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Concert among SADC ruling parties may speed up regional integration
The Vice-president of MPLA, Roberto de Almeida, admitted on Wednesday in Luanda that the Parliamentary Groups of the Forum on the ruling parties in SADC countries, whose institutionalization might happen during this second meeting, may contribute to the integration of the Southern African region.
The politician said so when speaking to the press at the end of an audience granted to the representatives of parliamentary groups of political parties in power in Mozambique, South Africa, Namibia, Democratic Republic of Congo, Zimbabwe, Zambia, Swaziland and Seychelles, who are in Luanda to attend the Forum, opened on Wednesday.
Roberto de Almeida, who said to have made a portrait of the MPLA's activity at this moment, argued that under the parliaments there are bodies that accompany economic activity and boost through various laws, the integration of Southern Africa.
He stated that the MPLA is engaged, through the Executive, in assuming its responsibilities within the framework of the Southern African Development Community (SADC), but there are still some assumptions to be met to sign the agreement establishing a regional cooperation in trade, industry and other fields.
“We cannot immediately integrate this framework, but we are making efforts to integrate the SADC economic terms by 2017”, said the MPLA official, who reaffirmed the desire to strengthen the friendly relations and cooperation among the SADC ruling parties, with a view to economic integration, one of the main objectives of the regional organization.
During two days, the forum is discussing “Policies of Economic Integration in SADC”, “Conflicts Prevention and Resolotion”, “Democracy and Development in the Region”, “Legal Framework of Integration and SADC Body” and “The Movement of People and Goods and their Constraints in SADC”.
Experts of the parliamentary groups of the ruling parties in Southern Africa will approve “Luanda Declaration”, as well as the institutionalization of the Forum, as a space of dialogue and concert of ideas on pressing problems affecting about 220 millions of inhabitants in the southern Africa.
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How mobile money is saving Africa $2bn annually
Mobile phones have proven to be potential game-changers in boosting access to financial products and services to people in Africa. This is particularly true for those at the bottom of the socio-economic pyramid as seen in East Africa. It has often been appraised based on its contribution to ‘banking the unbanked’, but mobile money has achieved much more, it has saved the continent nearly $2 billion previously lost annually to inefficient money transfer.
UK-based think thank, Overseas Development Institute (ODI), in a 2014 report noted that Africans in diaspora pay an average of 12 percent to money transmitters to send $200 home. This is a far-cry from the global average of 7.8 percent and more than double the 5 percent target set by the G8. “These excess fees cost the African continent $1.8 billion a year; enough money to pay for the primary school education of 14 million children in the region.”
Why Africa pays so much
Weak competition, concentration of market power and flawed financial regulation all contribute to high remittance charges, according to ODI.
Western Union and MoneyGram are the two leading money transfer operators (MTOs) that account for two-thirds of remittance transfers, and ODI estimates that both will account for $586 million of the loss associated with the remittance ‘super tax’, part of it through opaque foreign currency charges. ‘Exclusivity agreements’ between MTOs, their agents and banks also restrict competition and make prices jump.
However, WorldRemit, a UK-based company founded by a Somalian, is providing much-needed petition.
“With fair and transparent prices, we are challenging the “Remittance Super Racket” of incumbent money transfer companies in Africa which continue their practices of agent-exclusivity arrangements and charging unreasonable fees. We are embracing mobile money as new technology that is set to revolutionise banking from the ground up and make money transfers more convenient for everyone,” CEO & Founder of WorldRemit, Ismail Ahmed said in an interview.
Ahmed, who founded the online money transfer service in 2010 aims to use technology to shake-up the industry, which he considers stagnant. “By taking the industry online and refusing to engage in anti-competitive practices, we are bringing fairer, lower cost remittances to Africa.”
Years of experience working with a number of remittance businesses, as well as international policy makers has taught him that mobile money is a technology that addresses an important human need; access to financial services. With this at the back of his mind, he partnered with EcoCash and MTN to enable instant transfers to the telcos’ mobile wallets. The company is also close to launching instant mobile money transfers to EcoNet in Burundi. More than 50 percent of Worldremit’s transfers to Africa are currently received as Mobile Money or airtime top-ups.
Why is remittance important to Africa?
Money sent home by friends and relatives working abroad are critical to the survival of many in rural communities within Africa. Without a decent job or money-making trade, many rural dwellers depend on handouts to cater for domestic bills.
This has made the innovative transfer service popular within Africa. The continent received $32 billion in 2013 and is expected to receive more than $40 billion by 2016. Somalia is heavily dependent on remittances. Money sent home by Somali Americans to Mogadishu is estimated to hit $215 million annually. This accounts for about 4 percent of the country’s GDP.
Remittance flows to sub-Saharan Africa
Data from World Bank Migration and Remittances Data
According to Jonathan Scanlon of Oxfam America, remittances to Somalia is the largest and most important financial flow going into the country. “It really is a lifeline for the country.”
Nigeria, Africa’s largest economy also depends on remittances for foreign exchange. Money transfer, mainly from North America and Europe, makes up the country’s second highest foreign exchange earner. The country is also Africa’s top remittance recipient, accounting for around two-thirds of total remittance inflows to Sub-Saharan Africa. Remittance to Nigeria is recorded at $21 billion for 2014 alone.
While making a case for donor agencies to restructure the way aids are channelled for more efficiency, Hong Kong-based Ghanaian academic Adams Bodomo claimed that Africans living outside the continent send more money home than what traditional Western donors send as Official Development Assistance (ODA).
Africans in the diaspora have recognised the importance of the money they send home to their families are. With mobile money proving to be a more effective means of transferring funds home, they are increasingly adopting the service.
A GSMA report for 2014 highlights that “2014 saw a steep increase in the number of international remittances via mobile money, primarily driven by the introduction of a new model using mobile money as both the sending and receiving channel”.
Banking the unbanked
Mobile money continues to expand the reach of financial services in highly unbanked Africa. According to Frans Prinsloo, Managing Director at Hollard International, South Africa’s largest privately-owned insurance group, “The rapid uptake of mobile telephony, the introduction of smart phones and cloud computing, and the availability of affordable data have forever changed the financial services landscape.”
Today, the number of active Mobile Money accounts globally now exceeds 100 million and sub-Saharan Africa accounts for more than half (53 percent).
“Cash is increasingly becoming an obsolete technology as the developing world sprints ahead of the developed in its adoption of Mobile Money,” Ahmed of WorldRemit further explains.
Bill Gates recently made a big bet that by 2030, almost everyone will have a mobile money account. “Not having access to a range of cheap and easy financial services makes it much more difficult to be poor.
“Traditional banks cannot afford to serve the poor because of their costs. That’s why 2.5 billion adults don’t currently have a bank account,” Gates stressed.
Mobile money is affording the poor access to more financial services everyday. From savings account to credit insurance, the technology is saving Africa, a continent where nearly 50 percent of its population are resident in rural communities.
However, there is still a long way to go to finally establish a robust cross-border transaction market using mobile technology. Although its potential to lower costs is undisputed, its use remains limited due to the regulatory burden related to combating money laundering and terrorist financing.
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Fragile states need new form of development aid, OECD report says
Nearly 1.5 billion people live in countries riddled with conflict, fragility and violence, and which have also shown the least progress on achieving development goals, according to a new OECD study.
Progress in the fight against poverty is good news ahead of the steadily approaching deadline to fulfill the Millennium Development Goals (MDGs).
But 50 of the developing countries who will not reach the target are becoming increasingly marginalised, a new report from the Organisation for Economic Co-operation and Development (OECD) states.
Almost 1.5 billion people – 20% of the world population – live in conditions affected by conflict, fragility and violence.
These countries have made the least progress in development over the past few decades, despite the fact that 20% of last year’s funding from the KfW development bank went to these countries.
The report alarmingly concludes that fragility and violence constitute a massive barrier to development.
More efficient use of resources
“We must focus more on the question of how these development aid funds can actually be used efficiently,” said the director of the OECD’s Directorate for Development Cooperation (DCD), Jon Lomøy. He spoke at a presentation of the report in Berlin, which is intended to contribute to the development of the post-2015 development agenda.
Fighting poverty is crucially dependent on advances in reducing fragility, Lomøy indicated.
Promotion of peaceful and inclusive societies, and thereby the reduction of all forms of violence, is a basic condition for this process, he said.
The report identifies 50 countries, including 28 in Africa, as fragile states.
“Poverty is expected to build up in fragile states until 2030, according to our predictions,” warned OECD development analyst Jolanda Profos.
Poverty can only be sustainably fought if a state has stable institutions, she emphasised.
This is demonstrated by the rate at which children attend elementary school in developing countries. In fragile states, this was only 12% of children. But in other developing countries, the rate is around half of the children.
Concentration and calls for peace
“Our aid must become more political,” argued Jürgen Zattler, an analyst for European and multilateral development policy in the German Development Ministry (BMZ).
Peace and stability have a lot to do with sustainable development, Zattler pointed out. So far, two-thirds of the fragile countries have not done enough to reach the MDGs, he said.
A known difficulty for development aid in unstable countries is getting the aid to the right places, rather than further promoting fragility, Zattler explained.
Here, careful coordination between contributing countries, local platforms and multilateral organisations is indispensable to ensure aid is delivered at the right spot, the development analyst emphasised.
Flexibility on recognising changing lines of conflict
The fact that this approach requires constant flexibility and close contact with experts on the ground, was also indicated by Susanne Wolfgarten, from the German development organisation Gesellschaft für Internationale Zusammenarbeit (GIZ).
“Lines of conflict can change and shift rapidly,” Wolfgarten said. But at the same time, being able to understand them is hugely important, she explained, saying only then is good and correct aid possible.
Long-term measures are also important, according to Wolfgarten. These can help sustainably improve many things at a local level in fragile areas, she added.
Oliver Knabe, from the Civil Peace Service, is also calling for long-term aid. Such assistance creates trust among the local population, Knabe said, acting as a catalyst which is necessary for development.
The conclusion of the report indicates that new instruments and measures are urgently needed to sustainably promote development, especially in unstable countries.
In the discussion over the new sustainable development goals, a new understanding is needed on the role the international community can and should play in this process, the OECD’s Zattler emphasised.
“So far,” he said, “peace and security have not received enough attention in the Millennium Development Goals.”
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Investing to change lives: IFC and AfDB seek to boost private sector in Africa
Enhancing partnerships with a view to boosting private sector as the driving force for sustainable and inclusive growth in Africa is one of the main priorities for the African Development Bank’s Private Sector Department (OPSD) and the International Finance Corporation (IFC).
For this reason, the African Development Bank hosted a high-level delegation from the IFC for two days of meetings on May 6 and 7, 2015 in Abidjan, to deepen relationships between the two institutions, and to develop initiatives to increase private sector investments in the region. The ultimate goal: to use investment to change lives in Africa.
Opened by AfDB Vice-President Solomon Asamoah, the meeting offered the opportunity to assess the experiences and lessons learned over the past few years of private sector financing to drive better results on the ground. The meeting also examined how the two institutions can better collaborate to bolster Africa’s development by enabling sustainable private investment in a continent, which according to AfDB Private Sector Director Kodeidja Diallo, “is characterized by large and small projects funding gaps and challenges.
“Africa is a huge market and we need to invest to change lives,” she said, echoing Vice-President Asamoah, Vice-President, Operations, in charge of Infrastructure, Private Sector and Regional Integration.
The meeting particularly seeks how to increase the success factors for operations in fragile states, adequacy of business model for SME financing and advisory services. IFC Directors for Western and Central Africa, Saran Kebet-Koulibaly, and for East and Southern Africa, Cheikh O. Seydi, both of whom headed the delegation, expressed gratitude to the Bank for hosting the meeting, saying that it provided a golden opportunity to revamp the cooperation.
“We believe in our partnership with the AfDB and the benefit of it is to sit down and take the partnership to the next level,” Seydi underscored.
For his part, Asamoah emphasized the benefits of better leveraging of the resources and expertise of each institution for the benefit of Africa. “It is definitely a case of 1+1 potentially equalling 3,” he said.
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Implementation of NDP a top priority
Planning, Monitoring and Evaluation Minister in the Presidency, Jeff Radebe, says coordinating, monitoring and evaluating the implementation of the National Development Plan (NDP) is at the top of the department’s priorities.
Minister Radebe on Tuesday briefed media prior to tabling the department’s Budget Vote Speech. He said the department has committed to institutionalising long-term planning, building on the five years’ experience since it was established.
He said the department is pleased with the work it has done so far.
Operation Phakisa
Minister Radebe said since the launch of Operation Phakisa, the first project focusing on the Oceans Economy, key initiatives have been identified to realize the immense potential of the ocean’s economy to contribute to radical economic transformation.
“Progress made since the launch of the Oceans Economy Operation Phakisa includes commitment of R7 billion of public sector investment in our ports by Transnet Ports Authority, amongst other investments made,” said Minister Radebe.
He said the commencement of the construction of a new berth in Saldana Bay, the extension of the Mossgas Quay and the refurbishment of the Offshore Supply Base, valued at R9.2 billion of public and private investment, also shows progress made.
Also, the Minister said the recorded progress under Operation Phakisa is seen in the Department of Trade and Industry, which has designated that working vessels must meet a 60% local content target.
“The Treasury Instruction Note issued will ensure compliance with this in all tenders,” said the Minister.
He also said that various aquaculture projects which have been launched, that are benefiting many rural communities by enabling them to make a living from our seas and inland fresh water reserves, also show progress.
“Furthermore, the Department of Higher Education and Training (DHET) has developed skills implementation plans aligned with these initiatives.
“To this end, the South African International Maritime Institute (SAIMI) has been identified as the institution that would facilitate maritime skills development, with the support from DHET,” said Minister Radebe.
Health and mining sector
The second Operation Phakisa initiative introduced in 2014 was within the health sector, which focuses on improving the quality of services in primary health care.
Minister Radebe said a detailed plan for improving service delivery in public sector clinics in all provinces has been developed and approved by the National Health Council.
“We call this the Ideal Clinic initiative. It was undertaken in collaboration with provinces, districts, clinic managers as well as the private sector and non-profit sector.
“Operation Phakisa Labs will also be conducted in the mining and education sectors,” he said.
Meanwhile, the Minister said in the mining sector the focus will be on increasing investment, transforming the sector and improving the mineral beneficiation to drive radical economic transformation.
In education, the focus will be on Information and Communication Technology approach to enhancing basic education.
National Youth Policy
Minister Radebe said Deputy Minister Buti Manamela will today unpack the youth aspects in detail in the Budget Vote Speech, regarding the department’s mandate to mainstream, provide oversight and lead government’s efforts on youth development.
“We have taken a different approach to tackling youth issues, and we have gotten rid of government’s approach to youth issues whereby we would ask them what they think, ignore what they say and do as we want, and adopted a new approach of consultation,” said Minister Radebe.
Deputy Minster Manamela recently held several consultative meetings with youth across the country regarding the National Youth Policy (NYP) 2020.
Minister Radebe said the consultations culminated in the NYP 2020 Consultative Conference, in March, which resulted in inclusion of one more pillar to the four that existed initially.
“When we commenced with the consultative process of the NYP 2020, we initially had four pillars of the policy comprising skills and education, economic inclusion and participation, health and well-being of young people, and nation building and social cohesion.
“Through the inputs received from the youth through this consultative process that took place, we have included another pillar to form part of the policy, which is building youth machinery for effective delivery and responsiveness,” said the Minister.
He said the NYP 2020 conference inputs are in the process of being finalised, and will be adopted during the youth month of June.
He said the policy will then guide the drafting of the integrated youth development strategy which will be the blueprint for radically spearheading youth development against the backdrop of lack of skill and high unemployment.
“The DPME will monitor the implementation of the policy and its impact. As we finalise the youth policy… we give meaning to it by championing the development of the youth who are future leaders of this country.
“Thus, by prioritising youth development through education, entrepreneurship and job creation, it will be both a tribute to the Freedom Charter as well as to the future of our country,” said the Minister.
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Tanzania Mainland Poverty Assessment: A new picture of growth for Tanzania emerges
In Mainland Tanzania, poverty has declined by approximately one percentage point each year between 2007 and 2012, according to a new World Bank report released today.
Based on the 2012 Household Budget Survey, the Tanzania Mainland Poverty Assessment highlights the country’s first significant decline in poverty in 20 years. Basic needs poverty, which refers to the minimum resources needed for physical wellbeing, declined from 34.4% in 2006, to 28.2% by 2012. During the same time period, extreme poverty also decreased from 11.7% to 9.7%.
“There are emerging signs of increased participation of the poor in the growth process during the last five years,” said Nadia Belhaj Hassine Belghith, World Bank senior economist and lead author of the report. “The government will be able use this information to examine how this happened as they continue to devise policies to further accelerate extreme poverty eradication and promote growth, because in reality around 12 million Tanzanian people still live in poverty, and more than four million citizens continue to be in extreme poverty.”
Although there has been recent growth that has helped Tanzania’s poorest, the report emphasizes that approximately 70% of Tanzanians continue to live with less than $2 per day. To build on this growth and reach more people, the assessment recommends promoting faster economic growth in labor intensive sectors, including agriculture where three-quarters of Tanzanians continue to be employed. Reducing population growth and the country’s high fertility rate – on average, five children per woman – by empowering them through education and employment support and with family planning services can stimulate per capita economic growth further, according to the report.
The assessment also underscores the need for specific measures to develop the rural economy and agriculture, and to diversify livelihoods to include nonfarm businesses, which can be more helpful than agricultural activities to help households reduce poverty. Additional report findings include:
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In addition to the decline in the share of the population living in poverty, Tanzania is also witnessing a reduction in the level of deprivation among those still living in poverty
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All households saw large improvements in their housing conditions and modern amenities such as television sets and mobile phones
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While ownership of agricultural land improved, possession of productive assets such as mechanized equipment and big livestock remains limited
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Human development outcomes have improved with the increase of primary education enrollment and the decline of infant mortality and children less than five years old. Unfortunately, improvements in maternal mortality have not been as significant
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According to the Gini coefficient of real per capita consumption, the level of inequality for Tanzania declined from 39 to 36 during the last decade, and is now comparing favorably with Sub-Saharan Africa. This change seems to be driven mainly by an increase of the consumption share for the 20% poorest segment of the population.
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The number of poor, particularly in rural areas, is still high; about 12 million people, among them 10 million in the rural sector, continue to live in poverty
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Heads of households with less education and a large number of children and who are engaged in subsistence agriculture and living in communities lacking infrastructure are likely to be the most poor and many of them will pass on their poverty to their offspring
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The nature and composition of economic growth induced an uneven increase of welfare at the regional level. Household consumption and poverty improved faster in Dar es Salaam and inequality between the geographic regions is widening.
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While there are emerging signs of increased participation of the poor in economic growth, outside of Dar es Salaam an important proportion of the population remains unable to fully benefit from the economic prosperity of the country and are vulnerable to poverty.
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Managing the transition from the Millennium Development Goals to the sustainable development goals
Remarks by Mr. Joakim Reiter, Deputy Secretary-General, UNCTAD at the Ministerial Roundtable on Managing the transition from the Millennium Development Goals to the sustainable development goals: the role of science, technology and innovation, Geneva, 4 May 2015
A scientist and a visionary of the digital era, Alain Kay, once said: “the best way to predict the future is to invent it”.
And this is precisely what we are doing in 2015.
We are defining the contours of the world we want by 2030. The finance for development conference, the SDG summit, WSIS + 10 and COP 21, they are all part of our efforts to set the compass for the future we all want.
But we need to pave the roads to that future. And an important way of doing so is through science, technology and innovation.
The topic of this roundtable is timely and important (‘managing the transition from the Millennium Development Goals to the sustainable development goals: the role of science, technology and innovation’).
I would like to take this opportunity to share with you three ideas that, in my view, are important to consider if Science, Technology and Innovation are to play an even bigger role in the post-2015 agenda.
Let me start with the first one: gaps in STI capacities.
As we make the transition from the MDGs to an even more ambitious set of development goals, we need to ensure all our means of implementation are used at their maximum capacity. Science, Technology and Innovation are essential in this context.
However, the expansion of STI and their ability to foster development are often constrained by weak STI capacities in developing countries. There are glaring STI capacity gaps, especially in the least developed countries. This could range from inadequate human resources, a lack of research infrastructure, training facilities, to weak national innovation systems.
UNCTAD and the CSTD have previously highlighted the need to address these gaps, if STI is to foster inclusive development. It should therefore be a priority to strengthen the global partnerships and mobilize resources to mitigate such gaps.
Let me now turn to my second point: improving policy effectiveness.
The new and ambitious development agenda demands more resources. But its implementation will also require us to use available resources more efficiently and effectively. As a consequence, our policies will need to be more effective and more coherent.
To maximize effectiveness we need to ensure the implementation of evidencebased policies in all areas, including STI. And we also need to ensure the presence of feedback mechanisms that allow us to learn and correct the course if needed.
We also need greater coherence. Otherwise, resources can be wasted in policies that neutralize each other. For instance, promoting FDI in high tech and knowledge intensive sectors without a policy that fosters domestic technological capabilities can render FDI efforts expensive and ineffective.
I will turn to my third and last point: making the most of the big data revolution.
The exponential growth and availability of data, both structured and unstructured, represents an important opportunity in the post-2015 era. And big data may be as important to business – and society – as the Internet has become.
If used correctly, more data will allow us to make more accurate analyses of development problems. More accurate analyses, in turn, should lead to more confident decision-making. And better decisions can mean greater efficiencies, and reduced risk.
The global STI community has an important role to play in this regard. And, if the potential of big data is to be fully utilized for the SDGs, we need to facilitate and promote cross-border transfer of data, whilst addressing legitimate concerns that this may give rise to.
Transiting from the MDGs to the SDGs may not be an easy task, but it is feasible. And the CSTD can helped to pave the way for Science, Technology and Innovation to play the role it should in the post-2015 development agenda.
I am confident that your deliberations today will provide valuable inputs to the ECOSOC high-level segment in July.
Thank you very much.
Strategic foresight for the post-2015 development agenda: Report of the Secretary-General
This report identifies, analyses and presents for discussion key issues concerning the role of strategic foresight for policymakers, particularly in developing countries. Chapter II provides an introduction to strategic foresight and its use around the world. Chapter III presents key trends related to science, technology and innovation (STI) that are likely to be relevant for development in the post-2015 period, based on the findings of the metaanalysis of recent foresight reports and inputs from international foresight experts, together with a critical assessment of their potential socioeconomic and development impacts. Chapter IV highlights key policy lessons. Chapter V presents findings and suggestions for consideration by national Governments and other relevant stakeholders.
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LDCs prompt WTO discussions on rules of origin
The Least developed countries (LDC) group at the WTO presented on 30 April a paper aimed at stimulating a discussion among WTO members with regard to the implementation of the Bali ministerial decision on rules of origin in order to ultimately enhance market access for their products.
The submission of the paper entitled “Elements for a discussion on preferential rules of origin for LDCs” was submitted by Bangladesh on behalf of the LDC group during the WTO Committee of rules of origin held on 30 April.
Rules of origin specify how much processing must take place locally before goods are considered to be the product of the exporting country. They are often considered to be overly restrictive and inflexible; making it difficult for LDCs to take full advantage of the preferences they are granted.
Currently, these rules are designed on a unilateral basis without any harmonised standard, which critics say creates additional problems for the WTO's poorest members, forcing them to adapt to a range of rules depending on the intended export market.
A priority since Bali
The 2013 Bali ministerial conference adopted a package of decisions of importance for LDCs including the first set of multilateral guidelines on preferential rules of origin in response to their demand. The decision formally requests members to take into account certain guidelines contained in the decision to develop their rules of origin frameworks for LDCs.
Trade experts however were quick in noting that the decision is not legally binding and therefore it does not oblige members to follow the provisions strictly.
Since then, the LDC group have considered the implementation of the Bali decision on preferential rules of origin as one of their priorities in the WTO’s post-Bali work.
In October last year the LDC group presented a substantive report to the WTO Committee on Rules of Origin, calling for a more effective design of preferential rules of origin.
Reforms to reflect value chains requirements
The paper presented last week outlines six questions targeted to preference giving countries in order to better understand how they intend to address the various elements contained in the Bali decision related to rules of origin.
Speaking for the group, Bangladesh said it recognises that no single system of rules of origin used by preference-giving countries is better than the other.
However, members recognised “unequivocal evidence” that, under certain conditions, the reform of rules of origin to reflect current global value chains and commercial realities could generate benefits for LDCs.
The issue of adoption of a lower percentage requirements in case of percentage calculation of domestic content or greater allowance of non-originating materials to allow insertion of LDCs into global value chains was raised among other elements.
Regarding the value addition threshold, the document reiterates that “the value addition threshold should be kept as low as possible”. On this aspect, the LDC group suggests allowing foreign inputs to a maximum of 75 percent of value in order for a good to qualify for benefits under LDC preferential trade arrangements.
Some observers consider however that ≤75 percent non-originating material (or ≥25 percent originating material) is in fact still prohibitive, given modern manufacturing methods based on global value chains which require in some cases only very little domestic content.
Limited productive capacity
The paper suggests that specific manufacturing or processing operation rules should take into account the productive capacity in LDCs and members should apply specific processing rules when they are beneficial to the LDCs.
“Considerable progress” in the textile and clothing sector by the allowance of a single stage process was noted by the LDC group. The Group however noted that a number of rules in other sectors like steel and metals still require double processing requirements which contradict LDC countries’ limited productive capacity.
EU, Canada as role models
The paper also acknowledges that RoO reforms in Canada and in the EU respectively contributed to a higher utilisation rate as well as “relocation of factories to LDCs”, “increased manufacturing capacity”, “more skilled jobs” and “backward linkages.”
The EU upgraded its allowance for non-originating material to 70 percent in many sectors – from the previous 40 percent – and retained a single instead of a double processing stage for clothing in 2011. The report presented in October last year finds that such reform efforts helped increase the utilisation rates of preferential margins by LDCs from 89 percent in 2010 to 99 percent in 2013, excluding fuel and agricultural products.
With respect to Canada, where the government implemented more lenient RoO including greater opportunities for cumulation in 2003, the same report argues that the LDC garment industry has reaped substantial benefits.
Triggering some answers
At the meeting, Canada said its rules of origin system were generally consistent with the Bali Decision guidelines.
The EU announced they would shortly send replies to the LDC Group’s six questions and that it was looking forward to discussions on the paper.
The United States noted that legislation reinstating Generalized System of Preferences for LDCs was working its way through the US Congress.
China highlighted recent changes to its duty-free benefits programme that have already led to a 27 percent increase in LDC imports in the first quarter of 2015.
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Controlling Africa’s natural resources needs knowledge and good governance
“Growth derived from natural resources has not delivered goods in terms of addressing poverty because is it linked to exploitation,” said Mr. Abdalla Hamdok, the Deputy Executive Secretary of the Economic Commission for Africa during the opening of the Policy Dialogue on Challenges faced by African states in mining and petroleum contract negotiations on 5 May in Addis Ababa.
Africa sits on 30% of the world’s natural resources, and with 70% of coltan deposits (from which electronic microchips are made), the continent should be rich but too often those countries who own the resources are typically low income or underdeveloped countries with shortage of skills in negotiating for ‘win-win’ contracts. To rectify this, “we have to address issues of governance and leadership,” said Mr.Hamdok.
“There have been discoveries of oil and gas in many countries in Africa during the last 10 years but the way we exploit natural resources is important. We can use the benefits from these resources to address long-term development,” said Mr. Hamdok.
These petroleum and mining contract negotiations can no longer be limited to technical experts but must be broadened to include a number of other specialists. The delegates at the Policy Dialogue agree that skills and knowledge limitation often result in skewed contracts that favour the investor and not the owner of the resources. Education must be improved to ensure that citizens acquire the necessary skills to be able to negotiate complex mining and petroleum contracts.
Mr. Martin Ndende, the Senior Regional Advisor at ECA asserted that African states sometimes take fatalistic action when it comes to natural resources. “They act as if they were not holders of their resources,” Mr Ndende said. He, however, also stressed that the global economic and political context at the time of the negotiations also determines the type of contract produced. When commodity prices are high, states might be tempted to offer very generous tax rebates to attract investment, but when the inevitable price drop comes, states are disadvantaged by the deal.
Regime type also determines how contracts are negotiated and the outcome. The nature of the state is crucial because “negotiating mining contracts is also about negotiation the future of development,” said Professor Mohamed Salih, a consultant at the ECA. States must take issues of equity, rights and justice into account when negotiating for their citizens, Professor Salih believes.
States also compete with each other to attract investors; a process which sometimes results in lack of co-operation between states thus allowing the extractive-industry global companies to exploit that competition to their advantage.
Contracts are often concluded without the representation of the local communities who sit on the resources and whose land and society will be affected either through environmental degradation, or a higher care burden for women whose husbands have health complications from their work and loss of land, delegates pointed out.
If Africa’s natural resources are to benefit its people, knowledge; representative and transparent governments; good governance and leadership; gender equity; and skills development are necessary.
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How much finance is too much: Stability, growth and emerging markets
The world still lives in the shadow of the global financial crisis that began in the United States in 2008. The U.S. experience shone a spotlight on the dangers of financial systems that have grown exponentially and beyond traditional banks. It triggered a rethinking of the extent and speed of the expansion of a country’s financial sector, and raised questions about which policies promote a safe financial system.
In our new study, we emphasize that the most commonly used indicator – bank credit – is not sufficient to measure the size and scope of a country’s financial development. We create a comprehensive index for over 170 countries to answer several policy questions from the perspective of emerging markets.
We show that financial development entails tradeoffs. Our analysis uncovers evidence of “too much finance” in the sense that beyond a certain level of financial development, the positive effect on economic growth begins to decline, while costs in terms of economic and financial volatility begin to rise (see figure below). The analysis shows that these tradeoffs can be improved by strong institutions and a sound regulatory and supervisory environment. In other words, regulatory reforms can increase the benefits from financial development while reducing the risks.
We find that the gains for growth as well as for economic and financial stability from further financial development remain large for most emerging markets. But there are speed limits on financial deepening: when financial sectors deepen too fast, it often leads to crises and instability.
Moreover, we find it is better for countries to develop financial institutions first, and then markets. Strengthening regulations also matters. In fact, there is little trade-off between growth and stability when it comes to deciding on which regulatory principles to focus on – they are key for both.
What we mean by “too much finance”
We measure financial development by a combination of three elements:
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Depth – the size and liquidity of financial institutions and markets;
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Access – the ability of individuals to access financial services; and
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Efficiency – the ability of institutions to provide financial services at low cost and with sustainable revenues, and the level of activity of capital markets.
The “too much finance” effect reflects primarily the impact of a country’s financial development on total factor productivity growth. High financial development does not impede capital accumulation. However, it leads to a loss of efficiency in investment. This suggests that the quality of finance – for instance, allocation of financial resources toward productive activities – begins to decline.
Emerging markets still benefit from financial development
Most developing and emerging economies are still in relatively safe territory when it comes to financial development. In countries such as Gambia, Ecuador, and Morocco, further financial development is clearly growth-enhancing. That is, they can achieve higher growth and financial stability, and reduce economic volatility by developing their financial systems further. One health warning: risks to financial stability are present even at low levels of financial development. Therefore, policymakers need to ensure that capital and liquidity reserves are in place to mitigate the effects of financial crisis.
The benefits from developing financial institutions are large when countries have low income levels, and they decline as country income level increases, whereas the opposite is true for markets. Thus, when it comes to financial development, an appropriate sequencing would emphasize developing institutions in the early stages, with increasing attention to developing markets as per capita income rises.
Interestingly, we find that raising access to finance and financial sector efficiency is beneficial for growth at any level of financial development. In other words, the weakening effect on growth at higher levels of financial development stems from financial deepening, not access or efficiency.
Speed limits
A faster pace of financial deepening means greater risks of crisis and economic instability, other things being equal. There is a clear positive relationship between the speed at which financial institutions grow and financial instability. This is because when financial institutions grow fast, they often do so by taking on too much risk and leverage, particularly when the system is poorly regulated and supervised.
Building strong institutions and regulations helps increase a country’s benefits from financial development while reducing the risks. Better protection of property rights, creditor rights and information, higher regulatory quality and rule of law are positively associated with financial development.
Better regulation promotes both financial development and stability
There have been fears that sweeping changes to global regulatory frameworks would curtail credit, hamper financial development, and stifle growth.
Indeed, one effect of global regulatory reforms has been that banks in advanced economies have increased their capital and in some cases also reduced their assets to unwind some of the pre-crisis excesses. The empirical evidence in our study shows that of the 93 regulatory principles contained in international standards for regulation and supervision of banks, insurance companies, and securities markets, the critical principles that matter for financial development and stability are essentially the same.
These principles capture regulators’ ability to act by setting and demanding adjustments to capital, loan loss provisioning, and employee compensation. They also include transparent financial reporting and disclosures. This means that better – not necessarily more – regulation is what promotes financial stability and development.
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Azevêdo launches 10th WTO Ministerial Conference logo
Director-General Roberto Azevêdo at a General Council meeting on 5 May launched the logo for the 10th WTO Ministerial Conference, noting that the logo was being launched simultaneously by the Kenyan government in Nairobi.
He expressed the hope that “each time we see this logo, it will remind us of the many people in Africa, and all over the world, who are counting on us to deliver substantive outcomes in Nairobi which will support much-needed global growth and development”.
DG statement on launch of MC10 logo
I am delighted to be launching this logo for the 10th Ministerial Conference – which is being launched simultaneously in Nairobi this morning.
You will recall that when we agreed Nairobi as the venue for MC10 in December last year, our good friend Minister Amina Mohamed was with us.
In her remarks she emphasized that she was accepting this honour not just on behalf of Kenya but on behalf of Africa as a whole.
We developed the logo in close cooperation with our Kenyan colleagues, and so, as you can see, it reflects this important dimension.
It is my hope that each time we see this logo it will remind us of the many people in Africa, and all over the world, who are counting on us to deliver substantive outcomes in Nairobi which will support much-needed global growth and development.
I think this is appropriate for the first WTO Ministerial Conference held in Africa – and for a Ministerial Conference which must deliver for Africa.
Statement by DG Azevêdo as TNC Chair
Since the General Council in February, the TNC held its 36th formal meeting on 27 April. I also convened a Room W meeting on 18 March. At both of these meetings, members reviewed their progress in developing a work programme on the remaining DDA issues by July this year.
At last week’s TNC, we had the opportunity to hear directly from all the chairs on their recent consultations. The full texts of their reports, together with my assessment were immediately made available to delegations in document JOB/TNC/47.
I said at the TNC that I thought we should seek to avoid a repetition today of last week’s discussion.
Therefore I think that it makes sense to add all of the statements that were made at the TNC to the record of this meeting as a matter of course. Unless anybody requests otherwise, that means my statement, statements from the chairs, and statements from members – all of them will be reflected in the minutes of the TNC which will be added to the record of today’s General Council.
Members had the opportunity to express their views on the way forward at the TNC. Overall, I believe that we had a useful exchange of views on the progress we are making and on the challenges we still face.
Mr Chairman, I drew three main conclusions from what I heard from chairs at the TNC, but also from my own consultations. I would like to briefly reiterate my assessment, this morning.
My first conclusion was that a lot of good work has been done in the past few weeks, in particular in the three core areas.
This positive engagement is essential, but we cannot escape the fact that there are “gateway” issues that we need to tackle very quickly.
However, also at the TNC, many delegations noted that we have to be aware of the damaging consequences that any kind of de-facto sequencing may have.
My second conclusion was that development and LDC issues must continue to remain central to our work. I think this was a clear message from many delegations and groups at the TNC.
The Global Review of Aid for Trade in June will provide an important focus to the development component of our work.
The Global Review will also mark the re-launch of the Enhanced Integrated Framework for the LDCs. In addition, I will remain closely engaged with broader efforts such as the UN’s work on Financing for Development and discussions on the post-2015 development agenda.
On a related point, I would like to raise the issue of the operationalization of the LDC Services Waiver. As you all know there was a very successful high-level meeting on this issue in February. Over 25 members indicated LDC services sectors and modes of supply to which they will give preferential treatment. However, so far, only one member has followed through and submitted a notification.
I think it is very important that we deliver on these commitments – keeping in mind the agreed indicative timeline of the end of July.
My third conclusion was that while progress has been difficult, this was clearly to be expected, and there are reasons to be positive.
Engagement levels have been very high. Delegations have been constructive and have moved to a solution-finding mode. A number of new ideas and papers have emerged. I believe we now have a number of areas where potential outcomes exist that could be acceptable to everyone.
What I believe is important now is to begin to seek an overall balance. The key potential trade-offs between the different areas are not clearly on the table as yet.
This is why I announced at the TNC that I would increasingly look at ways to facilitate a discussion on the horizontal trade-offs, including through the wider Room W process.
And the importance of this horizontal process underlines how vital it is that we make substantive movement in all areas to facilitate these trade-offs.
Mr Chairman, many members and groups emphasized at the TNC that we must not only bear in mind our mandate from ministers but crucially we must deliver on it – and do so with an appropriate level of ambition. I wish to re-emphasize what I said at the TNC. Whatever the nature of the work programme that members will deliver in July, it has to be credible.
In my view, the work programme must fulfil three criteria:
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It must be substantive and meaningful.
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It must provide clear guidance on how to conclude the negotiations.
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And it must be a springboard to a successful MC10.
Following the realistic assessment of our progress at last week’s meeting, I believe members all share the same sense of urgency.
Together with the negotiating group chairs and the Chairman of the General Council, I will intensify my consultations in the coming weeks. But progress will be up to you.
We can provide the pitch, the ball and the kit – but you are the players.
So I urge you to redouble your efforts: to stay engaged, to keep being creative, to keep bringing fresh ideas to the table, and to stay focused on what is doable.
This concludes my report.
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Central Corridor trade barriers to crumble under political will weight
If you live and shop in Rwanda, six out of every ten imported products that you buy from malls are likely to have arrived in Kigali through the Central Corridor, a trade passage linking the port of Dar es Salaam to Rwanda, Burundi, DR Congo and Uganda.
That’s because, according to government statistics, Tanzania’s port of Dar es Salaam accounts for over 60 per cent of Rwanda’s external trade with the balance coming through the Kenyan port of Mombasa.
You probably also wonder why your supplies are relatively expensive; that’s because as a landlocked country (LLC), the final price of an imported commodity, to a fair extent, depends on the cost of transporting goods from the port to their stores.
Recent international trade studies have found that transport related costs account for about 30 to 40 per cent of the prices of goods in landlocked countries such as Rwanda, a factor that negatively, affects such countries’ competitiveness.
As a country with a low local manufacturing base, Rwanda heavily relies on imports to keep its citizens supplied and, according to statistics from National Bank of Rwanda (BNR), total imports in 2014 rose by 6.8 per cent to US$2,399.3 million.
It currently costs over US$4000 to transport a container from the port of Dar es Salaam to Kigali, according to traders and this cost impacts on the final price that the consumer pays for a commodity.
Rwanda has to continuously engage countries like Kenya and Tanzania to ensure its traders are well facilitated to clear their goods from the ports to Kigali.
Integration helps
However, the fortunes of East Africa’s landlocked countries have started taking a positive turn as the story of the region’s integration process adds more chapters; the benefits are envisaged to be felt, first by traders, and, subsequently, the consumers of their goods.
The story started in June 2013 when Uganda’s President Yoweri Museveni hosted his Kenyan and Rwandan counterparts in Kampala to brainstorm on how to facilitate trade on the Northern Corridor; the result was what’s now called the Northern Corridor Integration Projects Initiative (NCIPI).
After that initial meeting, the leaders agreed to meet every quarter on rotational basis to review their progress; they have since met nine times and their commitment has resulted into a number of groundbreaking achievements.
Early benefits include the Single Tourist Visa that enables tourists to use a single visa to visit Kenya, Rwanda and Uganda; citizens of the three countries can also cross borders using just their national identity cards, and there is harmonised telecom tariffs.
In October 2013, the leaders also launched a Single Customs Territory (SCT) on the port of Mombasa which, according to traders, has significantly eased clearance of goods.
The revenue authorities of both Uganda and Rwanda have been given space at Mombasa to enable their respective traders declare their incoming goods at the first point of entry after which goods are expected to move freely to their final destination without being stopped.
“It’s a great initiative that has reduced the cost of doing business as well as saving us a lot of time previously spent on clearing and forwarding, we’re flying on the benefits of the political will of our leaders,” says Fred Seka, head of the Freight Forwarders Association.
There are other long term projects such as the standard gauge railway, petroleum pipeline and refinery which require billions of dollars to implement and whose benefits will come later but traders are already enjoying early fruits.
Initially, critics had dismissed NCIPI as sign of disunity in the East African Community (EAC) but the story has since changed and is now being praised as the magic wand that has transformed the trade on the Northern Corridor.
“The time to clear goods from the port of Mombasa and transportation to Kigali has reduced from, I think ten, twelve days to now five days which is a big improvement,” said Jean Baptiste Gasigwa, the Private Sector Federation (PSF) resident representative at the Kenyan port of Mombasa.
And with time, officials say they want to see this reduced cost of doing business being felt by Rwandan consumers.
Political will expands
On March 25, Tanzanian President Jakaya Kikwete hosted his counterparts from Uganda, Burundi, Rwanda and DR Congo at the first ever Central Corridor Presidential roundtable and investor forum in Dar es Salaam. Kenya attended as an observer.
A number of resolutions were passed by the leaders, including the resolution to cooperate on funding Central Corridor Infrastructure development initiatives (CCIDI) similar to the NCIPI.
Like the Northern Corridor standard gauge railway, it was agreed that the leaders would jointly improve the current central corridor railway network and develop a Standard Gauge Railway line from Dar es Salaam-Isaka-Keza-Kigali/Keza-Gitega-Musongati; Uvinza-Musongati; Isaka-Mwanza South and Tabora-Kigoma.
There were other ambitious commitments pledged by the leaders but just like those of the Northern Corridor, they’re long term projects that require billions of dollars in funding and their benefits will probably be seen in five to ten years from now.
However, Rwanda’s Minister for East African Affairs Amb. Valentine Rugwabiza says apart from the long term benefits, there are low hanging fruits for Rwandan traders to reap if stakeholders can exploit the newly established presidential political will to improve the efficiency of the Central Corridor.
Before March 25, the ministry was already working with its counterparts in Tanzania to resolve challenges experienced by Rwandan traders on the Central Corridor but after the presidential roundtable in Dar-es-Salaam; those efforts will be boosted by the newly pledged presidential support.
Minister Rugwabiza has already started mobilising Rwandan traders to reposition themselves and exploit benefits from the leaders’ political will to address challenges such as the stubborn Non-Tariff Barriers (NTBs) and other negative elements to trade.
On April 24, the minister hosted, for the third time, Rwandan business leaders to a breakfast during which, at her encouragement, they expressed their current challenges on the Central Corridor.
She urged them to propose solutions that they want their leaders to consider.
Clearly, Rugwabiza regards the presidential political will as a vital tool to addressing most of the traders’ challenges on the corridor but also knows that without the right follow-up measures, opportunities could be missed.
To make that point, she borrowed a quote from President Kagame’s keynote address during the high level industry and investors forum in Tanzania during which he said that ‘political will needs to be translated into tangible results.’
“Momentum has value of its own. The important thing is to get started, keep moving, and build from there,” Kagame said of the new Central Corridor initiatives.
According to Rugwabiza, the commitment showed by the presidents is a challenge to officials to work hard towards deepening and accelerating regional integration.
“That is why I believe in continuous engagement with you – the captains of industry – in order to keep moving and take advantage of this new momentum. We, therefore, have to move fast together and take advantage of the opportunities presented,” said the Minister.
Regional observers are already predicting a healthy competition between the ports of Mombasa and Dar es Salaam, if the current momentum holds; for Rwandan traders, and consumers, that presents prospects of two good options, two smooth trade routes whose ultimate benefit should be cheaper commodity prices at the shopping mall.
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US beats Africa to third spot on list of Kenya import source
Kenya has for the first time bought more goods from the United States in one year than it did from the whole of Africa, underlining growing commercial ties that are expected to deepen with the recent thawing of relations and President Barack Obama’s visit in July.
US exports to East Africa’s largest economy rose to Sh168 billion last year compared to the Sh146 billion worth of goods and services that came from Africa, according to data from the Kenya National Bureau of Statistics (KNBS).
At Sh146 billion, the value of imports from Africa dropped marginally even as the value of goods and services from the world’s largest economy tripled.
The exponential growth of US exports to Kenya happened despite the Kenyan President Uhuru Kenyatta standing out as a leading advocate of intra-Africa trade who has made a series of trade promotion trips across the continent since coming to office in 2013.
“The value of imports from South Africa contracted from Sh70 billion to Sh63 billion in 2014. The value of imports from Mozambique and Nigeria also dropped by 60 per cent and 56 per cent respectively,” said the KNBS in this year’s economic survey report.
Kenyan exports to Africa rose by four per cent to Sh241 billion, supported largely by increased purchases by Ethiopia, the Democratic Republic of Congo and South Sudan.
The KNBS data shows export volumes to Kenya’s largest market, Uganda, dropped by seven per cent while trade with Somalia also contracted by Sh3.7 billion.
“The biggest reason there is so little intra-Africa trade is that we produce the same things – raw material. So why trade among ourselves? No wonder South Africa and Egypt are doing well because they have a good manufacturing base,” said Dr XN Iraki, a lecturer of economics at the University of Nairobi.
Intra-Africa trade is also hampered by physical and non-tariff barriers, making it easy for countries outside the continent to grab trade opportunities.
East African countries are currently working on projects such as the Lamu Port and South Sudan, Ethiopia Transport Corridor (Lapsset) to link their markets. Non-tariff barriers include visa applications, at a fee, in order to travel to most of the other African states.
The rapid growth of exports to Kenya has caught the eye of the world’s largest economy, which is seeking to stop China’s hitherto unchallenged march on the fast-growing continent.
“There seems to be a sustained effort to increase the amount of trade between the US and Kenya. Behind Clinton, Kerry and Obama visit is trade and investment. Americans know how to smell money,” noted Dr Iraki.
John Kerry, America’s Secretary of State, finished his two-day tour of the country Tuesday while the US President, whose biological roots are in Kenya, is expected in the country in July.
Mr Kerry’s comments were largely confined to the fight against terrorism but Kenya has indicated it will be pushing for the introduction of direct flights between Nairobi and Washington during the visit by Mr Obama to boost trade between the two states.
India is the largest exporter to Kenya, with goods worth Sh264 billion purchased last year followed by China, Sh248 billion.
The US had initially been unreceptive of the Kenyatta government but has in the recent past worked on smoothening relations between Washington and Nairobi as the economic significance of the country grew and the weight of the criminal charges facing the President eased.
The Americans will, however, have to work harder to win the hearts of the President’s supporters with a survey released on Monday showing a majority of Jubilee adherents view China more positively than the Americans in development relations.
The survey by Ipsos Synovate found that a majority of Kenyans, 35 per cent, favour stronger trade relations with the US than China, at 23 per cent.
Besides a growing middle class, Kenya has recently discovered oil and is undertaking huge infrastructural projects, attracting the American business community.
The KNBS said 70 per cent of the imports from the US were associated to purchase of aircraft and associated equipment, indicating that the volumes could be a one-off as Kenya Airways slows down on growing its fleet.
Washington is bent on making the numbers stick with incentives being offered to businesses importing from the US. The White House organised its first African-American summit last year, a move that was seen as driven by Washington’s realisation that it was missing out on Africa’s growth.
“Apart from faster processing of visa, the US commercial service has been verifying for us manufacturers we end up engaging with,” said Sammy Ng’ang’a, the managing director of Yashinoya Trading and Construction Company, which imported machinery from the US worth more than Sh91.6 million ($1 million), including those to be used in developing geothermal wells.
America also hopes to ride on the high cultural interaction between Nairobi and Washington compared to Beijing.
Kenya’s exports to the US were Sh38 billion, attributable largely to the African Growth and Opportunity Act (Agoa) trade agreement, compared to Sh6.5 billion worth of goods purchased by the Chinese.
Kenyans working and schooling in the US contribute more than half of the cash sent back to the country by those in the diaspora. Last year diaspora remittances were Sh130 billion.
Moses Ikiara, the chief executive of Kenya Investment Authority, said Americans were planning a US-Kenya summit to be held in Nairobi this year, offering their businesses a platform to showcase their products and scout for opportunities in the country.
Kenya, being a growing economy, is expected to continue importing increasing amounts of capital and intermediary goods to support production – a space that should interest American companies.
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Strengthened cooperation between United Nations, regional organizations vital to international peace, security, speakers stress at General Assembly debate
In a rapidly changing world, bolstered cooperation between the United Nations and regional and subregional organizations was needed to respond effectively to emerging threats to international peace and security, the General Assembly was told on Monday as it held a high-level thematic debate on the issue.
More than a dozen Government ministers and high-level officials from regional and subregional organizations stressed the need for innovative, flexible cooperation frameworks that reflected the “comparative advantages” of the United Nations and its regional and subregional partners.
“Conflict, poverty, violence, exclusion and disasters are grave and growing problems,” said United Nations Secretary-General Ban Ki-moon as he opened the debate. No country was immune from global threats, and no one country – however powerful – could respond alone to such problems. The Ebola crisis, the tragedy of migrants dying at sea, the international drug trade, organized crime and the rise of violent extremism all showed the urgent need for a collective response.
In that connection, he was doing everything possible to enable the United Nations and regional and subregional organizations to boost their cooperation, he said, adding that the collaboration between those organizations was already richer than ever before. In the area of conflict prevention and mediation, such cooperation had shown how working together “increases our powers of persuasion to press parties to make peace”. Regional organizations were also helping to shape the post-215 development agenda and would help the world reach the new sustainable development goals.
Delivering a keynote address, Yoweri Museveni, President of Uganda, said that while Chapter VIII of the United Nations Charter provided for cooperation between the Organization and regional and subregional partners, action by the Security Council – which continued to be dominated by the victorious powers of the Second World War – was frequently taken without the input of such partners and had caused much harm to Africa.
In order to talk about strengthening cooperation between the United Nations and regional and subregional organizations, the “old-fashioned” structures of the Organization needed to be re-examined and changed to conform to current realities. That would help to prevent the use of the United Nations for national or group interests of powerful Member States to undermine efforts of regional organizations and the peace of the world.
In that connection, the starting point for cooperation was the principle of complementarity envisaged in Chapter VIII of the Charter, he went on. “The United Nations should respect decisions taken by regional organizations, especially in areas of conflict resolution,” he said. Last-minute, high-handed interventions without a thorough understanding of the dynamics of the situation were wrong and injurious to the populations of the concerned areas.
Sam Kutesa (Uganda), President of the General Assembly, said that today’s debate was an opportunity to consider a number of pressing issues. First, how the international community could strengthen strategic partnerships with regional and subregional organizations; second, what needed to be done to build and enhance joint efforts in conflict prevention and resolution, human rights and other key areas; and third, how to ensure that regional and subregional organizations played a role in the implementation of the post-2015 development agenda.
Indeed, the implementation of that new agenda would take place “on the ground in our respective countries and regions”, he said, noting that regional and subregional organizations were well-placed to ensure that implementation. Innovative and flexible partnership agreements were needed that drew on the respective organizations’ strengths, and more predictable resources were crucial.
A number of Government ministers, as well as heads of regional and subregional organizations, then took the floor to deliver statements about the importance of strengthened cooperation in their countries or regions. They also raised issues pertinent to their constituents and made a number of proposals for better, stronger cooperation frameworks.
Strengthening cooperation was about trust and respect, as well as inclusivity and innovation, said Annika Soder, Vice Minister and State Secretary for Foreign Affairs of Sweden. It was time to find new ways to deal with emerging threats, including the rise of non-State actors in conflicts. Together, the United Nations and regional and subregional organizations could find solutions to specific situations and create more systematic early action procedures. She urged the United Nations to take into account the role of regional and subregional organizations in its 2015 review of its peacebuilding architecture.
Stressing the ability of such organizations to respond quickly and nimbly to crises, Dieudonné Ndzengue, Deputy Minister for Foreign Affairs, Francophony and regional Integration of Gabon, said that the United Nations was making a “true effort” to engage in regional partnerships. However, the large number of crises in the world and their complexity required that those partnerships did more. Cooperation must be based on coordination. Equally important were interregional partnerships, such as the one between the African Union and the European Union.
Carmen Liliana Burlacu, Secretary of State for Global Affairs of Romania, said that the topic of today’s debate was most timely, given challenges to peace and security in many parts of the world, including Eastern Europe. Regional organizations played an important role in facing situations that threatened international peace and security, she said, calling for cooperation frameworks that were flexible, responsive and consistent with the United Nations Charter.
“The global community is at a critical juncture,” said Fred Mitchell, Minister for Foreign Affairs and Immigration of the Bahamas, representing the Chair of the Caribbean Community (CARICOM). Building new partnerships would be essential going forward, and the United Nations must lend its weight to securing adequate and predictable financing for small island developing States and middle-income countries such as the ones in his region. In addition, the United Nations and its regional and subregional partners must ensure that a legally binding agreement was reached this year on climate change.
Georges Rebelo Chikoti, Minister for Foreign Affairs of Angola and Chair of the International Conference on the Great Lakes Region, said that the severity and number of conflicts in the world required stronger partnerships among the world’s organizations. In the Great Lakes region, countries and peoples were interlinked and conflict in one country could easily spread to others. He outlined a number of proposals for strengthened partnerships, including earlier coordination at the onset of a crisis, more systematic reporting, joint assessment missions and the enhanced mobilization of resources to implement agreed mandates.
Iyad Ameen Madani, Secretary-General of the Organization of Islamic Cooperation, listed a number of today’s most pressing challenges, including reaching out to the most marginalized and vulnerable, protecting the freedom of the individual and regaining “retreating” tolerance in many countries. When those challenges erupted, no country was immune, and there was no option but to work together. Regional and subregional organizations demonstrated the comparative advantage of local and regional knowledge, he said, stressing the need to pool resources, build capacities and benefit from those advantages in a horizontal manner.
Other ministers or heads of organizations participating in the debate were: Nabil ElAraby, Secretary-General of the Arab League; Lamberto Zannier, Secretary General, Organization for Security and Co-operation in Europe (OSCE); Erastus Mwencha, Deputy-Chairperson, African Union Commission; and Albert Ramdin, Assistant Secretary-General of the Organization of American States; and Alain Le Roy, Secretary-General, European External Action Service.
Also speaking in the morning session were the representatives of Guatemala (on behalf of the Central American Integration System), Ecuador (on behalf of the Community of Latin American and Caribbean States), Malaysia (on behalf of Association of South-East Asian Nations) and Tajikistan (on behalf of the Collective Security Treaty Organization).
This afternoon, the Assembly held two panel discussions related to the strengthening of cooperation between the United Nations and regional and subregional organizations.
The Assembly reconvened on 5 May for a plenary session. It adopted a negotiated political declaration on the outcome of the high-level debate.
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Coordinating mining conservation efforts in Liberia
Liberia emerged from 14 years of civil war in 2003 as one of the poorest countries in the world with unemployment estimated to be 86 percent. Although the country has made progress, access to basic services continues to be limited and almost two-thirds of Liberians live below the poverty line. The recent Ebola epidemic dealt another devastating blow to the people and the economy.
While Liberia’s mining sector has the potential to become a significant engine for growth, reconstruction and broader-based development, it also poses a threat to the last extensive forest areas of West Africa. The Upper Guinean Forest that runs through Liberia originally covered an estimated 1,265,000 square kilometers, but only one-tenth of the original vegetation remains.
Pervasive poverty and competition for commercial land contracts for palm oil, mining and forestry are major threats. The challenge is to protect the rich biodiversity that remains, while striking a balance between economic interests and respecting the legal and customary rights of local people.
“Mining is of growing importance for Liberia’s welfare, but the rich biodiversity of our forests also presents us with a responsibility to balance economic growth and conservation through strong governance, coordination and a regulatory framework,” said Deputy Minister of Mineral Resources of Liberia, Sam Russ at the recent launch of a World Bank Group study entitled “A National Biodiversity Offset Scheme: A Road Map for Liberia’s Mining Sector.” Russ emphasized that “Liberia urgently needs financial and technical assistance to put these biodiversity plans in place.”
The World Bank hosted a panel discussion to launch the study on March 26, 2015 that brought together experts from the Liberian government, the World Bank, conservation NGOs and mining companies active in Liberia. Biodiversity offsets are designed to compensate for the amount, type and quality of habitat that is likely to be affected by a proposed project by making improvements of the same amount, type and quality of habitat at new locations.
The study recommends the application of a common methodology by all mining companies working in biodiverse areas to ensure that conservation offsets are coordinated at the national level so their cumulative impact is greater and follows the national interest.
“This research has concluded that beyond doing no harm – the development of mineral resources in Liberia, accompanied by national biodiversity offsets, can help secure the long-term protection of biodiversity resources on which the poor and vulnerable are so dependent”, said Inguna Dobraja, Country Manager of Liberia for the World Bank.
Liberia is already taking the progressive step of legally requiring mining companies to implement biodiversity offsets to compensate for impacts arising from project development. However, this approach could result in a number of small ad hoc offsets that do not necessarily respond to the conservation priorities in Liberia and lack the necessary protection to ensure long term sustainability. A key challenge is that the capacity of mining companies to implement offsets effectively is often limited.
Both the Liberian government and the various mining companies expressed their support for working together on the development of a nationally coordinated biodiversity offsets scheme.
“After working on biodiversity offsets in Liberia for some years, we’re starting to demonstrate that they can benefit both biodiversity and people but there needs to be long term commitment from communities, government, companies and development agencies. This World Bank report is only the beginning; and we look forward to engaging on next steps”, said John Howell, environmental manager of ArcelorMittal Liberia Ltd, a mining company that has been mining iron ore in northern Nimba County for nearly four years.
Many challenges remain, both in terms of capacity and methodology but in close coordination with the government, the World Bank is working to develop a methodology and capacity building for implementation of the roadmap. One of the first steps will be the establishment of a Conservation Trust Fund that will function as an investment vehicle through which mining companies can offset their impacts, in return for biodiversity credits, dedicated to the expansion and support of a protected areas network.
“This biodiversity work is key to the livelihoods of the rural poor that are often dependent on natural ecosystems and features such as forests, oceans, soils, freshwater and wildlife,” said Bilal Rahill, Director of the Environment and Natural Resources Global Practice at the World Bank.
At the same time the World Bank has been increasing its focus on environmental performance and conservation efforts in coordination with the mining industry. Given the industry’s potential to generate jobs and revenue that support growth in Africa, the World Bank is working with governments to strengthen governance of the extractive industries so that the benefits of growth are equitable while respecting both the environment and communities.
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African Union Ministers of Trade Meeting (AMOT), Addis Ababa, Ethiopia
Dedicated Session of Experts and Senior Officials followed by Ministers of Trade, 08-15 May 2015, Addis Ababa, Ethiopia
Introduction
Following the recommendation of the 9th Ordinary Session of the Conference of African Union Ministers of Trade (CAMOT 9) held in Addis Ababa, Ethiopia in December 2014, the AU Executive Council in January 2015 directed the AUC to organize a Dedicated Session of Senior Trade Officials preceded by a meeting of experts in preparation for the launch of the Continental Free Trade Area (CFTA) negotiations (Ref: EX.CL/Dec.857 (XXVI)). In addition, the January 2015 Assembly of Heads of State and Government reaffirmed its commitment to launch CFTA negotiations in June 2015 and requested Ministers of Trade to meet and finalise preparations for the launch (Ref: Assembly/AU/Dec.555(XXIV) .
It is in this context that the African Union Commission (AUC) is organising a Meeting of trade experts/Senior Trade Officials followed by a meeting of Ministers of Trade to be held from 08-15 May 2015 at the African Union Commission Headquarters in Addis Ababa, Ethiopia.
Preparations for the launch of the CFTA negotiations
CAMOT 9 emphasised the importance of technical studies in the preparation for the launch of the negotiations. In response to the request of the Ministers, the Commission, working in collaboration with the United Nations Economic Commission for Africa (UNECA), United Nations Trade and Development Conference (UNCTAD), Trade Law Centre (Tralac) and the Trade Advocacy Fund (TAF) commissioned a number of technical studies. The areas covered by the studies include Rules of Origin regimes in Africa, gap analysis of existing studies on the CFTA, the role of trade in services in CFTA negotiations, options on levels of trade liberalization for the CFTA, among others.
During the Meeting, Experts/Senior Officials 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), the Draft Roadmap for the CFTA Negotiations and the Draft Declaration and Decision launching the CFTA Negotiations. The Institutional Arrangements for the CFTA negotiation were agreed upon during CAMOT.
Experts/Senior Officials will be expected to deliberate and agree on the objectives and principles that will guide the negotiations for the establishment of the CFTA. The meeting is also expected to discuss and agree on the Terms of Reference for the CFTA-Negotiating Forum, the Draft Roadmap for the CFTA Negotiations and consider the Draft Declaration and Decision launching the CFTA Negotiations for submission to the Ministers. Senior Trade Officials are also expected to give guidance of the nature of activities that will mark the launch on the negotiations as well as ways of strengthening the capacity of the AUC to support CFTA negotiations.
The Ministers of Trade will consider the recommendations of the Senior Officials as well as the revised working documents and give guidance on the way forward as Africa builds up to the launch of CFTA negotiations.
Objectives of the Meetings
The main objectives of the Meeting of Experts/Senior Trade Officials are to consider all the preparatory issues and develop a Road Map towards the launch of the CFTA negotiations for consideration by the Ministers of Trade. Specifically, they will undertake the following:
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Review studies on various technical areas on the CFTA such as Rules of Origin, trade in services, among others;
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Consider and adopt the Draft Objectives and Principles Guiding the negotiations of the CFTA,
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Consider and adopt the Draft Terms of Reference for the CFTA-Negotiating Forum;
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Consider and Adopt the Draft Road Map for the establishment of the CFTA;
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Consider and adopt the Draft Approach and Schedule for the CFTA negotiations;
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Consider and adopt the Draft Declaration and Decision launching the CFTA Negotiations.
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Rising Productivity of Capital: The Untold Story of Africa’s Recent Growth
UNCTAD’s latest policy brief identifies the rising productivity of capital in Africa as an important characteristic of recent growth and offers policy recommendations on how to sustain and improve upon the progress that has been made in this area.
As a result of Africa’s relatively good economic performance over the past two decades, there is the view that the continent has reached a turning point in its development history and is poised to play a more significant role in the world economy in the medium to long term. Yet not much is known about the nature and character of the continent’s recent growth.
This policy brief identifies the rising productivity of capital in Africa as an important characteristic of recent growth that has not been discussed in the literature and offers policy recommendations on how to sustain and improve upon the progress that has been made in this area.
Key points:
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Africa’s recent growth has gone hand in hand with a significant increase in the productivity of capital.
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The productivity of capital in Africa in the period 2000-2011 was much higher than those of developing countries in America and slightly higher than those of Asia.
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Although there has been an improvement in the efficiency of total investment, compared to the private sector the efficiency of public investment is still relatively low.
The ideas and issues discussed in this policy brief are based on information in the UNCTAD Economic Development in Africa Report 2014: Catalysing Investment for Transformative Growth in Africa.
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AfDB backs Botswana’s economic transformation, approves 2015-2019 Country Strategy Paper
Executive Directors of the African Development Bank Group (AfDB) have endorsed the Bank’s Botswana Country Strategy Paper (CSP) 2015-2019; which provides a framework for the Bank Group support to Botswana during the period to enable the country achieve inclusive sustainable growth.
The Bank’s support will focus on two pillars – (i) infrastructure development; and (ii) private sector development. These pillars are consistent with the core priorities of the Bank’s Ten Year Strategy, 2013-2022, and the priority actions of the country’s 10th National Development Plan.
Discussing the CSP at their regular meeting in Abidjan on Wednesday, April 29, 2015, Board members observed that infrastructure project-driven productivity would provide opportunities for Botswana’s private sector development.
This will be complemented by promoting private sector participation in public service provision through public-private partnerships (PPPs), and enabling policy and regulatory reforms. The CSP also emphasizes knowledge solutions to inform policy formulation.
According to the CSP, Botswana is at a critical juncture in its development noting that the 2009 global financial crisis exposed the country’s vulnerability to external shocks due to its reliance on one commodity. Real Gross Domestic Product contracted by 7.8 percent from an annual average growth of 10 percent experienced over the previous four decades. In addition, Botswana’s economy will face a difficult challenge in the medium term with the depletion of its diamond resources.
All of these call for a rethinking of the country’s development strategy. In particular, Botswana needs to accelerate economic transformation from the primary sector to advanced manufacturing and services in order to reduce its vulnerability to shocks in the diamond trade. To revive private sector investments and increase the productivity of economic investments, the government would have to invest in high impact infrastructure to improve competitiveness, provide a sound regulatory business as well as enhance skills development.
In the circumstance, the Bank underscored the need for flexibility and responsiveness to the country’s changing needs for lending and advisory services. For instance, the Bank will develop a rolling three-year pipeline of potential operations with confirmation done on an annual basis. This will be followed by the development of annual operations business plans aligned to the government’s financing priorities. It will creatively use its range of financial products, in addition to PPPs, to implement the CSP; as well as continue to coordinate closely with development partners to improve development effectiveness and enhance operational collaboration.
The Bank’s portfolio comprised six operations as at January 31, 2015. Agriculture accounted for 94.7 percent of the total portfolio, followed by multi-sector (3.9 percent) and social sector (1.4 percent).
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Spotlight on cross-border trade with Swaziland
Illicit trafficking in smuggled goods like medicines and tobacco continued to plague cross-border trade between South Africa and Swaziland, Thomas Moyane, Commissioner of the South African Revenue Service (Sars), said at a meeting with Swazi customs authorities last week.
Moyane also discussed measures to counter money laundering with his Swazi counterpart, Dumisani Masilela, Commissioner General of the Swaziland Revenue Authority.
“The matter of dealing with the vexing questions of an illicit economy with attendant negative consequences deserves our two countries’ urgent attention.
“Let alone that these goods pose serious health challenges, they also rob the fiscus of its due. Accordingly, it is very important that we work together to deprive life to this illicit economy,” said Moyane at a press conference.
No figures were given on the size of cross-border smuggling operations or projected revenue losses to the countries’ customs services from illegal trade, but the problem was of sufficient concern to warrant a summit between the two heads of their revenue services, the customs directors said.
Moyane admitted that the public needs to better understand customs procedures, and said as one example of better public relations: “We can pronounce as custodians of tax and customs what it is that we are doing to facilitate trade between our countries.
“We recently signed a Memorandum of Understanding between our countries based on the Value Added Tax (VAT) agreement. This agreement is intended to operationalise how we handle VAT incurred on the purchases in South Africa,” said Moyane.
The VAT agreement recently went into effect at South African and Swazi border posts, streamlining goods declaration and tax collection procedures so Swazis purchasing goods in South Africa need not be taxed twice on their purchases.
However, the system depends on Swazis shopping or buying business inputs in South Africa to honestly declare goods when returning to Swaziland.
Masilela admitted that full declaration of goods remains a problem.
Citing co-operation between South Africa and Swaziland on border procedures, Moyane spoke passionately of the need for regional integration of customs operations.
He offered as one example of regional co-operation a region-wide extension of border post operating hours.
Masilela and Moyane expressed a desire to see South Africa’s border post with Swaziland operating on a 24/7 basis, and said work toward extended border post hours is underway.
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Security, energy and roads take big share of budgets in the region
East African governments have increased their annual budgets for the 2015/2016 fiscal year, with more spending directed to security and key sectors expected to drive growth.
But the ballooning spending plan for the region comes against the backdrop of faltering revenue collection and declining donor support, creating a fertile ground for increased domestic borrowing.
In Rwanda, the total budget for fiscal year 2015/16 is projected at $2.47 billion, reflecting an increase of $8.26 million, compared with the 2014/15 revised budget of $2.46 billion.
The Finance Ministry announced that Rwf882.5 billion ($1.32 billion) equivalent to 50 per cent of the total budget will finance economic transformations, rural development, employment and accountable governance.
Economic transformation projects will be allocated Rwf413 billion ($619 million) – 23 per cent while rural development will be get Rwf227.9 billion ($341.8 million) – 13 per cent.
Productivity and youth employment will be allocated Rwf152 billion ($228 million) – nine per cent while the remaining Rwf89 billion ($133 million) – five per cent will go to accountable governance.
Foundational areas (education, health, public accounts, justice and sustainable development) will receive Rwf645.6 billion ($968.4 million) or 37 per cent of the total budget. Rwf240 billion ($360 million) or 14 per cent will go to service delivery and ICT promotion.
Donor funding is expected to decline to 5.7 per cent of the gross domestic product (GDP) in 2015/2016 from 7.3 per cent of GDP in 2014/15 as development partners opt to channel funds directly to specific projects and to non-governmental organisations
According to the budget estimates released last week, Tanzania plans to spend $12.31 billion in 2015/2016 compared with the current budget of $10.87 billion. The key feature of the country’s 2015/16 provisional spending plan is the absence of general budget support funds.
Tanzania is facing souring relations with donors, who are hesitant to open their purses over corruption allegations.
Speaking at a pre-budget presentation, MPs complained of poor implementation of the budget, saying only 50 per cent of the current budget had been achieved.
In Uganda, MPs complained that the government proposes to increase its expenditure by 19.3 per cent to $5.9 billion from $5 billion, with the bulk of the allocation going to the Ministries of Defence, Energy and Roads.
Agriculture and social sectors such as education and health will thus suffer a decline in the percentage allocation, they said. Budget estimates show that funding for the security sector increased by $118 million from $381.6 million on account of increased classified expenditure in South Sudan. Allocations to the roads sector rose to $1.1 billion from $786.6 million while the budget for the energy sector grew by $313.8 million to $916 million.
Aston Kajara, the Minister of State in charge of Privatisation, said social sectors are poor at absorbing budgetary funds.
Low absorption has already affected the disbursement of donor funding from lenders like the World Bank, the African Development Bank and the European Union. Lending from these donors is expected to drop from $341.9 million to $328.9 million, mostly affecting agriculture, health and education.
The Ugandan government is set to increase non-concessional borrowing with 25 per cent of the budget being financed by loans from commercial institutions.
The country is attempting to reduce the pace of internal borrowing, which has crowded the private sector out of financial markets in recent years.
In Kenya, the government proposes to increase total spending for the 2015/2016 fiscal year to a massive $21.27 billion from $19.14 billion in 2014/2015.
The National Treasury has increased the allocation to the military and the police to $2.28 billion from an estimated $2 billion in the 2014/2015 fiscal year.
The police department also benefited from an additional $106.38 million while the defence and intelligence department secured an extra $170.21 million.
About $7.6 billion will be spent on development programmes (including parliament and judiciary) while ministerial expenditure will amount to $8.36 billion.
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