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How can Uganda’s private sector yield maximum benefits from oil and gas?
The discovery of 6.5 billion barrels of oil reserves in the Albertine region of Uganda present an opportunity for the country to generate government revenues for domestic investment and catalyze domestic private sector development. However, the oil reserves represent a temporary boon, as revenues from oil reserves will be finite. But their impact on Ugandan economy and society, if deployed strategically, could be far more long-term, according to a new World Bank report.
The study, Leveraging Oil and Gas Industry for the Development of a Competitive Private Sector in Uganda, recommends that the oil and gas sector be leveraged for domestic private sector development by developing local suppliers and related industries.
Sajjad Shah, World Bank acting country manager for Uganda, said that the discovery of oil resources offers a unique opportunity to develop the Ugandan economy.
“Oil revenues can be used to finance priority domestic investments crucial for diversified growth,” Shah said. “Even before oil production commences and oil revenues start coming in, local enterprises can participate in supplying the industry and start growing their business and the national economy in general.”
The report also focuses on diagnosing the constraints, including access to finance, for local small-medium enterprises (SMEs) to enter into the oil and gas supply chains and highlights some case studies on how best to overcome these constraints.
The report notes that SMEs usually need to scale up their businesses significantly and/or buy specialized equipment to meet the high quality standards needed to participate in such a capital-intensive and quality conscious industry such as oil and gas. But securing financing is a challenge for SMEs, as many do not know the basics of the process, including how to prepare a business plan, which is required by financial institutions.
SMEs are also perceived as “high risk” by financial institutions, as there is little information available on their operations; SMEs do not have audited financial statements and credit bureau coverage is very limited in Uganda. To compensate, banks demand high levels of collateral, predominantly immovable, which most SMEs do not have, said Valeriya Goffe, a World Bank finance and private sector development specialist in the World Bank Finance and Markets Global Practice, and lead author of the report.
“Special financing mechanisms are needed to overcome the challenges of inadequate collateral and the higher perceived risk of lending to SMEs,” she said. “Efforts to address both supply and demand-side challenges are required in this case. For example, lines of credit could be provided to banks to expand the pool of available long-term finance and also increase lending for priority areas, such as oil and gas. Risk-sharing facilities could be utilized to address the issues of inadequate collateral, while capacity-building programs for entrepreneurs would be essential to make them more ready to apply for financing.”
The report also highlights examples to follow in the Albertine Region, such as the NGO Traidlinks in Hoima District, which has helped local farmers seize opportunities coming from the oil development by supplying fresh fruits and vegetables to the oil camps.
“Similar initiatives could be set up in other districts such as in the Buliisa district to benefit more farmers,” said Goffe.
The report also provides alternative approaches, including having large scale investors establish operations to produce food demanded by oil camps and use smallholders as outgrowers or contract farmers.
“There is a need to fast-track the development of skills and expertise and ensure national participation in the sector for which the National Content Policy provides the key framework,” said Fred Kabanda, Principal Geologist and Head Regulatory Unit, Petroleum Exploration and Production Department, Ministry of Energy and Mineral Development, on behalf of the Permanent Secretary. “The National Content Policy will guide the government, licensees, operators, oil service companies and other key stakeholders in the identification, planning, implementation, monitoring and evaluation of National Content development in the country.”
The report outlines multiple opportunities for the World Bank to support the country in its transition into high-quality exports to regional and international markets. These include providing a line of credit for local SMEs to scale-up their ability to supply goods and services to the oil and gas sector, capacity building for entrepreneurs and government ministries, and the establishment of an agro-industrial park to jumpstart the food processing sector in the economy.
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EALA sitting commences in Arusha as Members hail State of EAC Address
EALA commenced its 6th Meeting of the 3rd Session with Members by commending the Chair of the Summit of EAC Heads of State, President Jakaya Mrisho Kikwete for the insightful delivery of the State of EAC Address in Bujumbura, in March this year.
Legislators debated on the speech delivered to the Assembly on March 19th, 2015, terming it concise and one that elaborated on key policy issues for the region. The Motion to debate on the State of EAC Address moved by the Deputy Minister for EAC, United Republic of Tanzania, Hon Dr Abdullah Sadaala Abdullah and Chairman of the Council of Ministers received wide acclamation from the legislators.
Hon Saadala remarked that the speech had called for the full and systematic implementation of the pillars of integration.
The Minister termed the Address as pivotal in addressing matters of integration. He noted that from a board perspective, the President gave a knowledgeable and insightful outline of the Community’s principal priorities and areas of focus.
In his Bujumbura Address, President Kikwete urged Partner States to spare no efforts in ridding the region of Non-Tariff Barriers to spur the integration process. He re-affirmed his commitment during his term as Chairperson of the Summit to ensuring total removal of all barriers to trade.
“The progress made so far, at the ports of Mombasa and Dar es Salaam and, on the Northern Corridor with regard to road blocks shows that it is possible to eliminate these NTBs. Measures are being taken in earnest to reduce road blocks on the Tanzania side of the Central Corridor. I am sure in the next few months we will notice a huge improvement”, President Kikwete said.
President Kikwete was emphatic that the incremental approach of the integration process had been a great success. He said under the Customs Union, the region benefited from enhanced trade through the Common External Tariffs.
“Indeed, goods which meet the criteria of Rule of Origin have been moving across borders without paying taxes however non tariffs barriers remain a challenge. Progress has been made but the matter has not been resolved fully yet”, he added.
On the forthcoming elections in Burundi, the Head of State was categorical that the country should hold peaceful, free and fair elections. He remarked that any attempts to derail the electioneering in the country would be inappropriate.
“I appeal to the citizens of the country to adhere to the Constitution of Burundi, the Electoral Laws and the Arusha Accord”, President Kikwete remarked.
He said that Tanzania would also vote at the plebiscite for its new Constitution before the general elections in October.
During debate on Tuesday, Chairperson of the General Purpose Committee, Hon Dr. Odette Nyiramilimo called for the total removal of NTBs to create an enabling environment.
“It is our total duty to regularly revisit the issues around infrastructure development and to report to the House at intervals. At the same time, the pace of the Common Market Protocol is too slow, as the Head of State duly declared in his speech”, Hon Dr. Nyiramilimo stated.
The legislator noted that President Kikwete’s remarks on elections with reference to the Republic of Burundi were clear and emphatic. “You recall President Kikwete urged the Republic of Burundi to adhere to the country’s Constitution, the Electoral Laws and the Rule of Law.
We need to ensure this is done not only realized in Burundi but in all the Partner States”, Hon Nyiramilimo said.
Hon Joseph Kiangoi termed the speech a milestone in the integration process. He lamented that several challenges as spelt out in the speech continued to hamper progress in the region.
“In the transportation sector for example, we need to ensure that funding for infrastructural investment is secured”, the legislator said, adding, it was the imperative for the Council of Ministers to take a more central role in ensuring progress is realized.
“It is important for the Council of Ministers to be resident in Arusha to push things much faster”, he added. “As an Assembly, let us take a keen eye on the progress report and ensure there is actual movement in the Partner States,” Hon Kiangoi stated.
“We cannot speak at cross-purposes, we must be progressive at all times”, he added.
The legislator noted that the delay for example in the operationalization of the East African Parliamentary Institute (EAPI) Act, 2011 which envisages the establishment of the regional Parliamentary Institute was worrying.
On peace and security, Hon Kiangoi urged the Summit of the EAC Heads of State to pronounce itself clearly on the various challenges in the region.
“We want peace in the region. It is good the Summit shall sit to review the Burundi case. In the same vein, let us come together and address the insecurity issue”, he said, citing the case of the numerous Al-Shabaab attacks in the Republic of Kenya.
Hon Saoli Ole Nkanae termed the speech futuristic and forward looking. He hailed President Kikwete for his astute remark that the notion of regionalism needs to supercede nationalistic tendencies.
Hon Emerence Bucumi urged all concerned parties in Burundi to ensure peace is upheld. “We are grateful to the Partner States for supporting our sisters and brothers who have crossed over into their territories during this period,” she added.
On her part, Hon Dora Byamukama said an immediate end to the Burundi crisis was key. “We feel sad when the capital Bujumbura is on fire since it is part and parcel of East Africa. It definitely spreads fear to us. President Kikwete recently challenged us to ‘walk the talk’ with Burundi all the way - as has been done in the past. This is vital and we must help to find a way out of the problem,” she said.
The legislator said it was necessary for the Assembly to keep tabs on the decisions and Bills passed. In this regard, Hon Byamukama commended the EAC for the scorecard (on the Common Market Protocol) which she remarked was useful.
Hon Abubakar Zein said the House is mandated to translate the aspirations of East Africans in to laws. He thus called on the Council of Ministers to adhere to the Legislative Calendar by introducing Executive Bills as promised.
“I expect that the Secretariat and the Organs of the Community shall in future take into consideration the policy statements and allocate adequate resources for the same,” Hon Zein noted.
Hon Mike Sebalu termed Bills passed by EALA as progressive and of value addition to the region.
“The Assent of Bills is a process where technocrats are involved in advising the Heads of State. I urge them to advise the Summit appropriately to ensure the Bills are speedily assented to,” the legislator said.
Hon Hafsa Mossi lauded President Kikwete for his commitment to take the region to greater heights.
“His decision to call for the Extra-Ordinary Summit to discuss the unfortunate crisis in Burundi shows our desire to find home-ground solutions,” she added.
Others who contributed to the debate were Hon Nusura Tiperu, Hon Emmanuel Nengo, Hon Bernard Mulengani Hon Valerie Nyirahabineza and Hon Jeremie Ngendakumana. Hon Mumbi Ngaru, Hon Peter Mathuki also made submissions to the House.
The Minister for EAC, Uganda, Hon Shem Bageine, maintained that the Council of Ministers would henceforth play a more central role in ensuring the decisions of the Community are implemented. He noted that Sectoral Councils had at times altered the decisions of the Council of Ministers and said they (Council) had agreed to reduce reliance on the Senior officials and the Co-ordination Committees.
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New study reveals huge impact of hunger on economy of Malawi
Malawi’s economy loses nearly MKW 150 billion (nearly US$ 600 million) annually due to the effects of child undernutrition. This is the alarming finding of a new study launched on Wednesday in Lilongwe.
The Cost of Hunger in Africa: The Social and Economic Impact of Child Undernutrition in Malawi report shows that the country loses significant sums of money each year as a result of child undernutrition through increased healthcare costs, additional burdens to the education system and lower productivity by its workforce. It estimates that child undernutrition cost Malawi 10.3 percent of Gross Domestic Product in 2012 (most recent year with complete data).
Particularly detrimental are the consequences of stunting. Stunting (low height for age) occurs when children miss out on critical nutrients – including proteins, vitamins and minerals – while in the womb and in the first two years of life. People affected by stunting face lifelong consequences starting in childhood such as frequent illness, poor school performance, having to repeat classes or dropping out altogether, and having low productivity at work.
According to the study, which used data from 2012 as the most recent complete set of records, 60 percent of adults in Malawi suffered from stunting as children. This represents some 4.5 million people of working age who are not able to achieve their potential as a consequence of child undernutrition. In Malawi, where two thirds of people are engaged in manual activities, it is estimated that in 2012 alone, MWK 16.5 billion (US$ 67 million) were lost due to the reduced productivity of those who were stunted as children.
The study was undertaken in Malawi by the Ministry of Finance, Economic Planning and Development, in collaboration with the initiative’s partners: the United Nations World Food Programme (WFP), the African Union Commission (AUC), the New Partnership of Africa’s Development (NEPAD) Planning and Coordinating Agency, and the UN Economic Commission for Africa (ECA).
“The study findings have clearly shown that adequate nutrition is critical for one’s physical and intellectual development and work productivity, and is therefore an integral element for socioeconomic development,” says Honourable Goodall E. Gondwe, Minister of Finance, Economic Planning and Development. “It is in this context that we are determined as a government to channel adequate resources towards nutrition interventions. Government will also strengthen institutional and human capacity for the effective delivery of nutrition services.”
The Cost of Hunger in Africa is a 12-country study highlighting how undernutrition is not just a health issue, but an economic and social one as well that requires multisectoral commitment and investment. So far, it has been conducted in six countries in Africa including Malawi. Previously surveyed in southern Africa was Swaziland which was found to lose the equivalent of 3.1 percent of its GDP due to undernutrition.
The continent-wide and multi-partner initiative is led by the African Union Commission Department of Social Affairs, within the framework of the Revised African Regional Nutrition Strategy (2005-2015), and aligned to the objectives of the African Task Force on Food and Nutrition Development (ATFFND) and the principles of pillar 3 of the Comprehensive Africa Agriculture Development Programme (CAADP).
The findings of the Malawi report show that in order for Malawi to achieve sustainable human and economic growth, special attention must be given to the early stages of life. Without measures to combat and eliminate undernutrition, the cost to Malawi at current rates could increase at a higher pace by 2025, leading the country to not meeting the World Health Assembly global target for reduction of stunting.
The Cost of Hunger report comes at a crucial time for Malawi. Earlier this year, the southern part of the country suffered historic flooding which affected more than 1.1 million people, a quarter of whom were displaced from their homes. With huge areas of arable land lost in the floods, the food security outlook was made worse when in March severe dry spells negatively affected crops across the country. The Government estimates a 28 percent reduction in maize production alone this year. This is likely to mean that already-vulnerable people could be pushed deeper into food insecurity during the lean season later this year and early next year.
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Tanzania signs up for Customs deal
Tanzania has joined Kenya, Uganda and Rwanda in fast tracking the movement of goods along the main corridors (Northern and Central) under the Customs seals in the Comesa region.
This follows the signing of an inter-surety agreement by Tanzania’s National Insurance Corporation (NICT) to join Comesa Regional Transit Guarantee (RCTG) scheme thereby allow the country to issue regional Customs bond guarantees.
The RCTG Scheme is a Customs transit regime designed for the ease of movement of goods under Customs seals in the Comesa region and to provide the required Customs security and guarantee to the transit countries.
The scheme ensures that Customs in a transit country receive proper payment for dues and duties for any goods in transit.
Bonds or guarantees are given by the owner of goods or their agents to the benefit of the Customs of the country of transit.
“This will now enable the NICT to issue regional Customs transit bonds as part of the national chain of sureties that are signatories to the Inter Surety Agreement,” said NICT acting managing director Sam Kamanga.
Tanzania Revenue Authority has already configured its national IT system.
Last year, Uganda, Kenya and Rwanda started using the Comesa Customs bonds scheme after the rollout of the EAC Single Customs Territory.
The rolling out of the RCTG on the Northern Corridor from Mombasa to Kampala and Kigali has reduced transit time from an average of 21 days to four days.
Trucks with RCTG spend about 30 minutes on both sides of the border post in contrast to an average of two days for trucks that are not in possession of a single regional transit Customs bond guarantee.
“A three-day delay in clearing a transit truck at a border post added $1,500 to the cost of doing business,” said Comesa Secretary General Sindiso Ngwenya.
“The implementation of the RCTG aided by a virtual trade facilitation system that integrates all trade documents and different Customs authorities in real time on the basis of a single sign would significantly reduce trade costs and enhance the competitiveness of economies,” he added.
Comesa regional bonds scheme has so far generated premium incomes of over $600,000 from sureties covering 194 clearing and forwarding agents across the three East African countries. It was fixed at 0.5 per cent – a reduction from the initial 0.75 per cent.
The RCTG was introduced in 2012 on the Northern Corridor to ease movement of goods from Mombasa to the landlocked countries in the region.
Rwanda, which has already converted all local transit bonds into RCTG, is the stand-out performer, while Uganda has embarked on a similar process, accommodating both small operators and big businesses.
The scheme will be rolled out in the Central corridor, which covers Tanzania, Burundi and DRC. However the North-South Corridor countries are still held back by key member states like Zambia not ratifying the RCTG agreement.
The Ethiopia-Djibouti corridor is still experiencing challenges relating to the sharing of premiums on RCTG bonds.
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G-20 Agriculture Ministers warn of global food wastage
Agriculture ministers from the G-20 group of major advanced and emerging economies have warned that global food wastage could have devastating consequences for food security, nutrition, and the use of natural resources and the environment, following a 7-8 May meeting in the Turkish city of Istanbul.
“We highlight this as a global problem of enormous economic, environmental, and societal significance and encourage all G-20 members to strengthen their efforts to address it,” they said in their final communiqué.
With the global population set to hit nine billion by 2050, the UN Food and Agriculture Organization (FAO) has estimated that global food supply must increase by at least 60 percent to meet this higher demand. Members of the G-20 produced 68.7 percent of the world’s food in 2013.
However, feeding this growing population is becoming increasingly challenging, due partly to the impact of food waste and loss, referred to together as wastage, as well as the impact of climate change and the pressures being placed on natural resources and biodiversity.
While ministers made various statements of support for action and concern over the current state of affairs – along with reaffirming several existing commitments in this area – further clarity on what new, concrete actions they may take could emerge at the November G-20 leaders’ summit in Anatalya, Turkey.
Ministers have asked that their deputies work with the Development Working Group (DWG) to build on their conclusions from the Istanbul meet, as well as the recommendations from a separate Implementation Plan, into an “action plan” that G-20 leaders can sign off on in Anatalya.
This “G-20 Action Plan on Food Security/Sustainable Food Systems” would be geared toward helping both members of the G-20 group as well as low-income developing countries.
Repurposing versus recovering
In combatting food wastage, ministers also said that the priority should be placed on ensuring that “safe and nutritious otherwise wasted food” be recovered to feed those in need of it, as well as preventing its wastage in the first place. This approach, they said, should take precedent repurposing it for other uses, though the agriculture officials did not specify what types of uses these involved.
However, to ensure that “interventions” are better targeted, agriculture ministers last week called for improving current data and estimates on food loss and waste, as well as their effects and causes.
In this vein, ministers has asked that the FAO, together with the International Food Policy Research Institute (IFPRI) and other international organisations in this area, set up a platform that would help in sharing information and experiences in this area, both in quantifying and cutting the levels of food wastage.
“There is value in a common definitional and measurement framework that G-20 members can consider in order to establish coherent estimates of food loss and waste against which they can monitor progress in the reduction of food loss and waste,” they said.
Estimates from the FAO have placed annual food loss or waste at up to 1.3 billion tonnes, according to 2013 data. Furthermore, this wasted food is responsible for adding 3.3 billion tonnes of greenhouse gases to the atmosphere, while the producers of wasted food, with the exception of fish and seafood, face economic losses of US$750 billion annually.
Reducing losses, boosting productivity
According to the FAO, over half of food wastage occurs during production, post-harvest handling, and storage, with the remainder occurring during the processing, distribution, and consumption stages.
“Most important from the US perspective is acknowledging the importance of reducing post-harvest loss and food waste and the positive effect that can have on increasing food security,” said US Agriculture Secretary Tom Vilsack in a statement following the Istanbul meeting.
Along with improving the estimates of food wastage and reducing the amounts lost, ministers also stressed the role that sustainable food and agricultural systems could play in meeting the challenge of global food security and nutrition. Doing so would include, for example, ensuring that small producers adopt improved techniques and technologies that would allow for productivity gains.
Improved productivity, they said, could help in rural job creation and boosting rural incomes, particularly for women and youth. Investment throughout the food value chain could also help with both more productivity and less food wastage.
The ministers tied this in to the G-20’s overall “inclusive” growth agenda, given that the coalition’s members committed last year to boost GDP above current trajectories by 2.1 percent by 2018, amounting to an estimated US$2.1 trillion boost. These would be executed via national action plans, which were publicly released by each member economy during last November’s summit in Brisbane.
“Our fundamental shared challenge is this: how can we increase production while respecting our natural resources and reducing waste – how can we produce more, using less?” said EU Commissioner for Agriculture and Rural Development Phil Hogan during the meeting, according to a copy of his remarks.
Doha Round
The agriculture officials also referred to the importance of the multilateral trading system in ensuring global food security, citing the need to “promptly” conclude the Doha Round trade talks as well as ensuring a successful WTO Ministerial Conference this December in Nairobi, Kenya.
WTO members are in the process of negotiating a “work programme” that would outline a way to resolve the Doha talks, with the deadline for elaborating such a plan set for 31 July. Those talks, however, have reportedly been moving slowly, raising questions of whether this deadline will be met and what this would mean for the December conference.
G-20 agriculture ministers also called on FAO, the World Health Organization (WHO), and other relevant organisations to help boost the capacities of standard-setting bodies, citing specifically the Codex Alimentarius, the Intergovernmental Plant Protection Convention (IPCC), and the World Organisation for Animal Health (OIE), in providing scientific health and guidance, in a possible implicit reference to the issue of sanitary and phytosanitary measures (SPS).
Under the WTO, trade measures taken to protect food safety and animal and plant health, known as SPS measures, must be based on recognised international standards, particularly those of the above-mentioned agencies, along with meeting other requirements.
Post-2015 process
The preparations for November’s G-20 leaders’ meet comes as UN members work to finalise a post-2015 development agenda, together with a set of Sustainable Development Goals (SDGs), in time for a summit this September.
Last week’s communiqué did not refer explicitly to either the post-2015 or the SDG process; however, FAO Director José Graziano da Silva did raise the importance of implementing the G-20 Food Security and Nutrition Framework as part of ensuring the success of this new agenda.
“The change from MDGs to SDGs is about much more than a change in just one letter,” he said during the Istanbul meeting, with MDGs referring to the current Millennium Development Goals, set to expire this year. “It is about making the bold commitment to end hunger, malnutrition, and extreme poverty.”
This article is published under Bridges, Volume 19 - Number 17, by the ICTSD.
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Senior Officials consider the draft technical documents for the launch of the Continental Free Trade Area (CFTA) negotiations
The three-day Senior Officials’ Meeting segment of the African Union Ministers of Trade (AMOT), commenced on Monday at the African Union Headquarters in Addis Ababa, Ethiopia. The objective is to consider the preparatory draft documents amended by the Experts and prepare for the Ministers’ meeting scheduled for 14-15 May 2015. The meeting is attended by the Member States, the Regional Economic Communities (RECs), the United Nations Economic Commission for Africa (UNECA) and regional Private Sector organizations.
The Senior Officials’ meeting is the last Senior African trade officials before the launch of the CFTA negotiations in South Africa in June.
In her opening remarks, the Director for Trade and Industry, Mrs. Treasure Maphanga, pointed out, amongst others, that the CFTA will contribute significantly to the realization of the vision of creating a single economic space on the African continent as envisaged under the Lagos Plan of Action and the Abuja Treaty. “African economies are on a growth path and the services sector is contributing significantly in this regard. The inclusion of trade in services in the scope of the CFTA reflects the recognition by Member States of the importance of trade in services in boosting intra African trade”, she mentioned. Recalling other advantages of the implementation of the CFTA, Mrs. Maphanga indicated that the establishment of the CFTA will significantly accelerate growth of Intra-African trade and allow the people of Africa to use trade more effectively as an engine of growth and sustainable development and fight against poverty and underdevelopment in the continent. “It is our responsibility as Senior Officials to facilitate a process that will expand trade and investment opportunities for African businesses, farmers, workers and the peoples of Africa in general and provide win-win outcomes for partnerships with foreign investors” she emphasized. She concluded by thanking Member States for their commitment and their goodwill to make progress on the regional integration agenda. She also thanked development partners for their continued support.
Dr. David Luke, Coordinator of the African Trade Policy Centre at the United Nations Economic Commission for Africa (UNECA), recalled some of UNECA’s researches on the CFTA that show the positive expectations if the initiative is implemented by 2017 as scheduled. “UNECA’s research has shown that the CFTA combined with efforts to reduce non-tariff barriers, could double intra-African trade within ten years, in so doing could also boost the continent’s industrialization, given the higher value added content of Intra-African trade. It will also substantially add to the continent’s GDP”, he revealed. He further indicated that in addition to the studies conducted, UNECA has reflected on the progress that has been made towards trade liberalization in the various RECs and how to build upon what has been achieved to support the CFTA negotiations.
The Chair of the Senior Officials’ meeting, Mrs. Nafisa Mohamed Ahmed, Ag. Undersecretary of Trade of Sudan, welcomed the delegations to the AU Headquarters and thanked the Department of Trade and Industry for the excellent organization of the meeting. She observed that the implementation of the CFTA will make goods and services more competitive and underscored that the CFTA will enhance production and investment and improve people’s lives in Africa. She concluded by requesting all participants to observe a minute of silence in solidarity with the families and the victims of the Mediterranean sea migrant shipwrecks trying to cross into Europe and ISIS attacks in Libya.
The current Senior Officials’ meeting will be followed by a Ministerial meeting from 14-15 May 2015. A press briefing will be held by H. E. Mrs. Fatima Haram Acyl, Commissioner for Trade and Industry on the 14 May 2015, after the opening session.
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Call for ‘robust measures’ to prevent aid abuse in Africa
Report commissioned by Trócaire says increasing role of private sector in international development requires clarity on rules of ‘trade for aid’.
Robust measures aimed at preventing Irish companies from becoming involved in human rights abuses in Africa are “urgently needed”, according to a report published today.
In recent years, the private sector’s role in international development, particularly through investment, trade and policy design, has increased and altered the traditional “aid” concept.
However, concerns for conduct of business in Africa generally has led to calls for further clarity on how Irish activity can be overseen.
A new report commissioned by Trócaire says that, given the increased emphasis on promoting Ireland’s economic interests in developing markets, “robust mechanisms for policy coherence for development and for the prevention of potential human rights abuses by private companies are urgently needed”.
While Ireland maintains a strong record in international development, a briefing paper published in conjunction with the report – Where Aid Meets Trade: Ireland’s role in the changing development landscape in Africa – says more needs to be done in light of the changing relationship with Africa.
“To ensure long term responsible investment of Irish businesses in Africa, the Irish Government must mitigate against the risk that Irish companies will become complicit in human rights violations by ensuring companies adhere to the highest possible standards of behaviour overseas,” it says, asking: “Where does the delivery of human rights fit within the drive to make profit for shareholders?”
Trócaire’s research is a response to a growing international focus on private sector for development, and seeks to “further explore to what extent Ireland is following these trends in its engagement in development and trade promotion”.
The notion of “win-win” relationships where both donor and country benefit from increased trade requires careful management. “Aid for Trade” is more likely to benefit donor exports.
Irish activity in the area has increased following the economic crash. Since 2011, annual Africa Ireland economic forums have been held in Dublin promoting networking and investment opportunities. Enterprise Ireland has opened offices in South Africa and Nigeria, while the Kenyan embassy reopened in 2014 “to accelerate the planned transition from ‘aid to trade’ in Africa”.
Trócaire estimates Irish business interests in Africa to be relatively small but it says trade is “significantly imbalanced in favour of Irish exports” by a ratio of just over two to one.
In 2013, there was a total of €3.2 billion in exports to the continent, representing 1.5 per cent of Ireland’s total exports of goods and 2.1 per cent of Ireland’s total trade in services. Imports of African goods here were less than half of that, at €1.25 billion.
While acknowledging Ireland’s “excellent reputation in promoting human rights internationally”, Trócaire’s paper, written by by Hannah Grene of Barncat Consulting, highlights a need for further diligence in specific areas.
Bribery in particular is of concern, Ms Grene’s report notes.
“The December 2013 report on Ireland of the OECD Working Group Against Bribery raised serious concerns about Ireland’s failure to prosecute a single case in 12 years under the legislation, and the undue length of time it was taking to investigate those cases which are currently open.”
That report also highlighted concerns that “many Irish business professionals may believe that some degree of unethical behaviour is permissible, if engagement in such activity helps them achieve business growth”.
“A first step would be to emphasise that bribery of foreign officials is an offence under Irish law, a fact which does not appear to be widely understood in the Irish business community.”
A Barclay’s Bank study found that 77 per cent of Irish businesses surveyed felt corruption was the biggest threat to doing business in Africa.
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Revised draft of the Outcome document of the Third International Conference on Financing for Development
In its resolution 68/279, the General Assembly requested that the first draft of the outcome document of the Third International Conference on Financing for Development (13-16 July 2015, Addis Ababa, Ethiopia) be prepared by the co-facilitators on the basis of informal consultations, taking into account inputs from Member States, and presented by February 2015, and that informal consultations and drafting sessions on the outcome document be held in January, April and June 2015.
Pursuant to their letter of 28 April 2015, the Co-Facilitators for the preparatory process of the Third International Conference on Financing for Development, H.E. Mr. George Talbot, Permanent Representative of Guyana, and H.E. Mr. Geir O. Pederson, Permanent Representative of Norway, presented the revised Draft Outcome Document on 6 May 2015 which, as agreed, will serve as the basis of further consultations from 11-15 May. The revised Draft is based on views and comments on the Zero Draft during the Second Drafting Session (April 13-17), the joint session on means of implementation with the Post 2015 Development Agenda process (April 21-24) and the written inputs received.
Revised draft, 6 May 2015
Action Agenda: International trade as an engine for development
We will continue to promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization (WTO). Such a trading system, as well as meaningful trade liberalization; can serve as an engine of inclusive economic growth, not least by encouraging long-term private and investment in productive capacities, reduce poverty and promote sustainable development. With appropriate supporting policies, infrastructure and an educated work force, trade can help promote employment, decent work and women's empowerment, reduce inequality and contribute to the realization of the SDGs.
We recognize that the multilateral trade negotiations in the WTO have progressed slowly, although we regard the approval ofthe Bali Package in 2013 as an important achievement. We reaffirm our commitment to strengthening the multilateral system, and we commit to building coherence between bilateral and regional trade and investment agreements and the multilateral system. We call on members of the WTO to fully and expeditiously implement the Bali Package, including the decisions taken in favour of LDCs and the work programme on small and vulnerable economies. WTO members in a position to do so should provide commercially meaningful preferences for LDC services and service suppliers in the context of the Bali decision on the LDCs services waiver. We note that the Agreement on Trade Facilitation is of particular importance for LLDC trade.
Since the Monterrey Consensus, developing countries have significantly increased their share in world exports. South-South trade in particular has increased, partly due to the development of global value chains. At the same time, LDC and LLDC participation in world trade in goods and services remains low and world trade seems challenged to return to the buoyant growth rates seen before the global financial crisis. We will endeavour to significantly increase world trade in a manner consistent with the SDGs, including exports from developing countries, in particular from LDCs, with a view towards doubling their share of global exports by 2020. We will integrate sustainable development into trade policy at all levels, including sustainable development provisions in both trade and investment agreements. We will assess the sustainability impact of our trade agreements and their impact on developing countries, particularly LDCs. We welcome relevant multilateral and plurilateral initiatives, such as the negotiation to liberalize trade in environmental goods and services. We strongly support engagement of SIDS in trade and economic agreements, taking into consideration existing special and differential treatment provisions, as appropriate, and taking note of the work conducted to date under the work programme on small economies of the WTO.
As a means of fostering growth in global trade, we call on WTO members to redouble their efforts to promptly conclude the negotiations on the Doha Development Agenda and to recommit to placing the interests and concerns of developing countries at the heart of these negotiations. We commit to combat protectionism. In accordance with the mandate of the Doha Development Agenda we will correct and prevent trade restrictions and distortions in world agricultural markets, including through the parallel elimination of all forms of agricultural export subsidies and all export measures with equivalent effect. We also commit to strengthen disciplines on subsidies in the fisheries sector, including through the prohibition of certain forms of subsidies that contribute to over-capacity and overfishing. We welcome the 2012 rules for WTO accession, and urge WTO members to commit to implement them in a way compatible with expeditious accession of all developing countries, in particular LDCs, engaged in negotiations for membership in the WTO.
Members of the WTO will implement the principle of special and differential treatment (S&D) for developing countries, in particular LDCs. We welcome the establishment of the monitoring mechanism to review and analyse implementation of specific S&D provisions, as agreed in Bali, including consideration of challenges faced by developing countries in utilizing those provisions. Given the unique and particular vulnerabilities in SIDS, we will support their further integration regionally and in world markets.
Members of the WTO will realize timely implementation of duty-free and quota-free market access for products originating from the LDCs on a lasting basis, consistent with WTO decisions. We will also take steps to facilitate market access for LDC products including by ensuring simple and transparent rules of origins applicable to imports from LDCs, in accordance with the guidelines adopted by WTO members at the Bali ministerial conference in 2013. We support 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 of vital importance for sustainable development, including public health, in particular to provide access to affordable essential medicines and vaccines for all. To this end, we would urge all WTO Members that have not yet accepted the amendment of the WTO TRIPS Agreement allowing improved access to affordable medicines for developing countries to do so.
We recognize the significant potential of regional economic integration to promote growth and sustainable development, and commit to strengthen regional cooperation and regional trade agreements and to ensure the consistency of trade and investment agreements with the multilateral system. We urge the international community to increase its support to projects and cooperation frameworks that foster regional integration and that enhance participation in global value chains, and call on MDBs, including regional banks, in collaboration with other stakeholders, to address gaps in trade, transport and transit related regional infrastructure, including to complete missing links connecting LLDCs within regional networks.
Recognizing that international trade and investment offers opportunities but also requires complementary actions at the national level, we call on all countries to ensure domestic enabling environments and implement sound domestic policies and reforms conducive to realising the potential of trade for sustainable development. Aid for Trade can playa major role in this aspect. We will increase Aid for Trade support and aim to allocate 50 per cent to LDCs provided according to development effectiveness principles, including through the Enhanced Integrated Framework for Trade-Related Technical Assistance to LDCs. We also welcome additional cooperation among developing countries to this end. Recognizing the critical role of women as producers and traders we will address their specific challenges in order to facilitate women's' equal and active participation in trade decision-making processes and structures.
We will carry out negotiation and implementation of trade and investment agreements in a transparent manner and ensure that trade and investment treaties do not constrain domestic policies for sustainable development. We will strengthen safeguards in investment treaties to ensure that the goal of protecting and encouraging investment does not affect the ability of countries to pursue public policy objectives and their right to regulate is retained in areas critical for sustainable development. We commit to support capacity building, in particular in LDCs in order to benefit from opportunities in international trade and investment agreements.
We also recognize that illegal wildlife trade, including fishing and logging, and illegal mining are a challenge for many countries and create substantial damage, including lost revenue. We agree to strengthen national regulation and international cooperation, and to enhance global support for efforts to combat poaching and trafficking of protected species, dumping of hazardous waste, and illegal trade in minerals, including by increasing the capacity of local communities to pursue sustainable livelihood opportunities. We agree to take actions to enhance and implement the monitoring, control and surveillance of fishing vessels so as to effectively prevent, deter and eliminate illegal, unreported and unregulated fishing, including through institutional capacity building.
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Land Policy Initiative Update: Steering Committee lauds progress, approves 2015 work plan
The Land Policy Initiative (LPI) Steering Committee met on Friday 8 May at the African Union Commission (AUC) and approved a consolidated work plan for 2015.
The Chair of the LPI Steering committee, mr Abebe H/Gabriel of the AUC Commission noted that for the first time since its inception in 2006, the LPI Secretariat has an annual work plan developed jointly for implementation with regional economic communities (RECs) and other regional partners.
Mr. Abebe, who also chaired a Joint Working Group on Land (JWGL) meeting on 6 May 2015 led other members in commending the LPI Secretariat for successful efforts over the past two years that have culminated in the mainstreaming of land governance in the work programmes of these institutions. He noted that this is essential to the successful implementation of the AU Declaration on Land Issues and Challenges at regional and national levels.
With the support of the European Union (EU) and the Swiss Agency for International Development Cooperation (SDC), the joint work plan will include land governance related activities in the realms of research and advocacy, capacity development, knowledge management, and monitoring and evaluation implemented jointly with the secretariats of four RECs: the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), Economic community of West Africa States (ECOWAS) and the Intergovernmental Authority for Development (IGAD).
The LPI will also implement joint capacity development activities with the African Institute for Economic Development and Planning (IDEP) and the Regional Center for Mapping Resources for Development (RCMRD). The Steering Committee encouraged the LPI Secretariat to expedite finalization of joint work plans and agreements with outstanding RECs and implementing partners to enhance the reach and impact of the entire land governance program.
Examining progress made during 2014, the Steering Committee commended the LPI Secretariat for expediting implementation of Committee decisions and the LPI 2014 Work Plan. The Committee pointed to the launch of the Guiding Principles on Large Scale Land Based Investments and the inaugural Conference on Land Policy in Africa as key highlights of a successful 2014 for the LPI Secretariat, the tripartite partnership of the AUC, ECA and AfDB and indeed the entire membership of the Steering Committee. The committee also appreciated the efforts of the LPI Secretariat in taking the initiative and partnering with the AUC and NEPAD Agency (NPCA) to mainstream land governance in the AU year of agriculture and food security, culminating in the Malabo Declaration on Accelerated Agricultural Growth and Transformation for Shared Prosperity and Improved Livelihood in June 2014.
“Land governance now forms part of the three components in the implementation strategy for the Malabo Declaration,” said Mr Abebe. He called on the LPI Secretariat to be vigilant in ensuring that land governance indicators formed part of its monitoring mechanism.
Mr. Stephen Karingi, Director of the Regional Integration and Trade Division, ECA thanked the Steering Committee for its strategic guidance to the LPI.
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Signing of US $3m grant agreement with ACBF
The African Capacity Building Foundation (ACBF) has extended US $3m grant to the African Union (AU) in support of its 3-year capacity building program, which aims to build and enhance capacities within its Commission for the implementation of the continent’s development programs.
The AU’s program, set to be implemented over three years (2015-2017) aims mainly to strengthen institutional capacity to ensure that partnerships and collaboration between the Commission, AU organs such as the NEPAD Planning and Coordinating Agency, Pan African Parliament (PAP) and strategic partners contribute to the successful implementation of the continent’s development programs.
Since the inception of the AU and despite remarkable progress made in advancing Africa’s development agenda, further progress is being hampered by capacity weaknesses and gaps within the Commission.
Supporting the strengthening of institutional capacity within the Commission is thus crucial to the success of Africa’s development programs. “Through partnerships such as the African Union and ACBF, there is a shared responsibility to achieve results and develop a critical mass of Africans to deal with capacity development issues at national and regional levels,” said Prof. Nnadozie, ACBF’s Executive Secretary. He, further added: “this signing does not come at a better time than today as the AUC prepares to implement its 3rd Strategic Plan and Agenda 2063 as well as review of the post-2015 Development Agenda. We are happy to pursue our close collaboration with AUC to make the implementation of this project a resounding success and contribute to the capacity development in Africa.”
From her side, H.E. Dr. Nkosazana Dlamini Zuma, Chairperson of the African Union Commission, expressed appreciation to the long historical partnership and support from ACBF. She acknowledged their commitment to the continent and for accepting the responsibility of bringing their capacity into the discussions around implementation of Agenda 2063. “The Commission relies not only on the grant support, but also on the expertise and capacity that ACBF is able to bring into the discussions, as we look at the initiatives on implementation of Agenda 2063” she stated. “It is important for Agenda 2063 that we look at division of labor between the RECs and AU so that efforts are not duplicated”, added the Chairperson of the Commission.
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Namibia, EU ready to sign EPA
The European Union and Namibia have wrapped up negotiations for the Economic Partnership Agreement (EPA), and are expected to sign the agreement later this year as the EU builds on its involvement with Namibia.
This was revealed by the Head of the EU Delegation to Namibia, Ambassador Raúl Fuentes Milani at a reception marking the European Day celebrations held at the EU Residence in Windhoek on Friday last week.
“We have finalised negotiations and are ready to sign sometime this year,” said Milani adding that the cooperation, once officially announced, would “open a new page in economic relations.” The EU and Namibia, together with other SADC countries, have been negotiating the EPA since 2007, and although initialised, Namibia is one of the countries that have not signed the EPA citing differences on key issues of export taxes, safeguarding measures on agricultural products and rules of origin.
“The idea is to change the current situation, based on un-bilateral concessions by the EU, into a bilateral understanding,” said Milani on the new direction of the EPA.
Despite economic and trade agreements, the EU head says there is a lot of scope for cooperation on issues of international relations, as many of the goals that Namibia aim for in international relations are also in the EU’s focus.
“Namibia is an efficient and respected actor. Namibia’s credentials in the fight against colonialism and apartheid, together with its attachment to international law principles, are a worldwide reference and precious to EU member states. We believe that Namibia has a lot to say in international relations,” said Milani.
Further, Namibia and the EU would soon sign a new ‘National Indicative Plan for Namibia’ document that charts development cooperation for a period of five years from 2015 to 2020.
“Our focal sectors will be the support to early childhood development and pre-primary education in Namibia, and the rural economy, more particular the livestock value chain in communal lands,” said Milani, adding that the National Indicative Plan would also support civil society.
The National Indicative Plan will be fully coordinated with other European donors under the Joint EU Development Strategy for Namibia, which was adopted last year.
“No overlaps. No waste of resources, full alignment along Namibia’s development priorities. We want to support Namibia’s development as the Namibian government sees it. And we are here to stay,” said Milani.
He said that emerging investment opportunities both in Namibia and Europe, access to new markets and the exchange of skilled labour would make the Namibia-EU partnership more equal.
“Today the European Union (EU) and its member states are Namibia’s main trade partners, main development partners and a trusted political partner,” he said.
Fuentes further noted that 2015 is a special year for Namibia, citing the country’s 25th independence celebration and peaceful transferring of power from the second president Hifikepunye Pohamba to the current and third President of Namibia, Dr Hage Geingob.
“Namibia has been able to live up to its founding principles, such as reconciliation and the protection of human rights, to become a functional democracy which enjoys sustained growth and peaceful relations with its neighbours.”
“Since the first days after independence, we have worked together in the areas of development cooperation, trade, investment and people-to-people contacts,” he added.
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Relief as shippers, clearing agents move to establish a regional logistics platform
The cost of doing business within the East African community and Rwanda in particular could be further be reduced, thanks to the establishment of the East African Freights and Logistics Platform.
The platform seeks to promote dialogue on national and regional logistics with the aim of enhancing competitiveness by reducing the cost of logistics, John Bosco Rusagara, the Chairman Rwanda Shippers’ Council, told Business Times.
It is also expected to contribute towards improving the quality of logistics services through a multi-sectoral collaboration of key logistics players, including government agencies as well as the Private Sector, Rusagara said.
He was speaking during the Rwanda logistics stake holders’ forum organised by the Private sector Federation (PSF) in Kigali, last week.
Government last year announced that it was going to construct logistics hubs at the Mombasa and Dar es Salaam ports and a dry service port (Kigali logistics hub) in Kigali, besides upgrading the air cargo facility at the Kigali International Airport.
The government has also been discussing with investors from Singapore to establish a logistics fund to finance local businesses in the sector.
All these efforts seem to have received a timely shot, as stake holders begin discussing the creation of a regional freights logistics platform that will help lobby for the national logistics platform at a regional level.
Overall Objective
According to Hannington Namara, the Rwanda country manager Trademark East Africa, the objective is to try and improve Rwanda’s business competitiveness through efficient freight logistics services and facilitate the ease of doing business in the region.
It will also play a key role in the elimination of trade barriers thus resulting into a reduction in the cost of trade.
This will result into efficiency in customs and border clearance procedures, improved quality of trade and transport infrastructure across the region and Rwanda in particular, Namara noted.
The cost of shipping a container from sea ports to Kigali is still high at $4,200 and $5,000 in Dar es Salaam and equally $2000 and $5000 on the northern corridor.
This has mainly been due to lack of a coordinated approach towards addressing non-tariff barriers (NTBs) which has affected the region’s competitiveness.
However, with the platform in place Dr. Peter Kiriri TMEA’s Strategic Management and Monitoring and Evaluation Expert, believes trade among partner states will greatly improve thus increasing the region’s competitiveness.
“By putting in place competent and quality logistics services, it opens more trade opportunities for Rwanda and partner states. The ability to track and trace consignments and frequency with which shipments reach the destination within scheduled or expected delivery times, is key to trade and economic development in the region,” Kiriri told shippers.
Dieudonne Dukundane, TMEA’s logistics director, said the overall objective is ascertaining the logistics performance of EAC Partner states and drive the sector towards efficiency and transparency.
Dukundane said that the other objective is to promote fair trade and transparency in customs procedures,.
Priority issues waiting the platform
According to Dukundane, this particular platform will have to deal with the inefficiencies along trade and transit freight forwarders corridors, delays in the movement of goods, challenges in implementation of national and regional laws, and harmonisation of documentation requirements by customs in the central and northern corridors
Other challenges are security of goods and personnel in the corridors, congestion at the ports and border points, customs procedures and delays at transit points and ports.
And for the platform to effectively have any economic impact on trade, Fred Seka, chairman, Rwanda Freight Forwarders Association, noted that more focus will have to be on intensive advocacy especially on customs delays, unfair container deposit fees, corruption and extortion along the transit routes and inconsistent freight rates.
Current status
Currently different stakeholders pursue their own agenda with no concerted effort to address the issues and challenges faced by shippers and clearing agents, Dr, Peter Kiriri, a senior trade consultant Trademark East Africa said.
“In Rwanda and East Africa the logistic services are fragmented and lack a unifying platform from which they can share best practices, develop a coherent and unified advocacy agenda while exploiting the country’s and region’s collective bargaining strength,” Kiriri told Business Times.
Theobald Byaraje, the president Rwanda, Transporters Association is equally confident the platform will foster best practices in the freight logistics industry thus reducing the cost of doing trade.
This will result into increased competitiveness and efficiency through shared responsibility, stake holder awareness, and participation.
Issues for stakeholders to address
The Rwanda Shipper’s Council, importers and clearing agents will now have no choice but to participate in the identification of the platform stakeholders and their roles and come up with the scope of dialogue.
But before that can happen Fiona Uwera, the PSF’s head of research and policy analysis says sector players will have to work around the clock in identifying the framework of platform engagements, the structure and organization/organs of the platform.
They will also have to come up with platform committees and working groups who will take a center in it’s management, she said.
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The Ebola crisis: Implications for trade and regional integration
In addition to the severe effects of Ebola, the virus has implications for trade, investment, and regional integration in West Africa. What can be done to revitalise trade in West Africa in a post Ebola context?
The outbreak of the Ebola virus in parts of West Africa has been widely declared a threat to peace and security and a public health emergency by international organisations. By February 2015, nearly 23,000 people had been infected and more than 9,000 people had died from the virus, almost all of them in the three worst-affected countries – Liberia, Sierra Leone and Guinea. The devastation wrought on these three countries has been incalculable, not just in human terms but in terms of social dislocation and economic impacts. This article examines the broad economic impact on the three main affected countries and the implications for trade, investment and regional integration in Ebola West Africa.
Closed borders, transport and connectivity
To contain the epidemic, the affected countries had closed their own borders with each other and most of their neighbours. Many countries within Africa banned citizens from the three countries from entering their borders as well as travellers who had been to the affected areas. The majority of airlines stopped flights into the affected countries, mostly to Liberia and Sierra Leone. Only two airlines, SN Brussels and Royal Air Maroc, continued flights to these countries, although more airlines have since resumed flights.
Concerns about the spread of Ebola through cargo movements have been disruptive, with increased scrutiny on cargo shipments from West Africa and screening crew members for possible infection. Despite these concerns, the ports remain open and sea traffic continues to provide a crucial channel for trade.
Visitors from Africa and further afield have, however, avoided the region for fear of contamination, resulting in reduced demand for hotels, airlines and service providers with links to international business. Sub-Saharan Africa has suffered to a lesser degree from an ‘aversion’ and branding impact from outside the continent, with cancellation of conferences, holidays and a slowdown in business activities, particularly in hospitality and aviation.
Economic and fiscal impacts
Liberia, Sierra Leone and Guinea are all least developed countries (LDCs) that confront extreme poverty and socioeconomic challenges. Although these countries experienced high growth rates in recent times, buoyed by favourable commodity prices and post-conflict assistance, the gains of the past decade are being quickly eroded due to the current Ebola crisis notably. The World Bank has estimated the virus has cost these nations more than US$2 billion over 2014-15. Since mid-2014, the three affected countries have experienced flat or negative income growth.
The World Bank has further lowered the prognosis for 2015 on the basis of continuing new infections, second-round effects and investor aversion: -0.2 percent in Guinea, 3 percent in Liberia and -2.0 percent in Sierra Leone (down from pre-Ebola estimates of 4.3 percent, 6.8 percent and 8.9 percent respectively). The World Bank also estimates foregone income in 2015 of about US$1.6 billion: US$540 million in Guinea, US$180 million in Liberia, and US$920 million in Sierra Leone. This is more than 12 percent of their combined GDPs.[1]
Multinational companies operating in the three most affected countries have pulled back new investment (especially mining, oil and gas), repatriated many foreign workers, and cut production of critical revenue generating exports. Their economic plight has been exacerbated by the simultaneous drop in iron ore prices on international markets, adding to the revenue woes of these mining economies.
Tax collection has been identified as another major fiscal impact. According to the World Bank, tax revenues in Sierra Leone for the 2014/15 fiscal year, initially projected at US$399 million, could be $40 million lower. Money earmarked for capital spending has largely been diverted to recurrent spending on the Ebola crisis.
International and regional trade
The combined impact of Ebola and falling commodity prices from their peak a few years ago makes it very difficult to project the impact of the epidemic on the affected countries’ current and future trade performance. According to UNCTAD data, over the past decade Sierra Leone has steadily increased its trade from US$158 million in 2005 to US$341 million in 2010, soaring to US$1.917 billion in 2013. Much of this has been accounted for by foodstuffs and ores and metals destined for China. Sierra Leone’s exports grew remarkably by 220 per cent in 2012 and 70.9 per cent in 2013 reflecting favourable commodity prices.
Sierra Leone, for example, also confronts the challenge of diversifying its economy to take advantage of the various trade preferences offered to LDCs, notwithstanding their diminishing value. Sierra Leone also qualifies under the African Growth and Opportunity Act (AGOA), although its export performance under this scheme has been weak. Sierra Leone’s advantage in terms of producing ginger, cashews, textiles and garments could still be exploited for export to the USA. AGOA expires in September 2015 but is expected to be renewed, perhaps with some new conditions.
Regional trade in West Africa is largely informal and beset with considerable insecurity to traders and goods from corrupt law enforcement agencies or cross-border gangs or syndicates. The insecurity of traders is compounded by inadequate border infrastructure (such as warehousing facilities and reliable transport) and that traders often do not have valid travel documents or certificates of origin for their wares. Overall, aggregate levels of intra-regional trade are typically low relative to other regions of the world economy due to the prevalence of trade barriers, undiversified and underdeveloped production structures and poor infrastructure. According to UNCTAD data, in 2007-2011 the share of regional trade of the 15-member ECOWAS was only 9 per cent, down on previous years.
Regional integration in West Africa is progressing. In January 2015, ECOWAS launched the long-awaited common external tariff (CET). It is too early to say what the effects of the new CET will be but there are fears it may push up the price of basic household goods in these import dependent countries. Although the CET includes protection for agricultural products, it raises the tariff on rice, which is zero in many countries, to 10 per cent with a view to increases over time. However, this may also provide a regional export opportunity for rice producing countries in the region, which include the Ebola-hit economies. There are other examples of trade policies that may, if carefully negotiated and managed, form part of the post-Ebola strategy.
Ironically, this deepening of regional integration comes at a time when the region has shut down borders and is focusing more than ever on national priorities. The Ebola-induced suspension of formal and informal intra-regional trade in goods and services could lead traditional West African trading partners to seek alternative suppliers, even from outside Africa, thereby undermining regional integration and potential trade-led regional value chains in ECOWAS.
Conclusion: Post-Ebola West Africa
The economic impact of the virus on West Africa is continuously being assessed.[2] ECOWAS is projecting a regional growth rate of more than 6.4 percent in 2014, rising to 7.1 percent in 2015, largely discounting the Ebola effect but also based on a prediction of the epidemic ending by 2015. The three worst-affected countries are among the smallest economies in the region, accounting for about 2 percent of ECOWAS GDP compared to, for example, Nigeria, which accounts for more than 60 per cent. The growth projections do take into account the limited Ebola effect on Nigeria, Ghana and Côte d’Ivoire – the biggest regional economies, which are still trading with each other.
With these fragile countries now starting to look at post-Ebola recovery even as they continue to tackle new infections, there may be some light at the end of the tunnel. Already the International Finance Corporation has committed a financing package of US$450 million to stimulate private sector recovery, trade and investment in Liberia, Guinea and Sierra Leone. Similar efforts are likely to come from other agencies as the medical spending starts to wind down, barring no new Ebola frontiers emerging. Liberia is so confident it has beaten the epidemic that it announced the lifting of a night-time curfew and the opening of the borders in late February 2015.
The full impact of the virus on the three economies is still largely speculative and growth projections are estimates only. To date it is safe to say the worst-case scenarios for the countries concerned will be realised in terms of lost growth, productivity, trade and other issues. Proper recovery is only expected to gain traction in 2016, with another year of economic crisis still ahead.
There are not only issues of rebuilding the economies, but of building trust between people, governments and investors. The branding effect of Ebola may last a lot longer than the contagion, with foreigners from both within and outside Africa wary of the region for some time to come for fear of another outbreak. Assuming there is no spread of the virus into larger economies and it remains contained, the medium-term prognosis for the region may still be positive.
Dianna Games is Chief Executive, Africa @ Work, Johannesburg, South Africa; and Brendan Vickers is Economic Adviser, International Trade Policy Section, Commonwealth Secretariat, London. The views expressed in this article are those of the authors and do not necessarily represent those of the Commonwealth Secretariat.
This article is published under Bridges Africa, Volume 4 - Number 4 by the International Centre for Trade and Sustainable Development.
[1] World Bank, ‘The Economic Impact of Ebola on Sub-Saharan Africa: Updated Estimates for 2015’, paper prepared for the World Economic Forum in Davos, 20 January 2015
[2] See UNECA, Socio-Economic Impacts of Ebola on Africa (revised edition), Addis Ababa, Ethiopia, January 2015.
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AU-RECS-UNECA-AfDB Coordination Committee convenes on Implementation of Africa’s Agenda 2063
The Chairperson of the African Union Commission H.E. Dr. Nkosazana Dlamini Zuma, has called for a more dynamic relationship between the African Union Commission and the Regional Economic Communities (RECs) in the implementation of Africa’s Agenda 2063.
This came while the Chairperson was chairing the Coordination meeting of the African Union Commission (AUC), RECs, the United Nations Economic Commission for Africa (UNECA), and the African Development Bank (AfDB), held on Monday 11 May 2015, at the African Union headquarters in Addis Ababa.
The coordination meeting is an important working mechanism, to jointly strategize and check on progress on the organizations’ common mission, i.e. the integration and development of the continent. Today’s meeting addresses a number of issues on the implementation of Agenda 2063, including the First Ten Year Plan of Agenda 2063, allocation of roles and responsibilities between the AUC and RECs in implementing Agenda 2063, assessment of risks, the Agenda’s flagship projects and the way forward. It also follows-up on the recommendations of the previous Coordination Committee meeting that was held in Johannesburg, South Africa on 12 December 2014.
Speaking during the opening session of the meeting, AUC Chairperson Dr. Nkosazana Dlamini Zuma said that the empowerment of women and young people remains central, and since the continent is celebrating 2015 as the Year of Women, looking at the concrete actions to change the lives of African women and girls everywhere is very important.
The Chairperson highlighted the fight against Ebola as an example of what can be achieved through collaboration between the different parties. She lamented the effect of the conflict in South Sudan on its women and children and the deaths of hundreds of African migrants in the Mediterranean Sea.
On the progress in the implementation of Agenda 2063, Dr Dlamini Zuma disclosed among others, that 12 AU Member states have asked for the Commission’s support with the domestication of Agenda 2063.
Speaking on behalf of their organisations, Dr Abdallah Hamdook, Deputy Executive Secretary of the UNECA and Dr Sindiso Ngwenya Secretary General of COMESA who also spoke on behalf of the other RECs, both pledged support and collaboration in the implementation of Agenda 2063.
The meeting was attended by high officials from; AUC, UNECA, AfDB, the Common Market for Eastern and Southern Africa (COMESA), Economic Community for West African States (ECOWAS), Southern African Development Community (SADC), Economic Community of Central African States (ECCAS), Community of Sahel Saharan States (CEN-SAD), East African Community (EAC), and the Inter-Governmental Authority on Development (IGAD).
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EAC countries develop 5,000 standards to ease regional trade
The East African Community (EAC) Secretariat is set to introduce 5,000 new standards to ease the movement of goods and services.
Some of the new standards include seeds standards on maize, soya beans, sunflower, sorghum and groundnuts.
Such standards will help address challenges of fake seeds in the market when implemented by producers and government.
Other standards will be on sugar and sugar products such as chewing gum, liquid glucose used in industry, molasses, sugarcane and sweets.
These will help facilitate trade in the region.
Experts say the new standards could be an answer to the puzzled private sector whose products have been traded for more than 10 years but have no national standards.
EAC Secretary General, Dr Richard Sezibera, said: “Currently, EAC has 1,500 standards and we are bringing on board 5,000 more. We urge member states to domesticate them at the national level.”
Missing national standards
However, absence of national standards has hindered highly demanded products from enjoying the regional market.
The products mostly affected are ladies’ beauty products and the companies which have gone through this trial are Movit and Samona.
Mr Emmy Musasirane, the Movit director, in his submission, said: “We want the authorities to come up with provisions within the law to address the issue where a standard is not harmonised but a product has been in trade the country of origin for more than 15 years.”
He called for a special consideration which is acceptable by the other partner states, “We have written a letter to Uganda National Bureau of Standards (UNBS) who are responsible for standards but up to now, we don’t have a national standard of those products yet we have invested heavily and have been trading in such products for the last 15 years. ... What do we do?
There is provision that if they have restructured the products we have been trading in for the last 15 years and we have the machines, you cannot trade in such products but they have not given us a solution.”
Mr Sezibera asked the private sector to notify the secretariat if products are being blocked from accessing markets in other member countries to allow it solve the riddle.
If there is no national standard and no East African standard, it means products cannot move.
“There is urgency for these products to have their respective national standards to allow them move across the region,” Mr Sezibera urged.
He called for mutual recognition of products from the different member states.
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Strengthening the private sector to boost continental trade and integration in Africa
Africa needs a dynamic and vibrant private sector to seize existing opportunities in the trading system, says an UNCTAD Policy Brief. The document identifies some key elements of a credible policy package to promote private sector development and boost intra-African trade.
Regional trade has the potential to contribute to sustained growth, poverty reduction and inclusive development. It has played this role effectively in several countries in Asia and Latin America. But in Africa, the expected results have been slow to come to the fore.
Of the many factors that account for this situation, the weakness of the African private sector is paramount and needs to be understood and effectively addressed.
Key points
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African Governments should create more space for the private sector to play an active role in the regional integration and development process.
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Making regional integration work for Africa requires improving infrastructure, enhancing access to credit, facilitating cross-border trade, developing workforce skills, strengthening mechanisms for consultation with the private sector, and maintaining peace and security.
This policy brief draws heavily from the UNCTAD Economic Development in Africa Report 2013, subtitled Intra-African Trade: Unlocking Private Sector Dynamism.
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African Trade Experts meet to finalize the draft documents prior to the launch of the Continental Free Trade Area (CFTA) negotiations
The three-day Experts’ Meeting segment of the African Union Ministers of Trade (AMOT) opened on Friday at the African Union Headquarters in Addis Ababa, Ethiopia. The objective is to finalize preparatory draft documents for the launch of the Continental Free Trade Area (CFTA) negotiations scheduled for June during the 25th African Union Summit in Johannesburg, South Africa
The meeting is attended by the Member States, the Regional Economic Communities (RECs), the United Nations Economic Commission for Africa (UNECA), the United Nations Conference on Trade and Development (UNCTAD), the African Development Bank (AfDB), the Department for International Development (DFID), the Pan African Quality Infrastructure (PAQI) and regional Private Sector organizations.
During the Meeting, Experts will consider a number of essential technical documents that will enable the Assembly to launch the CFTA negotiations in June 2015 as scheduled. These documents are as follows: Draft Objectives and Guiding principles for the negotiations of the CFTA, the Draft Terms of Reference of the CFTA Negotiating Forum (CFTA-NF) and the Draft Roadmap and schedule for the CFTA Negotiations. In so doing the various studies commissioned by the 9th Conference of Ministers of Trade (CAMOT-9) held in December 2014 in Addis Ababa, to be presented during this meeting, will enable the Experts to recommend the best options towards the establishment of the CFTA to the Senior officials.
In her opening statement, the Director for Trade and Industry of the African Union Commission, Mrs. Treasure Maphanga, recalled the advantages of a CFTA built on best practices of the continent and pointed out to the Experts that the CFTA is a flagship project of the African Union Agenda 2063. “The establishment of the CFTA will significantly accelerate growth of Intra-African trade and allow us to use trade more effectively as an engine of growth and sustainable development and fight against poverty and underdevelopment in the continent. It is our responsibility as trade experts to facilitate a process that will expand trade and investment opportunities for African businesses, farmers, workers and the peoples of Africa in general and provide win-win outcomes for partnerships with foreign investors” she said.
The Director further insisted: “Through the CFTA, we can enhance trade liberalization and facilitation issues at the borders, improve the doing business environment ‘behind the border’and facilitate harmonization of policies ‘across the border’”. She also explained that the studies prepared for this meeting would provide useful insights in finalizing the key documents for the launch of the CFTA negotiations. She thanked Member States for their commitment and their goodwill to make progress on the regional integration agenda and thanked development partners for their continued support. Mrs. Maphanga finally, urged the meeting to design a CFTA that promotes the development of regional value chains and that is a lever in developing productive capacity in Africa.
The Chair of the Experts’ meeting, Mr. Mohammed Elmutaz Sir Elkhatim Ismaiel, welcomed the delegations to the AU Headquarters and thanked them for the honour bestowed upon him to preside over the meeting on behalf of the Republic of Sudan and East Africa. He requested all participants to observe a minute of silence solidarity for the victims in the Mediterranean seas and of ISIS attacks in Libya. He concluded by urging the meeting to examine in-depth the draft documents submitted so as to facilitate the work of the Senior Officials and Ministers.
The Experts’ meeting will be followed by a Senior Officials meeting from 11-13 May 2015 and a Ministerial meeting from 14-15 May 2015
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AfDB’s new fund paves the way for climate finance readiness in Africa: Africa Climate Change Fund Annual Report
Launched in April 2014 with a EUR 4.725 million contribution from Germany for an initial three-year period, the African Development Bank-sponsored Africa Climate Change Fund (ACCF) is working to address underlying challenges currently preventing many of the region’s countries from accessing the climate finance they require for engaging in climate smart development.
According to the ACCF Annual Report 2014, released on Friday, May 8, the goal of the Fund is to support regional member countries in their transition to climate resilient and low carbon development through technical assistance which will help them use funds received more efficiently, track climate finance flows, implement climate resilient and low carbon strategies, build resource efficiency and resilience, and develop relevant investment plans and projects. In the medium-term, the Fund will also co-finance sector-related projects, serve as a knowledge bank, and provide relevant capacity building.
Speaking on the release of the report, Kurt Lonsway, AfDB Manager for Environment and Climate Change, said, “In its first nine months of operation alone, the ACCF Secretariat was formed, operational guidelines were prepared, and a communication strategy was devised and implemented. In July 2014, the first call for proposals specifically dedicated to climate finance readiness projects was launched.”
Following screening and pre-selection of the 362 proposals received by the ACCF Secretariat, the pool was narrowed down to 22 proposals based upon a variety of factors including alignment with ACCF and Bank objectives and the project’s alignment on the scope of the call for proposals, in addition to the extent and measurability of development outcomes. More than half of the selected proposals came from ministries or national agencies, while regional organizations, African research institutions and African NGOs and AfDB comprised the remainder. “This first ACCF call for proposals was a great success and demonstrates the need for additional resources to be made available to African countries in their quest to transition towards climate smart development,” said Florence Richard, ACCF Coordinator.
The Report noted that moving forward, the ACCF Secretariat will work with these beneficiaries to fine-tune their proposals with the goal of approving as many projects as possible by the end of 2015, while it will continue to work with donors and other partners to attract additional funding to transition the Fund into a multi-donor trust fund and expand activities beyond climate finance readiness.
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South Africa and Mauritania strengthen bilateral economic relations
South Africa and Mauritania have committed to enhance the Bilateral Economic Relations. The commitment was made in Pretoria on Friday where the Minister of Trade and industry, Dr Rob Davies and the Mauritanian Minister of Commerce, Industry and Tourism, Ms Naha Mint Hamdi Ould Mouknass signed a Memorandum of Understanding (MoU) on Economic Co-operation. This will enable the two countries to explore trade and investment opportunities in the energy, mining, transport and communication infrastructure, agro-processing and tourism sector.
Minister Davies said the MoU on Economic Co-operation demonstrates the eagerness by both the governments of South Africa and Mauritania to strengthen bilateral economic relations. The MoU is in line with South Africa’s broad economic engagement framework for Africa.
“The primary aim of this MOU is to achieve mutual economic growth and development in a bid to accelerate regional and continental economic integration. We as government are striving to create a conducive business environment by removing impediments which affect business transactions between our business communities. The MoU is also aimed at facilitating economic activity between the two countries through business forums in economic sectors of mutual interest,” said Davies.
He urged the business community and state agencies to take full advantage of the MOU and to explore partnerships and joint ventures for the mutual benefit of their respective markets.
Davies added that there was a need to encourage and accelerate intra-Africa trade and investment by removing non-tariff barriers and lowering transaction costs, amongst others.
“We also need to create a conducive environment for the business community through the simplification of our domestic regulations,” emphasised Davies.
Mauritania Minister Ould Mouknass described the MoU as evidence of the will and commitment to allow both countries to stimulate commercial relations among businesspeople, industries and different sectors.
Trade between South Africa and Mauritania has been inconsistent during the period 2010-2014, recording several fluctuations in the total trade volumes. During the period 2010-2011 trade between the two countries doubled in terms of volume, increasing by over 50% to reach its highest of R440 million over the five year period.
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Southern Africa to commission 2,763MW new generation capacity
Southern Africa plans to commission new projects that will add 2,763 megawatts to the regional grid this year as the region targets to meet its energy needs by 2018.
Of the planned capacity from the 13 projects being undertaken in six SADC Member States, the majority will come from South Africa where at least five projects are targeted for commissioning this year, producing an additional 1,828MW for the regional grid.
According to the Southern African Power Pool (SAPP) Coordination Centre manager, Dr Lawrence Musaba, another significant contribution to the regional power grid is expected to come from the Democratic Republic of Congo, which is due to add 430MW this year.
Coal will contribute the largest share of the new generation capacity in South Africa, with the coal-fired Medupi Power Station expected to have additional capacity of 738MW by the end of this year.
With regard to the regional target of increasing the uptake of clean energy, about 45 percent of the planned new capacity for 2015 is expected to come from renewable energy sources.
The uptake of renewable energy follows a resolution made in 2012 by southern African countries to increase the uptake of cleaner energy sources that result in reduced carbon emission.
The long-term target set by regional energy experts is that SAPP should achieve a renewable energy mix in the regional grid of at least 32 percent by 2020 and 35 percent by 2030.
In addition, gas is becoming a major contributor of energy in the region as five of the projects to be commissioned are gas-fired, with South Africa expected to contribute 435MW from cogeneration capacity between the national power utility ESKOM and an Independent Power Producer (IPP).
This year will witness a major share of planned capacity coming from IPPs who contribute about 32 percent of new generation.
For example, new power to be commissioned in Zimbabwe and Mozambique will be produced by IPPs.
Zimbabwe has four notable IPP hydropower stations, one of which – the Pungwe – is expected to be commissioned this year and contribute 15MW to the power grid.
The Ressano Garcia and Kuvanianga power stations in Mozambique are also run by IPPs and are expected to add 175MW and 30MW respectively to the regional grid.
According to SAPP, southern Africa plans to commission 24,062MW of power between 2015 and 2019 if all proposed projects come on stream.
This development will see the region finally meeting its power needs after several years of shortages.
Since 2007 the region has been facing challenges in meeting its energy requirements, forcing most SADC Member States to implement demand-side management policies such as load shedding that have to some extent succeeded in restraining overall electricity demand in the region.