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The urgency of AGOA re-authorization
The rapid reauthorization of the African Growth and Opportunity Act (AGOA) remains a critical issue for the U.S.-Africa commercial relationship, African security, and for economic development and women’s empowerment on the continent.
The African Growth and Opportunity Act (AGOA) is an Act of the U.S. Congress, signed in 2000, that offers tangible incentives for African countries to continue their efforts to open their economies and build free markets. Currently, AGOA is set to expire on September 30th, 2015.
At the last African Union Summit, held in January 2015, Heads of State and Government of all 54 African Union Member States called upon the U.S. Congress to immediately reauthorize AGOA, co-terminous with the Third Country Fabric Provision, as the foundation of the U.S.-Africa trade and investment partnership. Following President Obama’s commitment to reauthorize AGOA at the U.S.-Africa Leaders’ Summit in Washington D.C. in August 2014, expectations for AGOA’s reauthorization were high, but those expectations have not yet been met.
AGOA has served as the cornerstone of commercial relations between the United States and Africa since its enactment in 2000, with significant economic benefits accrued on both sides. Studies by the U.S. International Trade Commission and the United Nations Economic Commission for Africa have clearly demonstrated AGOA’s benefits for both the U.S. and Africa in terms of improved business and trade environments, job creation, and economic growth.
For the United States, exports to Africa have grown by 284% under AGOA, from $5.6 billion in 2000 to $21.5 billon in 2012. Since its enactment, AGOA has also granted U.S. consumers access to more affordable goods: under AGOA, U.S. imports of non-extractive products from Africa have grown by 94%, to $6.0 billion. Tens of thousands of U.S. jobs are a dependent upon AGOA trade.
AGOA drives improvements in African investment climates as well. By creating tangible incentives for African countries to improve their economic and commercial policies, AGOA reauthorization will work in complementarity with global trade initiatives such as the Agreement on Trade Facilitation, for example by streamlining customs procedures.
Concrete business opportunities for U.S. companies also arise under AGOA. Six of the ten fastest growing economies in the world are in Africa. Chinese companies are rapidly establishing their market share in Africa, and while the U.S.-Africa Leaders Summit announced $14 billion in commercial deals, this is only a first step. AGOA reauthorization will help U.S. companies continue to take advantage of the widespread opportunities that exist.
On the African side, the benefits of AGOA have been even more pronounced. 25 of the 38 countries that were eligible in 2013 exported products to the United States under AGOA; 14 of those countries exported more than US$ 10 million worth of non-extractive products.
Along with increased trade, AGOA has accounted for significant job creation in Africa. More than 300,000 jobs have been directly created as a result of AGOA, along with the millions of jobs that have been created indirectly. Many of these new jobs have gone to women and youth, contributing to women’s empowerment and increasing stability and security in Africa; research demonstrates that job creation can help mitigate the risks, in terms of instability and civil strife, associated Africa’s demographic bulge. AGOA reauthorization will also support African efforts at regional integration, including most importantly, the establishment of the African Continental Free Trade Area (CFTA).
AGOA has clear benefits for both the U.S. and Africa. However, as AGOA’s expiration approaches, investors are getting nervous. Our experience with the renewal of the third country fabric provision shows that delay and uncertainty can result in economic and job losses. One can only imagine the consequences in terms of job losses and instability if the entire AGOA program is delayed.
AGOA reauthorization presents tremendous opportunities to continue to strengthen the U.S.-Africa commercial relationship, increase African stability, and drive economic development and women’s empowerment on the continent. In order to take advantage of these opportunities, AGOA should be reauthorized well before the September 2015 expiration.
Fatima Haram Acyl is Commissioner for Trade and Industry at the African Union Commission.
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World Bank Chief Economist sets up new Commission on Global Poverty
The World Bank’s Chief Economist on 22 June 2015 announced the launch of a new Commission on Global Poverty to report on the best ways to measure and monitor poverty around the world and help the World Bank Group achieve its twin goals and also track other forms of poverty and deprivation.
The new Commission, made up of 24 leading international economists, will be chaired by Sir Anthony Atkinson, a leading authority on the measurement of poverty and inequality, the Centennial Professor at London School of Economics, and a Fellow of Nuffield College, Oxford University.
Announcing the new advisory body, the World Bank’s Chief Economist, Kaushik Basu, said he expects the Commission to also provide advice on how to adjust the measurement of extreme poverty as and when new Purchasing Power Parity (PPP) and other price and exchange rate data become available.
PPP calculations allow economists to compare different global exchange rates to assess household consumption and real income in US dollars, since nominal exchange rates do not accurately capture differences in costs of living across countries.
“We want to hold the yardstick constant for measuring extreme poverty till 2030, our target year for bringing extreme and chronic poverty to an end,” says Basu who will travel to Europe this week for the Commission’s inaugural meeting.
“Furthermore, poverty has many other dimensions and it is unacceptable in today’s prosperous world that so many people suffer such deprivations. The Global Commission will advise us on other dimensions of poverty that the Bank should collect data on, track, analyze and make available to policymakers for evidence-based decisions.”
In 2014, World Bank Group President Jim Yong Kim announced the Bank’s commitment to two goals that would direct its development work worldwide. The first was the eradication of chronic extreme poverty, defined as those extremely poor people living on less than $1.25 PPP-adjusted dollars a day, to less than 3% of the world population by 2030. The second is the boosting of shared prosperity, defined as promoting the growth of per capita real income of the poorest 40% of the population in each country.
This year, UN member nations are expected to agree in New York to a set of post-2015 Sustainable Development Goals (SDGs), the first and foremost of which is the eradication of extreme poverty everywhere, in all its forms.
The final report will be ready by end April 2016.
“We expect the Commission report to be influential not only for our own work on poverty but also in shaping global research and policymaking on this most important challenge of our times,” said Chief Economist Basu.
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Financial sector must promote inclusive growth
Finance is a key ingredient of modern economies, but too much finance may hamper economic growth and worsen income inequality, according to new research from the OECD.
The OECD’s latest work on Finance and Inclusive Growth analyses 50 years of data to demonstrate the variable effects that further expansion of different types of finance can have on both economic activity and inequality.
“The global financial crisis has raised deep questions about the influence of finance on economic activity and the distribution of income,” OECD Chief Economist Catherine L. Mann said while launching the new research in London. “What our research has shown is that avoiding credit over-expansion and improving the structure of finance can lead to improvements in both economic and social well-being.”
The OECD identifies a number of risks to long-term growth posed by an over-reliance on bank lending, versus other types of market-based finance, such as bonds and equities. These include misallocation of capital, by funding investments with low profitability; magnifying the cost of implicit guarantees for too-big-to-fail banks; drawing highly talented workers away from sectors with greater productive potential; and generating boom-bust cycles.
At today’s level of financial development, further expansion of bank credit to the private sector is shown to slow growth in most OECD countries. A rise of bank credit by 10% of GDP translates into a GDP growth rate that is 0.3 percentage points less than would otherwise be the case, according to the OECD.
Greater levels of stock market financing, on the other hand, are still seen to boost growth. An increase in stock market capitalisation by 10% of GDP is, on average across OECD and G20 countries, associated with a 0.2% rise of GDP growth.
Bank loans slow economic growth more than market-based credit, while credit to households – which is primarily aimed at the real estate sector – is a stronger drag on growth than credit to businesses.
Whereas financial expansion can help low-income individuals fund their projects and home ownership, it tends more to drive inequality. People with higher incomes can and do borrow more than those on lower incomes, and the benefits from growth in stock markets accrue more to high-income households who tend to have more wealth in equity. Similarly, the financial sector pays high wages, which are above what employees with similar profiles earn in the rest of the economy, increasing income inequality. In Europe, financial sector employees make up 20% of the top 1% earners, but are only 4% of overall employment.
The OECD identifies reforms to make the financial sector more stable and enable it to contribute to strong and equitable growth. These include:
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Greater use of macro-prudential instruments to prevent credit overexpansion, and the supervision of banks to maintain sufficient capital buffers.
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Measures to reduce explicit and implicit subsidies to too-big-to-fail financial institutions, through break-ups, structural separation, capital surcharges or credible resolution plans.
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Reforms to reduce the tax bias against equity financing and to make value added tax neutral between lending to households and businesses.
This paper on the link between finance and growth is part of the OECD’s New Approaches to Economic Challenges (NAEC), an Organisation-wide reflection on the roots and lessons to be learned from the global economic crisis, as well as an exercise to review and update its analytical frameworks.
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Helen Clark: Speech at the Annual Meeting of UNDP Africa on “Towards an Emerging Africa: From MDGs to the SDGs”
It is a great pleasure to join the President of Madagascar, H.E. Hery Rajaonarimampianina, in welcoming you to the 2015 UNDP Regional Bureau for Africa Cluster Meeting.
I thank the President and the Government of Madagascar for hosting this meeting of the leaders of UNDP’s work in Africa. We also welcome our key partners from the African Union, the NEPAD Secretariat, academia, and the Governments of Madagascar and Mauritius.
UNDP enjoys a strong partnership with Madagascar. We applaud the country’s recent prioritisation of human and sustainable development in its new medium-term strategy. The track record of human development suggests that healthy, empowered, and educated people drive their economies and strengthen their societies. By investing in people and in the capacity of the country to sustain that investment, Madagascar will lay the foundations for inclusive and sustainable development.
An Emergent Africa
At this meeting of UNDP’s regional and country leaders in Africa, we focus on how the UN development system can contribute to the continent’s progress.
Last year, the African Union adopted its visionary Agenda 2063 which sets out a pathway to emergence. It has also adopted the African Common Position on the Post-2015 Global Development Strategy. This too is forward looking in calling for “an integrated, prosperous, and peaceful Africa, driven and managed by its own citizens.”
Both these documents provide all partners, including the UN, with clear guidance on the future Africa wants.
UNDP’s Regional Bureau for Africa is our largest. This reflects the number of countries covered by the Bureau, the scale of the opportunities and challenges for Sub-Saharan Africa, and the importance of progress in the region for achieving global goals for inclusive and sustainable development.
By the end of this year, there are expected to be new global agreements on financing for development, sustainable development goals, and climate change. Agreement on the new global framework for disaster risk reduction has already been reached. All these agreements will guide global development priorities for a generation. That is why I see 2015 as providing a once in a generation opportunity to set a clear global direction and priorities for the future we want.
The sustainable development agenda which UN Member States are now negotiating is universal in its scope – all countries are covered. But in its implementation, very high priority must be given to backing Africa’s quest for inclusive, sustainable and resilient development.
The challenges are great:
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I’ve just come from participating in the launch of the Post-Disaster Needs Assessment for Malawi which is endeavoring to recover from the massive floods of earlier this year. Malawi experiences recurrent cycles of flood and drought, which are exacerbated by climate change. Finding the resources to “build back better” and reduce disaster risk for the future is an imperative.
Here in Madagascar, cyclones, floods, and droughts have taken their toll on development too. Already in 2015, twenty African countries have experienced serious flooding. Protracted drought is also a huge problem for many. While low income countries are the least responsible for climate change, they are bearing the greatest cost in terms of lives lost, livelihoods damaged, and housing and other infrastructure destroyed.
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In February I visited Guinea, Liberia and Sierra Leone which are all endeavouring to recover from another kind of shock – the deadly outbreak of Ebola. The economies of these three countries were among the fastest growing in Africa. They were knocked sideways not by commodity price shocks or global recession, but by the failure of health and other systems to contain the outbreak at the earliest stage.
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South Sudan and Central African Republic have also experienced very serious shocks – the kind which comes from the failure of political systems to mediate differences and practise inclusion not exclusion. Protracted conflict has badly destabilised both countries – with no end to that in sight for South Sudan right now. Elsewhere, radical insurgents from Boko Haram to Al Shabaab are destroying lives and prospects across national boundaries.Yet, amidst all the challenges, we also see progress and grounds for optimism. African solidarity is playing an important role. Take, for example:
Yet, amidst all the challenges, we also see progress and grounds for optimism. African solidarity is playing an important role. Take, for example:
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The response to Ebola by countries and institutions on the continent. Many provided humanitarian, health worker, and/or financial support. The African Union, the African Development Bank, ECOWAS, and the Manu River Union have been key players.
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The role of African institutions and eminent persons in mediating disputes which threaten peace and stability; and the large numbers of African defence personnel deployed to peacekeeping forces. SADC’s support for Madagascar’s route back to constitutional government is a good example of how a sub-regional institution can help.
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The impetus for regional and sub-regional integration which expands domestic markets and creates opportunities for growth and jobs. SADC, the East African Community, and ECOWAS are among those pursuing pathways to integration.
As well, we see:
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Many peaceful and credible national and local elections. That in Nigeria, the most populous nation on the continent, was groundbreaking; for the first time, Nigeria experienced a peaceful transition of power to an opposition candidate.
- Relatively high rates of economic growth. Since 2005, Africa’s annual GDP growth has averaged around five per cent, notwithstanding the pressures caused by the global financial crises and its aftermath. Favourable commodity prices, investments in extractive industries, improved political stability, stronger institutions, greater security for many, and stable macroeconomic conditions have all been contributing factors.
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Extreme poverty reducing and services improving in many countries. Many countries have rapidly reduced their under-five mortality rates. Many more children are in school. There are lower rates of HIV prevalence, and many more people living with HIV have access to life-saving antiretroviral drugs.
Overall, the outlook for Africa is very different from when the MDGs were launched at the beginning of this century. Many African countries have momentum and a solid track record of progress on which to build. This bodes well for efforts to achieve the Sustainable Development Goals which world leaders are expected to adopt at the UN in New York in September.
UNDP’s support for the SDG agenda in Africa
UNDP worked alongside the countries of this continent as they integrated the MDGs into their national agendas. We have worked to strengthen capacities, transfer knowledge, and support access to finance. Over the past five years, we have worked with our partners in UN Country Teams, including the World Bank, to accelerate progress on key MDG targets. We can apply all our experience and lessons learned in support of SDG achievement. With our strengthened Regional Service Centre in Addis Ababa we are well placed to do so.
Many Country Offices and UN Country Teams in Africa are already working with their national and local partners to lay the ground for implementation of the SDGs. This is the case in the two countries I have visited just before coming here – Botswana and Malawi – where new national plans are being prepared. The earliest opportunity should be taken to support incorporation of the SDGs into national development agendas.
A number of countries have low institutional capacity – yet pursuing sustainable development requires joined up government which can pursue integrated strategies. It will be important to build and support “whole of government” approaches across the economic, social, and environmental strands of sustainable development.
MDG acceleration focused on removing bottlenecks and other obstacles to achieving targets – that must continue with the SDGs, and not least on the significant unfinished business of the MDGs. I am convinced that all efforts to achieve the SDGs will be consistent with achieving the vision of the African Union’s Agenda 2063 for African emergence.
Emergence requires structural transformation to make economies more inclusive and diverse. It requires the investments in people, services, and infrastructure and the strengthening of institutions which will help lift countries out of low income status to middle income status, and then to avoid the middle income trap.
In achieving both emergence and the SDGs, special focus must go on:
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Addressing inequalities. This is vital. By reducing inequalities, African countries will lift human development, and will harness the full potential of women and marginalized groups to contribute to development. UNDP’s next African Regional Development Report will provide recommendations on overcoming gender inequality.
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Harnessing the potential of youth. Africa’s large youth population offers the potential for a big demographic dividend, if there is investment in youth potential. The converse is also true – alienated and angry youth can’t make the positive contribution societies need.
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Improving jobs and livelihoods. More than four in ten people on the continent live in extreme poverty. Eighty per cent of Africa’s workers are in low productivity work in agriculture or in low value service sector livelihoods which generate little income. More decent work and livelihoods need to be generated through inclusive and sustainable growth.
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Maintaining ecosystem integrity. The SDGs will encourage all countries to promote economic and social progress with a light environmental footprint. This is essential if we are to preserve the global commons which secure our common future.
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Addressing the drivers of conflict and stability. This can include strengthening social cohesion, establishing the rule of law and the capacity for peaceful dispute resolution, and making governance more inclusive and effective.
Conclusion
UNDP’s Strategic Plan for 2014-2017 and the structural transformation we have been undergoing is designed to help us to be the very best we possibly can be in supporting programme countries to achieve national and global development goals.
These are not easy times for many development agencies. A number of traditional funders are cutting their development assistance budgets, and more and more of those budgets are being diverted to meet the humanitarian needs of catastrophic and protracted emergencies. It is hard to recall a time when so many crises were creating needs on such a scale.
But the need for UNDP’s work is as great as ever – arguably greater than ever before both in those countries needing to recover from crisis and disaster and in those wanting to accelerate their emergence. So we must be proactive, responsive, and entrepreneurial in meeting their needs, and in raising the funding and adapting our business models to ensure that we can do so. Many of you are leading Country Offices to do just that, and I appreciate that you, like senior managers at the global level are prepared to take the difficult decisions which are making our organization fit for purpose in a challenging environment.
Under Mar’s leadership, and with the commitment of all our leaders at country level and in the regional service centre, I am confident that the Regional Bureau for Africa and its Country Offices will continue to be regarded as indispensable partners in Africa’s emergence. I hope that this cluster meeting will succeed in bringing everyone up to speed with developments on the global and regional agendas and within UNDP and the broader development system, so that you can each return to your duty stations well equipped to lead relevant and responsive programming for Africa’s emergence.
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Dar es Salaam port container traffic grows
Tanzania Ports Authority (TPA) says the twenty-foot equivalent unit (TEUs) for its principal port has grown by 8.9% a year.
TEUs are used to measure a ship’s cargo carrying capacity. The dimensions of one TEU are equal to that of a standard 20 shipping container: 20 feet long, 8 feet tall.
This has been said by the TPA Acting Director General, Awadh Massawe when he met with Editors from various media houses in Dar es Salaam last week.
Massawe said the consignment of containers being handled by the Dar es Salaam Port grows to 612,551 containers in 2013/2014 compared to 435,899 containers in 2009/2010.
He said the development comes following a move by TPA to improve cargo clearance process to facilitate quick cargo off-take from the port.
“The harmonization of working hours with other stakeholders (all 24/7) together with the deterioration of ship turnaround time, have also boost TPA performance,” he said.
Ship turnaround time and waiting time has deteriorated from 4.9 to 5.2 days and from 1.7 days to 2.3 days in 2013/14 respectively, Massawe told East African Business Week last week.
He added that the average container dwell time has also improved from 9.8 days as compared to 9.4 days in 2013/14. In another development, Minister of State in the Prime Minister’s Office (Investment and Empowerment), Dr Mary Nagu said Dar port handled 14.26 million tonnes of cargo during fiscal year 2013/2014.
And thus surpassing the target of 13 million tonnes set for the year and 12 million tonnes that were handled in the previous year, Minister Nagu told Member of Parliaments.
She attributed the achievement to implementation of the Big Results Now (BRN) initiative, which has been implemented during the past one year.
Through BRN, the government identified six key results areas to boost the economy as the country geared itself to attaining a middle income economy by the year 2025 through the Tanzania Development Vision 2025.
“There have been impressive achievements since the introduction of BRN initiative. Change of mindsets among public servants is among the attainments,” she noted.
We now have in place an institutional framework for implementation of the initiative,” she said. Dr Nagu made the remarks in response to a basic question by Masasi MP Maryam Kasembe (CCM), who had tasked the government to explain the achievements and challenges faced in implementation of the scheme.
“Apart from the improvements at the port, the government has also revamped passenger and cargo transport on the central railway network by refurbishing the railway line and locomotives,” she explained.
DSM port serves a big hinterland consisting of Tanzania and six non-coastal countries (Zambia, Malawi, DR Congo, Burundi, Rwanda and Uganda).
The port is connected by road and two railway systems of different gauge as transit traffic contributes 30% of the cargo traffic handled by the port. The two railway lines, Tazara and Tanzania Railway Line.
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tralac’s Daily News selection: 22 June 2015
The selection: Monday, 22 June
African Economic Conference 2015: concept note and call for papers (AfDB)
The African Economic Conference 2015 will take place in Kinshasa, Democratic Republic of Congo from November 2 to 4, 2015. This 10th edition of the AEC will coincide with the unveiling of the new Sustainable Development Goals that are due to replace the Millennium Development Goals from January 2016.
This week in Pretoria: the African Capital Cities Sustainability Forum
Higher margins herd Indian dairy companies to Africa (Economic Times)
Indian dairy firms are trying to tap opportunities in the East African milk processing markets where demand has surged amid rapid urbanisation and rising income levels. This comes at a time when several global dairy giants are looking for acquisition possibilities in eastern Africa and leading local milk producers are trying to consolidate their market share through aggressive buyouts. Many Indian businessmen already have large exposure to the African agriculture and allied sectors, which include agriculture, floriculture and hybrid seed production.
Agricultural trade policy and sustainable development in East Africa: event notification (ICTSD)
South Korea and China overtake Portugal as Angola’s main suppliers of imports (MacauHub)
In the first quarter of 2015, South Korea accounted for 21.5% of all Angola’s imports, followed by China with 16.8% and Portugal with 10.9%. In terms of Angola’s exports, China remained the main buyer, with a total of 878.483 billion kwanzas, which represents a year on year fall of 49.7% and of 26.8% over the previous quarter, accounting for 43.9% of Angolan exports. In the list of buyers Portugal is located in sixth place, with a weight of 3.8% and South Korea is included in the “other” category. More than 9,000 companies from Portugal currently export to Angola and around 2,000 Angolan companies have Portuguese investors, according to the Portuguese Agency for Investment and Foreign Trade.
Business Confederation of CPLP calls for greater openness of the Portuguese-speaking community (MacauHub)
Zimbabwe: Govt signs 54 trade pacts (The Herald)
Government has signed 54 Bilateral Investment Protection and Promotion Agreements (BIPPA) that are now at various stages of completion as it moves towards injecting more pace in the country’s economic growth, a Cabinet minister has said. Economic Planning and Investment Promotion Minister Simon Khaya Moyo made the remarks during a meeting to discuss ways to improve economic growth last week. He said Zimbabwe signed the BIPPAs with countries on the African continent and the multi-lateral front. He said 16 of the investment pacts were still under negotiation, three await signatures, 26 await ratification and nine had been ratified.
Zimbabwe: Labour exportation agreements sealed (The Herald)
Namibia: 22 000 jobs created in 2014 - Alweendo (The Namibian)
The government has revealed that 22 000 jobs were created in 2014, which was more than 18 000 jobs the government had forecast in its growth plans. Minister of economic planning in the presidency, Tom Alweendo said last week that 22 700 jobs were created in 2014, while 19 500 people got employed in 2013, also surpassing the 18 000 jobs' target of that year.
Lack of electricity hinders DR Congo mining sector (New Vision)
The minerals in the south-eastern Katanga region represent potential riches for the Democratic Republic of Congo, but a lack of electricity is preventing the country from fully exploiting them. In Katanga's regional capital Lubumbashi, power cuts regularly shut down the furnace at the STL factory that extracts cobalt, copper and zinc oxide from a nearby mountain of slag. It takes 34 megawatts of electricity for the site's giant furnace to operate at full capacity, but DR Congo's national power company Snel is only supplying 24 megawatts. "We are living in a situation of continual stress and it's hell," said Jean-Pol Tavernier, STL's maintenance director. The lack of power has even forced Chinese company CDM to cut 300 jobs. "We can't work with the little power we have," said CDM's director in Katanga, Akili Peter. "This is what forced us to shut down the four furnaces and lay off all those people working with us."
Making mining work for Zambia: the economic, health, and environmental nexus of Zambia’s copper mining economy (World Bank)
How can Zambia use its mineral resources to help the country achieve its economic development ambitions? In addition to detailed conclusions, this brief highlights five key messages: [The authors: Philip Schuler, Martin Lokanc]
Zambia: Govt ponders SI to stop raw copper exports (The Post)
Mines minister Christopher Yaluma says mining companies insist on exporting unfinished copper because they extract other minerals to make additional incomes, but warned that he will soon come up with a law that will ban exports of unfinished mineral products. Yaluma, who is also the energy minister, wondered why Zambia is today failing to process copper when it used to do so in the past. “My intention is to come up with an SI [Statutory Instrument] to compel these mines not to take any raw or semi-raw or 95% completed copper. It has to be finished here. If we did it before, we can do it again,” he said at the mining conference in Lusaka on Friday.
Zambia: Minister of Transport calls for concerted efforts to transform TAZARA
And when asked to present their views on the operational challenges of the Authority, the members of the TAZARA Executive Committee observed that although the Authority possessed huge potential to raise the operational capacity to higher levels than was currently the case, there were several inhibiting factors that needed to be attended to by the shareholders first. In particular, the managers urged the two share-holding governments to consider cleaning the Authority’s balance sheet, whose liabilities were said to be too big, constricting the company’s liquidity and discouraging any commercial initiatives.
Helen Clark: 'The new global development agenda and Malawi' (UNDP)
While recognizing achievements, it is also true that by the time the SDGs will become the world’s new development compass, much unfinished MDG business will remain here in Malawi. In particular, the poverty target is significantly out of reach, with about 51% of people living under the national poverty line in 2010. There is some good news, however, as preliminary data from the 2010-2013 Integrated Household Survey, indicates that poverty may be starting to decline. Traditionally, poverty has been largely a rural phenomenon in Malawi, which points to the importance of strengthening rural infrastructure and raising the productivity of the rural economy, focusing in particular on agriculture and small scale enterprises for women.
Inequality, as measured by the Gini coefficient, is also troubling: between 2004 and 2010 it rose from 0.39 to 0.46. Gender equality is a particular challenge, and although there has been some progress in some areas, for example at the primary school level, critical gaps remain. An important manifestation of this is persistent high maternal mortality.
Malawi: Launch of the post-disaster needs assessment report (UNDP)
The PDNA report is comprehensive in documenting recovery needs across the reconstruction of homes and transport and irrigation systems, and on issues around food security and agriculture, employment and livelihoods, and disaster risk reduction. The emphasis on strengthening disaster risk management is particularly important, as this will build resilience to future extreme weather events. In the near term, revitalization of the agriculture sector through provision of tools, seeds, and livestock will be important. Malawi is primarily an agro-economy, and the flood damage has impacted on the population’s ability to feed itself over the next year. Repair of key roads and bridges will play a vital role in restoring access to basic services and markets. [Download]
SA border control plan hits brick wall (IOL)
The government is forging ahead with plans for a border management agency to handle all aspects of border control, from security to customs and plant and animal inspection – but MPs have said it can’t be done. Home Affairs Minister Malusi Gigaba and his defence counterpart Nosiviwe Mapisa-Nqakula launched Operation Pyramid – a transitional arrangement to improve interdepartmental co-ordination – on Friday, while a draft bill to create the legal framework for the agency was tabled at a workshop in Pretoria earlier in the week. But there are serious concerns about the ability of one entity to manage the diverse requirements of border control, which would require a huge single body that may prove unwieldy, while it would also need to assume some of the functions of the police and defence force. This would put it in conflict with the constitution, which provides for a single police service and defence force.
Foreign investment topped US$8.9 billion in Mozambique - 2014 (Club of Mozambique)
Deputy Mozambican Economy and Finance Minister Amelia Nakhare said the volume of foreign investment amounted to US$8.9 billion in 2014, mostly from the United Arab Emirates, United States, Portugal and South Africa. In an interview with APA, Nakhare explained that the bulk of the projects which attracted investment were in the resource-rich western Tete province and northern provinces where foreign firms are involved in the exploitation of coal and natural gas. Last year, according to Nakhare, the country recorded an average of 480 projects in different sectors, including special economic zones. “In relation to the investment volume made in 2012, there was a major jump from US$5.6 billion that year to US$8.9 in 2014 in investments and the extractive industry was a key magnet,” she said.
Pension reforms in Mauritius: balancing social protection and fiscal sustainability (IMF)
Despite important past reforms, the ageing population of Mauritius threatens the sustainability of its pension system. This paper examines how pension spending might increase without reforms and discusses reforms options. The findings suggest that unifying the retirement age and indexing it to life expectancy would contribute most significantly to secure and sustainable pensions.
Nigeria: CBN may bar rice importers from accessing forex (ThisDay)
There are indications that the Central Bank of Nigeria may stop granting traders access to foreign exchange for the importation of rice in order to enable local production of the staple food to thrive. The decision is expected to reduce further depletion of the nation’s foreign reserves, which stood at $29.008 billion as at June 18, 2015, after falling from $29.819 billion in the corresponding date last month. The apex bank is said to have realised that local rice farmers across the country have the capacity to cater for the needs of the rice consuming populace.
Agro-processing to drive Nigeria's new economy (ThisDay)
Rwanda: Bakers yet to benefit from tax waiver on wheat imports (New Times)
Zimbabwe: Tight import laws on cards (Sunday Mail)
Nigerian emerges as African Export-Import Bank president (Premium Times)
AfDB and AFRXIMBANK: a tale of Nigeria's resurgence (ThisDay)
Microfinance: Good for the poor? (Africa Renewal)
Sub-Saharan Africa Banking Review (EY Africa)
Business leaders urge G20 to push digital economy, e-commerce (Times of India)
US, India discuss intellectual property concerns (LiveMint)
Peter Drysdale: 'Redefining Japan’s Asia diplomacy' (East Asia Forum)
WTO: Secretariat issues report on members’ quantitative restrictions
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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New treaty to protect SA tax base
The new double tax treaty between South Africa and Mauritius is set to come into force in January next year, following a controversial renegotiation to give better protection to the South African tax base.
However, tax experts have warned that sweeping changes to the treaty, including withholding taxes for interest (10%) and royalties (5%) that were wholly eliminated in the 1996 treaty, may be to the detriment of cross-border investment.
The biggest issue for most taxpayers is the revised “tie-breaker” clause which resolves tax residency status when both countries claim to have taxing rights over the same taxpayer.
The new treaty allows for the South African and Mauritian tax authorities to come to a “mutual agreement” when there is a dispute about the tax residence of a company, and about who has the first right to tax.
No other tax treaties with South Africa have a mutual agreement procedure to determine residence status. Tax treaties use the “place of effective management” test as the so-called tie-breaker in the case of a dispute.
Competitor as gateway to Africa
Cynics may surmise that South Africa has inserted this in the South Africa-Mauritius tax treaty, and not in other treaties, simply to make life difficult for multinationals who have based themselves in Mauritius.
SA Institute of Tax Professionals Deputy CEO Keith Engel said this change is probably part of a larger trend. “I think we will be seeing a lot more of these tie-breaker clauses as we go forward, especially with low-tax countries.”
Webber Wentzel international tax director Dan Foster said the new tax treaty with Mauritius signed in Mozambique two years ago has now been ratified by South Africa and Mauritius, and will come into force in January 2016.
“It is no secret that South Africa considers Mauritius to be a competitor in terms of being a gateway to Africa. South Africa would do well to consider why investors chose Mauritius rather than South Africa.”
Perhaps Mauritius encourages investment because it has no exchange controls, simple taxes, low rates and business-friendly policies and treaties, said Foster.
“The existence of this mutual agreement procedure as a tie-breaker has led to considerable uncertainty and concern among multinationals that have Mauritian companies in their group structures,” said Foster.
“Such a procedure has generally been considered unworkable and a barrier to trade and investment,” he added.
Engel said resolution of disputes through this method generally takes at least a year or two, in the best of circumstances.
Still risk of double taxation
South Africa and Mauritius have signed a memorandum of understanding, setting out the factors to be taken into account to determine which country has the taxing right.
These factors include where the meetings of the entity’s board of directors or equivalent body are usually held, where the CEO and other senior executives usually carry out their activities, where the senior day-to-day management of the entity occurs, where the headquarters are located, where the accounting records are kept, and “any such other factors” that may be identified and agreed upon by the relevant authorities in determining residence.
“While the memorandum of understanding clarifies the situation somewhat, it is not clear whether the new landscape provides the certainty most taxpayers desire,” Engel said.
PwC national tax technical head Kyle Mandy said the new Mauritius treaty should make little difference in most cases.
A company that is effectively managed in South Africa is likely to continue to be regarded as South African tax resident under the new Mauritius treaty.
However, this will no longer apply automatically and the South African and Mauritian tax authorities will need to agree on the residence of the company each time it is regarded as tax resident in both countries.
“Until such time as the authorities have agreed, the company will not have access to the treaty and will run the risk of being taxed in both countries and suffering double taxation as a result,” Mandy warned.
“The immediate concern is whether both tax authorities will have adequate resources and capacity to resolve the issue within a reasonable time period in order to minimise uncertainty for taxpayers,” he said.
If the two tax authorities cannot reach an agreement on who has the taxing right, a company which contends that it does not have its place of effective management in SA will ultimately have to take the matter to court.
“The treaty itself does not seemingly provide a remedy for the situation where the tax authorities cannot agree on the place of residence,” Mandy said.
The new Double Tax Agreement was gazetted by National Treasury on Wednesday.
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SA border control plan hits brick wall
The government is forging ahead with plans for a border management agency to handle all aspects of border control, from security to customs and plant and animal inspection – but MPs have said it can’t be done.
Home Affairs Minister Malusi Gigaba and his defence counterpart Nosiviwe Mapisa-Nqakula launched Operation Pyramid – a transitional arrangement to improve interdepartmental co-ordination – on Friday, while a draft bill to create the legal framework for the agency was tabled at a workshop in Pretoria earlier in the week.
But there are serious concerns about the ability of one entity to manage the diverse requirements of border control, which would require a huge single body that may prove unwieldy, while it would also need to assume some of the functions of the police and defence force. This would put it in conflict with the constitution, which provides for a single police service and defence force.
Section 199.2 of the constitution states the defence force is the “only lawful military force in the Republic”. Establishing a border management agency performing security functions in parallel with the police and SANDF would thus require a constitutional amendment, but this is just one among many challenges.
The need for such an agency arose in the first place because numerous national intelligence estimates had said the lack of co-ordination in the border environment resulted in “significant weaknesses, threats and challenges”.
Briefing Parliament’s police oversight committee this week, Brigadier David Chilembe, head of border policing, outlined steps that had been taken to get the agency off the ground, six years after President Jacob Zuma ordered it to be done.
The Department of Home Affairs, the lead agent in the project, had established a project office to oversee implementation, heads of affected departments had signed a multiparty agreement and sat on a committee together to co-ordinate their efforts, while an interministerial committee ironed out the policy questions.
The Government Technical Advisory Centre in the Treasury was working on the business case for the agency, Chilembe said.
The plan was to set up the agency in stages and identify the legal and operational implications at each stage so they could be addressed.
But a follow-up briefing on concerns raised by MPs after an oversight visit to the Lebombo border post near Komatipoort in Mpumalanga opened a window into the difficulties the agency will face.
The committee wrote a damning report on the Lebombo border post after a visit earlier this year, when MPs found the ceiling was collapsing because air-conditioning ducts dripped on to it, the door was shattered and the gate jammed, meaning it was possible to drive or walk through it without stopping.
Police complained they had to stand unprotected in the sun or rain and had to make their own travel arrangements from town.
Lieutenant-General Kehla Sithole said the problems originated in a 1998 agreement between Mozambique and South Africa for the post to be established as a “one-stop” facility, with officials sitting back-to-back under one roof.
Mozambique later said it had expected South Africa to pay for its construction, but the Treasury balked at this.
The resulting limbo meant new facilities could not be built and neither could the existing ones be refurbished because the Public Works Department refused to upgrade buildings earmarked for demolition.
There were perceptions that the SA Revenue Service, which was the lead agency in the Border Control Operational Co-ordinating Committee – the body charged with harmonising the environment since 2001 – looked after its own interests first, leaving the SAPS short-changed in accommodation and office space.
MPs were shocked to hear an 80-room residential complex for SAPS personnel stood empty because police were expected to pay for it themselves but, unlike SARS officials, did not receive an accommodation allowance.
As a result, they preferred to rent a shack in town and travel to the border post daily.
There was also no scanner at the border post, meaning truck cargos, for instance, could only be inspected manually.
DA spokeswoman on police Dianne Kohler Barnard said this almost certainly meant the majority of vehicles went through the post unchecked, meaning it could easily be used for child trafficking, for example.
Sithole said the lack of a scanner was the result of a Treasury instruction for departments represented at the post to make a joint proposal for one to be procured, instead of each asking for their own – at a cost of millions a unit.
A “scanner committee” had been established in the late 1990s but, because one was provided for in the plans for the one-stop concept, it had yet to be bought.
Committee chairman Francois Beukman said MPs weren’t interested in the history of the problem, but rather in what would be done to get a scanner in place.
ANC MP Jerome Maake, supported by Leonard Ramatlakane, said after the presentation it was clear the border management agency couldn’t work.
If it was established as a government department – one of three options on the table – this would create a “super department” that would reach into the functions of the others. This would confuse lines of accountability.
If it was established as a government component under an executive authority, or as a public entity, the other two options, it would run into the constitutional challenges related to the police and defence functions.
“All I see here is problems and I don’t see how they can be solved,” Maake said.
“Maybe you’re just afraid of telling the president, this animal can’t be implemented and you’re moving around it, on the periphery, afraid to just say, no – can we come up with something new?
“This one is not implementable.”
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Microfinance: Good for the poor?
To lift the poor from poverty, create jobs, not loans, critics say
In 2005 the United Nations declared the year the International Year of Microcredit. At a time when the clamour for financial inclusion was gaining momentum, the declaration brought microfinance from the periphery of finance and offered an estimated 2.5 billion people an opportunity to “grow thriving businesses and, in turn, provide for their families, leading to strong and flourishing local economies.”
At that time it was widely believed that reducing extreme poverty would be nearly impossible if the majority of the poor could not save or have access to credit. Small lenders were hardly entering into the mainstream financial sector. Their loans were restricted to under $200 at high interest. The rigidity of commercial banks meant that microfinance institutions (MFIs) offered the only hope for financial inclusion to the world’s poor. Then UN Secretary-General Kofi Annan acknowledged as much when he declared that microfinance could be a “weapon against poverty and hunger.”
A decade later the world has an opportunity to evaluate whether microcredit really “changes peoples’ lives for the better,” as Mr. Annan asserted. In July of this year, the UN will hold the Third International Conference on Financing for Development, in Addis Ababa, Ethiopia. While the conference will discuss the whole spectrum of effective and efficient mechanisms of mobilizing resources for development, microfinance is likely to be one of the key topics.
The timing is critical because the contribution of microcredit in achieving the Millennium Development Goals, a set of global benchmarks for UN Member States that is set to expire in 2015, has been minimal. The MDGs will be replaced by the proposed Sustainable Development Goals (SDGs), to be endorsed at the September 2015 summit of world leaders at UN Headquarters.
Arguably, the microfinance movement is vital to the development agenda. The success of the movement in a country like Bangladesh, where there are a staggering 20 million micro-borrowers, has shown that microfinance can lift millions out of abject poverty.
China, which over a single generation has become the world’s second biggest economy, has also proven that microfinance can help enterprises flourish. Until 2005, China did not allow MFIs. A decade earlier the government had started experimenting with microfinance as a tool in poverty reduction, and in 2005 it allowed the commercialisation of microfinance. This opened the floodgates for resources that help tackle poverty and spur the growth of enterprises in rural areas, where the majority of the country’s 400 million people who live on less than $2 per day are concentrated. Since the approval of microcredit, the industry has grown exponentially.
In sub-Saharan Africa, governments now appreciate the impact of microfinance and have enacted favourable laws, encouraged investments, opened up the industry to foreign capital and improved policing mechanisms to protect customers. The growth of the industry is a testament to the high demand for microcredit.
“Microcredit is an effective catalyst in alleviating poverty in Africa. People need access to capital to grow their informal and formal businesses that offer them a regular income and enable them to lead decent lives,” says Mads Kjaer, chief executive of MYC4, a Denmark-based online platform that helps individuals to loan money to small enterprises in sub-Saharan Africa. The average loan is about $150 per month.
The growth of microfinance in Africa since 2000 has been inspiring. Data by Microfinance Information Exchange, a non-profit organisation that keeps track of the industry, shows that from 2002 to 2012 the industry expanded by more than 1,300%. During this period, gross loan portfolio leapfrogged from $600 million to $8.4 billion. The number of microfinance customers or depositors shot from 3 million to 20 million, with active borrowers increasing from 3 million to 7 million.
In countries like Benin, Rwanda, Senegal and Tanzania, microfinance has become a lifeline for low-income earners, who are largely in informal sectors. In Benin, where a third of the population lives on less than $1.25 a day, peasant farmers, food processors and small-scale traders depend entirely on microcredit for survival. This has even forced the government to join the sector by setting up the National Microfinance Fund, which is designed specifically to tackle poverty in rural areas by extending small loans. In Rwanda the growth of the microfinance sector is outpacing that of the official banking sector.
“Microfinance does not get the credit it deserves, yet it is the lifeline for the people at the bottom of the pyramid,” says James Mugambi, the managing director of Premier Kenya, a micro-lender with customers across East Africa.
Despite the impressive growth of microfinance in Africa, its impact in alleviating poverty remains relatively marginal, some critics say. The industry still serves a small fraction of the population and offers loans that are expensive and short-term. Its impact has thus largely been on basic household units, where small loans offer families opportunities to earn regular income through small enterprises, pay expenses like school fees, invest in livestock or buy solar lighting, among other things.
“Microcredit is not an effective way to reduce poverty,” observes Aneel Karnani of the Ross School of Business at Michigan University in the US. “The best way to reduce poverty is to create significant job opportunities suited for the poor. The best engine for doing that is small and mid-size enterprises, not micro-enterprises.”
Addis conference
The Third International Conference on Financing for Development will thus be faced with the unprecedented challenge of unlocking the stunted potential of microfinance to guarantee sustainable impact. Notably, it comes at a time when the microfinance industry is at a crossroads. Today microfinance risks being annihilated in many sub-Saharan African countries as commercial banks adjust their business models to accommodate small savers and borrowers. But probably the biggest threat to MFIs is from telecommunication companies, which are targeting micro-lenders’ clients with mobile banking.
A new World Bank report says mobile banking has become the panacea in Kenya for financial inclusion. The Measuring Financial Inclusion around the World report shows that a staggering 75% of the Kenyan population is banked, the majority through mobile phones. Mobile banking is now being hailed as more viable than microfinance. “Mobile banking will help the poor transform their lives,” said Bill Gates, one of the world’s richest men, referring to M-Pesa, a mobile banking product in Kenya.
According to Mr. Kjaer of MYC4, the Addis Ababa conference must explore the bottlenecks that have hindered microfinance from realising its full potential in poverty alleviation. “Microfinance is a tool that Africa cannot do without,” he says. “What we need are new and innovative ways and business models to make it more attractive.”
One potential way for microfinance to salvage its fading allure is by capitalization. In its current setup, the majority of MFIs in Africa are highly undercapitalized. Many are operating just above the threshold demanded by regulators. As a result of undercapitalization, MFIs are forced to spread risk by offering only small loans to many people at absurd interest rates.
Directing capital into microfinance to enable lenders to provide bigger loans at lower rates and with long maturity times would make it easier for the industry to contribute effectively in reducing poverty. While the natural sources of capital are donors and private investors, the industry can also tap into cheap capital being held by sovereign wealth funds and pension funds. By the end of 2013, the total assets of sovereign funds stood at $5 trillion across the globe.
“There are resources that can be made available to MFIs, but there is need for proper policing,” notes Mr. Kjaer.
Another potential strategy is to change the primary goal of microcredit. Traditionally microfinance is perceived as a quick-stop shop for emergency domestic loans. A more sustainable approach would be to change the industry’s mind-set so that it becomes a source of funds for enterprises that have the potential to expand and employ more people.
Pushing microcredit as a development tool to an increasingly sceptical world during the Addis meeting may be a hard sell. However, failing to convince stakeholders of the need for microfinance in poverty alleviation could be suicidal for the industry. It is imperative to note that the growth of microfinance over the past decade has been propelled largely by goodwill, mainly from development partners and the Norwegian Nobel Committee, which awarded the 2006 Nobel Peace Prize to Muhammad Yunus and Grameen Bank for giving loans to entrepreneurs too poor to qualify for traditional bank loans.
This article appears in the August 2015 edition of Africa Renewal, published by the United Nations.
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Helen Clark: “The New Global Development Agenda and Malawi”
Lecture on “The New Global Development Agenda and Malawi” by Helen Clark, UNDP Administrator, 18 June 2015
I thank the Speaker of the Malawi National Assembly, Hon. Richard Msowoya for inviting me to deliver this lecture here today.
As a former Member of Parliament, Minister, and Prime Minister in New Zealand, I know very well what a critical role parliamentarians play in shaping the development and future prospects of their countries. It is therefore a great pleasure to discuss with you the emerging post-2015 development agenda and the sustainable development goals (SDGs) – set to succeed the Millennium Development Goals (MDGs) at the end of this year – and how it relates to Malawi.
The new global agenda – building on the MDGs:
The new development agenda is shaping up to be both ambitious and transformational. It will be universal in nature, it covers all three dimensions of sustainable development, and aims to address the many interlinked challenges our world is facing. The agenda is relevant to countries at all stages of development – both this country, Malawi, and my own, New Zealand.
Without doubt, there has been tremendous development progress globally in the time span covered by the MDGs and their targets. Between 1990 and 2010, for example, extreme income poverty halved, and the likelihood of a child dying before their fifth birthday was nearly halved. Now most children in developing countries are enrolled in primary schooling for at least some time. Maternal death rates are down, although not nearly enough, and significant progress has been made on combatting HIV, malaria, and tuberculosis. The goal set for access to improved water sources has been met.
Yet there is much unfinished business from the MDGs. Poverty and hunger are yet to be eradicated, and inequalities are increasing in many countries. As well, the global environmental challenges are mounting. That is particularly evident with climate change. Its impacts threaten development achievements in all countries, and especially in the poorest and most vulnerable.
The new global agenda must take on these challenges. The alternative is to face a world characterized by even more turmoil and instability. The time to act is now. Exclusion is fueling the use of sectarianism and violence. The burden of complex humanitarian emergencies occasioned by conflict or by natural disasters is weighing heavily on peoples on the frontlines of these events, on national economic and on international relief budgets.
In the current set of proposed sustainable development goals (or SDGs) before UN member states, there are goals and targets which relate to economic growth, infrastructure, energy, and strengthening capacities to trade and attract investment. The agenda also tackles the MDGs’ unfinished business, and the challenges of environmental degradation, and rapid urbanisation. It prioritizes tackling inequalities – indeed the importance of leaving no one behind is a defining feature of the new agenda.
As well, and for the first time explicitly, the proposed new global development agenda affirms that development requires peaceful and inclusive societies, justice for all, and effective, accountable, and inclusive institutions at all levels.
In January 2014, the African leaders endorsed the Common African Position (CAP) on the Post 2015 Development Agenda as the first developing region to have a unified position on the new development agenda. These priorities are reflected in the proposals now on the table being negotiated by member states.[1]
Building resilience – integral to successful global development agenda
As a development organization, UNDP is very aware of the highly detrimental impact which disasters and crises – both man-made and those due to natural hazards – can have on development efforts. Too often, we see decades of hard work and billions of dollars in investments washed away by a hurricane, leveled by an earthquake, or destroyed in a war.
Here in Malawi, you know the effects of natural disasters all too well. The recent devastating floods impacted millions of people, part of a recurrent cycle of floods and droughts, which despite being predictable still require emergency responses of varying size each year.
While floods, droughts, and other natural hazards are often unavoidable, the planning for those events, the response, and recovery, can be managed. Our goal in the aftermath of crisis should always be to “build back better”. This is something which I emphasized at today’s launch of the Post Disaster Needs Assessment report, which is to underpin the recovery from this year’s floods. UNDP will support the Government and peoples of Malawi throughout these efforts.
The importance of resilience for sustainable development was featured at the World Conference on Disaster Risk Reduction in Sendai, Japan, earlier this year. Its outcome will complement the post-2015 development agenda and the SDGs as we move into the implementation phase at the beginning of next year.
Implementation of the new development agenda
The new development agenda will remain mere words on paper unless it can be effectively implemented. A strong package on “means of implementation” will be critical. Capacities need to be strengthened. Renewed global partnerships for development are needed. And, while money isn’t everything, access to finance is vital.
The Third International Conference on Financing for Development in Addis Ababa in July needs an outcome which is as bold and ambitious as the new sustainable development agenda promises to be.
It will be critical for the advanced economies to recommit to meeting the international target of 0.7 per cent of Gross National Income (GNI) for Official Development Assistance (ODA). ODA should be directed to where it is most needed and where it can catalyse other flows of finance. In this regards, meeting the targets of allocating at least 0.15 per cent to 0.20 per cent of GNI as ODA to LDCs by 2020 is vital.
ODA should be smart aid in supporting the building of national capacities for inclusive and sustainable growth, for domestic resource mobilization from that growth, and for the attraction of quality loans and investment.
The Addis Ababa Conference is also an opportunity for concrete commitments to be made to combat the tax evasion and avoidance and illicit financial flows which constrain efforts to raise domestic resources. I commend the African Union’s proactive engagement on this. Africa loses an estimated amount of US$ 50 billion annually to illicit financial flows. These lost resources are an important factor in explaining why Africa’s economic growth has often failed to accelerate human development. They can also be attributed to fueling conflicts on the continent.
There is also much more international policy coherence needed across areas like trade, taxation, and migration. As well, developing countries need readier access to the technologies which will enable them to make breakthroughs on sustainability.
The range of challenges the new global agenda seeks to tackle also requires more international public finance beyond ODA. More resources are needed for investments in areas ranging from communicable disease control to climate change adaptation and mitigation, infrastructure development, and science, innovation, and new technologies.
Implementing a bold global sustainable development agenda requires the engagement of the world’s private sector too. How business does business, and the regulatory framework within which it operates, have a huge bearing on whether development is sustainable.
Implicit in this universal agenda is the understanding that development is not just something which should happen for someone else somewhere else. The quest for attaining and sustaining high levels of human development is relevant to all countries. And the challenges of sustainability of our ecosystems are faced by countries at all levels of development – although regrettably, those who have contributed the least to the problem, like Malawi, are facing the gravest consequences
Malawi and the MDGs
Malawi has made important progress on some of the MDGs, especially on gender parity in primary school enrolment; child mortality; HIV/AIDS and malaria; and access to an improved water sources.
Malawi’s leadership in combating HIV and AIDS is particularly noteworthy. Commitment and effort has paid off: 82 per cent more people are being treated for HIV today than five years ago. Malawi has achieved one of the highest decline of new mother-to-child transmissions of HIV in the world. National prevalence of HIV has also declined to 10.6 per cent, down from 15 per cent in 1998. Addressing the rise in new infections, particularly among girls aged 15-24 years old, is the main challenge now.
While recognizing achievements, it is also true that by the time the SDGs will become the world’s new development compass, much unfinished MDG business will remain here in Malawi.
In particular, the poverty target is significantly out of reach, with about 51 per cent of people living under the national poverty line in 2010. There is some good news, however, as preliminary data from the 2010-2013 Integrated Household Survey, indicates that poverty may be starting to decline.[2] Traditionally, poverty has been largely a rural phenomenon in Malawi, which points to the importance of strengthening rural infrastructure and raising the productivity of the rural economy, focusing in particular on agriculture and small scale enterprises for women.
Inequality, as measured by the Gini coefficient, is also troubling: between 2004 and 2010 it rose from 0.39 to 0.46[3]. Gender equality is a particular challenge, and although there has been some progress in some areas, for example at the primary school level, critical gaps remain. An important manifestation of this is persistent high maternal mortality.[4]
Another concern is Malawi’s continued deforestation, which is progressing at a very fast pace – 2.8 per cent per year – the highest in the SADC region. This contributes to Malawi’s vulnerability; the devastating floods earlier this year are widely believed to have been exacerbated by the prevailing levels of environmental and natural resource degradation.
Malawi and the SDGs – an opportunity for accelerated progress
Regardless of many challenges, there are also a range of opportunities for Malawi to achieve the transformational change it seeks under the new development agenda.
Let me offer some thoughts on key entry points in this regard:
1. Inclusive growth – critical for progress
Promoting inclusive growth will be critical to the realization of the SDGs in Malawi. Progress on poverty reduction and employment creation has not been commensurate with the high growth of recent years – particularly between the years 2006 and 2011. Inclusive growth allows opportunities for everyone to participate in the growth process while making sure that benefits are shared. Without an effective inclusive growth strategy, it will be very difficult to achieve the principle of ‘leaving no one behind’ on the SDGs in Malawi.
UNDP is committed to supporting Malawi in making its economic growth more inclusive. For example, the Private Sector Development Project, for which DFID has provided financing, aims to contribute to the transformation of the private sector into the engine of real growth and anchor for economic diversification, job creation, and greater economic opportunity for all Malawians, with a particular focus on the poor.
2. Diversification as a strategy of structural transformation
Economic diversification towards manufacturing and the service sectors will be important to lessen Malawi’s dependence on agriculture, generate growth, and build economic resilience. In this regard, due focus needs be given to nurturing sectors which are job rich and promise higher productivity. Effective implementation of the National Export Strategy will be important to maximize the contribution of exports to economic and social development.
3. Building resilience at all levels
Resilience building is critical to Malawi’s sustainable development efforts. Integral to this is a strong focus on disaster risk reduction, including through actions aimed at mitigating risks related to floods, droughts, and economic shocks. As well, addressing deforestation and strengthening ecosystem integrity is critical.
As mentioned before, UNDP will work with Malawi to strengthen resilience at all levels. This includes helping Malawi avoiding catastrophic setbacks from climate change, through both adaptation and mitigation measures
4. The critical important of gender equality
For Malawi to make real progress on the SDG’s, the promotion of gender equality and women’s empowerment needs to be at the forefront of national planning and budgeting processes. This is particularly important given the fact that most of the MDGs which have been off-track in Malawi have strong gender dimensions. Equal rights to economic resources, land ownership, and access to reproductive health services is of the essence.
UNDP’s next Africa Human Development Report will focus on the political economy of gender inequality on the continent. It will explore the drivers of women’s economic exclusion, and provide strategic and policy options for the way forward.
5. Harnessing the potential of youth
Malawi’s population is very young – with a median age of 17 years - and is growing. Between 1966 and 2008[5], the population more than tripled. By 2050, it is projected to reach 41.2 million.
With the right set of policies, Malawi can turn its population growth into an opportunity by investing now in human development and creating productive employment for youth.
6. Mainstreaming SDGs into national development plans
The introduction of the SDGs will coincide with the preparation of the new National Development Plan. This will be an important opportunity to effectively mainstream the new goals into development planning at all levels – thereby ensuring that they guide national and local efforts.
As the SDGs will primarily be translated into action at the local, district, and village levels, it will be important to involve local actors like parliamentarians and councilors in the process. Strong synergies built between the national and local planning processes will empower local governance institutions to undertake participatory planning in order to best meet grassroots aspirations.
Uganda and Botswana have already started the process of integrating the SDGs into their national development plans, and can provide good lessons to learn from. UNDP is ready to support the Government of Malawi in ensuring a smooth transition to the new development agenda and articulating the SDGs in national development plans and policies. We have extensive experience in doing this with the MDGs from an early stage.
7. Citizen engagement on the SDGs
Citizen engagement is critical for the success of the new sustainable development agenda and the SDGs. There has already been wide outreach to the global public – through the online MY World Survey and in thematic and national consultations, including here in Malawi.
Throughout these consultations, citizens from across world have made it clear that they don’t want their engagement with the new global agenda to be limited to providing input at the outset. They expect to be informed participants in development, and to be able to monitor progress and hold governments and other actors accountable for the commitments they make.
Malawi can count on support from the UN system to develop effective mechanisms for peoples’ engagement in monitoring progress on the SDGs. This includes supporting Parliament in carrying out its critical oversight role.
8. Financing
To be successful, national and sub-national SDG-based development plans need to be adequately resourced, ensuring that ambition is matched by means.
While recognizing the critical role which ODA will continue playing for Malawi in the years to come, the post-2015 agenda cannot be achieved through aid alone and domestic resource mobilization will play an increasingly important role.
Malawi’s domestic resource mobilization will need to be underpinned by expanding the revenue base, improving tax administration, and quality service deliver. It is also intimately linked to the choices and investments made in health, knowledge, skills development, and food security, as these all contribute to building healthy and productive societies, thereby broadening the tax base.
Conclusion
In conclusion, let me emphasize that Malawi has great potential to make significant sustainable development progress under the post-2015 development agenda and the SDGs.
You, as parliamentarians, will play a critical leadership role in this regard – be it through legislation, budget scrutiny, or overall oversight.
Indeed, you are key players when it comes to institutionalization of actions and creating enabling conditions; prioritization of critical issues such as gender equality and resilience-building; monitoring and reporting on progress; ensuring transparency and accountability of resources; and maintaining that critical link between your constituencies and what is happening at the national level. I am therefore very pleased with having the opportunity to address you here today.
Please be assured that UNDP remains fully committed to supporting Malawi on its development path.
[1] The common position grouped Africa’s development priorities unto into six pillars: (i) structural economic transformation and inclusive growth; (ii) science, technology and innovation; (iii) people-centred development; (iv) environmental sustainability natural resources management, and disaster risk management; (v) peace and security; and (vi) finance and partnerships.
[2] According to the Integrated Household Panel Survey Report 2010-2013 by NSO the “incidence of poverty is estimated to have fallen from 40 percent of the population in 2010 to 39 percent in 2013”. The incidence of ultra-poverty decreased from 15 percent of the population in 2010 to 12 percent in 2013. Urban poverty is estimated to have increased from 17.9 percent to 26.2 percent while rural poverty has decreased from 44.0 percent to 42.0 percent.
[3] Latest available data
[4] Malawi is ranked among the 20 countries in the world with the highest level of maternal mortality: 510 maternal deaths per 100,000 live births according to the Trends in Maternal Mortality Report in 2014.
[5] NSO 2009
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Climate finance mobilized by the AfDB went up by 60% compared to 2013
Multilateral Development Banks provided US $28 billion in climate finance in 2014
The world’s six large multilateral development banks (MDBs) delivered over US $28 billion in financing last year to help developing countries and emerging economies mitigate and adapt to the challenges of climate change. The latest figures bring total collective commitments of the past four years to more than US $100 billion.
In 2014, the six banks together provided over US $23 billion dedicated to mitigation efforts and US $5 billion for adapation work, according to the fourth joint report on MDB Climate Finance.
The report reveals the important part the MDBs play in delivering development finance in a world shaped by climate change. It was prepared by the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank (IDB) and the World Bank Group (WBG).
Of the total commitments in 2014, 91 percent came from MDBs’ own resources, while the remaining 9 percent, or US $2.6 billion, came from external resources including bilateral or multilateral donors, the Global Environment Facility, and the Climate Investment Funds.
Among the regions, South Asia received the largest share of total funding, at 21 percent. Latin America and the Caribbean, non-EU Europe and Central Asia, Sub-Saharan Africa, and East Asia and the Pacific received 17 percent, 16 percent, 15 percent and 10 percent, respectively.
In Africa, climate finance mobilized by the AfDB went up by 60% compared to 2013 boosted by increased investments in renewable energy and sustainable transport. A total of US $1.92 billion was mobilized: US $1.16 billion for mitigation and US $760 million for adaptation, 50% more than in 2013 because the Bank continues to push for increased funding for adaptation projects. Over the last four years, the Bank has delivered US $7 billion in climate-smart development.
“Our aim is to do more and we are committed to scaling up much-needed climate finance for the continent,” said Alex Rugamba, AfDB Director, Energy, Environment and Climate Change Department. “2015 represents one of the last opportunities for the global community to deviate from its current unsustainable growth pathway. This year is critical for solid decisions on sustainable development and on climate change in particular. For African economies which are considered among the most vulnerable to the adverse effects of climate change, the importance cannot be overstated. The AfDB has been at the forefront in supporting sustainable development working closely with African countries to transition towards climate resilient and low carbon growth.”
About one-third (36 percent) of the total in adaptation funding went into agriculture and ecological resource projects, and 40 percent went into projects involving infrastructure (including flood protection), energy, and the built environment. Renewable energy was the most common mitigation project, drawing 35 percent of the funding. Energy efficiency accounted for 22 percent. The banks also invested heavily in sustainable transport, at 27 percent of the total.
“The increasing level of climate financing delivered by MDBs is a positive trend and should encourage all stakeholders to stay the course with particular attention to delivering more adaptation finance to countries with the least resources,” said Rugamba. “The African Development Bank also commends the joint work undertaken by MDBs and IDFC (International Development Finance Club) to harmonize climate finance tracking methodologies, leveraging climate finance and greening development; all these geared towards a robust climate finance pronouncement at COP 21.”
The 2014 report is based on a joint MDB approach for climate finance tracking and reporting that counts only the project components directly providing mitigation or adaptation co-benefits.
Knowing where the money is flowing is critical for reaching areas of opportunity and need, because what gets measured gets managed. The MDBs have harmonized their principles for tracking climate mitigation finance with members of the International Development Finance Club, and have started a similar process for adaptation finance.
The MDBs, together with other public development finance institutions, play a strategic role in smartly deploying scarce government resources and leveraging much larger, and longer-term, private investments.
It is increasingly clear that the finance required for a successful, orderly transformation to a low-carbon and resilient global economy is counted in the trillions and not billions. The immediate challenge of climate finance, while we build the policy framework that will drive investment of the trillions, is to meet the promise made by developed countries to mobilize US $100 billion a year by 2020.
With their ability to catalyze public and private funds, the report shows how the MDBs have successfully attracted and deployed climate financing to support low-carbon resilient growth in developing countries and emerging economies.
The report provides key data on climate finance flows and is expected to inform discussions at the Third International Conference on Financing for Development in Addis Ababa next month, and the UN climate change negotiations (COP21) in Paris at the end of the year.
» Press Release: Multilateral Development Banks Provided $28 billion in Climate Finance in 2014
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Free trade area deal will boost EAC integration and intra-Africa trade
There is cause for celebration following the meeting in Cairo of 26 African heads of state representing the countries that make up the three major trading blocs on the continent – the East African Community, Southern African Development Community and the Common Market for Eastern and Southern Africa – for the formalisation of the Tripartite Free Trade Area (TFTA) agreement.
The leaders endorsed a five-year negotiated framework that establishes preferential tariffs to ease the movement of goods and traders in a region of 625 million people.
The conference kick-started a process that will set up harmonised trade policies, the removal of trade barriers and a renewed promotion of trade facilitation.
The momentum for intra-African trade is strong, with real benefits in increased trade, global competitiveness, employment and higher incomes for the region, and the culmination of the African Union action plan in 2012 to double intra-Africa trade and fast-track a continental free trade area.
The main attraction at the Egyptian conference was the offer of 100 per cent liberalisation on tariff lines. Thereafter, no country should face higher tariffs under the new trade regime.
Although there are more than a dozen overlapping regional trade arrangements of which only eight are recognised by the African Union, intra-Africa trade and investment has remained a distant goal with low trade volumes among countries partly due to the conflicting trade policies and a “bandwagon effect” brought about by corresponding membership in the different trading blocs.
While the preceding trade arrangements in Africa were set up to promote colonial interests, recent negotiations have been motivated by dissatisfaction with the slow progress in multilateral trade liberalisation in the context of the World Trade Organisation (WTO) hence the push for South-South trade.
Numerous players and development partners were delighted by the pact signed by the African leaders and hoped that respective parliaments will expedite the process of authenticating the agreement.
One such partner said in a statement: “As a strong active supporter of the EAC in the negotiations leading to the TFTA, TradeMark East Africa is proud to be associated with this momentous event.”
The World Bank President Jim Yong Kim said that with the launch of the TFTA, “Africa has made it clear that it is open for business.” And the final communique signed by the 26 heads of sates state read: “The establishment of TFTA will bolster intraregional trade by creating a wider market that would increase investment flow… and ensure regional infrastructure development.”
Under the new arrangements, trading will also be governed by harmonised rules of origin, which ensure that only goods produced in the region benefit from the preferential trading arrangements.
The TFTA will also ensure that Angola, DR Congo, Eritrea, and Ethiopia, which are currently outside existing FTAs, are involved in the tariff liberalisation process. It will also ensure that countries in the various FTAs that are not trading under any preferences are enabled to exchange and negotiate tariff offers among themselves.
The new TFTA will be in place once all the non-FTA countries are participating fully within their regional economic communities and necessary tariff offers have been exchanged and duties eliminated. This is expected to become a reality by July 2016.
Africa’s trade potential is not in question. Records show that the world’s second largest continent made its mark in history long ago both as a point of origin as well as a sought after trade destination despite the existence of real logistical and language barriers. Yet African economies account for only two per cent of global trade today.
With a combined market of 625 million people in 26 countries, the EAC, SADC and the Comesa will be the largest single trading bloc in Africa with a GDP of more than $1 trillion.
Data from a study by the Institute of Development Studies at the University of Sussex, indicates that with the elimination of tariffs on trade, the three regional economic communities (RECs) within this expanded market are projected to generate annual welfare gains of at least $3.3 billion per annum.
Entrepreneurs and traders will also benefit from better policy co-ordination and cohesion across sectors, especially in industry and infrastructure development as well as a reduction in overlapping memberships in the RECs.
As far back as 2011, negotiations to establish the TFTA undertook to cover trade in goods, services, intellectual property rights, competition policy, development and cross-border investments. An agreement on the movement of traders was negotiated parallel to that on trade in goods.
The TFTA arrangement has adopted a development approach towards integrating the economies of the 26 member states of the three regional economic communities, based on the three pillars of Market Liberalisation, Industry Development and Infrastructure Development.
Inter-state co-operation implemented through regional trade agreements is not new on a continent that boasts some of the oldest trade arrangements in the world, among them the Southern Africa Customs Union (SACU) and the old EAC, established in 1910 and 1917 respectively.
Since then, trade agreements have proliferated and to date 406 are in force. By April this year, a total of 612 agreements had been notified to the WTO.
Long after the ink dries on the TFTA, the work will have only just begun to secure the nuts and bolts of the second phase of the agreement and to nail down the negotiations on trade in services, intellectual property rights, competition policy, trade and development and cross-border investments – the conduits to the success of the Free Trade Area.
There is also room for further negotiations to unpack the liberalisation of tariffs and rules of origin and to create the pathways that will move Africa away from the traditional but narrow reliance on primary commodity exports. Only then can the citizens of the region begin to reap the benefits of an expanded trade environment.
The writer is the senior director and head of TradeMark East Africa-East African Community (TMEA-EAC) Partnership Programme
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tralac’s Daily News selection: 19 June 2015
The selection: Friday, 19 June
25th Assembly of the African Union: summary of outcomes (AU)
A declaration on self-reliance was adopted. It approves the First Ten-Year Implementation Plan of Agenda 2063 and its Financing Mechanism, as a step towards Africa’s collective vision for the level and depth of integration and development that the continent must achieve in the next 50 years.
The Tripartite FTA: technical features, potential and implementation – the road ahead (tralac)
This note contains a brief analysis of the text of the TFTA Agreement, mentions outstanding issues, and discusses some of the broader implications. We also mention the linkages to the other important recent development; the launch of the Continental Free Trade Area negotiations; which took place on 15 June at the African Union Summit in Johannesburg. [The author: Gerhard Erasmus]
Understanding the importance of the Tripartite Free Trade Area (Brookings)
Even when the negotiations are concluded and all the outstanding issues resolved, the actual implementation of the FTA could still be a difficult, risky, and lengthy process. It will require significant consultations with all relevant stakeholders and real political will from regional and national policymakers. In addition, the agreement needs to be ratified by the national parliaments of the bulk of the member states before it becomes in force. Given its importance, communicating what TFTA is, what it is not, and what its promises are to the general public is crucial as national parliaments move to vote on its ratification. [The author: Soamiely Andriamananjara]
The Saana Institute is launching its first ever Essay Competition in association with the Centre for the Analysis of Regional Integration at Sussex (CARIS) at the University of Sussex and the Trade Law Centre (tralac) in Stellenbosch, South Africa.
Who can enter? The competition is aimed at university students who are citizens of any African Union country, between the ages of 18-25 and currently enrolled in undergraduate studies in economics, law, political science or other relevant discipline. Entries are welcomed from AU citizens between 18-25 years enrolled in higher education institutions inside and outside of the borders of AU countries.
How do I enter? Choose one of the topics below and write an evidence-based essay of between 1,500 to 2,500 words. The topics are based on the Tripartite Free Trade Agreement (TFTA) and the Continental Free Trade Agreement (CFTA).
SACU: a new AU REC in the making? (The Namibian)
Question: Is there somewhere a conflict of interest between the configurations in Southern Africa (besides the AU's recognised and unrecognised configurations)? Given the above, and taking into account the AU's unanswered diversion from their Abuja Treaty, which configuration would eventually triumph in the end? Would the future include a clash of Titans in Southern Africa? [The author, Wallie Roux, is the head of research and development at the Namibia Agricultural Union]
Next week, in Johannesburg: Shaping a Global Trade Agenda for Development (Commonwealth Secretariat)
The Commonwealth Secretariat will convene the Commonwealth Trade Symposium between 23-24 June 2015 in Johannesburg, South Africa, providing a platform for officials, experts, the private sector and other stakeholders to meet and review emerging and long-standing trade related issues. The objective of the Symposium is to highlight issues and perspectives that are critical to ensure an inclusive global trade support architecture for development. The forum will facilitate a better understanding of interlinked issues and support the sharing of country perspectives on the process of achieving trade development objectives and setting global priorities. [Agenda]
Developing nations want trade talks to follow earlier mandates (LiveMint)
India and China, along with 100 other developing and poor nations, on Tuesday insisted that the ongoing Doha agriculture negotiations of the World Trade Organization (WTO) be concluded only on the basis of all existing ministerial mandates, including the 2008 revised draft modalities. Trade officials from the developing countries objected to what they call ongoing attempts to change the goalposts of agriculture negotiations under the guise of “recalibration or simplification”. They were responding to new approaches suggested by ambassador John Adank, who chairs the Doha agriculture negotiations.
China, India, South Africa and Indonesia, on behalf of the 46-member developing country farm coalition, and Barbados, on behalf of Africa, Caribbean and Pacific (ACP) group of countries objected to the new approaches on several grounds. The approaches, they said, are opposed to the contents of the Doha declaration of 2001, the 2004 July framework agreement and the 2005 Hong Kong Ministerial Declaration. They also felt this was another attempt to undermine S&DT flexibilities.
Developing countries submit WTO trade facilitation commitments with ITC support (ITC)
Zambia’s budget deficit poses risk – World Bank (World Bank)
Zambia's current levels of budget deficit of K20 billion poses a risk to macroeconomic stability and growth, World Bank senior country economist Philip Schuler has said. He said at the launch of the World Bank brief titled: “Making Mining Work for Zambia: The economic environmental and health nexus of Zambia’s copper Mining,” on Wednesday that discipline and dedication is considerable required to reduce deficit reduction, given the likely pressures to increase spending in an election year. “How can we manage fiscal challenges in years ahead? The current level of deficit of six percent or more poses a risk of macroeconomic stability [as], this kind of deficit and borrowing cannot go on for long. It poses a risk to sustainability on public finances,” he said.
Zambia to host copper indaba (Daily Mail)
Mugabe turns to Khama for help (Zimbabwe Independent)
Nothwithstanding the frosty relationship, Mines and Mining Development minister Walter Chidhakwa will visit Botswana on July 2 to study the diamond model in Botswana — the world’s leading diamond producer by value. He said he has also been to Namibia and South Africa to study their models and now wants to look at the Botswana model as he works on his plans to consolidate the diamond mining companies into one entity, with 50% government shareholding as is the case in Botswana. The government of Botswana mines diamonds in partnership with South African giant De Beers. “Diamond mining is a very difficult sector,” said Chidhakwa. “It is difficult to monitor and manage, but if we consolidated the companies into one and have one monitoring mechanism the model of consolidation will allow for better monitoring thereby reduce the leakages.”
Kenya: Rotich scraps tax holiday for rural based companies (Business Daily Africa)
Treasury secretary Henry Rotich has scrapped tax incentives for large manufacturers setting up in rural areas, ending a long-running policy which analysts say has cost the government billions of shillings in tax revenue without realising the goal of luring investors away from major towns. The government in 1991 introduced a 150 per cent tax deduction for capital investments of Sh200 million or more spent on industrial buildings and machinery outside Nairobi, Mombasa and Kisumu.
Kenya Budget Bulletin (PWC)
Tax, regulation top list of worries for EAC chief executives (Daily Nation)
Uganda: Kasaija’s Budget, fails to inspire, the Shilling (Daily Monitor)
Somalia: IMF completes 2015 Article IV mission (IMF)
An International Monetary Fund team led by Rogerio Zandamela held discussions in Nairobi from June 8–18, 2015 on the Article IV Consultation with Somalia, the first such discussions in over 25 years. At the conclusion of the mission, Mr. Zandamela made the following statement:
Leveling the field for women farmers in Uganda (World Bank Blogs)
We estimate the simple gender gap after accounting for plot size at 30 percent. As expected, we found subsistence farming by far the most important source of livelihood among sampled households, ranging from 52 percent in the Central region to 76 percent in the Northern region. Ultimately we were able to attribute two-fifths of the productivity gap to women’s greater child care responsibilities and one-fifth to their difficulty accessing markets from more remote areas. We also found male-managed plots were 60 percent larger and 11 percentage points (25 percent versus 14 percent) more likely to be planted with cash crops such as bananas and coffee.
Egypt’s non-petroleum exports drop by 20% in 4 months, report (The Cairo Post)
Egypt’s non-petroleum exports during the first four months of 2015 declined by 20 percent to stand at $8 billion compared to $10 billion during the same period last year, official report said. The non-petroleum exports in May 2015 reached $1.7 billion down from $2.1 billion in May 2014, according to a Wednesday report by The General Organization for Export and Import Control (GOEIC.) Egypt has acquired 25 percent of intra-regional trade exports in the COMESA.
Rwanda: Formal external trade in goods statistics report (Q1, 2015)
In the first quarter of 2015, Rwanda’s total trade reached up US$ 572.38 million. This is 0.13% higher than the same quarter in 2014. In addition, official data show that imports decreased by 1.75% over the same quarter of 2014 and exports increased by 10.22% when comparing to the same quarter of 2014. The total value of exports is US$ 101.90 million, the total value of imports is US$ 432.61 million while the total value of re-exports is US$ 37.87 million. The trade deficit for the first quarter of 2015 worked out to US $ 292.75 million, which is 5% smaller than the deficit of the first quarter of 2014 (US $ 309.06 million) but 16 % higher than the fourth quarter of 2014 (US$ 253.11 million). [Downloads]
The troubling details in Indian export numbers (LiveMint)
UN warns of ‘record high’ 60 million displaced amid expanding global conflicts (UN News Centre)
According to data gathered by Office of the UN High Commissioner for Refugees (UNHCR) over the course of 2014, the number of people forcibly displaced during the reporting year swelled to a staggering 59.5 million people compared to the 51.2 million from the previous year. The figures, collected by the UN agency for its latest Global Trends: World at War, suggest that one in every 122 humans is now either a refugee, internally displaced, or seeking asylum. If this were the population of a country, says UNHCR, it would be the world’s 24th largest. “We are witnessing a paradigm change, an unchecked slide into an era in which the scale of global forced displacement as well as the response required is now clearly dwarfing anything seen before,” UN High Commissioner for Refugees António Guterres declared in a press release issued earlier today and marking the report's release.
East Africa countries among world’s ‘most fragile’ again (The EastAfrican)
Millions going hungry in South Sudan as donors get 'frustated' (The EastAfrican)
Dangote takes cement empire to Asia (ThisDay)
NERCHA hosts successful SADC mainstreaming meeting (Swazi Observer)
Renewable Energy in Africa - Tanzania country profile (AfDB)
Brazil, China could be partners in lighting up Africa: Brazilian expert (ecns)
Africa Regional Forum on Sustainable Development: downloads
Insurers managing $14 trillion commit to backing sustainable development (UNEP)
Cabinet to consider India’s membership of China-led multilateral lender AIIB (Economic Times)
This week in the news
Follow the links below to read tralac’s daily news selections for the past week:
The selection: Thursday, 18 June 2015
The selection: Wednesday, 17 June 2015
The selection: Monday, 15 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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The year 2015 decisive for Africa’s sustainable development plans
“This is a momentous opportunity that the Africa region must seize to pave the way for its meaningful participation in the global institutional architecture for sustainable development,” declared Mr. Abdalla Hamdok, ECA’s Deputy Executive Secretary as he opened the Africa Regional Forum on Sustainable Development conference in Addis Ababa.
Mr. Hamdok reminded delegates of the timeliness of the meeting of the Forum in that its recommendations “will guide the implementation of the post-2015 development agenda and the SDGs” and precedes three major events of the year. The Third International Conference on Financing for Development will be held in Addis Ababa in July; the adoption of SDGs in New York in September; and the Climate Change Conference in Paris in December.
Planning, deliberating and reviewing are necessary parts of this complex process of defining development priorities and “finding adequate means of implementation”. Mr. Hamdok recognised that “development challenges are more profound in Africa” but indicated that “the achievement of sustainability in national development requires a strategic long-term and integrated approach which is sophisticated enough to meet the complex challenges of sustainable development”.
Mr. Hamdok praised African states for their active participation in the consultations and drafting of common positions on development. However, he pointed out that the work is yet to be complete. “Africa should continue to be meaningfully engaged in the elaboration of an indicator framework for the SDGs”.
He further suggested, “given that development aspirations and processes are context specific, African negotiators should ensure that this work takes into account regional and national contexts, as well as initial conditions of each country, to effectively convey the region’s views and positions on the ongoing international consultations and negotiations at all levels”.
To be able to draft and plan for sustainable development many African states will have to boost competencies in information management and effective monitoring. “National statistical capacities must be strengthened for data gathering, analysis and reporting to support timely reviews,” suggested Mr. Hamdok.
The Forum is being held for the first time following its establishment by the eighth Joint Annual Meetings of the African Ministers of Finance, Planning and Economic Development held in March 2015.
The Forum is jointly organised by ECA, the African Union Commission (AUC) and the African Development Bank (AfDB) in collaboration with the United Nations Department of Economic and Social Affairs (UNDESA), the United Nations Environment Programme (UNEP) and the United Nations Development Programme (UNDP).
» Presentations from the Africa Regional Forum on Sustainable Development (ARFSD) are available below.
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the dti Plans to Grow Exports
The Department of Trade and Industry (the dti) has committed to growing the diversity and volume of the country’s exports by ensuring that all the stakeholders play their active role in the implementation of the National Exporter Development Programme (NEDP). This came to light at a 3-day Team Export South Africa Workshop that that started in Pretoria on Wednesday 17 June. The workshop was hosted by the dti under the theme “Export-driven Economic Growth and Industriali-sation in South Africa”.
The first of a three-day workshop, focused on the strategic direction in driving the national export agenda, soliciting support from stakeholders and industry, and encouraging collaboration with stakeholders in the implementation of the National Exporter Development Programme (NEDP) and the reviewed Export Council Model.
The Director of Industrial Policy at the dti, Mr Fanie Gagiano, said that one of the most important strategies was identifying sectors in which South Africa has a comparative advantage. He also identified the need to strengthen institutional support for these sectors and develop a matrix management system to ensure linkages between Industrial Policy Action Plan (IPAP), enterprise development and empowerment programmes on the one hand, and export promotion and development programmes on the other hand.
“The effective implementation of export development requires commitment from a broad range of stakeholders who are involved in the export sector and supporting exporters. The current exporter development landscape in South Africa is extensive but very fragmented, and a deeper engagement and collaboration to effect changes is required to introduce a more coherent support framework,” said Gagiano.
The Acting Chief Director of Export Development and Support at the dti, Mr Jacob Moatshe the New Growth Path also prioritises the creation of jobs in South Africa through a coordinated set of actions consisting of macroeconomic strategies, microeconomic measures and stakeholder commitments to drive employment and economic growth.
“To widen the market for South African goods and services through a stronger focus on exports to the region and other rapidly growing economies, as government we must encourage collaboration with stakeholders in the implementation of the NEDP and the reviewed Export Council Model”, said Moatshe.
He added that the NEDP avoids a “one size fits all” approach and caters to existing exporters and potential exporters at different stages of development. It also focuses on developing emerging exporters, especially black-and women-owned businesses and potential exporters in targeted sectors.
The Minister of Trade and Industry, Dr Rob Davies will address delegates tomorrow [Friday].
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25th Assembly of the African Union Commits to Mainstreaming Women as the Continent begins to Implement Agenda 2063
Heads of State and Government of the 54 member states of the African Union (AU) met in Johannesburg, South Africa from the 14th to 15th June. The Assembly meeting was the last in the three meetings that form the summit of the AU, which started with a meeting of the Permanent Representatives Committee (PRC) from 7-8 June and moved on to the meeting of the Executive Council from 11-12 June.
This year’s summit was held under the theme, Women’s Empowerment and Development Towards Agenda 2063. Agenda 2063 is a fifty year framework that sets Africa on the path to achieving integration, prosperity and peace. Its first ten year implementation plan was adopted by the Assembly.
The theme of women’s empowerment and development was a common thread in all discussions since the 25th summit of the AU started on the 7th of June in Pretoria. It was carried through to the meeting of the Union’s Executive Council held from the 11th to 12th June in Johannesburg, where AU Commission Chairperson, Dr Nkosazana Dlamini Zuma, announced that a gender scorecard would be launched as an instrument to monitor progress in women’s development, share best practices and hold each other accountable.
At the meeting of Heads of State and Government, the AUC Chairperson launched a campaign to consign the hand held hoe to the museum, in an accelerated effort to assist women with access to modern technology, land, credit, and extension services in order to empower women in agriculture and agro industry.
The summit theme also received the support of many prominent women including international actress and UN ambassador, Angelina Jolie.
The Assembly adopted wide ranging decisions aimed at pushing forward the implementation of Agenda 2063. Below is a summary of the decisions, declarations and resolutions.
The Assembly adopted a declaration on 2015 Year of Women’s Empowerment and Development Towards Agenda 2063. The declaration contains commitments to:
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Enhancing women’s contribution and benefits from formal agriculture/ agri business value chains.
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Enhancing women’s access to health
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Pushing forward women’s economic empowerment
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Enhancing the Agenda on Women Peace and Security
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Enhancing women’s participation in governance
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Enhancing women and girls’ access to education, science and technology
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Mutual accountability to actions and results
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Strengthening the AU Commission to support delivery on these commitments
The declaration ends with a commitment to an expedient process of translation of these economic and transformational commitments into results.
On the decision on the launch of the continental Free Trade Area (CFTA) negotiations, the Assembly launched 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 and requested the Continental Free Trade Area-Negotiating Forum (CFTA-NF) to organise its inaugural Meeting in 2015 and to work towards concluding the negotiations by 2017.
On the Ebola Virus Disease (EVD) outbreak, the Assembly noted that the EVD outbreak emergency is over and the African Union Support to Ebola Outbreak in West Africa (ASEOWA) mission is preparing for the final exit by the end of its current mandate on 18 August 2015. The Assembly congratulated the People and Government of Liberia on being declared Ebola free by the WHO on 9 May 2015.
The Assembly expressed appreciation to all Member States that contributed volunteer health workers to ASEOWA, and commended the Commission for putting in place adequate safety measures that ensured the safe return of all the volunteer health workers.
The Assembly expressed appreciation to Member States and Partners that supported ASEOWA and the affected countries with financial and material resources and invited all Member States to participate at the highest level, in the International Conference on Africa’s Fight against Ebola being organized under the theme: “Africa Helping Africa in the Ebola Recovery and Reconstruction”, that will take place in Malabo, Equatorial Guinea from 20 to 21 July 2015.
The Assembly requested the Commission, in collaboration with Member States and Development Partners to establish an African Volunteer Health Corps to be deployed during disease outbreaks and other health emergencies.
On the report of the AIDS Watch Africa (AWA), the Assembly decided to extend the AU Roadmap on Shared Responsibility and Global Solidarity for AIDS, TB and Malaria Response in Africa from 2016 to 2020 to achieve full implementation and reaffirmed its commitment to strengthen health systems and to increase domestic funding in line with the Abuja 15% target. It called upon countries and development partners to contribute towards the 5th replenishment target of the Global Fund in order to control TB, Malaria and HIV/AIDS.
Naming of African Union Garden under the name of Professor Wangari Maathai. In recognition of environmental conservation and protection and in appreciation by the African Union for her contribution to the African Continent and the whole world, Assembly endorsed the proposal by the Republic of Congo to name the AU Garden under the name of Professor Wangari Maathai.
On the outcomes of the Dakar Summit on Higher Education, the Assembly requested the AU Commission to take the lead in building the African common space for higher education and research. It requested member states to, among others, strengthen their support and investment in higher education in order to develop a critical mass of high level intellectual capital, and promote youth employability through entrepreneurship skills and innovation.
Assembly also committed to the establishment of a team of ten Heads of State and Government (two from each geographic region) as African champions of education, science and technology and endorsed President Macky Sall of Senegal as the first coordinator of the group champions.
On the state of progress and accelerated implementation of the decision on the Establishment of the South-South and Triangular Coalition in support of Africa Post 2015, the Assembly requested the Commission to organize, in collaboration with partners, the Conference of Partners of the Coalition before the end of December 2015.
On the decision of the high level committee on the post 2015 development agenda, the Assembly reiterated its call to member states to participate, at the level of Heads of State and Government, in the Third International Conference on Financing for Development (FfD), and encouraged member states to attend, at the highest political level, the September 2015 UN Summit on the adoption of the Post 2015 Development Agenda.
On the sixteenth report of the committee of ten heads of state and government on the reform of the United Nations Security Council, the Assembly reaffirmed that the Common African Position, as contained in the Ezulwini Consensus and Sirte Declaration, shall continue to serve as the only viable option that reflects Africa’s legitimate right and aspiration to rectify, inter alia, the historical injustice endured by the Continent. It also reiterated its call that Member States of the African Union include the issue of the reform of the Security Council among the priorities of their foreign policy while engaging with non-African Partners; in particular, to include in their statements at the United Nations General Assembly Debate the need to redress the historical injustice the continent continues to suffer.
On the decision on the election of 6 members of ACERWC, the Assembly appointed the following members of the African Committee of Experts on the Rights and Welfare of the Child (ACERWC) for a five year term: Mrs. Dikéré Marie-Christine BOCOUM of Côte d’Ivoire: Ms. Aver GAVAR of Nigeria; Ms. Maria MAPANI-KAWIMBE of Zambia; Mr. Clement MASHAMBA of Tanzania; Mr. Benyam Dawit MEZMUR of Ethiopia and Ms. Goitseone Nanikie NKWE of Botswana.
On the decision on the election of 3 members of the ACHPR
The following 3 people were appointed members of the African Commission on Human and Peoples’ Rights (ACHPR) for a six (6)-year term: Mr. Solomon Ayele DERSSO; Mrs. L. King JAMESINA ESSIE of Sierra Leone and Mrs. Sylvie KAYITESI ZAINABO of Rwanda.
On polio eradication in Africa: our historic legacy to future generations, the Assembly adopted a declaration that reaffirms the AU’s commitment to help deliver a polio-free Africa as a historic legacy to children of all future generations. The declaration encourages all the Member States of the African Union to allocate additional domestic resources to strengthen routine immunization and disease surveillance initiatives, and closely monitor the full implementation of the 2013-2018 Polio Endgame Strategic Plan.
The Assembly adopted a declaration on the launch of the negotiations for the establishment of the continental free trade area (CFTA). The declaration launches 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.
On the situation in Palestine and the Middle East, the Assembly adopted a declaration that calls on the international community to exert pressure on Israel to stop all settlement activities, release Palestinian prisoners in Israeli jails and equally demands that Israel refrains from arbitrary arrests of Palestinians including children and women which is an act of violation of international laws and human rights norms including the Geneva Convention on the Rights of Women and Children. The declaration calls upon the international community to exert pressure on Israel to lift the blockade on the Gaza Strip and open the border-crossing for the movement of people and goods and respond immediately to the humanitarian situations due to this siege.
A declaration on self-reliance was adopted. It approves the First Ten-Year Implementation Plan of Agenda 2063 and its Financing Mechanism, as a step towards Africa’s collective vision for the level and depth of integration and development that the continent must achieve in the next 50 years.
It also recalls that the summit agreed that, through the African Union Foundation, a vehicle established for resource mobilisation on the continent, the AU will work with the African people, including the private sector, to explore other innovative sources for funding our Union. The declaration reiterates the Union’s commitment to the implementation of the fast track programmes and initiatives of Agenda 2063.
In addition, the Assembly adopted a resolution on Chagos Archipelago in which it urges the United Kingdom, pending the return of the Chagos Archipelago to the effective control of the Republic of Mauritius, not to take any measures or decisions that might affect the interests of the Republic of Mauritius without the latter’s full prior involvement, in accordance with the Award of the Arbitral Tribunal and international law.
All the decisions, declarations and resolutions of the Assembly of the AU are available here.
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Developing countries submit WTO trade facilitation commitments with ITC support
“The involvement of the private sector must be through participation in analysis and decision making as well as in overseeing the implementation of trade facilitation measures.” – Nazaire Pare, Director General for Foreign Trade, Ministry of Industry, Trade and Handicrafts, Burkina Faso
With assistance from ITC in 2014, eight developing countries formally identified and announced binding commitments to improve customs and border procedures, with a dozen more such notifications under the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO) in the pipeline.
The agreement, concluded in December 2013 and written into WTO rules 11 months later, promises to be an important tool in helping developing countries and least developed countries (LDCs) reduce costs linked to international trade. This is particularly crucial for small and medium-sized enterprises (SMEs), which often lack the capacity, personnel and resources to navigate complicated border procedures.
Upon entry into force, the agreement will create binding obligations for WTO members to improve customs procedures, transparency and efficiency. However, before some TFA provisions become binding, the agreement’s ground-breaking development-oriented provisions specify that developing countries and LDCs must receive the technical and financial assistance required to implement them.
As the first step towards the implementation, developing countries and LDCs need to categorize their obligations under the treaty into Category A commitments, which they will implement immediately; Category B commitments, which they can only implement later; and Category C commitments, for which they require assistance and support.
Helping exporters in Burkina Faso, Tajikistan and Mauritius
As a result of the consultation process and ITC support, Burkina Faso decided to re-evaluate the classification it had previously drafted, said Nazaire Pare, director general for foreign trade at the Ministry of Industry, Trade and Handicrafts. To make sure the measures adapted address real bottlenecks to trade, private sector participation in policy making has been key, he said.
‘The involvement of the private sector must be through participation in analysis and decision making as well as in overseeing the implementation of trade facilitation measures,’ Pare added.
ITC has played an instrumental role in Tajikistan’s timely submission of its Category A commitments, according to Saidrahmon Nazriev, the country’s deputy minister of economic development and trade. Following a workshop in June, with the participation of representatives of the public and private sector, Tajikistan made its submission to the WTO in July. As a landlocked country, Tajikistan expects to draw important benefits from the TFA, Nazriev said. ‘The agreement has the potential to be of particular benefit to our traders, who continually face lengthy and costly border delays. It will be important for Tajikistan’s businesses to monitor its implementation in the countries with which they trade,’ he added.
“We look forward to the full implementation of the TFA not only in Mauritius, but also at our trading partners. For an open economy such as ours, seamless borders are key to the international competitiveness of our enterprises.” – Israhyananda Dhalladoo, Ambassador, permanent representative of Mauritius to the WTO
Mauritius in April 2014 was among the first developing countries to notify trade facilitation commitments to the WTO following assistance from ITC and the United Nations Conference on Trade and Development (UNCTAD). Its government believes it is important for ITC to work with as many countries as possible to hasten the implementation of the agreement, according to Ambassador Israhyananda Dhalladoo, permanent representative of Mauritius to the WTO. ‘We look forward to the full implementation of the TFA not only in Mauritius, but also at our trading partners. For an open economy such as ours, seamless borders are key to the international competitiveness of our enterprises,’ he said.
ITC and UNCTAD assisted in building stakeholder awareness, particularly among the private sector, of the TFA and its implications, both with regard to categorizing TFA commitments and the establishment of the Mauritius National Trade Facilitation Committee which will oversee their implementation, Dhalladoo explained. ‘The project has created national momentum around the TFA implementation process,’ he said. ‘The ground has been very well prepared.’
Defining what measures the country can implement on its own and where it needs assistance is just the first step, said Pare of Burkina Faso. ‘We require further support in capacity building on implementation, on increasing the awareness of the new measures in the business community and in identifying the funding needs for Category C measures,’ he said.
Tajikistan is looking for support in strengthening the capacity of staff at the Ministry of Economic Development and Trade. In this way they can better oversee the implementation of TFA provisions, said Inoyatullo Kasimov, head of the Department of WTO Affairs at the ministry.
ITC will build on this work in 2015, with plans to assist more than 20 additional countries in scheduling their trade facilitation commitments.
Funders
Canada, China, Denmark, Finland, France, Germany, India, Ireland, Norway, Sweden, Switzerland
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Essay Competition: Tripartite FTA and Continental FTA
Essay Competition on the COMESA-EAC-SADC Tripartite Free Trade Area and the African Union Continental Free Trade Area
The Saana Institute is launching its first ever Essay Competition in association with the Centre for the Analysis of Regional Integration at Sussex (CARIS) at the University of Sussex and the Trade Law Centre (tralac) in Stellenbosch, South Africa.
ESSAY COMPETITION THEME: AFRICAN REGIONAL ECONOMIC INTEGRATION
June 2015 has been a watershed for Africa’s regional trade and integration agenda with the signing of the COMESA-EAC-SADC Tripartite Free Trade Area (TFTA) agreement in Sharm El Sheikh, and the launching of negotiations for the Continental Free Trade Area (CFTA) during the African Union Heads of State Summit in Johannesburg.
The signing of the TFTA agreement and launching of the CFTA negotiations are the key steps towards the establishment of an African Customs Union by 2019.
WHO CAN ENTER?
The competition is aimed at university students who are citizens of any African Union country, between the ages of 18-25 and currently enrolled in undergraduate studies in economics, law, political science or other relevant discipline. Entries are welcomed from AU citizens between 18-25 years enrolled in higher education institutions inside and outside of the borders of AU countries.
HOW DO I ENTER?
Choose one of the topics below and write an evidence-based essay of between 1,500 to 2,500 words. The topics are based on the Tripartite Free Trade Agreement (TFTA) and the Continental Free Trade Agreement (CFTA).
- Where can the TFTA and CFTA make the biggest contribution to boosting inter-African trade and responding to Africa’s economic development challenges and opportunities? How can they be designed to realise these gains?
- Africa already has a plethora of regional economic communities and related institutions and initiatives. Are these building blocs or stumbling blocs for the TFTA and CFTA?
- Does the evidence suggest that regional free trade agreements such as the TFTA and CFTA will cater to the needs of smaller, less industrialised nations in Africa, as well as the larger economies? How can we ensure the TFTA and CFTA benefit Africa’s poor?
- What governance arrangements would work best for the TFTA and the CFTA to ensure a business-led and people-centred integration process? Is there sufficient political will to conclude the TFTA and CFTA negotiations and implement provisions in a timely manner?
- Assess the economic benefits of regional integration in Africa such as the Tripartite Agreement or the proposed continental FTA over the successful conclusion of the WTO Doha round at the 10th Ministerial Conference in Nairobi in December 2015. Where should African policy makers focus their attention?
The deadline for essay submission is Monday 3rd August 2015 at 23:59 hours British Summer Time (BST). Winners will be announced in September 2015.
WHAT ARE THE PRIZES?
The first prize will be USD 1,000 and the winner will be invited to present their paper during tralac’s Conference on the Continental Free Trade Area during the last quarter of 2015. The first runner up will receive USD 750. Further prizes of hardback book sets published by tralac will be awarded to highly commended entries. The winning essays will also be published by tralac.
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tralac’s Daily News selection: 18 June 2015
The selection: Thursday, 18 June
DG Azevêdo tells members it is “decision time” on the Doha work programme (WTO)
“Taking an overview of all of these consultations it is hard to see a way forward. There has been no progress on the gateway issues. We still have no convergence. Of course we shouldn’t draw conclusions too early. I don’t want to prejudge the outcome — but I think I have the responsibility to be honest and realistic. As things stand I see very little prospect of delivering the substantive, meaningful work programme which we have been aiming towards. That is the reality today. The question is whether we can change this situation by the end of July — and that is up to you."
Fostering development through trade finance (AfDB)
Trade finance default rates are higher in Africa than in the rest of the world, averaging 4% in comparison with a global average of less than 1%. This varies from an average of 1.1% in Southern Africa to 6.3% in West Africa. There is an obvious correlation between stability and access to trade finance. However, trade finance default rates are significantly lower than banks’ overall non-performing loans ratio. Average default rates for all assets are 4% in Southern Africa, ranging up to 12% in West Africa. Commercial African banks already generate 17% of their earnings from trade finance and only one out of every 14 African banks is yet to enter the trade finance market revealing substantial appetite for the sector. [Download]
Trade between China and Portuguese-speaking countries falls 28.23% from January to April (MacauHub)
Figures from China’s Customs Bureau published by Forum Macau showed that in the first four months of the year China sold to the eight Portuguese-speaking countries goods worth US$13.411 billion (+0.34%) and imported goods worth US$16.263 billion (-41.88%).
Angola comes second in terms of total trade with US$7.135 billion (-46.49%) as a result of Chinese exports worth US$1.681 billion (+29.26%) and imports of US$5.454 billion (-54.68%). Fourth is Mozambique with trade of US$792 million (+36.19%), with Chinese exports of US$620 million (+47.23%) and imports of US$172 million (+7.19%).
India: Exports of cotton textiles to Africa badly hit -TEXPROCIL (Business Wire)
The new Foreign Trade Policy 2015-20 has removed all benefits on exports to African countries. This has had a serious impact on exports of value added products like cotton dyed and printed fabrics and made-ups to African countries, said Shri R.K.Dalmia, Chairman, The Cotton Textiles Export Promotion Council (TEXPROCIL).
AGOA: statement by Minister Rob Davies on the Paris deal on poultry (dti)
The Paris deal can be seen as a win-win for South Africa and the United States and both our countries should use it as a platform to build and deepen our trade and investment relationship across all sectors of the South African economy and as partners to strengthen regional value chains across the continent, strengthening regional integration. In addition, the deal on poultry will mean that Senators Coons and Isakson could become key allies in helping to keep South Africa in AGOA for a further 10 years as they will be keen to ensure that USAPEEC continues to benefit from the Paris deal.
New tax treaty with Mauritius may affect cross-border investment (Business Day)
The new double-tax treaty between SA and Mauritius is set to come into force in January next year, following a controversial renegotiation to better protect the South African tax base. However, tax experts have warned that sweeping changes to the treaty, including withholding taxes for interest (10%) and royalties (5%) that were wholly eliminated in the 1996 treaty, may be to the detriment of cross-border investment. The biggest issue for most taxpayers is the revised "tie-breaker" clause that resolves tax residency status when both countries claim to have taxing rights over the same taxpayer.
Swaziland: SACU revenue to decrease, warns Central Bank Governor (Swazi Observer)
Swaziland’s revenue receipts from the Southern African Customs Union are projected to decrease this year. This was said by Central Bank of Swaziland Governor Majozi Sithole when delivering his annual monetary policy statement address for the year 2015, at Sibane Hotel last Friday. The country experienced a 12.9% increase in earnings from exports, reaching E20.6 billion in 2014 compared to 2013. Central Bank Governor Majozi Sithole said 61% of the country’s merchandise exports were destined for the South African market. [Download]
Zambia: 2015 IV Article Consultation (IMF)
Zambia achieved strong growth and macroeconomic stability over most of the last decade. However, in the last two years, the Zambian economy has been facing strong headwinds from large fiscal imbalances, lower copper prices, and policy uncertainties. The current account has deteriorated, international reserves have fallen, and the exchange rate has been under downward pressure.
Zambia: Selected Issues (IMF)
Zambia cuts economic growth target for 2015 (The Namibian)
Zimbabwe: Diasporans prop struggling economy (Financial Gazette)
Information provided by the RBZ last week indicates that international remittances into Zimbabwe increased significantly from the US$1,76bn recorded last year to US$2,5bn, representing a 13% growth. This year alone, between January and May 31, Diasporans remitted approximately US$740,6 m. While the figures may indicate Diasporans’ confidence in the use of formal channels to remit funds, the amount remitted might be much higher given that some funds come into the country through informal channels, especially from Zimbabweans resident in neighbouring countries such as South Africa, Botswana, Mozambique, Zambia and Namibia.
EAC and AfDB call for closer partnership in the design and delivery of regional projects (AfDB)
The workshop came up with a number of key recommendations, among them: (i) capacity-building of RECs to better coordinate regional projects; (ii) capacity-building of key institutions at national level responsible for regional projects; (iii) training of recipients on Bank procurement, financial and fiduciary services and project management in general; (iv) development of manuals and models to facilitate documenting and sharing of best practices; (v) re-engineering of Bank business processes to better respond to the demands and complexity of regional projects; (vi) procurement reforms in member states to be more responsible to regional projects; (vii) enhanced monitoring and reporting on performance of regional projects so as to address challenges in good time; and (viii) enhanced information sharing as well as tracking and reporting on the development impact of regional projects.
Fitch concerned over Kenya, Uganda aggressive borrowing (The EastAfrican)
AfDB ranks Kenya third in Africa on economic progress (Business Daily)
Kenya has retained an improved third position in Africa, after Rwanda and Senegal, for achievements in several areas including infrastructure and financial sector development. The latest African Development Bank Country Policy and Institutional Assessment (CPIA) gives Kenya a score of 4.3, an improvement from 3.73 in 2005 out of a possible six points.
Visitors via JKIA hit 8-year low amid mega expansion (Business Daily)
Visitor arrivals at Kenya’s two main airports have dropped to the lowest level in eight years, reflecting how badly the travel industry has been damaged by a spate of terrorist attacks that have killed hundreds. The Jomo Kenyatta International Airport (JKIA) and Mombasa’s Moi International Airport recorded arrivals of 231,038 visitors in the first four months of the year, a 29.4 per cent drop from 2014, says Kenya National Bureau of Statistics (KNBS) data.
In to Africa: Dubai bids to become continent’s staging post (The National)
The Chilly Willy tomato paste factory is a small example of how the emirate is already benefiting as a staging post for the continent for goods originating from China. A much bigger example can be found at the other end of the city where the sprawling Dragon City development is taking shape. It is already home to the city’s Dragon Mart, the biggest Chinese trading hub outside mainland China. About 3,500 outlets are based there, many of them re-exporting goods arriving from China via Jebel Ali Port to countries across Africa. Now the developer behind the project is adding another 1.3 million square feet of space to cope with demand.
Africa to become world's manufacturing hub through industrial cooperation with China: AfDB chief (FOCAC)
The chief of the African Development Bank (AfDB) Donald Kaberuka says time has come for Africa to become the world's manufacturing hub and this can be done through industrial cooperation with China as the Asian giant phrases out labour-intensive industries. "The global manufacturing cycle started from Europe then to America, before moving to South East Asia and China. It is now coming to Africa," Kaberuka told Xinhua Monday on the sidelines of the African Union (AU) summit held in Johannesburg, South Africa.
Export workshop begins in Pretoria (IOL)
Key leaders and stakeholders in the export industry would be attending the workshop to discuss issues pertinent to the country’s export industry. Trade and Industry Minister Rob Davies said the workshop “is geared to enable the dti, the export formations and other key stakeholders at local, provincial and national level to engage on the national export agenda and discuss concrete plans which will contribute to the realisation of the National Development Plan (NDP) and the New Growth Path (NGP) imperatives”.
South Africa: Act on private security sector must not be passed (Business Report)
The private sector should drive industrialisation (New Era)
The principal drivers of Namibia and Africa’s industrialisation efforts must be the private sector as governments are merely the enablers, says Dr Malan Lindeque, Permanent Secretary in the Ministry of Industrialisation, Trade and SME Development. Lindeque made the remark yesterday at a very well attended first-ever public seminar in Windhoek on the Southern African Development Community’s industrialisation strategy and roadmap, which was launched in Zimbabwe in April. The objectives of the seminar include sensitising the public on the key elements of the strategy as well as to provide an avenue for a high level discussion on opportunities for Namibia emanating from the strategy.
Francis Mangeni: 'Tripartite Free Trade Area - diplomatic feat' (Zambia Daily Mail)
The Tripartite: What to expect from Africa’s grand free trade area (World Commerce Review)
Anchoring mineral infrastructure regional integration: what role for policy frameworks? (ECDPM)
Agricultural input use in Africa - revisiting our meagre evidence base (World Bank)
So what’s a policy analyst to do when the evidence base is likely problematic? Just wish and hope that more appropriate data existed? For a set of eight countries in Sub-Saharan Africa, the wait is over. The Living Standards Measurement Study Integrated Surveys on Agriculture now provide nationally representative and highly disaggregated data from farmers’ agricultural plots to help rebase our understanding of African agriculture and rural spaces.
Nigeria: Customs boss laments law enforcement agents’ complicity in smuggling (ThisDay)
The Comptroller-General of Customs (CGC), Alhaji Abdullahi Dikko Inde on Tuesday accused some unscrupulous elements within the law enforcement agencies as well as regulatory bodies of jeopardising the economic prospects of the country by aiding smuggling activities across the borders. He said the recent seizure of contraband goods worth N480 billion in Kano State showed total failure on the part of government agencies to undertake their statutory functions.
Nigeria: The challenge of porous borders (editorial comment, ThisDay)
There is also need for a thorough probe of the present border security outfits, namely the Immigration and Custom, with a view to establishing the extent of their collusion and collaboration with criminal elements at the border towns. Nigeria should meanwhile initiate a cause of action to properly demarcate the nation's borders through the setting up of an ECOWAS Special Commission. There should also be regular joint-border patrol with neighbouring countries.
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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Fostering Development Through Trade Finance
Trade finance in support of Africa’s development
“We need to ensure that Africa is not left out of mainstream trade markets because of a lack of trade finance.” – Donald Kaberuka, President of the African Development Bank
Trade is a fundamental driver of economic development. Nowhere is this more relevant today than in Africa, which has the world’s highest proportion of low income countries and accounts for only 3.3 per cent of global trade. Because of the lack of affordable trade finance, Africa has not been able to take full advantage of new opportunities offered by the changing global economic landscape.
Following the financial crisis of 2008-09, global trade dipped due to falling demand and a lack of liquidity in the international financial system. The global economy has now rebounded and liquidity levels improved but the African continent is still involved in far too little International trade.
The financial crisis precipitated enormous shifts in the direction and balance of trade around the world. Africa found that new markets in Asia, to some extent, offset declines in Europe and North America. However, the continent’s exporters are yet to fully exploit emerging opportunities in neighbouring countries.
Africa and world trade
Export growth in most African economies plus a rebalancing of the global economy, are changing the face of African trade. Low levels of growth, high unemployment and economic uncertainty persist across the European Union, while other developed markets have struggled to return to their pre-crisis highs.
The relative decline of Africa’s traditional export partners in the industrialised world has been speeded up by continued strong growth in much of Asia. This has fostered rapidly rising trade volumes between Asia and Africa, plus much greater Asian investment in Africa.
The value of Sino-African trade grew by an average rate of 14% a year between 2000 and 2012, while Indian, Malaysian, Singaporean and Thai companies are also making major investments. New sources of new trade are not restricted to the Far East, as Brazilian and Turkish companies are becoming much more heavily involved in the continent.
Perhaps more importantly, buoyed by internal dynamics – its urbanising, growing population and improving political stability – Africa itself is becoming a driver of economic growth. However, many African countries have not fully capitalised on their neighbours’ growth. While trade with Asian markets has increased rapidly, intra-African trade remains a relatively small proportion of total African trade – around 13.5 per cent according to WTO figures.
For years intra-African trade has been constrained by the historical configuration of infrastructure, by the political hangovers of the Cold War era and by the failure of many African economies to move from primary commodity production to manufacturing, and in particular to the manufacturing of products tailored for African markets.
These factors, in addition to the relatively easy money to be made in supporting primary exports to existing markets, have contributed to a lack of investment in mechanisms – both physical and financial – for intra-African trade.
Stronger intra-African trade could act as a catalyst for growth. While Africa’s exports are 80% raw commodities and 20% processed goods, intra-African trade accounts for 40% of the former and 60% of the latter. International trade was at the heart of the economic boom in Asia, driving the creation of productive employment, in particular in manufactured goods, as developed markets took advantage first of labour arbitrage and then of the increasing sophistication of the production capacity in Asia. Larger numbers of higher quality jobs moved millions of South Korean and Chinese people out of poverty.
Trade finance in global trade
If the role of development financiers is to deploy resources where both the need and potential impact is greatest, the financial crisis and ensuing economic downturn around the world created whole new areas for them to intervene in. One of these was the sudden requirement to put money into the global system of trade.
Multilateral Development Banks (MDBs) have been working to fill the gaps in trade for many years. Trade finance is a commercially viable business as long as the risks for commercial banks are managed and mitigated. MDBs, with their strong financial backing and credit ratings, are able to create facilities that can de-risk transactions for commercial banks and help to promote trade.
The European Bank for Reconstruction and Development began its Trade Facilitation Programme in 1999 in order to promote foreign trade in its countries of operation in Eastern Europe, the Middle East and the Mediterranean. The success of the model has been adopted by other international financial institutions, including the Asian Development Bank and Inter-American Development Bank. Development institutions also reacted to the drop in trade resulting from the global financial crisis by supporting trade finance through the Global Trade Liquidity Programme among other initiatives.
For development finance institutions, there are clear benefits to supporting trade finance. Low income countries and fragile states, which are considered high risk by commercial banks, are often the first to suffer in times of tightening credit supply. This is equally true of small enterprises in developing markets. Small businesses are very often the largest source of employment and job growth, and supporting their success has immediate and obvious development outcomes.
Global commercial banks are often reluctant to support trade in developing countries because of perceived high levels of risk, relatively weak banking systems and limited transaction data. The Basel II directive increased the amount of information required by regulators, creating greater caution among international banks.
The liquidity, capital and leverage requirements of Basel III could have an even greater impact. Like its predecessor, Basel III is designed to encourage banks to incorporate trade finance into their leverage calculations, by factoring in short-term contingent liabilities relating to trade finance. This could push banks with capital constraints out of the market. Limited support from international banks for African trade finance means that African banks must take the lead.
Trade finance default rates are higher in Africa than in the rest of the world, averaging 4% in comparison with a global average of less than 1%. This varies from an average of 1.1% in Southern Africa to 6.3% in West Africa. There is an obvious correlation between stability and access to trade finance. However, trade finance default rates are significantly lower than banks’ overall non-performing loans ratio. Average default rates for all assets are 4% in Southern Africa, ranging up to 12% in West Africa. Commercial African banks already generate 17% of their earnings from trade finance and only one out of every 14 African banks is yet to enter the trade finance market revealing substantial appetite for the sector. A report by the AfDB in December 2014 revealed that 72% of responding African banks expect to increase their trade finance activities in the immediate future but there are still many obstacles to overcome. These include low US dollar liquidity, regulation compliance, slow economic growth, and the inability to assess the credit-worthiness of potential borrowers. The requirement of confirmation of letters of credit (LCs) remains a major challenge for African banks as virtually all LCs issued by banks on the continent require confirmation when the counterparty is located outside the region. Given the limits on risk headroom by confirming banks for African issuing banks, a large number of the latter are highly constrained in providing needed trade finance.
Given these obstacles, governments and development finance institutions (DFIs) must continue to play a big role. In particular, trade facilitation programmes that address US dollar liquidity and relax constraints from binding risk are needed to meet the increasing demand of African firms for trade finance. Given this reality, the AfDB’s trade finance programme - backed by the AfDB’s AAA credit rating - is a welcome addition to on-going trade facilitation programmes instituted by a number of DFIs. An estimated US$340 billion – or a third of all African trade – is backed by bank-intermediated trade finance, although this proportion is higher in North Africa than in the rest of the continent. Just 18% of this US$340 billion comprises intra-African trade, although this a relatively high proportion in comparison with the contribution of trade between African countries to total trade flows on the continent. Intra-African trade accounts for 11% of the total value of African trade, equivalent to US$110 billion.
A great deal of the demand for trade finance comes from labour intensive industries, such as agriculture and agribusiness. Interventions in these sectors, which in African countries are typically the largest employers and contributors to GDP, are broad-based.