers and restrictions on temporary employment – risk depressing growth and job creation. Long-standing recommendations for reforms in these areas remain essential for sustainably higher, job-rich growth. Better quality education and training and more liberal immigration policies would ease skills mismatch. Reducing the regulatory burden and strengthening competition, including through trade liberalization, will help reduce the wage-productivity gap by lowering the cost of living and enhancing productivity. Simultaneous labor market reforms – giving more consideration to the unemployed and small firms in wage setting, exempting small and medium enterprises (SMEs) from the extension of collective bargaining outcomes, and reducing firing costs – will increase job creation and facilitate new firms’ entry. A renewed impetus for reforms in this direction is urgently needed. The government should give weight to the interests of those not represented in the collective bargaining processes to achieve the best social outcome. For example, in the debate on the envisaged minimum wage, government should take care to balance social protection and job creation. Progress made on the renewal of the Africa Growth and Opportunity Act, if confirmed, is positive for exports and jobs. The authorities are also pursuing regional free trade arrangements that could help South Africa benefit more from the dynamism of the continent. Other potential positive steps that could be taken in the short term include facilitating the process for allocating visas to skilled workers, measures to achieve more stable industrial relations (e.g. secret strike ballots), and tangible progress in port tariff reductions and lowering information and communication technology costs.
Fiscal Policy
The 2015 Budget
The Budget rightly adjusts to lower potential growth and increases revenue, but further measures and reforms are needed to address risks and make fiscal policy more supportive of long-term growth and jobs. The structural primary balance is projected to improve by 1 percent of GDP over three years. This, coupled with GDP rebasing, a better-than-anticipated FY14/15 outcome, and lower budgeted transfers to the Southern African Customs Union (SACU) countries, should stabilize debt at about 50 percent of GDP by FY19/20 (lower than the 56 percent of GDP projected in the 2014 Article IV and close to the 2015 Budget). But the planned sharp deceleration in spending growth in FY16/17 and the use of the contingency reserve to accommodate higher public wages makes achieving the authorities’ targets a tall order. Additional substantial fiscal risks stem from further support to Eskom, lower growth, and the fiscal impact of the public sector wage agreement. The planned national health insurance (NHI) could add to spending pressures and the envisaged nuclear power plants could entail a large public debt increase. The decline in SACU revenue could have significant implications for recipient countries, especially those for whom these transfers represent a high share of revenue, underscoring the importance of close engagement within the currency union.
Addressing fiscal risks
The Treasury has made significant progress in its analysis of fiscal risks. Also, National Treasury’s increased monitoring of SOEs is welcome and could help identify ways in which their performance can be strengthened. It would be prudent to smooth the consolidation path, including by taking advantage of lower 2015 inflation to further contain nominal spending growth beyond what is envisaged in the Budget. Consideration should be given to raising consumption taxes, which are low by international standards, to ensure a sufficient revenue base to face forthcoming spending commitments, notably the NHI, and to bring debt toward safer levels.
Enhancing spending efficiency remains critical
Ongoing efforts to strengthen government procurement, including making smarter use of technology to simplify bidding and increase transparency, and standardization of government contracts to reduce costs, are welcome. While the emphasis on integrating SMEs into the public supply chain should help level the playing field, procurement should remain focused on value for money. In addition, spending reviews and performance-based budgeting would improve the impact of government programs. While the public sector wage settlement averts a costly strike, it keeps compensation budgets high and could crowd out higher-impact social and capital expenditure, underscoring the importance of the comprehensive review of compensation budgets announced in the 2015 Budget. A review of tax expenditures could also help eliminate ineffective spending, creating space for priority programs. All these reforms that improve public service delivery would be positive for jobs and growth.
Monetary Policy
Monetary policy may have some breathing space
We project year-on-year inflation to accelerate, breaching the upper end of the target band in 2015: Q4-2016: Q1, easing to 5.5 percent by end 2016. The temporary breach of the South African Reserve Bank’s (SARB) inflation target is driven by base effects from higher fuel prices, and electricity tariff increases. As the SARB has noted, monetary policy should generally only address second-round effects of supply-side shocks. The output gap remains negative (1-1.5 percent) and demand pressures subdued. There is significant uncertainty about the timing and pace of Fed tightening, the extent of rand depreciation, and the degree of pass-through. In sum, the SARB could stay on hold unless core inflation or inflation expectations rise, or external financing becomes problematic. The current inflation outlook presents communication challenges and puts a premium on explaining to the broader public the drivers of rising inflation. In that context, the announced publication of the assumptions underlying the SARB’s inflation forecast is helpful.
Enhancing resilience
Building larger external buffers
Domestic capital markets are mainly linked to U.S. financial conditions, which are expected to tighten. The possibility of significant market volatility associated with higher U.S. policy rates poses risks for EMs with high gross external financing requirements like South Africa. In addition, commodity prices remain volatile. In this context, strengthening external buffers is important. Official reserves ($47bn in May) are relatively low by EM standards and below the revised IMF reserve adequacy metric by $13-19bn. The authorities should give consideration to pre-announced small regular foreign exchange purchases that would not interfere with the floating exchange rate regime. In addition, while capital flows remain volatile, there could be opportunities to purchase small amounts of foreign exchange during risk-on episodes. The SARB’s recent swap agreement with the People’s Bank of China is a positive development. The authorities could continue to explore other options to build external buffers and improve the funding mix, including multilateral and official financing, and swap arrangements.
Strengthening the financial safety net
As the 2014 Financial System Stability Assessment (FSSA) notes, financial sector risks and vulnerabilities are elevated but manageable. Recently, as observed globally, market and liquidity risk have moderately risen and equity valuations are fairly high. Credit risk has remained broadly stable, but continued high scrutiny is warranted. Households are slowly deleveraging though debt service ratios have inched up, while credit growth to corporates has been vigorous and partly funded by banks’ foreign loans. The recent approval of amendments to the Bank Act and the issuance of a second draft of the Financial Sector Regulation Bill are welcome. The FSSA recommendations to strengthen the bank resolution framework, and introduce deposit insurance and variable net asset value for money market funds remain important to further improve the financial safety net and reduce systemic liquidity risk.
The next Article IV consultation with South Africa is likely to take place in early 2016.
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Boost investment in Africa’s energy for a triple win for people, power and planet, Annan report urges
African governments, investors, and international financial institutions must significantly scale up investment in energy to unlock Africa’s potential as a global low-carbon superpower.
That is the main message of a new report from Kofi Annan’s Africa Progress Panel, Power, People, Planet: Seizing Africa’s Energy and Climate Opportunities. The report calls for a ten-fold increase in power generation to provide all Africans with access to electricity by 2030. This would reduce poverty and inequality, boost growth, and provide the climate leadership that is sorely missing at the international level.
“We categorically reject the idea that Africa has to choose between growth and low-carbon development,” said Kofi Annan, Chair of the Africa Progress Panel. “Africa needs to utilize all of its energy assets in the short term, while building the foundations for a competitive, low-carbon energy infrastructure.”
In Sub-Saharan Africa, 621 million people lack access to electricity – and this number is rising. Excluding South Africa, which generates half the region’s electricity, Sub-Saharan Africa uses less electricity than Spain. It would take the average Tanzanian eight years to use as much electricity as an average American consumes in a single month. And over the course of one year someone boiling a kettle twice a day in the United Kingdom uses five times more electricity than an Ethiopian consumes over the same year.
Power shortages diminish the region’s growth by 2-4 per cent a year, holding back efforts to create jobs and reduce poverty. Despite a decade of growth, the power generation gap between Africa and other regions is widening. Nigeria is an oil exporting superpower, but 95 million of the country’s citizens rely on wood, charcoal and straw for energy.
The report reveals that households living on less than US$2.50 a day collectively spend US$10 billion every year on energy-related products, such as charcoal, kerosene, candles and torches. Measured on a per unit basis, Africa’s poorest households are spending around US$10/kWh on lighting – 20 times more than Africa’s richest households. By comparison, the national average cost for electricity in the United States is US$0.12/kWh and in the United Kingdom is US$0.15/kWh.
This is a significant market failure. Low-cost renewable technologies could reduce the cost of energy, benefiting millions of poor households, creating investment opportunities, and cutting carbon emissions.
The report says Africa’s leaders must start an energy revolution that connects the unconnected, and meets the demands of consumers, businesses and investors for affordable and reliable electricity.
The 2015 Africa Progress Report urges African governments to:
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Use the region’s natural gas to provide domestic energy as well as exports, while harnessing Africa’s vast untapped renewable energy potential.
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Cut corruption, make utility governance more transparent, strengthen regulations, and increase public spending on energy infrastructure.
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Redirect the US$21 billion spent on subsidies for loss-making utilities and electricity consumption – which benefit mainly the rich – towards connection subsidies and renewable energy investments that deliver energy to the poor.
The report also calls for strengthened international cooperation to close Africa’s energy sector financing gap, estimated to be US$55 billion annually to 2030, which includes US$35 billion for investments in plant, transmission and distribution, and US$20 billion for the costs of universal access.
A global connectivity fund with a target of reaching an additional 600 million Africans by 2030 is needed to drive investment in on- and off-grid energy provision. Aid donors and financial institutions should do more to unlock private investment through risk guarantees and mitigation finance.
Time to end ‘climate negotiating poker’
The report challenges African governments and their international partners to raise the level of ambition for the crucial climate summit in Paris in December, and calls for wholesale reform of the fragmented, under-resourced and ineffective climate financing system.
G20 countries should set a timetable for phasing out fossil fuel subsidies, the report states, with a ban on exploration and production subsidies by 2018. “Many rich country governments tell us they want a climate deal. But at the same time billions of dollars of taxpayers’ money are subsidising the discovery of new coal, oil and gas reserves,” Mr Annan said. “They should be pricing carbon out of the market through taxation, not subsiding a climate catastrophe.”
While recognising recent improvements in the negotiating positions of the European Union, the United States and China, the report says that current proposals still fall far short of a credible deal for limiting global warming to no more than 2˚C above pre-industrial levels. It condemns Australia, Canada, Japan and Russia for effectively withdrawing from constructive engagement on climate.
“By hedging their bets and waiting for others to move first, some governments are playing poker with the planet and future generations’ lives. This is not a moment for prevarication, short-term self-interest, and constrained ambition, but for bold global leadership and decisive action,” Mr Annan said.
Mr Annan added, “Countries like Ethiopia, Kenya, Rwanda and South Africa are emerging as front-runners in the global transition to low carbon energy. Africa is well positioned to expand the power generation needed to drive growth, deliver energy for all and play a leadership role in the crucial climate change negotiations.”
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COMESA Immigration Chiefs meet
Heads of Immigration from COMESA Member States are meeting in Lusaka for a two days meeting to address the implementation of the COMESA Protocol on free movement of people and the right to establishment. This is their ninth meeting and will focus on three things; Consider a report of a Task force that conducted a study on the implementation of the protocol in eight selected countries in the region.
The Task Force was constituted following concerns by Ministers in charge of Immigration that there had not been much progress in the implementation of the Visa Protocol on one hand and the signing and Ratification of the Protocol on Free Movement. Consequently they directed for the constitution of the team to establish the challenges and reason why member States were slow.
The Immigration Chief will also discuss a draft strategy and Action Plan for the implementation of the COMESA Protocol on Visas and how to engage Member States to sign and ratify it. Thirdly, they will discuss the status report on the implementation of the Protocols and decision of the COMESA Council of Minister with regard to Immigration issues.
During the opening of the meeting today, Kenya, Rwanda, Uganda, Seychelles and Mauritius won praise for having gone beyond the Protocol requirement in easing the Visa requirements for African countries. COMESA Secretary General Sindiso Ngwenya challenged immigration chiefs from countries with strict Visa restrictions to learn from their counterparts how they had addressed inherent fears that inhibit them from relaxing Visa rules.
“Immigration department exist to facilitate movement of persons and not to control them,” Ngwenya said. “With the modern technology, some of the concerns raised by States concerning security can easily be addressed especially in identification of people.”
Further, he observed that the quest for revenue from Visa fees should not encourage States to maintain them as there were more economic benefits to reap from movement of business people and tourism in comparison.
“Whereas many countries have signed and ratified Free Trade Area for goods, they have not done the same for the movement of business people who are the owners of these goods,” Mr Ngwenya noted. He encouraged Member States to work in clusters whereby they put in place reciprocal measures such as issuance of Visa on point of entry and progressively work towards full elimination of visa requirement and expansion of the clusters to include more States.
Focus he said should be on enhancing the capacity of Immigration departments to deploy modern technology in facilitating travel so that countries can complement each especially on skilled labour gaps as this will contribute to their economic growth and competitiveness.
The Programme Manager for EU expertise at the International Centre for Policy Development (ICMPD) Mr Chirita Oleg told the delegates that success of regional economic cooperation and integration depended on the effective removal of restrictions to citizens’ movements. “The twentieth century assumption that migration is a strictly national problem is no longer valid.” He said. “Today’s approach to migration demands that we come to terms with the social and economic forces propelling people across borders, and that the instruments developed at regional level equip countries to reap the full benefits of intra-regional mobility.”
Charles Kwenin, Adviser to the Director General of the International Organization for Migration also addressed the Immigration chiefs.
The meeting ends on Wednesday with the production of a report that will be presented to the Ministers of Immigration who will meet on Thursday 25 June 2015.