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Specific policies needed for Africa’s development, forum hears
The International Conference on the Emergence of Africa opened Wednesday, March 18 in Abidjan, Côte d’Ivoire, with calls for African governments to address inequality. Even though Africa is experiencing economic growth, many still cannot feel the impact, the forum heard.
“We have to ensure we get rid of the current inequalities in our societies. We have to find a way of ensuring everyone, including the poor have access to resources,” said Macky Sall, Senegal’s President. To reach this level, Helen Clark, Administrator for the United Nations Development Programme (UNDP), emphasised the need for African governments to adopt specific policies. These, she said, will improve the human development standards.
The conference serves as a platform for governments, private sector and partners to exchange ideas and learn lessons of how to improve policies and strategies that will help African nations become emerging markets.
The three-day event is co-organized by the Government of Côte d’Ivoire and UNDP, in collaboration with the African Development Bank (AfDB) and the World Bank Group. Participants include Heads of African States, BRICS (a group of emerging economies including Brazil, Russia, India, China and South Africa), diplomats, private sector, and civil society, amongst others.
China shared its story of transformation, from a poor country, to now one of the world’s fastest growing economies. This was after it adopted market reforms in 1978. The Asian country’s Gross Domestic Product averages 10 percent per year, lifting most of its population out of poverty.
For Africa to report such change, Steve Kayizzi-Mugerwa, AfDB’s Acting Chief Economist and Vice-President, observed the importance of ensuring peace and stability. “Let us stop civil wars, let us stop deaths of our mothers and sisters. Development is impossible without peace,” he said.
Addressing Africa’s energy problem and enhancing private sector participation are key elements that are expected to take centre stage at the meeting, which runs till Friday.
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East and Southern Africa resume negotiations on EU-EPA
After their meeting on 9 and 10 March 2015, senior officials from Member States of East and Southern Africa (ESA) agreed to resume negotiations with the EU within the framework of the Economic Partnership Agreement (EPA) in order to discuss the issues left outstanding since the last round of negotiations between the two parties, which took place in Mauritius in November 2011.
These contentious issues currently relate to several matters, including export taxes, substantially all trade and the liberalisation schedule, trade in services and safeguard measures.
Both parties also need to continue discussions on the section related to development cooperation. The current text of the EPA chapter on this issue has been broadly agreed, but ESA wishes to strengthen the language in relation to the availability of additional funds from EU Member States. On the European side, the support designated under the European Development Fund (EDF) will be considered. The EU has also explained that its Member States are eager to support ESA States in their trade efforts and that specific needs could be identified in the framework of the EU “Aid for Trade” initiative.
“Although stakeholders in the negotiations with the European Union sometimes have differing interests, it is reasonable to believe that the EPA can be an inclusive tool for economic development”, the Minister of Trade and Consumer Affairs for Madagascar, Henri Rabesahala, stated at the opening of this technical negotiation meeting.
“The full contribution of the countries in question to all the work over the next two days will fashion the future of the region”, he continued.
During their previous meeting in Lusaka in 2013, senior officials from the region recommended organising a meeting between stakeholders with the objective of concluding an agreement on the regional level to foster sustainable development and promote regional integration.
However, ESA countries will need to overcome some internal differences. Indeed, due to their constitution as a group, which includes islands in the Indian Ocean (Comoros, Madagascar, Mauritius and Seychelles), countries in the Horn of Africa (Djibouti, Ethiopia, Eritrea and Sudan) and landlocked countries in Southern Africa (Malawi, Zambia and Zimbabwe), the Member States of ESA were not able to put forward a common market access offer for the region. Instead, each country presented an individual offer that was designed based on their specificities. The region will first need to reach a consensus on these issues, mote some observers.
Additionally six ESA States (Comoros, Madagascar, Mauritius, Seychelles, Zambia and Zimbabwe) have concluded an interim EPA with the EU. The interim EPA contains a rendezvous clause providing for negotiations on trade in services, investment, agriculture, rules of origin, sanitary and phytosanitary (SPS) provisions, technical barriers to trade (TBT), customs and trade facilitation issues and trade-related rules. All these issues are currently under discussion.
The last negotiations on the general EPA took place at the end of 2011 and, to date, none of the countries that did not join the EPA in 2007 have made an offer for trade in goods or trade in services.
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Algeria may submit WTO accession file in December, says Benyounes
Algeria may submit its World Trade Organization (WTO) accession file to the 10th WTO ministerial conference to be he held next December in Kenya, said Tuesday in Algiers Minister of Commerce, Amara Benyounes.
“If the accession dossier will be ready, we will submit at the coming ministerial conference of the WTO, otherwise it will be for next year,” the minister told the press on the sidelines of a meeting of the National Commission in charge of the negotiations for Algeria’s accession to WTO.
According to him, Algeria accession to this Organization does not face any major obstacle and it’s in the “last stage.”
“We have achieved several stages since the beginning of WTO talks on the accession. Today we are really in the last stage,” stressed Benyounes.
Since the holding of the last round of multilateral negotiations in Geneva in March 2014, Algeria received 131 additional questions that are examined by the various ministries.
“I think this is the last question” sent to the country, he added.
Concerning the meeting of the National Commission in charge of the negotiations for Algeria’s WTO accession, held Tuesday behind closed doors in the presence of representatives of several ministries, Benyounes said that it focused on the examination of the answers to the questions of the United States and the European Union (EU) notably.
Those questions mainly concern the Algerian law and its compliance with the WTO rules.
Once the answers approved, they will be transmitted to the government committee responsible for monitoring and supervision of Algeria accession to WTO, which is chaired by Prime Minister Abdelmalek Sellal. He will decide definitively on these answers.
“Later, we will probably schedule a multilateral meeting in Geneva in June,” added Benyounes.
So far, Algeria has conducted 12 rounds of multilateral negotiations that have treated more than 1,900 issues related to national economic system.
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Transatlantic economy showing growing gaps in growth, jobs, trade, energy and monetary policies
The two biggest trading blocs are taking divergent economic paths
At its Transatlantic Conference, the American Chamber of Commerce to the European Union (AmCham EU) on 19 March 2015 released the results of The Transatlantic Economy 2015, the annual survey of jobs, trade and investment between the EU and the United States. The report showed that since the financial crisis, the United States and Europe have embarked on divergent economic paths. The U.S. economy is now in its sixth year of recovery while Europe struggled in 2014 to avoid a triple-dip, or a third recession in six years, with real growth at 0.9% versus 2.4% in the United States. The IMF predicts this gap to widen in 2015.
Job creation is another area where both economies diverge. The U.S. economy is generating jobs; this is not the case in Europe. As of February 2015, America’s unemployment rate was 5.7% compared with 9.9% in Europe. The report states that there is potential for these figures to diverge even more with Europe now undergoing a technology backlash and facing growing energy insecurity. This has left the digital and energy sectors in Europe lagging behind their US counterparts.
Joe Quinlan, Senior Fellow, Center for Transatlantic Relations, Johns Hopkins University stated, ‘The transatlantic economy is now at a pivotal juncture. If Europe continues on this track the two economies will be even more out of step. We need to ensure this gap does not widen as it could have negative repercussions for both sides of the Atlantic. I strongly believe the Transatlantic Trade and Investment Partnership (TTIP) can provide the best opportunity to make a positive difference and produce much needed growth for both the EU and the United States.’
Despite these findings there is cause for optimism: the United States and Europe remain each other’s most important markets generating $5.5 trillion in total commercial sales each year. Since 2000 Europe has attracted over 55% of total US global investment and remains the most profitable region for US companies. US foreign affiliate income earned in Europe rose 6.2% in 2014 to an estimated $238 billion – a record high, and one-third higher than the depressed levels of 2009.
The launch of the report comes just weeks after the 8 th round of TTIP negotiations in Brussels. The report highlights the significance of the transatlantic economy not only in terms of GDP but also employment with some 15 million workers, on both sides of the Atlantic, in mutually ‘onshored’ jobs.
The transatlantic economy remains the world’s largest and wealthiest market, and still accounts for roughly 35% of world GDP in terms of purchasing power parity. It remains the dominant force in the global economy.
» Download the full report (29.91 MB)
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The Renewable Electricity Grid: The future is now
Even a few years ago, renewable energy played only a small role in most countries’ energy planning. While governments and publics were eager to increase the share of renewables in their energy systems, the economics of doing so were challenging. There were also serious concerns about the impact on the electricity grid of adding too much capacity from variable renewable energy sources, such as solar and wind.
This has all changed. Prices for inputs – particularly for solar photovoltaic panels and wind turbines – have come down so far that renewable power is now cost-competitive with conventional generation in some regions. As of 2014, 144 countries had established national plans to expand renewable energy, and almost hundred had set specific targets and incentives.
And as a new report from the World Bank’s Energy Sector Management Assistance Program (ESMAP) makes clear, with the right combination of new policies and investments, countries can integrate unprecedented shares of variable renewable energy into their grids without compromising adequacy, reliability or affordability.
“Renewables are no longer a marginal business,” said Anita Marangoly George, senior director of the World Bank’s Energy and Extractives Global Practice. “We are talking about levels of energy that can bring light to thousands of households, grow businesses, meet the needs of cities, and drive entire economies.”
Making the transition to large-scale renewable energy supply requires substantial shifts in thinking and infrastructure: grid modernization, adoption of new technologies, reworked business models for utilities, and updated policy and regulatory frameworks. The new ESMAP report, Bringing Variable Renewable Energy Up to Scale: Options for Grid Integration Using Natural Gas and Storage, looks at a number of new approaches to facilitate these shifts and ensure the success of this transition.
These approaches include strengthening interconnections between areas, diversifying the contribution of different renewable energy sources from various locations, and building up complementary generation and demand response technologies. The report builds upon previous reports on the topic published by the World Bank and other international organizations, by focusing on the important role that natural gas and energy storage can play in integrating variable renewable energy sources.
With their fast start-up times, natural gas-fired power generation technologies have an edge over other conventional generation options such as nuclear or coal in that they can ramp up and down quickly, providing power as needed to balance variations in wind and solar inputs.
Likewise, energy storage options have the potential to address most of the challenging aspects of integration. Comprising a wide range of technologies – including pumped hydro, compressed air, multiple battery technologies, and thermal storage – energy storage can act as a source of demand (through charging) at times of low energy use throughout the day, and a source of supply (through discharging) when demand increases.
As the report makes clear, this new comprehensive approach also brings new challenges. For example, using natural gas for complementary power generation can have an impact on national budgets and gas procurement strategies, and running gas generators on a part-time basis can also increase maintenance costs.
Utilities and regulators will also have to rethink their business models to accommodate an increasing number of clients that are both consumers and distributed generators.
Additional compensation mechanisms or incentives may need to be created for flexibility and reserve capacity, so that system operators can procure the necessary supply to ensure reliable delivery of electricity.
These and other policy proposals mark just how far forward the debate has come, according to Anita Marangoly George.
“Five years ago, we would not have even been talking about these issues,” she said. “We are no longer talking about getting to five percent renewable energy penetration; we are talking about the challenges of balancing when you go above 20 percent. We are no longer talking about intermittency; we are talking about managing variability across the entire system.”
» Infographic: Bringing Variable Renewable Energy Up to Scale
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Zim loses $12 billion to multinationals
Zimbabwe has lost an estimated $12 billion through illegal trade involving multinational companies from rich countries involved in the mining sector here.
The amount siphoned off is enough to pay off the country’s total debt - estimated at just under $10 billion. A new report, entitled Capital Flight, Natural Resources and Institutions in Zimbabwe and compiled by Zimbabwean researchers and academics, reveals that the multi-billion capital flight has taken place over the last three decades – largely through falsified invoicing.
According to the researchers, trade in the major minerals involves companies from Zimbabwe’s main trading partners, which include South Africa, Canada, Australia, UK, China and the US.
“Capital flight from Zimbabwe reached a record high of $3.1 billion in 2006. Evidence from the African Development Bank and Global Financial Integrity (2013) also shows that Zimbabwe has lost a cumulative $12 billion in the last three decades through illicit financial outflows ranging from secret financial deals and tax avoidance to illegal commercial activities,” says the report. “Furthermore, according to the Minerals Marketing Corporation of Zimbabwe (2014) the country is losing more than $50 million worth of gold every month through smuggling,” it adds.
Independent estimates last year indicated that gold leakages accounted for losses of around $ 800 million every month, a figure that has not been officially refuted. Zimbabwe is endowed with abundant mineral resources that experts say could easily turnaround the economy, but their contribution to economic development has remained minimal. The report says the mining sector, despite being touted as one of the biggest sectors in the national economy, has contributed only between 3-4 percent of the Gross Domestic Product (GDP).
Mis-invoicing
Zimbabwe accounts for about 9 percent of the world’s diamond production, 6 percent of platinum and about 4 percent of palladium output.
The country is currently extracting around 30 different types of minerals, chief among them diamonds, gold, nickel and platinum, with minerals accounting for most of the exports.
“Most of the metals and minerals mined locally are for the export market. This therefore presents a fertile ground for mis-invoicing - given that most of the companies in the mining sector are foreign owned,” reads the report.
The research indicates that the companies involved in minerals trade have been under-invoicing their goods by bringing less capital into Zimbabwe and then exporting high value minerals to numerous destinations.
The offending companies declare a smaller amount of money they receive from exports than what is reported as imports by trading partners.
They have also been over-invoicing imports, whereby the companies have been accessing more locally available foreign currency and then taking it out under the pretence that it would be used to import goods and service. The exporters report a larger amount of money they use for importing than what is reported by trading partners.
Tax evasion
The report identifies corruption, dysfunctional regulation, weak enforcement of rules and money laundering as the main drivers of capital flight. It also blames the financial leakages on tax evasion, lack of transparency in trade transactions, high and persistent government budget deficits, excessive external borrowing, and political instability.
Canada, China, Germany, UK, Greece, Italy, US and Zambia are named as gateways to facilitate capital flight out of Zimbabwe. Italy recorded the highest capital flight from Zimbabwe between 2008 and 2013 while the highest illegal inflows came through Belgium.
The researchers also blamed President Robert Mugabe’s Look East policy for massive capital flight.
“Even the ‘friendly countries’ like China show capital flight from 2010. This might suggest that during the crisis period China was bringing unrecorded capital into Zimbabwe, but as the economy improved China was sending out money from Zimbabwe as illegal repatriation of profits,” says the report.
Developed countries like the US, Germany and Canada could have been used as routes through which money was illegally taken out. The report also notes that diamond export mis-invoicing was rife in trade between Zimbabwe and European countries, including the UK.
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Sendai: UN conference adopts new, people-centred disaster risk reduction strategy
Death, destruction and displacement wrought by natural disasters would be significantly reduced by 2030 under a new framework adopted by countries attending the Third United Nations World Conference on Disaster Risk Reduction, in Sendai, Japan, where they also affirmed the “urgent and critical need” to anticipate, plan for and reduce such risk to more effectively protect people, communities and countries, and to build resilience.
Adopting the Sendai Declaration and Framework for Disaster Risk Reduction 2015-2030 after days of discussions and a final 30-hour negotiating session, 187 UN Member States attending the Conference approved seven targets, four priorities and a set of guiding principles, underscoring that substantial reduction of disaster risk requires perseverance and persistence, “with a more explicit focus on people and their health and livelihoods, and regular follow up.”
Recognizing the increasing impact of disasters and their complexity in many parts of the world, the Member States in their Declaration called all stakeholders to action, “aware that the realization of the new Framework depends on our unceasing and tireless efforts to make the world safer from the risks of disasters in the decades to come for the benefit of present and future generations.”
Echoing the views of many speakers throughout the week, the Declaration also noted that Sendai, in the midst of what was hailed as a “vibrant recovery” following a massive 2011 earthquake and tsunami that triggered a nuclear accident at the Fukushima Daiichi Nuclear Power Plant, proved a well-timed location the Conference, which was devoted to updating the landmark disaster resilience agreement reached in 2005 in Hyogo, Japan.
The Hyogo Framework for Action (HFA), was itself crafted in the wake of the devastation of the Indian Ocean tsunami, which claimed 227,000 lives. The HFA has since produced some important successes, including the reduction in the number of people directly affected by natural disasters in Asia – where most such disasters occur – by almost one billion.
Yet the Sendai outcome acknowledges that over the past decade, disasters had continued to take a heavy toll, killing more that 700,000 people, injuring 1.4 million, and leaving some 23 million homeless as a result. Overall, more than 1.5 billion people were in some way touched by disaster and worldwide economic losses topped $1.3 trillion.
With the world facing this stark reality, the new accord – the first intergovernmental agreement of the UN post-2015 sustainable development era – seeks to achieve, over the next 15 years, “the substantial reduction of disaster risk and losses in lives, livelihoods and health and in the economic, physical, social, cultural and environmental assets of persons, businesses communities and countries.”
The realization of this outcome, the Conference agreed, requires strong commitment and involvement of political leadership in every country in the implementation and follow-up of the new framework. As such, the Conference agreed on the need for focused action in four priority areas: understanding disaster risk; strengthening disaster risk governance to manage disaster risk; investing in disaster risk reduction and resilience; and enhancing disaster preparedness for effective response, and to 'build back better' in recovery, rehabilitation and reconstruction.
The seven Framework's global targets to be achieved over the next 15 years: a substantial reduction in global disaster mortality; a substantial reduction in numbers of affected people; a reduction in economic losses in relation to global gross domestic product (GDP); and substantial reduction in disaster damage to critical infrastructure and disruption of basic services, including health and education facilities.
The targets also increase in the number of countries with national and local disaster risk reduction strategies by 2020; enhanced international cooperation; and increased access to multi-hazard early warning systems and disaster risk information and assessments.
Margareta Wahlström, head of the UN Office for Disaster Risk Reduction (UNISDR), said adoption of the new framework “opens a major new chapter in sustainable development” as it outlines clear targets and priorities for action which will lead to a substantial reduction of disaster risk and losses in lives, livelihoods and health.
“Implementation of the Sendai Framework over the next 15 years will require strong commitment and political leadership and will be vital to the achievement of future agreements on sustainable development goals and climate later this year,” she said.
“As the UN Secretary-General Ban Ki moon said here on the opening day, sustainability starts in Sendai,” she said, as the Conference had successfully kicked off a particularly crucial year for the United Nations, with world leaders set to meet in Addis Ababa in July to discuss development financing, then again in New York in September to adopt a new development agenda, and finally in Paris in December to forge a meaningful, binding climate change agreement.
The work of the Conference, which opened on 14 March, began on somber note, as a powerful cyclone was pummeling Vanuatu and distant neighboring islands in the South Pacific. Mr. Ban has pledged the support of the entire United Nations system as the extent of the devastation to the small island has slowly begun to emerge.
The World Conference was attended by over 6,500 participants including 2,800 Government representatives from 187 governments. The Public Forum had 143,000 visitors over the five days of the conference making it one of the largest UN gatherings ever held in Japan.
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Economic growth alone not enough to face Africa’s emerging challenges, UN Development Chief
Africa has recorded impressive economic growth over the last decade, its ability to address emerging challenges will be strengthened by investing in citizens’ health, education and participation in society, said the UN’s development chief on 18 March 2015 in Abidjan, the capital of Cote d’Ivoire.
“There are many reasons to be optimistic about Africa”, said United Nations Development Programme (UNDP) Administrator Helen Clark. “Steadily increasing revenues have created more opportunities to transform economies and societies, clearing the way for an emergent Africa. The goal of emergence must also embrace the pursuit of greater wellbeing.”
Helen Clark was speaking at the opening of the “International Conference on the Emergence of Africa”, organized by the Ivorian government in association with UNDP, and with the support of the World Bank and the African Development Bank.
It brings together global and regional leaders, experts, and researchers on inclusive social and economic development from around the world; to share lessons learned and challenges in order to support strategies and policies on emergence.
The Abidjan conference comes against the backdrop of increased momentum on the continent towards emergence. Some thirty African countries have included the aim of reaching “emerging” or “emerging country” status in their national development strategies. This is also in line with the African Union’s Agenda 2063, that provides a pathway to ensure positive socio-economic transformation within the next 50 years, focused on a more peaceful and prosperous continent.
The African Development Bank projects that, by 2050, an “emergent Africa” would have tripled the continent’s share of global GDP, enabling 1.4 billion Africans to be part of a middle class, and reducing tenfold the number of people living in extreme poverty.
“These are exciting prospects,” said Helen Clark. “An “emergent Africa” will ensure that all Africans have the opportunities they need to improve their lives.”
She outlined a number of concrete steps leaders could take, including to reduce inequalities, harness the potential of youth, improve livelihoods, maintain ecosystems, and reduce the drivers of conflict and instability.
“Africa has the leadership and it has the vision necessary for emergence,” she concluded. “With a commitment to inclusive and sustainable growth and governance, a commitment to arrest environmental degradation and build resilience to shocks, with a drive for greater equality and harnessing the full potential of women, youth and indeed of all Africans, emergence will happen. Human and sustainable development will be the winner.”
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Bill proposing cut to EAC trade barriers gets priority
The regional assembly will give priority to the passage of a new law on the elimination of non-tariff-barrier (NTBs) to end protectionism that has hindered smooth trade among partner states of the East African Community (EAC).
East Africa Legislative Assembly (Eala) Speaker Daniel Kidega said the Elimination of Non-Tariff Barriers Bill, 2015 would be fast-tracked to compel states to eliminate the numerous NTBs and boost integration.
“NTBs have consistently interfered with the progress of integration. I am particularly elated that the Council of Ministers is now considering a regulatory framework to reverse the trend following the recent introduction of the Bill at Eala,” he told a session of the third Assembly of the Eala in Bujumbura on Monday.
“This is going to be one of the priority Bills of the Assembly this year. It is hoped that once enacted, it shall be assented to speedily as Community Act to ease business and spur free movement,” the Speaker said.
The region has lately witnessed a surge in disputes as partner states differed over administrative measures deemed injurious to free trade.
Kenya and Tanzania are for instance under renewed pressure to harmonise their port procedures and charges to ease flow of shipment to landlocked states in the trade bloc.
A recent audit of operations at the Mombasa and Dar es Salaam ports revealed challenges to traders from Burundi, Rwanda and Uganda which affected the overall performance of trade in the region.
“The two ports could consider harmonising their port charges, grace period and penalties, in view of the implementation of the EAC single customs territory,” Burundi said in a new report to the bloc’s secretariat.
“The two countries should consider allowing clearing and forwarding agencies to go to work at Dar es Salaam and Mombasa ports.”
The two ports are the main gateways to the East African region and also service markets in South Sudan and the Great Lakes region, handling key items including fuel, consumer goods and other imports as well as exports of tea and coffee from the region.
“Dar es Salaam and Mombasa ports, should establish one terminal for all transit containers for EAC countries. For example, you will see at the Jomo Kenyatta International Airport in Nairobi that there is a window for EAC citizens only,” said Burundi further in the update published by EAC secretary-general Richard Sezibera last month.
The challenges cited by Burundi added to a list of concerns by landlocked members of the bloc who felt disadvantaged.
A long-running feud between Ugandan traders and Kenyan authorities over the auction of uncollected cargo at the Mombasa port has already escalated to the EAC leadership amid claims of unfairness.
Uganda has accused Kenya of imposing a new non-tariff barrier by “selectively auctioning” Ugandan goods held at the port of Mombasa.
In a recent status update to the EAC on trade with Kenya, Uganda also raised concern over increased impounding of suspected counterfeit goods meant for its market at the port.
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Kenya to reap from World Trade Organisation forum
Kenya is set to benefit from the tenth World Trade Organisation ministerial conference with an estimated $8 million (about Sh1.6 billion), expected to be spent in the country.
The conference which coming to Africa for the first time is set for Nairobi between December 15 and 18.
According to the ministry of foreign affairs, the conference is expected to attract more than 5,000 trade stakeholders from 161 member states.
Among top beneficiaries will be hotels, restaurants and transporters which include taxis.
The head of economic affairs and international trade in the ministry of foreign affairs, Nelson Ndirangu yesterday said the conference would deliberate on pending issues carried over from the 2013 forum in Bali, Indonesia among other agreements, which have not been properly implemented.
These include decisions aimed at streamlining trade, allowing developing countries more options for providing food security, boosting least-developed countries’ trade and helping development more generally.
Ndirangu however said Kenya will push for policies focusing on agriculture, industrial products and development.
Ndirangu was addressing journalists in Mombasa during the first technical preparation meeting by the national trade negotiating committee.
He said Kenya hosting the WTO conference is proof that the country is safe.
“Hosting this event will prove that Kenya is safe and peaceful than other countries which think they are peaceful than us. It will also prove that Africa can hold a meeting of such magnitude as we remain part of the global trading nations,” said Ndirangu.
Kenya won the bid to host the conference after the Turkish government stepped down in its favour.
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PwC launches ‘Into Africa – the continent’s cities of opportunity’ report to highlight potential of the continent and provides some surprises
On 17 March 2015 at the Africa CEO Forum 2015 in Geneva, PwC launches the first edition of its report ‘Into Africa – the continent's cities of opportunity’, which details the potential of 20 African cities that we judge to be among the most dynamic and future focused of the continent. The report is part of PwCs global Cities of Opportunity series and its analysis is structured around the critical issues of the business community as well as those of the office holders and other public authorities who have responsibility for improving the collective life of each city examined here.
The continent sees five trends merge: demographic change, urbanisation, technological advances, the shift in economic power and resource scarcity. Urbanisation is of particular importance because by 2030, half of Africa’s population will live in cities which are where economic activity and growth will be focused as well as becoming communication centres and a hub for social trends. The megatrends, as we call them in PwC, are colliding across Africa. The growing middle class, strong demographic growth with an improving age mix, technological innovation that we have already seen in mobile payments and a growing choice of investment partners from the global south as well as fast-paced urbanisation are all shaping what the future of Africa could look like.
Paul Cleal, partner and PwCs Africa Business Group Leader commented: “We have sought to answer ‘what makes an African city one of opportunity’ by developing a set of questions that investors should ask themselves and themes on which city politicians and officials can work on to improve their competitiveness. This report assesses how the cities are performing not only on a regional level but also on an international one which is hugely important in terms of these cities being able to compete and prosper on both of these stages.”
PwC studied four indicators: Economy, infrastructure, human capital and society & demographics (which in total contains 29 variables). From this analysis, two rankings emerged; ‘overall’ and ‘opportunity’, from this unique perspective which emphasised the dynamism, vision and efforts by cities to develop, the report throws up some surprises.
Overall ranking
North African cities lead the way
Four of the top five cities in our report are located in North Africa; Cairo, Tunis, Casablanca and Algiers. The preponderance of North African cities at the top is mainly due to the length of time they have been established. This has given them time to develop infrastructure, regulatory and legal frameworks as well as establishing socio-cultural ecosystems. Johannesburg is the only exception to this pattern, it was formed more recently in 1886 (compared to the other cities it’s ranked highly with) and was developed rapidly for political reasons. Therefore, the infrastructure and services are comparable to the more established African cities.
Opportunity ranking
Several of the more ‘forward-looking’ variables were combined in the opportunity indicator in order to highlight those cities in which future opportunities may lie (rate of real GDP growth, ease of doing business, attracting FDI, city middle-class growth, and population growth).
Another major gauge of a city’s potential is in the vision they have for their future. Accra, the capital of Ghana is a good example of a city that has a good reputation throughout Africa and beyond for the quality of its communications infrastructure, low crime rates and steady democracy. Economically, it ranks second for both its attractiveness as a destination for foreign direct investment and also for the diversity of its GDP.
Most of the African cities with promise can (and will) climb to join those cities at the top of our overall ranking, with a little effort and organisation. Moreover, many of them have already become key regional platforms such as Dar es Salaam and Douala as ports, Accra for telecommunications, Lagos for Culture and Nairobi for financial services.
With 5% growth, dynamic demographics and a growing middle class, Africa is exceptionally appealing to investors. After suffering a period of pessimism about the future of Africa with some exaggerated optimism, leaders today share a more realistic view of the economic situation of the continent and it's what PwC calls ‘Afro-realism’.
Africa is at an exceptional, historic crossroads, if there was ever a moment for an entire continent to seize the day, this is it.
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Opinion: Agoa is of mutual benefit to SA and US
During the week of March 2 to 6, I led a South African delegation to the US to make the case for the African Growth and Opportunity Act (Agoa) to be extended by a further 15 years. Agoa was passed by the US Congress in May 2000 to facilitate trade between sub-Saharan African countries and the US.
It was intended to assist African countries to improve their export performance, enhance economic development and reduce poverty. It provides duty-free access to the US market for 6 400 products from about 40 countries.
While some African countries have been able to use this preference to attract foreign investment and increase their production and exports of mainly clothing and textiles, most African countries have not been as successful.
South Africa has been a significant beneficiary of Agoa as it has been able to utilise these preferences to expand its exports in significant high value growth sectors of the South African economy, such as vehicles, wine and citrus.
However, this success of South Africa must be seen in the context of a structure of US-South Africa trade relations in which about 70 percent of South Africa’s exports are made up of commodities, while the US exports mainly high value-added manufactured products to South Africa.
Africa is poised to become the next global platform for the exports of clothing and textiles. South Africa is vital to the emerging regional value chains from which African countries can build their industrial development and exports.
Parts of the South African clothing and textile industry have begun to move to other African countries.
Agriculture
In agriculture, South African farmers and agro-processing companies offer significant investment and expertise to other African countries to produce high quality agriculture products and meet the stringent health standards in the US and other developed country markets. South Africa’s continued inclusion in Agoa would be of benefit to all of sub-Saharan Africa. African ambassadors that we met in Washington provided their full support for our continued inclusion in Agoa.
While there are some perceptions in the US that South Africa is more developed and should be graduated out of Agoa, the reality is that almost half of South Africa’s population live below the poverty line, and more than 25 percent are unemployed.
While in Washington, we did not detect any significant opposition to South Africa’s continued inclusion in Agoa. Senators Chris Coons and Johnny Isakson have been the main champions of Agoa since its inception in 2000.
These senators have threatened to block South Africa’s inclusion in Agoa unless the US poultry industry’s demand for increased market access into South Africa is addressed. The US states of Delaware and Georgia, which are represented by the two senators, respectively, are the home of the US poultry industry.
Our discussion with both senators last week was warm and friendly. They urged us to make progress on finding the “sweet-spot” of compromise between their industry and ours.
With the encouragement and urging of Trade and Industry Minister Rob Davies, the South African Poultry Association (Sapa) has been in dialogue with the USA Poultry and Egg Export Council (USAPEEC) to agree on improved market access for US bone-in chicken into our market.
Sapa made a second improved offer to USAPEEC for a quota US bone-in chicken pieces, while we were in the US. The gap between the two offers remains significant.
In the meeting with the senators, we also urged them to help us to bring their industry round to the “sweet-spot” by reducing their demands to a reasonable number.
The reason for the high duties (anti-dumping), which the US industry has been complaining about, is due to the peculiar nature of the US consumer market. US consumers prefer the white meat (chicken breast) and so they pay a premium price for this. The brown meat (chicken legs) becomes a surplus product.
The South African industry thus complained that imports of US bone-in chicken pieces were undercutting their prices, resulting in loss of production and jobs. However, notwithstanding this challenge, Sapa has agreed to engage with USAPEEC with a view to agreeing to an acceptable level of imports of US bone-in chicken.
These discussions are further complicated by the current ban on US chicken into South Africa due to an outbreak of avian flu in the US. Our Department of Agriculture has agreed to work with the US officials to assess the possibility of allowing US exports of chicken from those states that are free from avian flu.
There are several other issues related to animal health that South Africa is considering to allow the imports of US beef and pork to South Africa. These sanitary and phytosanitary issues can be very complex, as health standards have to be met to prevent the outbreak of disease that can destroy large herds of animals.
For our part, South Africa has issued the US about 38 veterinary health certificates during the past few years, while the US has issued South Africa with four certificates for our agricultural products.
There are of course continuous US-South Africa discussions that are reviewed annually by our two governments at the annual Trade and Investment Forum. The many bilateral trade issues that both South Africa and the US have on their regular agenda should not become gateways for the implementation or suspension of Agoa benefits.
Such an approach will lead to increased trade friction. South Africa is committed to making every effort to address the poultry issue. In addition, South Africa will attempt to undertake the necessary processes to allow for the exports of US beef and pork into South Africa.
Agoa is of mutual benefit for the US and South Africa. A US study undertaken by the Brookings Institute found that Agoa has created 100 000 jobs in the US and a local study has found that 62 000 jobs were created in South Africa.
Without South Africa, Agoa would be significantly diminished and its value to Africa much reduced. Agoa has created goodwill, not only in South Africa but also in sub-Saharan Africa, and is an excellent platform for the future of US-Africa relations.
Narrow vested interests should not be allowed to undermine this. Extending Agoa by a further 15 years will provide the much needed certainty and incentives for US and other investors to remain and expand their investments in Africa.
Ambassador Faizel Ismail is South Africa’s Special Envoy on Agoa.
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Africa trade finance needs innovation, tech focus
Those involved in the finance trade in Africa often overlook what would be needed to catalyse change and deliver on the continent’s potential, according to Justin Sherrard, global strategist, food and agribusiness research, at Rabobank.
As the keynote speaker at the GTR Africa Trade Finance Week in Cape Town he said it in his view it really boiled down to leadership.
Jason Barrass, head of Africa trade at Barclays Africa Group, added that the trade finance industry in Africa is rapidly changing because of alternative funding methods and the use of technology.
“These are interesting times for professional bankers. The industry is at a stage where it is looking at the next growth area and that leads to the question whether Africa’s time has come,” said Barrass.
“It is alarming to see banks not thinking outside the box. The question is how we can use technology to allow us to get more comfortable with risks and how to work better with the funds available out there.”
Food demand
There will be a 46% increase in food demand in sub-Sahara Africa by 2030, according to Sherrard.
“For sure the potential to provide this is there, but if we look at the trade data, we see it is not pointing in that direction. The gap between imports and exports is widening and creates a need to change the way things have been done up to now,” said Sherrard.
“There is a need for innovation and we cannot keep doing trade finance in the food and agriculture sectors in Africa in the way we have been doing it up to now and expect a different outcome.”
In his view supply chains have to be strengthened and co-investment used to enhance infrastructure and boost productivity.
The focus must, furthermore, be on innovation to increase productivity. Risks must also be reduced and access to finance increased.
“We must completely rethink the models we have been using to secure finance in Africa’s agriculture sector,” he said.
“It is possible to embrace innovation and harness the potential which is there.”
Banks must be part of this process, in his view.
Commodity finance
Shannon Manders, editor of GTR (Global Trade Review), said as part of a panel discussion that 2015 is perhaps critical for commodity financing in Africa.
In her view commodity trading houses might now play a key role.
According to Zhann Meyer of Nedbank Capital, there are alternative sources of finance out there in Africa and Manders pointed to the use of so-called hybrid transactions as an example.
For Ryan Stokes of structured trade and commodity finance at Standard Bank, the key is to focus on pockets of opportunity existing accross Africa.
“There is no plan B. We are completely committed to Africa,” he said.
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Tanzania dreams big with port project at former slave harbour
In its heyday, Bagamayo was a gateway to the heart of Africa for colonisers, with trade goods surging in from the Indian Ocean, and timber, ivory and countless slaves exported from the east coast harbour.
Then Bagamoyo, which looks out towards the island of Zanzibar, fell on lean times for more than a century. Now Tanzania plans an $11 billion project to make it the region’s biggest port and an engine of Africa’s boom.
The Chinese-backed project would dwarf Kenya’s port at Mombasa, east Africa’s trade gateway some 300 km (180 miles) to the north, and include an industrial zone and rail and road links to capitalise on growth in a region hoping to exploit new oil and gas finds.
“It will be the engine for economic activity not only for Bagamoyo but for the entire region,” said district executive Ibrahim Matovu, speaking from offices overlooking beaches where ship-builders hammer out wooden dhows as they have for centuries.
Many doubt the plan can succeed and ask if Bagamoyo is even the right location for a port, given it is just 75 km (50 miles) up the coast from Dar es Salaam and far from gas deposits off Tanzania’s southern coast.
Politics also plays a role.
President Jakaya Kikwete comes from Bagamoyo and many see the port as his legacy project. But a groundbreaking ceremony was delayed from July and the project is unlikely to be revived during an election season that culminates in October, when his successor will be chosen.
In addition, Tanzania faces a budget crunch and has been cutting infrastructure spending and the country lacks a credit rating, making borrowing more costly.
China Merchant Holding International has been joined by Omani sovereign wealth fund, the State General Reserve Fund, on the project but there has been little progress on building the infrastructure. The companies could not be reached for comment.
Critics say the project is too much too soon for a nation with solid growth but big infrastructure gaps.
Instead, they say the government should focus on improving Dar es Salaam’s port, which handles 90 percent of exports and is growing at 10 percent per year.
“Unfortunately, I think they lost a bit of focus. There is a need for more coordination and clear direction on priority projects,” said Jacques Morisset, the World Bank’s lead country economist.
Tanzania, a former socialist state, is struggling to shake its image as aid-dependent and corrupt. Last month, the acting port authority director was suspended amid a corruption inquiry, two years after his predecessor was similarly ousted.
“WHITE ELEPHANT”
Across the region, fast-growing economies have launched infrastructure projects at a scale unprecedented in most of Africa.
Many are hitting bottlenecks. Kenya, east Africa’s top economy, is upgrading Mombasa port and says it plans to move ahead with a long-delayed megaport in Lamu, an ancient Arab trading post near the border with Somalia.
The Bagamoyo plan, 10 km from Bagamoyo town, a tentative U.N. World Heritage site which has the crumbling remains of a slave market and other remnants of the East African slave trade, was unveiled during a visit of the Chinese premier in 2013.
It is meant to ease congestion in Dar es Salaam and transform a depressed area into a trade and manufacturing hub. Yet there are practical difficulties, not least that Bagamoyo’s port, unlike Dar es Salaam’s, would most likely need regular, extensive dredging.
“Bagamoyo is a really good example of a white elephant,” said one analyst who focuses on infrastructure. “If you’re going to have two major ports, then isn’t the place to have it in the south, where the gas is?”
Tanzania has up to 53.28 trillion cubic feet of off-shore gas, putting it on par with some Middle East producers, but it has yet to construct a liquefied natural gas plant.
Plans to upgrade Tanzania’s central corridor rail line that connects mineral-rich Democratic Republic of the Congo to the coast are moving slowly.
“If you improve only the ports without improving the railway, you are not doing anything,” Shaaban Mwinjaka, permanent secretary at the Ministry of Transport, told Reuters.
“PEOPLE, THEY HOPE”
In the meantime, Dar es Salaam has problems of its own. The World Bank recently issued a stark assessment of the efficiency of a port expected to reach capacity within a decade.
Last September, the Bank signed a $565 million deal to nearly double Dar’s capacity by 2020.
“If the port was as efficient as Mombasa, which is certainly not a great benchmark, the country would make almost $2 billion profit gain per year,” said World Bank economist Morisset.
At the port, in Tanzania’s biggest city, warehouses are being raised to handle more goods and machinery is being brought in to convert general cargo wharfs into container terminals, while there are plans to deepen two berths to make way for bigger ships.
Back in Bagamayo, artisans sip tea as they wait for the odd tourist to amble by.
“They’ve been talking about this (port) project for so, so long, but there’s no action,” said Rast Mwite, a painter who sells leather sandals and chairs cut from coconut wood. “But people, they hope.”
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Roundtable on Intra-Regional Migration and Labour Mobility within Africa
The Roundtable on Intra-regional Migration and Labour Mobility within Africa will be held on 23-25 March 2015 in Kigali, Rwanda, under the theme “Enhancing capacities of RECs and Member States to facilitate Intra-regional Migration & Labour Mobility for Regional Integration and Economic Cooperation in Africa”.
The event is a joint initiative of the African Union (AU), the International Organization for Migration (IOM), the International Labour Organization (ILO) and the Economic Commission for Africa (ECA) in conjunction with the Swiss government.
Background
A growing body of evidence suggests that the ratification of free movement protocols increases trade levels and boosts development. The experiences of the EAC and ECOWAS economic communities as well those of the European Union and the Union of South American States have shown that free movement of persons and goods has positive effects on economic development. However, intra-regional migration and cross-border labour mobility still face several impediments in Africa, which has negatively impacted the level of intra-continental trade. These include the lack of effective domestication and implementation of regional and international instruments, lack of mutual recognition of credentials and qualifications between and among countries. Moreover, of the eight African Regional Economic Communities (RECs), only two (2) have fully ratified their protocols on free movement of persons. Consequently, intra-African trade lags far behind other global regions. Over the past decade intra-African trade averaged 10 – 12%, whilst the average was 40% in North America, 40% in Asia and 63% in Western Europe.
To address these challenges, the African Union has adopted the Migration Policy Framework for Africa (MPFA), to strengthen migration governance for regional economic integration and inclusive development. Furthermore, the AU has adopted an Action Plan to boost intra-African trade and a roadmap to fast-track the establishment of a Continental Free Trade Area (CFTA) by 2017. African Union Member States therefore need to aggressively pursue comprehensive and harmonized regional trade policies as part of their collective development and transformation strategies in the context of regional integration.
Building on the endorsement of the Special Session of the Labour and Social Affairs Commission in Windhoek (April 2014), the 24th Summit of the African Union held in January 2015 adopted the AUC/ILO/IOM/ECA Joint Labour Migration Programme (JLMP) a strategic and flagship initiative in support of the implementation of the labour migration priority of the Ouaga + 10 process. While the region is now well equipped with a strategy (MPFA) and a politically validated programme of action (JLMP), there is a renewed focus towards an operational roadmap.
Objectives
The main objective of this joint initiative is to encourage and facilitate free movement of persons within Africa with the potential to provide alternative legal channels of migration.
Other specific objectives include:
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To improve the awareness and understanding of the benefits that migration and labour mobility, as powerful drivers of sustainable economic and social development, bring to countries of origin, transit, and destination as well as to migrants themselves.
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To result in policies and actions to unlock opportunities to deepen regional integration and economic cooperation for inclusive growth and sustainable development in Africa.
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To provide a platform for a wide range of stakeholders to holistically evaluate the issue of intra-regional migration and mobility in Africa.
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To share experiences, good practices and lessons, empirical data and evidence-based information on the benefits, opportunities and challenges of intra-regional migration and labour mobility from other regions including Western Europe and South America and its potential to boost intra-regional trade and investment.
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Change import rules on cut flowers, Kenya urges Japan
Kenya wants Japan to review mandatory fumigation of flowers exported to the Asian nation from Nairobi.
Foreign Affairs and International Trade Cabinet secretary Amina Mohamed made the request to the Japanese vice-president of agriculture, forestry and fisheries Akio Koizumi during bilateral talks held in Tokyo, last week.
“Under the present arrangement, flowers exported to Japan are required to be inspected and fumigated at the port of entry. This requirement has imposed extra costs on exporters, eroding their benefits,” said Amb Mohamed.
Wide consultations
She presented a proposal by the Flower Council of Kenya for a review of the fumigation requirement.
Mr Koizumi acknowledged the challenges the requirement has imposed on exporters, but called for wider consultations among all the stakeholders on the way forward.
“We will consult with authorities responsible for standards and engage with the Kenya Bureau of Standards with a view to working out a way forward,” said Mr Koizumi.
Ms Mohammed was part of a Kenyan delegation that accompanied President Uhuru Kenyatta on an official visit to Japan last week.
During the visit, the minister also urged Japan to consider assembling motorcycles in Kenya to help create jobs and support economic growth.
Avoid tariffs
“This will also enable Japan to meet the East African Community’s local content requirements and avoid the tariffs imposed on motorcycles,” said Ms Mohamed.
In a meeting with Japan’s state minister of economy, trade and industry Daishio Yamagiwa, Ms Mohammed called on Japanese companies to participate in the development of a free port in Mombasa.
“Currently, traders in the East and Central Africa region depend on the free port of Dubai for goods. This is expensive considering the distance, the travel and shipping costs involved,” she said.
“A free port in Mombasa will therefore go a long way in reducing costs and consequently enhance intra-regional trade.”
COMESA market
The Cabinet secretary said involvement of Japanese firms in the development of the port would enable them access the huge Comesa market, which has a population of over 450 million.
On the World Trade Organisation conference to be hosted in Nairobi in December, Ms Mohamed called for wide consultations to thrash out outstanding issues ahead of the forum.
“We intend to convene a mini-ministerial conference ahead of the main conference to facilitate broad consensus on the deliverables of the 10th ministerial conference in Nairobi,” said Ms Mohamed.
“It is only in this way that we will ensure a successful conference in December.”
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Launch of the African Tripartite FTA now set for June
The launch of the Tripartite Free Trade Area will now take place in June during the third COMESA-EAC-SADC Tripartite Summit. As we go to press, the exact date is not yet known.
The TFTA, once enacted, would bring together the East African Community (EAC), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA).
The TFTA would cover 26 countries ranging from Egypt to South Africa with a combined population of 625 million people and an aggregate GDP of US$1 trillion. These figures represent half of the African Union’s membership and 58 percent of the continent’s economic activity, according to COMESA.
Negotiations to launch the TFTA were initiated in 2011 with the adoption of a declaration aimed at establishing an FTA that emphasised market integration, infrastructure and industrial development as the three main pillars of such process. The negotiating principles and the roadmap to conduct the negotiations were also adopted during the 2011 Tripartite summit.
A new deadline
The launch of the TFTA was originally projected to take place in December 2014 at the Tripartite Summit of Heads of State and Government in Cairo, Egypt. However, it was then delayed and rescheduled for the first quarter of 2015, according to a draft report of the senior official’s meeting that preceded the December African Union Conference.
Earlier this year, in January, Fatima Acyl, AU Commissioner for Trade and Industry indicated that the TFTA would be launched in May in Cairo, Egypt.
After the launch of the TFTA in June, negotiations to establish a continental FTA across Africa are expected to be initiated shortly.
More progress expected
“The meetings in Malawi did not achieve as much as we expected” declared a source involved in the Tripartite negotiations.
Malawi hosted the 11th Tripartite Trade Negotiations Forum (TTNF) from 21-24 February and discussions were geared to finalise work in various areas such as tariff offers, rules of origin (RoO) regimes, trade remedies, dispute settlement, and movement of business people.
Apart from RoO, the other difficult negotiating areas are related to trade remedies and the dispute settlement mechanism, indicated our source.
Rules of origins
The COMESA-EAC-SADC troika faces notable challenges in harmonising differential RoO, which have so far impeded inter-regional trade and the creation of regional value chains. One of the key challenges consists in finding an acceptable framework for RoO, as the EAC and COMESA regimes in this area are significantly different from the one used by SADC.
Experts such as Eckart Naumann from the Trade Law Centre in South Africa have pointed out that 56 percent of the RoO are dissimilar across the three regional economic communities.
The TTNF agreed during their previous round of discussions in October last year that “where rules of origin among the three RECs are common or identical, these will be adopted as Tripartite rules without engaging in negotiations on these rules.”
This time, the TTNF considered the need for a legal instrument for the operationalisation of the interim rule of origin for the TFTA.
Currently the following option to operationalise rules of origin under the TFTA has been put forward: where rules are common (including wholly originating) 35 percent ex-works costs (distribution and logistics) has been retained as an interim option. If enacted, such move could mean that products on which the value added criteria of 35 percent ex- works cost would apply could gain duy free regional market access.
Work on rules of origin is likely to continue after the launch of the TFTA as part of the “post signature activities” indicated an observer.
Discussions related to rules on specific products will be more “gradual”; however “it is not expected that such work will be completed prior to the launch.”
Trade remedies and dispute settlement
The annex dealing with dispute settlement has been concluded by the technical working group on trade remedies and dispute settlement and will be considered upcoming TTNF meetings. Deliberations on these topics have been deferred to the next TTNF.
The discussions on trade remedies and dispute settlement have been particularly challenging given the lack of consensus on the approach and the content of trade remedy disciplines in the TFTA agreement, indicated the negotiations progress report of the 10th TTNF held in Bujumbura, Burundi in October 2014 – a copy of which has been reviewed by Bridges Africa.
Another TTNF will take place in the coming months where “more concrete progress should be achieved,” according to the source.
Tariff liberalisation
15 countries had made offers by the time of the third Tripartite Sectoral Ministerial Committee (TSMC) on Trade, Finance, Economic Matters, Home and Internal Affairs, which also took place in October 2014 in the context of the 10th TTNF. Since then other Tripartite member states have been in the process of exchanging tariff offers.
The October meeting urged member states that have not exchanged tariff offers to do so by 30 April 2015.
Additionally the Tripartite Task Force was tasked to populate Annex 1 of the TFTA agreement with finalised tariff offers while mobilising resources to assist those member states experiencing challenges in finalising their tariff offers.
Tariff offers for all COMESA countries that are not in in the EAC or SACU are “ready” except for Zimbabwe, the Democratic Republic of Congo, Eritrea and Ethiopia, indicate the negotiations progress report.
All EAC member states (i.e. Burundi, Kenya, Rwanda, Tanzania, and Uganda) have completed their tariff offers also. Offers for Burundi, Kenya and Rwanda are based on the EAC acquis of 100 percent tariff liberalisation for existing FTA countries, subject to reciprocity. For example, EAC and SACU and EAC and Egypt have exchanged tariff offers and embarked on the process of negotiations.
Tariff offers for non-COMESA SADC countries (including Swaziland) were not ready, the report specifies.
According to the report, the modalities for tariff liberalisation set a goal of 100 percent tariff liberalisation under the TFTA.
The principle of “building on the acquis” has been retained. As a result countries that are members of existing REC FTAs are not required to negotiate tariff liberalisation under the TFTA with other members of the same REC FTAs. However, they can consolidate their existing tariff liberalisation levels into the TFTA in line with the above-mentioned principle.
In addition, the modalities stipulate that for countries that have not yet fully liberalised their tariffs under their respective REC regimes, or between countries in existing REC FTAs, 60-85 percent of tariff lines should be liberalised upon entry into force of the TFTA. The text includes an additional period of five to eight years to liberalise the remaining tariff lines under the TFTA.
Movement of business people
The main stumbling block to progress on the movement of business persons has been divergent views over the interpretation of the Ministerial direction that negotiations should take place in Phase I of the TFTA “on a separate track”.
Following guidance from the third Meeting of the TSMC in October 2014, the Technical Tripartite Committee on Movement of Business Persons (TC-MBP) agreed to develop the terms of an agreement on the Movement of Business Persons. The COMESA-EAC-SADC Tripartite Technical Committee settled on a draft agreement on the movement of business persons within the region in November 2014.
While much progress has been achieved in the last two meetings of the TC-MBP, some important articles on the draft agreement are still outstanding and have to be resolved. These include: Guiding principles, temporary entry, stay and exit and dispute settlement.
National consultations are ongoing on all these areas and a meeting of the TC-MPB is being considered in July 2015, to resolve the outstanding issues.
Industrial Development
The Tripartite Technical Committee on Industrial Development (TTCID) has adopted draft Modalities for Cooperation, and a draft Programme of work on industrial development. The TTCID will now develop the appropriate legal instrument for cooperation in industrial development as outlined in the Programme of Work and Road Map.
Forging a link between TFTA and EU-EPAs
A briefing released this month by the European Parliament explains that the creation of the TFTA is “important” in the context of the Economic Partnership Agreements, as it would prevent a potential situation in which EU goods could enjoy better access to local markets than products originating from other African Regional Economic Communities (RECs).
The EU concluded their EPAs with three African regional economic communities last year, namely SADC, EAC and the Economic Community of West African States (ECOWAS), after more than a decade of difficult negotiations. All three African RECs are now expected to engage in the ratification process.
Next steps
Among other elements, the finalisation of negotiations on outstanding areas of the TFTA agreement, especially in regards to rules or origin, trade remedies and dispute settlement, will be introduced following the launch of a post-signature implementation plan.
After the launch, the entry into force of the agreement will be conditional on the ratification of the text by two-thirds majority of the Tripartite FTA member states, according to the revised 2010 draft agreement. The Tripartite FTA will then form a building block for the continent-wide free trade agreement, known as the Continental FTA.
During a meeting last month, Sindiso Ngwenya, Secretary General of the Common Market for Eastern and Southern Africa (COMESA) and Chair of the Tripartite Task Force, proposed initiating negotiations with the ECOWAS to establish an FTA between COMESA, SADC, EAC and the ECOWAS ultimately.
This article is published in Bridges Africa by the International Centre for Trade and Sustainable Development.
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“Africa is a continent of the future,” AfDB President Donald Kaberuka tells Africa CEO Forum 2015 in Geneva
For a decade, Africa has had a steady growth rate of six per cent. But signals to the contrary are emerging, raising doubts about the continuation of this trend and even leading to pessimism about future years on the part of some analysts.
For his part, Donald Kaberuka, President of the African Development Bank (AfDB), does not share this Afro-pessimism. He made this absolutely clear on Monday, March 16 in Geneva at the opening of the Africa CEO Forum 2015. The high-level forum for the continent’s business leaders, leaders from the world of finance and policy-makers is organized by the Paris-based press group Jeune Afrique, with support from the AfDB.
Speaking during the opening ceremony and during a panel session on the theme of “What growth trajectories for African economies?,” the AfDB President asked whether the good times of growth were coming to an end given the fall in the price of commodities, the inversion of the trend in some emerging countries, and the Ebola crisis in West Africa.
In response, he cited the financial crisis situation of 2008-2009 and the efforts made by the AfDB and its African partners to address it. This enabled the continent to demonstrate great resilience and even to experience some of the strongest economic growth in the world. It was a way for Kaberuka to say that in the face of any crisis one needs to know how to take the correct measures and reforms. “I am as optimistic today as I was yesterday and will be tomorrow,” he said.
AfDB President is realistic, however. “Nothing is ever guaranteed in advance. In countries with different nuances, everything depends on what the government does or does not do,” he said, adding that countries that made special efforts to ensure political stability, put energy infrastructure in place and remove non-tariff barriers would be the ones to make progress.
Speaking more specifically about the conditions for strong growth in Africa, Kaberuka emphasised the importance of planning for both investment and policy, of establishing confidence between governments and the people, and supplying energy, without which there could be no growth.
Alongside Kaberuka, World Bank Vice-President for the Africa Region, Makhtar Diop, and Executive Secretary of the United Nations Economic Commission for Africa (ECA), Carlos Lopes, also participated on the opening day panel.
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Industrialization is a political project
Industrialization is as much an economic as it is a political project and requires unorthodox thinking, difficult policy choices, innovation and creativity.
Speaking at the official opening of the 21st Session of the Intergovernmental Committee of Experts (ICE) on Accelerating Industrialization in Southern Africa through Beneficiation and Value Addition, ECA Southern Africa Regional Director Said Adejumobi said that industrialization is a political project with an economic strategy, “It is about making correct policy choices, creating the necessary institutions and incentives and summoning the political will to do things in the most unconventional ways.” Adejumobi said that the African youth will have to be a major part of that unorthodox thinking in Africa’s path to the future.
The 21st ICE is convened by ECA Southern Africa Regional Office and hosted by the Government of Zimbabwe in Victoria Falls from 12-13 March 2015.
Meanwhile, the Government of Zimbabwe says that the unstable global environment is negatively affecting Africa’s efforts to address poverty, unemployment and inequality. Permanent Secretary for the Ministry of Finance and Economic Development, Munango, says that the marginal recovery of the world economy in 2014 continues to undermine Africa’s overall growth. “The continent’s growth rate of 3.5 percent in 2014 is still way below the pre-economic crisis levels.” Munango called for diversification from the export of raw materials to value added products. “The reason is simple; value addition, beneficiation and industrialization create jobs, linkages and contributes to reducing poverty and inequality” he said.
Speaking at the same meeting, Africa Union Regional Delegate to Southern Africa, Salif Sada Sall in his opening remarks said that Africa’s Development Agenda 2063 had singled out value addition and beneficiation as one of the key priorities. He called for Africa to scale down on exporting raw materials, expressing concern that African industries still remained the world’s least competitive and productive with the Manufacturing Value Added as a percentage of GDP remaining very low at 12-14%. “As regards to the percentage of world Manufacturing Value Added, Africa stands at 1.5% compared to east Asia at 17.2%, Latin America 2.8%, North America 22.4% and Europe at 24.5%.
Sall cited several continental development initiatives including the African Mining Vision, the Accelerated Industrial Development of Africa and the African Agro-business and Agro Industries Development Initiative.
The ICE is a UN statutory annual meeting which brings together experts from Southern Africa and the continent to discuss current pressing issues affecting the social and political economy of the Southern African region. The ongoing ICE has attracted experts and a wide pool of stakeholders from member States, private sector, academia, international development organizations and civil society.
The focus is on industrialization, beneficiation and value addition a current and recurring subject in Southern Africa. The meeting will advance the recommendations made the by the last SADC Head of State Summit in August 2013 in which they requested for a clear roadmap to accelerate industrialization in the region.
An issues paper ‘Accelerating Industrialization in Southern Africa through Beneficiation and Value Addition’ forms the main document for discussion and review. The recommendations from the meeting will be presented to the Conference of Ministers, an annual gathering of ministers responsible for finance and planning on the continent in March 2015.
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Transboundary use and protection of natural resources in the SADC-region
Introduction
The region of the Southern African Development Community (SADC) is rich in natural resources. Over 50 per cent of the GDP in the Member States is earned from the primary sector (agriculture, mining and forestry) and most of the rural communities are directly dependent on natural resources to secure their livelihoods. With its unique wildlife and natural beauty, the region attracts millions of tourists every year, providing direct and indirect income opportunities for many people.
However, natural ecosystems and their services are under increasing pressure from population growth, the expansion of farmland, growing demand for energy, infrastructure development and the impact of climate change. The deforestation rate in the SADC region is currently the highest in Africa. Poaching is on the rise again, even in conservation areas. Fires set to clear land frequently get out of control and emit large amounts of greenhouse gas.
The SADC Member States established the Food, Agriculture and Natural Resources (FANR) Directorate in 2004 to tackle these challenges and to make sure that cross-border management of natural resources contributes to poverty reduction, peace keeping and regional integration. The 15 Member States of the SADC have agreed on policy documents, strategies and frameworks which address the degradation of natural resources – such as the Protocol on Wildlife Conservation and Law Enforcement and the Protocol on Forestry. Implementation of these agreements is key to ensuring the sustainable protection and use of the region’s abundant and diverse natural resources.
The overall objective of the Trans-boundary use and protection of natural resources in the SADC-Region programme is to ensure that the regional and national actors improve the implementation of SADC protocols and strategies for sustainable natural resource management. GIZ is contributing to the implementation of the following three regional programmes:
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Trans-frontier Conservation Areas (TFCA)
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Regional Cross-border Fire Management
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Reducing Emissions from Deforestation and Forest Degradation (REDD).
On the basis of pilot activities the project introduces innovative methods and concepts in selected TFCAs that address cross-border fire management, income generation through natural resource management and tourism, climate change adaptation and HIV/AIDS prevention. Training tailored to the specific needs is provided to back up all activities.
The project advises the SADC Secretariat on policy and concept development by drawing up and monitoring guidelines and standards, designing innovative financing mechanisms and identifying and disseminating best practices. At TFCA level, it assesses and selects best practices in pilot projects on cross-border management and supports networking among TFCA practitioners to facilitate knowledge transfer. It also offers training and organisational consultancy in collaboration with SADC Centres of Excellence.
Impacts and Achievements
A total of nine pilot projects are being implemented in seven TFCAs in the SADC region. Three of these focus on income generation, four on trans-boundary fire management and two on climate change adaptation. Regional guidelines on tourism concessions and the establishment and management of TFCAs were developed in collaboration with the SADC Secretariat and its Member States. These guidelines, which have been adapted to the needs of the region, will assist in the implementation of future projects in the TFCAs.
In order to build up trans-boundary expertise in the SADC region, particularly at local level, individual course modules were devised on integrated fire management, reducing emissions from deforestation and degradation (REDD) and climate change adaptation. 18 ‘change projects’ with 52 participants from the 18 existing TFCAs had been carried out by mid-November 2014. Six mobile training courses were also conducted on the ground in the TFCAs as a way of encouraging cross-border communication and information-sharing on topics that are of concern for all neighbouring countries.
The project supported SADC Member States to set up the TFCA network and its online portal. Since the launch of the network in September 2013 when 10 SADC member states and about 30 people founded the network, this number has increased by March 2015 to over 170 network members.
Members include government, parastatal stakeholders, nongovernmental organizations, academic institutions, International Cooperating Partners and consultants. The platform is used as a source of technical information and a way of sharing information on cross-border TFCA management. Members are also using it to stimulate discussion of the challenges the region currently faces, such as poaching, and to announce events such as the participation of SADC TFCAs in the 2014 World Parks Congress held in Sydney, Australia.
TUPNR Second Phase
In the second phase of the programme starting in June 2015, a stronger focus is placed on improving the implementation of the TFCA Programme by local actors within selected SADC TFCAs. This way, the project will ensure that experiences made in TFCAs will serve as a base for changes of policies and procedures at the national and the regional level.
» Further information: Transfrontier Conservation Area Programme (SADC TFCA)