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South Africa upbeat on ‘Make In India’ to boost trade
30-member South African team in India to exploring partnerships in pharma, manufacturing and IT
South Africa is considering the ‘Make In India’ initiative a key area of interest at a time when the country is keen on boosting bilateral trade and has placed India as a priority destination for improving the business ties.
“Prime Minister Modi’s ‘Make In India’ is of great interest to us. This will see much more participation of South African companies in India. Over the next few years, we will see more of our firms taking up industrial projects that support the development of airports and seaports in India. Our defence industry is also coming in a big way to the country,” said Pule I Malefane, consul general of South Africa in Mumbai, today here.
Meanwhile, a 30-member South African business delegation led by the department of Trade and Industry is in India as part of sixth trade and investment drive for exploring potential partnerships in pharma, manufacturing and information technology.
The delegation is keen on diversifying trade basket by focusing on value-addition by tying up with Indian industry.
“Value-addition would form an important element in our bilateral trade even as South Africa had traditionally been exporting gold, diamonds, coal and other raw materials to India,” said deputy minister of trade and industry Mzwandile Masina today.
Masina said the imposition of restrictions on gold import had dealt a considerable blow to the bilateral trade, which stood at 90 billion Rand in the fiscal 2013-14. While China is the top trading partner for it, India is at a distant eighth. During 2009-14, South Africa had picked up investment to the tune of 80 billion Rand from the Indian companies, Masina said.
On what were the issues affecting business, a high commission official accompanying the minister said, “India has a difficult business environment and our companies are facing non-trade barriers. While Indian banks SBI, Bank of Baroda and ICICI are free to expand anywhere in our country with one licence, whereas in India, our First Rand Bank was not being allowed to move beyond Mumbai.
“However, he said, issues like this and others were being discussed with the Indian government. Masina said the business delegation would be meeting Andhra Pradesh chief minister Chandrababu Naidu today to express their interest in partnering the state government in its plan to develop three new cities with modern airports. They would also call on Telangana industries commissioner to discuss business.
South Africa is expecting India would kickstart the official process for issuing the “10-year multiple long term CEO visa” for the top business officials. The exclusive arrangement had been agreed as part of the BRICS common understanding. Masina said South Africa was the first in the emerging countries club to put in place the exclusive visa.
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Angola, Namibia push for improved cross-border trade
The Namibia Chamber of Commerce and Industry (NCCI) and the Angolan Chamber of Commerce and Industry (CCIA) are engaging stakeholders to improve the cross-border trading environment between the two countries.
During a visit to Luanda last week, NCCI’s Chief Executive Officer, Tarah Shaanika, held talks with his counterpart, Tiago Gomes, and exchanged views on making trading arrangements between the two countries more efficient.
During the meeting, the two chambers agreed that cross-border trade between Angola and Namibia needed significant improvement, especially the level of efficiency in moving goods from one country to the other. It was noted that the process of clearing goods at the borders on both sides needed to be accelerated so that the turnaround time for trucks carrying goods from Namibia into Angola and vice versa is reduced to competitive levels.
The two chambers therefore agreed to engage stakeholders to identify bottlenecks in the customs clearing processes and reduce unnecessary bureaucracy, which delay the export of goods between the two countries. NCCI and CCIA will engage the governments of Namibia and Angola, respectively, to address bureaucratic hurdles hampering cross-border trade between the two countries.
The meeting commended the central banks of Angola and Namibia for signing a currency exchange agreement, which allows the Angolan Kwanza to be accepted by Namibian banks at Oshikango and the Namibia Dollar to be accepted by Angolan banks at Santa Clara. This agreement, which is expected to be implemented in March 2015, will be very crucial in the facilitation of trade between Namibia and Angola through the Oshikango/Santa Clara border post.
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Tanzania’s exports to India increase by 70pc
Tanzania’s exports to India increased by about 70 per cent last year as the two countries amplify efforts to boost their bilateral trade relations, it was revealed yesterday.
Tanzania exported goods worth $1.3 billion (Sh2 trillion) to the world’s tenth-largest economy – by nominal gross domestic product – last year from $752.2 (Sh1.2 trillion) exported the previous year, the Indian High Commissioner said in Dar es Salaam. “This is the first time that Tanzania’s exports have shown an impressive growth,” Mr Debnath Shaw as he addressed a high level business delegation from Federation of Gujarat Industries, Vodadara and Gurarat.
The growth, according to the Indian diplomat, stems from efforts such as organising seminars, exhibitions and business visits between governments and members of the private sector from the two countries. The High Commissioner of India to Tanzania, Debnath Shaw described the performance as a huge achievement, given the country has not recorded such export volume to India before.
He said there have been a lot of positive trends in trade ties between the two countries during the past two years of his term as Indian Ambassador to East Africa’s second largest economy. “When I came, the volume of trade between the two counties was $1.5 billion (Sh2.7 trillion). But, the figure has more than doubled to $4 billion (Sh7.2 trillion),” he said, noting that the data are from Tanzania Revenue Authority (TRA).
Last year, the volume stood at $3.7 billion (Sh6.7 trillion) of which imports were about $2.5 billion. He was optimistic that in the next two and a half years, trade volume between the two will hit the $5 billion (Sh9 trillion) mark. The High Commission of India and the Tanzania Chamber of Commerce Industry and Agriculture (TCCIA) hosted the 15 companies from Gujarat, under the event dubbed ‘Seminar-cumB2B meeting’.
TCCIA Dar es Salaam region chairman, Francis Lukwaro said it was the duty of the chamber to connect and give opportunities to its members so they can learn what it takes to do business or get into joint ventures with their Indian counterparts. “I call upon Tanzanians to make use of this opportunity. The chamber is also ready to connect some delegates to institutions like power utility and road agency,” explained Mr Lukwaro.
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Nigeria will call emergency OPEC meeting if oil rout continues
Nigeria will call an extraordinary meeting of OPEC if crude oil prices slip any further, the country's oil minister said in an interview with the Financial Times, in a sign of growing alarm over the impact of oil's collapse on oil-producing economies.
"We're already talking with member countries," said Diezani Alison-Madueke in the interview published on Monday. As OPEC president, she is responsible for liaising with member countries and the producer group's secretary-general in the event of an emergency meeting. If the price "slips any further it is highly likely that I will have to call an extraordinary meeting of OPEC in the next six weeks or so", she said.
Almost all OPEC countries, except perhaps the Arab bloc, are "very uncomfortable," she said. The comments are the first public sign of the deepening unease about the oil crisis since Venezuela and Iran last month pushed for the cartel to cut output in a bid to reverse the more than 50-percent drop in prices since June last year.
In November, the 12-member group chose to hold production at 30 million barrels a day. The next official meeting is scheduled for June. Global benchmark Brent oil prices briefly rose by more than $1 a barrel on the comments, reversing earlier losses, but quickly sank again as dealers doubted whether there was any scope for rapid action given core Gulf OPEC members led by Saudi Arabia have given no sign they are ready to curb production.
Nigeria "obviously needs more money for its oil, but if the Saudis, who control one third of OPEC production, do not go along, what can it do?" said James L. Williams, energy economist at WTRG Economics in London, Arkansas.
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Swaziland SACU woes: Reduced foreign reserves, capital projects
THE unpredictable Southern African Customs Union (SACU) receipts in the country will have a negative impact on the country’s foreign reserves.
Southern African Research Foundation for Economic Development (SARFED) Regional coordinator George Choongwa said the fiscal situation of the country was unpredictable mainly because of the continuous decline in SACU receipts and other external forces.
He said this would have an indirect impact on the socioeconomic status of an average Swazi with high cost of living due to reduced level of incentives such as subsidies in concurrence of the projected two years economic downturn. “The long term expected impact would be a reduction in capital projects and reduced foreign reserves which would negatively affect the government spending. “Adding, the degree of indicator predictability perpetrates that since the decline in revenue due to 2011 economic crisis, government has engaged several provisions that have continued to mitigate the impact,” he said when commenting on His Majesty King Mswati III’s speech he delivered during the official opening of the second session of the 10th parliament.
Meanwhile, the King said the highly unpredictable SACU revenues remained one of the biggest challenges in the country. He said SACU receipts continued to present a critical challenge to the country’s fiscal sustainability and this would remain one of the biggest challenges of the times. The King said the solution was to save for rainy days during good years whilst carefully investing in critical infrastructure projects. He said this would be critical for growing the economy and diversifying Swaziland’s revenue base.
“The nation is aware that we are still faced with a risk of declining SACU revenues over the next two years, at the very least. “This would require us to invoke all the lessons we learnt in the past financial crisis. “Greater fiscal discipline will also be needed, both in the way resources are allocated and utilised,” he said.
He said they were pleased that this was what government has been doing since the fiscal crisis that ended in 2011. The King said government has progressively increased the country’s reserves to around four months of imports from two months in March, 2012. On another note, Choongwa said Swaziland has introduced several revenue incentives of which have simulated a positive indication of improved average social status and national performance. These were; improved government accountability for service delivery and cost-effective socioeconomic monitoring system, increased consumer purchasing power parity, improved standard of living and reduced cost of living.
However, he said government would have to intensify on public information sharing platform and establish systems such as boarder trade aided system in order to reduce social costs like tax inversion and tax non-compliance.
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South Africa alleges “inconsistent” citrus inspections in Southern Europe
South African delegates will soon be touring several European nations in a bid to clarify citrus black spot (CBS) inspection procedures, which are estimated to be squeezing more than ZAR1 billion (US$86 million) out of the industry each year in associated spraying, market access and fruit deviation costs.
During a CBS briefing at Fruit Logistica in Berlin last week, the Citrus Growers Association of Southern Africa’s (CGA) special envoy for market access Deon Joubert said the group had obtained documents showing Spain had tested fruit without symptoms this past season.
“As long as South Africa is dealt the same hand as anybody else then there’s no problem, but we know the other importing countries didn’t have this kind of focus on asymptomatic fruit,” the former Capespan exec told the crowd gathered at the South African stand. “We have official documentation from Spain that says that every South African container will be technically tested for CBS, and that’s inconsistent. “We have had imports cleared of CBS on the border, sold, eaten, finished and then we have two or three weeks later a report of a CBS strike, which is inconsistent with the normal procedure.”
Exporters have seen varied detection rates for the disease in the old continent, with a dramatic reduction in interceptions in the Netherlands where similar volumes were able to move through, contrasted with a sharp uptick in strikes from the Mediterranean.
Drawing up an inspection direction
Joubert, along with South African experts and officials, have sought to harmonize inspection practices in a bid to remove these discrepancies. The envoy noted a very productive visit to Dutch and German laboratories in August where the industry was assured it could be confident in handling and testing methods. “Theoretically on those [labs] we don’t have any problems. We had four [interceptions] in Germany, five in Holland, one in the U.K., no issue,” he said, adding the total number of interceptions was 28 but the figure was being challenged.
“The concern is to the south. We had what was a very low two [interceptions] go to 18….the problem is in Spain. We had 401 consignments, and we had 10 interceptions.” “Although the legislation on access and trade is harmonized in Europe, the inspection services are the national authority’s responsibility. So each country can principally interpret and report as they want.” While changing legislation would be a challenge, the South Africans are doing what they can to standardize procedures on a practical level. Joubert himself plans to visit the inspection services of Spain and Italy at the end of the month to try to reach an agreement.
“We seem to be quite near to agreement in the northern part of Europe,” he said. Additionally, he said the EU’s Directorate General for Health and Food Safety (DGSANCO) would be arranging an expert visit with South Africa’s Department of Agriculture, Forestry and Fisheries (DAFF) to Spain, Italy, Portugal, England and France. “Then the issue is for South Africa to improve or rectify its performance, we need to know as much as we can from what happened in each individual case.” The industry representative clarified that no decision had yet been made by South Africa to avoid Mediterranean import markets.
“It will not be our recommendation, unless we find it extremely difficult or highly risky to the entire campaign in the middle of June if we have the inconsistent application of rules which will bring a spate of CBS interceptions based on dead genetic material.”
The feasibility of viability
While the CGA accepts that the EU has a different scientific opinion on the risk of CBS infection, it is holding the authorities to account for the consequences of their view. The core issue revolves around “viability”, which Joubert explained to www.freshfruitportal.com prior to the briefing. “For Europe to be consistent in terms of their thought process, at least for them to have infection possible you must have something that can infect, so you have to have something that is viable and alive. “So we’ve said, ‘test the product for viability this year’. If you get an interception, cut the lesion out and grow a live culture. If you can grow a fungus, then at least we would know that theoretically there is something to start the process with.”
He told participants at the briefing that after adopting this method, authorities were only able to find one viable culture out of 28 CBS interceptions, with the fruit in question detected in Nancy, France. “Our argument is that because of the sprays and the inspection, and the fact we’ve got an ethephon test for viability at the packhouse level, we’ve reduced CBS symptoms dramatically,” “If you have traces of CBS on arrival here, that’s fine in the sense of a viable culture. That’s the principle that DGSANCO accepted, but it’s not applied as such,” he said during the briefing. “The solution at the moment seems to be to get an agreement on a national level for 2015 that the individual inspection services of the member countries will report CBS on finding a viable organism.”
And then there’s Russia
South Africa’s inspection circumstances in Europe have been compounded by the Russian ban on EU fruit, as rejected fruit can no longer just be sent to St Petersburg as an alternative option. “What we’ve found is that if they’ve exported to Europe and the authorities would stop the export due to say symptoms of CBS, then you’ve got a problem because principally it’s imported,” Joubert said. “Then you have to re-export and you can’t do that with European product. So it loses nationality in that moment. “I’d say we’d do 12-15% with Russia so the majority would be set up to go to Russia directly in any case. But that option if something goes wrong to then send to Russia has been jeopardized.”
He said the drop in the ruble has not only had an impact on exporter returns in the Russian market, but the overal negative state of the economy has also led to heightened levels of non-payment. “Even though the fall happened after the product was received, it had a massive effect on the negativity of the payments. “It always takes 10-16 weeks after export that you usually get paid. The Russian shipments are late, towards the end of the season, so it had a profound effect on the payment. “There are a lot of guys who have not yet received their payment, so that effect has been severe.”
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Status of Elimination of Non Tariff Barriers in the EAC
This publication highlights what the East African Community has achieved in redressing Non Tariff Barriers in the second quarter of the financial year 2014/2015.
It is aimed at galvanizing more support for the removal of Non Tariff Barriers which continue to hinder full achievement of the objectives of the East African Community Customs Union and Common Market.
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Uganda scraps work permits and visa fees for Kenyans, Rwandans
Uganda has scrapped work permit fees and visa requirements for Kenyans and Rwandans entering and leaving the country.
The decision is in line with the ongoing implementation of the “free movement” system under the East African Community Common Market Protocol that was signed in 2009 by presidents Museveni (Uganda), Mwai Kibaki (Kenya), Jakaya Kikwete (Tanzania), Paul Kagame (Rwanda) and Pierre Nkurunziza of Burundi.
The commissioner for Immigration Control in the Ministry of Internal Affairs, Mr Anthony Namara, told Saturday Monitor on Thursday that nationals of the two countries will also not be required to produce visas or other travel documents to enter Uganda except their respective national Identity Cards.
He said Kenya and Rwanda are already implementing the “free travel” system, which is intended to promote tourism in the region and also allow free movement of professionals across the three countries.
“We are yet to agree on the category of people who can move freely. At first, we had said we will allow managers, professionals, artisans and people in related fields but we want to subdivide these categories; for example which specific kind of manager can move,” Mr Namara noted.
Tanzania and Burundi are not catered for in this arrangement of work permits and visa requirements. In September last year, East African professional bodies signed agreements allowing the movement of select professionals such as engineers, accountants and architects in any of the five countries.
Attempts to reach Kenyan authorities were futile by press time. But the Rwandan ambassador to Uganda, Maj. Gen Frank Mugambage, commended the development and said his country had done it earlier.
Mr Namara urged Ugandans to use their national identity cards or voter cards to cross into Kenya or Rwanda.
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Egypt: Going for roubles
Experts have praised an agreement to use national currencies in future bilateral trade between Cairo and Moscow instead of the US dollar that was taken during Russian President Vladimir Putin’s visit to Egypt last week.
The two countries also discussed a free-trade agreement between Egypt and the Eurasian Economic Union led by Russia, as well as Russia’s supplying Egypt with more natural gas.
By replacing the dollar with the Egyptian pound and the Russian rouble for settling accounts in bilateral trade, the decision is seen as a way of boosting the volume of trade and reducing dependency on the dollar in trade agreements, something that had previously contributed to the weakening of both currencies on the exchange markets.
This is not the first time Russia has sought to reduce the influence of the US dollar on its currency. At the end of last year, an agreement with China resulted in both countries switching to domestic currencies in trading. Officials from Egypt and Russia are still discussing the mechanisms by which bilateral trade can be conducted in local currencies. The countries aim to double their mutual trade exchanges to reach $10 billion in five years. In 2014, bilateral trade was $4.5 billion, an 80 per cent increase compared to the previous year.
“Both sides will benefit from direct payments and will not have to worry about charges for the conversion of currencies,” said Salama Al-Khouli, an economist at the National Bank of Egypt, adding that the move would ease the burden on Egypt’s foreign currency reserves. Al-Khouli said that the decision to use national currencies did not necessarily mean paying for goods and services in money and that a kind of barter system was more likely to take place.
It would mean that the Egyptian government and companies would be able to import from Russia in exchange for the value of purchases of Egyptian products by the Russian government and businessmen, he explained. A special banking system needs to be created between the two countries as part of the agreement to make sure trade accounts are settled between the two sides.
According to Al-Khouli, special accounts can be opened in the banks of the two countries in order to settle debts without having to transfer money each time. He explained that through such an account a Russian company could deposit roubles for the value of products it purchased from an Egyptian company, and then the Russian bank concerned could wait until an Egyptian company bought products from a Russian company, and vice versa. Debts could be settled at the end of a scheduled waiting period, he added.
Putin told Al-Ahram daily last week that settling accounts by national currencies would also help create more favourable conditions for Russian citizens spending their holidays in Egypt. The depreciation of the Russian rouble against the dollar and euro has been discouraging Russian tourists from visiting Egypt.
After the agreement to use local currencies comes into effect, Russian tourists would be able to pay tour agents in roubles and not worry about changing exchange rates against the dollar. A third of all tourists visiting Egypt each year comes from Russia. Egypt received around 9.5 million tourists in 2014.
The method by which the currencies will be valued remains a topic of discussion between the central banks of Egypt and Russia. Once Egypt and Russia start trading in local currencies, the same method could be applied to other countries that have higher bilateral trade volumes with Cairo, like China, said Ahmed Sheiha, head of the Importers Division at the Cairo Chamber of Commerce and former head of the Egyptian-Russian Business Council.
This will lead to a significant reduction in the huge amount of payments in dollars for Egyptian imports, Sheiha said. “The dollar, consequently, will not be the main force moving our economy.” The trade balance between Egypt and Russia, currently tilted in favour of Russia at almost $4 billion against $500 million, is expected to become more balanced after the dollar is replaced with domestic currencies and the barter system.
However, obstacles still face Egyptian products when trying to enter Russian markets. “The customs authorities in Russia are valuing some Egyptian products at more than their real value and more customs duties are paid as a result,” said Mustafa Al-Naggari, head of the exports committee at the Egyptian Businessmen’s Association.
He added that the Russian customs authorities had been concerned that the bills of Egyptian products entering Russian markets were not accurate. “This is a problem that should end soon, as a Russian delegation will be visiting Egypt on 24 February to discuss ways to solve the matter,” Al-Naggari said.
He said that Egypt’s efforts to reach an agreement with the Eurasian Economic Union, which includes Russia, Belarus, Armenia and Kazakhstan, would make a huge difference to Egyptian exporters because entering the markets of these countries duty-free would give the Egyptian economy a boost driven by a quick rise in exports. However, this could take some time as the four countries are still studying benefits.
Al-Naggari said that Russian demand for Egyptian products would likely be limited primarily to goods that Russia has stopped importing from the EU in retaliation for the sanctions imposed by the latter following the crisis in Ukraine. “Agricultural goods and dairy products top the list,” he said.
Egypt relies heavily on Russian wheat to meet local demand, with almost 40 per cent of wheat consumed in Egypt coming from Russia. The agreement to pay in Egyptian pounds instead of dollars should ease pressures on the country’s hard currency reserves. Net international reserves stood at $15.4 billion at the end of January. Egypt and Russia will also cooperate in the area of energy, and discussions are underway for the construction of a nuclear power plant in Dabaa on the north coast.
The Ministry of Petroleum has announced that an agreement will be signed by the end of February with the Russian company Gazprom to provide Egypt with liquid natural gas over the next five years, with an average of seven shipments per year starting this year.
Neither the exact amount of gas in each shipment nor the total amount was specified.
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ECOWAS Community Development Programme to mobilize $21bn for projects
The ECOWAS Community Development Programme (CDP) is set to mobilize about $21 billion to enable them finance over 200 projects that cuts across various sectors of the economy in the West African sub-region.
The projects are part of a long-term development strategy to be implemented over a five-year period. Sectors to benefit from the projects include transport infrastructure, energy, agriculture, health, education development, capacity building among other areas.
Dr Guevera Yao, Coordinator of the ECOWAS-CDP made this known at a meeting of the Network of Economic Journalists in West Africa. The meeting brought journalists from 15 countries in the sub-region to review and validate the communication plan of an impending High level Conference and Roundtable to be held in Cote D’ Ivoire later this year. Dr Yao said the ECOWAS -CDP already has seven billion dollars in their coffers and need the 21 billion to enable them to holistically implement the five-year development plan.
He explained that the projects to be implemented are proposals brought to the CDP through a survey conducted among inter-governmental organizations, non-state actors and media networks. He further explained that if the ECOWAS CDP gets the needed funds to implement the projects it will enhance the overall economic development in the sub-region by increasing the Gross Domestic Products as well as reduce poverty.
Mrs Sena Siaw-Boateng, Director, Africa and Regional Integration Bureau at the Ministry of Foreign Affairs who chaired the meeting, earlier noted that the Network of Economic Journalists had an important role to play in the resource mobilization effort. While pledging government’s support for the meeting, she expressed believe that the meeting would be a success and urged the participants to develop a good action plan for the regional media network.
The ECOWAS CDP programme was formulated in 2008 to help with the vision of transforming the ECOWAS from an organization where heads of states meet to an organization where people or citizens play a vital role.
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Deputy Minister Masina lead business delegation to India, 23 to 27 Feb
The Deputy Minister of Trade and Industry, Mr Mzwandile Masina will lead a delegation of 25 South African business people to the sixth annual India Investment and Trade Initiative (ITI) taking place in Hyderabad and Kolkata, India from 23 – 27 February 2015.
The ITI is part of the Department of Trade and Industry’s (the dti) export and investment promotion strategy to focus on India as a high growth export market and foreign direct investment source.
Deputy Minister Masina says as a follow-up to the fifth ITI held in March 2014 , this ITI will target South African companies seeking to attract foreign direct investment and also project owners and managers seeking joint venture partnerships in agro-processing, cosmetics, pharmaceuticals, mining and mineral beneficiation, infrastructure, architecture and renewable energy sectors.
According to Masina, South Africa’s economic relations with India have flourished since the establishment of diplomatic relations in 1993. Closer economic ties are also fostered using initiatives such as the Joint Ministerial Commission and business engagements facilitated through the SA-India CEOs Forum.
“Beyond bilateral relations, South Africa and India remain committed partners and are determined to strengthen the South-South Cooperation in the context of IBSA (India, Brazil and South Africa) and BRICS. These forums are an undertaking by countries with shared interests in a multilateral system to address political, social and economic matters,” he adds.
Masina’s programme will include bilateral meetings with representatives of government and businesses. He will also conduct site visits to various industries in Hyderabad and Kolkata.
India ranks among the top 10 investing countries in South Africa. Between January 2009 and June 2014 a total of 44 Foreign Direct Investment projects from India were recorded. These projects represent a total capital investment of R18.25 billion which is an average investment of R414.76 million per project.
The total trade between India and South Africa was worth R80.9 billion in 2013 with a trade balance of R22.9 billion in favour of India.
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Worst food crisis since 1992 looms
The country could be facing a food crisis of a magnitude not experienced since the crop failures of 1992, when the government had to subsidise mealie meal for the poor, if the north-west Free State, North West Province and Mpumalanga do not get sustained rain of at least 20mm in the next fortnight.
Chief executive of Grain SA Jannie de Villiers said there was already “90 percent certainty” of a significant grain shortage, owing to extreme heat and low rainfall in those three areas recently. De Villiers said that by Thursday the government would announce the quantity of maize the country would harvest this season, but it was likely it would be significantly short of what is needed for domestic consumption.
De Villiers said the country had 2.6 million hectares of maize in the ground and, despite the fact that last year produced the second-highest yield on record, North West Province, the north-west Free State and Mpumalanga – the areas that produce the bulk of the country’s maize – had received no rain from mid-February and had experienced extremely high temperatures.
“One farmer told us that in the Free State area of Botha-ville there would normally be eight days in the year when the temperature was above 32ºC. Since the start of the year, there have already been 22 such days,” De Villiers said.
“Combined with the low rainfall, the extreme heat limits the ability of the mealie kernels to fill the cob, with a negative impact on the viability of the crop.” The chief executive said that, while exact figures were not yet available on what the shortfall in domestic maize produce would be, “South Africa needs 10.2 million tons to feed those who rely on maize as their staple diet”.
He said local shortages would also have an impact on neighbouring countries such as Botswana, Lesotho, Swaziland and Namibia, whose people also relied on the staple food. “The price of mealie meal has increased by around 50 percent, so the poorest of the poor are hard hit.
“They are paying far more than usual for the mealie pap that is their main food source.” De Villiers said the failure of the local maize crop was exacerbated by the fact that the developed world did not produce white mealie meal for human consumption, but only for animal feed, thus limiting import options.
However, he said it was still too early to declare a food security emergency.
"We are red-flagging the issue, but we will only know the true extent of the problem in six to eight weeks’ time. By the end of March, we will have a clearer idea of where we stand. “While the early plantings have had it, there is still young maize that might survive if we get adequate rain in the next few weeks.”
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Trade Volume and Economic Growth in the MENA Region: Goods or Services?
While the expanding importance of services in the economy has certainly been noticed, it is only recently that the international trade literature has started to study the linkages between trade in services and growth.
This paper explores the effects of trade in goods and trade in services on the economic performance of Middle East and North Africa (MENA) countries.
The study becomes even more important if we take into account how recent political uprisings in North African countries affected trade policies and consequently exports, imports and thus growth. In fact, in the wake of the so-called Arab uprising, several North-African economies have implemented different protectionist measures, especially Egypt, Tunisia and Morocco. For instance, according to the WTO, the Egyptian authorities initiated several anti-dumping investigations against China (on PVC floor) and India (on pens).
For this reason, serious efforts should be deployed in order to reduce both non-tariff and tariff barriers that hinder trade and growth within North African economies.
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Kenya ranked eighth largest global geothermal producer
The injection of additional 280 megawatts produced in Olkaria to the national grid in December has lifted Kenya’s global ranking as the eighth largest producer of geothermal energy, a new study shows.
The US remains the world’s top geothermal producer with an installed capacity of 3,389 MW – nearly six times Kenya’s output – followed by Philippines (1,894MW), Indonesia (1,333MW), Mexico (980MW) and Italy is fifth with 901MW of steam power. New Zealand is graded sixth with 895MW ahead of Iceland (664MW).
Rwandan president Paul Kagame and his host Uhuru Kenyatta on Thursday switched on the second phase of the Olkaria project, offering households and manufacturers hope for cheaper electricity as steam displaces costly thermal power. “Kenya has immense geothermal production potential,” said Albert Mugo, KenGen managing director. “Geothermal power has contributed to lowering the cost of doing business by displacing thermal power and adds to Kenya’s green energy initiatives,” Mr Mugo said.
The Olkaria geothermal power has pushed down fuel cost charge in electricity bills to an all-time low of Sh2.51 per kWh in February from a high of Sh7.22 per unit in August last year. Kenya has the potential to produce about 10,000 megawatts of geothermal power from the Rift Valley basin, studies by the Ministry of Energy show.
KenGen’s Sh118.7 billion ($1.3 billion) Olkaria project is billed Africa’s largest steam development, consisting of four power plants each generating 70MW. In comparison, Japan has 537MW of geothermal, Russia (97MW), China (27MW), France (15MW) while Germany has 13MW.
Geothermal now accounts for 29 per cent of Kenya’s energy mix, up from the previous 13 per cent four years ago. President Uhuru Kenyatta has lined up multiple geothermal projects and is banking on steam power to halve the cost of electricity to Sh9.54 (¢10.45) per kilowatt hour from the current average of Sh18.07 (¢19.78) per unit for domestic households.
State-funded Geothermal Development Company (GDC) has signed a deal with three independent power producers (IPPs) - Ormat Technologies, Quantum Power and Sosian Energy – who will each build a 35MW steam power plant under a build–own–operate (BOO) model. OrPower 4, Kenya’s sole IPP generating geothermal energy, is currently increasing its output by 24MW, which will bring its total capacity to 134MW.
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East Africa sets July deadline to harmonise roaming rates
Communications ministers in the five East African Community members states have been given up to July to harmonise roaming rates in the region.
The directive was issued through a joint communiqué signed by the presidents of the five countries following the 16th heads of state summit held in Nairobi, yesterday. Tanzania and Burundi finally agreed to join the drive for common roaming rate to cut the cost of calling across borders in the bloc. It was started by Kenya, Uganda and Tanzania.
“The summit directed the council to expedite implementation of the framework for harmonised roaming charges, including the removal of surcharges for international telecommunications traffic originating and terminating within the East African Community by July 15, 2015,” the statement read. Present at the summit were presidents Pierre Nkurunzinza (Burundi), Jakaya Kikwete (Tanzania), Uhuru Kenyatta (Kenya) Yoweri Museveni (Uganda) and Paul Kagame of Rwanda.
High call rates across borders has been cited as one of the biggest hindrance to economic integration in the region, as countries imposed high taxes for international calls terminating within their borders. Under the northern corridor infrastructure summit last year, Kenya, Uganda and Rwanda agreed to limit the maximum roaming charges in the three countries at about Sh9 ($0.10) per minute for retail and Sh6.21 ($0.069) for wholesale.
On September 1, the three States published gazette notices to implement roaming tariffs within the one area network. The plan is expected to spur international trade with the community, which has been on the decline over the past few years. On Thursday, manufacturers in Kenya said they were concerned that the contraction of trade between Kenya and the countries in the East African Community could hurt their revenues.
Trade between Kenya and Tanzania, Rwanda, Uganda and Burundi declined by Sh10 billion in 2013 and the gap could be bigger when the 2014 statistics are out. “The government has focused too much on what happened in the few years to 2012 when there was tremendous growth in the value of trade with the region. But if you look at 2013, you will see that there is a crisis. A lot needs to be done for this to change because the community is a very important market for us,” Kenya Association of Manufacturers chief executive Betty Maina said.
Ms Maina noted that the trend is worrying given that manufacturers have always found their biggest export market in East Africa. She was speaking during a forum on market expansion, Kenya’s foreign trade policy and challenges facing the regional market. “It is a big concern for us and we are reaching out to our counterparts in the regional governments to see if there are interventions we can make at policy level as well fast-tracking the implementation of already established initiatives,” Mr James Kiiru, a director at the Ministry of Foreign Affairs and International Trade said.
Kenya Association of Manufacturers said it was ready to host a meeting with government officials to help check the decline in trade.
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New initiative to increase access to seed varieties in Comesa area
Rwanda yesterday assented to regulations that will govern trading in seed varieties within the Common Market for Eastern and Southern Africa (Comesa).
The regulations, which will have to be adopted in all the 19 member states before coming into force, will facilitate safe movement of quality seeds within member states. To qualify to benefit from the initiative, seeds will first have to go through a quality certification process, according to officials.
The Minister for Agriculture and Animal Resources, Geraldine Mukeshimana, said the initiative will stimulate the breeding and availability of many new improved seed varieties, which will give better alternatives to farmers. “We had challenges where someone, for example, couldn’t easily sell seeds produced in other countries which were hindering farmers to access various varieties,” Mukeshimana said. She added that having many seed varieties to choose from will help farmers alternate, especially in the era of climate change which requires innovation from time to time to keep the yields high.
Argent Chuula, the chief executive of Alliance for Commodity Trade in Eastern and Southern Africa (Actesa), a Comesa specialised agency, said there is a lot to do to move the sector upward by availing adequate improved seeds for farmers to attain food security. Chuula said, currently, the region has a total seed production of about 500,000 metric tonnes per annum, while a total demand for seeds is about two million metric tonnes.
In Rwanda, seed production stands at about 8,000 metric tonnes a year, while some members of the bloc have even less production capacity. This indicates that there is still deficit in the region that imports from other regions outside Africa, a fact that calls for Comesa to have own producing industries.
Gervais Ngerero Nkuriza, the director of seed department at Rwanda Agriculture Board (Rab), said the harmonisation of regulations requires that seeds fulfill international standards before being added on the list. “The seeds are to be certified in a harmonised way. Variety can be from one country to another, Rwanda has, for example, beans varieties of “Vun’inkingi” and will be exported to Kenya, Uganda, and Tanzania to be grown there. So we also can import others,” he said
Among the laboratory standards required to be certified, there is, for some crops, a minimum germination at 90 per cent, minimum pure seed at 99 per cent, and maximum moisture 13 per cent, among others, he said.
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UNCTAD releases review of trends in investment agreements and investor-State dispute settlement
This UNCTAD IIA Issues Note reviews recent trends in international investment agreements (IIAs) as well as investor-State dispute settlement (ISDS) cases, providing up-to-date statistics and analysis.
According to the Note, countries continue to use IIAs as a tool for international investment policy making. The year 2014 saw the conclusion of 27 IIAs, that is one every other week. This brings the total number of agreements to 3,268.
The IIA universe is evolving with regard to substantive provisions: pre-establishment commitments and sustainable development-oriented clauses are on the rise. At least 45 countries and four regional integration organizations are currently revising or have recently revised their model agreement. Investors continue to use the ISDS mechanism. In 2014, claimants initiated 42 known treaty-based ISDS cases. With 40 per cent of new cases initiated against developed countries, the relative share of cases against developed countries has been on the rise (compared to the historical average of 28 per cent).
The two types of State conduct most commonly challenged by investors in 2014 were cancellations or alleged violations of contracts, and revocation or denial of licences. Over time, the Energy Charter Treaty surpassed the North American Free Trade Agreement as the most frequently invoked IIA. ISDS tribunals rendered at least 42 decisions in 2014. This includes an award of USD 50 billion in three closely related cases, the highest known award by far in the history of investment arbitration. The overall number of concluded cases has reached 356, with 37 per cent decided in favour of the State, 25 per cent in favour of the investor and 28 per cent of cases settled.
The year saw important multilateral developments geared towards increased transparency in ISDS. These include the coming into effect of the United Nations Commission on International Trade Law Rules on Transparency and the adoption of the Convention on Transparency in Treaty-based Investor-State Arbitration, which will be opened for signature later in 2015.
Concerns about IIAs and ISDS have prompted a debate about their challenges and opportunities in multiple forums. Today, a broad consensus is emerging that the regime of IIAs and the related dispute settlement mechanism need to be reformed to make them work better for sustainable development. Such reform would need to be undertaken in a comprehensive and gradual way, taking into account the interests of all stakeholders.
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ArcelorMittal calls for tariff protection
ArcelorMittal SA has applied to the International Trade Administration Commission (Itac) for anti-dumping duties as they claim Chinese steel is coming into South Africa and being sold at a price below the cost of production.
In an interview, ArcelorMittal chief executive Paul O’Flaherty said this week that this came as over 600 000 tons of steel was imported into South Africa from China last year, which was sold at least R500 per ton cheaper than local prices. “We believe they are offering their products at prices lower than their costs,” he said.
O’Flaherty said ArcelorMittal had asked for tariff protection on four steel products. “We have put our application through and it is going through the process.”He said the company had undertaken all the cost cutting it could and that the tariff intervention was more of a last resort for the industry, particularly as the price of steel was on a downward spiral.
“To counter this we are producing at full capacity so we can benefit from economies of scale,” he said. An official of the Steel and Engineering Federation of South Africa (Seifsa) confirmed that China had a surplus of steel that had resulted in depressed world prices. ArcelorMittal employs 13 500 people at its South African operations.
In another development, the wire and mesh industry has successfully applied to Itac for the introduction of tariffs on some of their products as a result of imports from China. The wire industry was granted an ad valorem tariff that was increased from 5 percent to 15 percent on barbed wire, wire mesh and hexagonal wire netting. An ad valorem tariff is a duty or other charges levied on an item on the basis of its value and not on the basis of its quantity, size, weight or any other factor.
The wire and mesh industry was also granted an increase to 10 percent ad valorem tariff from tariff free for wire of iron or non-alloy steel. The latest increase was granted in early February, while the first was granted in December. An application for the introduction of tariffs on galvanised wire was turned down by Itac, but a source at the South African Wire Association (Sawa) said they would be appealing the decision in a year’s time. The reason was that galvanised wire was an input product and its cost in South Africa was very competitive.
Sawa’s membership includes Scaw Minerals Group, Hendok, ArcelorMittal SA, Ram Trading, Consolidated Wire Industries, Fournel, Galvco Engineering and Cape Gate among others and collectively employ about 3 000 people. The association said the intervention by Itac came as a number of their members were on the verge of bankruptcy, having lost market share in large parts of Africa, North America, Europe, as well as the Far East. “There have always been some wire products coming in, but they have been increasing to a greater extent in recent years. The Chinese have become very aggressive of late,” the source said.
The Sawa members will now focus on exporting to the rest of Africa, where they hope to have a competitive advantage over Chinese producers.He said Sawa was pleased that Itac had intervened favourably, and said the benefits of the new tariffs would perhaps be seen from the next quarter. Itac spokesman Foster Mohale confirmed that “most of the imports originate in East Asian countries”. “The commission did not support the application for an increase in customs duty on galvanised wire. However, the application for an increase in customs duty on the other three wire products was supported,” he added.
He said the commission had found that import volumes for galvanised wire declined from about 21 200 tons in 2011 to about 15 700 tons in 2013. Mohale said with regards to the other three wire products, the commission had found that import volumes grew significantly during the three years.
In volume terms, imports of barbed wire increased from about 3 000 tons in 2011 to almost 4 400 tons in 2013; wire mesh imports rose from about 800 tons in 2011 to almost 1 400 tons in 2013; and imports of hexagonal wire netting climbed from about 1 300 tons in 2011 to roughly 4 300 tons in 2013. “As a result of increased imports, the domestic industry is unable to utilise its existing production capacity to achieve economies of scale,” he said.
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The AfDB Group supports power trade between Kenya and Tanzania
The Board of Directors of the African Development Bank Group (AfDB) approved on Wednesday, February 18 in Abidjan an African Development Fund (ADF) Loan of US $144.9 million, to the Kenya–Tanzania Power Interconnection Project.
The project will allow the two countries to exchange power. In addition, the Kenya–Tanzania Interconnection Project plays an important role in promoting regional integration through power trade. The project is expected to improve the supply, reliability and affordability of electricity in the Eastern Africa region through cross-border exchanges of cheap and cleaner surplus power from neighbouring countries. The project involves the construction of approximately 508 kilometres of transmission line between Kenya and Tanzania (about 93 km in Kenya and 415 km in Tanzania) and associated substations in Arusha and Singida (Tanzania).
The line will have a transfer capacity of up to 2,000 MW in either direction. The Ethiopia–Kenya interconnection line will allow for the interconnection of the Eastern Africa Power Pool to the Southern African Power Pool and further in the future to Northern Africa through the East Africa Electricity highway. At its initial stage, the project will allow Ethiopia and Kenya to exchange power, followed by the import and export of energy from the interconnected countries.
Following the Board’s approval, the Director of the AfDB’s Energy, Environment and Climate Change Department, Alex Rugamba, explained that the project aligns with the pillars of the regional integration strategy papers (RISPs) for Eastern Africa, which focus on regional infrastructure and capacity building. It also fulfills the objectives of the New Partnership for Africa's Development (NEPAD) in terms of regional integration and promotion of infrastructure development through regional co-operation in key productive sectors such as energy. He also added that the interconnection line will create competitiveness in the energy sector and will encourage private sector investing in the generation of electricity by facilitating power transfer through the interconnector.
New report on national trade facilitation bodies in the world
With the signature of the WTO Trade Facilitation Agreement (TFA), countries have committed to creating or maintaining a national trade facilitation committee.
Setting up a national mechanism is in itself one of the most traditional and most important trade facilitation measures to ensure that the main public and private stakeholders are consulted and engaged in the elaboration and implementation of national trade facilitation reforms. Over the past decades, it has received a lot of attention from national and international agencies dealing with trade facilitation.
Undoubtedly, since UNCTAD published its Trade Facilitation Handbook Part I – National Facilitation Bodies: Lessons from Experience in 2006, the picture has changed for trade facilitation working groups. The presence of trade facilitation in the international trade agenda has increased and trade facilitation working groups now benefit from stronger national, regional and international support. As shown in recent UNCTAD research, the number of provisions related to customs and trade facilitation included in regional trade agreements has increased, including those that encourage or require the creation of trade facilitation bodies.
Moreover, almost a decade after they were launched, the negotiations on trade facilitation at the World Trade Organization successfully came to an end in December 2013. World Trade Organization members have committed to creating or maintaining a national trade facilitation committee, as stated in section III, article 23.2 of the Agreement on Trade Facilitation.
In this context, this UNCTAD publication, based on an in-depth analysis of 50 trade facilitation bodies, could not be timelier. It provides the first quantitative analysis of existing national trade facilitation bodies and a first-hand set of recommendations extracted from the experiences of participating stakeholders. The study provides policy-oriented conclusions aimed at assisting those countries that are looking to set up or strengthen their national trade facilitation working groups.
The study shows that, regardless of the type of body, the biggest challenge for trade facilitation working groups is their sustainability. There is no one determining element, but many factors might have an impact on the sustainability of a group. The relative importance of each element depends on the administrative culture of each country. However, analysis shows that the level of development of a country is the most influential factor on the sustainability of a group. The type of body and geographical region may also be determining elements.
With an interactive and user-friendly interface, UNCTAD’s latest version of the online repository of national trade facilitation bodies presents information from trade facilitation platforms in over 80 countries and also assists UNCTAD member States in creating or strengthening trade facilitation bodies through useful information about country cases from different geographical regions on the establishment and management of trade facilitation bodies.