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Tackling Africa’s illicit finance flight
This week, delegates from across the world are meeting at the University of Johannesburg to discuss financial transparency and human rights. It sounds boring, but tackling illicit financial flows from Sub-Saharan Africa is gaining attention. If nothing is done the majority of people will likely remain poor while a tiny percentage benefits, and benefits big.
Stories on the illicit financial outflows from Africa often focus on the numbers, simply because they are astounding. A Global Financial Integrity report conservatively estimates that between 2003 and 2012 $529 billion left Sub-Saharan Africa through illicit flows, growing an average 13.2 percent each year. These figures aren’t as high as in other parts of the world, but they’re the worst when compared to growth, with illicit financial outflows in Sub-Sahara Africa averaging 5.5 percent of GDP. If $529 billion seems hard to grasp, it’s almost twice what Sub-Saharan Africa received in foreign direct investment and one-and-a-half times what it got in official development assistance in the same period. So for every $1 of foreign investment and aid, 84 cents leaves illegally.
The system’s like a sieve, but instead of flour it’s billions of dollars falling through the cracks.
Now, unless you follow global financial systems like the BeyHive follows Beyonce, the details seem exceptionally boring. But the lost billions are tied to expanding basic human rights and turning the continent’s successful economic growth into things like jobs, service delivery, education and health. A leader of the World Bank has called illicit financial outflows a global priority, the White House has recognised the problem, the United Nations has a team on it and so does the African Union. On Monday, Global Financial Integrity president Raymond Baker said, “This is the ugliest chapter in global economic affairs since slavery.” It’s a big deal.
Thabo Mbeki has been focusing on the issue in recent years and a statement on his foundation’s website traces the origins of illicit financial flows from Africa back to the 1960s, when elites in newly-independent governments were uncertain about stability and sought to stash money away in Western institutions. At the same time large corporations were globalising and looking to minimise corporate taxes.
Essentially, the practice is the illegal transfer of money from one country to another, when funds are illegally earned, transferred or used. Think of tax havens and shell companies, a politician transferring dirty money offshore, criminal organisations laundering their cash through trade, terrorists doing wire transfers, or traffickers carrying suitcases of cash across borders. Most importantly, think of multinational companies. According to Global Financial Integrity, corruption accounts for about five percent of illicit flows, criminal activity like drug trafficking and smuggling 30 to 35 percent, and transactions from multinational companies 60 to 65 percent.
Addressing the African Union this year, Mbeki, chair of the high level panel on illicit financial flows, agreed “that large corporations are by far the biggest culprits responsible for illicit outflows, especially given their ability to retain the best available professional legal, accountancy, banking and other expertise”. They do it mostly through misinvoicing, or lying about the commercial value of a transaction on invoices submitted to customs. It’s often easy, because trading partners write their own invoices. Companies can evade taxes, claim certain tax incentives, and shift money into tax havens and secret accounts.
It’s estimated that at least $122 billion was illegally transferred out of South Africa between 2003 and 2012, recording the tenth highest illicit outflows in the world (Nigeria was ninth, once again a step ahead). Ceasing illicit transactions does not mean the money would be available directly to spend on services, but to put it into perspective, the $29 billion estimated to have illegally left the country in 2012 exceeds the total 2015 education budget. It’s something like 1,300 Nkandla upgrades.
On Monday, Yale University’s Professor Thomas Pogge brought the issue back to human rights and development. Curbing illicit financial flows would significantly boost tax collections in developing countries. Currently, these countries struggle to collect taxes from much of the population and those who can afford to pay, wealthy citizens and international companies operating in the area, are doing all they can to avoid paying, leaving governments with fewer resources to improve the lives of citizens. “Clearly, massive reductions in existing human rights deficits could be achieved by allowing poor countries to collect reasonable taxes from multinational corporations and from their own most affluent nationals, assuming the resulting revenues were appropriately spent,” said Pogge.
There are a number of recommendations. Countries should try to confirm who owns anonymous companies and enforce laws against money-laundering. Multinational corporations should be required to report their finances and details of subsidiaries in all countries where they operate. Resource extraction contracts should be made public. States should boost customs enforcement and heavily scrutinise transactions involving tax havens. Citizens, both of developing countries and those in states with powerful financial centres that enable tax dodging, should demand greater transparency.
While there’s hope – the issue is at least now on the global agenda – there are many challenges. “Why is this such a hard problem to resolve? Is it a question of getting governments to do the right thing? Is it a question of getting corporations to do the decent thing? What is it?” asked Siphosami Malunga from Open Society Initiative for Southern Africa. The challenge, he said, is that political and business elites have a common interest. “They are not two separate entities. They are one working in tandem to make money,” he said. “This is a problem of elite capture and in order to address it we are going to have to disentangle those relationships.”
He has a point. During the Marikana Commission, suspicions were raised that platinum company Lonmin had a questionable transfer pricing agreement going through Bermuda (the company denied the allegations and certain transfer pricing practices are legal in SA). Months after the allegations surfaced, former Lonmin non-executive director and current Deputy President Cyril Ramaphosa said tax dodging was stealing from South Africans. But Lonmin only stopped paying “sales commissions” to the Bermuda company in 2012. Why? The commission heard that Lonmin’s BEE partner, controlled by Ramaphosa’s Shanduka Group, didn’t want to break the Bermuda ties.
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EA traders spoilt for choice as infrastructure upgrade boosts supply chain
It used to be the most efficient way, to ship Zambian copper through Mombasa. When a better supply chain option emerged through the TAZARA railway, the volumes were diverted to Dar es Salaam.
During the period up to the 1970s, truckloads of copper ingots would line up in Mombasa port to deliver their cargo. A dedicated area – the “G” section – at the port would store Zambian copper awaiting export.
In those years, the port “hinterland” covered reached as far as Zambia. That was then. Today, not a single kilogramme of Zambian copper is exported through Mombasa. Most of it goes through Dar es Salaam port. What happened?
In those past years, it was generally accepted that Mombasa port’s absolute hinterland was geographically determined and static, covering Kenya, Uganda, Rwanda, Burundi and Eastern DRC.
It has since been proved that hinterland can be influenced and changed by technology – such as the Single Window customs clearance, removal of non-tariff barriers and enhancement of physical infrastructure such as roads, rail and even port efficiency.
The speed of change was slow in the past, but with the current ambitious investment in infrastructure by all regional governments, how will the network of refurbished roads, new road network, new standard gauge railway network and new ports influence supply chains?
Kenya has unveiled an ambitious road construction plan – the building of an additional 10,000km of tarmacked roads in five years. Compare that to 14,000km in 50 years since independence.
Two SGR corridors, Mombasa-Nairobi-Malaba and Lamu-Isiolo to Ethiopia and South Sudan, when completed, will open up new opportunities for Mombasa port. The proposed SGR master plan provides for a linkage of the Northern Corridor with a line between Garissa and Nairobi.
Shifting hinterland situations make a very strong free market point. Increasingly, importers and exporters don’t choose ports just because they are the nearest to their business locations. Instead, businesses select supply chains, not ports.
The most efficient supply chain has the biggest possibility of being picked, regardless of the port used. When a middle income Nairobian imports a car from Japan, one’s main concern is how to get the car in Nairobi at the lowest cost and shortest time possible, regardless of the port used.
Efficiency of any supply chain is mainly measured in terms of cost and speed. An inefficient supply chain gets relegated or bypassed.
It used to be the most efficient way, to ship Zambian copper through Mombasa. When a better supply chain option emerged through the TAZARA railway, the volumes were diverted to Dar es Salaam.
The Dar es Salaam-Zambian copper supply chain option became more efficient than Mombasa. There are many examples that can be given and from every port, hinterland have been shifting.
Kenyan sea ports – Mombasa and Lamu – are set to benefit from the proposed SGR and highway to run from Addis Ababa. Part of southern Ethiopian cargo should now find Kenyan ports a preferred supply chain compared to Djibouti and the new Berbera corridor.
The Mombasa and Lamu port hinterland is bound to get a boost of the extension. Port competition between Mombasa and Lamu will be expected, especially for Kenyan and South Sudan cargo. Both ports will rely on improved infrastructure.
With the interlink connecting Nairobi to Garissa, Lappset will be able to feed into the Northern Corridor and vice versa, giving exporters and importers the much needed alternative of ports choice.
In the same way that a shipper in inland Berlin, Germany has a choice between using the port of Hamburg or the port of Bremen, a shipper in Nairobi will have the choice between Mombasa and Lamu.
It is, however, in Northern Tanzania, Rwanda, Burundi, parts of eastern DRC and Uganda where consumers of port services will most likely be spoilt for choice.
Mombasa, Tanga, Bagamoyo and Dar es Salaam – they remind one of the North European port competition among Lehavre (France), Antwerp (Belgium), Bremen and Hamburg (Germany) ports all within about 800km with adequate road and rail network connection inland.
All are major European ports with world-class reputation, competing for cargo from the same hinterland. However, service level, port costs and specialisation are the major differentiation and the reason one may choose a port instead of another.
A new SGR is proposed from all the four East African ports – Dar es Salaam, Bagamoyo, Tanga and Mombasa – and the road networks are undergoing an upgrade. The Tanzania rail network to be linked with the Kenyan one between Voi and Moshi, will give customers in northern Tanzania, Rwanda and Burundi a wide option of supply chains to the ports.
East African ports will find themselves under increasing competition from rail and road. With reduced border formalities and NTBs, rail and road transport is likely to be faster than sea transport for the intra-regional trade, including along the East African coast.
Value added services would play a big role in attracting both cargo and ships to one port instead of another port. It will be interesting to see how our major ports in East Africa will respond to this anticipated fierce competition.
Mr Kututa is a shipping and logistics consultant.
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Kenya loses over Sh600bn every year in tax evasion
Kenya loses an estimated Sh639 billion annually in tax evasion by multinational corporations, significantly hampering economic growth.
A report released by the Tax Justice Network – Africa (TJN-A), an affiliate of the African Union, said available documents and statistics from multinational companies only trace about Sh146 billion lost in trade mis-invoicing between 2002 and 2011.
“The money ends up in tax savings in multinational headquarters and subsidiaries, while data from local firms are manipulated to read losses,” said TJN-A policy and advocacy manager for Africa, Mr Savior Mwambwa, during the launch of the report in Nairobi.
Mr Mwambwa added that many local firms continuously manipulate accounts and shift their profits to subsidiaries.
An example is Mauritius where policies allow for low tax rates and tax secrecy.
The report of the ‘High Level Panel on Illicit Financial Flows from Africa’ profiled Kenya, Ghana, Mozambique, Tanzania and Uganda.
Tax evasion forms the major part of financial fraud in the country, followed by commercial transactions and criminal activities (money laundering, and drug, arms and human trafficking).
Bribery, corruption and abuse of office also make up the list of financial fraud in Kenya.
The trend, the report says, is rampant in financial services and the horticultural exports industry.
Telecommunications business is also affected through SIM box fraud, which costs Kenya over Sh500 million a month.
“The most serious consequences of illicit flows are the loss of investment capital and revenue that could have been used to finance development programmes, the undermining of state institutions and a weakening of the rule of law,” said the report.
It singles out a change in policies per country, with strict measures in place for multinational and local firms in terms of financial audits with the aim of restricting illicit money transfers.
The report recommends thorough investigations of the financial sector and placement of tight laws on financial audits.
United Nations Economic Commission for Africa senior adviser Adeyinka Adeyemi said that in the countries under investigations, ministers for finance are part of the tax loopholes that the countries face.
“We need a mechanism to continuously monitor financial fraud in Kenya and the entire African region which suffers $50 billion a year,” he said.
Read more: Report of the High Level Panel on Illicit Financial Flows from Africa
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tralac’s Daily News selection: 21 May 2015
The selection: Thursday, 21 May
Transformative regionalism, trade and the challenge of poverty reduction in Africa (UNCTAD)
The paper identifies the key elements of Transformative Regionalism, examines the extent to which the current approach to integration adopted by African regional economic communities (RECs) are consistent with transformative regionalism, and also highlights other critical elements of a credible policy package to promote regional integration in Africa. These include enhancing implementation of existing programmes and action plans, refocusing the role of the RECs on the goal of economic integration, doing away with false dichotomies that often cloud the debate on development in Africa, and recognising as well as exploiting the vital role of industrial policy and consumer behaviour in promoting regional integration. [The author: Patrick N. Osakwe]
Jonathan slams ECOWAS leaders over AfDB presidency (Daily Trust)
President Goodluck Jonathan has condemned the ECOWAS leaders’ disregard for an earlier resolution that the sub-region adopt a single candidate for the Presidency of the African Development Bank. “At our last session in Abuja, it was resolved, after due deliberations, that ECOWAS should adopt a single candidate for the post of President of the African Development Bank. Today, we’ve no less than four candidates from our sub-region alone vying for the post as against four candidates representing the other four regions of the continent. Our experience with the Economic Partnership Agreement, with the European Union is yet another example."
ECOWAS @40: Kadre Desire Ouedraogo interviewed (Leadership)
ECOWAS calls on developed countries to consider debt cancellation for three Ebola affected West African countries(Ghana Broadcasting Corporation)
Rob Davies: Budget vote address delivered to the National Council of Provinsce (the dti)
The TFTA launch signifies the conclusion of negotiations on the legal instrument and will be followed by a process to finalise negotiations on tariffs and Rules of Origin, the key elements of a functional free trade area. This is an important milestone in the implementation of the development integration agenda in Africa aimed at promoting market integration, based on industrial and infrastructure development. The TFTA launch will be followed by the launch of the negotiations for a Continental Free Trade Area at the AU Summit here in SA. The CFTA once established will be a market of over 1 billion people and a GDP of US $2 trillion. The African market is crucial for South Africa’s industrialisation and job creation efforts as one of the key destinations for our value-added exports.
Africa will also host the 10th WTO Ministerial Conference on 15-18 December in Kenya. There are many challenges that will confront us and all developing countries in ensuring that the outcome of the MC10 underscores the centrality of development as provided for in the Doha Development mandate, supports the industrial objectives of Africa and includes meaningful disciplines on subsidies in agriculture, particularly those that disadvantage farmers in developing countries.
South Africa-India Joint Ministerial Commission: communiqué (DIRCO)
Both sides agreed on the need to expedite the consultations and hold the 6th round of negotiations on India-SACU PTA at the earliest possible opportunity. Both sides agreed to co-operate in their respective regional bodies including SACU, Southern African Development Cooperation (SADC), and SAARC, in accordance with the relevant rules and practices of the concerned regional bodies.
Both sides undertook to provide preferential policies and measures, equitable legal environment, and pragmatic and efficient government services for investors from the other side, to invest and do business in their respective countries.
Modernizing Development: report of President Obama’s Global Development Council (USAID)
This second report of the Global Development Council is designed to follow-up on the recommendations spelled out in our first report issued in April 2014. It proposes a number of concrete, actionable measures – some new and some refined – to make U.S. development efforts more catalytic and innovative with a view to U.S leadership galvanizing even more the creativity, resources and partnership of developing countries, civil society, the private sector and key multilateral institutions.
As this bill moves closer toward becoming a reality, it is important to review the specific changes that the Senate’s version of AGOA reauthorization entails for African beneficiaries and their counterpart in the U.S. Here, we briefly evaluate the key revisions of the program, broadly classified as the “good” and the “to be determined.” Importantly, opportunities still exist to modify AGOA reauthorization, and several amendments could strengthen the bill.
AGOA: Building trade capacity of smallholder women farmers (Bread for the World)
Female farmers often have fewer options in their livelihoods, including access to markets. The Senate version of AGOA includes a bipartisan amendment that will strengthen the trade capacity of smallholder women farmers. This language was introduced by U.S. Sens. Debbie Stabenow (D-Mich.) and Pat Roberts (R-Kan.), leading members of the Senate Agriculture Committee. “Through this language, AGOA will have a direct impact on Africa’s women farmers, as well as improving overall food security,” Mitchell said.
Bring back AGOA, Minister begs US (Swazi Observer)
Following the registration of federations in the country, Minister of Labour and Social Security Winnie Magagula has called for the United States of America to review the country’s AGOA status. Magagula said now that government had met another important benchmark and committed to meeting all of them, they were expecting that the US would review the status. This is especially because this registration was exactly in line with the benchmarks and ILO requirements,” she said.
South Africa: ‘Forced localisation’ of security companies could lead to Agoa suspension
Namibia's trade deficit grows (New Era)
Namibia Statistics Agency yesterday announced that a trade deficit of N$26.2bn was recorded last year compared to N$17.2bn in 2013. “This widening of the trade deficit was reflected in a 23.2 percent increase in the import bill to N$90.6 billion from N$73.5 billion the previous year. On the other hand, total exports increased only moderately to N$64.4 billion from N$56.3 billion when compared to a year earlier.” In terms of economic blocks, Namibia’s imports were mainly from SACU (N$53.8bn), the European Union (N$8.6bn), BRIC (N$5.4bn) and non-SACU-SADC (N$3.5bn). In terms of exports, Namibia exported goods worth (N$19.4bn) to SACU, (N$8.6bn) to non-SACU-SADC, (N$7.9bn) to the EU, (N$7.8bn) to EFTA, (N$3.6bn) to COMESA and (N$2.5bn) the BRIC. [2014 Annual Trade Statistics Bulletin]
Robert Mugabe slams ‘giant’ SA – again (City Press)
Zimbabwe’s president Robert Mugabe has again complained that South Africa acts like a giant in the region, and does not tolerate competition from businesses outside its borders. “Right now some of us are complaining about the bigness of South Africa, a giant establishing itself,” he told journalists in Gaborone, Botswana, following a “familiarisation visit” to the Southern African Development Community headquarters. Mugabe said this issue was discussed at last month’s SADC meeting on its trade protocol in Harare. “That is what we discussed at the meeting, that if we are trying to establish our industries, they are blocked.”
Nyusi wants an understanding with Tanzania over the Rovuma basin (Club of Mozambique)
It is estimated that Tanzania has discovered more than 45 billion cubic meters of natural gas in the Rovuma basin. Simultaneously, in the same basin but the Mozambican side, natural gas reserves amount to more than 100 trillion cubic meters. Lake Niassa, that has been disputed between Tanzania and Malawi, is also suspected to hold hydrocarbons and is also shared by a third country: Mozambique.
SADC judges look at fighting cybercrime (New Era)
Judges from nine SADC countries yesterday began a workshop in Windhoek aimed at devising effective strategies to curb the growing threats of cybercrime. The Southern African Regional Cyber Investigation and Electronic Evidence Workshop is the brainchild of the United States of America Embassy in Namibia. The workshop is supported by the USA’s Department of Justice through its Computer Crime and Intellectual Property Section.
Millions misused in Congo fiber optic line construction: report (Reuters)
Millions of dollars were misused in the first phase of a project to build a national fiber optic network in Democratic Republic of Congo, a parliamentary mission has found. Aimed at reducing communication costs in the infrastructure-poor country, construction of a national "backbone" by Congo's state-owned telecommunications company (SCPT) and China International Telecommunication Construction Corporation (CITCC) began in 2012. It was financed in part by China's Exim Bank. The backbone links Congo to the West Africa Cable System (WACS), a submarine cable system in the Atlantic Ocean.
Spar close to signing deal in Zambia (Business Day)
"We’re trying to do a deal in Zambia with local Spar partners in the next few months and then we’re also in discussions in Ghana and Kenya as well … we would like to do something in Africa, it’s just not that easy though," Mr O'Connor said. The Spar brand has been present in Zambia since late 2003. The wholly Zambian owned and managed company operates about 17 stores across the country through corporate and franchised outlets.
SA's growing Africa trade could buffer lesser Chinese demand (News24)
South Africa’s growing trade links with sub-Saharan Africa, where investment has begun to diversify towards manufacturing, services and infrastructure, should continue to provide expanded export markets, though there may be negative effects from reduced Chinese demand, according to international credit insurance group Coface.
Kikwete tells off critics over controversial laws (The Citizen)
President Jakaya Kikwete declared yesterday that he would not be cowed by donor countries that are threatening to cut aid funding to his government over controversial Bills he recently signed into law. The President said the government was ready for budget cuts should donors peg aid to the newly-enacted laws designed to clamp down on cybercrime and streamline publication of official statistics. “There are people who have been saying that if we don’t amend the two laws they may withhold their aid,” the Head of State said at the official opening of a major conference on Open Government Partnership (OGP). “But we will know what to do because our government needs to be respected sometimes.” [OGP Africa Regional Meeting]
Assessing Nigeria’s chances at passing EITI validation (Leadership)
But the recommendations of the audit reports are given little or no attention by the National Assembly and relevant government agencies even as the remedial issues are far from being implemented. It is in this regard that some experts opine that the validation exercise which is to be conducted by independent international experts to be appointed by the global EITI based in Oslo, Norway, may be a bit difficult for Nigeria to pass.
How the Special Economic Zones can help spur Kenya’s growth (Business Daily)
Delay in signing pacts affects Uganda-Turkish trade (New Vision)
Moody's supports Africa's maturing multilateral development bank sector (CPI Financial)
African tax administrators meet in Zimbabwe (ZNBC)
‘Declining oil price forces SA's SacOil out of Nigeria’ (Leadership)
China says rare earths export quota scrapped after WTO ruling (Economic Times)
Agricultural trade and development: a value chain perspective (WTO)
UN financing for development negotiators review revised outcome draft (BioRes)
BRICS bank complements global financial mechanism (Xinhua)
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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Communiqué of the 9th South Africa-India Joint Ministerial Commission
Communiqué of the 9th Session of Joint Ministerial Commission between the Republic of South Africa and the Republic of India, Durban, 18-19 May 2015
At the invitation of Her Excellency Ms. Maite Nkoana-Mashabane, the Honourable Minister of International Relations and Cooperation of the Republic of South Africa, Her Excellency Smt. Sushma Swaraj, the Honourable Minister of External Affairs and Overseas Indian Affairs of the Republic of India, visited the Republic of South Africa officially from 18 to 19 May 2015, in order to co-chair the 9th Session of the Joint Ministerial Commission.
Extracts from the final communiqué are presented below.
B: ECONOMIC AND TECHNICAL
Trade
The Ministers assessed the level of economic and commercial relations between the two countries. They emphasised the need to develop strategies to significantly expand trade cooperation. This would include the establishment of JWG for promotion of bilateral trade and investment.
They agreed to address obstacles and challenges through bilateral exchanges and meetings between their respective public and private sectors, including under the existing mechanisms.
Both sides encouraged the exchange of trade missions, participation in trade fairs hosted by the other side, and promotion of competitive products to each other in order to expand trade volume, improve trade structure, promote balanced and sustainable development of the bilateral trade, and strive to further increase the current bilateral trade volume.
To strengthen mutual understanding, promote friendly cooperation, and pursue mutual development of the film industry, both sides will encourage further film exchanges and cooperation, including the signing of a film co-production agreement, and hosting as well as participating in national and international film festivals etc.
Both sides agreed on the need to expedite the consultations and hold the 6th round of negotiations on India-SACU PTA at the earliest possible opportunity.
Both sides agreed to participate in each other’s key sectoral exhibitions, including Mining, Tourism, Capital Equipment, Agro-Processing, Oil and Gas and Defence sectors.
Both sides agreed to co-operate in their respective regional bodies including SACU, Southern African Development Cooperation (SADC), and SAARC, in accordance with the relevant rules and practices of the concerned regional bodies.
Investment
Both sides undertook to provide preferential policies and measures, equitable legal environment, and pragmatic and efficient government services for investors from the other side, to invest and do business in their respective countries. The two sides will encourage and support their enterprises to increase direct investments in fields such as agriculture, fishery, energy, mining, particularly mineral beneficiation, manufacturing, infrastructure building, including water conservancy, electricity, telecommunications, roads, railways, ports and airports, and finance and tourism, with the aim of significantly increasing two-way investment, and creating more job opportunities, tax revenues and foreign reserves for both sides.
Industry
The Ministers agreed to explore cooperation on industrial development and technology transfer.
Both sides expressed their willingness to encourage their respective private sectors to participate in, and prioritise areas such as the defence sector, deep mining, and infrastructure.
Small Business Development
Both sides noted that the National Small Industries Corporation (NSIC), Government of India had signed a MoU with Black Business Council (BBC) of South Africa for developing and promoting MSMEs in South Africa for unemployed youth on January 19, 2015.
Minerals and Energy
Both sides agreed to explore areas of further collaboration in the field of renewable energy technologies such as wind, solar and bio-energy and collaboration in energy efficiency. It was also agreed to support the growth of investment in both the renewable energy and the energy efficiency sectors.
Both sides agreed to explore further cooperation in the coal sector through encouraging investment in mining, collaboration in the area of clean coal technology, deep mining and coal-to-liquid technology as well as in sharing expertise, advanced technologies and best practices in the coal sector.
Both sides expressed interest in collaboration in upstream and downstream industries with regard to oil refining activities and to encourage the growing partnership between PetroSA and ONGC Videsh.
Finance and Banking
Both sides agreed to enhance relations between the financial institutions of the two countries and expressed their willingness to strengthen links between the financial sectors, particularly with regards to the banking sector, in order to further expand mutual trade and investments opportunities.
Science and Technology
The Chairs agreed that due to the comprehensive cooperation that is already in existence between South Africa and India, a Sub-committee on Science, Technology and Innovation be launched that will participate as a full member in future Joint Ministerial Commissions.
Agriculture
Both sides declared their readiness to strengthen personnel and technology exchanges, and to promote capacity building in the agriculture sector through exchanging delegations, hosting technology and management workshops and strengthening cooperation between research institutes, universities and colleges of the two countries.
Both sides expressed their willingness to strengthen cooperation in areas such as aquaculture and aquatic product processing and to support exchanges of delegations and cooperation in the fishery sector.
Information and Communications Technology
Both sides agreed to strengthen cooperation in the field of Information and Communications Technology. They agreed to pursue support programmes and commit to the establishment of a sectoral committee to support new ICT research areas. Through the Memorandum of Understanding (MoU) in the fields of ICT, both sides will enhance the focus on skills development and expertise exchange to cultivate more specialists to utilise the ever-advancing information and communication technology. The two sides noted the considerable scope for joint cooperation projects in the area of ICTs between the two countries. The following focus areas have been identified:
- Bridging the digital divide through last-mile connectivity authentication and through use of Free and Open Source Software (FOSS);
- Popularising ICTs in schools;
- Technology parks;
- Cyber security;
- e-Governance including e-Postal;
- Telemedicine; and
- Exchange of experts for sharing best practices; and
- Promoting business-to-business cooperation through mobility of professionals
Implementation Mechanism
Both sides agreed to fully utilise the mechanisms of the JMC and to strengthen coordination, monitor implementation and review the proposed Five Year Strategic Programme on Cooperation between the Republic of South Africa and the Republic of India to identify and address problems, promote cooperation, and ensure comprehensive and effective implementation of the Program in a timely manner.
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Transformative Regionalism, Trade and the Challenge of Poverty Reduction in Africa
Regionalism has played a vital role in fostering peace and security in Africa over the past few decades.
However, fully exploiting its potential for economic development remains a challenge as evidenced, for example, by the prevalence of weak production and export structures in African countries, the increase in the number of poor people on the continent, and the low shares of regional trade in Africa’s total trade.
This paper argues that making regional integration work for Africa requires that African governments change their approach to economic integration and in particular shift emphasis from the current model of integration, which focuses mostly on trade reforms and processes and institutions of integration, to an alternative approach − Transformative Regionalism − in which regional integration promotes and also ensures progress in building productive capacities and achieving structural transformation for sustained development.
The paper identifies the key elements of Transformative Regionalism, examines the extent to which the current approach to integration adopted by African regional economic communities (RECs) are consistent with transformative regionalism, and also highlights other critical elements of a credible policy package to promote regional integration in Africa.
These include enhancing implementation of existing programmes and action plans, refocusing the role of the RECs on the goal of economic integration, doing away with false dichotomies that often cloud the debate on development in Africa, and recognising as well as exploiting the vital role of industrial policy and consumer behaviour in promoting regional integration.
The aim of the Trade and Poverty Paper Series is to disseminate the findings of research work on the inter-linkages between trade and poverty and to identify policy options at the national and international levels on the use of trade as a more effective tool for poverty eradication. The opinions expressed in papers under the series are those of the authors and are not to be taken as the official views of the UNCTAD Secretariat or its member states. The designations and terminology employed are also those of the authors.
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UN financing for development negotiators review revised outcome draft
Delegates tasked with hammering out an outcome document for a UN conference on development finance reviewed a revised draft during an informal session held last week in New York, completing a paragraph by paragraph review of the proposed text.
On Friday the co-facilitators of the talks – George Talbot, Permanent Representative of Guyana to the UN and Geir Pedersen, Permanent Representative of Norway to the UN – said that they would shortly release a compilation text containing proposed modifications made throughout the week.
The co-facilitators also confirmed that while no further revised outcome document draft would be released at this stage, they would develop proposals on how to bridge differences over certain paragraphs, where this seemed appropriate to do so.
Additional informal sessions have been scheduled for the end of May and early June, with a view to advancing work on the draft outcome before a formal negotiation session in mid-June.
The Third Conference on Financing for Development (FfD3) is due to be held in mid-July in Addis Ababa, Ethiopia. The co-facilitators had released the revised outcome draft in early May based on views and comments on a first iteration of the document – a zero draft – aired during talks held last month.
On that occasion a joint session held with the UN talks geared towards crafting a post-2015 development agenda saw delegates diverge on how best to stitch together the outcomes of both processes.
World leaders are due to meet in late September in New York to adopt a post-2015 development agenda, including a set of Sustainable Development Goals (SDGs), designed to replace the current Millennium Development Goals (MDGs). Delegates from the post-2015 track are meeting this week at UN headquarters to discuss commitments on follow-up and review for the eventual agenda.
Revised outcome draft
The revised outcome draft as released on 7 May is organised into three sections: an introductory narrative, an action agenda, and a now separate section on data, monitoring, and follow-up.
A trade section is included in the seven areas targeted under the action agenda. Other references to trade-related policy are also scattered throughout some of the other areas. A number of these areas complement trade references found in a list of 17 proposed SDGs and 169 targets – put forward by a UN working group last July – but in some instances also go beyond these.
The updated trade section retains references found in the zero draft to the importance of a universal, rules-based, and non-discriminatory multilateral trading system; a commitment to conclude the WTO’s Doha Round of trade negotiations; and a call to implement a package of decisions reached at the global trade body’s last ministerial held December 2013 in Bali, Indonesia.
Language has also been kept around implementing duty-free and quota-free (DFQF) market access for products originating from least developed countries (LDCs) in accordance with past WTO decisions, ensuring simple and transparent rules of origin (RoO) applicable to imports from LDCs, the principle of special and differential treatment (S&D) for developing countries, and raising poor countries’ participation in world trade. A specific reference to the Bali decision on operationalising a previously-agreed waiver granting preferential treatment to LDC services and services supplier has been added.
The revised document also firmly acknowledges the links between trade policy and domestic policy in promoting sustainable development. “With appropriate supporting policies, infrastructure, and an educated workforce, trade can help promote employment, decent work and women’s empowerment, reduce inequality, and contribute to the realisation of the SDGs,” the current text runs.
Reference is also made to integrating sustainable development into trade policy at all levels, including sustainable development provisions in both trade and investment agreements, as well as pledging sustainability impact assessments for trade agreements.
A specific mention of conducting a proper review of investor-state dispute settlement (ISDS) clauses has been dropped, however, replaced by language around strengthening safeguards in investment treaties.
The revised draft now includes several references to the importance of trade to land-locked developing countries (LLDCs), small island developing states (SIDS), and women – groups for whom participation in trade could be particularly important, experts suggest.
The document commits to building coherence between bilateral and regional trade and investment agreements and the multilateral system, adding to the recognition in the earlier draft of the significant potential of regional economic integration to promote growth and sustainable development.
Language in earlier outlines of the FfD3 outcome document released in January, which suggested that regional trade agreements (RTAs) may not always foster positive economic, social, and environmental aims, had received pushback from some countries.
New environment, trade language
The trade section in the revised draft makes specific and separate references to the reform of both agricultural and fisheries subsidies. The zero draft had bundled the latter in along with a broader call for WTO members to correct distortions in both fisheries and agriculture markets.
Language recognising the challenge posed by illegal wildlife trade, including fishing and logging, as well as illegal mining has been inserted into the trade section. The draft would urge support for enhanced global efforts to tackle the poaching and trafficking of protected species, dumping of hazardous waste, and illegal trade in minerals. This is placed within the context of increasing the capacity of local communities to pursue sustainable livelihood opportunities.
Within the same paragraph, the revised draft adds text on boosting the monitoring, control, and surveillance of fishing vessels in order to effectively prevent, deter, and eliminate illegal, unreported, and unregulated (IUU) fishing.
The draft also now welcomes the plurilateral talks between a group of 17 WTO members to liberalise trade in environmental goods. The FfD3 text also refers to environmental services in this context, although reports on the Environmental Goods Agreement (EGA) talks suggest participants diverge on where best to tackle these.
The revised draft keeps a reference to supporting WTO members in taking advantage of the flexibilities in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to further the public interest in sectors critical for sustainable development, including public health. This broader language appears to also cover responses to climate change, the specific references to which in the TRIPS context have been scrubbed.
Reactions to revised draft
The trade section was relatively well-received at the FfD3 session last week, sources say, although some textual suggestions were made and discussion prompted on certain key topics.
On global value chains, the EU proposed to insert language on sound, enabled domestic environments providing the key to integration in such chains. Elsewhere, the G77/China called for deleting text on implementing sound domestic policies and reforms conducive to realising the potential of trade for sustainable development, perhaps suggesting a divergence on how to go about promoting participation in GVCs.
The EU also suggested adding a call for upper-middle income countries, to provide DFQF access for LDCs’ products.
References to TRIPS flexibilities were panned by both Switzerland and Japan while the G77/China proposed an additional paragraph in this area.
The EU and the US proposed shifting the focus of the reference to the WTO’s Trade Facilitation Agreement from LLDCs to LDCs, while the G77/China are said to have supported keeping the LLDC text.
Japan and the EU proposed deleting references to numerical targets for the WTO’s Aid for Trade initiative, and Japan also proposed deleting references to increasing this type of support and the Enhanced Integrated Framework for Trade-Related Technical Assistance to the LDCs, suggesting that this would be decided within the context of the WTO.
Last week’s consultations also saw some discussion on the relationship between climate and development, with developed and developing countries disagreeing on whether or not to include language separating climate finance from Official Development Assistance (ODA).
In the context of the domestic public resources section of the document, some delegates also commented on overlaps between the draft and work ongoing under the UN Framework Convention on Climate Change (UNFCCC). Saudi Arabia reportedly suggested that carbon pricing was being examined in the context of the UN climate talks.
The revised zero draft includes several paragraphs in the international public finance section on climate change and climate finance, recognising the UNFCCC as the primary intergovernmental forum for tackling this issue, reaffirming the importance of meeting existing commitments in this area, and welcoming pledges made to the Green Climate Fund – an international finance body geared towards helping developing countries mainstream green growth into their development strategies.
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BRICS bank complements global financial mechanism
The BRICS development bank is expected to start operations around the end of this year and play a complementary role to existing global financial mechanisms.
The bank, known as New Development Bank (NDB) and proposed in 2012, is backed by the five major emerging global economies – Brazil, Russia, India, China and South Africa. NDB headquarters are on the site of the 2010 World Expo in Shanghai. Along with a 100 billion U.S. dollar contingent reserve arrangement to help countries forestall short-term liquidity pressure, the new bank is expected to strengthen the global financial safety net.
“The bank will have profound implications for infrastructure and sustainability in new markets and developing countries,” said Shi Yaobin, China’s vice Minister of Finance.
Shi said NDB would enhance international financing capabilities and facilitate world growth, especially developing countries.
The World Bank estimated that South Asia needs to invest about 250 billion U.S. dollars a year to bridge the infrastructure gap over the next 10 years, while East Asia needs about 600 billion U.S. dollars annually.
Developing countries have long complained that loans from organizations like the World Bank always come with strings attached and have campaigned for changes to these institutions.
“The NDB offers them a new financing channel and may spur other international financial institutions to do more to address the concerns of fast-growing economies,” said Huang Jianhui, a senior researcher with China Minsheng Bank.
Meanwhile, NDB will soon welcome new member in addition to its founding members, according to Shi.
“An open stance, welcoming more countries, is expected to expand the influence of the NDB, as did the Asian Infrastructure Investment Bank (AIIB),” Huang said.
Shi pointed out that the NDB and AIIB are complementary and the two can work together with other international financial institutions to improve global economic governance.
The NDB will draw on the experience and established practices of other counterparts to become an efficient, professional and transparent organization, Shi said.
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ECOWAS calls on developed countries to consider debt cancellation for three Ebola affected West African countries
The 47th Ordinary Session of the Authority of Heads of State and Government has opened in Accra with a call on multinational countries to consider debt cancellation for the three West African countries hit by the deadly Ebola disease.
ECOWAS Chairman and President of Ghana, John Mahama who opened the summit said the devastation caused by the Ebola virus which claimed about 11,000 lives has eroded much of the gains in three most hit countries.
He told developed countries that while considering debt cancellation for the three most affected countries, they should assist those countries to rebuild their economies.
President Mahama said the ECOWAS authority is doing everything possible to ensure zero cases of Ebola in the Sub-Region.
He congratulated health workers from the continent who helped in the fight against the virus and called for more consented effort to address some of the challenges in the Sub-Region.
President Mahama also called on West African leaders to ensure that all the bottlenecks that impede on trade are address.
On Youth unemployment President Mahama said that remains one of the biggest challenges yet to be tackled.
He urged the leaders to let that be paramount in their discussions.
Meanwhile, West African Leaders have congratulated the President of Nigeria Goodluck Jonathan for conceding defeat in the country’s general election.
According to the leaders, the maturity showed by Mr Jonathan to accept the outcome of the election is a testimony that democracy in Africa has come to stay and the era of military dictatorship is gradually fading out.
President Mahama who conveyed the praises on behalf of the West African leaders also congratulated Togolese President Faure Gnassingbe on his election victory.
In a related development, a Former Senior Advisor to the UN, Professor Baffour Agyeman-Dua has asked Heads of State and Government attending the ECOWAS Summit in Accra to work seriously towards trade integration in the sub-region.
Speaking to Radio Ghana, Professor Agyemang-Dua called on the leaders to review the Ebola scare and take decisive steps to deal with Boko Haram and religious extremism in the sub-region.
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tralac’s Daily News selection: 20 May 2015
The selection: Wednesday, 20 May
ICGLR Heads of State and Government: statement
ECOWAS Council of Ministers: statement
African Union: popular version of Agenda 2063
SACU: 2013/14 challenging and important year (Namibian Economist)
Launching the latest Southern African Customs Union Annual Report, its Executive Director, Paulina Elago remarked that the customs union had survived the most challenging year in its 105 year long history. She said, “Key global and regional developments have had a profound impact on the manner in which the Customs Union and in particular, its Membership approached the continued implementation of the SACU Work Programme.” [Download 2014 report]
Continental Free Trade Area: UNCTAD's suggestions
UNCTAD participated in a dedicated meeting of AU Trade Experts in Addis Ababa from 8 to 10 May 2015 to consider the objectives and principles for CFTA negotiations, and the associated roadmap and schedule for the setting up of the CFTA. UNCTAD presented a summary of the main policy suggestions on the scope, objectives and principles of the CFTA as well as institutional supportive arrangements that emerged, inter alia, from four studies commissioned on intra-African trade in goods, services, agricultural value chains and institutional arrangements, as inputs from AUC and ECA. Five main suggestions on the way forward:
Inhofe, Coons introduce African Free Trade Initiative Act (Edmund Sun)
US Sen. Jim Inhofe (R-Okla.) and Sen. Chris Coons (D-Del.) today introduced the African Free Trade Initiative Act, which would require the president to establish a plan to negotiate and enter into Free Trade Agreements in sub-Saharan Africa and would require the United States Trade Representative, the Millennium Challenge Corporation and USAID to coordinate and collaborate together on how to implement the goals established in the Free Trade Agreement plan. The legislation was also introduced as an amendment to the Trade Promotion Authority legislation currently being
Ben Leo: 'It’s time to push for reciprocal US-Africa trade and investment agreements' (CGD)
The United States does not have a single FTA in Sub-Saharan Africa. Existing BITs cover a mere 7 percent of regional GDP, including only one of the ten largest economies. And while Washington has pursued ineffectual, non-binding trade and investment framework agreements, Beijing, Ottawa, New Delhi, and others have been inking deals all across the continent. It’s sorely time to move more strategically toward mature economic relationships with several African countries. This is why the Inhofe-Coons amendment could be so helpful. It would apply pressure on the White House and USTR to develop a clear plan of action and to assess individual countries’ readiness. Yet, it also would provide the executive branch with sufficient flexibility to pursue sensible negotiating strategies.
Trade Hub collaborates with SADC Secretariat on development of investor roadmaps
The SADC Secretariat, in cooperation with the OECD and the EU through the Regional Economic Integration Support (REIS) Programme, has been working for the last two years to develop a SADC Investment Policy Framework using the OECD Policy Framework for Investment. In order to complement the ongoing efforts and activities of the REIS Programme and the overall SADC IPF initiative, the SADC Secretariat requested support from the Southern Africa Trade Hub to develop “Investor Roadmaps” for SADC Member States that had not previously gone through an investor road map exercise.
Corruption and conflict in SADC countries: views of SA business (Stellenbosch Business School)
The Centre for Corporate Governance in Africa at the University of Stellenbosch Business School has released its Ethics and Compliance Risk Survey 2014. The survey covers ethical and compliance risks faced by South African companies with operations in SADC. The research is based on responses received from 26 companies listed on the Johannesburg Stock Exchange. Most of the respondents were company secretaries, compliance officers or risk managers. [Download]
Botswana: De Beers accused of breaking beneficiation promises (Mmegi)
According to analysts that claim to have intimate knowledge of the ten-year 2010 agreement, the diamond manufacturers’ plight might be lessened if De Beers keeps its promise of supplying local companies with ‘suitable’ stones that are profitable to cut under Botswana’s high cost operating environment. In the better quality ranges, Botswana’s labour costs are competitive with other centres and below some of the other southern African countries.
Sub-Saharan Africa’s top cotton company seeks rescue partner (Bloomberg)
Cottco Holdings Ltd., sub-Saharan Africa’s biggest cotton company, said it’s seeking a partner to help it with funding after talks with the China-Africa Development Fund collapsed and as it renegotiates debt payments with lenders. “The business was looking for a partner to work with in its efforts to grow the crop volumes,” Collins Chihuri, Cottco’s managing director said in an interview on May 15 in Gokwe, 227 kilometers (141 miles) southwest of the capital Harare.“The negotiations did not go through for now, but the business will continue to look out for opportunities.” He declined to say why talks failed.
KRA sets up cross-border monitoring unit (Business Daily)
The taxman has set up a unit to monitor cross-border transactions of multinational firms in Kenya, further tightening the noose on non-compliant companies. The Kenya Revenue Authority on Tuesday said the government is also in the process of making laws that would effect agreements already signed with over 85 new tax jurisdictions to facilitate exchange of information on multinational firms. The organisation has also joined the Global Forum, the premier international body for ensuring the implementation of the internationally agreed standards of transparency and exchange of information.
Foreign products constitute 80% of counterfeits in African market, say SON, ARSO (ThisDay)
The Director General, SON and President of ARSO, Dr. Joseph Odumodu, made this known during the stakeholders launch to announce a three-day expo for Chief Executive Officers of all African National Standards Bodies slated to be held next month in Abuja. “We believe that the present membership of ARSO, which is 34 countries today, may not serve the purpose the Heads of States have set for us as a target. It is imperative that we must bring all African countries under the umbrella of the ARSO so that in 2017, when the CFTA starts, we will be on the same page and raise the volume of intra-Africa trade from the current 5 per cent to 30 per cent yearly, moving forward,” he said.
Tanzania: Tax breaks cost nation billions every year (IPPMedia)
Tanzania loses billions of shillings every year in unwarranted tax exemptions to foreign companies, Controller and Auditor General Prof Mussa Juma Assad told the National Assembly yesterday. Tabling the CAG’s report for financial year 2013/14 in the House, he pointed out that while the government failed to fund various development projects in the last financial year, it gave tax breaks of a whopping 22.33bn/- to two giant miners – Geita Gold Mine and Resolute Tz Ltd.
Thabo Mbeki to present High Level Panel on Illicit Financial Flows from Africa report to PAP (UNECA)
Central Africa’s resolve on free movement is laudable - Carlos Lopes (UNECA)
The UNECA has hailed the decision by leaders of the Central African Economic and Monetary Community to lift visa-based restrictions on free movement of citizens of member States across the Community with immediate effect, in compliance with existing agreements. “The resolve by CEMAC Heads of State, coming just days after a technical committee involving ECA deliberated on pressing sub-regional integration issues, in Yaounde – Cameroon, is an indication that Central Africa’s leaders are fully committed to the African Union vision of an integrated, prosperous and peaceful continent."
Congo Basin countries: Road improvement and deforestation (World Bank)
The paper contributes to several aspects of the literature. First, it provides the most recent and reliable estimates of the drivers of deforestation in the Congo Basin, with the latest high-resolution satellite data on forest cover changes. Second, it presents novel estimates of biodiversity threats by creating an index that combines and synthesizes several measures of biodiversity loss and impacts.
Rwanda: Govt asks Parliament to approve export guarantee fund (New Times)
The Ministry of Trade and Industry is seeking from the Treasury Rwf500 million during the next financial year to initiate a guarantee facility for exporters in the ongoing efforts to reduce the trade imbalance. According to the Minister for Trade and Industry, François Kanimba, setting up an export guarantee facility will help exporters to venture more into trading at foreign markets where they have been shying away from exporting their goods because they would lack the capital needed for initial investments.
Rwanda to set up business support centres in Brazzaville (New Times)
EA traders spoilt for choice as infrastructure upgrade boosts supply chain (Business Daily)
It has since been proved that hinterland can be influenced and changed by technology — such as the Single Window customs clearance, removal of non-tariff barriers and enhancement of physical infrastructure such as roads, rail and even port efficiency. The speed of change was slow in the past, but with the current ambitious investment in infrastructure by all regional governments, how will the network of refurbished roads, new road network, new standard gauge railway network and new ports influence supply chains?
Plan to raise Dar es Salaam port user charges by over 30% opposed (Business Daily)
Logistics audit system set to boost efficiency (Business Daily)
Trade ties with Asia, Middle East attract airlines to Uganda (Daily Monitor)
Study claims China is illegally fishing in Africa (New Vision)
Chinese companies have been illegally fishing off the coast of West Africa, environmental campaign group Greenpeace said in a study Wednesday, at times sending incorrect location data suggesting they are as far away as Mexico. The number of Chinese-flagged or Chinese-owned fishing boats operating in Africa has soared in recent decades, from just 13 in 1985 to 462 in 2013, the international advocacy group said.
The trade challenge for Latin America and the Caribbean (World Bank)
The World Bank’s latest flagship report for the region, “Latin America and the Rising South: Changing World, Changing Priorities” provides an in-depth look at these global connections in trade and finance, and a sober assessment of their promise and trials for the region. [Downloads]
Joakim Reiter: 'Unleashing the power of trade' (UNCTAD)
Conclusions of the WPTGS Chair and Bureau of the WPTGS 2015 meeting (OECD)
Tanzania-Israel extend bilateral ties for better investment links (IPPMedia)
SA banks facing forex fines (Moneyweb)
Africa-Arab Joint Action Plan on agricultural development and food security (African Union)
On the sustainable development goals and the role of Islamic finance (World Bank)
Founding members of China-led Asian infrastructure bank to meet in Singapore this week (Straits Times)
Japan set to unveil $133b infrastructure plan for Asia (Asia One)
MEPs subject to fierce lobbying on conflict materials (EUobserver)
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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SACU: 2013/14 challenging and important year
Launching the latest Southern African Customs Union Annual Report, its Executive Director, Paulina Elago remarked that the customs union had survived the most challenging year in its 105 year long history.
She said, “Key global and regional developments have had a profound impact on the manner in which the Customs Union and in particular, its Membership approached the continued implementation of the SACU Work Programme.”
In 2007, the Customs Union begun laying the foundation for its Work Programme.
Amongst the five initiatives undertaken, the Customs Union agreed to a one stop border post arrangement, joint border controls, electronic data interchange, capacity building and the use of a single administrative document.
According to Elago, further progress was made with regards to the implementation of a SACU-WCO Customs Development Programme. “The SACU regional Customs-to-Business Forum was launched in November 2013, thus enabling a platform to facilitate dialogue and interactions with the public sector, specifically the revenue authorities and the business community in the SACU region.”
Former Minister of Finance and current Premier Hon. Saara Kuugongelwa-Amadhila in her previous capacity as Chairperson of SACU Council of Ministers said at the time, “The SACU Work Programme remains our priority in pursuit of a collective effort to deepen financial integration and the development of the regional industrial development policy is an overarching objective of the programme. Work to support cross-border value chains.”
On the issue of the contentious revenue sharing formula, Kuugongelwa-Amadhila remarked, “During the period under review, work was in progress in reviewing the current sharing formula to align the new revenue with the new SACU vision.”
Added Elago, “I am anticipating that the 2014/15 financial year will pave the way for a renewed focus on the vision and operations of the oldest Customs Union in the world and the benefits it brings about not only for its individual members but also for the region as a whole.”
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Africa loses $50 billion a year through tax avoidance and fraud, report states
Africa’s money that could be used to improve lives and reduce poverty is leaving the continent through illicit financial flows defined as money illegally earned, transferred and used.
As the Chairperson of the High Level Panel on Illicit Financial Flows from Africa, the former South African President, Mr. Thabo Mbeki, will present the Panel’s Report to the Pan African Parliament in Midrand, South Africa on 21 May 2015.
Considering the rapid population growth of the past two decades resulting in the largest youth population in the world, and that in 2010 about 414 million people compared to 290 million in 1990, lived on less than $1.25 a day, these IFFs are a huge drain and a hindrance in addressing the developmental needs of the African people.
This money, usually made from laundering proceeds of crime, abuse of power, market or regulatory abuse with a considerable portion emanating from tax abuse, comes from commercial and criminal activities, and abuse of entrusted power through corruption.
Companies may hide wealth, avoid taxes and dodge custom duties through transfer pricing and trade mispricing. Underreporting of profit and misinvoicing of services are also common practices. Criminals make their money by keeping transactions from view of law enforcers through trafficking of people, drugs and arms, smuggling of oil and minerals.
Illicit financial flows will always thrive in environments where governance and regulatory structures are weak. When states do not possess the technical and human capacity to address sophisticated crime syndicates, money will leave the continent. The destination is most likely a tax haven or a state with financial secrecy jurisdiction making it impossible for African governments to demand those funds returned to the country of provenance.
The AU Convention on Preventing and Combating Corruption and the African Peer Review Mechanism are some of the methods African governments use to put fetters on the IFFs. They also try to recover frozen assets through global initiatives though “access to information by African countries is made conditional”, the report states.
With less capital at their disposal, African governments become weakened and are hard pressed to deliver appropriate infrastructure. Their control of domestic fiscal policies is reduced. Without IFFs, Africa’s capital stock would have expanded by 60%. The rate of domestic investment to GDP would have risen from 19% to 30%, potentially creating more growth and jobs.
Transparency in financial markets, international trade and investment laws is requisite in tackling IFFs. African states can closely monitor routes of illicit financial flows; train technical experts on law and tax to track trade activities and halt or reduce corruption in their own governments; and collaborate with global initiatives as a way of fighting IFFs. Ultimately, the success in addressing illicit financial flows is a political issue, the report asserts.
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African Continental Free Trade Area discussed and UNCTAD’s suggestions presented
African Union Trade Experts meeting in Addis Ababa from 8 to 10 May 2015, considered UNCTAD’s suggestions on policy and negotiation options for building the African Continental Free Trade Area (CFTA).
In June 2015, the African Union (AU) Summit is expected to adopt the negotiating guidelines and roadmap for the creation of the African Continental Free Trade Area (CFTA) by 2017.
In preparation for this, the AU Commission (AUC), in collaboration with regional and international organizations, including UNCTAD, carried out technical analyses and held intergovernmental discussions to prepare the negotiating guidelines and roadmap.
UNCTAD participated in a dedicated meeting of AU Trade Experts in Addis Ababa from 8 to 10 May 2015 to consider the objectives and principles for CFTA negotiations, and the associated roadmap and schedule for the setting up of the CFTA. The Trade Experts recommendations would be submitted to Senior Officials who would then recommend them to Trade Ministers.
UNCTAD presented a summary of the main policy suggestions on the scope, objectives and principles of the CFTA as well as institutional supportive arrangements that emerged, inter alia, from four studies commissioned on intra-African trade in goods, services, agricultural value chains and institutional arrangements, as inputs from AUC and ECA.
Five main suggestions on the way forward in strengthening the CFTA were made by UNCTAD that were generally supported by the Trade Experts.
UNCTAD’s suggestions for the African Continental Free Trade Area
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A development oriented and people centre CFTA can foster African growth and transformation in the post 2015 period.
Further analytical studies were requested from UNCTAD, AUC and UNECA on the following issues:
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Suggestions on mechanisms for balancing gains from the CFTA, including on neutralizing fiscal losses, drawing ideas from existing experiences in African as well as from successful examples outside Africa such as in the case of the EU.
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A focused study on costs and benefits of CFTA for SIDS, LLDCs and LDCs.
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A dispute settlement mechanism.
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An investment agreement.
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A competition policy framework.
- The technical details of liberalizing trade in goods.
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“Unleashing the power of trade”: Statement by Mr. Joakim Reiter at the Trade and Development Commission
Opening Statement by Mr. Joakim Reiter, Deputy Secretary-General, UNCTAD at the seventh session of the Trade and Development Commission, 18-22 May 2015
Good morning and welcome to the seventh session of the Trade and Development Commission.
Two weeks ago, I had the opportunity to listen to a great speaker expressing the commitment of his brave nation to international trade. The man is Axel Addy – Minister of Commerce and Industry; and the nation is Liberia – an LDC recovering from a history of horrific civil war, and now a devastating health crisis.
There are many reasons why trade is important for Liberia, but Minister Addy summed them all up in one powerful phrase. In doing so, he explained not only why trade is important for his country, but to any country in the world. He said: “For us trade matters, because people matter”. This is it: We should not care about trade for the sake of trade, but because the power it has to transform the lives of our peoples and their standards of living.
In fact, trade is so omnipresent that, at times, we tend to forget that it is there. But it is. Trade is one of the driving forces behind cities turning into industrial centers, behind the diffusion of technologies and innovation; behind many of the new skills people acquire; behind job creation and rising wages; and, importantly, behind poverty reduction. More mundanely, trade is probably behind most of the clothes you all are wearing today, the computer or tablet on which you will write your reports from this meeting, or even perhaps the fact that you are here.
And yet, probably the most powerful aspect of trade is hidden. Trade impacts how we use our time. Trading with others, be it a neighboring country or a far-away nation, gives us the opportunity to rely on others for some or most of the goods and services we enjoy. And that reliance on others, in turn, allows even the poorest nations in the world to have more choice and a standard of living that would be unimaginable in an autarky.
It is this power to transform the lives of people that gives trade such an important role in development policy.
2015 is supposed to be a decisive year for development.
We are about to define the contours of the world we want by 2030. The finance for development conference, the SDG summit, the WTO Ministerial Conference and COP 21, are all part of our efforts to set the compass for the future.
But setting the compass is not enough. We need the means to get where we want. And trade is one of the key engines to help us getting there.
In this context, and the context of the items of this Commission, I would like to share with you three points that, in my view, are important to unleash the power of trade in the post-2015 era.
My first point is this: we need to understand that trade is much more than the global rulebook or the development of new global rules.
The multilateral trading system and its rules are crucial for predictability. These rules work as an insurance policy against protectionism and ensure a basic level playing field for smaller economies.
But reducing trade to the Multilateral Trading System and its normative process is dangerous. It risks converting a means into an end. Let me give you an example.
Under the Millennium Development Goals, trade was confined to Goal 8 and mainly referred to as a matter of market access and tariff reduction under WTO. It seemed as if all we had to do was to conclude the Doha Development Agenda and provide duty-free/quota-free access for LDCs.
Of course, those two targets are important, but they also had at least three unfortunate consequences:
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First, it missed the reality of trade as it has developed over the last two decades. Just to name two issues: The importance of services, and trade in services, for sustainable development was not correctly captured; also, the fragmentation of production, rise in regional and global value-chains and its implication for development prospects were ignored;
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Second, it missed the reality of trade measures, especially of importance to developing countries. For example, the growing relevance of Non-Tariff Measures – including market-driven measures – and their economic impact on the origin, price and quantity of goods traded was out of the picture. Similarly, it overlooked the growing need to support poorer countries and their exporters to meet increasingly complex regulations in mature and emerging markets; and
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Third, it missed the reality of where improvements of trade and trade measures predominantly take place – and should take place: Most major strides to improve trading conditions, during the last decade, were made at national level. With the growing overlap between trade policy and other policy areas, this is likely to continue to be the case for the future. In addition, we have seen a major surge in bilateral and regional integration.
Therefore, reducing trade to the multilateral system will constrain its power; a luxury we cannot afford in the post-2015 era.
This brings me to my second point: focusing on areas to reduce the cost of trade and thus enhance its power.
We need to pay more attention to trade facilitation, non-tariff measures and services. Trade Facilitation, in its broader sense, transport and port management, is an area where UNCTAD has worked on for a long time. We will also continue to work hard to help countries implement, and make the most of, the much celebrated new Trade Facilitation Agreement in WTO. This is essential in today’s trading environment where reliability, speed and cost efficiency are ever more crucial. No country can afford to be the weakest link in global and regional value chains.
But trade facilitation, and the customs reforms that it implies, is still largely a traditional trade policy issue. For our generation, and future ones, Non-Tariff and Regulatory Measures – far beyond border measures and for both goods and services – is the area where significant “home work” remains. Even if these measures could have legitimate non-trade objectives, many NTMs have significant restrictive and distorting effects. They alter the price and quantity of traded goods and services. But they can also frustrate markets access altogether.
On average, the negative effects of NTM, in terms of restricting market access, is at least more than double that of tariffs. While eliminating Sanitary and Phytosanitary Measures, Technical Barriers to Trade and other regulatory measures is not an option, convergence is necessary to reduce the additional costs imposed on trade. We must be better at inter alia aligning to international standards, increasing the use of equivalence between trading partners and mutually accept test reports and certificates of conformity. Similarly, we should improve assessments of trade impacts of domestic regulatory measures, enhance transparency and due process in regulatory decision-making and ensure that markets remain competitive no matter the regulatory action needed.
This leads me to my third and last point: inclusiveness.
Trade is only inclusive if it creates broad-based benefits. And this requires complementary policies.
Let me give you two examples to illustrate my point.
First: Trade openness normally increases competition, resulting in enhanced firm productivity, lower prices, and more and better products. This clearly benefits consumers. However, anticompetitive practices, such as cartelization or predatory pricing, can revert the gains from trade. This may create the feeling among consumers that something is wrong with trade. But the problem lies somewhere else: in the absence of competitive market conditions and an effective competition policy.
Second: The blessing of trade lies in its transformational powers. If no transformation, no benefits. But transformation, in itself, will hurt some. Trade produces winners as well as losers. So if trade is to be inclusive, we need to compensate the “losers”.
All countries will have to figure out what particular policy mix may be most effective to this end. But doing nothing should not be an option. In order to maintain wide-spread political support for trade, especially in the face of slow recovery and persistent high unemployment following the financial crisis, we need to find ways to help those workers negatively affected by trade, to get back on their feet and reintegrate into the labor market. Similarly, since the new Sustainable Development Goals aim at eradicating poverty, we also need to combine trade with policies that specifically target poorer and more vulnerable groups. For instance, it is critical to mainstream gender in policymaking to ensure that trade reduces and not exacerbates gender inequalities. The same can be said about income inequality and disadvantaged minorities.
Inclusive trade must be put at the service of all: rich and poor nations, just as rich and poor people. But governments need to make better use of the complementary policies to make trade this force for good for all.
Setting and implementing the post-2015 agenda will be a challenging task. Trade is a powerful means in this endeavour. And you, through your deliberations, are key in enabling that trade plays its rightful role in the Post-2015 era. In the end, as the Liberian Minister stated: “trade matters, because people matter”.
Thank you very much.
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Foreign products constitute 80% of counterfeits in African market, say SON, ARSO
The African Organisation for Standardisation (ARSO) and the Standards Organisation of Nigeria (SON) yesterday stated that products imported from countries outside Africa constitute over 80 per cent of substandard goods found in markets in Nigeria and other parts of Africa.
The Director General, SON and President of ARSO, Dr. Joseph Odumodu, made this known during the stakeholders launch to announce a three-day expo for Chief Executive Officers (CEOs) of all African National Standards Bodies (NSBs) slated to hold next month in Abuja.
He added that unfortunately, most of the influx of the substandard goods into the nation’s market and the continent are deliberately carried out by people intent on undermining the African market and diminishing the value for money in the usage of such products, for their selfish benefit.
According to him, it was against this background that the ARSO forum in Abuja scheduled for next month is planned, to sensitise the world on the readiness of African standards bodies to strengthen the continental economic integration by breaking technical barriers to trade through standards unification to enhance industrial and economic empowerment.
“We do not have a problem with products made in Africa. Africa only has an issue of sub-standardisation due to lack of requisite technology and absence of the capacity to produce at the highest level in terms of quality. Currently, we are having issues in trading among ourselves and we are looking at building an intra-Africa trade, to take the volume of trade within the continent beyond the current precariously low level of five per cent.
“If African nations can trade with one another, we will not only trade more economically, but build a more robust African economy,” Odumodu said.
He added that Africa must come together to fight its common enemies, stressing that the continent may not be able to fight its enemies with each country acting on its own.
“I believe if we all stick together and form a powerful force, it may be a lot easier to actually check the excesses of those who have made Africa to remain on its knees all these years. This forum which we have tagged “Africa Rises for Standards” which is to hold in Abuja, will among other expectations, bring about the strengthening of the standardisation capacity of Africa through dialogue, information and experience sharing to form the key elements that will promote and sustain Africa’s productivity and trade,” he said.
He noted that the African Heads of States declared 2017 as the year when all the countries in Africa will be integrated into a Continental Free Trade Area (CFTA), but maintained that for this to happen successfully, the countries in Africa have to be on the same page, having common standards and same language in other aspects of the quality infrastructure.
“We believe that the present membership of ARSO, which is 34 countries today, may not serve the purpose the Heads of States have set for us as a target. It is imperative that we must bring all African countries under the umbrella of the ARSO so that in 2017, when the CFTA starts, we will be on the same page and raise the volume of intra-Africa trade from the current 5 per cent to 30 per cent yearly, moving forward,” he said.
He said one of the challenges faced within the ARSO, is that a number of countries do not have their own standard bodies, stressing the need for these countries to be supported by those countries that have built robust capacities in order to make every nation in the continent speak with one voice.
“We have so far given out about 800 standards to countries that do not have standards and this is worth $9 million. This is part of our own quota to contribute and support these countries technically and financially,” he said.
He said going forward, ARSO seeks to integrate the whole of Africa through standardisation, to empower the continent within itself for sustenance. Standardisation is capable of breaking barriers inhibiting trade and development.
He stressed that no country can develop industrially, economically or socially without the culture of quality and standards.
He added that the forthcoming event, the ARSO President’s Forum for CEOs of NSBs holding from 22nd to 24th June, 2015 will provide an opportunity to chart a course for the standardisation of African products and the integration of a common market, as all barriers inhibiting trading within Africa would be removed for free flow of goods and services.
“As we welcome African standardisers in Abuja in Nigeria, we enjoin all reputable organisations to partner and support SON and indeed ARSO in showing the strength of Nigeria as a people to break new frontiers through standardisation,” the ARSO president added.
He said SON’s re-engineering activities involving certification, accreditation of its laboratories and the secretarial coordination of the Nigeria Quality Policy are parts of its readiness to break barriers and sustain growth within Nigeria.
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MEPs subject to fierce lobbying on conflict materials
The European Commission on Tuesday (19 May) said mandatory requirements on EU companies to trace conflict minerals would hurt trade.
EU trade commissioner Cecilia Malmstroem told MEPs in Strasbourg that a mandatory scheme could increase the risks of “disrupting global supply chains” and could drive trade “away from Africa altogether”.
“It is crucial to understand that there is no silver bullet to deal with this problem,” she said.
The Brussels executive introduced a bill last year to prevent warlords and other armed groups in the Democratic Republic of Congo (DRC) and elsewhere from making money on the mineral trade.
Despite recent tweaks by the European Parliament’s international trade committee, the bill remains largely voluntary and only covers tin, tantalum, tungsten and gold ores.
The metals are used in smart phones and other electronic devises. Some 35 percent of the global mineral trade is in the EU.
The parliament’s version requires the around 20 smelters and refiners in the EU to source the precious metals.
But the estimated 880,000 EU-based companies selling products that contain the metals would remain exempt.
Set for a plenary vote on Wednesday, debate around the bill has become more heated with MEPs subject to heavy lobbying by big tech firms.
The bill is inspired, in part, by the 2010 US Dodd-Frank Act. But unlike the EU bill, the Act requires manufacturers to audit their supply chains and report and make public any instances of conflict minerals being used.
Voluntary approach
The parliament’s lead negotiator on the bill, centre-right Romanian Iuliu Winkler, backs a voluntary approach.
“It does not unilaterally impose obligations on EU companies, it respects and ensures a continuous uptake of the minerals market towards responsible conflicts free certification,” he said.
Malmstroem, for her part, said the mandatory scheme would create severe mineral shortages for EU companies without making any notable difference to people living in the conflict zones.
She noted a review clause, inserted into the bill, would allow legislators to change their minds later should the voluntary scheme not work out as planned.
Mandatory approach
But not everyone was convinced.
Italian Gianni Pittella, who heads the parliament’s centre-left group, said obligatory traceability for minerals along the entire supply and trade chain is needed.
“We, the socialists will not support a fictitious bit of regulation, a bluff, simply something that really doesn’t affect major financial interests,” he said.
German Green Ska Keller said the proposals by the commission and the parliament committee fail to address human rights.
“Voluntary self-certification doesn’t work. It is possible even now to do that but only 12 percent of companies avail themselves to that possibility and they only do it because they want to export to the US market,” she said.
On Monday, some 150 civil society organisations published an open letter to the European Parliament to back mandatory sourcing of the minerals.
“The weak proposals on the table would leave Europe lagging behind global efforts, including mandatory requirements endorsed by the US and by twelve African countries,” it says.
Amnesty International and Global Witness in a joint-statement said the minerals trade has fuelled deadly conflicts in the Central African Republic, Colombia, and the Democratic Republic of Congo. Those conflicts have displaced 9.4 million people.
Heavy lobbying to weaken bill
Meanwhile, big electronic companies like Intel and Ericsson as well as car producers Renault and Citroen have lobbied MEPs to get their views across.
One source close to the issue said The American Chamber of Commerce has attempted to use the debate to undermine the Dodd-Frank in the US.
Green MEP Reinhard Butikofer in February told members of the parliament’s foreign affairs committee that lobbyists wanted him to weaken the bill and the US act.
“I have been approached by lobbyists that have clearly argued they want to have a weak European regulation, much weaker than Dodd-Frank, in order to use that afterwards as a level to undercut or undermine Dodd-Frank in the transatlantic negotiations,” he said.
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SA banks facing forex fines
Far more conservative and far less leveraged than their global counterparts, South African banks may yet face massive fines from the country’s competition authorities for allegedly manipulating foreign exchange trades.
Barclays Africa, JPMorgan South Africa and Investec Ltd are among the traders in foreign currencies that have “allegedly been directly or indirectly fixing prices in relation to bids, offers and bid-offer spreads in respect of spot, futures and forwards currency trades”, the Competition Commission said in a statement on Tuesday.
Referring to the alleged collusion as the “ZAR domination”, the Commission said it was carried out through electronic messaging platforms used for currency trading, enabling the banks to coordinate their trading activities when quoting customers who buy or sell currencies.
“This coordination has the effect of eliminating competition among the Respondents, as it enabled them to charge an agreed price for a specific amount of currency,” the Commission, whose investigation focuses on trade in currency pairs involving the South African rand, explains.
Other banks involved include BNP Paribas; BNP Paribas South Africa; Citigroup Inc.; Citigroup Global Markets (Pty) Ltd; Barclays Bank Plc; JPMorgan Chase & Co; Standard New York Securities Inc. and Standard Chartered Bank.
“Conduct of this nature distorts the price of foreign exchange and artificially inflates the cost of trading in foreign currency paired with the South African rand. Indications are that this conduct was prevalent offshore, but with this investigation we are sending a clear message that we will pursue cartels affecting South Africa wherever they take place,” Competition Commissioner, Tembinkosi Bonakele, said in a statement.
The South African Reserve Bank (Sarb) said it understands that the alleged instances of market misconduct took place in foreign jurisdictions and “do not relate to actions that took place in South Africa”.
“In so far as there are links to South African entities, the Registrar of Banks has been assured by such entities that they will fully cooperate with the investigation of the Competition Commission,” it said in a statement.
The Reserve Bank said its recently announced review of local forex trading operations, with the help of the Financial Services Board (FSB), is not informed by any indications of “widespread misconduct”.
Global banks cough up
Forex rigging has come under the spotlight in recent years, with large UK banks paying fines and settlements as a result of their forex traders sharing client orders and trading positions with competitor forex traders.
According to Bloomberg, at the beginning of last year, global regulators began probing evidence that traders at large banks (including JPMorgan Chase, Citigroup, UBS, Barclays and others) were using online chat rooms to share information in order to manipulate forex prices and maximise profit.
More recently, The Telegraph reported that the UK’s Financial Conduct Authority (FCA) is expected to fine Barclays, Royal Bank of Scotland, UBS, JPMorgan and Citigroup in excess of £4 billion (R73.8 billion) for “currency rigging”.
Barclays alone is expected to pay at least £250 million (R4.6 billion), as it chose not to settle with the FCA in November. The group earned more than £5.5 billion in adjusted profit before tax for the 12 months to December 2014.
If these fines provide any indication of the sums the Competition Commission is considering, local banks, which have so far said very little about the probe, could be in for a real hiding.
“Investec will co-operate with the Competition Commission with respect to their investigation. Unfortunately, at this stage we do not have further information with respect to the nature of the investigation and queries should be directed to the Competition Commission directly,” Investec, whose Southern Africa operations earned some £297.4 million (R5.5 billion) for the year to March 2014, said in an emailed statement.
The global specialist bank and asset manager will issue results for the 12 months to March 31 2015 on Thursday.
Bloomberg reported that both Standard Chartered and Barclays Africa said they will cooperate with the investigation, while Standard Bank and JPMorgan declined to comment and Citigroup was not available for immediate comment.
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tralac’s Daily News selection: 19 May 2015
The selection: Tuesday, 19 May
Today, in Accra: 47th Ordinary Session of the Authority of ECOWAS Heads of State and Government
West African leaders meet Tuesday in Ghana’s capital (VOA)
ECOWAS summit to decide on two-term tenure for heads of member states (StarrFM)
Yesterday, in Midrand: President Kenyatta's address to the Pan-African Parliament
@UKenyatta: My full address to the Pan-African Parliament, televised live by public broadcaster SABC
Pan-African Parliament meets to deliberate on African issues (Shanghai Daily)
Multimedia: Fortifying Africa's legislature (CNBC)
Kenyatta appeals for the opening of borders (Business Day)
Kenyatta sideswipes SA over visa restrictions (City Press)
The main objective of the study is to undertake survey and assess industrial statistics and information management systems in the Tripartite Area with the view to formulating a programme to address the identified gaps. The survey data and information is the next process of developing comprehensive industrial databases at national and Regional levels as well as providing the basis for technical support for Tripartite Countries (T-Countries) to build their capacity to collect, compile and disseminate international comparable industrial statistics. COMESA invites eligible consultants to indicate their interest in providing these services.
Dollarization in Sub-Saharan Africa: experiences and lessons (IMF)
Dollarization is also present, prominently, in sub-Saharan Africa (SSA) where it remains significant and persistent at over 30 percent rates for both bank loans and deposits—although it has not increased significantly since 2001. However, progress in reducing dollarization has lagged behind other regions and, in this regard, it is legitimate to ask whether this phenomenon is an important concern in SSA.
Tony Elumelu Foundation, ECA collaborate on a Data Revolution for Africa (UNECA)
To better meet the challenges and realize the promises of the data revolution through collective effort among African stakeholders, a High Level Conference (HLC) on Data Revolution was held in Addis Ababa, March 2015, in response to a request by African Heads of States. During the HLC, an Africa Data Consensus (ADC) was adopted, which urges African data communities to develop a coordinated response and exploit the new opportunity while responding to the challenge together.
The conversation on the data revolution in Africa continued in Lagos when the Economic Commission for Africa convened data experts to discuss immediate steps to be taken to actualize the data revolution in Africa. The Lagos meeting, hosted by The Tony Elumelu Foundation’s Africapitalism Institute, included experts from the World Wide Web Foundation, United Nations, African Union Commission and the African Development Bank. The outcome of the meeting becomes a permanent annex to the ADC and includes guiding principles for partnership with other ongoing initiatives at global, national and regional levels.
EAC Secretary General's Private Sector CEO Forum
The Secretary General informed his guests that due to the growing portfolio of the EAC projects and programmes, and also in order to diversify the EAC resource base and cut on donor dependency, there was need for the Community to tap into the potential funding from the private sector through the establishment of an EAC Private Sector Fund. Amb. Sezibera informed Tanzania's business community that the ongoing initiative to set up a $20 Million EAC Private Sector Fund was to boost the participation of the private sector in the ongoing market integration. The Chair of EABC drew the attention of the Secretary General on a number of outstanding issues that need to be addressed and they include:
IGAD: training course on technical barriers to trade
Training participants made the following recommendations and way forward: Develop and validate regional SPS strategy, enhance promotion and implementation of standards, countries to domesticate international standards in their national context, IGAD to support countries to harmonize standards, policies and control procedures to enhance cross-border formal trade...
Ethiopia plans export hubs with $10bn factory parks (Bloomberg)
Ethiopia is targeting $1 billion of annual investment in industrial parks over the next decade to boost exports and make it Africa’s top manufacturer, a special adviser to Prime Minister Hailemariam Desalegn said. The government may invest half of the $10 billion needed for zones across the country that will house textile, leather, agro-processing and other labor-intensive factories, Arkebe Oqubay said in an interview in the capital, Addis Ababa. The International Finance Corp., the World Bank’s private lending arm, along with Chinese and European lenders and private-equity funds are interested in projects, he said.
Dar, Maputo agree on stronger ties (Daily News)
Tanzania and Mozambique have agreed on a Joint Permanent Commission to work on areas of cooperation between the two countries, the main focus being on trade and investment promotion, natural gas, education, fighting cross border crime and security in territorial waters. Speaking at a state banquet in honour of visiting Mozambican President Filipe Nyusi in Dar es Salaam on Sunday night, President Jakaya Kikwete said the two governments have started to ease the movement of people across the borders by relaxing visa protocols.
Zambia: Government will ban chain stores from importing chips from South Africa - Sampa (Lusaka Times)
Government will ban chain stores from importing certain processed foodstuffs such as potatoes if they fail to comply with the directive by President Lungu to stock locally produced goods. Deputy minister of Commerce, Trade and Industry Miles Sampa has since given a two-month ultimatum to international chain stores such as Shoprite, Spar, Pick n Pay and Hungry Lion to start buying potatoes produced by local farmers.
SA investors target Zambia (Daily Mail)
A business delegation from South African is in the country to explore business and investment opportunities in the Copperbelt and North-Western provinces. According to a statement issued by Zambia Development Agency (ZDA) yesterday, the delegation comprising 14 companies from various sectors is looking to expand their businesses into Zambia. The sectors include energy, engineering, construction, mining, logistics and finance.
Egypt devises strategy to double exports to $42bn by 2019 (AMEinfo)
The Egyptian government has devised a strategy to double the country’s exports to $42 billion by 2018-2019, an Egyptian minister announces. Egyptian Minister of Trade and Industry, Mounir Fakhry Abdel Nour, announces that his country will sign major free trade pacts with the three largest economic blocs in Africa in June in a bid to increase national exports. According to the minister, the agreements will allow Egypt to become an export hub for African nations.
Swaziland: Good times beckon for the informal cross border trader (Swazi Observer)
Southern Africa Cross Border Traders, coordinator, Francis Ngambi said informal trade contributes about 43% of overall Africa’s gross domestic product (GDP). In the SADC intra-regional trade, informal cross border trade contributes 30 to 40%.. However, he stated that informal trade chokes because there is still lack of information on the existing legal documents that apply in the SADC Free Trade Area.
Botswana retailer picks Kenyan partner in EA growth plans (Business Daily)
Choppies Supermarket, a Botswana-listed retail chain has picked a Kenyan businessman as its partner to help in its expansion plan into East Africa. Birju Pradipkumar Patel, who serves as a director at Export Trading Group — one of the largest global agriculture commodity companies based in Dar es Salaam — confirmed that he had partnered with Choppies for its Kenya and Tanzania operations.
Where does the world stand in reaching sustainable energy objectives? (World Bank)
“Progress Toward Sustainable Energy: Global Tracking Framework 2015” gives a snapshot of how far the world has come in achieving universal access to modern energy, doubling the global rate of improvement in energy efficiency and doubling the share of renewable energy in the global energy mix and shows how much work remains to reach these objectives. So what happened to global access to electricity between 2010 and 2012? There have been notable advances in electrification—driven primarily by India— but progress in Africa remains far too slow.
Achieving clean, sustainable off-grid lighting for Africa (UNEP)
Creating favourable conditions for modern solar lighting markets can provide a low-cost solution to reducing carbon emissions, indoor air pollution and health risks, while bringing electricity to an estimated 600 million people in Africa who lack access to the power grid, says new report by UNEP. The report, entitled Developing Effective Off-Grid Lighting Policy - Guidance Note for Governments in Africa, recommends best practices and smart policies enabling the market uptake of off-grid lighting solutions
Transport infrastructure and welfare: an application to Nigeria (World Bank)
Transport infrastructure is deemed to be central to development and consumes a large fraction of the development assistance envelope. Yet there is debate about the economic impact of road projects. This paper proposes an approach to assess the differential development impacts of alternative road construction and prioritize various proposals, using Nigeria as a case study.
Zimbabwe: Govt to introduce 30 new tollgates by year-end (The Herald)
Government has applied for a $25 million loan facility from two local financial institutions to be used for the acquisition of new equipment for road maintenance this year while 30 new tollgates will be opened by the end of the year in order to boost revenue inflows.
Africa's 'infrastructure apartheid' is deep; Lusaka, Luanda and Accra painful for construction firms (Mail & Guardian Africa)
Infrastructure in conflict-prone and fragile environments: evidence from the DRC (World Bank)
Christian Kingombe: 'Shifting perceptions of Africa - considering the rising middle class' (Tutwa)
Zimbabwe: Indaba to audit regional integration on cards (The Herald)
South Africa: Call to increase security at ports to stop illegal export of scrap metal (News24)
Nigeria, Poland trade hits N23m (ThisDay)
Nigeria: Improving non-oil export with EEG scheme review (The Guardian)
Pakistan: Dumping duty on cement (Business Recorder)
Witney Schneidman: 'Going to Kenya is an important undertaking, Mr President' (Brookings)
Roberto Azevedo: 'Trade supports Malaysia’s development' (The Star)
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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ECA and Tony Elumelu Foundation collaborate on a data revolution for Africa
The Tony Elumelu Foundation and the United Nations Economic Commission for Africa concluded a three-day working session to create a roadmap on how to implement an ambitious plan to initiate a “data revolution” across Africa.
2015 marks the end of Millennium Development Goals (MDGs) – a global initiative with the aim of addressing some of the most intransigent problems facing millions of people throughout the developing world including extreme poverty and hunger, gender inequality, and disease, among others. As the world prepares to establish a new set of goals for the post-2015 development agenda, the importance of data for human-oriented and sustainable development will play a critical role, which consequently has led to a global call for a “data revolution” to improve the availability of development data to ensure that no group is left behind.
The Tony Elumelu Foundation’s Africapitalism Institute, which conducts rigorous research on economic and social development, hosted a group of data experts at it’s offices in Lagos in order to help move the conversation forward, recognizing that there is an urgent need for a data revolution in Africa to inform key policies that address some of the continent’s most critical needs. The Institute represents the private sector’s role in the data revolution process as both a provider and a consumer. In order for Africapitalism – the private sector’s commitment to Africa’s development, through long-term investment in strategic sectors that drive both economic prosperity and social wealth – to take root on the continent, the data revolution must be as inclusive as possible. Commenting on the data revolution, the Director of the Institute, David Rice, stated, “The proliferation and ubiquity of information communication technology, electronic financial transactions, digital commerce, and social media has resulted in an unprecedented amount of data being gathered by the private sector – data that would be extraordinarily useful in the formulation of public policy, allocation of government resources, and creation of effective development strategies for Africa."
To better meet the challenges and realize the promises of the data revolution through collective effort among African stakeholders, a High Level Conference (HLC) on Data Revolution was held in Addis Ababa, March 2015, in response to a request by African Heads of States. During the HLC, an Africa Data Consensus (ADC) was adopted, which urges African data communities to develop a coordinated response and exploit the new opportunity while responding to the challenge together.
The conversation on the data revolution in Africa continued in Lagos when the Economic Commission for Africa convened data experts to discuss immediate steps to be taken to actualize the data revolution in Africa. The Lagos meeting, hosted by The Tony Elumelu Foundation’s Africapitalism Institute, included experts from the World Wide Web Foundation, United Nations, African Union Commission and the African Development Bank. The outcome of the meeting becomes a permanent annex to the ADC and includes guiding principles for partnership with other ongoing initiatives at global, national and regional levels. The meeting also included a webinar session that lasted for 90 minutes and had over a hundred participants from across the globe.
At the end of the three day session Dozie Ezigbalike from the UN Economic Commission for Africa (ECA), said: “For me, I see the data revolution as an active process of doing things in different and new ways; be disruptive of the status quo if need be, with the objective to empower citizens to become active participants in processes that would affect them. With access to appropriate data, appropriately presented, citizens can demand services that they rightfully deserve, and confirm that the agreed services were actually delivered.”
The World Wide Web Foundation’s Nnenna Nwakanma, likewise,restated her commitment to the data revolution saying, “Data is the new gold. The more of it you can generate, use, and share, the more sustainably developed you will be. Opening up data is key to my work at the Web Foundation and engaging our expertise towards the Data Revolution in Africa is a firm decision. We are here to support policy, build capacities, contribute to better governance with data and support citizen engagement. Our work in research, in Open Data, in standards, in data labs and in policy advisory will accompany the implementation of the Africa Data Consensus.”
Jointly issued by ECA and Tony Elumelu Foundation
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EAC Secretary General’s Private Sector CEO Forum held in Dar
The Secretary General of East African Community, Amb. Dr. Richard Sezibera has assured Chief Executive Officers of Private Businesses and Business Leaders/Owners in Tanzania that the governments in the region were determined to do away with non-tariff barriers (NTBs) that continue to present a serious challenge to regional trade and integration in East Africa. He said NTBs account for a significant proportion of the high transportation costs, which are estimated to be 60-70% higher than in the U.S. or Europe, and 30 percent higher than in Southern Africa.
Amb. Sezibera, who was speaking at the breakfast meeting with Tanzania’s Private Sector CEOs and leading Business Owners held on 14 May 2015 at the Hyatt Regency Dar es Salaam, The Kilimanjaro, said “in March this year, the East African Legislative Assembly (EALA) passed a law that will compel Partner States to eliminate barriers and end protectionism that had hindered smooth trade. The object of the Bill, which was moved by the Council of Ministers, is to provide a legal mechanism for the elimination of identified non-tariff barriers (NTBs) in Partner States and the Bill now awaits assent by the Summit for it to become operational.
The Secretary General informed his guests that due to the growing portfolio of the EAC projects and programmes, and also in order to diversify the EAC resource base and cut on donor dependency, there was need for the Community to tap into the potential funding from the private sector through the establishment of an EAC Private Sector Fund.
Amb. Sezibera informed Tanzania’s business community that the ongoing initiative to set up a $20 Million EAC Private Sector Fund was to boost the participation of the private sector in the ongoing market integration. “The idea behind the fund is to see how we can ensure that the private sector plays a bigger role in the integration of EAC. The fund will be used to address various challenges facing the private sector within the EAC” disclosed the EAC official.
The Chair of East African Business Council Mr. Felix Mosha commended the Council of Ministers for the appropriate decisions it continues to make towards the improvement of the business environment in the EAC region including the approval of the Consultative Dialogue Framework, which has facilitated consultations with the East African private sector to be institutionalized.
He also commended the East African Legislative assembly for passing the EAC Elimination of Non-Tarrif Barriers (NTB Bill) which is expected to significantly reduce the number of NTBs in the region and enhance the realization of the EAC integration benefits.
The Chair of EABC drew the attention of the Secretary General on a number of outstanding issues that need to be addressed and they include; fast tracking implementation of the Single Custom Territory so that the intended benefits can be realized by removing unfair competition and encourage efficiency and competitiveness in EAC.
There is also the need to strengthen the capacity of the National NTBs Monitoring Committees to enable them conclude their tasks more efficiently for the benefit of all EAC members states.
On the list is also the need to expedite harmonization of domestic, excise, income and value added taxes and harmonization of product standards. The harmonization of product standards at the regional level is very slow and the adoption of approved EAC product standards at national level is very slow and the capacity of institutions charged with this responsibility needs to be enhanced. “It is also important that we work together to develop regional quality mark and an EAC regional technical regulations framework”.
On air transport, the EABC Chair reiterated the urgent need for the Partner States to liberalize the EAC airspace as a matter of urgency to facilitate trade competition in the region. “It is ironic that air fares between EAC capital cities are higher than a round trip between these cities and Dubai or even close to the fare to North America” stated Mr. Mosha.
He urged for the expedition of the adoption and operationalization of the EAC Air Transport Regulations; harmonization of regulatory fees and charges in the region in order to have a level playing field and enhance competition for the air operators in the region; and the provision of national treatment to EAC national air operators, passengers and cargo in all EAC Partner States.
The Chair of EABC urged the Business CEOs and Leaders in the region to actively participate in the first-ever EAC Manufacturers Summit scheduled for September 2015 in Kampala, Uganda. The forum is expected to deliver key recommendations for improving and expanding East Africa’s manufacturing sector through among other measures including strategic linkages with both Agriculture and banking sectors.