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Central Corridor to open Congo DR to sea
The launch of the Central Corridor Transit Transport Facilitation Agency (CCTTFA), will further open the Democratic Republic of Congo to the Indian Ocean and ease that country’s Imports and Exports transportation.
The corridor will bring Burundi, DR Congo, Rwanda Uganda and Tanzania together in ensuring that consignments to these countries, that are landlocked are transported by rail and road without interruptions or delays, a move that may affect Zambia greatly.
Tanzanian Minister of Transport Samuel Sitta, disclosed the formation of the corridor in Dar es Salaam recently.
“The Central Corridor Transit Transport Facilitation Agency (CCTTFA) recently held the first Central Corridor Development Acceleration Process High Level Investors Forum, which among other things, discussed the launch of block trains designated to transport exclusively, consignments directly to Burundi, Democratic Republic of Congo, Rwanda and Uganda, without any interruptions or delays,” Sitta told journalists in Dar es Salaam.
The minister further said that Tanzania, has an international duty to facilitate land locked neighbouring countries to access the ocean in transporting their imports and exports using Tanzanian harbours.
“This meeting prepared the ground work for the Presidents to reach an agreement amicably on various infrastructure projects once they convene later this month in Dar es Slaam,” Mr Sitta said.
He also said that during the Presidential Summit to be held between the 25 and 26 March, the presidents of Uganda, Rwanda, Burundi and DRCongo will flag off the block trains from the central railway line from Dar es Salaam to the three neighbouring countries at their border points.
In addition, he said that the presidents will also visit the Dar es Salaam Port during the Summit. According to a statement issued by CCTTFA, a regional task force from all Central Corridor member States will be set up to coordinate preparation of the projects, selected 22 transnational priority infrastructure projects to be developed and implemented in phase one.
These include ports development, railways and toll roads selected from all five member States. It further stated that the conference will bring together participants from the private sector World Economic Forum’s Business Working Group(BWG), International Financial Institutions, partner States of the Central Corridor, Bilateral and Multi-lateral Development Institutions, East African Community and other Private Sector players.
He also said that the Heads of States of all the CCTTFA Member States; Burundi, Democratic Republic of Congo (DRC), Rwanda, Tanzania, Uganda and Kenya are expected to attend the said Summit.
According to the minister, yesterday’s meeting is part of preparations of the programme that seeks to accelerate infrastructure investments through private sector participation.
“The conference will allow the participants to examine well prepared and packaged infrastructure projects in which they can invest,” he said.
The Central Corridor was selected as the pilot project out of 51 projects under programme for Infrastructure Development in Africa-Priority Action Plan (PIDA-PAP). The Central Corridor Acceleration Process was launched in Devos, Geneva in January 2014 during World Economic Forum (WEF) meeting.
Meanwhile, the Chairman of the CCTTFA, the Minister for Transport and Ways of Communication in DRC, Mr Justin Kalumba Mwana Ngongo, has hailed efforts taken by Tanzania to improve the transport capacity in the region. “This is a great achievement that will witness a major facilitation of transport of goods through the central corridor,” he remarked.
DR Congo, Namibia and Zambia are members of the Walvis Bay-Ndola-Lunbumbashi Development Corridor that also seeks to accelerate infrastructure investments through private sector participation.
The lack of a trade agreement between Zambia And the DR Congo, and the numerous trade bottlenecks between the countries, are forcing most DR Congo business men to take their business from Zambia to Tanzania.
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Critical conference maintains global momentum to curb wildlife crime
Heads of State, ministers and officials from 31 governments meeting on Wednesday in Kasane reaffirmed their determination to scale up their response to the global poaching crisis, and adopted crucial new measures to help tackle the unprecedented surge in illegal wildlife trade.
During the one-day meeting, governments reported on their progress since the London Conference on Illegal Wildlife Trade in February last year, when 41 countries and the EU agreed to take urgent and decisive action to combat wildlife crime, which threatens national security and sustainable development as well as populations of iconic species, such as elephants, rhinos and tigers.
Key successes in the past year include increased levels of law enforcement action, especially in Africa, which have led to a rise in ivory seizures, while some countries have started to improve their domestic wildlife-related legislation. Last month, 13 tiger range countries in Asia committed to a zero poaching framework and toolkit, which could be used as a blueprint for curbing poaching worldwide.
“World governments demonstrated here in Kasane how they are turning the commitments in the London Declaration into tangible actions on the ground and strengthening their resolve to see the job through,” said Steven Broad, Executive Director of TRAFFIC.
The Kasane Statement builds upon the commitments in the London Declaration to eradicate the market for wildlife products, ensure effective legal frameworks and deterrents against wildlife crime, strengthen law enforcement, and support sustainable livelihoods.
Countries adopted a number of additional measures, including focusing on tackling money laundering and other financial aspects of wildlife crime.
“The commitment to follow the money is a huge, innovative step that provides a mechanism to bring down the trafficking kingpins by hitting them where it hurts – in their pockets. It should also help to stamp out the corruption that so often undermines enforcement actions,” said Broad.
The Statement calls for the engagement of relevant community groups and the appropriate retention of benefits from wildlife resources by local people. Participants also agreed to engage further with the private sector, including logistics and transport companies, which are uniquely placed to stem the flow of illicit wildlife products but often find themselves an inadvertent vector for wildlife trafficking.
At the consumer end of the trade chain, extra impetus will be injected into understanding the motivations and behaviour of users of illegal wildlife products.
“Wildlife criminals have been reaping big profits for very little risk for too many years but the commitments agreed to in London and now Kasane could change the game by drastically increasing the risks for traffickers while also reducing their rewards,” said Carlos Drews, WWF Director Global Species Programme. “The Kasane Statement also provides important backing for an ambitious United Nations General Assembly resolution on wildlife crime, which would raise the stakes even higher and encourage a more concerted global drive against transnational organized crime.”
A strong UNGA resolution would be the ideal mechanism to monitor and report on the implementation of the commitments made in London and Kasane, which will be vital to the long-term success of global efforts to reduce the illegal wildlife trade.
“It’s a year since London and while the tide is slowly turning against wildlife criminals, more effort is urgently needed because poaching levels are still far too high,” said Drews. “Important progress has been made but the war against illegal wildlife trade will only be won if governments continue scaling up their efforts and working together to turn these commitments into concrete results.”
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EALA passes key report on Single Customs Territory
EALA has debated and adopted a key committee report on the Single Customs Territory.
The report of the Committee on Communication, Trade and Investment on oversight activity of the EAC Single Customs Territory (SCT) was presented by the Committees Chairperson, Hon Mukasa Mbidde.
The report urges EALA to come up with pieces of legislations that support the implementation of SCT including those enhancing health and education insurances, immigrations, and vehicle registration for staff working in different Partner States.
The report further wants the roll-out of more products to be integrated under the Single Customs Territory arrangement. To do so, the Assembly is calling for the finalization of the utilization of the Single Regional Customs Bond by EAC Secretariat.
The Report also urges Revenue Authorities to streamline the process of granting rights of access to information to the Clearance & Forwarding agents. The report followed an on-spot assessment undertaken at the Tanzania Ports Authority (TPA) and the Tanzania Revenue Authority (TRA) on September 29th 2014 to October 2, 2014 to engage ports and customs authority and the freight forwarders Association.
The objectives of the on-spot assessment were to; understand the state of play for the operationalisation of the Single Custom Territory, analyse operations and processes involved in the implementation of the EAC Single Customs Territory and to recommend solutions to the fears and challenges faced.
The Committee was informed that Standard Operating Procedures covering most of the key customs procedures and control mechanisms were developed and tested. “In terms of Customs Systems Interconnectivity, Tanzania’s ASYCUDA++ was interfaced with ASYCUDA world of Rwanda, Uganda and Burundi and Simba system of Kenya, to allow piloting of SCT that commenced in June 2014”, a section of the report says.
The United Republic of Tanzania has commenced on piloting the SCT with the Partner States. SCT piloting with Rwanda, the report states, commenced in June 2014 with the wheat grains and petroleum products. The piloting with Uganda has since August 2014 seen petroleum products, rice, cotton seed cakes and fertilizers discharged and cleared at Dar es Salaam port.
Laundry soap, cooking oil and galvanized pipes were discharged in Dar es Salaam from Kenya under the SCT while in Burundi, the following products were piloted; wheat, beer malt, phosphorous acid, silicon dioxide and cement.
Under the SCT arrangement, the EAC Partner States have adopted a destination model of clearance of imports whereby the assessment and collection of tax revenues on such consignments are done at the first point of entry. This allows for free circulation of goods within the single EAC market, with variations to accommodate exports from one Partner State to another.
In this regard, Customs administrations in destination states retain control over the assessment of taxes. This crystallizes the gains of regional integration characterized by minimal internal border controls and more efficient institutional mechanisms for clearing goods out of Customs control.
The SCT according to the report is not without challenges. Such include Information Technology interconnectivity challenges and non-compatibility and difficulties in data sharing under different electronic cargo tracking systems by Partner States. The absence of the EAC regional removable bond to facilitate clearance of goods to warehouse and exempted goods is also an impediment.
At the same time, the report suggests the non-implementation of the Common Market Protocol with the un-harmonized work permit requirements in the EAC as a major hindrance for business people to operate in any country.
During debate, Hon Bernard Mulengani said the passage of the Non-Tariff Barriers Bill, 2015, shall enable the region to curb some of the challenges faced by traders in the region.
“I urge the Council to put in place a uniform policy that has clear processes to enable sanctions to be applicable to Partner States not complying to the instituted legal frameworks”, Hon Mulengani said.
Hon Mike Sebalu called for sensitization amongst the business community.
“We need to remove the fears arising out of lack of awareness. What we need as a region is quality products, lower costs of doing business and competitiveness to spur benefits to the citizens of the region”, the legislator said.
Hon Christophe Bazivamo, Hon Dora Byamukama and Hon Celestine Kabahizi also supported the report. The Chair of Council of Ministers, Dr. Abdulla Saadalla Abdulla, said the Community would immediately pick up on the matter of harmonizing work permits in line with the annex of the protocol on the Common Market.
He noted that Partner States were finalizing the issue of e-passports which would be available. He noted that tax collection would be done at the point of entry. “Already, the customs officers are posted at the ports to assist the process”, Hon Dr. Abdulla said.
Analysts term the Single Customs Territory, as a positive measure in the quest to enhance trade. It is envisaged that application of the Single Customs Territory (SCT) shall reduce cargo clearing costs by half, since the transit bond fees along the corridor would be scrapped. The move shall definitely enhance trade thus enhance sustainable economic growth to propel the region into a middle income status in the next decade.
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Foreigners grapple with poor asset-pricing data
Foreign investors are facing challenges in pricing assets in Africa as lack of data and a formal market weigh negatively on their plans to expand in the continent, a survey says.
It indicates that firms from abroad are increasingly facing difficulties in accessing accurate, up-to-date figures and relevant information about markets they intend to grow into, especially through mergers and acquisitions.
This is largely due to the absence of active formal markets. In some, thriving secondary markets and exchanges are not present or those established are so limited that valuers are unable to gain much use from them.
Other challenges listed are unavailability of local macroeconomic data and the quality of financial information provided.
The PricewaterhouseCoopers survey is titled Africa: A closer look at value.
“Interest in Africa as an investment destination has continued to grow, with the continent often viewed as an investment market with the potential for significant growth and superior returns. Assets on the continent remain difficult to value with large expectation gaps between buyers and sellers,” PwC’s southern Africa valuation and economics leader Jan Groenewald says.
The study echoes views of 77 financial analysts and corporate financiers in southern Africa (35), East Africa (19) and West Africa (23).
Pundits and corporate financiers cited lack of data as the most difficult challenge that investors face in finding comparable companies to offer appraisal benchmarks in a valuation analysis or industry data for financial analysis.
Despite such challenges, Africa continues to attract a high level of interest as an investment destination from the US, the EU, Brazil, Russia, India, and China as well as from within.
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Innovative Financing for the Economic Transformation of Africa
Foreword
Strong voices from the four corners of the globe have continued to tell the compelling story of an African continent that is resolutely on the rise and within the threshold of economic transformation and take-off. One of the most important planks which supports the growing optimism about Africa’s imminent economic take-off is the continent’s impressive economic growth rates during a greater part of the last two decades. Economic growth has averaged about 5 per cent a year, making it one of the fastest-growing regions. However, some of the shine generated by this impressive economic growth rates has been dulled by its non-inclusive character and because the growth has not been accompanied by economic transformation that generated employment. Increasingly, therefore, various segments of African societies, including its leadership, have come to recognize the imperative of economic transformation as a means of engendering sustainable development on the continent.
Despite the strong consensus around the need for the economic transformation, the challenge of how to finance the transformation is well-known but has yet to be addressed adequately. The financial resources needed for Africa’s structural transformation, including for filling its huge deficits in infrastructure and energy, which are critical for industrialization, are enormous and well documented. The quest for solutions to the resources requirements for Africa’s structural transformation has to be viewed from the prism of the growing unreliability and inadequacy of traditional sources of development finance, particularly those from external provenance, such as foreign direct investment (FDI) and official development assistance (ODA).
Although development assistance and other external sources of development financing continue to be relevant, they cannot be relied upon as the principal sources of funding for the industrialization and economic transformation of African countries. Rather, in light of the scale and scope of the resources needed for transformation and development priorities, the continent’s policymakers increasingly have to prioritize attracting and retaining both new and old domestic sources of finance and developing innovative mechanisms that can leverage hitherto unexplored sources such as remittances, savings from the curtailment of illicit financial flows (IFFs), diaspora funds, better negotiated mineral contracts and the expansion of Africa’s fiscal space. In a nutshell, Africa’s transformation agenda must be met with internally mobilized financial resources, which ideally should only be supplemented by external sources.
This book builds on the issues papers and synthesis of discussions of the Ninth African Development Forum, organized by the Economic Commission for Africa and its strategic African partners, and examines five thematic issues areas of development financing. These are deemed to have the potential to respond to Africa’s quest for alternative and innovative sources of finance to underwrite its economic transformation agenda. The five thematic areas are: Domestic resources mobilization, illicit financial flows, private equity, climate financing and new forms of partnership. These innovative sources of finance offer the continent a range of options and opportunities. If they are properly leveraged, they would considerably reduce its dependence on external resources and provide the requisite resources for the implementation of regional and global development agendas, such as the evolving African Union Agenda 2063 and the post- 2015 global development agenda.
It demonstrates that a number of characteristic features of African economies are at the root of the rather low levels of mobilizing domestic resources, including: low public and private savings rates; narrow tax bases; complex administrative and bureaucratic procedures; corruption; tax evasion; deficiencies in the growth and development of financial systems; and the high levels of dependence on external financing. It makes a very strong case for robust policy measures to alter these features, with a view to enable African countries to be better equipped to capture sources of finance that are currently unexplored or poorly developed, including closing the loopholes that facilitate the haemorrhage of the continent’s financial resources through illicit financial outflows.
The book analyzes the various dimensions, sources and impacts of illicit financial flows from the continent and the strategies that could be deployed to halt and redirect them towards Africa’s development. It demonstrates that the scale of these flows in Africa is higher than the volumes of official development assistance inflows. If Africa could halt illicit financial outflows successfully, it would not need development assistance. The book also provides analysis of private equity. It argues that Africa lags behind other regions of the world in developing this potentially lucrative source of development financing, partly because of the lack of adequate knowledge and understanding. It unpacks the potential benefits of private equity and makes proposals on ways African countries could better leverage them for development.
This book also establishes the critical linkages between Africa’s transformation agenda and climate change and clearly demonstrates the inseparability of climate finance from development finance. It concurs with dominant scientific consensus on the fact that Africa is the region that is most vulnerable to the impacts of climate change and least able to cope with them, owing in part to its relatively low levels of economic development. It highlights the high adaptation costs that the continent faces and the various challenges related to getting access to various global climate funds. The book also documents the commendable efforts that African countries have deployed to address the challenges posed by climate change, including the establishment of the Climate for Development in Africa programme (ClimDev-Africa) and the ClimDev Special Fund.
The book also speaks to the imperative for a paradigm shift in Africa’s partnerships with various global actors, particularly in the area of development finance. It lays bare the shortcomings in current donor-recipient relationships, including the lack of mutual accountability and the reluctance by the more powerful global actors to concede to the reform of existing global trade and financial institutions. It urges a fundamentally different approach to development finance, underpinned by innovative forms of international partnerships that are cognizant of the new realities of the global political economy and which accord Africa its rightful place.
Taken together, the five areas of innovative and alternative sources of financing analysed in this book have the potential greatly to reduce Africa’s dependence on external sources for the resources for its development. More importantly, if these new sources are properly developed and leveraged, they would provide the resources required to finance Africa’s development agenda, embodied in Agenda 2063, and facilitate meeting the ambitious goals set out in the evolving post-2015 development agenda.
It is against this background that we strongly believe that this publication would constitute a useful input into the forthcoming United Nations Third International Conference on Financing for Development, scheduled for Addis Ababa in July 2015.
Carlos Lopes, United Nations Under-Secretary-General and Executive Secretary of the Economic Commission for Africa
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Falling exports risk to growth, warn analysts
The declining level of Kenya’s exports relative to rising imports could derail the country’s positive economic growth outlook of 6 per cent this year, analysts have warned.
Last year, Kenya’s current account deficit – measured in terms of what the country earns from exports in relation to payment for imports – widened by 17 per cent to Sh510 billion, extending a relentless multi-year trend that could jeopardise the country’s ambitious growth projections.
In 2006, the current account deficit stood at Sh47 billion but has continued rise following fast-growing imports.
Exports have, on the other hand, shrunk over the years, a trend that poses a big risk to the country’s macro-economic stability.
“There still exist potential risks that could taint this rosy picture such as widening of the current account deficit, public expenditure pressures, especially on wages, and unexpected weather patterns (reduced rainfall) in parts of the country could (undermine) output in the agricultural sector,” analysts at Sterling Capital said in their Fixed Income Outlook Report for March 2015.
BOOST PRODUCTION
While releasing the Kenya Economic Update on March 5, 2015, the World Bank sounded an alarm on sluggish demand for Kenya’s exports, stating that the country needed to boost productivity and improve the business environment to regain and increase its competitiveness.
“In recent years the manufacturing’s contribution to Kenyan exports and growth has fallen behind and performance has been less than optimal.
“Kenya needs to increase the competitiveness of its manufacturing sector so that the country can grow, export and create much-needed jobs,” World Bank Group private sector development specialist Maria Mogollon said when the KEU report was released.
Kenya’s economy is estimated to have expanded by 5.9 per cent last year, above the sub-Saharan Africa average projected at 5 per cent.
This year, it is anticipated to grow by 6.2 per cent, riding on lower inflation levels and a stable macro-economic environment.
Export diversification, value addition vital to boost intra-COMESA trade
Ethiopia stressed the need to diversify export items and value addition to boost trade tie between countries in Eastern and Southern Africa.
While opening the 34th COMESA Intergovernmental Committee (IC) meeting held here yesterday, Ethiopian State Minister for Industry Dr. Mebratu Meles said diversification and value added export items will play vital role to enhance intra-regional trade.
He said “trade among COMESA member states has shown dramatic increase over the past few years. This can be considered as highly encouraging.” In 2014, intra-COMESA trade reached 20.9 billion USD.
However, it is low compared to non-COMESA countries because of the similarity on items produced by the countries.
Value addition would address this challenge while empowering small, medium and micro enterprises among member states, he said.
Furthermore he added, intensify efforts to industrial development and adding values instead of supplying row products, will help to address the challenge.
Supply side constraints, non-tariff barriers, monetary challenges, and restrictive visa and border control measures are the main challenges to increase volume of intra-regional trade, according to him.
Enhancing value added products and inclusive sustainable industry development is core among COMESA member states to boost intra-trade, Admasu Nebebe, United Nations Agency and Regional Economic Cooperation Director at the Ministry of Finance and Economic Development said.
He argued that member states should give due attention to expand infrastructure networks and competiveness to enhance the trade relations between them.
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EAC Council of Ministers’ assures EALA: We have tight lid on finances
EALA on 23 March 2015 debated and adopted the Report of the Committee on Accounts on the EAC’s audited accounts for the Financial Year ending 30th June 2013. The Council of Ministers meanwhile assured the House of key remedial steps taken to address the gaps raised in the report.
Key amongst the issues the Council of Ministers has undertaken directives to the EAC Management to adhere to set out procedures and regulations, measures to ensure adherence to valid contracts and the recovery of funds from EAC Officers that were not used in the appropriate way.
The (Acting) Chair of the Council of Ministers, Hon Dr. Abdalla Saadalla Abdulla noted that fundamental corrections had been taken in response to the audit queries raised in the Committee’s report.
The Minister further clarified that during the FY’2012/2013, there was no over expenditure as stated in the report. He informed Members that an amount of USD 1,674,084 appropriated by the Assembly was transferred to the EAC General Reserve account as a result of improved efficiency in running the operations although part was due to unexpended salaries for vacant positions.
“The Council of Ministers further exonerated EAC over the impression created by the Audit Commission report that substantial advances were made to Accounts staff at the close of the year for activities not taken. He remarked that the amount in question of USD384, 834 was spent in accordance with the Financial Rules and Regulations, and the activities facilitated were captured within the approved EAC Calendar of activities.
“Records of the meetings and acknowledgment from the delegates paid were availed to the Council”, the Minister said.
The EAC Management has ensured that since February 2013, daily attendance lists are attached to accountability documents, indicating the participants to all EAC meetings, in addition to boarding passes,” he added.
On the issue of excessive pay of daily subsistence allowances, the Council of Ministers told the House that all the undertaken activities had hitherto received approval by the Assembly. He further added that all travel was in tandem with the Calendar of Activities approved by the Council of Ministers and had received operational clearance by Management.
“The Council directed that save for self-accounting EAC Institutions, EALA, and EACJ, statutory/policy and technical meetings for Organs and Institutions of the EAC, should rotate and be shared between Headquarters and Partner States on a ratio of 50/50 basis; subject to further review and finalization of the Study on Equitable Sharing of the Costs and Benefits of the Community integration,” Minister Saadalla said.
The Chair of Council of Ministers clarified there were no issues of double ticketing and maintained that the unused tickets were paid for as is the stipulated policy within the airline industry.
“The EAC then put in the said amount for reimbursement,” he noted.
The Minister said that the Council has taken it upon itself to arm the risk committee with more teeth to investigate queries raised and to any unearth instances of impropriety.
Debate on the report which was tabled at the last sitting in Arusha in January 2015 by the Chair of the Accounts Committee, Hon Jeremie Ngendakumana, was adjourned following a motion for adjournment (then) by the Council of Ministers, Hon Dr Abdulla Saadalla Abdulla.
The motion for adjournment of the debate was then pegged on the basis of Rule 31(c) of the Rules of Procedure governing the Assembly which provides that a motion for adjournment may be moved without notice.
Contributing to the debate which started last week, Members reiterated that it was vital to tighten procedures to enable the EAC to utilize resources more efficiently.
In his submissions, Hon Abubakar Zein remarked that he would at the next sitting in June 2015 introduce 3 key Private Members Bills to support effective use of resources and better management at the regional bloc. He cited the envisaged Bills as the EAC Integrity and Anti-Corruption Bill, the EAC Procurement Bill and the EAC Whistle Blowers Bill.
Hon Peter Mathuki raised the issue of extended short-term contracts at the EAC and urged the management to adhere to the rules and regulations provided for in the labour laws.
“We need to ensure that EAC adheres to the labour laws as is the case in the Partner States and international convention and that Council of Ministers must remedy the situation to enhance productivity,” Hon Mathuki said.
Hon Dora Byamkama said that in some instances, the EAC lacked policies to help it in its duties and said it was necessary to have effective policies with stringent measures to non-adherence.
Hon Isabelle Ndahayo urged the EAC to give value of money in all its expenses. She challenged the EAC to prioritise funds for key sectors.
“Climate change for example is a major factor today and we need adequate resources for this aspect,” she said.
Hon Joseph Kiangoi urged the EAC to take the reports of the audit commission more seriously. He called for objectivity in procurement matters while Hon Bernard Mulengani noted it was time to undertake an audit for value for money.
Hon AbuBakr Ogle opposed the report saying it was necessary for the entire Community, EALA included to adequately utilize available resources of the Community.
Hon Susan Nakawuki termed inadequate staffing as a chronic problem and said the Organs and Institutions of the EAC were unable to undertake their duties well.
She urged the Council to fastrack the realization of the alternative funding mechanism for sustainability purposes.
The Secretary General of the EAC, Amb Dr. Richard Sezibera said management would continue to take audit reports seriously and informed the House that 12 audit series had been undertaken by the management during the financial year.
“We take the reports of the audit commission very seriously and shall continue to do so. I want to assure this Honourable House,” he said.
Amb Sezibera maintained that EAC management had instituted several measures including; putting in place an audit manual, conflict of interest policy, risk management manual and the automation of financial, human resources and budget management systems.
The Secretary General said the management had moved ahead to correct some of the anomalies including the recovery of funds inappropriately used by Officers.
“Management has also addressed concerns about project management and a process of setting up a project management unit at the secretariat was underway,” Hon Sezibera remarked.
The Secretary General said the issues at the Financial Sector Development and Regionalization Project (FSDRP) had also been addressed.
“We have restructured the project and laid off two staff due to unsatisfactory performance,” he remarked.
The Secretary General noted that generally the partners had continued to release funding on time and remarked that during the reporting year, the Community had utilized the funds and made savings of about USD 1 Million.
Amb Dr Sezibera said the Community lacked adequate resourcing compelling management to source for short-term contracts. He remarked that a Human Resources Advisory Committee had been set up to look into modalities of staff matters and to offer advisory services to the Secretary General.
The Minister for EAC, Republic of Uganda, Hon Shem Bageine, noted that the media had exaggerated the issue especially that related to travel.
“It is unacceptable to generalize that EAC has misused funds given the fact that the nature of work involves travel. The travel budget was in effect approved by this House and I plead with media not to be sensational but to adequately research and report objectively,” he said.
The Minister also stated that media had also misinformed the public about the construction of the EAC Headquarters. He assured the House that the construction of the EAC was managed by a project management team appointed by the Development Partners. The only role of the Secretariat was to clerk the contractual obligations between the partners and the contractors.
He remarked that the Council of Ministers was committed to effectively overseeing its role. “We are hoping to have more presence in Arusha and work with management to address the issues,” he said.
Minister Bageine noted that Council of Ministers would in the interim hold quarterly meetings between sectoral ministries with the Permanent Secretaries.
Others who spoke to the report included Hon Saoli ole Nkanae, Hon Celestine Kabahizi, Hon Leonce Ndarubagiye, Hon Yves Nsabimana and Hon Emmanuel Nengo.
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IMF Executive Board reviews the role of trade in the Fund’s work
On February 27, 2015, the Executive Board of the International Monetary Fund (IMF) discussed the five-yearly Review of the Role of Trade in the Work of the Fund. This review follows the Board-endorsed recommendations and proposed implementation plan arising from the 2009 IEO Evaluation of IMF Involvement in International Trade Policy Issues.
The staff paper provides a broad overview of the role of trade and trade policy issues in the work of the Fund over the past five years and discusses how to integrate and operationalize the implications of the changing global trade landscape at the Fund.
The paper focuses on macro-critical trade issues and proposes to introduce a work agenda for the next five years. Based on the staff paper, the Board’s discussion focused on how to make trade an essential element of the IMF’s operational work and to further develop a work agenda for the Fund.
Following the Executive Board’s discussion, Ms. Christine Lagarde, Managing Director and Chair, stated:
“Executive Directors welcomed the review of the role of trade in the work of the Fund and broadly agreed with its main findings. They noted that the trade landscape has changed rapidly in recent years. Directors considered that trade is an essential component of the global policy agenda to bolster growth and saw a need to reignite the multilateral trade system. They noted that there are potentially large global gains to be derived from further trade liberalization and integration, including from traditional trade liberalization in many countries and sectors, lowering barriers in new trade policy frontiers, and additional expansion of global supply chains. Directors also noted that trade reforms can complement and augment the benefits of other structural reforms, spur additional infrastructure investment, and support the strengthening of policy and institutional frameworks.
“Directors welcomed the high quality and policy-relevant work done by the Fund. They emphasized that the Fund’s work in this area should remain within its mandate, addressing trade issues deemed macro-critical and taking into account resource constraints and limited trade expertise. This would require careful prioritization and continued collaboration with other international institutions, including the World Trade Organization and the World Bank.
“Directors emphasized that the coverage of trade issues in Fund surveillance should be tailored to the specific needs of individual countries. Recognizing differences across countries, Directors noted that for advanced countries, a key issue would be the implications of their efforts to pioneer and advance new trade policy areas such as services, regulations, and investment. For emerging market economies, there are still benefits from traditional liberalization and anchoring to global supply chains. For low-income countries, greater integration requires sustained efforts to reduce trade costs, including upgrading trade infrastructures and improving economic institutions both at national and regional levels, supported by relevant technical assistance.
“Directors agreed that better embedding trade in surveillance work would require a concerted effort on several fronts. They saw merit in enhancing efforts to translate key implications from the evolving trade landscape and continuing analytical work, and in further developing a work agenda for the Fund for the next five years based on the key considerations discussed. Several Directors suggested that staff should consider a range of issues for further work. Some Directors were open to having a clearer institutional view. In this regard, Directors noted that the 2010 reference note on trade policy will be updated to provide staff guidance on macro-relevant trade and trade policy issues. Directors stressed the importance of ensuring that the Fund’s approach to trade policies is evenhanded. Going forward, Directors considered it important to regularly review the role of trade in the Fund’s work.”
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Regional initiatives cannot substitute for the multilateral trading system – Azevêdo
Director-General Roberto Azevêdo, in a lecture at the Stockholm School of Economics in Riga, Latvia on 24 March, noted that bilateral and regional trade agreements have been “growing rapidly” but stressed that “there are many big issues which can only be tackled in an efficient manner in the multilateral context through the WTO,” citing as “a good example” the Trade Facilitation Agreement struck in Bali. He said that most of the big challenges facing world trade are “global problems demanding global solutions”.
This is what he said:
It’s a real pleasure to be here at the Stockholm School of Economics – and to be here in Latvia. This is my first visit as Director-General of the World Trade Organization. In fact, this is my first visit to Latvia – full stop! So I’m very glad to be here.
Besides, this year the WTO is marking its 20th anniversary – and so it seems like an ideal moment to take a look at the future of this organization.
That’s what I want to talk about this afternoon – and to explain why this organization will continue to play a crucial role in securing growth and development for Latvia and the rest of the world.
But, in doing so, I think it is useful first to consider the roots of the multilateral trading system as we know it today.
At 20 years of age, the WTO is a relatively young organization. But actually our story extends back much further – all the way to the Bretton Woods conference of 1944.
As part of the post-war desire to build a better, more stable world, it was proposed there that an International Trade Organization be created. This organization, alongside the IMF and World Bank, would complete the framework of global economic governance and cooperation.
It was conceived on the basis that trade is not just a force for growth and development, but also for stability and peace.
However, the vision of an International Trade Organization could not be fully realised at that time, and instead the General Agreement on Tariffs and Trade was signed in 1947.
Rounds of negotiations followed to lower tariffs and increase the scope of the Agreement and bring in more members until, finally, the WTO was created in 1995.
Our role today is essentially to:
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agree global trade rules,
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monitor adherence to those rules, and
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help to resolve disputes between nations when they arise.
And, running through all of this, we work to help developing countries to integrate into the global trading system.
I think the value of this work is clear.
For example, exports have grown thirty-five fold since the Second World War, thanks largely to a reduction in average tariffs from around 40% to 4% under the auspices of the multilateral trading system, now embodied in the WTO.
Another example can be found in the response to the recent financial crisis, the effects of which we are still living with today.
Contrast this experience with the crisis of the interwar years.
In the 1930s governments responded by throwing up trade barriers, such as the Smoot-Hawley Tariff Act, which pushed the world into a spiral of protectionism.
Between 1929 and 1933 retaliatory trade restrictions wiped out two thirds of world trade. But the mistake was not repeated in 2008.
After the financial crisis hit seven years ago the value of world trade did fall, but the decline was only a fraction of that seen in the 1930s – and it rebounded straight away.
Instead of a protectionist panic the response was one of restraint and caution.
So why was the response so different? One key reason was the multilateral system that had been painstakingly constructed in Geneva and which covered the vast majority of the world economy.
Despite mounting domestic pressure to adopt protective measures, governments knew that they were bound by rules and obligations that were common to all, and this gave them confidence that others were going to play by the rules as well. Any improper multilateral trade action could have significant legal and economic consequences.
And so we avoided turning a damaging financial crash into an economic catastrophe.
So I think there is great value in the system.
And it continues to evolve.
We have welcomed 33 new members to the WTO over the last 20 years, ranging from some of the world’s largest economies – including China and Russia – to some of the least developed. Today our 160 members account for approximately 98% of global trade.
We welcomed Latvia to the WTO in 1999. Today Latvia is noted for its openness to trade – outstripping many of your European partners.
Latvia has proved to be a very proactive member of this organization – and one that is not afraid to show leadership. This is something which we are seeing now through the Latvian Presidency of the EU. We also saw Latvia’s support during another key moment in our recent history.
At our 9th Ministerial Conference in Bali that year, we took our first big step forward to update global trade rules. This was an historic breakthrough as it was the first such agreement since the WTO was founded. And Latvia was there throughout the negotiations, as part of the EU delegation, playing a crucial role.
The decisions which members took in Bali have economic significance by themselves, but together they also opened a new chapter for multilateral trade negotiations.
After many years without multilaterally agreed outcomes, the success of Bali created new momentum for further negotiations. It has the potential to change the game.
A key element of this was the Trade Facilitation Agreement.
Once implemented, this agreement will help to cut red tape and streamline border procedures in all WTO member economies, reducing the time and cost of trade operations worldwide.
Indeed, it is estimated that the agreement could cut the costs of trading in developed countries by up to 10%. The overall benefits of the agreement have been estimated at up to a trillion US dollars a year. This could create 21 million additional jobs worldwide – the vast majority of which would be in developing countries.
Indeed, the Bali Package had real developmental significance – and this was clear in its advocates.
There was no developed country against developing country divide over this package. Everybody was involved in the negotiations and everybody wanted to deliver a successful outcome.
We are a truly global organization today. Everyone has a seat at the table – and all voices are heard.
Ultimately, by widening the membership and bringing all of the major trading powers, as well as the smaller economies, together in an open, rules-based system, I think the WTO has finally delivered the vision of 1944.
But of course the creation of the WTO was not the end of the story – rather it was the beginning of a new chapter.
And I want to be clear that there is no complacency here. We still have a great deal to do – and real challenges to overcome.
CHALLENGES
One such challenge is the pace of progress in negotiations.
While Bali was a major success, it is clear that we need to deliver more.
It is sobering to reflect that the bulk of our current trade rules were agreed 20 years ago when the organization was founded.
Despite the fact that many of those rules embody basic and perennial principles, the reality is that our legal texts are yet to properly enter the 21st century.
I am conscious that we need to deliver more outcomes, more quickly – and we will do everything we can to work with members to make this happen.
The frustration with negotiations at the multilateral level is often cited as a contributing factor to the increase in bilateral and regional trade negotiations that we have seen in recent years.
Of course these types of non-multilateral trade agreements are not a new phenomenon.
In fact they pre-date the multilateral system because, in a sense, they were the seeds which grew into the General Agreement on Tariffs and Trade.
These initiatives co-exist with the multilateral system. They can bolster it in a significant way. And, at the same time, it is the global system of rules which forms the basis of each of these agreements.
Indeed, members of these regional agreements still and mostly rely on the WTO’s dispute system.
Moreover, we should remember that the WTO provides an important backstop. Because of the multilateral system, countries cannot fall back into bad practices and raise new barriers.
Nevertheless it is clear that these bilateral and regional agreements have been growing rapidly in recent years. TPP and T-TIP are often in the headlines but there are many others. The WTO has already been notified of over 250 RTAs that are in force today.
These initiatives are important for the multilateral trading system – but they do not substitute it – so countries need to remain engaged at all levels. And let me explain why.
Of course it is simpler and less sensitive to strike market access deals bilaterally. This is never going to change, so the bilateral or regional market access negotiations will continue to be – as it has always been – the most obvious approach. However, there are many big issues which can only be tackled in an efficient manner in the multilateral context through the WTO.
The Trade Facilitation Agreement that we struck in Bali is a good example.
That agreement was negotiated successfully in the WTO because it makes no economic sense to cut red tape or simplify trade procedures at the border for one or two countries – if you do it for one country, in practical terms you do it for everyone.
And this is not the only issue that’s inherently multilateral.
Financial or telecoms regulations can’t be efficiently liberalized for just one trade partner – so it is best to negotiate services trade-offs globally in the WTO.
Nor can farming or fisheries subsidies be tackled in bilateral deals.
Disciplines on trade remedies, such as the application of anti-dumping or countervailing duties, cannot significantly go beyond WTO rules.
The simple fact is that very few of the big challenges facing world trade today can be solved outside the global system. They are global problems demanding global solutions.
Indeed, it seems clear that global companies operating in global markets will inevitably demand global rules.
Overlapping agreements can sometimes increase the costs and complexity that businesses have to deal with – which can prove a barrier to doing business, particularly for SMEs.
So we need global rules.
And we should recognise that multilateral agreements can deliver much more than non-multilateral agreements.
For example, regional or bilateral agreements tend to deepen existing trade connections. In contrast, multilateral reforms support the creation of new trading relationships – and thereby bringing new players into the trading system and creating new trade flows where they did not exist before.
Indeed, the evidence shows that by bringing developing countries into the world economy in a fair and progressive way is the best way to boost their development, and it is the best way to maximize the contribution that trade makes to global growth.
Yet, as I indicated earlier, it is a long time since the world has come together to overhaul trading rules.
We are living off the liberalization of the past, and the reforms negotiated by the last generation.
So we need to be more ambitious.
THE WTO AGENDA
This brings me to what is happening at the WTO today.
We showed with the Bali Package in December 2013 that we can deliver outcomes which have real economic importance.
We hit an impasse in implementing the Bali Package last summer, which had a freezing effect across all of our negotiations.
But we worked hard to resolve the issue – and so, again, at the end of last year we delivered – and we put our work back on track.
Members committed not just to implementing all aspects of the Bali Package – but also to agreeing a work programme on the remaining issues of the Doha Development Agenda by July this year.
This means that the big, tough issues of agriculture, services and industrial goods are all back on the table.
And it means the opportunity to advance negotiations which have been stalled for some years.
We want this work to be the springboard for success at our next Ministerial Conference, which is being held in Nairobi in Kenya this December. This is the first time that a WTO ministerial meeting has been held in Africa and so expectations are high.
There is a lot at stake here – and I think we have real momentum behind us.
We started an intensive process of negotiations in January and so far we have seen good progress and strong engagement.
In fact I think we made more progress in the first weeks of these talks than we did in all of 2014. And we have continued to make steady progress since then.
Members are engaging on the detail and are beginning to bring some new proposals to the table.
There is a clear sense that they are moving into a solution-finding mode.
This doesn’t mean that our work is done.
Moving the Doha Development Agenda forward is still going to be incredibly difficult. There remain many challenges to overcome before we can find solutions – but at least now we are looking for them.
And we will continue to push these efforts forward.
CONCLUSION
The world is watching the WTO this year.
Not only because it’s our 20th anniversary.
Not only because of our success in Bali.
Not only because we’re implementing the Trade Facilitation Agreement and the other Bali decisions, with all the benefits they will bring.
The world is watching because all members – developed and developing – are again engaging in broad and meaningful negotiations that had been firmly stuck for years and that can boost global economic growth precisely when we most need it.
I will do everything I can to ensure that we succeed.
And I know that Latvia will be an important partner in this effort.
Thank you for listening.
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“Zero draft” for UN financing talks released, trade section included
The co-facilitators of a process geared towards committing to development financing have released a zero draft of the outcome document for a high-level conference scheduled to be held in Addis Ababa, Ethiopia in July.
The document, published on Monday [16 March 2015], pledges to establish a holistic financing framework to ensure future sustainable development and lists a series of eight areas for specific action.
These include domestic public finance; domestic and international private business finance; international public finance; international trade for sustainable development; debt and debt sustainability; systemic issues; technology, innovation, capacity building; data, monitoring, and follow up.
The outcome document of the Third Financing for Development Conference (FfD3), as the July meet is known, agrees to build on earlier financing commitments in the Monterrey Consensus and Doha Declaration. These represent the outcomes of previous FfD conferences in 2002 and 2008, respectively.
The document acknowledges, however, that the global economic outlook has changed substantially since the conclusion of these outcomes and also that current policy, financing, and investment patterns are not delivering adequately to promote sustainable development.
The zero draft is correspondingly geared towards supporting the implementation of the post-2015 development agenda and its planned sustainable development goals (SDGs). An introductory section of Monday’s document identifies key areas of synergy between the SDGs including agriculture, essential social services, infrastructure, investing in ecosystems, and supporting small and medium enterprises (SMEs).
The document will be discussed by UN members at a drafting session in New York in mid-April. At a previous session in January, delegates reportedly questioned how exactly the FfD3 outcome document would interact with the post-2015 process.
Trade for sustainable development
As with previous FfD outcomes, the zero draft includes a specific action area dedicated to mobilising trade for sustainable development. Some commentators have suggested that Monday’s draft streamlines some of the trade references made in a non-paper designed to facilitate January’s discussions.
The non-paper had included several trade-related ideas that went beyond the SDG targets including the concept of trade financing, the alignment of the WTO’s Aid for Trade initiative with regional and national strategies while addressing productive capacity constraints, and the incorporation of binding social, environmental, and human rights standards in investment agreements.
On this front, however, Monday’s draft pledges to improve safeguards in investment agreements, including a review of investor-state-dispute-settlement (ISDS) clauses, to ensure countries’ right to regulate in areas such as employment and the environment.
Monday’s document also calls for an increase in Aid for Trade to developing countries, particularly the poorest. The WTO will hold its Fifth Global Review of Aid for Trade from 30 June-2 July, with this year’s conference focusing on the theme of “Reducing Trade Costs for Inclusive, Sustainable Growth,” given the post-2015 development agenda context.
The zero draft also proposes that governments hold an open and inclusive discussion on updating the definition for overseas development assistance (ODA) funds and on a proposed indicator for “total official support for sustainable development” (TOSSD).
Multilateral trade
The opening paragraph of the trade section in the FfD zero draft provides a complementary narrative to the trade targets included in a list of 17 proposed SDGs. UN members are set to discuss these goals at a meeting in New York next week.
Building on previously used language, the document supports a universal, rules-based, and non-discriminatory multilateral trading system and “meaningful trade liberalisation” as an engine for promoting economic growth and sustainable development. Flanking policies will also be required to achieve these ends.
Acknowledging slow progress in the current Doha Round multilateral trade talks at the WTO, the document calls for a conclusion of these global trade talks, mirroring language found in the final proposed SDG on means of implementation (MoI). WTO members are currently working to meet a July deadline for finalising a work programme to conclude the Doha negotiations.
The document also urges members to ratify the WTO’s Trade Facilitation Agreement (TFA) and implement a package of other outcomes also secured the global trade body’s December 2013 ministerial conference in Bali, Indonesia.
The TFA is geared towards smoothing customs and border procedures to help boost international trade flows. Trade facilitation issues were dropped from the proposed SDG framework during last year’s negotiation process.
Monday’s zero draft reiterates a commitment found in the proposed SDGs to correct and prevent restrictions and distortions in global agricultural markets, including removing all forms of agricultural export subsidies and disciplining measures with equivalent effect.
The FfD zero draft also says that WTO members should reaffirm that special and differential treatment (S&D) is an integral part of WTO agreements, referring to the Bali ministerial decision on a monitoring mechanism for S&D provisions. This builds on a target listed under a proposed SDG on reducing inequality within and among countries.
The document reiterates a call found in the final proposed SDG to implement duty-free quota-free (DFQF) market access for all products originating from least developed countries (LDCs) in accordance with WTO decisions, including those taken in Bali. Unlike January’s non-paper, however, the zero draft does not specify that DFQF access should be provided to all markets of high- and upper-middle-income countries.
Regional trade
The zero draft underscores the importance of regional integration and regional trade agreements (RTAs) – a topic not covered in the SDG targets – but also flags associated policy tensions, according to some experts.
Compared with January’s non-paper, the zero draft language is more positive around the role for RTAs in promoting growth and sustainable development. The January paper had said that a proliferation of such deals may not always foster positive economic, social, and environmental outcomes.
At the same time, the latest draft includes a commitment to work towards reducing fragmentation caused by international trade and investment agreements.
Domestic coherence
Alongside the role of international trade in fostering sustainable development outcomes, the zero draft also highlights the importance of a coherent domestic framework, calling on countries to implement policies and reforms to reap the potential sustainable development benefits of trade.
Examples of such policies can be found in other action areas in the document. The domestic public finance section, for example, refers to a need for transparent public procurement that reinforces sustainable development.
The elimination of harmful subsidies, including those related to fossil fuel production and consumption, are also referred to in the domestic public finance section.
According to experts, fossil fuel subsidies harm the environment by supporting conventional sources of energy, while causing distortions in world trade markets due to impacts on production costs.
Compared with January’s non-paper, the zero draft no longer mentions the need to remove or reduce harmful fisheries subsidies. The new document does refer to fisheries trade issues in the broader call for WTO members to correct distortions in agricultural and fishery markets.
Experts have warned that fisheries subsidies contribute to overfishing of wild fish stocks – some 29 percent are harvested at a rate beyond biologically sustainable levels according to UN estimates – and are also trade distorting, often putting LDCs at a disadvantage in global markets.
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Africa needs strong migration governance for inclusive development
With an estimated 19 million migrants in Africa, the region needs a strong coherent migration policy response to boost regional integration and inclusive development, agreed participants of the Roundtable on labour migration and mobility in Rwanda.
The Roundtable on intra-regional migration and labour mobility in Africa kicked off on 23 March 2015 urging member States to focus on migration for better integration and inclusive development of the continent.
The meeting opened with a strong call to prioritize migration in Africa’s Development Agenda. It aims to reach a consensus on concrete actions to encourage ratification of free movement of persons, protect migrant workers’ rights and support the AUC/ILO/IOM/ECA Joint Labour Migration Programme to achieve fair and effective migration governance for Africa.
This joint initiative is held under the theme “Enhancing capacities of RECs and member States to facilitate Intra-Regional Migration and Labour Mobility for Regional Integration and Economic Cooperation”.
Speaking on behalf of the African Union Commission, AUC Director of Political Affairs, Dr. Khabele Matlosa underscored the fact that historically, Africa is a region of migrants. Moreover, he highlighted the different initiatives undertaken by the African Union and Regional Economic Communities like ECOWAS and EAC to facilitate the movement of persons on the continent. However, for migration to be a catalyst of regional integration and economic cooperation in Africa, “it is imperative that the African Union develops a Protocol on free Movement of persons, the Right of Residence and the Right of establishment as provided for in Article 43 of the 1991 Abuja Treaty”, he emphasized.
Migration for economic development
H.E. Ambassador Sammie Pesky Eddico, Chairman of the International Organisation of Migration (IOM) Council and Ghana Permanent representative to the UN in Geneva pointed out that migration forms an integral part of the economic development process in Africa. The experiences of ECOWAS and EAC economic communities testify that free movement of persons and goods have positive effects on economic development, and called on Member States to ratify existing regional instruments on free movement.
He underscored the need for the AU Assembly to encourage member states that are yet to ratify the existing protocols on free movement of persons to do within a specific timeline. He also proposed that the ratification of protocols on free movement of persons be considered with the African Peer Review Mechanism (APRM).
The International Labour Organisation (ILO) Regional Director for Africa, represented by Mr. Alexio Musindo, ILO Director Tanzania, Kenya, Uganda and Rwanda focused on Labour Migration as a core component of the ILO’s mandate for social justice. Accordingly, this meeting provides an excellent opportunity for Africa to address key labour migration issues including promoting regional social dialogue on labour migration, strengthening institutional capacity to improve labour migration governance as well as the portability of social security benefits.
He reiterated his commitment to continue to champion the exemplary AUC/ILO/IOM/ECA Joint Labour Migration Programme. He took also the opportunity to urge African states on Member states to ratify ILO conventions N0 97 and 143 on the protection of migrant workers and the governance of labour migration.
Protect, promote and prioritize migration and mobility
In the same view, the Director General of IOM, Amb. William Lacy Swing, emphasised on the necessity for this roundtable to demystify the “myth” or “fear factor” about facilitating free movement of people within the continent. It is in that regard that he proposed the Paradigm of the 3Ps in order to protect, promote and prioritize migration and mobility as powerful drivers of sustainable development in Africa.
“But above all, you have a fundamental role in promoting human rights of migrants and the fact that the respect of rights needs to take a central stage, both as end and as condition, for harnessing the benefits of migration for the development of migrants and societies.”, he recalled to the participants.
The representative of the EU delegation to Rwanda, H.E Ambassador Michael Ryan, welcomed the adoption of the Joint Labour Migration Programme and underscored the willingness of EU to assist Africa for a better governance framework on migration.
Effective governance of migration
Mr Silvio Fluckiger, Deputy regional Director of Swiss Cooperation declared that meeting should be a turning point in changing perceptions on migration issues. Indeed, “Migrants cannot simply be viewed as economic commodities to address labour market gaps or demographic needs. Migration is about both, economic and human development.”, he noticed.
Officially opening the ceremony, Hon Venantia Tugireyezu, Minister in the Office of the President of Rwanda, underlined the urgency to fast track different projects facilitating regional integration. The meeting represents therefore an opportunity to identify methods in order to address different challenges in this regard.
The opening ceremony ended with a presentation of the Labour Migration Governance for Development and Integration in Africa Initiative (commonly referred to as the Joint Labour Migration Programme) by Mrs Cynthia Samuel-Olonjuwon, UN CO-Chair of the Employment and Labour Cluster.
The Joint Labour Migration Programme aims to strengthen effective governance and regulation of labour migration and mobility in Africa under the rule of law with involvement of stakeholders; including the employers of labour, organisation of workers and migrants. She emphasised that the JLMP constitutes a major contribution to obtaining the development potential of labour and skills mobility in Africa for migrants as well as receiving and sending countries.
It is worth recalling that this meeting is a joint initiative of the AUC/ILO/IOM/ECA. The main objective is to improve the awareness and understanding of the benefits that migration and labour mobility bring to countries of origin, transit and destination as well as migrants themselves.
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ADB, IMF, World Bank to cooperate with China-led Asian Infrastructure Investment Bank, leaders say
The Asian Development Bank (ADB), International Monetary Fund (IMF) and World Bank all expressed support Sunday for the new kid on their block, a $50 billion multilateral lender led by China, which gave the financing operation most of the seed money upon its founding last year. Inside and outside the Asia-Pacific region, more than 30 countries are now members of the Asian Infrastructure Investment Bank (AIIB). Additional nations may join by a March 31 deadline, as BBC News reported.
The AIIB is designed to provide project loans to developing countries, with operations beginning by the end of this year.
ADB President Takehiko Nakao and China’s Finance Minister Lou Jiwei have conducted discussions about possible cooperation between the two regional lenders, they said at a China Development Forum 2015 session in Beijing, Reuters reported. At the same event, IMF Managing Director Christine Lagarde said her fund would be “delighted” to work with the AIIB, as there was “massive” room for cooperation on infrastructure financing in the Asia-Pacific region.
Meanwhile, one of the World Bank’s leaders said Sunday her institution also would be cooperating with the AIIB. “Any new initiative that will mobilize funding in order to fill infrastructure gap is certainly welcome. World Bank really welcomes the AIIB initiative,” Managing Director Sri Mulyani Indrawati told China’s official Xinhua News Agency in an exclusive interview. “We will definitely open for cooperation with AIIB.”
Most of the AIIB’s regional members joined last year, while most of the bank’s nonregional members joined this month. The former encompass India, Indonesia and Pakistan; the latter include France, Germany and the U.K. Conspicuous by their absences on its membership roll are Japan and the U.S. Neither country has expressed support for the venture, which some observers have attributed to their rivalries with China. Among national economies around the world, the U.S. ranks No. 1, China No. 2 and Japan No. 3.
China’s finance minister has previously indicated the AIIB’s approach would be not to compete but to complement existing international institutions such as the ADB, IMF and World Bank. The ADB is based in the Philippines capital of Manila, while the IMF and World Bank both are headquartered in the U.S. capital of Washington.
Eight more countries may join the AIIB by the March 31 deadline, Jin Liqun, secretary-general of the bank’s interim secretariat, said Sunday, according to Reuters. At the start of operations, it will have the approval of shareholders to double its capitalization to $100 billion, the news agency said.
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Kikwete talks tough on roadblocks
Tanzania President Jakaya Kikwete said last week urgent measures are being taken to reduce road blocks on the Tanzania side of the Central Corridor.
This Corridor is the southern alternative route to the East African hinterland.
“The progress made so far, at the ports of Mombasa and Dar es Salaam and, on the Northern Corridor with regard to roadblocks shows that it is possible to eliminate these non-tariff barriers. Measures are being taken in earnest to reduce road blocks on the Tanzania side of the Central Corridor.
“I am sure in the next few months we will notice a huge improvement,” Kikwete said. He was delivering the State of East African Community address in Bujumbura, Burundi.
According to a press release, Kikwete, who is the Chair of the Summit of EAC Heads of State, told Partner States to spare no efforts in ridding the region of Non-Tariff Barriers. He said this will spur the integration process.
He re-affirmed his commitment during his term as Chairperson of the Summit to ensuring total removal of all barriers to trade.
The President remarked that roadblocks along the central corridor within the hinterland of Tanzania were on the verge of been removed.
“Police check points have been reduced from 15 points to six. Our aim to reduce them to none except when need arises,” he said.
He said the Tanzania Revenue Authority had also reduced the checks from three to zero along the Central Corridor. He noted that the revenue authority would further reduce the weighbridges from eight to three and to introduce weigh in motion technology.
The President informed the House that one such weighbridge was already installed in Vigwaza with another two on the way to Manyoni and Nyakahura on the central corridor.
“I am told with the current improvements alone, for a container to move from the port of Dar es Salaam to Kigali takes three days from the previous 8 days. It takes three and a half days to Bujumbura from the previous 8 days,” he said.
Kikwete said, “I call upon EALA to join in the partnership to ensure the removal of NTBs to make EAC the best region to do business.”
The President noted that improved infrastructure would bring down the costs of doing business. He said poor infrastructure had resulted in the upward and spiral effect of transportation costs resulting in skyrocketing of between 30-40% of the price of goods especially in the landlocked countries.
He thus urged the region to invest better on efficient ports, railways, roads, aviation services, energy and telecommunication.
In attendance were high ranking government officials led by the 2nd Vice President of the republic of Burundi, Dr. Gervais Rufyikiri, legislators, diplomatic corps and various stakeholders.
President Kikwete was emphatic that the incremental approach of the integration process had been a great success. He said under the Customs Union, the region benefited from enhanced trade through the Common External Tariffs.
“Indeed, goods which meet the criteria of rule of origin have been moving across borders without paying taxes however non tariffs barriers remain a challenge. Progress has been made but the matter has not been resolved fully yet,” he said.
He said, “Trade is now at 23 % over and above intra African trade figure of 12%. There has been a 300% increase in the value of trade from, 2 billion US Dollars in 2005 to 6 billion US Dollars in 2014.”
“These numbers, coupled with the combined EAC GDP of $110.3 billion with an average annual rate growth, of 2.6 percent makes our region a formidable trade and economic bloc in Africa,” Kikwete said.
The Head of State remarked that contrary to initial fears within the Partner States, an increase in government revenue had been recorded as a result of the Customs Union.
On the Common Market pillar, the Head of State lamented over its slow progress which he said was discouraging to the EAC citizens. He noted that the Common Market scorecard 2014 presented at the last EAC Summit in Nairobi shows more good be done.
He cited the example with regard to the free Movements of Services, where 63 measures out of 500 key sectoral laws and regulations of Partner States were identified to be inconsistent with the Common Market Protocol. 73% of these are exclusively related to professional services.
The President challenged the Partner States to embrace the wider picture of regional integration in their approach. In this regard, the Head of State lauded EALA for the introduction of the Community Cross Border Legal Practice Bill (2014); the East African Community Electronic Transactions Bill 2014; and the East African Community Competition (Amendment) Bill (2015) and urged EALA to treat the Bills with the urgency deserved.
On the forthcoming elections in Burundi, the Head of State was categorical that the country should hold peaceful, free and fair elections. He remarked that any attempts to derail the electioneering in the country would be inappropriate.
“I appeal to the citizens of the country to adhere to the constitution of Burundi, the electoral laws and the Arusha Accord,” he said.
He said that Tanzania would also vote at the plebiscite for the new constitution in April before the general elections in October.
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India opposes new US proposal on food stockholding at the WTO
India and other members of the G-33 grouping have opposed a new US proposal for a permanent solution to the factious issue of food stockholding for food security in developing countries at the second informal meeting at the WTO this year.
India said the US proposal may result in an outcome where countries are advised as to what kind of food security programmes they should adopt, which is not part of the existing mandate.
In trying to address the food security issue vis-a-vis the proposal, one of the outcomes could be a decision on public stockholding whereas the mandate is the other way round, India argued.
The G-33 countries – led by India and including China and the Philippines – want public stockholding for food security purposes to come under the ‘Green Box’ – subsidies that cause no or minimum trade distortion.
The G-33 debated the US proposal on Friday’s second dedicated session this year on the issue at the Geneva-based World Trade Organisation (WTO). The proposal was among many others to clinch a deal.
The proposal comprises three main elements – reviewing efficacy and trade effects of existing food security programmes and the extent to which they meet their goals; evaluating the real and potential problems encountered in implementing food security programmes because of constraints in the existing WTO rules; and drawing from the best practices and recommendations on food stockholding.
Best practices in food stockholding would include programmes in states that are most economical, targeted and effective and the ones that are not trade distorting and have enhanced transparency.
Indonesia, speaking on behalf of the G-33 countries, said that the real issue is getting a permanent solution, not to engage in an academic programme or to expand the mandate to review existing programmes.
The informal meeting also saw the playing out of the old hardened battle lines between the proponents of another proposal to the issue, called the G-33 proposal, and the opponents of it.
The G-33 proposal suggests to amend the Agriculture Agreement to provide new flexibilities for programmes when governments buy food from low-income farmers at supported prices to build up stocks, to be shifted from the ‘Amber Box’ – all domestic support measures considered to distort production and trade – to the Green Box.
The EU along with Australia and some other countries have called for maintaining the “integrity of the Green Box” and keeping the “Green Box, Green”.
One of the suggestions to the logjam was a solution on the basis of the calculation of Aggregate Measurement Support (AMS) – the base period for which is still the 1986-88 prices. India, which is against it, has been arguing that this has made it increasingly difficult for developing countries to stay within the WTO-prescribed limits.
An interim peace clause was brokered last year in November, when India had blocked the global Trade Facilitation Agreement to find a solution to the stockpiling logjam, which protected developing countries from legal consequences if it exceeded its Amber Box limits as a result of stockholding for food security.
India also suggested a new ‘Friend of the Chair’ (a delegate designated by the presiding officer to perform a particular task) to expedite the process of finding a solution before the end of the year as “time is running out”.
Chairperson Ambassador John Adank, New Zealand’s Permanent Representative to the WTO, said that “wide gaps” remain between the G-33 proposal and its opponents.
There are two broad areas of concern – the impact on the architecture of the existing Agriculture Agreement, particularly shifting the market price support programmes into the Green Box, and secondly, the “unintended consequences” of the G-33 proposal on export markets, Adanks stated.
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OPEC won’t bear burden of propping up oil price: Saudi minister
OPEC will not take sole responsibility for propping up the oil price, Saudi Arabia’s oil minister said on Sunday, signaling the world’s top petroleum exporter is determined to ride out a market slump that has roughly halved prices since last June.
Last November, Organization of the Petroleum Exporting Countries kingpin Saudi Arabia persuaded members to keep production unchanged to defend market share.
The move accelerated an already sharp oil price drop from peaks last year of more than $100 per barrel that was precipitated by an oversupply of crude and weakening demand.
Since the oil price collapse, top OPEC exporter Saudi Arabia has said it wants non-OPEC producers to cooperate with the group. But Saudi oil minister Ali al-Naimi said on Sunday that plan had so far not worked.
“Today the situation is hard. We tried, we held meetings and we did not succeed because countries (outside OPEC) were insisting that OPEC carry the burden and we refuse that OPEC bears the responsibility,” Naimi told reporters on the sidelines of an energy conference in Riyadh.
“The production of OPEC is 30 percent of the market, 70 percent from non-OPEC...everybody is supposed to participate if we want to improve prices.”
Earlier, OPEC governor Mohammed al-Madi said it would be hard for oil to reach $100-$120 per barrel.
Oil prices recovered since January to over $60 a barrel, but have fallen again in recent days following a bigger than expected crude stock build in the United States that fueled concerns of an oversupply in the world’s largest oil consumer. Benchmark Brent crude settled at $55.32 a barrel on Friday.
Oil companies, including U.S. shale producers, have slashed spending and jobs since the price of oil fell, and may face another round of spending cuts to conserve cash and survive the downturn.
Naimi repeated on Sunday that politics played no role in the kingdom’s oil policy.
Some producers such as Iran, a political regional rival of Saudi Arabia, have criticized Riyadh for its stance on maintaining steady production.
“There is no conspiracy and we tried to correct all the things that have been said but nobody listens,” Naimi said.
“We are not against anybody, we are with whoever wants to maintain market stability and the balance between supply and demand, and (with regards to) price the market decides it.”
He said the kingdom’s oil production was around 10 million barrels per day (bpd), and it had the ability to increase that to meet demand if customers asked for more.
“Currently there is no plan because there is no demand,” he said, when asked if Saudi Arabia planned to expand production capacity beyond 12.5 million bpd.
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The potential of fair African development
Across Africa, where many nations show high economic growth rates but with little benefit to their populations, the notion of social and economic “emergence” is taking hold as a remedy for perennial pessimism.
The term has become a buzzword among international donors and African politicians who take it to mean a fairer distribution of wealth and other measures that benefit society at large.
About 30 countries on the continent have signed up to the doctrine, according to the United Nations. Ivory Coast’s President Alassane Ouattara, who hosted a regional conference on the theme this week, has grabbed on to the promise of economic emergence as he plans to seek re-election in October.
Emergence, modelled on the success of the “baby tigers” of Asia – Indonesia, Malaysia and Vietnam – as well as Brazil, Chile and Colombia in South America, is presented as the opposite of a capitalist and dehumanised economic vision.
“For me, the goal of emergence is not GDP (gross domestic product) growth per se: it is the pursuit of greater human health and happiness so that each one of us can fulfil our potential and participate fully in our societies,” said Helen Clark, administrator for the UN Development Programme.
Ivory Coast, the world’s leading cocoa producer, barely four years ago came out of a political and military crisis after a bloody decade. It has since achieved an annual growth rate of 9.0 percent and is due to be an “emerging” economy by 2020, Ouattara told the conference, though the Ivorian opposition considers that goal far-fetched.
Leaders elsewhere in Africa are less ambitious but equally determined. Chad was aiming to emerge in 2020 but has revised the date to 2030, like Togo. More cautiously, Senegal’s rulers are looking to 2035 to attain key goals.
“In addition to being strong and sustainable, the growth that leads us to emerge should generate jobs, force down unemployment and reduce social inequalities,” Senegalese President Macky Sall said during the forum.
The UN’s Clark envisaged that “by 2050, an ‘emergent Africa’ would have tripled Africa’s share of global GDP, enabled 1.4 billion Africans to join the middle class, and reduced tenfold the number of people living in extreme poverty. These are exciting prospects.”
Investment in health and education and reducing inequalities between cities and the countryside and between men and women, along with diversifying the economy and appropriate infrastructure projects, are among means cited by experts to reach emergent targets.
‘Bet on the future’
On a continent where 300 million inhabitants were considered middle-class citizens by the African Development Bank (ADB) in 2011, out of an overall population of around one billion, “Afro-pessimism is now giving way to optimism,” Ivory Coast’s Planning Minister Albert Toikeusse Mabri asserted.
“The African narrative has changed. Just a while ago, Africa was a place which was exceptional, but for negative reasons. It was a place where there was no growth, no law,” said ADB vice-president Steve Kayizzi-Mugerwa.
“People would say, ‘Yeah, that’s Africa’, where there was war, quick death, no accountability,” he said, before adding how things have changed.
“We can no longer blame it on geography, we can no longer blame it on disease, we can no longer blame it on the colonial legacy, because many people have emerged,” the ADB official said, though conflict rages in Somalia and South Sudan and parts of the Democratic Republic of Congo.
South Africa, Botswana, Mozambique, Kenya and more recently, Ivory Coast, have sparked a more positive outlook on the continent, impressing the financial community with their success in development terms.
“Emergence is a bet on the future,” declared UNDP regional director Abdoulaye Mar Dieye.
The ideas discussed at the conference mean that “economic growth without social benefits isn’t inevitable”, said Makhtar Diop, vice-president of the World Bank for Africa, adding that the “redistribution of wealth” was vital for “social wellbeing”.
However, participants pointed out that emergent development is hampered by undue dependence on a single resource, like Nigeria and Angola which rely on their oil exports. Massive corruption and a lack of economic integration are also barriers to success.
Capital flight costs Africa between 60 and 100 billion dollars a year, said Dieye of the UNDP. “With good governance, you see what could be injected back into African economies.”
» Download the outcome document from the International Conference on the Emergence of Africa: Declaration of Abidjan (French)
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Azevêdo underscores WTO commitment to trade programme for poorest countries
Director-General Roberto Azevêdo, in closing the Enhanced Integrated Framework’s (EIF) ‘Global Platform’ meeting at the WTO on 19 March 2015, said that “we can take pride in the fact that the EIF is becoming more flexible, more efficient, more effective and more adaptable, to the specific needs of the least developed countries”. He urged participants to “continue working together to ensure that the second phase of the EIF is the major success story that we all want to see”.
This is what he said:
Good afternoon everybody.
I know this is your third day here, so I hope it has been a productive session.
We are proud to be the home of the EIF – and to be supporting this EIF Global Platform event.
I have been getting updates from my team and I understand that you have had a very successful meeting so far.
I am delighted to see that the room is still full after three days of very intense, constructive and inclusive discussions.
It is good to see all EIF partners represented here: LDCs, donors and partner agencies.
It’s great to see such a strong turnout of donor representatives – from capitals, from Geneva, and I know that many of you have come from assignments in LDCs, where you play the critical role of EIF donor facilitator.
This level and quality of commitment and participation is very, very encouraging. I think that it reflects the high expectations of all partners for this meeting, and more importantly, for the next phase of the EIF.
I see from the banners here that you have gathered in Geneva to “shape the future together”.
I know that this is precisely what has happened over the past three days.
Through the exchanges you’ve had here, the different partners have had the opportunity first to understand each other’s issues and priorities, and then to plan, together, the basis for the EIF’s second phase.
This kind of partnership has been central since the creation of the EIF, and will certainly underpin the next phase which we are shaping here.
On that note, I am particularly pleased that this Global Platform event has provided an opportunity to so many countries to showcase and share how the EIF has helped them to prioritise trade in their national development agenda.
And, indeed, among all the reports that we’ve seen and comments we’ve listened to, it is imperative that the voices of the LDCs themselves are always heard first and foremost.
That’s what we tried to achieve here.
So I want to acknowledge the hard work and careful preparation that the Executive Secretariat Team has put into making this event a success.
And I have no doubt that this has been a joint effort. I think that everybody here today can take pride in the fact that the EIF is becoming more flexible, more efficient, more effective and more adaptable to the specific needs of the LDCs.
So I am confident that the EIF Global Platform has laid a clear path for a recommitment to this partnership. From the reports I have heard, I think that everyone knows the importance of their own respective roles and their contribution to the objectives of the EIF.
This applies to the WTO just as much as it does to everyone else. So I want to take this opportunity to underscore the WTO’s commitment to contributing to the EIF in whatever way it can. We want to make sure that the second phase of the EIF is more efficient and effective in delivering results on the ground.
The final evaluation of the first phase of the EIF has confirmed that it is yielding sustainable results.
It is important now that the donor community supports the EIF so that we can continue this work in assisting the integration of the LDCs into the global trading system. This applies to phase 2 itself, but also in ensuring that the transition towards phase 2 is as smooth as possible.
I know that there will be occasions during the course of the year to bring this support forward, and so I encourage donors to be ready.
Finally, I would like to invite you all to participate in the 5th Global Review of Aid for Trade which will be held here at the WTO from 30 June to 2 July.
The EIF is Aid for Trade in action for the LDCs, and so it will be an important part of that event.
So once again, congratulations on an excellent event. Let’s continue working together like this to ensure that the second phase of the EIF is the major success story that we all want to see.
Thank you for listening.
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Mauritius: A National Export Strategy is underway, announces Minister Gungah
The formulation of a National Export Strategy by the International Trade Centre is underway and this will constitute an added advantage in devising new policies and orientations, announced the Minister of Industry, Commerce and Consumer Protection, Mr. Ashit Kumar Gungah at the Mauritius Export Association’s (MEXA) 9th Annual General Meeting, held on 19 March 2015.
He highlighted that the country is increasingly relying on the ingenuity, creativity, sense of leadership and commitment of its entrepreneurs. Government and the private sector are natural partners in the industrialisation process and we are proud that this partnership has been a shining model in the region and elsewhere, he added.
The country owes much to the efforts of the business community for having sustained the process of industrialization for more than forty years now, said the Minister. He also expressed his appreciation to business operators for having developed manufacturing as a major economic pillar.
According to Mr. Gungah, close collaboration between the public and private sector is today more important than ever. The challenges are multi-faceted but the most daunting is no doubt the lingering economic difficulties in our traditional markets, he underlined.
He recalled that Government Programme 2015-2019 provides for an Africa Strategy, to create the conditions for operators to take advantage of rising purchasing power in many African countries. We need to improve on regional integration policies through more bilateral trade agreements, concerted efforts to address non-tariff barriers and vigorously pursue export promotion, he added.
The Chairman of MEXA, Mr. Phil Ryle, for his part, stated that presently, the Mauritian economy is encumbered with an economic growth of 3 to 4% annually, while export growth has also stagnated at around 3% over the last 4 years. For the economy to regain its verve, he stressed, the country needs a strong and viable manufacturing base with exporters delivering double digit growth.
Speaking about product diversification, Mr. Ryle said that we are witnessing a diversification of our exports with the emergence of sub-sectors, such as Light Engineering, Medical Devices and Agro-Based products, which have grown by 9% in 2014.
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Private sector players line up for East Africa LIFT fund
More than 30 private sector companies have so far applied for grants in the first round of TradeMark East Africa’s Logistics Innovation for Trade, or LIFT, fund, which was launched in Europe last month.
With such funds typically attracting a deluge of applications in the final days before a round closes, many more are expected to submit proposals between now and the March 31 deadline, according to Clara Garcia Parra, a consultant at Nathan Associates, which is managing the fund. A number of the firms applying are multinationals.
Backed by the U.K. Department for International Development, the LIFT fund has raised $16 million to provide challenge grants ranging from $250,000 to $750,000 to help companies develop new ways of cutting the cost and time involved when trading goods within East Africa.
Its aim is to encourage the private sector to invest in East Africa’s logistics and transportation industry, testing out fresh innovations that will help bring down the significant barriers to trade that slow the region’s economic development.
The idea is that LIFT will shoulder part of the perceived risk of investing in East Africa and reduce the cost of entry for companies eyeing the region, TMEA CEO Frank Matsaert told Devex. This will not only inject expertise into the sector but will stimulate price competition into “what are fairly cartelized niches.”
Transport costs in East Africa are around 60 percent higher than those in the United States or Europe, many supply chains are underdeveloped, and the logistics industry lacks technological breadth, he noted. This results in higher prices for many goods and makes it harder for companies to grow and create jobs.
The fund follows a model trailblazed in East Africa by M-Pesa, a mobile money wallet that allows users to store and transfer money using their mobile phones. Telecommunications provider Safaricom initially received a grant to absorb the risk of developing the product, which 80 percent of Kenyans now use.
Some innovative applications
LIFT is open to companies from anywhere in the world, but TMEA is especially targeting logistics and transportation firms that operate in logistics hubs in Belgium, the Netherlands, Germany and the United Kingdom.
One example of the type of innovation TMEA hopes to trigger through the grants is the development of electronic platforms allowing small businesses to jointly buy space on a truck rather than individually bearing the whole cost of one vehicle, Matsaert explained.
Applications received have so far included a number of interesting proposals in the fields of intermodal transport solutions and 4PL, which is relatively new to East Africa, according to Nathan Associates’ Garcia Parra.
Several applications seek to address information asymmetries, for example through the creation of online exchange platforms, with a view to bringing the price of transport and logistics services down. Fund managers also expect to receive a number of ICT-based proposals to improve logistics efficiency.
The fund has generated an “encouraging response” in terms of proposals on East Africa’s so-called central trade corridor, which serves Burundi, the Democratic Republic of the Congo, Rwanda, Uganda and South Sudan, with the emphasis here on reviving intermodal solutions, especially on Lake Victoria, she said.
“Follow-ups are also being conducted with academic institutions with a view to establishing tertiary logistics training in the area. A large number of advocacy proposals have also been received,” the Nathan Associates consultant explained.
How to apply
To apply for funding, firms must first submit a proposal outlining the innovation they would bring to East Africa’s trade and logistics industry, including the proposal’s economic feasibility and how it would fulfill TMEA’s remit of reducing trade barriers to assist economic development and improve the lives of the poor, according to Allan Ngugi, business competitiveness program manager at TMEA.
An independent investment committee will then shortlist interesting contenders and, after a due diligence process and negotiation of targets and timelines for rollout, make the final award. First funding will be disbursed to companies as reimbursement for their investments when initial targets are achieved, potentially as early as July this year, he said.
TMEA hopes to expand the LIFT fund after a pilot phase of around two years, according to Matsaert.