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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.
The fiscal deficit will be financed through external borrowing of $3.62 billion, domestic loan repayments ($23.4 million), National Bank of Kenya rights issue ($53.19 million) and domestic borrowing ($2.33 billion).
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South Africa: Merchandise Trade Statistics March 2015
The South African Revenue Service (SARS) has released trade statistics for March 2015 that recorded a trade surplus of R0.48 billion. This figure includes trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).
Including BLNS
The R0.48 billion surplus for March 2015 is due to exports of R91.34 billion and imports of R90.86 billion. Exports increased from February 2015 to March 2015 by R14.75 billion (19.3%) and imports increased from February 2015 to March 2015 by R5.55 billion (6.5%). The cumulative deficit for 2015 is R32.62 billion compared to R27.22 billion in 2014.
Trade highlights by category
The month-on-month export movements:
R’ million
|
|
|
Section:
|
Including BLNS:
|
|
Precious Metals & Stones
|
+ R4 697
|
+ 37.8%
|
Machinery & Electronics
|
+ R1 864
|
+ 25.1%
|
Base Metals
|
+ R1 551
|
+ 15.5%
|
Vehicle & Transport Equipment
|
+ R1 372
|
+ 12.6%
|
Mineral Products
|
+ R1 344
|
+ 8.3%
|
The month-on-month import movements:
R’ million
|
|
|
Section:
|
Including BLNS:
|
|
Vehicle & Transport Equipment
|
+ R2 544
|
+ 29.1%
|
Machinery & Electronics
|
+ R2 061
|
+ 10.7%
|
Mineral Products
|
+ R1 266
|
+ 8.7%
|
Equipment Components
|
+ R 508
|
+ 7.6%
|
Vegetable Products
|
- R1 102
|
- 41.5%
|
Trade highlights by world zone
The world zone results from February 2015 to March 2015 are given below.
Africa:
Exports: R26 221 million – this is an increase of R3 251 million from February 2015
Imports: R11 097 million – this is a decrease of R 475 million from February 2015
Trade surplus: R15 124 million
This is a 32.7% increase in comparison to the R11 398 million surplus recorded in February 2015
America:
Exports: R9 118 million – this is an increase of R1 514 million from February 2015
Imports: R10 411 million – this is an increase of R 978 million from February 2015
Trade deficit: R1 293 million
This is a 29.3% decrease in comparison to the R1 829 million deficit recorded in February 2015
Asia:
Exports: R26 904 million – this is an increase of R4 176 million from February 2015
Imports: R39 223 million – this is an increase of R 872 million from February 2015
Trade deficit: R12 319 million
This is a 21.1% decrease in comparison to the R15 623 million deficit recorded in February 2015
Europe:
Exports: R21 658 million – this is an increase of R3 382 million from February 2015
Imports: R28 910 million – this is an increase of R4 828 million from February 2015
Trade deficit: R7 252 million
This is a 24.9% increase in comparison to the R5 806 million deficit recorded in February 2015
Oceania:
Imports: R1 045 million – this is a decrease of R 657 million from February 2015
Trade surplus: R 47 million
This is an improvement compared to the R 901 million deficit recorded in February 2015
Excluding BLNS
The trade data excluding BLNS for March 2015 recorded a trade deficit of R8.58 billion.
The R8.58 billion deficit for March 2015 is as a result of exports of R79.50 billion and imports of R88.07 billion. Exports increased from February 2015 to March 2015 by R13.70 billion (20.8%) and imports increased from February 2015 to March 2015 by R5.18 billion (6.3%). The cumulative deficit for 2015 is R57.13 billion compared to R52.44 billion in 2014.
Trade highlights by category
The month-on-month export movements:
R’ million
|
|
|
Section:
|
Excluding BLNS:
|
|
Precious Metals & Stones
|
+ R4 999
|
+ 43.9%
|
Machinery & Electronics
|
+ R1 522
|
+ 25.5%
|
Base Metals
|
+ R1 409
|
+ 15.2%
|
Mineral Products
|
+ R1 381
|
+ 9.6%
|
Vehicles & Transport Equipment
|
+ R1 161
|
+ 12.1%
|
The month-on-month import movements:
R’ million
|
|
|
Section:
|
Excluding BLNS:
|
|
Vehicles & Transport Equipment
|
+ R2 529
|
+ 29.0%
|
Machinery & Electronics
|
+ R2 001
|
+ 10.5%
|
Mineral Products
|
+ R1 254
|
+ 8.6%
|
Equipment Components
|
+ R 508
|
+ 7.6%
|
Vegetable Products
|
- R1 108
|
- 42.2%
|
Trade highlights by world zone
The world zone results from February 2015 to March 2015 are given below.
Africa:
Imports: R8 310 million – this is a decrease of R 838 million from February 2015
Trade surplus: R6 062 million
This is a 100.1% increase in comparison to the R3 029 million surplus recorded in February 2015
BLNS (Only)
Trade statistics with the BLNS for March 2015 recorded a trade surplus of R9.06 billion.
The R9.06 billion surplus for March 2015 is as a result of exports of R11.85 billion and imports of R2.79 billion.Exports increased from February 2015 to March 2015 by R1.06 billion (9.8%) and imports increased from February 2015 to March 2015 by R0.36 billion (15.0%). The cumulative surplus for 2015 is R24.51 billion compared to R25.22 billion in 2014.
Trade Highlights by Category
The month-on-month export movements:
R’ million
|
|
|
Section:
|
BLNS:
|
|
Machinery & Electronics
|
+ R 342
|
+ 23.4%
|
Vehicles & Transport Equipment
|
+ R 211
|
+ 16.5%
|
Chemical Products
|
+ R 171
|
+ 20.5%
|
Base Metals
|
+ R 142
|
+ 19.1%
|
Precious Metals & Stones
|
- R 302
|
- 29.1%
|
The month-on-month import movements:
R’ million
|
|
|
Section:
|
BLNS:
|
|
Precious Metals & Stones
|
+ R 270
|
+ 122.7%
|
Machinery & Electronics
|
+ R 60
|
+ 30.5%
|
Textiles
|
+ R 45
|
+ 14.4%
|
Chemical Products
|
- R 35
|
- 6.2%
|
Prepared Foodstuff
|
- R 74
|
- 16.4%
|
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Public participation key to Kenya’s devolution
Kenya’s devolution, adopted following the March 2013 general elections, is expansive in scope and implementation timelines. A significant portion of public finances and responsibility for service delivery in health, agriculture, urban service and local infrastructure was rapidly devolved to 47 new county governments in less than a year, instead of over the planned three-year transition period.
This ambitious devolution shifts some key decision-making from central to county governments, creating a window of opportunity for more ‘bottom-up’ engagement, backed by a Constitution and legal framework that include provisions for government to share information, consult the public and regularly gather citizen feedback.
“Kenya has a powerful legislative landscape, providing an array of clear, pragmatic provisions and principles,” said Mwanamaka Mabruki, Principal Secretary, Ministry of Devolution and Planning. “The challenge now is on implementation, providing an enabling environment for service delivery with the necessary capacities, systems, and regulations at county level.”
Public Participation in Sub-national Government
As Kenya enters its second year of devolution, the focus is on the role of public participation in promoting accountability and enhancing local service delivery.
“Kenya’s emphasis on public participation resonates with global experience, which shows that building bottom-up participatory mechanisms is a key ingredient to effective decentralization,” said Chris Finch, team leader of the World Bank’s Kenya Accountable Devolution Program.
The government and the World Bank Group have developed the Devolution Working Paper Series, which sets out options and a framework for strengthening participation in decentralized governance and service delivery. Based on extensive research and lessons from global experiences, KSG and the WB have published six working papers covering the following areas:
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Basic requirements for public participation in the legal framework
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Lessons from past Kenya experiences with participation in local development funds
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Lessons from an initiative to strengthen participation in local Kenya health facilities
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A review of initial county efforts to enhance participation
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Practical approaches for facilitating public participation in county government.
The working paper series are part of a package of devolution support that the World Bank provides to the Kenya School of Government (KSG), including support to develop KSG training and technical assistance for county officials responsible for financial management and managing participation.
Challenges and opportunities for public participation
The working papers, although with public participation in the devolved government, have been the focus of two regional dialogues and a national forum convened by KSG. The events drew deputy county governors, executives and assembly members, as well as representatives from the Council of Governors, Ministry of Devolution and Planning, civil society and development partners. Participants agreed that both citizens and government have the responsibility to make public participation work.
The papers highlight that county governments and civil society are innovatively engaging citizens by publishing citizen-friendly budgets, holding structured planning and budgeting forums and using social media to share and receive information. However, these good practices are unique to a few counties.
Whilst there is a strong impetus towards conducting public participation, there is a gap between the provisions in the legal framework and actual practice on the ground. There are also different views of what constitutes effective participation.
“The approaches have to be practical when we go out there to implement in the sun and dust,” said Muranga County’s Deputy Governor, Augustine Gakure Monyo. “We need clear policies and guidelines for public participation so we can carry out our duties,” added Ruth Odinga, Deputy Governor of Kisumu County.
Although counties are mandated to facilitate public participation, they face challenges – such as how to engage disadvantaged communities especially in marginalized areas including arid and semi-arid regions. “Counties should consider translating public information into local languages to expand outreach,” said Geoffrey Kaituko, speaker of the Turkana County Assembly.
The working papers identify steps to strengthen participation, including developing clear guidelines and minimum standards, civic education and outreach to build awareness. Other proposed actions include counties allocating budget for public consultations and outreach, developing feedback mechanisms, and building capacity of government officials to facilitate public consultations and disseminate user-friendly information.
Building on past Kenya experience, the papers also highlight how partnerships between civil society and county governments can be a useful approach to design and roll-out participatory processes and ensure representation at the grassroots level, including marginalized groups.
“Real citizen participation is about the ability to influence outcomes,” said Wanjiru Gikonyo, head of The Institute for Social Accountability, “and it’s both beneficial to the county governments and to citizens; it’s the root of success.”
The KSG-WBG partnership is part of analytical and technical assistance provided to Kenya under the World Bank’s Kenya Accountable Devolution Program (KADP). KADP is supported by the governments of Australia, Finland, Sweden, the United Kingdom and the European Union and the World Bank Group.
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World Bank to help improve Malawi’s main national highway and border posts to facilitate regional trade
The World Bank Group’s Board of Executive Directors on 29 April 2015 approved a US$69 million credit to help improve Malawi’s road and border post infrastructure connecting the country to regional trade corridors in southern Africa.
The funds have been provided to Malawi by the International Development Association (IDA*) under the second phase of the Southern Africa Trade and Transport Facilitation Program which aims to ease the movement of goods and people along the North-South Corridor (NSC) and at the key border crossings in Malawi, whilst supporting improvements in road safety and health services. The NSC runs for 3900 km from the port city of Dar-es-Salaam in Tanzania to Durban in South Africa.
“Malawi being a landlocked country needs to be well-connected to ports and other key cities through good quality roads to help reduce transport costs which are one of the major obstacles to increasing trade and economic growth,” says Richard Record, Acting Country Manager for Malawi. Much as the regional road network is in fair condition, some sections in Malawi and her neighbors are in poor condition and the railway services are unreliable, resulting in 80 percent of all freight in the NSC being moved by road transport.
The program will focus on the M1 Road which is the backbone of Malawi’s road network. The priority routes will be in the northern part of Malawi namely the Karonga-Songwe (46 km), Kacheche-Chiweta (70 km) and Mzimba Turn Off-Mzuzu-Kacheche (147km). The Karonga-Songwe portion of the road carries 22 percent of Malawi’s foreign trade to Songwe, the border point with Tanzania. It is also important for Zambia as it provides the shortest route to Dar-es-Salaam. All these priority routes are in agriculturally productive areas thus will benefit the local communities to transport their produce.
Beyond roads, the program will also upgrade and modernize border post facilities to improve trade facilitation at Songwe on the Tanzania border, and Dedza, Mwanza, and Muloza border crossings on the Mozambique Border. Among other improvements will be structured sharing of information across borders, ICT connectivity, interagency co-operation, and equipment for physical inspections.
Apart from infrastructure, the program will also help Malawi address road safety which is a major problem in the country. Seven priority accident blackspots at trading centres along the M1 will be treated. These are: Chimbiya, Lumbadzi, Mponela, Lizulu, Tsangano/Biriwiri, Kampepuza, and Lunzu. “These blackspots contribute to a significant number of fatalities and serious accident injuries yet most hospitals have poor capacity to provide adequate trauma care, and the country lacks a coordinated emergency response system. The program will therefore address these issues,” says Richard Martin Humphreys, the Bank’s Task Team Leader for the program. In addition, the program will support the implementation of a road safety strategy prepared with support from the European Union.
The program will be implemented by the Roads Authority whose capacity will also be built, including that of the Ministry of Transport and Public Works. The implementation period is expected to be six years, closing in December 2021.
* About IDA
The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 77 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.8 billion people, the majority of whom live on less than $2 a day. Since 1960, IDA has supported development work in 112 countries. Annual commitments have averaged about $18 billion over the last three years, with about 50 percent going to Africa.
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Unfair trade practices hurting East Africa’s investment climate
East Africa’s competitiveness as an investment destination is at risk from the rising incidence of unfair trade practices among firms operating across the region.
The delayed enactment of the East African Community Competition Act (2006) has created loopholes for trade associations and firms operating across the region to engage in exclusive agreements, and from cartels, forcing consumers to pay relatively higher prices for goods and services.
The operationalisation of the Act, however, requires EAC member countries to have in place national competition laws and institutions.
Kenya and Tanzania already have fully functioning national competition laws while Burundi has enacted its own Competition Act and is in the process of creating the necessary institutions.
Although Rwanda already has various laws in place to regulate unfair trade practices, a specialised authority to enforce the competition and consumer protection laws has not been established. Uganda is also in the process of enacting competition laws.
“There is a serious problem of cartels as some of these companies operate across the region. We have advised our government to ensure that the East Africa Community Competition law comes into force from July 1,” said Wang’ombe Kariuki, director-general of the Competition Authority of Kenya (CAK).
The EAC Council of Ministers is working on the EAC Competition (Amendment) Bill 2015, which seeks to amend the Competition Act to establish a mechanism to eliminate counterfeiting and piracy in the region.
The Bill is further expected to create a conducive investment climate, free of unfair competition practices and also promote intellectual property rights in the region.
“The 16th meeting of the Legal and Judicial Affairs Sectoral Council advised the 30th Council of Ministers that the East African Competition Amendment Bill 2015 meets the legal requirements of the Treaty and may be introduced in the East African Legislative Assembly,” an official from Kenya’s Ministry of East African Community Affairs told The EastAfrican last week.
“The 30th Council of Ministers held in Nairobi on November 20-28, 2014 decided that the Bill be introduced in EALA.”
Kenya is set to launch investigations into the conduct, practices and procedures of trade associations, which have come under the spotlight for colluding with its members to fix consumer prices.
It has been established that despite clear provisions in the Kenyan competition law, many trade associations continue to have rules, practices and procedures that contravene the Act. These trade malpractices are undermining the region’s competitiveness as an investment destination.
Top on the list of trade associations to be probed are those in the financial, agriculture and agro-processing sectors. The probe, to be undertaken under a newly-introduced Special Compliance Process (SCP), will inform further inquiries into the conduct of member firms.
Through a notice in the Kenya Gazette to be published in June this year, the Competition Authority of Kenya will give powers to the SCP to require trade associations in the financial services and agriculture sectors to align their operations with the competition law.
The proposed Special Compliance programme is expected to grant associations a chance to streamline their operations and adhere to the competition law.
The SCP is expected to address and resolve inadvertent contraventions of the competition law and foster better practices in the future.
The competition body said individuals found engaging in restrictive trade practices will, if convicted, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding $107,526.88.
Trade associations have been blamed for being at the centre of many cartels, which are partly responsible for the high prices of goods and services in Kenya.
CAK said the high cost of living in the country is partly driven by unscrupulous practices and a cartel-like business environment.
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Seeing value where others see challenges – The Story of South African businesses in Nigeria
Another Look at Pan-Africa Cooperation Beyond the Lens of Xenophobia
Following the break-out of Xenophobic attacks targeted at African nationals, living and working in South Africa, in the Durban area of South Africa, which was sparked-off by the retrenchment of some South African blue-collar workers and their replacement with foreigners from other African Countries, trade and mutual cooperation agreements such as the NEPAD have been threatened. But beyond this crisis, what clearly stands out, is the need to encourage intra-Africa cooperation, rather than allow this crisis destroy it, in order to boost shared growth and prosperity on the African Continent. Apart from this, South Africa also needs to check growing inequality, beyond the trumpeted black empowerment programme, which has done very little to bridge the inequality in South Africa, through an affirmative action which places an emphasis on compulsory education and a development programme directed at opening up slum areas and creating cottage industries.
However, to overcome the vestige of Africa as the Dark Continent, Africa needs to integrate on the economic front in order to drive growth and boost shared prosperity. If China, with a population of 1.2 billion people can build an economic power-house, Africa, with a combined population of 903 million people can do the same thing.
The Paradox of Having a Huge Economy with Weak Infrastructure and Un-coordinated Policies
With a population of 170 million people out of Africa’s 903 million total headcount, which represents one-fifth of the continent’s population, Nigeria is a huge paradox for global investors looking for opportunities in Africa.
When Nigeria’s huge potential is juxtaposed with unsavoury conditions which are detrimental to investment, such as corruption, excessive bureaucratic bottlenecks and infrastructure challenges, an investor is likely to face a huge dilemma.For instance, the World Bank’s 2013 “Doing Business” survey puts Nigeria at 185th out of the 189 countries it surveyed on ease of getting electricity. In addition to shortfalls in power generation, transmission and distribution, transportation systems and other critical support infrastructure are also relatively under-developed. This, coupled with the endemic corruption and the bureaucratic red-tape make doing business in Nigeria tougher than in other climes.
Beyond these challenges, however, Nigeria offers a basket of opportunities for the intrepid. Nigeria is currently rated as the biggest economy in Africa, accounting for 26% of the economic output in sub-Saharan Africa and over 70% of the economic output in the ECOWAS region. Except for the year 2015, which has seen a reduction in growth projections because of falling oil prices and the anticipated crisis from the general elections, Nigeria has maintained an average year on year economic growth of 6% in the last 10 years.
Other macro-economic variables have also remained relatively stable over this period.
Despite these positive indices, business in Nigeria is admittedly tricky, hence the departure of a lot of European and American trans-national corporations and the refusal of others to operate in Nigeria. Aside core investors in commodity and extractive industries – and a couple of players in manufacturing, who had been operating in Nigeria before its independence from Great Britain in 1960, a lot of European and American Technology and Consumer Goods businesses do not dare to take the plunge.
It is therefore no surprise that the likes of Starbucks, McDonald’s, and a host of other companies involved in retail and distributive trade are missing the huge opportunities presented by Africa’s biggest and most populous economy. To these companies, the risks outweigh the possible benefits – a clear case of seeing the cup as half empty.
The loss of these European and American companies is the gain of South African companies. Operating in Nigeria despite the huge challenges, they are reaping huge returns on their investment. From the foregoing, it is glaring that navigating Nigeria’s interesting investment paradox, borders on differences in perspective.
While the West is seeing the glass as half empty, Chinese and South African companies are seeing the glass as half full and are therefore coming to the party with enthusiasm and a “can-do” spirit. This positive perspective informed MTN’s huge investment in the Nigerian Tele-communications Industry in 2001 – at a time when Nigeria was perceived as one of the low value ends of the frontier markets.
Given that the MTN investment was a Greenfield investment in a newly liberalized industry, the huge risk which MTN took at its market entry into Nigeria was such that the company’s share price initially plummeted on the Johannesburg Stock Exchange. However, as if it knew what others did not know, MTN was undeterred and continued to inject the liquidity needed to shore up its Nigeria operations. The investment paid off and as the cliché goes, the rest is history.
Beyond Half-Full: How Have South African Investments Fared in Nigeria?
Despite the infrastructure challenges, bureaucratic bottlenecks and corruption often cited as the bane of investing in Nigeria, South African businesses appear better suited to the Nigerian business environment than their Western counterparts.
From the retail end, with players such as Shoprite and Game, to Hotel and Hospitality with the Protea Hotel chain (which was recently acquired by Marriot, the American Hotel chain), onto Media and Cinema with companies like MultiChoice and Nu-Metro, banking and financial services – Stanbic IBTC Bank, First Rand Bank, Old Mutual and Nedbank (which recently acquired a sizable stake in Ecobank, the Nigeria led Pan-Africa Banking Franchise), and other mid-sized businesses dotting the Nigerian business landscape, South Africa today stands as one of the major players in the Nigerian economy.
Following the restoration of democracy in Nigeria in 1999 and the adoption of the New Partnership for Africa Development (NEPAD) statute in the early 2000’s, South Africans were quick to identify opportunities in Nigeria and were bold in their market entry. First to make a statement with its entry was MultiChoice, which had arrived well before the return of democratic governance and adoption of the NEPAD Agreement, and its entry re-invented the media, cable and pay-TV industry in Nigeria.
Offering unparalleled value within the local market, MultiChoice quickly became a monopoly, dominating the Nigerian market and making it difficult for the local players to compete in this capital intensive industry. Following the MultiChoice example, MTN also rolled out its services as the second player within the newly liberalized Nigerian
Telecommunications market, immediately asserting its leadership of the industry, rolling out critical infrastructure across Nigeria and making huge investments in brand building.
Unsurprisingly, MTN became the market leader in less than one year of its operations.
While MTN was growing value in the Telecommunications sphere, the Protea Hotel chain was also planting its presence in Nigeria’s major cities. Today Protea is the largest hotel chain in Nigeria, operating through a unique franchise model which seeks out Nigerian hotel and hospitality Investors as partners, while bringing in its own brand franchise and management expertise.
Furthermore, South Africa also registered its presence in the Nigerian Financial Market with the entry of Stanbic Bank, a wholly-owned local subsidiary of South Africa’s Standard Bank. Seeing the need to grow its presence in Nigeria, it soon acquired a mid-sized local Universal Bank with a huge Investment Banking franchise – the IBTC Chartered Bank. It is on record that the deal is the first ever tender offer in Nigeria and with it came a 525 million dollar Foreign Direct Investment, the biggest single investment in Nigeria’s financial industry till date.
Through this investment, South Africa was able to make inroads into the Nigerian stock exchange given the fact that IBTC Chartered Bank was then the largest equity trader by volume and value on the Nigeria exchange as well as the largest portfolio manager and is represented on the council of the Nigerian Stock Exchange. Furthermore, this strategic acquisition also brought South Africa into Nigerian government bond management because the acquired Bank is the sole broker for the Federal Government of Nigeria and was picked by the government to be the settlement bank for the electronic warehouse receipt system introduced by the Nigerian Commodity Exchange.
Aside from the Stanbic IBTC success story in the Banking sector, South Africa is also deepening its participation in the Nigerian manufacturing and consumer goods sector. Tiger Brands, a South African company, recently bought a majority stake in UAC Foods and Dangote Foods. This strategic acquisition comes as a move to shore up the earnings of Tiger Brands, which has flattened at home, given Nigeria’s huge consumer market.
Furthermore, Shoprite, another South African firm, is making huge forays into the Nigerian retail sector, with retail presence in key Nigerian cities of Lagos, Ibadan, Enugu, Ilorin and a host of others. The fast expansion of the Shoprite franchise is driven by a retail boom in Nigeria. The retail sector in Nigeria has continued to expand, with value sales increasing strongly in 2013 and 2014, faster than GDP growth.
This development is propelled by an expansion in Nigeria’s urban and middle class population and an increase in disposable income. Away from retail, South Africa has also entered Nigeria’s lucrative beer market with SABMiller. SABMiller recently built a state-of-the-art brewery in Onitsha, in the South-East of Nigeria, and is gradually growing its distributive capacity pan-Nigeria.
Aside from all of the businesses mentioned above, there other new entrants into the Nigerian economy from South Africa, and these includes, Nedbank, FirstRand, Old Mutual, Sanlam and MMI Holdings.
Initial Policy Obstacles and South Africa’s Entry in the Era of Liberalisation
The curious though unspoken question on the lips of international venture capitalists and investors, is how come the South Africans seem to be succeeding where others are failing? This question comes against the background of the noted challenges in the Nigerian environment which are compounded by the absence of a stable policy environment.
The history of international investments in Nigeria before the return of democracy was not particularly savoury, what with the indigenisation decree of the 1970’s under the Military governments of Murtala Mohammed and General Olusegun Obasanjo, which saw a lot of foreign business interests in Nigeria ceding their stakes to Nigerian shareholders in a push for the localization of multi-national businesses in Nigeria. This move saw the exit of Shell Petroleum and British Petroleum from the down-stream sector of Nigeria’s lucrative Oil and Gas market.
As if the set-backs of the 1970’s were not enough, the structural imbalance of the 1980’s also saw the plummeting of industrial capacity in Nigeria. This situation arose largely from the rationing of foreign exchange under a corrupt and highly politicized import licence order. Given this scenario, there were frantic calls for structural reforms. These reforms were soon ripe and ready, following the huge debts which Nigeria incurred from the London and Paris club of Creditors.
Initial reforms were thus undertaken in the late 80’s to early 90’s, tailored towards budgetary tightening and fiscal discipline with a view to raising industrial capacity in order to reduce dependence on imported finished goods. Prodded further by the Breton Woods Institutions, to undertake more reforms, given its huge sovereign debt, the Nigerian Military government under General Ibrahim Babangida, announced more fiscal reforms; starting with the Second-tier Foreign Exchange Market, which saw the devaluation of the naira, and the Structural Adjustment Programme which engendered a high-level of fiscal tightening in a bid to refocus the economy.
As all these reforms were going on, the Nigerian economy was still largely perceived as unattractive to Foreign Investors in Europe and America who only saw opportunities in the commodities and extractive industries and were uninterested in deepening their involvement in the Nigerian manufacturing and retail sectors having been scarred by the indigenization decree promulgated by the Murtala/Obasanjo Military regime. The conventional wisdom at the time was therefore to stay aloof to the reforms and the liberalisation of critical sectors of the Nigerian economy that followed thereafter.
Therefore, while the Nigerian government devalued its currency and made it attractive for smart foreign investors to take advantage of its economic liberalisation policy, investors watched from afar, wary of the policy-somersault. It was this confused and highly volatile environment that South Africa was soon to profit from, following the return of democracy in 1999 and a renewed push for foreign direct investment by the new democratically elected government.
Boosting Intra-Africa Trade: The Nigeria/South Africa Example
Aside from the existence of South African companies in Nigeria, Nigerian businesses are also gradually making in-roads into South Africa, thereby helping to boost the intra-Africa trade that was very low before the advent of the New Partnership for Africa Development (NEPAD). Nigerian energy firm, Oando, for example, is listed on the Johannesburg Stock Exchange, while Dangote Group has also invested over $378 million in South Africa’s cement industry. In addition to these two companies, there are also a couple of other Nigerian businesses in South Africa such as Arik Air, First Bank and Union Bank which have representative offices in South Africa.
Between 2007 and 2008, trade volumes between both countries stood at approximately $2.1 billion. By 2012 this figure had increased to $3.6 billion. It must be noted that 83% of this trade figures came from South Africa’s purchase of crude oil from Nigeria. Between 2002 and 2012, South African imports from Nigeria increased by about 750%, with crude oil sales accounting for a greater chunk of this figure. This scenario points to the fact that, outside of trade in crude oil and commodities, trade volumes between both countries are still relatively low.
The Down-side of South Africa’s Involvement in Nigerian Economy
The South Africans may have cashed in on the opportunities availed by the liberal regime bought on by the new democratic order in Nigeria and are making a kill where the west did not initially see any prospects, but there are a couple of things South Africa is also not getting right.
One of these is the tendency of South African firms to only trade among themselves rather than patronize local options in Nigeria. It is usually alleged that MTN Nigeria, in giving out its banking and collection mandate, will prioritise Stanbic IBTC Bank, a bank with South African interest, above local Nigerian Banks. The same is said of the other South African businesses. This situation has tended to increase the mistrust between Nigerian local businesses and their South African counterparts. Given this situation, the prevailing feeling within the Nigerian business community is that the South Africans are not returning the friendly gesture of Nigerian businesses and consumers towards South African interests and are therefore not displaying ‘brotherly’ love towards Nigerian businesses.
Aside from this, there is also the issue of the monopolistic tendency of South African firms which creates industrial tensions, especially in the Telecoms and pay-TV segments of the Nigerian economy where South African behemoths like MTN and MultiChoice are dominant. Accusations are rife about the deployment of arm-twisting tactics in the bid by these players to retain their dominant positions. Beyond this, there are also the allegations of over-pricing of services in Nigeria, in comparison to the prices these firms charge in South Africa.
Furthermore, there is also the issue of the non-reciprocation of Nigeria’s open door policy in South Africa. The poser often raised by cynical Nigerian business analysts is, ‘which major Nigerian company has made any inroads worth mentioning in South Africa even though South Africans are making a huge kill in Nigeria?’Skeptics also cite the exit of THISDAY Newspaper from South Africa under a very curious circumstance, as proof of hostility of South Africa to Nigerian businesses.
Complaints about the non-reciprocity of the open door policy to Nigerian businesses in South Africa often create inter-government friction, to the extent that bi-lateral relations between the two countries was nearly damaged in 2012 when 125 Nigerian business travelers to South Africa were denied entry into South Africa for not having valid Yellow Fever certificates. The Nigeria government, in retaliation, also expelled 56 South Africans. This situation led to huge tensions which were later resolved with the easing of travel restrictions
Beyond the Opportunities and Challenges, What Does the Future Hold for Nigeria-South Africa Business Relationship?
Having x-rayed the opportunities and challenges of South African companies doing business in Nigeria, it is evident that great prospects lie ahead for this ingenuous partnership which is opening up vistas of opportunities for boosting intra-Africa trade. However, a couple of things need to be addressed on both sides:
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Easing of Visa processing and travel restrictions
While it may be tough to have a visa free regime or a visa-on-arrival situation, there is the need to ease visa processing in order help facilitate the interchange of business between both countries.
- The setting up of a clearing house for the resolution of business and investment disputes
Given the necessity for speedy resolution of business disputes between both countries, there is the need for the setting up of a conflict resolution mechanism outside of the traditional legal and arbitration systems provided by both countries. This will help ease investment processes and speed up transaction time while creating better value for investors seeking opportunities in both countries.
- The need for reciprocity in the spirit of African brotherhood.
There is the need for reciprocity in term of access to opportunities between both countries. This will go a long way in strengthening relationships and lessening tension.
- Political and fiscal risk
This is particularly important because if businesses are not sure of the political and fiscal risks that they are likely to confront, it might stifle investment and lead to value attrition. The withdrawal of the 2.3Giga Hertz (GHz) licence initially awarded to Multilinks (the Nigerian subsidiary of Telkom), which happened under very curious circumstances, was one of the reasons for the exit of the company from Nigeria.
- Resolving the issue of high costs of doing business
This particularly relates more to the Nigeria environment than the South African environment. Nigeria needs to bridge her infrastructure deficit in order to be able to attract more quality investments from South Africa. A situation where a company like the MTN was saddled with building its own backbone before being able to operate in Nigeria is not standard practice and will therefore not be the case in more investment friendly environments. There is the need for Nigeria to look more critically at building the necessary support infrastructure which will make doing business in Nigeria a lot cheaper and help drive foreign direct investment.
Facilitating Intra-Africa Trade by Setting the Right Example – The Nigeria/South Africa Option
The popular view that Africa stands to benefit more from trade among Africans than trading with Europe, America and Asia rings true when one considers the progress made so far in Nigeria’s partnership with South Africa and the benefits that have accrued there-from. However, more effort is required to take this to the next level.
Currently, Africa’s intra-regional trade stands at about 10-12 percent of Africa’s entire trade. This is very small when compared with intra-regional trade within North America which is over 40 percent and intra-regional trade in Western Europe which is about 60 percent. African Countries trade more with America, China and Europe than they do among themselves. This is largely attributable to the existence of artificial barriers to trade as well as poor transport and communication infrastructure across Africa. Furthermore, the lack of a political will to affirm commitments on the lifting of cross-border restrictions on the movement of goods and services across Africa beyond mere promises represents a major hindrance to achieving the desired end-state.
Given the need for the economic integration of Africa, African leaders adopted the decision to establish a Pan-Africa Continental Free Trade Area (CFTA) by the indicative date of 2017 taken during the 18th Ordinary Session of Heads of State and Government of the African Union that was held in Addis Ababa, Ethiopia, in January 2012. But, beyond boosting intra-Africa trade by strengthening trade within regional blocs in Africa, there is the need for the big economies and fast growing economies in Africa to set the right example by removing barriers to trade among themselves. Nigeria, South Africa, Egypt and other fast growing economies in Africa such as Kenya and Angola warehouse about 45 percent of Africa’s total economic output, and given the need to raise intra-Africa trade, Nigeria and South Africa, two of Africa’s economic power-house need to take the lead.
Dealing with the Xenophobia Issue – The Need for Constructive Rather Than Combative Engagement
A lot of Nigerians are pushing for the boycott of South African businesses as an option in the fight against Xenophobia, but beyond this combative posture, there is the need to push for a more inclusive environment where South Africa learns to open its door, just as we have opened ours. Truth is, we cannot fight evil with evil, we will get nowhere with that, as the real people who will benefit from such an arrangement are the Europeans, Americans and Asians (especially the Chinese). Already, intra-Africa trade is less than 10 per cent of total trade emanating out of Africa, and beyond East Africa, real economic integration is lacking on the Continent. Truth is, no one can love us more than ourselves, so the best route to deal with this crisis and put an end to the recalcitrance of a few violent locals in South Africa is through constructive engagement rather than a combative posture which might fritter the little gains made so far.
Bolaji Okusaga is the Managing Director of The Quadrant Company, a Lagos based Public Relations Consultancy.
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Communiqué of the Extraordinary Meeting of the SADC Summit of Heads of State & Government
1. An Extraordinary Summit of the Heads of State and Government of the Southern African Development Community (SADC) was held in Harare, Republic of Zimbabwe on 29th April 2015 and considered the SADC Industrialisation Strategy and Roadmap as decided by the 34th Ordinary Summit held in August 2014 in Victoria Falls, Zimbabwe.
2. The Strategy and Roadmap operationalises the theme of the 34th Summit: “SADC Strategy for Economic Transformation: Leveraging the Region’s Diverse Resources for Sustainable, Economic and Social Development through Beneficiation and Value Addition”.
3. The Extraordinary Summit was attended by the following Heads of State and Government and or their representatives:
Botswana : H.E. President Lt. Gen. Seretse Khama Ian Khama
Lesotho : Rt. Hon. Prime Minister Pakalitha Mosisili
Madagascar : HE. President Hery Rajaonarimampianina
Mozambique : H.E. President Filipe Jacinto Nyusi
Namibia : H.E. President Dr. Hage Geingob
South Africa : H.E. President Jacob Gedleyihlekisa Zuma
Swaziland : H.M. King Mswati III
Zambia : H.E. President Edgar Lungu
Zimbabwe : H.E. President Robert Mugabe
United Republic of Tanzania : H.E. Vice President Dr. Mohamed Gharib Bilal
Angola : Hon. George Rebelo Pinto Chikoti, Minister of External Relations
DRC : Hon. Raymond Tshibanda N´Tungamulongo, Minister of Foreign Affairs, International Cooperation and Francophonie
Malawi : Hon. Dr. George T. Chaponda, M.P., Minister of Foreign Affairs and International Co-operation
Seychelles : Hon. Vincent Meriton, Designated Minister for Social Affairs, Community Development and Sports
Mauritius : Ambassador Mrs Usha Dwarka-Canabady, Acting Secretary for Foreign Affairs and SADC National Contact Point
4. The Extraordinary Summit was also attended by SADC Executive Secretary, H.E. Dr. Stergomena Lawrence Tax.
5. H.E. Robert Gabriel Mugabe, President of the Republic of Zimbabwe, SADC Chairperson and host of the Extraordinary Summit welcomed the SADC Heads of State and Government and other delegates to the Republic of Zimbabwe. Opening the Summit, President Mugabe applauded the collective resolve by SADC to the industrialization of the region. He underscored the critical importance of beneficiating and adding value to the abundant resources of the region in the quest for socio-economic development and poverty eradication among the people of the region.
6. Summit commended the people and governments of Six (6) SADC Member States namely Botswana, Mozambique, Namibia, Mauritius, Zambia and Lesotho for holding peaceful, free, fair and credible elections.
7. Summit congratulated Their Excellencies, President Lt. Gen. Seretse Khama Ian Khama of Botswana, Rt. Hon. Prime Minister, Anerood Jugnauth of Mauritius, President Filipe Jacinto Nyusi of Mozambique, President Edgar Lungu of Zambia, President Dr. Hage Geingob of Namibia and Rt. Hon. Prime Minister Pakalitha Mosisili of Lesotho for emerging victorious in the elections held in their respective countries.
8. Summit witnessed the handing over, by the President of the Republic of Zimbabwe, His Excellency Robert Gabriel Mugabe, of the Regional Peacekeeping Training Centre, a facility established in Zimbabwe to harmonize peacekeeping training in the SADC region. In her acceptance speech, the SADC Executive Secretary, Dr. Stergomena Lawrence Tax, thanked the Republic of Zimbabwe for the generosity of donating the Centre to SADC as it plays a pivotal role in the maintenance of peace, security and political stability in the region, which are prerequisites for development.
9. Summit approved the SADC Industrialisation Strategy and Roadmap and reaffirmed the importance of industrial development in poverty alleviation and the economic emancipation of the people of the region.
10. The SADC Industrialisation Strategy is anchored on three pillars, namely, Industrialisation, Competitiveness and Regional Integration, and premised on a three-phase long perspective covering 2015 – 2063. The Industrialisation Strategy is aligned to the Continental Vision, Agenda 2063, a global strategy aimed at optimising the use of Africa’s resources for the benefit of all Africans.
11. Summit underscored the critical importance of infrastructure in support of industrilisation and the need to explore appropriate funding mechanisms to support the implementation of the Industrialisation Strategy.
12. Summit directed the Secretariat to finalise the development of a costed Action Plan to facilitate the urgent implementation of the Industrialisation Strategy and Roadmap.
13. Summit directed that the industrialization strategy be accorded top priority in the implementation of the Revised RISDP (2015 – 2020).
14. The Summit commended the Council of Ministers, the Ministerial Task Force on Regional Economic Integration, the Experts and the SADC Secretariat for an excellent job in finalizing the Industrialisation Strategy in record time.
15. Summit approved the Revised Regional Indicative Strategic Development Plan (2015 – 2020) that will guide the implementation of SADC programmes in the next five years, with four major priority areas, namely, Industrial Development and Market Integration; Infrastructure in Support of Regional Integration; Peace and Security Cooperation as a prerequisite or regional integration and Special Programmes of regional dimension.
16. Summit noted progress on the COMESA-EAC-SADC Tripartite initiative and the launch of the Tripartite Free Trade Area (TFTA) by the Tripartite Summit, which is scheduled to take place in June 2015. In this regard, Summit noted the draft Declaration Launching Phase II Negotiations for the TFTA and endorsed the principles to guide SADC in the finalisation of the Declaration.
17. Summit noted progress on the Tripartite Industrialisation Pillar and urged SADC, COMESA and EAC to urgently finalise the Roadmap and programme of work on Industrialisation.
18. Summit also noted the state of preparedness for the launch of the negotiations for the Continental Free Trade Area (CFTA) and adopted a common SADC position on industrialisation within the context of the CFTA negotiations.
19. Summit conveyed heartfelt condolences to the family, the people and Government of the United Republic of Tanzania, on the death of Brigadier General Ambassador Hashim Mbita (Rtd), former Secretary General of the then Organisation of African Unity Liberation Committee, during which he immensely contributed towards the liberation of the SADC Region in particular, and Africa in general.
20. H.E. President Jacob Zuma of the Republic of South Africa briefed Summit on the recent attacks against foreign citizens, including those from SADC Member States that occurred in parts of Durban and Johannesburg communities of South Africa. While condemning the attacks, Summit commended the measures that the Government of South Africa has put in place and resolved to work together to deal with the situation and ensure it does not recur.
21. H.E. Hery RAJAONARIMAMPIANINA, President of the Republic of Madagascar made a report on the national reconciliation process in Madagascar. The Summit noted the efforts accomplished by the President and encourages him to continue the progress in favor of the ongoing process. He also recognized the support of SADC and the international community in crisis resolution process.
22. The Extraordinary Summit was officially closed by the SADC Chairperson, H.E. President Robert Gabriel Mugabe of the Republic of Zimbabwe.
23. Summit expressed its appreciation to the Government and people of Zimbabwe for hosting the Summit and for the warm hospitality extended to all the delegates.
DONE AT HARARE, ZIMBABWE
APRIL 29, 2015
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Namibia backs regional parliament
Speaker of the National Assembly Professor Peter Katjavivi has revealed Namibia fully supports efforts to transform the SADC Parliamentary Forum (SADC-PF) into a SADC Regional Parliament.
Katjavivi revealed Namibia’s stance on the planned SADC regional parliament when he recently confered with the Secretary General of SADC-PF, Dr Esau Chiviya, who led SADC-PF directors and managers on a courtesy call at the Speaker’s chambers.
Describing himself as “a converted” man with respect to the genesis and aspirations of SADC-PF, Katjavivi said Namibia was with those seeking the transformation of the forum in keeping with its founding objectives.
“You are speaking to the converted. I share the vision (of a transformed SADC-PF) and am particularly interested in the path that you have charted and the groups that you have formed to convince our leaders,” Katjavivi said.
He told his guests efforts to transform SADC-PF were intensifying and “music” to his ears.
Earlier, Chiviya had briefed Katjavivi on the initial objectives, success, challenges and aspirations of the SADC-PF. Additionally the SG outlined steps that the SADC-PF had taken as it prepared for the transformation into a SADC Regional Parliament.
The steps included requesting a meeting of SADC Speakers with the Chairperson of SADC to present the case, establishing lobbying teams, making contact with the SADC executive secretary and preparing a lobbying document for SADC heads of state and government, the Council of Ministers and the SADC Secretariat.
Why a SADC Regional Parliament?
Chiviya said a SADC Regional Parliament was needed because as things stand the SADC region has only two instead of three arms of government, namely, the executive based in Gaborone and the SADC Tribunal based in Windhoek but which is currently suspended.
“The third arm – the legislature – is missing. There is, therefore, need for a SADC Regional Parliament to complete the three arms of SADC as a community,” Chiviya expounded.
He said in the establishment of SADC PF in 1997, SADC PF was viewed as a forerunner to the SADC Regional Parliament.
He said 11 SADC member parliaments rallied behind the transformation of SADC-PF into a Regional Parliament by debating and passing motions to that effect.
What a SADC parliament would do
He explained a SADC regional parliament would facilitate the ratification, domestication and implementation of SADC Protocols.
“There are over 33 protocols that our heads of state and government have passed. However, less than a third of them has been implemented,” he noted.
Accordingly, Chiviya said that a SADC regional parliament would enhance the capacity of SADC to implement its policies and programmes.
“It would also enact model regional laws on issues that cut across national boundaries such as those related to the environment, the movement of people, shared water courses, trade, gender equality and transport.”
At what, whose cost?
Over the years, some stakeholders have sought clarity on the financial implications of the envisaged SADC Regional Parliament. Chiviya explained that it would come at no additional cost to member states given that the current SADC-PF Secretariat in Windhoek would serve as the Secretariat of the SADC Regional Parliament. The SADC Regional Parliament would hold its sessions on a rotational basis in member parliaments in accordance with current practice. Also, its office-bearers would not be full-time but would be presiding officers of national parliaments while its financing would be based on the current model of equal contribution from member parliaments. The headquarters of a SADC Regional Parliament would continue to be in Namibia.
Going forward
A noticeably excited Katjavivi commended Chiviya for providing a “comprehensive briefing” and revealed that Namibia had taken a decision to hand over the current National Assembly building to SADC-PF once it becomes a SADC Regional Parliament.
“You have demonstrated a very good sense of sensitivity to financial implications of this transformation,” he said.
He however advised SADC-PF to continue working closely with stakeholders including the media to explain the benefits that would accrue from transforming SADC- PF into a SADC Regional Parliament.
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UNCTAD calls on Investment Promotion Agencies to act on sustainable development at G20 conference in Istanbul
UNCTAD Secretary-General Mukhisa Kituyi has called on investment promotion agencies (IPAs) to do more to attract investment for sustainable development.
Speaking at the 20th anniversary of the World Association of Investment Promotion Agencies (WAIPA), in Istanbul, Turkey on 27 April 2015, Dr. Kituyi said it was important for countries to prepare and promote bankable projects in sustainable development sectors.
He also focused on the importance of facilitating business linkages and the creation of partnerships that can lead to the development of SDG incubators and special economic zones.
Later this year global leaders will meet in New York to hammer out an agreement on ending poverty, disease and environmental degradation, known as the sustainable development goals, or SDGs.
UNCTAD has already calculated a major shortfall in financing needed to meet the SDGs in developing economies, estimated to be around $2.5 trillion per year between now and 2030.
Also speaking at the two day-meeting, which was held as part of Turkey’s presidency this year of the G20 group of countries, Deputy Prime Minister Ali Babacan of Turkey praised WAIPA and the work of IPAs as engines for economic development through the promotion and facilitation of investment.
Mr. Babacan restated the G20’s desire to establish a global forum for small and medium-sized enterprises. UNCTAD representatives at the meeting expressed its support for this initiative.
WAIPA is based in Istanbul and has a membership of 170 national and subnational IPAs from 130 countries.
The agreement to establish WAIPA was reached in April 1995 during an UNCTAD meeting of IPAs in Geneva.
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Trade volumes soar in African ports despite challenges, says report
A new report has described African ports especially those in West Africa as the least efficient globally. However, the report explained that trade volume is on the increase despite the challenges.
According to the report, how to best serve the region is a daily dilemma for shipping lines, adding that CMA CGM subsidiary recently announced an “emergency port congestion” surcharge for Doula, Cameroon to be implemented on May 1, 2015.
“Despite modest gains reported in the first three months of 2015, overall reliability to and from the (African) continent is still far from optimal,” said the co-author of the study, Victor Shieh.
Shieh noted that with container shipping lines deploying much bigger ships on services from Asia, quay and landside congestion at African ports is a massive challenge for the industry.
The report explained that even the planned new terminals at Abidjan, Tema, Lome and Lagos, “which are forecast to add up to 12 million Twenty foot Equivalent Units (TEU) of quayside capacity, will only improve reliability if there is land-based infrastructure growth as well”.
According to the London Loadstar, West Africa’s ports are almost entirely dependent on roads to remove containers, “so it follows that the bigger the ships, the more severely landside congestion will affect nearby cities”.
It explained that vessels of 5,000 TEU or more account for more than 20 per cent of tonnage deployed between Asia and West Africa, and “MSC has even introduced an 8,500-TEU ship on its Africa Express Service that hubs at Lome, Togo”.
For the year 2014, the Nigerian Ports Authority (NPA) recorded a cargo throughput of 86,603,903 metric tonnes of cargo, an increase of 12.64%, 6 per cent over the 2013 figure of 76,886,997 metric tonnes.
Reacting to the result, recently, Managing Director of NPA, Habib Abdullahi said within the year, management continued to pay attention to first and foremost improving existing port infrastructure in the areas of rehabilitation of port quay walls and apron, deepening of channels, upgrading of common user facilities and wreck removal from channels.
A statement issued by the Assistant General Manager (Public Relations) Iliya Musa explained that the LNG shipment topped the figure with 21,679,330 metric tons, indicating an increase of 12.1% over 19,341,663 metric tons in 2013. According to IIiya, General Cargo trade also showed strong growth as it recorded 14,502,263 metric tons, an increase of 21.2% over 11,964,978 metric tons in 2013 while Dry Bulk stood at 9,843,199 metric tons, showing an increase of 3.2% over 9,537,442 metric tons achieved in 2013, the statement said. Refined Petroleum was 20,736,699 metric tons, an increase of 6.8% over 19,416,043 metric tons in 2013.
Laden Container Throughput was 1,063,380 TEUs, a growth of 5.2% over 1,010,836 TEUs in 2013. Empty Container Throughput was 790,586 TEUs, an increase of 10.3% over 717,011 TEUs in 2013.This shows that Nigeria remains a significant hub of containerized goods in the West and Central Africa.
Crude Oil shipment stood at 107,880,239 metric tons, an increase of 0.2% over 107,686,011 metric tons in 2013. Also, the total of 5,541, oceans going vessels with a total Gross Registered Tonnage (GRT) of 147,852,920 gross tons called at Nigerian Ports.
In the period under review, Lagos Port Complex (LPC) recorded a Gross registered tonnage of 36,969,456, showing an increase of 7.2 per cent over 34,466,291 gross tons achieved in the same period of 2013.
Tin can Island Port recorded a Gross registered tonnage of 50,011,289, indicating 17 per cent increase over the corresponding period of 2013 which was 42,758,161 gross tons. Calabar Port complex recorded a total GRT of 4,085,903 showing an increase of 46.3 per cent compare with 2,792,488 gross tons recorded in 2013.
Rivers Port complex recorded a total Gross registered tonnage of 7,304,591, representing 14.2per cent growth over 6,394,270 gross tons achieved in the corresponding period of 2013. Onne Port complex recorded a GRT of 41,854,687, reflecting an increase of 7.4 per cent over 38,967,131 gross tons recorded in the corresponding period of 2013.
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Development Effectiveness Review 2014 – Energy
Energy is one of the most essential requirements for Africa’s development. In the 21st century, it is a matter of concern that over 620 million Africans still live without the benefits of an electricity connection. A reliable and affordable energy supply is key to generating the broad‑based and inclusive economic growth needed to make major inroads into poverty; it can transform the lives and livelihoods of Africans, helping them to take charge of their own development.
Energy is also a field of opportunity for Africa. The continent has significant share of the world’s renewable energy sources, of which only a fraction is under development. Africa has the potential to leapfrog over carbon‑intensive technologies and meet most of its future energy needs from renewable sources, putting it firmly on the path to green and inclusive growth.
The African Development Bank has therefore placed energy at the heart of its portfolio. Over the past four decades, we have invested over $13 billion in the energy sector, to boost generation capacity and rural electrification.
We help African countries build modern energy sectors that are socially, economically and environmentally sustainable.
We will support regional investments that link national electricity systems into regional power pools, to enable power‑sharing across national borders and promote more efficient regional planning of energy infrastructure.
Working closely with our member states and international partners, the Bank will help the continent and its people realise the vision of reliable, affordable and sustainable power for all Africans.
Level 1: Africa’s progress in the energy sector
Over 620 million Africans are living without the benefits of an electricity connection, a situation that limits both their quality of life and their livelihood opportunities. African businesses suffer from high energy costs and unreliable connections that limit their competitiveness. Extending access to affordable and reliable energy is fundamental to achieving inclusive growth.
This chapter summarises Africa’s progress towards universal energy access. It looks at electrification rates across the continent; the rate of expansion of national power grids and innovative, off-grid solutions for remote areas; Africa’s abundant clean energy potential and what is required to develop it; measures to improve energy efficiency and to foster regional cooperation in energy; institutional development in the sector; and the emergence of new approaches to financing energy infrastructure. In this chapter we draw on the indicators from the first level of our Results Measurement Framework.
Level 2: The Bank’s contribution to the energy sector
This chapter sets out the Bank’s contribution to Africa’s energy needs, looking at policies, strategies and investments to increase access to affordable and reliable energy. We show how our programmes have developed over recent years, with a shift towards clean and renewable energy and a focus on increasing energy efficiency. We also describe how we have fostered regional cooperation and strengthened governance and energy sector reforms. Finally, we explain our efforts to help African countries attract increased finance into the sector, particularly from private sector investors.
To assess the Bank’s contribution to Africa’s energy sector, we will build up our results from the project level. In Level 2 of our Results Measurement Framework for energy operations, we have 15 indicators that aggregate outputs from Bank projects that closed between 2009 and 2013 and for which we have Project Completion Reports. We also look at the results expected in 2014-18 from ongoing projects, giving us a 10-year period of analysis. To help explain these results, we provide examples of our energy projects at work. Lastly, we review some of the lessons learnt from implementing energy projects.
Level 3: How well is the Bank managing its energy portfolio?
This chapter reviews how well the African Development Bank manages its portfolio of operations in the energy sector, drawing on the 16 indicators in Level 3 of our Results Measurement Framework. We assess the quality of our project designs, our generation of new knowledge, our use of environmental and social safeguards, and our progress on addressing gender equality issues across the portfolio.
We track whether projects are being implemented efficiently, and whether we are complying with our aid effectiveness commitments. We discuss our work to mitigate emissions through clean energy and energy efficiency savings, and examine how we are improving resilience to climate change impacts through our operations.
Level 4: How efficient is the Bank in supporting its energy operations?
Level 4 of our Development Effectiveness Review tracks how well we manage our organisation in order to deliver our energy projects efficiently and effectively, using the eight indicators of our Results Measurement Framework. We set out the changes we have made to our organisational structure and describe the new financing instruments we have developed to promote investment in the sector. We assess progress in creating a conducive working environment. We also look at the placement of energy professionals in the context of the Bank’s wider decentralisation programme.
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Tension looms at SADC summit in Zim over xenophobia
Tensions over attacks on migrants in South Africa will be officially set aside as regional leaders meet for a summit in Zimbabwe on Wednesday to plan industrial growth, an official said.
But heads of state from countries whose nationals were killed or forced to flee might choose to raise the issue, Zimbabwe’s presidential spokesperson George Charamba told AFP.
“It’s an extraordinary summit and by definition it’s a one-issue summit,” he said.
“Whether people are going to take advantage and bring the matter up will be at the discretion of the heads of state.”
At least seven people died and thousands were displaced by the violence in South Africa earlier this month against migrant workers from countries such as Zimbabwe, Mozambique and Malawi.
The presidents of all three of those countries - and President Jacob Zuma - will be among the 10 heads of state at the one-day summit of the Southern African Development Community (SADC) in the Zimbabwean capital Harare.
Sophisticated economy
The subject of the summit - industrialisation - could itself raise the issue of why so many citizens of neighbouring countries head for South Africa, the continent’s most sophisticated economy, to find work.
Zuma, who condemned the attacks after an outcry at home and abroad, focused on the problem on Tuesday in a manner unlikely to have been well received in neighbouring capitals.
“We cannot shy away from discussing the reasons that forced migrants to flee to South Africa,” he said. “All of us need to handle our citizens with care.”
Host President Robert Mugabe, for example, has been blamed for a collapse in Zimbabwe’s economy which has sent millions of his people to seek work in South Africa.
But Zuma himself has been criticised at home for failing to reduce rampant unemployment and poverty, which are seen as an underlying cause of the violence by mobs who accused migrants of stealing their jobs.
Industrialisation strategy
The Harare meeting is a follow-up to a summit in Victoria Falls last August which resolved to discourage the export of primary goods and develop industries to ensure the region reaps maximum benefit from its resources.
“The summit will discuss SADC’s draft industrialisation strategy and the regional indicative strategic development plan,” Charamba said.
Briefing journalists after a ministers’ meeting ahead of the summit, Zimbabwe’s foreign minister Simbarashe Mumbengegwi said “the idea is that the processing should be done in the region”.
“As you know, the bulk of our products are exported in their raw form and we get little returns from them,” Mumbengegwi said.
Many member countries of SADC, which seeks to promote socio-economic, political and security co-operation, are rich in minerals.
Heads of state expected at the summit are presidents Jacob Zuma (South Africa), Edgar Lungu (Zambia), Peter Mutharika (Malawi), Ian Khama (Botswana), Joseph Kabila (Democratic Republic of Congo), Kailash Purryag (Mauritius), Filipe Nyusi (Mozambique), Hage Geingob (Namibia), King Mswati III (Swaziland) and Prime Minister Pakalitha Mosisili (Lesotho).
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Resilient growth in Sub-Saharan Africa, despite strong headwinds
Growth in sub-Saharan Africa should remain robust but decelerate in the wake of the decline in oil and commodity prices.
The IMF’s latest Regional Economic Outlook for sub-Saharan Africa projects that the economy of the region is set to register another year of solid performance, expanding at 4½ percent in 2015. While this rate will be at the lower end of the range experienced over the last few years, sub-Saharan Africa will remain among the fastest growing regions of the world.
The deceleration in growth reflects the adverse impact of the sharp decline in the prices of oil and other commodities. However, this impact will be highly differentiated across the region.
On the one hand, growth among oil importers will remain strong, notably in low-income countries, driven by investment in mining and infrastructure and by strong private consumption. Excluding South Africa – where growth is expected to remain lackluster, held back by continuous problems in the electricity sector – and Guinea, Liberia, and Sierra Leone – where the Ebola outbreak continues to exact a heavy economic and social toll – growth among oil importers is still expected to reach close to 6 percent in 2015 and 6½ percent in 2016.
On the other hand, the eight oil-exporting countries in the region, hard hit and with limited savings to fall back on, are expected to undertake significant fiscal adjustment, with adverse implications for growth. Growth among these countries is now expected at 4½ percent in 2015, some 2½ percentage points lower than what had been expected six months ago.
Fiscal deficits are set to remain high or worsen in several countries. Among oil exporters, fiscal adjustment efforts will offset only partially the impact of lower oil prices, while in some other countries fiscal deficits are expected to remain close to the elevated levels of 2014. In the countries hit by Ebola, worsening fiscal positions reflect the efforts to combat the disease.
Downside risks
In that context, the outlook is subject to various downside risks. Countries depending on external financing to cover large deficits are vulnerable to a steep increase in their financing costs that could be triggered, for instance, by the normalization of monetary policy in the United States.
Further weaknesses in Europe and Japan and an abrupt slowdown of growth in China could also lower the demand for sub-Saharan Africa’s products, driving growth lower and widening fiscal imbalances. Meanwhile, further dollar appreciation would make imports more expensive, lower investment and growth, and fuel inflationary pressures.
Region-specific risks also exist. Security-related risks have recently come to the forefront in a number of countries; should these risks escalate, they would generate serious fiscal costs, hamper growth, and deter domestic and foreign investors. In addition, elections in a number of countries in 2015 could complicate the implementation of politically difficult policies; and while there are indications that the Ebola epidemic is coming under control, the situation remains fragile.
Fiscal adjustment and economic diversification
In the short term, faced with a massive shock and limited external reserves and fiscal savings, oil exporters will have no choice but to undertake fiscal adjustment. Where feasible, allowing exchange rate flexibility will be important to help preserve scarce external reserves. In addition, low oil prices provide a unique opportunity to introduce politically difficult energy subsidy reforms across the region.
The current shock is also a powerful reminder of the need to make more rapid progress toward economic diversification. To that end, addressing the infrastructure gap remains critical to allow new higher-productivity sectors to develop and to achieve sustained, high, and inclusive growth. In scaling up investment spending, though, countries should remain mindful of the need to preserve debt sustainability.
Harnessing the demographic dividend
The Regional Economic Outlook also discusses, in two background studies, how countries in the region may benefit from current demographic trends and how they can become more integrated in global trade.
The first study considers the implications of the rapid increase in the sub-Saharan African population, projected to grow to 2 billion by 2050 and 3.7 billion by 2100. As a consequence, the region will become the main source of new entrants into the global labor force over the next 20 years. The experience of East Asia and Latin America, which underwent a similar transition in the past, suggests that these trends could yield a valuable “demographic dividend.”
However, the magnitude of this dividend will critically depend on the speed of decline in fertility rates and on the strength of accompanying policies. The study finds that the largest dividend will be gained if policies are focused on a set of interlinked actions, including fostering private sector development outside agriculture, bridging the infrastructure and human capital gaps, tackling labor market rigidities, and supporting stronger trade ties.
Effectively mobilizing the increase in domestic savings arising from the demographic transition could also spur higher investment and growth. Implementing these policies could lift sub-Saharan Africa’s GDP per capita by as much as 50 percent by 2050.
Better integrating into global value chains
The second study reviews the region’s integration into the global economy, with a special focus on trade and participation in the global value chains. It finds that sub-Saharan Africa has become significantly more open to trade since the 1990s, developing new partnerships with China and other emerging markets as well as trade within the region. However, while the expansion of trade has contributed significantly to growth, productivity gains have lagged those recorded in other regions.
Looking ahead, the study finds that there are still substantial opportunities for further regional and global trade integration. Even after accounting for factors such as low levels of income, small economic size, and distance, trade flows from sub-Saharan Africa are still significantly smaller than in the rest of the world.
Likewise, the region still has some way to go to better integrate into global value chains – a process that in other regions has been associated with higher growth over time. In countries where progress in integrating into value chains has been largest, manufacturing, agriculture and agro-business, tourism, and transport have been the largest contributors.
To leverage this potential and tap the region’s comparative advantages, the study emphasizes the need to improve infrastructure, reduce tariff and nontariff barriers to trade, improve the business climate and access to credit, and improve education.
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Extraordinary meeting of the SADC Council Ministers
The Extraordinary SADC Council of Ministers Meeting was held at the Meikles Hotel, Harare, Zimbabwe on 27 April, 2015.
The Meeting was convened to review the progress made with the process of developing the SADC Strategy and Road Map following a directive from the SADC Summit of Heads of States and Government at their meeting held in Victoria Falls in August, 2014.
Council considered the Draft Industrialisation Strategy and Road Map that has been prepared as part of the broad based consultative process involving experts from Member states, and approved by the Ministerial Task Force on Industrialisation, which met in Harare in early April, 2015. The Strategy will be presented to the Summit on Wednesday, 29 April, 2015 at the Rainbow Towers in Harare, Zimbabwe.
The Strategy is anchored on three pillars, namely: Industrialisation as a champion of economic and technological transformation; competitiveness as an active process to move from comparative advantage to competitive edges, and Regional integration and geography as the context for industrial development and economic prosperity.
Council underscored that, focused programmes aimed at enhancing economic inter-linkages to unlock regional potentials, scaling up productive capacities and competitiveness, stimulating beneficiations and value chains, enhancing technological set-ups, and improving the business enabling environment, as important features of the Industrialisation Strategy; and that implementation will be underpinned on sound policies and appropriate enabling environment across the Member States.
The Strategy has a long term perspective, covering the period 2015-2063, aligned to the Continental Agenda 2063, a continental strategy whose aim is to optimize the use of Africa’s resources for the benefit of all Africans.
Council has recognized the pivotal role that the private sector would play in making this process a success., for which reason the region will develop immense public-private sector partnerships.
Council also reviewed the Revised Regional Indicative Strategic Development Plan (RISDP) within the framework of the Mid Term Review of the RISDP, SADC’s blue print for development. The region recognized that in order for our countries and our citizens to benefit economically, it is critical that we maximize on value addition on our natural resources and other related products.
To this end, Summit directed that as part of the RISDP review, it was necessary to front load the aspect of industrialization into the RISDP, ahead of the Market Integration programme which merely focuses on trade liberalization, and considering the poor state of industrialisation of SADC countries, this earlier approach would perpetually result in skewed trade patterns which favour the more industrilaised countries.
Council reviewed the amended RISDP and satisfied itself, that indeed the aspect of industrialization, which takes on board beneficiation, had been taken on board going forward. However, associated with this is the recognition by Council that there will be need to not only allocate resources to implement this ambitious agenda, but also ensure that the resources are allocated on a priority basis. Furthermore, it will be critical, that a proper structure be developed to ensure adequate human resources to implement the programme at the national and regional levels. We are encouraged by the number of partners who have expressed interest to also assist the region in this regard.
Council also considered the SADC Common Position on Negotiations for a Continental Free Trade Area (CFTA), which position is based on consensus amongst SADC Member States, and will constitute guidance for SADC as a region, when it comes to engagement with the rest of the continent, within the process of negotiations for the continental trade regime.
Council also received a report on the Status of Preparations for the Forthcoming COMESA-EAC-SADC Tripartite Summit that will be held in Egypt in June, at which the Tripartite Free Trade Area will be launched.
As Council, we will always appreciate the role of the media in creating awareness around this strategy and the need to successfully implement the same.
» Download: Remarks by SADC Executive Secretary Dr. Stergomena Lawrence Tax
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South Africa: The 20 Year Review – Thematic Background papers
The Twenty Year Review was launched by President Jacob Zuma on 11 March 2014. The Review reflects on how the country has progressed since the dawn of democracy in 1994, the challenges it still faces and how these can best be addressed. Going forward, it is being used to inform implementation of the National Development Plan.
The 20 Year Review synthesis report was informed by several thematic areas. These are regarded as focal areas to tell the story of South Africa’s progress since democracy. The 21 thematic background papers are written by officials in the Presidency and other government departments using research and other evidence to inform progress, sector developments and challenges still remaining. The body of work that went into developing these papers was extensive with the goal of understanding where we came from in order to inform South Africa’s future trajectory. Each of the thematic papers underwent peer-reviewing and editing, guided by a common conceptual framework.
As we approach the end of the 20th year of democracy and celebrate the 50th anniversary of the Freedom Charter in 2015, we hope to keep the momentum alive. The papers are now available for use within various knowledge sharing spaces and serve to act as catalysts for dialogue and engagement between all those stakeholders who need to come together to implement the National Development Plan and effect positive change in our society.
» Download the Thematic Background Papers informing The 20 Year Review here.