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ECOWAS lags as other RECs seal pact on CFTA
Preparatory to the 2017 establishment of a Continental Free Trade Area (CFTA) in Africa, three Regional Economic Communities (RECs) – the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and Southern African Development Community (SADC) – have reached an agreement to expedite the process towards the operationalization of the tripartite Free Trade Area by finalising outstanding issues.
With this development, the three regions have made a bold move to realise the African Union (AU) 2017 target ahead of the Economic Community of West African States (ECOWAS) region, which is still bedevilled by other trade issues.
Indeed, the tripartite agreement would see the establishment of a single market for the 26 African countries in the Eastern and Southern African Region, while outstanding issues like the elimination of import duties, trade remedies and rules of origin, as well as the commencement of Phase II negotiations covering trade in services, cooperation in trade and development, competition policy, intellectual property rights and cross border investments would be addressed under the outstanding issues.
The President of African Organisation for Standardisation (ARSO), Dr. Joseph Odumodu, who is also the Director-General of Standards Organization of Nigeria (SON), noted that by 2017, the African standardisation mechanism should be able to deliver a benchmark that would be acceptable to all in the continent.
He explained that continental trade deal can only become achievable if standards issue is addressed as well as other bilateral trade agreement concerns. Odumodu added that African countries need quality infrastructure to kick-start the CFTA.
“The Continental Free Trade Area means that Africa will become one common market, just like the European Union markets. We will collapse all boundaries, depending on what the African Union Heads of State agree. We may not apply any kind of tariffs because we need to break down the tariffs that are barriers to trade seamlessly with each other.
In doing that, we must ensure that we have all attained a comfortable level of development in terms of quality infrastructure”.
“These circumstances help to explain why agricultural development is such a powerful tool for reducing poverty in Africa and eliciting economic development,” the ARSO boss explained. In a statement obtained by The Guardian, the Executive Secretary of the Economic Commission for Africa (ECA), Carlos Lopes lauded the tripartite free trade area agreement reached by three Regional Economic Communities (COMESA, EAC and SADC) describing it as “a step in the right direction for the continent.”
African countries committed themselves to economic integration in 1991 through the Abuja Treaty, which came into force in 1994 with the intention of moving towards the African Economic Community.
“The process of this integration would entail RECs serving as building blocks. The harmonization of trade policies through the Tripartite Free Trade Area is yet another building block,” he added.
While not all countries have signed on to their region’s tripartite agreement and the negotiations towards the 2017 deadline for the establishment of the CFTA will need to address some thorny issues, Lopes stressed that the principle at work is that of ‘variable geometry’ as not all countries are ready at the same time.
He cited the 2015 Economic Report on Africa published by the ECA stating that deepening market integration is one of the necessary conditions for industrialization in Africa. The tripartite agreement, he added, “has set a benchmark for the CFTA, as it demonstrates it can be done.”
There are expectations that countries will complete the negotiations in the next 12 months. This sets the stage for deepening the agreement. In the meantime, the ratification of the CFTA, which requires a minimum of 14 countries to come into force, will begin.
In her statement to the Executive Council, the African Union Chairperson, Dr. Nkosazana Dlamini Zima said that trade amongst African countries remains below global standards, although a number of regions through their respective Economic Communities are making progress – especially in the East African Community, in SADC, ECOWAS and COMESA.
She noted that the trade agreement reached by the tripartite and the launch of the African Continental Free Trade negotiations this year, “are all aimed at growing trade amongst ourselves and therefore jobs and creation of wealth.”
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AfDB ranks Kenya third in Africa on economic progress
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.
The CPIA is a rating against five criteria – economic management, structural policies, policies for social inclusion and equity, governance; and, infrastructure and regional integration.
“Infrastructure and regional integration registered the highest score of 4.6, being the second best in Africa,” said the AfDB.
The bank recommended further improvement, through a better road network, to increase Kenya’s share of paved roads to above seven per cent, development of a mass transit system in urban areas and more investment in environment-friendly infrastructure.
“Structural policies including financial, trade and business regulatory policies scored 4.3 and ranked Kenya at position two in Africa,” said the AfDB.
The bank released the scores during a press conference held at its east African regional offices in Nairobi Tuesday.
To improve on the financial sector, the bank recommended that Kenya continues monitoring its stock of non-performing loans, especially in lending to agriculture, tourism and construction.
The institution noted the sectors are often adversely affected by weather, insecurity and delayed payment to contractors.
“Kenya needs to continue expanding access to finance… improving the business environment including ease of registration of business and exit,” said the AfDB.
The lowest score for Kenya was in the area of governance where it was ranked 11th in Africa.
It scored 3.9 points largely due to corruption, insecurity and questions around land titles.
The country scored 4.3 points on economic management, placing it ninth in the continent.
“While the country is strong in debt management, monetary policy and fiscal stability, a few areas remain to be tackled.
‘‘These include taming the fiscal deficit which currently stands at more than eight per cent, improving tax collection as already proposed by the Treasury by addressing tax evasion and the wage bill which currently remains sustainable,” said AfDB.
In social inclusion and equity Kenya scored 4.3 points, putting it fourth in Africa. AfDB noted that Kenya had put in place good programmes to address gender and regional inequality such as Uwezo and Youth Enterprise funds.
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Zambia: IMF Executive Board 2015 Article IV Consultation
On May 20, 2015, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Zambia.
Executive Directors noted that, after a period of strong macroeconomic performance, the Zambian economy is facing significant challenges arising from large fiscal deficits, lower copper prices, and policy uncertainties. Directors emphasized that steadfast and strong efforts are needed to ensure macroeconomic stability and foster inclusive growth.
Directors underscored the need for significant fiscal consolidation in 2015 and over the medium term, to reduce the deficit, stabilize debt, and create conditions for lower interest rates. They welcomed the authorities’ decision to implement the policy of full cost recovery in the pricing of petroleum products. Directors called for sustained expenditure and revenue efforts, including efforts to contain the wage bill, target social spending through cash transfers, broaden the tax base, and put the pension system on a sustainable footing. They also welcomed the authorities’ decision to rescind the royalty-based mining fiscal regime, and called for swift action to resolve the issue of outstanding VAT refund claims to exporters.
Directors welcomed recent progress in the implementation of public financial management reforms, including the Integrated Financial Management Information System and the pilot phase of Treasury Single Account. They encouraged the authorities to utilize these tools to strengthen budget controls to avoid the accumulation of arrears, and to enhance the transparency of the budget process by improving fiscal reporting.
Directors noted that Zambia’s moderate risk of external debt distress calls for prudence in borrowing on commercial terms. Recognizing the need to address infrastructure gaps, they advised the authorities to strengthen the project selection process and prioritize capital spending. They also called for the development of a comprehensive debt management strategy to help address public debt vulnerabilities.
Directors supported the commitment of the Bank of Zambia to maintain a tight monetary policy stance to contain inflationary pressures. They stressed the importance of continued exchange rate flexibility and rebuilding reserves to provide adequate buffers for the economy.
Directors noted that the financial sector remains well capitalized and stable, and commended the strengthened banking supervision. They recommended continued efforts to enhance financial inclusion, including improving access to financial services in rural areas. Directors also called for the elimination of interest rate ceilings as they restrict access to credit.
Directors noted that poverty remains high, particularly in rural areas. To foster job creation, inclusive growth, and economic diversification, Directors encouraged the authorities to improve the business climate by restraining labor costs and ensuring a stable regulatory environment. They also recommended action to address infrastructure and electricity supply constraints; develop skills; and rationalize farm subsidies with a reallocation of resources to the social cash transfer program.
Key issues
Context
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.
Outlook and risks
Provided the authorities implement strong adjustment measures, growth is projected to remain at annual rates of 5½-7 percent over the medium term, as investments in mining and electricity bear fruit. Annual inflation is projected to stay in single digits and decline gradually to 5 percent. Key risks to the outlook are persistent low copper prices, delayed fiscal adjustment in the lead-up to general elections in 2016, and policy uncertainties that could undermine mining operations and overall investment in the economy.
Resolving mining sector tax issues
A large build up of VAT refund claims of exporters and a change in the mining fiscal regime that came into effect at the beginning of 2015 adversely impacted the outlook for the mining sector which accounts for three quarters of Zambia’s export earnings. The authorities have partially addressed the VAT refund problem and have announced that the mining fiscal regime will revert to a system similar to what was in effect in 2014.
Ensuring macroeconomic stability and reducing external vulnerability
Growing fiscal deficits and depleting government deposits are threatening macroeconomic stability. Fiscal adjustment and continued tight monetary policy will help stabilize the exchange rate and contain inflation pressures. Given Zambia’s susceptibility to external shocks, the Bank of Zambia should aim to rebuild reserves over the medium term. Also, the export base needs to be diversified to reduce the high dependence on copper.
Enhancing competitiveness and inclusive growth
The government needs to address impediments to doing business and labor market policies in order to enhance competitiveness and promote job creation. To maintain Zambia as an attractive investment destination, frequent regulatory changes and uncertainty about policy direction should be avoided.
Selected Issues
Analysis of change in Zambia’s mining fiscal regime
Foreign investment has revived Zambia’s mining sector. Copper mines were privatized in the late 1990s and early 2000s after three decades under government control. Since then, foreign companies have invested around US$10 billion in the sector, revitalizing Zambia’s production to historical high levels. Copper production has trippled from about 250,000 tons in 2000 to over 750,000 tons in 2013.
The mining sector’s direct contribution to government revenues (royalties, corporate income tax) has been low. During 2000-07, on average, the sector contributed less than 0.1 percent of GDP to government revenue while accounting for about 6.2 percent of GDP. This low contribution reflected a combination of low international copper prices, depressed production, low profitability (due in part to large capital investments made to restore production resulting in significant tax credits), and the concession agreements granted to mining companies. Revenues have increased with increasing copper production, higher sector value-added, rising prices, and changes to the fiscal regime.
Enhancing financial inclusion in Zambia
The authorities are concerned about high lending rates and limited access to credit, particularly by small- and medium-scale enterprises (SMEs). Despite various measures taken, the authorities believe that lending interest rates in Zambia remain very high, which has limited access to credit by SMEs in particular. Credit to the private sector remains low at 14 percent of GDP in 2014, below the sub-Saharan regional average.
Toward more inclusive growth in Zambia
In the last decade, Zambia has sustained high growth in line with fast-growing peer countries in sub-Saharan Africa. Supported by market-liberalizing reforms in the 1990s and strong copper prices since 2004, real GDP growth has averaged about 7 percent since 2003, above the average of about 5½ percent for sub-Saharan Africa (SSA). Over the same period, improved policies for macroeconomic stability helped bring inflation down from about 20 percent to single digit. Strong growth resulted in sustained increases in GDP per capita, which more than tripled from about US$500 in 2000 to about US$1,800 in 2013, albeit still below the peak level of US$2,000 reached in the 1970s.
However, Zambia’s strong growth has not been sufficiently inclusive to benefit all Zambians. The overall growth effect in reducing poverty in Zambia is on par with those experienced in other developing countries. For each percentage point increase of growth in 1998-2010, Zambia’s extreme poverty rate declined by about 1.1 percentage points, and the overall poverty rate declined by about 0.7 percentage points, in line with the SSA average. But the rural-urban divide is significant. While the urban poverty rate has fallen to about 30 percent in 2010, the poverty rate in the rural areas – where 2/3 of the population lives – remains above 70 percent, much higher than the SSA average poverty rate of 48 percent. Growth incidences for 2006-10 also exhibit a sharp rural-urban divide on the consumption impact. In urban areas, consumption growth has been positive for all households and higher among poorer ones. In contrast, the impact has been regressive in rural areas, where the consumption of poorer households even declined. Similar urban-rural disparity exists in social indicators. From 2007 to 2010, the prevalence of underweighted children in urban areas dropped from 12.8 percent to 10.8 percent, while the indicator in rural areas declined from 15.3 percent to 14.2. As a result, inequality has worsened, with the Gini coefficient increasing from 0.47 to 0.52 over the last decade.
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June 2015 Graduation: Master of Commerce in Management Practice (specialising in Trade Law and Policy)
tralac is pleased to congratulate those students who graduated with the degree Master of Commerce in Management Practice (specialising in Trade Law and Policy) on 12 June 2015. This programme has been presented by tralac in collaboration with the Graduate School of Business, University of Cape Town. The degree is accredited and awarded by the University of Cape Town.
The graduates are:
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Tania Bowers (South Africa)
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Batanai Chikwene (Zimbabwe), degree awarded with distinction
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Bharti Daya (South Africa)
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Limpho Debeshe (Lesotho)
Congratulations from the tralac team.
Photographs from the graduation ceremony at the University of Cape Town are shown below.
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tralac’s Daily News selection: 17 June 2015
The selection: Wednesday, 17 June
ECA chief tells AU Summit to align and measure African Development Goals (UNECA)
“ECA is working to ensure that the issue of the African Development Goals (ADGs) does not fall off our collective radar but we must remember that existing programmes and frameworks are not yet being tracked and measured through a unified system of goals, targets and indicators,” said Mr. Carlos Lopes, the Executive Secretary of the ECA during the 25th Summit of the AU taking place in South Africa. Mr. Lopes suggested that ADGs should be developed in a way that takes account of the different starting points of our countries and gives them the space to adopt suitable policies rather than have a ‘one size fits all’ policy regime. They will also need to be compatible not only with Agenda 2063 but also with the African Common Position.
AU moves toward financial independence (Business Report)
Dr Donald Kaberuka: valedictory remarks at the AU Summit
Dr Nkosazana Dlamini-Zuma: statement to the AU Summit
COMESA-EAC-SADC TFTA Agreement signatures rise as Swaziland signs
The Kingdom of Swaziland became the 16 State to sign the COMESA-EAC-SADC Tripartite Free Trade Agreement. Member/Partner States that have so far signed the Agreement are; Angola, Burundi, Comoros, DR Congo, Djibouti, Egypt, Kenya, Malawi, Namibia, Rwanda, Seychelles, Sudan, Tanzania, Uganda, Swaziland and Zimbabwe. This [also] brings to 24 Member/Partner States that have signed the Declaration launching the TFTA except for The Republic of Libya and The State of Eritrea.
“Help us keep the momentum” RECs urge African Leaders (SADC)
Speaking on behalf of the African Regional Economic Communities (RECs), SADC Executive Secretary, Dr. Stergomena Lawrence Tax urged the Heads of State and Government to enable the RECs to keep the momentum on the pressing matter of Capacity Development and Institutional Transformation of Africa’s Regional Economic Communities, which are the “building blocks” of the African Union. “The capacity of the entire AU institutional architecture requires attention, as part of the RECs capacity and institution building process particularly as it relates to effective linkage with other AU institutions in avoiding, the long standing and unattended problem of overlaps and duplication by institutions which are supposed to be working in coherence, linking and reinforcing transformation efforts.”
AfCoP annual meetings conclude with renewed commitment to results-oriented regional integration (AfDB)
In addition to sharing lessons and best practice from the AfriK4R assessments and regional roadmaps for COMESA and WAEMU, the delegates examined Africa’s landscape of challenges, opportunities, and trends related to economic integration and regional development. A recurring theme throughout the 2015 AfCoP Annual Meetings was the need to address “Africa’s implementation crisis” and to adopt innovative thinking and practices in areas like public finance, capacity building, and monitoring and evaluation (M&E). [Downloads]
Phyllis Wakiaga: 'The significance of the Tripartite FTA launch and signing' (Capital FM)
Despite the signing, without the finalization of tariff offers and rules of origin which are important trade facilitation instruments, the TFTA will be a challenge to operationalise and the inconclusive status of these areas does not bode well for trade in the bloc. This TFTA should not just be a political commitment on paper only but rather a show of political will to improve trade and should be signified by a quick resolution to the pending issues. [The author is CEO designate of Kenya Association of Manufacturers]
Kenya offers to host Cape-Cairo FTA secretariat (Capital FM)
Reform Africa’s policies for better trade – Uhuru (Capital FM)
Forge pacts to benefit from green energy, Uhuru tells Africa (Capital FM)
BoT: Gold, crude oil and white petroleum record price decline (IPPMedia)
Crude oil, white petroleum products and gold have recorded price decline during the year ending April this year, the Bank of Tanzania (BoT) has said in its May Economic Review issued yesterday.
Crop choice and infrastructure accessibility in Tanzania: subsistence crops or export crops? (World Bank)
Officials move to ease money transfer across East Africa (Business Daily)
Officials in East Africa are working to ease money transfer across the region in a move to boost trade. Low cross-border money transfer rates are set to be a reality as Kenya, Rwanda, Uganda and South Sudan formulate harmonised money transfer guidelines. Through the One Area Network Agreement, ICT ministers from the four countries have arranged with finance ministers and central banks to draft a proposal that is currently under discussion by individual governments.
East Africa Regional Transport, Trade and Development Facilitation Project (World Bank)
The World Bank Group has approved $500 million for the development of the transport and trade corridor in north-western Kenya and improve the livelihoods of the communities in Turkana and West Pokot counties. The upgraded road will link up to the Northern Corridor transport system and other major transport and trade corridors in the Eastern African region. [Project documentation]
MDBs provided $28bn in climate finance in 2014 (World Bank)
The MDBs’ channeling and leveraging of climate finance supports a mix of policy work and investments in both the public and private sectors with adaptation and mitigation benefits. Of the $28 billion committed in 2014, 82 percent was dedicated to mitigation projects that can reduce greenhouse gas emissions, and 18 percent went to adaptation projects designed to help countries adjust to the impacts of climate change and build resilience. [Download]
Framework for enhanced engagement with civil society organizations (AfDB)
The CSO Engagement Framework is designed to structure the AfDB’s broader and deeper engagement with CSOs through three dimensions—outreach, dialogue, and partnership—carried out at the corporate, regional/country, and project levels (three-tier engagement). It sets out specific activities for each dimension at each level: for example, encouraging greater civil society participation in annual meetings, developing and disseminating guidelines to staff on selecting and working with CSOs, and establishing a CSO portal on the Bank’s website. Once the Board adopts the CSO Framework, the Bank will implement the framework in a progressive way, building on results achieved:
Namibia: New investment act to bring wholesale changes (The Namibian)
The new law is likely to define what will be expected from domestic as well as foreign investors. The law is also expected to restrict some of the economic sectors to foreign investors and introduce investor-performance requirements. Malan Lindeque, permanent secretary in the Ministry of Industrialisation, Trade and SME Development said in an interview that transparency procedures for foreign investors will also be introduced and that investor registration will become compulsory. Lindeque said the ministry is currently undertaking a study to identify the economic sectors that are reserved for government, Namibian investors or those who require special entry requirements. Lindeque added that it has been proposed that the current EPZ regime will be phased out, and replaced by a new incentive regime covering manufacturing, agro-processing, logistics and tourism.
Namibia stands firm over poultry import restrictions (Global Meat News)
The Namibian government is continuing to fight a legal challenge against its decision to restrict South African chicken imports.
Namibia: Food safety policy launched (New Era)
Crisis-era trade distortions cut LDC export growth 5.5% per year (VOX)
This column summarises the findings of a recently-published study of the impact of crisis-era trade distortions on the exports of the Least Developed Countries (LDCs), based on data collected by the Global Trade Alert (GTA). Between 2000 and 2008 LDC exports grew in nominal terms 20.6% per annum. Since 2008 the annual rate of growth of LDC exports has collapsed to an average of 5.7%. How much of that export slowdown was due to trade distortions imposed since the crisis began?
The study breaks new ground by presenting new data on the extent of trade covered by crisis-era trade distortions, by considering a wider range of such distortions than most studies of bilateral trade flows, and by taking account of the impact of trade reforms. A richer and disturbing picture of the challenges facing LDC exporters emerges, with clear implications for trade and development policymaking. [The authors: Simon J Evenett, Johannes Fritz]
WTO sees “slight deceleration” in G20 trade restrictions but calls for continued vigilance (UNCTAD)
During the reporting period, G20 members continued to negotiate or conclude new international investment agreements (IIAs). Between 16 October 2014 and 15 May 2015, G20 members concluded seven bilateral investment treaties (BITs) and four “other IIAs” (table 1). Also during the reporting period, Indonesia sent notices of BIT terminations to Cambodia, Hungary, India, Romania, Singapore, Turkey and Vietnam. As of 15 May 2015, there existed globally 2,926 BITs and 345 “other IIAs”.
China third largest export market for American goods (USCBC)
The US-China Business Council’s annual report on US exports to China shows that China continues to be an important destination for American goods and a significant contributor to US economic growth, despite a slowdown versus previous years. In 2014, US exports to China totaled $120 billion, making it the third-largest export market for American goods behind Canada and Mexico, our neighbors and NAFTA partners. Overall, 42 states experienced at least triple-digit export growth to China since 2005, and five states saw export growth of more than 500 percent over the same period.
Nigeria among top beneficiaries of Europe’s migrants $110 bn remittances (BusinessDay)
Nigeria is among the top beneficiaries of the $110bn in remittance sent home by Europe’s 50-million-strong migrant population in 2014, an International Fund for Agricultural Development (IFAD) said on Monday. Dr Kanayo Nwanze, the IFAD President, said the figures were released amid growing intra-European tensions on migration. Nwanze argued even though they should not be seen as a substitute for development aid, yet the remittances brought a measure of hope and stability to their countries of origin, and the international community could do more to help maximise their positive effect. [Sending money home: European flows and markets]
Nestle cuts 15 percent of its Africa workforce (NewsDay)
ILO adopts historic labour standard to tackle the informal economy (ILO)
India’s exports contract for a sixth month, down 20.2% in May (LiveMint)
Falling exports have Indian producers banking on Yellen (LiveMint)
‘Essential shifts’ needed for UN to tackle new peacekeeping challenges, report reveals (UN News Centre)
Brazil asserts its influence across the Atlantic (Foreign Policy)
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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African Union Assembly launches the Continental Free Trade Area (CFTA) negotiations
The African Union Assembly launched the Continental Free Trade Area (CFTA) negotiations during the 25th Extraordinary Summit of Head of States and Governments on 15 June in Johannesburg, South Africa. The CFTA negotiations were launched at a luncheon hosted by the Chairperson of the African Union Commission, H.E. Dr. Nkosazana Dlamini Zuma.
The launch of the Continental Free Trade Area negotiations was preceded by a High Level Panel discussion on the CFTA. The objective was to discuss the importance and benefits of the Continental Free Trade Area for Africa.
H.E. Macky Sall, President of Senegal pointed out that Africans trade only 12% of their merchandise among themselves and emphasized the urgent need for the continent to come together and establish one African Free Trade Area. “We now have to make a giant step to make the CFTA a reality”, he said. The President urged African countries to learn from the Community of West African States (ECOWAS), a regional group of fifteen countries which has implemented a single passport to facilitate the intra-regional movement of people and goods across the West Africa region. He also mentioned that trade-related infrastructure is key to the implementation of the CFTA. “Infrastructure has to be the priority and without it, trade between African countries will never be improved”, he stressed.
H.E. Mr. Uhuru Kenyatta, President of Kenya and one of the Champions of the CFTA, highlighted how important and critical the CFTA is for the Continent. For the President, the CFTA means, amongst others, prosperity, job creation for youth, peace and security and agricultural development. He noted that 6 out of the 10 fastest growing economies in the world are in Africa and the CFTA will build one common African market and address the challenges of youth migration and poverty issues. He deplored the fact that Africa is still exporting its raw materials to third countries, depriving itself of the opportunity to create decent jobs for its people. He insisted that countries should remove artificial borders that fragment the African market. “I can assure everybody that the CFTA, if it is implemented, will benefit big and small countries. We just have to remove the artificial boundaries we have created for ourselves and that have been inherited from colonial times”, he said.
Representing the President of Ghana, H.E John Dramani Mahama also a Champion of the CFTA, Mrs. Hanna Tetteh, Minister of Foreign Affairs & Regional Integration pointed out that Ghana fully supports the implementation of the CFTA. “The CFTA is a vehicle to empower our young people to create jobs and a better life for our people”, she said.
The Executive Secretary of the United Nations Economic Commission for Africa (UNECA) H.E. Dr Carlos Lopez, welcomed the launch of the CFTA negotiations and noted that the Continent has made some progress in terms of economic growth but emphasized that this growth is not sustainable without industrialization and the creation of an internal African market.
The Deputy Chairperson of the African Union Commission, H.E Erastus Mwencha deplored the fact that currently it is so difficult to move across borders in Africa. He highlighted that an African trader faces a higher level of tariff protection when exporting within the continent than a trader from overseas. The CFTA is therefore an instrument to create favorable trading conditions for African traders. He urged countries to seriously address the issues of tariffs and non-tariff barriers during the CFTA negotiations.
The Commissioner for Trade and Industry of the African Union Commission, H.E Fatima Haram Acyl, applauded the Heads of State and Government for their commitment to the establishment of the CFTA. She reaffirmed the AU Commission’s readiness to support Member States in the CFTA Negotiations. The Commissioner emphasized the importance of involving various stakeholders in the negotiations and implementation of the CFTA in particular the private sector. Regional Economic Communities (RECs), private sector, civil society, and strategic partners all have an important role to play in the CFTA negotiations under the leadership of African Member states.
“I am convinced that through the CFTA, we can put trade at the center and at the service of development and create economic opportunities and decent jobs for our youth here in Africa. Africa cannot afford to keep losing its young people to the Mediterranean Sea as they seek to migrate to Europe in search of jobs and greener pastures”, she concluded.
Officially launching the CFTA negotiations, the Chairperson of the African Union and President of Zimbabwe H.E Robert Mugabe, welcomed the commencement of the negotiations and urged countries to learn from the Tripartite Free Trade Area among COMESA-EAC-SADC which was launched on 10 June 2015 in Sharm El-Sheikh, Egypt. He emphasized the importance of accelerated infrastructure and industrial development to enable the CFTA is to be an engine of economic growth and development for Africa.
The CFTA negotiations are expected to be concluded by the indicative date of 2017.
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Reform Africa’s policies for better trade – Uhuru
President Uhuru Kenyatta has urged African countries to reform trade policies at national, regional and continental levels to be in tandem with rules and regulations governing an enlarged free trade area.
He said strengthened trade facilitation will reduce the costs and time for movement of goods and people across borders.
“Let us also enhance and diversify production capacities in order to add value to Africa’s primary commodities and boost regional and continental value chains,” President Kenyatta said.
He was speaking during the launch of negotiations on the Continental Free Trade Area (CFTA) by African Union chair President Robert Mugabe of Zimbabwe at Sandton International Convention Centre, Johannesburg, South Africa.
President Kenyatta called for promotion of trade-related infrastructure (transport, energy, ICT etc), improved access to financing and establishment of frameworks for viable continental payments systems through banking and export guarantee systems.
“CFTA means a lot to Africans. Jobs for the youth, peace and security, prosperity, self-reliance and meeting only to discuss our prosperity and not problems,” the President added.
The CFTA, covering all economic blocs, will aid intra-Africa trade and is envisaged the continent-wide free trade area by 2017 after more than a decade of plus-five percent a year growth on average in African economies.
“Pooling economies and markets together through regional integration will provide a sufficiently wide market space to make economies of scale possible for African industries and allow Africa to play its rightful role in the global market,” the President said.
President Kenyatta said CFTA will boost intra Africa trade besides promoting regional and continental integration.
It will also develop larger markets, foster greater competition which in turn will result in poverty reduction, growth and sustainable development, the President added.
“Kenya welcomes road map for achieving CFTA by 2017, with the underlying principle being to build upon the current levels of tariff liberalization amongst Regional Economic groupings and existing achievements of the RECs,” the President said.
Launching the negotiations, President Mugabe told African leaders to put mechanisms in place to remove barriers that may impede free trading between countries and economic blocs.
During the occasion, President Kenyatta was honoured for the efforts Kenya has made to champion women empowerment through strengthened institutional frameworks, budgetary allocations and the thirty per cent government contracts.
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Ninth Session of the Committee on Sustainable Development and the Africa Regional Forum on Sustainable Development
The ninth session of the ECA Committee on Sustainable Development is being held from 16 to 18 June 2015, to deliberate on statutory and programmatic matters related to the ECA subprogramme on innovations, technologies and the management of natural resources, under the auspices of the Special Initiatives Division.
The session will provide a platform for the Africa Regional Forum on Sustainable Development, which ECA is organizing jointly with the African Union Commission and the African Development Bank, in collaboration with the Department of Economic and Social Affairs, the United Nations Environment Programme, and the United Nations Development Programme. In keeping with the General Assembly resolution, the Africa Regional Forum on Sustainable Development will bring together government ministries and agencies, major groups and other stakeholders, to deliberate on, and provide Africa’s collective input to the coming High-level Political Forum on Sustainable Development.
Objectives
The main objectives of CSD-9 are to:
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Review and provide guidance on the ECA Subprogramme on Innovations, technologies and management of Africa’s natural resources, the implementation of its 2014/2015 work programme, and priorities of the subprogramme for the 2016/2017 work programme in the context of the ECA strategic framework and proposed programme budget for the 2016/2017 biennium; and
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Provide a platform for ARFSD for the HLPF 2015. The Africa Forum deliberations will focus and agree on Africa’s collective input, in the form of key messages to HLPF 2015. These are on (i) integration, implementation and review including shaping the HLPF beyond 2015; (ii) new and emerging issues and the science-policy interface; (iii) sustainable consumption and production; (iv) SIDS and other countries in special situations.
Expected Outcomes
CSD-9 is expected to lead to:
1. Clear understanding and appreciation of the new ECA subprogramme on innovations, technologies and the management of Africa’s natural resources. Specifically on:
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Role and potential of new innovations and technologies as engines of economic growth in Africa, and strategic options for member States to harness these innovations and technologies;
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Green economy as a tool to achieve inclusive and green structural transformation and development;
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Role and importance of mineral resources in fostering sustainable socio-economic development and strategic options for achieving such development in the context of the African Mining Vision; and
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The challenges posed by climate change and measures for climate change mitigation and adaptation including appropriate mechanisms for integration into national development priorities, policies, strategies and programmes.
2. Clear guidance and direction on enhanced implementation of the 2014/2015 work programme; and on priorities for the 2016/2017 biennium for the ECA Subprogramme on innovations, technologies and management of Africa’s natural resources.
3. Clear understanding and articulation of Africa’s priorities and key messages on the theme and other discussion topics of HLPF 2015.
Background documents and reports are available below.
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ILO adopts historic labour standard to tackle the informal economy
“It is not just the adoption of this Recommendation, it’s actually putting it into practice that will matter,” said ILO Director-General Guy Ryder.
The International Labour Organization (ILO) has adopted a new international labour standard that is expected to help hundreds of millions of workers and economic units move out of informality and into the formal economy.
More than half of the world’s workforce is estimated to be trapped in the informal economy*, which is marked by the denial of rights at work, the absence of sufficient opportunities for quality employment, inadequate social protection, a lack of social dialogue and low productivity, all of which constitutes a significant obstacle to the development of sustainable enterprises.
The new Recommendation acknowledges that most people enter the informal economy not by choice but due to a lack of opportunities in the formal economy and an absence of any other means of livelihood.
The Recommendation – the first ever international labour standard specifically aimed at tackling the informal economy – was passed by 484 votes in favour and garnered outstanding support from the ILO’s tripartite constituents.
The new labour standard provides strategies and practical guidance on policies and measures that can facilitate the transition from the informal to the formal economy.
The vote by the International Labour Conference is seen as a crucial step in assisting countries to set up the necessary measures to promote decent job creation and sustainable enterprises in the formal economy.
“Over the years we’ve seen a growing consensus between governments, workers and employers that the right thing to do is to move people from an informal to a formal employment situation. We know it is not easy, we know that these are processes are complicated and take time, but the great value of this Recommendation is that we now have an international framework of guidance to help member States bring this about,” said ILO Director-General Guy Ryder.
“It is not just the adoption of this Recommendation, it’s actually putting it into practice that will matter,” he added.
The Recommendation is of great significance for all those who are concerned with inclusive development, poverty eradication, reducing inequalities and who are looking forward to a strong focus on the goal of decent work for all in the context of the new post-2015 development agenda.
Objectives
The new international standard provides guidance for member States to:
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facilitate the transition of workers and economic units from the informal to the formal economy, while respecting workers’ fundamental rights and ensuring opportunities for income security, livelihoods and entrepreneurship.
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promote the creation, preservation and sustainability of enterprises and decent jobs in the formal economy and the coherence of macroeconomic, employment, social protection and other social policies, and
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prevent the informalization of formal economy jobs.
The Recommendation gives guidance for action in the form of 12 guiding principles. Countries’ successful experiences formed the best practices that shaped the Recommendation, which accommodates diverse national situations and provides multiple approaches but remains universally relevant.
The extent of informality
The adoption of this Recommendation constitutes a historic landmark event for the world of work, as it points to the desired direction of many countries in making the transition to formality. It provides concrete guidance about the multiple pathways to achieve decent work and to respect, promote and realize the fundamental principles and rights at work for those in the informal economy.
“The new Recommendation is a major step forward in bringing the grey economy out of the shadows. It will help transform the informal economy, which has been particularly pervasive in developing economies. Importantly, it will facilitate the transition of the many million workers in the informal economy; promote job creation in the formal economy and prevent further informalization,” said Virgil Seafield, Chair of Committee on the Transition from the Informal to the Formal Economy and Chief Director for Advocacy and Statutory Services at the Department of Labour in South Africa.
Depending on the developing region, between 45 and 90 per cent of workers are in the informal economy. As concerns small and medium enterprises with 10 to 250 employees, as many as 90 per cent are informal.
The share of women in informal employment is higher than men in most countries, and other vulnerable populations, such as youth, ethnic minorities, migrants, older people and the disabled are also disproportionally present in informality.
The adoption of the Recommendation came as the ILC is gearing to close its 104th session, where once again government, employer and worker representatives have worked together to discuss and move forward on key world of work issues.
* Informal economy: All economic activities by workers and economic units that are – in law or in practice – not covered or insufficiently covered by formal arrangements. Activities are not included in the law, which means that they are operating outside the formal reach of the law; or they are not covered in practice, which means that – although they are operating within the formal reach of the law, the law is not applied or not enforced; or the law discourages compliance because it is inappropriate, burdensome, or imposes excessive costs.
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New electronic port clearance system to be operational in two weeks
The electronic platform for lodging of trade documents will be fully operational from July 1 as the State moves to boost efficiency and transparency in business transactions.
Treasury secretary Henry Rotich said the Kenya National Electronic Single Window System (Kenya Tradenet System) will handle transactions by all government regulatory agencies to help cut costs and time, as well as enhance transparency in importation of commodities.
“The declaration module has now been put in place and beginning the first of July 2015, all importers and exporters and other related stakeholders will be required to process their transactions through the system. This will enhance transparency, accountability, governance and competitiveness while at the same time improving revenue collection,” he told Parliament last week.
The online platform enables parties involved in trade and transport to lodge standardised information and documents within a single entry point to fulfil all import, export and transit-related regulatory requirements.
Several agencies including the Kenya Bureau of Standards (Kebs), the Kenya Revenue Authority (KRA) and Kenya Ports Authority (KPA) are already operating on the platform that has also been piloted in Rwanda.
The implementation of the Kenya TradeNet System started in 2012 and the system went live in October 2013. It was officially launched on May 2, 2014 in Nairobi by President Paul Kagame of Rwanda at the invitation of President Uhuru Kenyatta.
To date, at least 17 modules have been successfully implemented with only three still under implementation.
Besides clearance of trade transaction online, the government also plans to have all public procurement done online and linked to the Integrated Financial Management Information System (IFMIS) which links all ministries and agencies including county governments.
The procurement and payment module will replace the current uncoordinated accounting and budgeting system which makes it easy for dishonest officials to collude with cartels in defrauding the government.
Estimates by the Treasury show that the government loses over Sh70 billion annually due to fraudulent manipulations in procurement processes. The Procure to Pay system will handle purchase requisition, online tendering and award, receipts matching, invoice delivery, purchase order generation and payment initiation.
The module will also handle complex jobs including budgetary controls, goods delivery and inspection receipting.
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WTO sees “slight deceleration” in G20 trade restrictions but calls for continued vigilance
The WTO’s thirteenth trade monitoring report on G20 trade measures, issued on 15 June, shows a slight deceleration in the application of new trade-restrictive measures by G20 economies, with the average number of such measures applied per month lower than at any time since 2013.
The report also underlines that it is not yet clear that this deceleration will continue and it calls on G20 leaders to show continued vigilance and reinforced determination towards eliminating existing trade restrictions.
This thirteenth Monitoring Report reviews trade and trade-related measures implemented by G-20 economies during the period mid-October 2014 to mid-May 2015. These reports have been prepared in response to the request by G-20 Leaders to the WTO, together with the OECD and UNCTAD, to monitor and report publicly on G-20 adherence to their undertakings on resisting trade and investment protectionism. The most recent report on G-20 economies was issued on 5 November 2014.
Key findings
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This report shows a slight deceleration in the application of new trade-restrictive measures by G-20 economies with the average number of such measures applied per month lower than at any time since 2013. Since mid-October 2014, 119 new trade-restrictive measures were put in place over the period – an average of 17 new measures per month.
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Also during this period, G-20 economies continued to adopt measures aimed at facilitating trade. The trend on these trade liberalizing measures remains stable with G-20 economies introducing some 112 new measures during the period under review – an average of 16 measures per month.
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Despite these recent trends, it is not yet clear that the deceleration in the number of measures introduced will continue in future reporting periods. Therefore, continued vigilance and reinforced determination towards eliminating existing trade restrictions remains an important priority.
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The longer‑term trend remains one of concern with the overall stock of trade-restrictive measures introduced by G-20 economies since 2008 continuing to rise. Of the 1,360 restrictions recorded by this exercise since 2008, less than a quarter have been eliminated, leaving the total number of restrictive measures still in place at 1,031. Therefore, despite the G-20 pledge to roll back any new protectionist measures the stock of these measures has risen by over 7% since the last report.
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The broader international economic context also supports the need for continuing vigilance and action. According to the WTO’s most recent forecast (14 April 2015), growth in the volume of world merchandise trade should increase from 2.8% in 2014 to 3.3% in 2015 and further to 4.0% in 2016, but remaining below historical averages.
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While the stock of trade restrictive measures has risen, the overall response to the 2008 crisis has been more muted than expected when compared with previous crises. The multilateral trading system has proved an effective backstop against protectionism.
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This role in providing a stable, predictable and transparent trading environment should be kept in mind as Members prepare for the WTO’s tenth Ministerial Conference in Nairobi in December.
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The G-20 must continue to show leadership in eliminating remaining trade-restrictive measures and in the pursuit of further multilateral trade liberalization.
WTO Report on G-20 trade measures: Executive Summary
This is the thirteenth trade monitoring report on G-20 trade measures. It covers the period from 16 October 2014 to 15 May 2015.
This report shows a slight deceleration in the application of new trade-restrictive measures by G‑20 economies with the average number of such measures applied per month lower than at any time since 2013. Since mid-October 2014, G-20 economies applied 119 new trade-restrictive measures over the period – an average of 17 new measures per month. A slight decrease in the number of trade remedy investigations by G-20 economies has also contributed to this overall figure.
During this period, G-20 economies also continued to adopt measures aimed at facilitating trade, both temporary and permanent in nature. The trend on trade‑liberalizing measures thus remains stable with G-20 economies introducing some 112 new measures during the period under review – an average of 16 measures per month. When counted without trade remedy actions, G-20 economies have adopted more liberalizing import measures than restrictive measures since the end of 2013.
These developments confirm that G-20 economies overall have shown a degree of restraint in introducing new trade restrictions during this reporting period. However, it is not yet clear that the deceleration in the number of measures introduced will continue in future reporting periods. It is also relevant that the slow pace of removal of previous restrictions means that the overall stock of restrictive measures is continuing to increase.
Overall, this report shows that of the 1,360 restrictions recorded by the monitoring exercise since October 2008, only 329 have been removed. In other words, the total number of those restrictive measures still in place currently stands at 1,031 – up by over 7% compared to the last report. The addition of new restrictive measures, combined with a removal rate which fails to significantly reduce the overall stockpile of restrictive measures, is inconsistent with the longstanding G-20 pledge to roll back protectionist measures. With the share of removals of total restrictive measures still under 25%, the longer term trend in the number of trade restrictive measures remains one of concern. Therefore, continued vigilance and reinforced determination towards eliminating existing trade restrictions remain an important priority.
The broader international economic context also supports the need for continuing vigilance and action. Trends in world trade and output have remained mixed since the last monitoring report, as merchandise trade volumes and GDP growth picked up in the second half of 2014 but appear to have slowed in the first quarter of 2015. Economic activity remained uneven across countries as the United States (US) and China slowed in Q1 while growth in the euro area and Japan picked up. Plunging oil prices and strong exchange rate fluctuations – including an appreciation of the US dollar and a depreciation of the euro – contributed uncertainty to the economic outlook. Lower prices for oil and other primary commodities were expected to provide a boost to importing economies, but reduced export revenues weighed heavily on commodity exporters. In light of these developments, the Secretariat’s most recent forecast (14 April 2015) predicted a continued moderate expansion of trade in 2015 and 2016, although the pace of recovery was expected to remain below historical averages. According to this forecast growth in the volume of world merchandise trade should increase from 2.8% in 2014 to 3.3% in 2015 and further to 4.0% in 2016.
In the area of government procurement, work from the OECD identifying 65 measures implemented since the financial crisis, suggests that discriminatory government procurement policies have become increasingly popular and potentially affect US$423 billion of government procurement in the implementing economies.
This report shows that G-20 economies implemented 48 new general economic support measures during the period under review with the majority targeting the manufacturing and agricultural sectors through various incentive schemes, often, but not exclusively, in the context of exports.
From transparency and systemic points of view, important developments took place in the WTO’s TBT and SPS Committees. Although an increase in the number of notifications does not automatically imply greater use of measures taken for protectionist purposes, both Committees saw record levels of notifications in 2014 driven by a significant growth in notifications from developing countries. The number of specific trade concerns raised in the TBT Committee has increased significantly lately.
Among G-20 countries a number of recent policy developments in services are noteworthy. These include reforms of the insurance and pension sectors and easing of the rules on foreign investment in the construction and railway transportation sectors in India, as well as the lifting of restrictions on foreign investment in several service sectors in China. Also noteworthy is the amendment of the Russian Law on Foreign Investment in Strategic Companies and several important reforms in the audio-visual and ICT sectors by Argentina, Mexico, the Russian Federation and the US.
The overall assessment of this thirteenth report on G-20 trade measures is that the continuing increase in the stock of new trade-restrictive measures recorded since 2008 remains of concern in the context of an uncertain global economic outlook. The G-20 individually and collectively must show leadership and deliver on their pledge to refrain from implementing new measures taken for protectionist purposes and to remove existing ones.
While the stock of trade‑restrictive measures has risen, the overall response to the 2008 crisis has been muted when compared with previous crises. The multilateral trading system has thus proved an effective backstop against protectionism, and the system must do more to drive economic growth, sustainable recovery and development. The role of the multilateral trading system in providing a stable, predictable and transparent trading environment should be kept in mind as Members prepare for the WTO’s MC10 in Nairobi in December. Decisive progress in eliminating remaining trade-restrictive measures combined with further multilateral trade liberalization would be a powerful policy response.
Thirteenth UNCTAD-OECD Report on G20 Investment Measures
Investment policy measures introduced by G-20 members between mid-October 2014 and mid-May 2015 tended to enhance openness for international investment, the joint report found. The findings were prepared by UNCTAD and the OECD that are part of a wider report on trade and investment measures in the G20 issued periodically by UNCTAD, the OECD and the WTO.
According to the Report, during the reporting period the following measures were adopted:
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Five G20 members – Australia, Canada, P.R. China, India and Mexico – amended their investment-specific policies.
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Two G20 members – Canada and the Russian Federation – amended their investment policies related to national security.
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Five G20 members – Brazil, Canada, India, Indonesia and Japan – concluded seven bilateral investment treaties and four other international investment agreements.
The inclusion of any measure in these Reports implies no judgment by the WTO, OECD or UNCTAD Secretariats on whether or not such measure, or its intent, is protectionist in nature. Moreover, nothing in the Reports implies any judgment, either direct or indirect, as to the consistency of any measure referred to in the Reports with the provisions of any WTO, OECD, or UNCTAD agreements.
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Competition from Egypt held off for two years under free trade area agreement
East Africa’s producers of sugar, maize, cement and other goods categorised as “sensitive” will be protected from intense competition from Egypt and other countries as the Tripartite Free Trade Area (TFTA) comes into force next month.
Restrictions on the entry of the sensitive goods will remain in force until 2017, allowing the industries to adjust to the cut-throat competition expected from cheaper products.
The list of sensitive goods also has wheat, rice, textiles, milk and cream, meslin grain and flour, cane and beet sugar, khangas, kikois, kitenges, second hand clothes, beverages, spirits, plastics, electronic equipment and paper materials. All these will be subject to duty and quota restrictions.
TFTA was launched by the Heads of State in Egypt on Wednesday last week. It will pool the trade interests of the East African Community (EAC), Southern African Development Community (Sadc) and the Common Market for Eastern and Southern Africa (Comesa) and other African countries that have a combined GDP of more than $1 trillion, and a population of 625 million people.
The countries that signed the deal were Kenya, Uganda, Tanzania, Rwanda and Burundi, Zimbabwe, Egypt, Sudan, Ethiopia, Malawi, Namibia, Comoros, Seychelles, Mozambique. Others were Angola, Botswana, Democratic Republic of Congo, Djibouti, Lesotho, Eritrea, Madagascar, Mauritius, South Africa, Swaziland, Zambia.
The launch of the TFTA effectively opens the door for EAC goods that could not easily access bigger markets such as South Africa, Egypt, Ethiopia and Eritrea.
“The two-year period will allow for gradual tariff alignments and adjustments by the TFTA member states before all trade in goods in the tripartite region becomes free,” said Mark Ogot, senior assistant director at Kenya’s Ministry of East African Affairs, Commerce and Tourism and a tripartite expert.
He said the particular goods would be imported into the countries under strict quota and duty provisions.
East African traders have over time expressed fears that subsidised products from developed markets like Egypt would swamp the regional market if the EAC market is extended to the Free Trade Area.
“The main challenge has been that some countries repackage goods like sugar, electronic equipment and paper materials from other countries, and export them into the region as its own goods when they do not meet the rules of origin threshold. The goods are then sold at a cheaper price at the expense of the locally manufactured goods,” said Vimal Shah, chairman of the Kenya Private Sector Alliance (Kepsa).
Under the current rules of origin, only goods produced wholly from local inputs are allowed to cross national borders without attracting Customs taxes.
“The list of sensitive goods should be maintained to balance the trade until a proper agreement especially on rules of origin has been reached,” said Mr Shah. In East Africa for example, Kenya has been protective of its sugar industries under the Comesa sugar safeguard that allows it to limit the entry of sugar imports.
Also, the common external tariff (CET) rates on the sensitive products in the EAC are substantially higher than the 25 per cent maximum rate for non-sensitive products. For example, rice will attracts a CET of 75 per cent in Uganda, Tanzania instead of 35 per cent as it is in the other EAC countries, wheat attracts between 60 and 35 per cent CET in both countries and sugar 100 per cent.
CET is a single/common tariff agreed to by all member states of a custom union like EAC on imports of goods outside the union.
The removal of tariffs on goods under the TFTA is expected reduce the cost of procurement of essential raw materials and, therefore, of production. This would make East Africa’s products cheaper, more accessible to the region and more competitive on the global market.
A trade framework adopted by the partner states during TFTA launch by the Heads of State requires countries to exchange tariff concessions based on reciprocity. The agreement will be enforced from July 1.
“The aim is to liberalise as many goods as possible, effective immediately once the agreement has been ratified,” noted Mr Ogot.
According to Mr Shah, liberalisation of trade in all the goods in the FTA agreement is necessary and unavoidable since duty and quota-free movement of goods is always a key aspect of any FTA.
“It is also important to have a competition policy in the TFTA for fair competition that is mutually beneficial to business,” said Mr Shah. “EAC partner states have a competition policy but implementation has been slow due to limited awareness of its importance.”
The World Trade Organisation does not have any policies on competition. However, through its principles of non-discrimination, monopoly, national treatment and others as enshrined in the multilateral agreements on trade, competition is somewhat indirectly covered to some extent.
Eric Musau, an analyst at Standard Investment Bank, says that manufacturing companies from developed economies like Egypt, South Africa have an added advantage of cheaper electricity, oil and gas.
“The issues of energy, high cost of raw materials, infrastructure and bureaucracy are raising the cost of production in East Africa, making the local companies less competitive,” said Mr Musau.
The TFTA agreement will, therefore, serve as the basis for the completion of a Continental Free Trade Area by 2017, with the aim of boosting trade within Africa by up to 30 per cent in the next decade, and ultimately establishing an African Economic Community.
As per the agreement, finalisation of negotiations on outstanding TFTA areas especially with regard to rules of origin (RoOs), trade remedies, and dispute settlement will be introduced following the launch of a post-signature implementation plan.
After the launch, the deal will enter into force upon ratification of the text by two-thirds of the Tripartite FTA member states. The Tripartite FTA will then form a building block for the continent-wide free trade agreement, known as the Continental FTA.
The Comesa-EAC-Sadc partnership faces significant challenges in harmonising differential RoOs, as the EAC and Comesa regimes in this area are significantly different from the ones used by SADC.
The TFTA experts have suggested that where rules are common (including wholly originating) 35 per cent ex-works costs (distribution and logistics) should be retained as an interim option. If enacted, such a move could mean that products on which these value-added criteria of 35 per cent ex- works cost would apply could gain duty free regional market access.
“Work on rules of origin will continue after the launch of the TFTA as part of the “post signature activities, noted Mr Ogot.
“TFTA has been launched, while negotiations would continue on product- specific rules of origin. The final outcome is hard to predict.”
Although the provisions of the Tripartite Draft Agreement favour a single value-added rule as in the EAC and Comesa regional agreements, the focus has shifted during negotiations from a percentage-based approach towards a product-specific approach, which will involve defining specific rules for numerous product categories (those covered by divergent rules of origin).
According to the agreement the modalities for tariff liberalisation set a goal of 100 per cent tariff liberalisation under the TFTA.
The principle of “building on the acquis” has been retained. As a result, countries that are members of existing regional economic community (REC) FTAs are not required to negotiate tariff liberalisation under the TFTA with other members of the same regional deals. However, they can consolidate their existing tariff liberalisation levels into the TFTA in line with the above-mentioned principle.
The agreement also requires that Tripartite Partner States accord one another the Most-Favoured-Nation Treatment.
“Nothing in this Agreement shall prevent a Tripartite Member/Partner State from maintaining or entering into new preferential trade agreements with third countries provided that any advantage, concession, privilege or favour granted to a third country under such agreements are offered to the other Tripartite Member/Partner States on a reciprocal basis,” says the agreement.
“Tripartite Member/Partner States shall not impose new import duties or charges of equivalent effect except as provided for under this Agreement.”
A map of the Tripartite Free Trade Area (TFTA)
Source: AFP via MailOnline
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“Help us keep the momentum”, RECs urge African Leaders
African leaders converged in the Sandton Convention Center in Johannesburg for a New Partnership for Africa’s Development (NEPAD) Heads of State and Government Orientation Committee (HSGOC) meeting on Saturday, 13th June, 2015, where leaders discussed how NEPAD can be used to address some of the pressing issues affecting the continent.
Speaking on behalf of the African Regional Economic Communities (RECs), SADC Executive Secretary, Dr. Stergomena Lawrence Tax urged the Heads of State and Government to enable the RECs to keep the momentum on the pressing matter of Capacity Development and Institutional Transformation of Africa’s Regional Economic Communities, which are the “building blocks” of the African Union.
“Clearly, an effective continental programme requires appropriate capacity to drive its programme on a sustainable trajectory if our intended objectives are to be met. It is also critical that we put in place a homogenous capacity across the RECs, the AUC, the national levels and related stakeholders. I am inspired that through the Agenda 2063, we seek to ensure an asymmetrical capacity building programme, based on which we can collectively drive our common integration and development agenda. Excellencies, please enable us to keep the momentum,” said Dr. Tax.
She said capacity development and institutional transformation is at the centre of the quest for impactful and sustainable results from regional integration efforts, adding that “The capacity of the entire AU institutional architecture requires attention, as part of the RECs capacity and institution building process particularly as it relates to effective linkage with other AU institutions in avoiding, the long standing and unattended problem of overlaps and duplication by institutions which are supposed to be working in coherence, linking and reinforcing transformation efforts.”
Dr. Tax further said “Let us not lose sight of the fact that the overall capacity of Africa and the African Union’s institutions, including RECs will ultimately determine the quality of regional integration that will be attainable. That the effective delivery of regional integration in Africa implies a strong, robust, learning and transformational network of both national and regional institutions and in particular the RECs, as the building blocs for Africa’s transformation.”
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Statement by Chairperson of the African Union Commission, Dr Nkosazana Dlamini-Zuma, to the 25th AU Summit
Statement by the Chairperson of the African Union Commission, HE Dr Nkosazana Dlamini-Zuma, to the 25th Ordinary Session of the African Union Assembly of Heads of State and Government: Johannesburg, 14 June 2015
Let me welcome all of you to this 25th Summit of Heads of State and Government. Karibuni Aukana!
I would like to thank the President, the government and the peoples of the Republic of South Africa for the excellent hospitalities and facilities extended to all of us.
A very warm welcome and congratulations to the Presidents who are joining us following elections in their countries: President Muhammadu Buhari of the Federal Republic of Nigeria, President Hage Geingob of the Republic of Namibia, President Filipe Jacinto Nyusi of the Republic of Mozambique and Prime Minister Pakalitha Mosisili of the Kingdom of Lesotho. We also congratulate Prime Minister Hailemiriam Desalegn of the Federal Democratic Republic of Ethiopia, President Faure Gnassingbé of the Togolese Republic and Omar al-Bashir of the Republic of the Sudan for their re-election.
When we met in January this year, we were still in the throes of the Ebola epidemic. But, thanks to the resilience, and hard work of the peoples and governments of Guinea, Liberia and Sierra Leone, to the young African men and women of ASEOWA, to Member states, the private sector, to the international community and to the African citizens; Liberia has been declared Ebola free for the last 78 days. We congratulate President Sirleaf Johnson, her government and the people of Liberia for this achievement.
In the other two countries Sierra Leone and Guinea, numbers have significantly reduced. We should not get complacent. We must stay the course until the other two countries are also declared Ebola-free.
The lesson from the Ebola Virus Disease is that with African solidarity and resolve, we can find our own solutions to our challenges. The disease also exposed the weaknesses of our health systems, especially public health. As we move towards recovery, we must train more health workers, and build and strengthen our health systems and infrastructure.
We’ve been faced by the incidents of xenophobia, and the tragedy of many people dying in the Mediteranean sea, leaving their countries out of desperation, to make a living elsewhere.
In 1906, one of the finest sons of our soil, Pixley ka Isaka Seme in his George Wilson Curtis Medial winning essay at Columbia University said,
The African people, although not a strictly homogeneous race, possess a common fundamental sentiment which is everywhere manifest, crystallizing itself into one common controlling idea. Conflicts and strife are rapidly disappearing before the fusing force of this enlightened perception of the true intertribal relation, which relation should subsist among a people with a common destiny.
It is this common destiny that should guide us towards an integrated, prosperous, peaceful and people-centered Africa which is a dynamic force in the world. Of course for this to happen we should refuse to camp forever on the borders of the industrial world, and having learned that knowledge is power, educate our children and youth, as Pixley ka Isaka Seme said, in 1906.
Indeed, if we educate and skill our people, with an emphasis on science, engineering, technology, maths resource and innovation, including technical and vocational skills; our people will stop undertaking the perilous journeys across the Sahel and the Mediteranean sea.
When we undertake this skills revolution, extremists, armed groups and terrorists will find it difficult if not impossible to recruit our young women and men.
Instead, our youth will have the skills to generate electricity, including renewables.
They will produce enough food for the entire Africa, as they modernise and grow agriculture and agroprocessing, and agribusiness.
They will stop camping at the borders (and shores) of the industrial world, but will transform our economies through industrialisation, manufacturing and by adding value to our natural resources.
They will develop our blue economy and build our infrastructure, connecting our capitals and commercial centres through ICT, and through highways, rail, aviation and oceanic and waterways. They will ensure that this is done through the most modern of technology, including the Pan African high speed rail network.
They will create a uniquely African continent whose economic development will not only be based on profit, but on the needs of the people, driven by the youth and women. They will create a prosperous and non-sexist continent. They will take charge of our outer space.
To achieve Seme’s dream, there are a few hurdles we have to overcome. We must believe in ourselves. We have to realise that the demographic dividend is possible if we adopt the right policies, manage our diversity and make every citizen feel valued and part of the driving forces for change and progress, irrespective of tribe, religion, colour or creed, and whether they are man, woman, boy or girl.
In the world today, the countries that now drive the world economy are those with huge populations, such as the emerging economies of China, India and Brazil. Even in Africa, the largest economy (Nigeria) has the largest population.
They are in the same league in terms of population as Africa, but they have the advantage that they are united.
It is for this reason that even though we cannot be one country, we need to speed up our integration and unity.
We must recall Kwame Nkrumah’s words that Africa must unite or perish.
This is why we are so excited about the signing of the trade agreement by the twenty-six countries that make up the Tripartite of COMESA, EAC and SADC in Shamal Sheik this week. This indeed is a good basis for the launch of the Continental Free Trade Area. Of course, if we add ECOWAS – it will be 41 countries, making the Continental Free Trade Area well within reach. This will not only boost intra-Africa trade, but also boost investment. In a similar vein, if we move faster on the free movement of people, goods and services, and the African passport, we are sure to see an increase in trade, as well as tourism and economic growth.
The adoption of the First 10-year implementation plan of Agenda 2063, the Africa we want, will signal a new determination and a desire to bequeath a better Africa to the next generations.
We should chart a new unique Africa, without comparison. Our ancient civilizations cannot be compared to any other.
For instance, the obelix of Axum, the civilizations of Egypt, the Nok and the Ashanti; the Empires of the Shongai, Mali and Monomotapa, the Royal Houses of Nubia, d’Oyo, Benin, Kongo, Kanem-Bornu and Dahomey; Abyssinia, Zimbabwe and Mapungubwe compared to no other; the Egyptian, Ethiopian and Sudanese pyramids; the mosques of Timbaktu, our langauges, our art, music and dance; our geniuses created what is uniquely African.
As the leading generations of our time, it is upon us to help chart our uniquely African path and place in the world today. Agenda 2063 is our roadmap and beacon.
Seme also said:
“In all races, genius is like a spark, which, concealed in the bosom of a flint, bursts forth at the summoning stroke.”
It is our responsibility in all sectors to create the conditions that act as a summoning stroke for the human genius of Africans. It will be contributions of Africa’s young people, its men and women, its intellectuals, its entrepreneurs, its artists, and its sports people today that will shape our destiny.
We are a century late in terms of Seme’s dream, but we can see in the cities and towns, in rural areas, the spark of this brighter Africa.
In building our shared prosperity we must be uniquely African, by placing the human being, rather than only profit at the centre.
As Seme said: The most essential departure of this new civilization is that it shall be thoroughly spiritual and humanistic – indeed a regeneration moral and eternal!
By January next year we shall present the comprehensive strategy to build African capacity and skills for implementing Agenda 2063. This capacity and skills plan shall be geared towards the empowerment of Africa’s young people, women and girls, creating an enabling environment for them to become the drivers of our transformation and development.
Over the last fifteen years, our development agenda has focused on primary education, it’s now time we urgently paid attention to vocational and higher education. We cannot drive our economic development only through primary education. We need champions for higher education, to help steer and support the African higher education sector. At the Universities Summit hosted in Dakar Senegal by President Macky Sall in March 2015, His Excellency graciously accepted to be one of these champions, who paying special attention to the issue of harmonization of higher education.
This will enable our young people to study and apply their skills anywhere on the continent. We need more such champions. I am sure we shall have more champions volunteering to join him in this task.
Between now and January, we must also do more to popularise the 10-year plan, to align Agenda 2063 to our national and regional strategies and report on our recommendations on the allocation of roles and responsibilities between the RECs, the AU Commission and the Nepad Agency.
We will send teams to the countries that ask assistance to domesticate their plans. We will undertake that exercise together with NEPAD.
The AU Commission and other organs will also align their Strategic plans with Agenda 2063.
Our coastline and waterways are amongst the largest in the world and offer for us much opportunity. Consequently, on 25 July this year we shall launch the Decade of African Oceans and Seas. We will also celebrate that day annually as the Day of African Oceans and Seas, so as to fully utilise and create awareness on the opportunities presented to us by the ocean and seas. We therefore call on all coastal countries, island states and countries with waterways to join us in launching this important decade, so that Africa can be part of this Blue economy.
Already, African women in maritime met in Luanda, Angola earlier this year, refusing to camp at the borders, but instead charted areas of cooperation for women in shipping, port management, fishing and other areas of the blue economy. We have to take charge of our oceanic space.
Africa has many examples of indeginous and good farming practices, some of them climate smart and we must share these experiences, and replicate and upscale them.
In addition, more must be done on agro-processing and businesses, as part of building our collective food security, to reverse our high food imports bill and as part of industrialisation and job creation.
We look forward to the recommendations from the High Level Gender Panel and Ministers of Women on financial inclusion and agro-businesses to this Summit.
We announced in January that the Pan African Parliament will host the 3rd AU Intergenerational dialogue, and we are glad to report that this indeed took place. The young men and women from across the continent met with the Parliamentarians from PAP, a target for youth employment and investment in our Agenda 2063 first 10 year plan and for an annual report on the status of the continent’s youth.
In my 2013 email to Kwame Nnkrumah, I spoke about students forming AU clubs. I am happy to say there is a delegation from the University of Cape Town’s AU club who are present here. We would like to know about similar clubs in other universities. We welcome the UCT AU Club delegation, and we encourage all students and youth to form AU clubs at their institutions and communities.
We are also happy about the numbers of women at this Summit from all over this continent. As they say in South Africa: Malibongwe, Igama lamakhosikazi – We praise the Women!
Seme contended that ‘the victories of peace are greater and more abiding than the spoils of war.’
It is for this reason that our Peace and Security Council, our peacekeepers, mediators and our high representatives are working tirelessly to silence the guns within the five years we have pledged.
But, as political leadership, governments, political parties, faithbased organisations and communities, we must play our part, to build tolerant, inclusive and democratic communities and societies, where the dignity and rights of all are respected.
Unfortunately, women and children are the main victims of conflicts, enduring untold miseries, hardships, sexual and other forms of violence, in wars and conflicts which they played no part in starting.
Our resolve to silence the guns, must therefore give hope to women and children suffering from the terror of Boko Haram and Al Shabaab. Our resolve must provide renewed hope to the peoples in conflict ridden areas in Darfur, East DRC, Libya, Mali, Somalia, and South Sudan, where lives and livelihoods have been shattered.
We must in the words of Seme ensure that “conflicts and strife rapidly disappear before the enlightened perception… among a people with a common destiny.”
We are encouraged by the movement on the decision on Alternate sources of funding, to incrementally provide more domestic resources for the AU and its organs. Starting from next year, we will take the first step in this direction, which is testimony the determination of Africans to take charge of their destiny.
We thank the South African government for the Golf Day and fund raising dinner last night, and for all the individuals pledges.
We welcome the fact that we shall debate the Summit theme Women’s empowerment for the realisation of Agenda 2063 later today. Agenda 2063 is about the people, we cannot leave out halve of the population. May I also remind all of us, that women and youth form the majority of the voters.
We should therefore heed President Nelson Rolihlahla Mandela’s words when he said:
The legacy of oppression weighs heavily on women. As long as women are bound by poverty and as long as they are looked down upon, human rights will lack substance.
As long as outmoded ways of thinking prevent women from making a meaningful contribution to society, progress will be slow.
As long as the continent refuses to acknowledge the equal role of more than half of itself, it is doomed to failure.
Ngiyabonga
Asante sane
Ke a leboga
Shukran
Mercie
Muchos obrigade
Kanimambo
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African leaders commend NEPAD’s role in Africa’s transformation and regional integration
African leaders gathered on 13 June 2015 at the Sandton Convention Centre in South Africa for the 33rd NEPAD Heads of State and Government Orientation meeting.
Welcoming the delegation to the Opening Session, South African President Jacob Zuma commended NEPAD for keeping the dreams and potential of the African continent alive. He said, “the continent is now reaping the benefits of responsible macro-economic management and deepening integration into the world economy.” President Zuma underscored that investments in infrastructure programmes, regional integration and intra-African trade is Africa’s solution for sustainable growth and development.
African Union Chairperson and President of Zimbabwe, Robert Mugabe, applauded NEPAD’s breakthroughs in project conceptualisation and implementation on the continent. He said “NEPAD has provided critical synergies between and among African institution, thereby enhancing a much needed continental integration”. He urged the Agency to play a lead role in capacitating Regional Economic Communities to fast-track Africa’s quest for industrialisation and value addition of its vast mineral resources. “Surely the African people cannot continue to be hewers of wood and drawers of water, while others delight in their resources, in our resources. With unwavering courage and collective determination, Africa can also industrialise in the same manner other regions have achieved industrialisation within the shortest period possible”, President Mugabe said.
Newly elected President of Nigeria, Muhammadu Buhari, was welcomed to the HSGOC. As a founding member of NEPAD, Nigeria emphasised its continued commitment to championing NEPAD programmes and projects, said Ambassador B.Z. Lolo, Permanent Secretary of Foreign Affairs, reading a speech on behalf President Buhari. Ambassador highlighted commenced work on the Trans-Saharan gas pipeline from Nigeria to Algeria, as well as the Trans-Sahara Highway linking several African countries as key achievements of NEPAD. He referred to the NEPAD Agency as a strategic body for Africa’s structural transformation.
The 20-membership NEPAD HSGOC met ahead of the 25th AU Assembly, to provide leadership to the NEPAD process as well as to set policies, priorities and the programmes of action.
Chair of the NEPAD HSGOC and President of Senegal, Macky Sall, underscored the achievements made by NEPAD in advancing regional integration through infrastructure and capacity development projects. He noted the need to tackle illicit financial flows from Africa and to enhance the capacities of African member countries to negotiate mining and oil contracts for the social benefit of African people. President Sall also commended the NEPAD Spanish Fund for African Women’s Empowerment, in line with this year’s Summit theme.
NEPAD Agency Chief Executive Officer, Dr Ibrahim Mayaki, reported back on concrete results made for the period January to June 2015. “We have achieved 313 results that each has had quantifiable impacts: 20 at the continental level, 30 at the regional level and 264 at the national levels. All the impacts demonstrated are geared towards the industrialization of the Continent”, he said.
Some of the key achievements Dr Mayaki highlighted included the establishment of an Africa Climate Smart Agriculture Alliance aimed at reaching out to 25 million farmers by 2025, the launch of a Continental Business Network for Infrastructure financing in Africa, and providing access to clean water and sanitation to 9 656 women in Benin and Togo.
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tralac’s Daily News selection: 15 June 2015
The selection: Monday, 15 June
SADC-EAC-COMESA Tripartite Free Trade Area Legal Texts and Policy documents: updated resource page (tralac)
The benefits of Africa's new Free Trade Area (Belfer Centre, Harvard)
The TFTA is a key landmark in Africa's economic history. It ranks in significance with the independence of Ghana in 1957, the creation of the Organisation for African Unity in 1963, and its reinvention as the African Union in 2002. To paraphrase Kwame Nkrumah, Ghana’s first president, the best way to learn to be a continental free trade area is to be a continental free trade area. The TFTA will benefit Africa in at least six mutually reinforcing ways: [The authors: Calestous Juma, Francis Mangeni]
Storify of Twitter chat w/@calestous and @JulieGichuru on Africa's new grand free trade area
Seychelles signs up for Tripartite Free Trade Agreement (Seychelles News Agency)
Although the archipelago’s regional imports to COMESA, SADC and the Indian Ocean Commission totalled a substantial 2.8 billion Seychelles rupees ($214 million) in 2014, this was offset by weak reciprocal exports of only SCR50.2 million ($3.8 million) with Seychelles’ regional neighbours in 2012, indicating that much more can still be done to promote the exportation of Seychelles’ goods to other African countries.
Africa free trade zone of benefit to Botswana (CoastWeek)
While the TFTA pact is a noble idea, Jefferies pointed out there will remain some non-tariff barriers to free trade in Africa. "What often happens is that while a free trade agreement reduces tariffs, there will often be an increase in non-tariff barriers," Jefferies said. "For example, if a pharmacist in Botswana wants to import medicines from South Africa, there has to be an approval first from local authorities, not to mention associated regulatory standards. "So trade is still restricted by non-tariff barriers."
Mega trade agreement a step forward for the continent – Carlos Lopes (UNECA)
While not all countries have signed on to their region’s tripartite agreement and the negotiations towards the 2017 deadline for the establishment of the Continental Free Trade Area (CFTA) will need to address some thorny issues, Mr. Lopes stressed that the principle at work is that of ‘variable geometry’ as not all countries are ready at the same time.
Carlos Lopes: ‘Seize your future’ (UNECA)
“If Africans do not occupy the policy space vacated in the recent past, thanks to the various crises that shook the pillars of the financial system and facilitated the emergence of new South engines of growth, they may not have another chance,” Mr. Carlos Lopes, the Under-Secretary of General of the United Nations and the Executive Secretary of the Economic Commission for Africa said during the opening ceremony of the twenty-seventh ordinary session of the Executive Council of the African Union in Johannesburg, South Africa.
Support African monitoring system, President Kenyatta says (Daily Nation)
Kenya has urged African countries to revive an African Union monitoring system as a way of improving governance and political stability among member states. President Uhuru Kenyatta on Saturday said AU member states have an urgent obligation to support the work of the African Peer Review Mechanism (APRM) and make it the source of continental policy standards. “The APR mechanism has lost much of its lustre as an innovative, home-grown and effective tool to deliver on good governance for Africa,” he told the 23rd summit of the heads of state of APRM in Johannesburg. “Its promise of enhancing good governance is fast waning. It has given way to routine exercises that do not instill enthusiastic commitment to leadership transformation reminiscent of past years.” [Statement by President Kenyatta during African Peer Review Forum]
What Buhari told African leaders: AU PSC meeting speech (Premium Times)
The images in the international mass media of African youths getting drowned in the Mediterranean sea on their illegal attempts, and often times illusory hope of attaining better life in Europe is not only an embarrassment to us as leaders, but dehumanises our persons. Indeed, they combine to paint a very unfavourable picture of our peoples and countries. Those of us gathered here today owe it as a duty to reverse this ugly trend. We must put an end to the so-called push factors that compel our young men and women to throw caution to the winds and risk life, limbs and all, on this dangerous adventure. We must redouble our efforts to sustain the economic development of our countries, ensure empowerment of our youths, create more jobs, improve and upgrade our infrastructure, and above all continue the enthronement of a regime of democracy, good governance and respect for human rights and rule of law. These and other measures that engender peace and stability must be pursued relentlessly.
AU leaders pledge unity, integration at first day of Summit (SAnews.gov.za)
HLP on Gender Equality and Women’s Empowerment: financial inclusion of women in agri-business (AU)
Report on the NEPAD Agency's support for regional integration and women empowerment (AU)
Dynamics of the war to peace transition in Northern Uganda: EOI (AfDB)
The goal of this study is to investigate how the households in Northern Uganda have responded to the return of peace and how this is reflected in their livelihood patterns, asset accumulation, demographic and migration patterns, and their demand for services.
Burundi: communiqué of AU Peace and Security Council, at the Level of Heads of State and Government (AU)
Assessing the state of regional financial integration in SADC (FinMark Trust)
FinMark Trust seeks a service provider to conduct an assessment of the State of Regional Financial Integration (RFI) in the Southern African Development Community (SADC). The overall purpose of the project is to assess and analyse the actual state of regional financial integration in the SADC region. The study will determine the level of actual RFI and, through detailed analysis, indicate the sectors and activities that effectively contribute to RFI. This will help the SADC regulators and financial sector service providers to have a better understanding of state of regional financial integration and to make better decisions on the basis of this information.
Walvis Bay Dry Port: untying a white elephant (Mmegi)
BITC will work hand in hand with Botswana Railways, Gabcon and Sea Rail Botswana to ensure the expansion and growth potential of the Port. The above stakeholders will play a very vital role in deviating traffic from Durban and Cape Town to Walvis Bay; more Batswana will be encouraged to use Walvis Bay as opposed to Durban due to the quicker arrival of goods and the nature of the relationship the Namibian and Botswana governments have with each other.
China beats India to become Kenya’s top imports source (Business Daily)
China has overtaken India to become Kenya’s largest source of imports in the first four months to April, latest data shows. The value of China’s exports to Kenya rose to Sh93.6 billion from Sh63.6 billion in a similar period last year, moving ahead of India — which has been the largest seller of goods to the local market since 2011. India’s exports to Kenya dropped to Sh80.6 billion in the period to April from Sh84.5 billion in a similar period last year, the Kenya National Bureau of Statistics’ (KNBS) latest data shows without giving details. [Download]
Zambia: Growth promotion through industrial strategies (International Growth Centre)
The study analysed trends and patterns in industrial performance over time, as well as industry-level capabilities and competitiveness; scoped high potential sub-sectors, with particular attention to resource-based industries and regional markets; and reviewed at broad level the policy framework for industrial development. [The authors: Judith Fessehaie, Reena das Nair, Phumzile Ncube, Simon Roberts]
Regional value chains in East Africa (International Growth Centre)
This project will focus on three key value chains in different major sectors, one each from the agricultural, manufacturing and service sectors. The research will be guided by the following research questions:
Targets Kenya must aim for in AGOA renewal (Business Daily)
East Africa freight logistics chains - market analysis and programme design (TradeMark East Africa)
TMEA has established a trade and component under SO3 to facilitate improved performance indicators such as time and cost to import and export. The Terms of Reference outline the scope of work required for support to developing the programming.
Simultaneous budget readings give us the broader regional picture (The New Times)
EAC finance ministers seek to create more jobs for youth in spending plans (The EastAfrican)
EAC protocol on labour in the offing (The EastAfrican)
Nigeria losing 400,000 barrels of oil to thieves daily — Osinbajo (Premium Times)
Poverty Reduction Strategy Paper (PRSP) countries in Sub-Saharan Africa have shown strong signs of growth resilience in the aftermath of the recent global crisis. Yet, this paper finds evidence that growth has more than proportionately benefited the top quintile during PRSP implementation. It finds that PRSP implementation has neither reduced poverty headcount nor raised the income share of the poorest quintile in Sub-Saharan Africa. While countries in other regions have been more successful in reducing poverty and increasing the income share of the poor, there is no conclusive evidence that PRSP implementation has played a role in shaping these outcomes. [The author: Daouda Sembene]
Mapping Poverty in Botswana 2010 (Statistics Botswana/World Bank)
This report discusses the main findings of the Poverty Map 2010 at the village level in Botswana. It also provides a discussion of how different village poverty estimates are from district poverty rates, as well as how different these are within the district. The authors also provide a detailed discussion of the precision of the Poverty Map estimates.
Dani Rodrik: 'The muddled case for trade agreements' (Project Syndicate)
Trade agreements have long stopped being the province of experts and technocrats. So it is not surprising that both initiatives [TTIP, TPP] have generated significant and heated public discussion. The perspectives of proponents and opponents are so polarized that it is hard not to be utterly confused about the likely consequences. To appreciate what is at stake, we have to understand that these deals are motivated by a mix of objectives – some benign, others less so from a global perspective.
Is the WTO passe? (World Bank)
The WTO has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements (PTAs). Should economists see this as an efficient institutional hand-off, where the WTO has carried trade liberalization as far as it can manage, and is now passing the baton to PTAs to finish the job? This paper surveys a growing economics literature on international trade agreements and argues on this basis that the WTO is not passé. Rather, and subject to some caveats, this survey of research to date suggests that the WTO warrants strong support while a more cautious view of PTAs seems appropriate.
Formulas for failure? Were the Doha tariff formulas too ambitious for success? (World Bank)
This paper views tariff-cutting formulas as a potential solution to the free-rider problem that arises when market opening is negotiated bilaterally and extended on a most-favored-nation basis. The negotiators in the Doha Agenda chose formulas that are ideal from an economic efficiency viewpoint in that they most sharply reduce the highest and most economically-costly tariffs. When the political support that gave rise to the original tariffs is considered, however, this approach appears to generate very high political costs per unit of gain in economic efficiency. The political costs associated with the formulas appear to have led to strong pressure for many, complex exceptions, which both lowered and increased uncertainty about members’ market access gains.
Competitive neutrality in competition policy: issues paper (OECD)
This issues paper examines (1) why competitive neutrality matters, (2) which state measures may distort the playing field, (3) how competition policy, law and enforcement contribute to enhance competitive neutrality in the market place, and what other rules and tools may be available, and (4) some concrete challenges arising for competition authorities in ensuring neutral competitive markets.
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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High Level Panel on Gender Equality and Women’s Empowerment calls for financial inclusion of women in agri-business
2015 is the African Union declared “Year of Women’s Empowerment and Development towards Africa’s Agenda 2063.”
Women play a cardinal role in any country’s economy and the African Union Commission has called for enhanced efforts to financially empower more women in agribusiness.
Speaking on 10 June at the opening of the 2nd African Union High Level Panel on Gender Equality and Women’s Empowerment, the African Union Commission Chairperson, H.E Nkosazana Dlamini-Zuma, represented by AUC Commissioner for Rural Economy and Agriculture, H.E Tumusiime Rhoda Peace said more than 70 percent of women in Africa are victims of financial exclusion.
“African women face many barriers in accessing financial services, including the constraints of time and mobility, illiteracy, legal and cultural constraints and sexual discrimination,” she said.
Organised by the AUC’s Women, Gender and Development Directorate, in collaboration with the Department of Rural Economy and Agriculture and development partners, the High Level Panel, themed, ‘Financial Inclusion of Women in Agribusiness,’ is being held at the margins of the 25th Ordinary Session of the AU Heads of State and Government Summit and is one of six priority areas identified in January 2015 by the AU Commission to be implemented during the year.
Dr. Dlamini-Zuma emphasised the importance of the relationship between women empowerment and the development of Africa, which is key to Agenda 2063.
This year’s theme builds on the outcomes of last year’s AU declared Year of Agriculture and Food security, which concluded with the AU Heads of State and Government committing to the Malabo Declaration. The Malabo Declaration on Africa Accelerated Agricultural Growth and Transformation (3AGT); adopted seven key commitments which are gender cross-cutting.
The Commitments include:
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Recommitment to the Principles and Values of the Comprehensive Africa Agriculture Development Programme (CAADP) Process
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Commitment to Enhancing Investment Finance in Agriculture
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Commitment to Ending Hunger in Africa by the year 2025
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Commitment to agriculture contributing to poverty reduction at least by half by the year 2025, through Inclusive Agricultural Growth and Transformation
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Commitment to tripling Intra-African Trade in Agricultural commodities and services, by the year 2025
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Commitment to Enhancing Resilience of Livelihoods and Production Systems to Climate Variability and other related risks
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Commitment to Mutual Accountability to Actions and Results
Dr. Dlamini-Zuma bemoaned the fact that African women continue to labour in the 21st century with outdated means such as the hoe, the machete, the pestle and mortar as well as the grinding stone.
She expressed the Commission’s vision that in 2015 and beyond, African women should have access to new technologies and work in a modernized and mechanized agricultural sector to enhance the commitment and vision of the African Union, namely, that the Hand-held hoe should be relegated to agricultural museums!
Consequently, the AUC on June 14, 2015 will launch an advocacy campaign during the Summit by handing tillers symbolically to all 54 AU Member States translating the commitment of the countries to mechanize agriculture and reduce the physical and moral suffering of African women.
South Africa’s Minister in the Presidency Ms. Susan Shabangu noted that Africa’s Agenda 2063 would be judged by its commitment to gender equality and women’s empowerment.
She emphasised the need to absorb more women into mainstream economic activities, noting that, “The reality is that a more diverse business has a better understanding of markets that are themselves diverse in terms of gender.”
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AU leaders pledge unity, integration at first day of Summit
The African Union (AU) believes it could achieve its Agenda 2063 goal of a prosperous and technologically-advanced continent at peace with itself if leaders speed up the process of integration and adopt the continental Free Trade Area proposals.
This comes as AU leaders opened their 25th Ordinary Session of the African Union Heads of State Summit, in Johannesburg, on Sunday night, with pledges to do more to promote unity on the continent, accelerate the implementation of the first years of Agenda 2063 blue print, fight terrorist groups like Boko Haram, address African migrants crisis and fight diseases like Ebola.
The theme of the summit is “a Year of Women Empowerment and Development towards Africa’s Agenda 2063” and is dedicated at placing attention on the development of women on the continent.
Although the official opening ceremony of the summit started several hours late, when it eventually began at around 4pm, leaders wasted no time and spelled out their plans for the continent challenged by poverty, diseases and under development. First to speak was President Jacob Zuma who used his address to call on leaders to address the scourge of conflicts which has escalated to terrorism.
“We believe it remains important to ensure that the necessary preventative measures are established. We also need new ways in which we, as Africa and not our partners, manage our conflict situations,” President Zuma said. He said the Summit provided the AU with the specific opportunity to express its resolve on the challenges and opportunities Africa is experiencing; and to affirm “our strong political will to rid ourselves of these challenges”.
President Zuma noted that this year marks 15 years since the adoption of the Constitutive Act of the African Union.
“The Act, amongst others, also acknowledges our impediments to the continent’s socio-economic development. Since the adoption of the Constitutive Act, Africa has taken its destiny, specifically its socio-economic development and integration, in its own hands. “Africa is thus on a new path of development and growth that will enable it to take its rightful place in global affairs,” President Zuma said.
Agenda 2063
He congratulated the African Union Commission (AUC) on the work done since 2013, to develop and finalise Agenda 2063. Agenda 2063 has been the central part of the messages coming out of the summit delegates since the beginning of meetings early this week. Agenda 2063 is a blue print which deals with how the continent should learn from the lessons of the past and take advantages of the opportunities available in the short, medium and long term to achieve a prosperous Africa by 2063, a year that will mark 100 years of the formation of the Organisation of African Unity, the precursor of the AU.
President Zuma said the expectations from the people of Africa were high and said the AU cannot fail in the implementation of Agenda 2063 for the continent to redefine, lead and fund its own development and future.
“To realise our vision, we continue to support attempts to establish sustainable and predictable sources of funding for the African Union that will ensure less reliance on development partners for the implementation of our African projects and programmes,” he said.
The issue of alternative sources of funding for the AU have been at the top of the agenda of AU Summits since Dr Nkosazana Dlamini-Zuma took over as the chairperson of the AUC. The fact that 70 percent of the union’s budget is coming from donors did not sit well with her and she pledged to use her time in Addis Ababa, the headquarters of the AU, to mobilise leaders towards exploring alternatives sources of funding for the continent. Membership fees by member states had also been reviewed. In opening the Summit on Sunday, Dlamini-Zuma said funding was of paramount importance to the work of the summit but that money should not come only from development partners.
Ebola
Dlamini-Zuma also reported to the Summit that Liberia has been declared Ebola free for the last 78 days. The deadly disease had claimed thousands of lives since its outbreak in 2014.
In the other two countries Sierra Leone and Guinea, numbers have significantly reduced. But Dlamini-Zuma cautioned that the continent should not get complacent.
“We must stay the course until the other two countries are also declared Ebola-free. The lesson from the Ebola Virus Disease is that with African solidarity and resolve, we can find our own solutions to our challenges,” she said.
The disease also exposed the weaknesses of the continent’s health systems, especially public health.
“As we move towards recovery, we must train more health workers, and build and strengthen our health systems and infrastructure.”
Tackling the crisis of emigration
Dlamini-Zuma believes that if African countries can invest heavily in education and skill with an emphasis on science, engineering, technology and maths Africans will stop undertaking the perilous journeys across the Sahel and the Mediterranean Sea to Europe as seen in recent years.
“When we undertake this skills revolution, extremists, armed groups and terrorists will find it difficult if not impossible to recruit our young women and men. Instead, our youth will have the skills to generate electricity, including renewables,” she said.
More effort needed to strengthen AU
Zimbabwean President Robert Mugabe, who is the chairperson of the AU, called on leaders to do more as the AU works to enhance the effectiveness of the union.
“We must reduce the number of decisions we take at our summit and instead we must prioritise action plans and ensure the decisions we take are implemented,” President Mugabe said.
He spent a considerable amount of time paying tribute to the women of the continent describing them as a “special breed” before he called on countries to tap on the continent’s natural resources by industrialising so that beneficiation can be possible.
“As we celebrate that Africa has 10 of the world’s fastest growing economies, this growth must be sustained,” he said. The summit will end on Monday with the reading of the declaration and adoption of decisions.
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China beats India to become Kenya’s top imports source
China has overtaken India to become Kenya’s largest source of imports in the first four months to April, latest data shows.
The value of China’s exports to Kenya rose to Sh93.6 billion from Sh63.6 billion in a similar period last year, moving ahead of India – which has been the largest seller of goods to the local market since 2011.
India’s exports to Kenya dropped to Sh80.6 billion in the period to April from Sh84.5 billion in a similar period last year, the Kenya National Bureau of Statistics’ (KNBS) latest data shows without giving details.
The two Asian nations entrenched their presence in the country with intense economic diplomacy that started with President Mwai Kibaki’s election in 2002. The present regime has also embraced a “look East policy.”
China’s rise is expected to intensify its battle with India. China has recently made major inroads into Kenya with big-ticket contracts in healthcare and energy sectors.
Kenya mainly imports textiles, pharmaceuticals, industrial machinery, vehicles, electronics, motorcycles, tuk tuks and semi-processed goods from India.
Key items imported from China include heavy machinery, electronics, vehicles, textiles and a range of household goods.
Chinese firms are currently undertaking mega infrastructure projects in Kenya such as building the multibillion-shilling standard gauge railway which will eventually link Mombasa to Kampala.
The India-China rivalry has benefited Kenya in terms of foreign direct investments, a wider variety of consumer goods and opened new sources of technical and financial assistance.
Though the rivalry has played out as a battle of the Asian giants, the biggest losers have been the traditional Western trading partners such as Britain whose share of the Kenyan market has been steadily declining.
The April data also shows the falling fortunes of the United Arab Emirates.
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New World Bank Group report finds doing business in South Africa can be made easier if local good practices are replicated across the country
A new World Bank Group report assessing the business environment and state of regulations for domestic firms in South Africa finds that local entrepreneurs face a wide array of business obstacles depending on which city they establish their companies in the Republic. The report also highlights a number of constructive practices that can be better leveraged within the country to improve the business climate for local entrepreneurs and firms.
Released on 12 June 2015, Doing Business in South Africa 2015 benchmarks nine of the country’s largest urban areas and four ports across six Doing Business topics namely: starting a business, dealing with construction permits, getting electricity, registering property, enforcing contracts and trading across borders.
The nine cities covered by the report are Buffalo City, Cape Town, Ekurhuleni, eThekwini, Johannesburg, Mangaung, Msunduzi, Nelson Mandela Bay and Tshwane. The four ports are Cape Town, Durban, Ngqura, and Port Elizabeth.
“The Government of South Africa is committed to expanding economic opportunity for its citizens and improving the business climate in the country is a step towards that goal. As the Doing Business in South Africa report highlights, there are many good practices already in place and these can and should be expanded throughout the country,” said Mcebisi Jonas, South Africa’s Deputy Minister of Finance.
The report finds that no city outperforms the others in all areas benchmarked: Ekurhuleni, Johannesburg and Tshwane lead in starting a business, Cape Town in dealing with construction permits, Mangaung in getting electricity and enforcing contracts, and Johannesburg in registering property.
According to the new report, local officials could significantly improve their local and national business climate by replicating good practices already being used successfully in other cities in South Africa. Local reforms could not only improve the business environment of one location as compared to another within South Africa, but also make a significant difference on the global scale. If a South African city was to adopt the good practices found across the nine cities in dealing with construction permits, getting electricity and enforcing contracts, it would surpass the average performance of the OECD high-income economies in all three areas.
However, notable challenges remain. Firms across South Africa still face inefficient and complex red tape securing electricity, registering property and trading across borders.
“We hope the report can draw policy makers’ attention to areas where improvements are possible without major legislative changes,” said Mierta Capaul, Lead Private Sector Development Specialist with the World Bank Group. “Sharing experiences across cities and learning from each other are key to promoting business regulatory improvements throughout South Africa.” Capaul added.
Doing Business in South Africa 2015 report was produced by the Global Indicators Group of the World Bank Group in collaboration with the National Treasury, the Department of Trade and Industry and the South African Cities Network. The study was co-funded by Switzerland’s State Secretariat for Economic Affairs (SECO) and the National Treasury.
About the World Bank Group
The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. It consists of five institutions: the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Working together in more than 100 countries, these institutions provide financing, advice, and other solutions that enable countries to address the most urgent challenges of development.
About National Treasury
The National Treasury is responsible for managing South Africa’s national government finances. It aims to advance policies that promote economic growth, social development and poverty reduction. The National Treasury recognizes that cities play a key role in driving economic growth. Through its Cities Support Programme, the National Treasury assists cities to plan and implement investments that will support growth. In 2013 the National Treasury, the Department of Trade and Industry, and the South African Cities Network partnered to conduct a Doing Business study in nine of South Africa’s largest cities.