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African Development Report 2014: “Leveraging Regional Integration for Inclusive Growth”
The 2014 edition of the African Development Bank’s African Development Report, on the theme of “Regional integration at the service of inclusive growth”, was officially launched Tuesday, December 16 at the Bank’s headquarters in Abidjan.
In her opening address, AfDB Secretary General and Vice-President Cecilia Akintomide emphasized how “Africa’s regional integration is a major pillar in the Ten-Year Strategy of the Bank, which is celebrating its 50th anniversary in 2014 as Africa’s premier development finance institution.”
Presenting the report, AfDB’s Acting Chief Economist and Vice-President Steve Kayizzi-Mugerwa highlighted the themes developed in it: regional integration and inclusive growth, regional institutions, regional infrastructure, regional migration, regional financial integration and value chains.
Indeed, this report puts regional integration under the spotlight as being necessary for Africa’s development, recalling that this is an aspiration dating back to the independence period in the 1960s. Critically examining the developments that have marked these last 50 years in terms of economic and political integration, the publication underscores how much it needs to be stepped up. The world may well be radically changing, but African integration remains as topical as ever, concludes the Report, which also highlighted how much integration could stimulate sustained, inclusive growth.
The development of distribution networks and regional trade within global and African value chains into which the continent fits, institutional challenges, infrastructure – both tangible and “intangible” – indispensable to interconnect markets and boost competitiveness, strengthened financial systems, were among the challenges to the continent’s integration that were examined in the report.
The launch of the publication was also the occasion for a Davos-style discussion with three AfDB Executive Directors, Abdallah Msa (representing Benin, Burkina Faso, Cape Verde, the Comoros, Gabon, Mali, Niger, Senegal and Chad), Dominic O’Neill (Italy, Netherlands and the United Kingdom) and Shehu Yahaya (Nigeria and São Tomé and Principe), and by Marlène Kanga, AfDB Central Africa Regional Director, and Sylvain Maliko, Acting Director of the AfDB’s NEPAD Regional Integration and Trade Department.
All five discussed the increase in migratory flows, while obstacles to mobility never cease to appear (particularly in Central Africa), and the looming gap between regional integration policies depending on whether they are carried out at national or regional levels.
The panellists did, however, note some progress, particularly with regard to infrastructure development and the free movement of persons, especially in the east and west of the continent.
To close the launching ceremony, AfDB President Donald Kaberuka focused on the respective national policies of African states: “More than infrastructure, it is political will that boosts regional integration in Africa,” he said, before recalling that over the last 10 years the Bank had been ceaselessly financing road infrastructure throughout the continent, with the aim of interconnecting countries. He also lamented the fact that the Regional Economic Communities (RECs) seemed to be working disparately, struggling from a lack of coordination and resources to implement initiatives to further integration, because far too often national interests take precedence over regional ones.
“I recommend that all those interested in the challenges of regional economic integration in Africa and the opportunities arising from this integration read this report,” said Kaberuka. “The Bank will continue to play a leading role in supporting the economic integration of Africa, while helping regional economic communities to create dynamic and attractive regional markets, so that every country in the continent, including the most landlocked and fragile, can benefit from interactions with global markets and from intra-African trade.”
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Building infrastructure to spur intra-African trade and tourism
African Heads of States and Governments recognize the potential contribution of tourism to the growth and transformation of the continent, given that Africa is endowed with rich and diverse cultures, landscapes, and biodiversity. Consequently, tourism is one of the strategic areas in the New Partnership for Economic Development (NEPAD) framework, and is identified there as a key driver for socio-economic growth.
To foster the development of tourism in the continent, the NEPAD Tourism Action Plan (TAP) was formulated under the guidance of African Ministers of Tourism, who convene annually under the auspices of the World Tourism Organization (WTO) Commission for Africa (CAF). The TAP was adopted at the 3rd General Assembly of the African Union (AU) in July 2004 in Addis Ababa, Ethiopia. Since the adoption of the TAP, the continent has been experiencing growth in the tourism sector despite facing major challenges, including a serious infrastructure deficit.
TAP was primarily established to harness Africa’s vast endowment of geographical assets and cultural heritage through promotion of the tourism sector. Indeed, the continent’s abundant natural resources have contributed an average of 5.2% annually to the continent’s economic growth over the past decade, including through foreign exchange earnings.
In 2013 alone, the continent’s receipts from international tourism were USD 34.2 billion. Therefore, it comes as no surprise that tourism as a service sector has been acknowledged as a driver of socio-economic development and growth in Africa. Moreover, it has been identified as such in the African Union (AU) Agenda 2063, which sets out a long-term strategy to “optimize use of Africa’s resources for the benefit of all Africans” and to accelerate development and integration across the continent.
Despite the progress made in the tourism industry, most African countries have yet to reach their full potential. A myriad challenges face the tourism sector: the urbanization of the continent is faster than anywhere else in the world and by 2025 half of the African population will live in cities.
The issue of urbanization will bring serious challenges of integrated waste management, transport and pollution, which will impact touristic activities. Additionally, slow visa facilitation; low investment levels; the capacity gap in the hospitality service industry; poor connectivity and infrastructure are major impediments to tourism growth and sustainability. For instance, what should be a normal 6-hour trip from West to Southern Africa can take as long as 48 hours due to poor air connectivity.
On the other hand, Africa is experiencing low levels of intra-regional economic exchange, while it also has the smallest share of global trade of all regions. Africa is the least integrated continent in the world.
Infrastructure inefficiencies are costing Africa billions of dollars annually and are stunting growth. Bridging the gap in infrastructure is vital for economic advancement and sustainable development. However, this can only be achieved through subregional and continental cooperation and solution finding. The Program for Infrastructure Development in Africa (PIDA) encourages regional cooperation as a means of building mutually beneficial infrastructure. It helps to strengthen the ability of countries to trade and establish regional value chains for increased competitiveness, as well as the free movement of African citizens. As the unique strategic and sectoral framework to accelerate the physical integration of the continent, PIDA promotes the development of infrastructure projects in the areas of transport, energy, information and telecommunications technologies, as well as transboundary water supplies.
The United Nations World Tourism Organization (UNWTO) 2014 report, Tourism Towards 2030, predicts that tourism arrivals in Africa will reach 134 million by 2030, from the present-day level of 65 million. This is a strong growth that could significantly contribute to the GDP, job creation, and transformation of African countries and the continent at large.
However, for this projection to become a reality, there is a need for an enabling environment that would facilitate infrastructure development, investment in human capacity development and growth in the Africa market to promote regional tourism.
In this regard, the importance of infrastructure to tourism development and growth in the continent cannot be over-emphasized hence PIDA implementation is imperative.
This will require building strong partnerships and the collective effort and actions of African governments, the private sector, civil society, regional and continental institutions, as well as development partners.
This article appears in the November 2014 issue of the NEPAD Newsletter.
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Construction of Rubavu-Goma one-stop border post launched
Construction of one-stop border post linking Rubavu in Western Province to Goma town in eastern DR Congo was launched on 15 December 2014.
The border post is expected help meet the required standards of a proper functional border post and reduce the overall transit time for cargo and passengers while easing trade and commerce.
The groundbreaking ceremony was held in Rubavu at La Corniche border post, commonly referred to as ‘Grande Barrière’.
The construction, worth $9 million (about Rwf6 billion), is being financed by the Howard G. Buffet Foundation, according to Christian Rwakunda, the permanent secretary in the Ministry of Infrastructure.
The Howard G. Buffet Foundation is a US-based philanthropist organisation working to improve the standard of living and quality of life for the world’s most impoverished and marginalised population.
The government will cover taxes, including value added tax, customs and duty free and the expropriation cost, at $1.7 million. The financer also donated another $9 on the DR Congo side.
Shortly after laying the foundation stone where one border post will be constructed, Howard Buffet said they financed the facility because they believe it will boost trade between the two countries and enhance peace and security.
“It is a dream to see Rwanda and DR Congo sit together to build peace and trade and this is one opportunity to work together,” Buffett said.
The project outlook
The project will cover the construction of border post facilities, including the main building to accommodate all services, passenger car parking and handling facilities, warehouses as well as the heavy trucks transit parking.
Officials believe that this will improve border crossing efficiency and cut down unnecessary costs due to duplication of operations
Rwakunda welcomed the support, saying it was timely and will boost trade and enhance security between two countries as all institutions working at the border will have upgraded facilities.
He said the one-stop border post will significantly enhance the mobility of people and goods at the border and thus intensify regional economic growth through the promotion of market integration, infrastructure and industrial development as well as enhanced competitiveness.
Rwanda Transport Development Agency (RTDA) will be the implementing agency on behalf of the government and will closely follow up on implementation of the project in conjunction with the Howard Buffett Foundation.
The construction is expected to be completed in 18 months, according to Rwakunda.
Border communities have welcomed the construction of the border post, saying it will halt delays and cut unnecessary costs.
Between 4,000 and 5,000 people cross the border, where the one-border post is to be constructed, majority being informal traders.
Agricultural produce and livestock remain the major commodities traded informally across the Rwanda-DR Congo borders.
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OECD experts advise multilateral action to reduce export restrictions
The BIR world recycling organisation has welcomed OECD proposals of multilateral action to counter the harmful impact of export restrictions on steelmaking. The advice was given at an OECD workshop in Cape Town on December 11 which highlighted the detrimental effects of such export restrictions and the efficiency gains to be made from their simultaneous removal both upstream and downstream of steelmakers.
It was strongly argued in Cape Town that export restrictions introduced to protect a national metals industry’s primary and secondary raw material supply could actually jeopardise the viability of, respectively, the mining and the scrap supply sector. The access to cheap domestic scrap created by export restrictions could lead to uncompetitive plants remaining in operation and could serve as a deterrent to investment for the future. Furthermore, such restrictions placed governments in the position of arbitrating between industry sectors across the same value chain.
Making the use of export restrictions more transparent was the first step proposed towards their removal because only then could alternative policies to achieve the same objective be determined. Indeed, the best way forward was the simultaneous multilateral removal of export restrictions. The time was ripe for such action, it was said, in order to seize the opportunity created by the oversupply of steelmaking raw materials in the next few years.
In comparison to other industries, the steel industry is most affected by trade-restrictive measures, and the risk of trade friction in the global steel industry has increased of late. The industry is particularly susceptible to protectionist measures owing to its well-known history of subsidies and excess capacity. It was explained in Cape Town that the most common reasons given for introducing export restrictions were to strengthen the competitive position of national processing industries and to enhance government revenues. As regards the latter, better alternative policies existed that did not deter investment, it was stated. Regarding trade defence instruments, steel accounts for: over 40% of Countervailing Duty Initiations; for nearly a quarter of anti-dumping cases; and for over 15% of safeguard actions. The OECD saw the need was now to avoid further escalation of trade actions.
“While the trend towards more export restrictions is currently the case, this OECD workshop has now made the case for multilateral action to reduce such restrictions in order to benefit the steel industry worldwide,” comments BIR Environmental & Technical Director Ross Bartley, who attended the workshop. “The slower alternative is for countries to remove export restrictions though bilateral trade agreements. The difficulty is that almost all steelmakers and their governments would need to be convinced of the benefits to take multilateral action, and to take that multilateral action in order to get those increased benefits to more steelmakers more quickly.”
Organised jointly by governments participating in the OECD Steel Committee and by South Africa’s Department of Trade and Industry, the Cape Town workshop brought together almost 100 representatives from governments and the steel industry value chain with the aim of: assessing emerging market trends and policy developments affecting trade in steelmaking raw materials; achieving a better understanding of the impacts of trade-restrictive raw material policies on the global steel industry; and exploring policy approaches that would improve the longer-term efficiency and functioning of these markets. Eric Harris, Associate Counsel/Director of Government & International Affairs at BIR’s US member ISRI, actively participated in two of the panel discussions.
It was also noted at the event that local export restrictions were often being justified on the basis of historical experiences of the industrialisation of Europe and North America, but that such experiences did not match current business practices. The overriding conclusion was that worldwide export restrictions had been more effective as an investment deterrent than as an industrialisation incentive. OECD modelling has showed that the simultaneous abolition of export restrictions on all major steel raw materials would increase trade, reduce steelmaking production costs and expand the global supply of steel inputs. And there would be a dual benefit if the steelmakers in the countries facing relief from restrictions were also exporters.
» Excess capacity and risks of trade friction cloud the outlook for the global steel industry (OECD)
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Local Content Requirements and the Green Economy
This publication, Local Content Requirements and the Green Economy, is a product of the Trade Environment, Climate Change and Sustainable Development Branch, DITC, UNCTAD.
It was commissioned for and forms part of the background documentation for an ad hoc expert group, entitled: “Domestic Requirements and Support Measures in Green Sectors: Economic and Environmental Effectiveness and Implications for Trade”, held in Geneva on 13 and 14 June 2013.
The study is far from an exhaustive examination of these issues. In many areas, the analysis is speculative, aimed at raising questions and suggesting areas where domestic and international policy makers may need to consider undertaking further analysis. Above all, it should be stressed that the study raises these matters at a very general level.
Whether any given governmental measure is consistent with WTO rules is a highly contextual question, that may well depend on the exact design features of that particular measure, and its broader context – regulatory, technological and commercial. Thus, nothing in this study should be considered as a judgment that any actual measure of any particular government violates WTO rules.
The study and the meeting are part of a larger effort by UNCTAD to analyze issues arising at the intersection of green economy and trade policy. The study has been prepared at a time when the “green economy” concept moved from theory to practice, with a range of developed and developing countries placing local content at the heart of their green economy strategies, and their green economy plans at the heart of their industrial policies.
It reflects developing countries’ increasing emphasis on the “sustainable” element of traditional development objectives, such as rural development, urban planning and industrialization.
The study has also been prepared at a time when countries across the income spectrum are taking a fresh look at local content requirements, after having largely phased them out in traditional strategic industries such as fossil fuel energy and automobiles.
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What do we know about the economic and environmental effectiveness of performance requirements in green sectors?
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Do performance requirements provide a compelling business case, with short- and long-term returns?
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Is there anything unique about renewables that makes them a special case for performance requirements?
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Does the politics of accommodating the higher cost of renewable energy demand a clear-cut avenue towards job creation through localization?
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Does greening the value chains provide a new rationale for performance requirements?
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Can better governance play a role in dealing with protectionist elements of support measures?
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Are there any upsides for developing countries in a world where performance requirements are extensively used?
Objective evidence on the economic and environmental effectiveness of trade-related measures such as subsidies or local content requirements can provide the answers.
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Secretariat to assist MS with legislation on One Stop Border Posts
COMESA Secretariat is coming up with a model legislation to assist Member States in implementing the One Stop Border Post (OSBP). The model will be shared with Member States early 2015 for their input.
This decision was made by the Council of Ministers during its 33rd meeting in Lusaka on 9 December 2014.
The OSBP is one of the highly successful initiatives in facilitating smooth flow of intra-regional trade along the major transit corridors especially those connecting landlocked countries to seaports. Currently, three OSBP namely Chirundu (Zambia/Zimbabwe) Malaba (Kenya/Uganda) and Nemba/ Gisenyi (Rwanda/Burundi) are operational. Other border posts whose work has already begun for development of OSBP include Mchinji, Nakonde, Namanga, Akamnyaru Haut, Mpondwe/Kasidi and Rubavu Goma.
In making the decision, the Council noted that OSBP are critical in easing transit trade since the longest delays occur at borders. The OSBP thus reduce the time it takes to cross borders whose effect has great potential to facilitate trade.
The Chirundu border-post is perhaps a best practice for replication across more borders in COMESA and beyond. Since the introduction of the OSBP, waiting time for trucks has reduced from up to nine days, to 20 minutes for accredited clients and a maximum of two days for clients who don’t declare their documents in advance.
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Members prepare for 200-day push on GI register portion of post-Bali programme
WTO intellectual property negotiators said they were committed to meet the July 2015 deadline for laying down plans on how to complete the Doha Round talks – in their case on how to set up a geographical indications register for wines and spirits. But speakers on both sides of the debate said in a 12 December 2014 informal meeting that hard talking would have to wait until a clearer picture emerges in other key subjects.
“1 July 2015 is only 200 days away – we will have to think concretely about how to structure our work next year and how to get back to the substance of our mandate,” warned Ambassador Dacio Castillo of Honduras who chairs a negotiation that has been inactive since early 2011 and has only met twice since then (in March 2012 and April 2014).
The talks on the geographical indications register are returning to activity following the breakthrough in the General Council on 27 November. This included agreement to resume work agreed at the 2013 Bali Ministerial Conference and to set a new deadline of July 2015 to produce a work programme (download decision here) for completing the Doha Round negotiations as a whole.
Ambassador Castillo proposed starting with an informal information meeting – rather than a negotiating session – in February 2015. This would include a summary of what had happened up to 2011, as reminder to delegates on where the talks had reached. It could also include information on developments outside the WTO that might have a bearing on the talks.
Several speakers asked for more information on how the information session would be organized so they could consult their capitals. The chairperson said he would consult members on this and invited them to contact him.
The 12 December meeting was an informal negotiations meeting of the full membership, officially an “open-ended” informal “Special Session” of the WTO’s intellectual property (TRIPS) council. Ambassador Castillo reminded delegates that these talks are only mandated to negotiate a multilateral register for geographical indications for wines and spirits and that any change to the mandate would have to be decided in the WTO bodies overseeing the negotiations. He urged them not to repeat known positions but to introduce any new ideas they may have.
Delegations on either side of the negotiation offered no new ideas and said the talks should not return to the substance until a clearer picture emerges on negotiations in agriculture, non-agricultural market access and services.
One group repeated its position that talks on the register should be part of a package that includes two other proposals.
One is to extend to other products the higher level of protection for geographical indications currently given to wines and spirits (“GI extension”).
The other is a proposal to require patent applicants to disclose the origin of genetic resources and any associated traditional knowledge used in their inventions, evidence that they received “prior informed consent” (a term used in the Biological Diversity Convention), and evidence of “fair and equitable” benefit sharing (the “disclosure proposal”).
This group are sponsors of document TN/C/W/52 of 19 July 2008 (download document). They claim to have over 100 supporters and to be the largest coalition in the WTO.
Sponsors of the alternative “Joint Proposal” repeated their view that these negotiations should stick to the mandate: to negotiate the geographical indications register and nothing else. They also argued that the weight of numbers does not count since WTO decisions are taken by consensus.
The current version of the draft text on the register dates back to April 2011.
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Socio-Economic Impacts of the Ebola Virus Disease on Africa
The Ebola Virus Disease (EVD) outbreak in West Africa has the worst death toll since the disease was diagnosed in 1976. It also has farreaching socio-economic consequences. Although the disease is still unfolding, several studies on those impacts have been conducted this year, including those by the World Bank, the International Monetary Fund (IMF), the World Food Programme (WFP) and the Food and Agriculture Organization of the United Nations (FAO). Country Reports have been prepared by United Nations Country Teams (UNCTs) under the leadership of the United Nations Development Programme (UNDP) country offices and the World Health Organization (WHO).
But fewer reports have focused on West Africa, and virtually none on the continent of Africa. Moreover, most early prospects and projections on EVD’s socioeconomic impacts were based on patchy data and reflected uncertainty about the disease’s future epidemiological path. It is against this background that the United Nations Economic Commission for Africa (ECA) began this study.
The overall objective is to assess the socioeconomic impacts on countries and Africa as a whole, both the real costs entailed and growth and development prospects, so as to devise policy recommendations to accompany mitigation efforts. The findings and conclusions of the study will be adjusted and updated until the crisis is over, culminating in a fully fledged evaluation of the impacts once the outbreak is contained.
EFFECTS ON ECONOMIC PROSPECTS IN WEST AFRICA AND THE CONTINENT
Although Guinea, Liberia and Sierra Leone have suffered serious GDP losses, the effects on both West Africa and the continent as a whole will be minimal, partly because, on the basis of 2013’s estimates, the three economies together account for only 2.42% of West Africa’s GDP and 0.68% of Africa’s. Thus, if the outbreak is limited to these three countries, the size of its impact on GDP levels and growth will be extremely small. ECA simulations based on a “bad scenario,” where all three countries record zero growth in 2014 and 2015,suggest that the growth effect for these two years for West Africa will be only -0.19 and -0.15 percentage points, and for Africa as a whole a negligible -0.05 and -0.04 percentage points. In short, at least in economic terms, there is no need to worry about Africa’s growth and development prospects because of EVD.
POLICY RECOMMENDATIONS
Economic
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In devising fiscal measures, the three governments should include social protection and safety net programmes to help families of victims and their immediate communities.
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The governments and their partners should invest in building skills and human capital in the three counties in the short, medium and long term so as to enhance labour supply.
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The monetary authorities should cut interest rates to boost growth.
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Tourism authorities should refocus their efforts on strategies to increase connectivity among them and the countries of the region more broadly, and on business-friendly travel, such as easing procedures for entry visas and encouraging competitive rates at hotels.
- Governments should reinforce border health checks rather than shut down borders, given the huge damage to economic activity that such closure entails, in affected and non-affected countries.
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The three countries should add value to export products so as to take advantage of preferential trade arrangements, such as the Africa Growth and Opportunity Act.
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Bilateral and multilateral creditors should seriously consider cancelling the three countries’ external debts.
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The three governments and their partners should engage in food aid efforts and emergency safety nets to address acute food shortages, particularly among the most vulnerable groups, such as children at risk of malnutrition.
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The three countries’ governments should provide special incentive packages to their farmers to help relaunch their agricultural sectors.
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The three governments should devise recovery contingency plans for quickly reviving their economies, which may require them to revise their medium-, and possibly long-term, national development plans.
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Agenda 2063 needs to be credible, realistic and technically sound to succeed
As consultations on Agenda 2063 – Africa’s vision and blueprint for economic, human and social development – are reaching a crucial point, the year 2015 will prove key as continental actors are expected to define how to implement the vision.
“Consultations won’t be over, but dealt with, and we will need to move into the concrete with the publishing of the vision and the definition of the first phase of its implementation: the 10-year economic plan,” said Carlos Lopes, the Economic Commission for Africa’s (ECA) Executive Secretary in his opening remarks at the African Union (AU)-Regional Economic Communities-United Nations Commission for Africa-African Development Bank Coordination Meeting of the Committee of Ministers to follow up on the Implementation of the Bahir Dar Ministerial Retreat, held on Friday in Sandton, South Africa.
M. Lopes said that the 10-year plan needed to be credible, realistic and technically sound to allow African countries to align their respective development plans to Agenda 2063. “It is a challenge we have to introduce in our planning the evolution of the post-2015 discussions, among them the sustainable development goals, which will replace the Millennium Development Goals. However, we may take advantage of the post-2015 African Common Position, which is well articulated.”
AU Commission Chairperson and chair of the Ministerial Committee, Dr. Nlozasana Dlamini-Zuma said that it was about time that Africa had the shared responsibility to work at the success of Agenda 2063. “Part of the problem in the past is that we have had good documents, but which were not implemented and we don’t want agenda 2063 to share the same fate. It is about how we can create a continent with shared prosperity.”
Dr. Dlamini-Zuma said that some of the key drivers for better economic integration would be free movement of people and goods as well as solidarity among African countries and that these should be included in the 10-year plan. “We need to focus on the first 10 years and set benchmarks and targets to meet. Coordination and good relationship with the RECs will be important in helping realize the vision.”
Solomon Asamoah, VP Infrastructure, Trade and Regional Integration at the AfDB said that Africa has made great strides in reaching and sustaining good economic growth but that challenges remained. “The ebola outbreak is one such challenge, which poses a serious threat to human and economic development. This epidemic goes beyond loss of lives. We have to support the quick recovery of the economies affected by the crisis,” he added.
M. Asamoah also said that collaboration among African actors was needed more than ever if Africa wanted to realize its programs in infrastructure, intra African trade, transport and other important fields. “We need to pull efforts and resources together.”
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Financing Africa’s massive projects
Innovative bankrolling gains popularity and raises high hopes among key countries
It is an audacious $4.8 billion project undertaken by one of the world’s poorest countries. At the construction site in the Benishangul region of Ethiopia near the Sudanese border, some 8,500 workers are labouring tirelessly every day to build the gigantic Grand Ethiopian Renaissance Dam. When completed in 2017, the dam will generate 6,000 megawatts of electricity for domestic consumption and export.
On the surface, the 558 ft tall dam – Africa’s biggest hydropower project – belies Ethiopia’s financial muscle. The GDP per capita in Ethiopia is only $475. The late Prime Minister Meles Zenawi, who laid the foundation stone in 2011, said the dam would be built without begging for money from donors. Since then, construction has progressed steadily using money from local taxes, donations and government bonds. Ethiopians abroad and at home contributed the first $350 million, with government workers contributing amounts equivalent to a month of their salaries.
Semegnew Bekele, an Ethiopian construction engineer working on the dam, told The Guardian, a British newspaper: “Ordinary people are building an extraordinary project.” Development experts now showcase the dam as proof of an innovative approach to project financing. “Approximately $450 million has been raised from Ethiopians to help build the dam and I think the target is probably a billion dollars,” says Zemedeneh Negatu, managing partner at Ernst & Young Ethiopia, a financial consulting firm.
Ethiopians, private companies and even other countries such as Djibouti are buying bonds. In addition, the Ethiopian Electric Power Corporation, a state-owned utility, is investing its own revenue and the money it is borrowing from state-owned banks. Economists warn that using private sector finance to pay for the dam could slow Ethiopia’s economic growth in the future. But the government counters that this will be offset by selling electricity to countries in East Africa, a region with improving economic growth.
Ethiopia’s recipe for financing the dam from bonds and taxes is being touted as a model for other African countries. This East African country uses a computerised system to track and collect taxes, making evasion difficult. The government regularly carries out awareness campaigns to explain taxation and publicize what collected taxes are funding such as the dam.
Dismantling tax havens
Ethiopia’s financing approach, including taxes, is just one of the emerging ways of funding projects in Africa. Other countries on the continent are working towards similar initiatives. Africa currently collects about 27% of its GDP in taxes, which is insufficient to fund infrastructure such as roads, bridges, schools and hospitals.
At the Ninth African Development Forum in Marrakesh, Morocco, last October, Prime Minister José Maria Pereira Neve of Cape Verde explained that Africa could receive more tax revenues with “good governance and transparency in the management of public finances.” Many of the 700 delegates at the conference, which was organized by the UN Economic Commission for Africa (ECA), including some African heads of state, private sector and civil society representatives, discussed innovative ways of financing Africa’s projects. They urged African governments to laser-focus on tax havens where some multinational companies keep their money.
Tax havens, which are places where taxes are markedly low, are a part of the broader problem of illicit financial flows (IFFs) from Africa, an issue that has lately drawn scrutiny. In 2013, for instance, ActionAid, an international non-government organization focusing on poverty, launched a global campaign to stop Barclays, a British bank, from promoting tax havens in Africa. By “helping your clients set up operations in tax havens like Mauritius, you are part of a system that is draining vital public funds out of the continent each year,” ActionAid warned the bank. Barclays denied it encourages business set-ups in tax havens.
Magnets for investors
Africa loses between $50 billion and $148 billion annually to IFFs, according to a 2013 ECA report titled: The State of Governance in Africa: The Dimension of Illicit Financial Flows as a Governance Challenge. Tracking and stopping “illicit financial flows is not just a moral imperative, it is a good input for transformative policies,” said Carlos Lopes, ECA’s executive secretary, in an interview with Africa Renewal held at the conference. IFFs include under-invoicing, over-pricing, double duties, disguised profits and the use of tax havens.
In tones that were at times urgent and angry, some speakers at the Marrakesh conference maintained that while Africa could still accept aid and encourage foreign direct investments, these should not be the main sources of finance. Africa’s vast natural resources such as gold, platinum, diamonds, chromite, copper, coal, cobalt, iron ore and uranium – 12% of the world’s oil reserves and arable land and forests – will continue to be magnets for investors. The rate of return on investment in Africa today, even adjusting for real and perceived risks, is higher than in any other developing region, according to an ECA report.
Private equity firms forage
Mr. Lopes is optimistic about Africa’s private sector investment prospects. “Africa might have finally found a way to whet the appetite of private equity investors,” he says, adding: “The reality is that Africa cannot rely on development aid for its transformation agenda, so its appetite is moving towards private investment and domestic resource mobilization.” The message sounds good except that, again, tax loopholes are spanners in the works. In response, Mr. Lopes is arguing for an African common market to harmonize disparate regulatory systems and discourage companies from exploiting both the loopholes and the tax havens.
Private equity funding, which is when rich individuals or institutions inject capital into a company and acquire equity ownership, can be lifelines for companies gasping for cash. Yet, ten years ago, it wasn’t even well known in Africa, according to the ECA. But in the second quarter of 2013 alone, 164 firms secured $124 billion private equity capital, according to Preqin, a firm that tracks private equity trends.
The African Development Bank (AfDB) states that between 2010 and 2011, investment deals in Africa increased from $890 million to $3 billion. In 2012, institutional investors injected $1.14 billion in Africa-focused private equity funds, according to African Private Equity and Venture Capital Association, an organization that promotes private investments in Africa. For example, Ethos Private Equity, a South African firm, alone received $900 million from equity funds.
The AfDB has also jumped on the private equity bandwagon, launching a pan-African facility to support the development of women fund managers. Geraldine Fraser-Moleketi, the bank’s special envoy on gender, told Africa Renewal that the idea is about looking at “innovative policies because current models are not inclusive.” Africa’s approximately one billion population and a combined consumer spending power that will rise to over $1.3 trillion by 2020, according to McKinsey, a global management consulting firm, makes the continent a tantalizing prospect for private equity funders.
Pension funds pool money from workers to be paid upon retirement and are particularly useful for long-term investments. During tough financial times, pension funds can be handy to augment infrastructure expenditure, financial experts believe. David Ashiagbor, a consultant with the AfDB’s “Making Finance Work for Africa” project, says Africa’s pension funds currently hold $380 billion in assets, thanks to a decade of economic growth. Even then, only very few countries, including South Africa, have pension systems that are broad-based, relatively transparent and protect beneficiary rights. Another problem is that many pension funds lack credibility due to poor services to beneficiaries and mismanagement of funds, according to 27four, a South African firm that consults on managing retirement funds. Consequently, not every African country can rely on pension funds for projects.
Growing investments at home
Despite Africa’s socioeconomic challenges, Mr. Lopes remains optimistic. “I am also a realist,” he says, identifying three megatrends in Africa’s favour. “The first is the demographic one. It is true the rest of the world is aging and Africa is getting younger. The second is the hard commodities in Africa once you take out oil and gas. The third is Africa’s reservoir of productivity through unused arable land.”
Cristina Duarte, Cape Verde’s finance and planning minister, who has announced her candidacy for the AfDB’s presidency, says Africa must keep trying to grow investment at home, adding: “How can we convince others to invest in our continent and in our development if we are not doing the same to the full extent of our ability?” Still, the current project financing picture in Africa is mixed: Ethiopia’s fast-moving dam construction is a success story compared with a trans-West African highway that is yet to be completed 40 years after it was conceived. At the Marrakesh Development Forum, however, the palpable feeling was that Africa is entering a new dawn of innovative financing.
This article appears in the December 2014 edition of Africa Renewal, published by the United Nations.
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Sustainable Development Goals: New targets hold promise for Africa
MDGs come to an end in 2015 as the new goals come into effect
The first draft of the world’s new development agenda – the Sustainable Development Goals – takes into account Africa’s interests, but not in the same way as the expiring Millennium Development Goals (MDGs) once did.
The Sustainable Development Goals (SDGs) are expected to shape the global agenda on economic, social and environmental development for the next 15 years. They are to replace the MDGs, which reach their deadline in 2015. Based on comparison with a key African Union position paper, Africa is getting what it asked for from the UN General Assembly document that proposes the new set of global goals.
Africa’s ‘special needs’ were addressed in the year 2000 Millennium Declaration, from which the MDGs were drawn. Even though the eight MDGs do not mention Africa, their emphasis on eliminating extreme poverty rates, reducing child mortality, promoting gender equality, halting the spread of HIV/AIDS, malaria and other diseases, and providing universal primary education by 2015 means that they target the world’s poorest – many of whom are in Africa.
In their current form, the SDGs are more focused on building productive capacity and give more weight to economic and environmental factors, which are also key features of the ‘Common African Position (CAP) on the post-2015 development agenda’. The CAP was the consensus of African leaders, civil society and the private sector.
The congruence between African recommendations for the post-MDGs era and the framework accepted by the UN General Assembly as the basis for 2015 negotiations on the final shape of the SDGs may be an indication that the rest of the world, especially other developing countries, shares the same concerns as Africa.
It may also mean influence. With a population of more than a billion and a new venue as a sought-after investment destination with economic growth rates rivaling those of any other continent, Africa may be moving from a familiar position of receiving advice to one of dispensing it.
Speaking in New York in October, the head of the New Partnership for African Development (NEPAD), Ibrahim Mayaki, checked off some of the features of the CAP that also appear in the draft SDGs and on which Africa will need to rely: capacity development enhanced; gender issues tackled, including empowering the small-scale farmers who are women to ensure food security; jobs and a sense of social ownership found for youth; greater investment in research and technology.
“We should think about the private sector, including small and medium-size firms, where innovation is taking place,” Dr. Mayaki said.
Africa’s common position
In early 2014, around the time the CAP was drawn up, a working group of the UN General Assembly was starting on a draft to fulfill objectives set at the 2012 Rio+20 summit on sustainable development.
The Rio text advocated for a continuation of the MDGs, to sustain progress on living standards and to catch up where achievements had fallen short. But given the ‘sustainable development’ mantra of the goals and deep concern about eco-systems and climate change, it was certain that environment would figure more prominently in the SDGs. Concerns over climate, drought and land use feature prominently in Africa’s position paper as well. What stands out in both the African position and the General Assembly working group is the emphasis on the economy and empowerment.
“The CAP provides important input for the next stage of the intergovernmental process,” as the UN seeks to finalize the SDGs by September 2015, UN Under-Secretary-General for Economic and Social Affairs Wu Hongbo said in an interview with Africa Renewal.
Both the SDGs and MDGs place poverty eradication at the top of the agenda. This was considered by Africa and the developing world in general to be a bedrock requirement, at least in part to ensure that the strengthening of environmental considerations does not signal a retreat from poverty eradication.
In fact, Mr. Wu says, the balanced SDG package is effective in that it addresses poverty in terms of vulnerability of the poor to environmental degradation and through inclusiveness and social justice, as well as through economic advance. “I would say the African countries especially will benefit,” he added.
Peace, security and governance
Another feature of the plan for the SDGs as distinct from the MDGs is the grouping of peace and security issues under the development banner. The reasoning is that conflict impacts whether countries advance in their development or not. For Africa, putting peace and security into the SDGs directs attention to conflict-preventing factors such as equity, inclusiveness and rule of law.
Finance matters
As opposed to the North-to-South direction of the global partnership laid out in the MDGs, the SDGs will apply equally to all countries. One question is whether Africa, which has long been an area of concentration for official development assistance (ODA), will see less incoming aid.
But Africa’s position as privileged beneficiary of aid may already be slipping. According to the Organization for Economic Co-operation and Development (OECD), official bilateral aid to Africa fell by 10 % in real terms in 2012, and by about 5% in 2013, despite an increase in ODA to all developing countries for an all-time-high in the latter year. In Africa, incoming foreign direct investment now surpasses ODA.
A simple substitution of private resources for public funds may not be the best way to characterize African options. The Common African Position takes into account a blend of finance sources. These include improving traditionally low domestic tax collection rates, staunching the flow of illicit flight capital and recovering stolen assets, tapping global financial markets, stepping up intra-African trade, South-South cooperation and public-private partnerships.
As the debate over the post-2015 development agenda continues, further preparatory work on implementing the SDGs will be held in July 2015 in Addis Ababa, Ethiopia, at the third international conference on financing for development.
MDGs:
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Eradicate extreme poverty and hunger
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Achieve universal primary education
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Promote gender equality and empower women
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Reduce child mortality
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Improve maternal health
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Combat HIV/AIDS, malaria and other diseases
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Ensure environmental sustainability
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Develop a global partnership for development
Common African Position pillars:
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Structural economic transformation and inclusive growth
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Science, technology and innovation
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People-centred development
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Environmental sustainability, natural resources management and disaster risk management
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Peace and security
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Finance and partnerships
Proposed SDGs:
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End poverty in all its forms everywhere
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End hunger, achieve food security and improved nutrition, and promote sustainable agriculture
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Ensure healthy lives and promote well-being for all at all ages
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Ensure inclusive and equitable quality education and promote life-long learning opportunities for all
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Achieve gender equality and empower all women and girls
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Ensure availability and sustainable management of water and sanitation for all
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Ensure access to affordable, reliable, sustainable, and modern energy for all
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Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
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Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
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Reduce inequality within and among countries
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Make cities and human settlements inclusive, safe, resilient and sustainable
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Ensure sustainable consumption and production patterns
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Take urgent action to address climate change and its impacts
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Conserve and sustainably use the oceans, seas and marine resources for sustainable development
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Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, halt and reverse land degradation and halt biodiversity loss
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Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
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Strengthen the means of implementation and revitalize the global partnership for sustainable development
This article appears in the December 2014 edition of Africa Renewal, published by the United Nations.
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Nairobi, Dar lead in region’s M&A deals
Kenya and Tanzania are leading in mergers and acquisitions in East Africa, having recorded over 150 deals since 2010.
According to KPMG’s DealSpace: East Africa report, most of the deals were in the mining sector followed by financial services, energy and communications. However, manufactur-ing, tourism, healthcare, wholesale and retail trade performed poorly.
Among the deals were the $4.8 billion acquisition of African Barrick Gold in Tanzania in 2010, the sale of oil blocks by Tullow Oil Plc for about $3 billion in 2011, the $335 million investment by City Trust in Kenyan I&M Bank in 2011, and the $243 million investment by Vodacom Group in Vodacom Tanzania in 2013.
The total value of publicly disclosed M&A deals in Kenya in 2011 reached $667 million, but dropped to $119 million in 2012. “This was followed by recovery, with the value reaching $863 million in 2013,” said the report.
Activity in Kenya rose from 15 deals in 2010 to 44 deals in 2013. Financial services had the largest increase from two to 18 deals. These include acquisition of a majority share of Genesis Kenya Investment Management by Centum Investment, and the acquisition of Real Insurance by British-American Investments.
For Tanzania, the energy and mining sectors were most active. The deals included the $4.8 billion acquisition of African Barrick Gold in 2010 and the $1.3 billion acquisition of three oil blocks by Pavilion Energy in late 2013.
KPMG director of transactions and restructuring Ernest Cheruiyot said Tanzania has consistently recorded strong growth figures in recent years and should continue to do so.
“Looking ahead, the banking and telecommunication sectors will continue to support services growth, while increased electricity generation capacity will benefit the expansion of the manufacturing industry,” he said.
After dropping from $211 million in 2010 to $57 million in 2011, Tanzania’s total deal value increased to $366 million in 2012 but dropped to $306 million in 2013.
Mining push
The number of M&A deals in Tanzania has declined from 31 in 2010 to 17 in 2013. The mining sector accounted for 52 per cent of deals in 2010, 38 per cent in 2011, 40 per cent in 2012, and 59 per cent in 2013.
Large mining deals include the $19 million investment by Peak Resources in Zari Exploration and the $18 million acquisition of Lake Cement by an undisclosed buyer.
The energy sector made a significant contribution in 2010 and 2011. Deals include the acquisition of natural gas exploration blocks by ExxonMobil, and the acquisition of Baobab Energy Systems Tanzania.
KPMG considers Uganda and Rwanda as future hotspots for mergers and acquisitions. Uganda’s economy has shown remarkable recovery following a slowdown in 2012 but the current account deficit remains wide.
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UN climate meet clinches decision, Paris deal up for negotiation
Delegates from over 190 nations meeting in Lima, Peru have agreed to a text framed as a key stepping stone towards building a new climate regime to come into force at the end of the decade.
The deal, secured early Sunday morning, will see all nations come forward with self-determined plans for emissions-cutting contributions and reiterates support for poor countries in preparing these.
Developed countries are also urged to provide financial support to developing countries for ambitious mitigation and adaptation actions, and the Lima text provides recognition to complementary support by other parties. The latter tones down language from earlier drafts that invited other parties willing to do so to complement developed country finance, in other words suggesting room for some developing country finance responsibilities, which prompted backlash from some parties.
Consensus was reached after the Twentieth Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) laboured into extra time, some 30 hours beyond the initial scheduled closing session.
Late night consultations between the COP20 President and party negotiating groups helped bring the talks back from the brink after an impasse emerged during the day on Saturday around a draft text discussed in the Ad Hoc Working Group on the Durban Platform (ADP), the body tasked with negotiating the new deal.
The COP20 President, Peruvian environment minister Manuel Pulgar-Vidal, gavelled the decision through in a record thirty seconds, after a final hour of informal consultations within party delegations revealed no objections to his proposed decision, publicly released just before midnight.
“Even if it seems the world is on opposite sides, there is just one planet,” said Pulgar-Vidal in welcoming the ADP decision.
Some civil society and environmental groups reacted strongly against the final text, however, suggesting that it represented a lowest common denominator outcome.
Lima climate action
The new seven-page text, dubbed the Lima Call for Climate Action, confirms parties’ intention to develop and adopt a global climate deal by next December’s climate meet in Paris, France. The new agreement will apply to all parties and address in a balanced manner mitigation, adaptation, finance, technology development and transfer, capacity-building, and transparency of action and support.
Sunday’s decision acknowledges progress made in Lima towards elaborating elements of a draft negotiating text for the 2015 deal, which now sits in an annex. This move helps formalise a 37-page non-paper on Paris deal options issued by the ADP co-chairs on Wednesday based on views previously expressed by the parties.
Agreement was also reached on the type of information parties may include when communicating their intended nationally determined contributions (INDCs) – the building blocks of the eventual Paris deal.
However, options for more detailed complementary information for parties’ INDCs have been scrubbed. One paragraph now suggests that the information to be provided would include a reference point against which emissions cuts would be made; timeframes in which this would happen; scope and coverage; methodological approaches; and how each party considers its submission to be fair and ambitious.
While the INDCs are framed in the context of Article 2 of the Convention – in other words, the ultimate objective of stabilising harmful emissions – parties are also invited to consider including an adaptation component.
The final ADP decision requires that INDCs be posted on the UNFCCC website and that the Secretariat prepare a technical paper by early November 2015 on their aggregate nature. This section cuts text from previous drafts that would have seen an ex-ante or review process framed around a dialogue on the contributions – an apparent concession to the Like-Minded Developing Countries group.
In a bid to assuage expressed concerns by the African group and others, one paragraph specifies that the INDC arrangements are made without prejudice to the shape or legal nature of the Paris deal.
Some paragraphs refer to scaling up climate action before 2020, including through technical expert meetings on actions with high mitigation potential, including those with adaptation, as well as health and sustainable development co-benefits.
A UN emissions gap report ahead of the Lima meet had warned that carbon emissions will need to peak by 2030 to avoid disastrous climate impacts and that the world was not currently on track to achieve this.
The final text also adds language recalling past decisions on the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts, a compensation instrument held dear by countries particularly vulnerable to climate change.
Emissions cutting responsibility?
In a victory for some developing countries, the agreed ADP text underscores a commitment to reaching a Paris deal that reflects the UN principle of “common but differentiated responsibilities” (CBDR).
In the final negotiating stretch, the African group and others had insisted on a clear delineation between climate efforts undertaken by developed and developing countries. Other parties said that while no one wished to deny the importance of CBDR, they would not accept a bifurcated approach to differentiation.
The UNFCCC annexes with lists of countries were established in 1992 as a means to operationalise CBDR through assignment of differing level of commitments according to relative degrees of industrialisation. This so-called firewall between countries has since proved a major source of contention in the UN climate talks.
Moreover, ever since the commitment to a universal climate regime at the 2011 meet held in Durban, South Africa, debate has been ongoing as to whether the ADP strays too far from the principles of the Convention and CBDR.
Non-state actors
A penultimate paragraph in the decision also welcomes a high-level climate action meeting held last Thursday geared towards a formal recognition of the engagement of non-state actors in the efforts of the intergovernmental UNFCCC and encourages future COP presidencies to continue to convene such occasions.
At a joint press conference early Sunday morning COP President Pulgar-Vidal and next year’s COP President Laurent Fabius, French minister of foreign affairs, announced a new Lima-Paris Action Agenda to this end.
Thursday’s event saw the launch of a new web portal showcasing climate efforts undertaken by cities, regions, companies, and investors. Dubbed the Nazca Climate Action Portal, after Peru’s World Heritage listed site of ancient lines depicting wildlife and geometric forms, the tool highlights a range of undertakings to action from increased energy efficiency to carbon pricing policies.
“It is clear the governments are finally bringing the non-state actors into the process,” wrote James Cameron, a non-executive Chairman of green asset management group Climate Change Capital, underlining the role played by non-state actors in implementing governments’ climate pledges.
A house divided
A strain in the ADP began to show mid-week as line-by-line negotiations on a revised text released on Monday resulted in 58 pages’ worth of tracked changes and alternative paragraph proposals.
Some observers said that the textual disagreements demonstrated the extent to which parties were starting to grapple with the dynamics of a new, universal climate regime.
The ADP co-chairs were also criticised at various intervals last week for allegedly failing to listen to developing countries’ views and for not building these into two new iterations of a draft decision issued on Thursday evening and Saturday dawn, respectively. Fears were expressed that Lima would end the same way as the 2009 Copenhagen meet, where backroom deals announced at the plenary at the last minute helped derail the talks.
Sources report extensive dialogue throughout Friday – the last scheduled day of the COP – between COP President Pulgar-Vidal and various heads of delegations, after Norway’s climate and environment minister Tine Sundtoft and Singapore’s environment and water resources minister Vivian Balakrishna had also helped to reach out to fellow ministers in an effort to bridge divisions.
As various party consultations with the President dragged on into Saturday evening, one Peruvian official told BioRes that the COP Presidency was carefully weighing the risks and calculating the best way to introduce a new ADP decision text based on these talks.
Once agreement was eventually reached, US lead negotiator and special envoy for climate change Todd Stern praised the COP Presidency’s dedication to completing the task.
“It wasn’t always easy guiding this decision to a safe landing. Even this morning things looked somewhat uncertain,” Stern told the COP closing plenary.
Climate finance
While much of the attention at the end of the week focused on the ADP, the UK’s energy and climate minister Ed Davey and South Africa’s environmental affairs minister Edna Molewa were helping to facilitate talks regarding a COP agenda item on climate finance. Observers had warned these negotiations would need to be resolved before being brought to the meet’s closing plenary.
A draft text on long-term climate finance, focusing on how developed countries will mobilise funds to the end of the decade, was ultimately reached by Saturday afternoon.
The hard-fought text recognises previous commitments by developed country parties to jointly mobilise US$100 billion annually by 2020 to help poor countries cope with their climate-driven needs. A call is made for a substantial share of public climate funds to be channelled into adaptation activities.
Parties also reached consensus on other tricky finance sub-items on Saturday afternoon, namely on the UNFCCC’s Standing Committee on Finance; a report on and guidance for the Green Climate Fund; the report on and guidance to the Global Environment Facility; and a fifth review of the financial mechanism.
Notably, pledges of US$6 million each were made by host nation Peru as well as Colombia last Wednesday, after Australia and Belgium also made pledges earlier in the week tipping the fund over its targeted US$10 billion mark.
Héla Cheikhrouhou, the Green Climate Fund’s Executive Director, told journalists in Lima that so far around 70 parties have set in motion processes to work with the new fund and that cash could start to flow as soon as 2016, pending project approvals next year.
Some parties expressed concern in Lima that Washington’s US$3 billion GCF pledge made in November may be blocked by Congress, which would have to sign off on appropriating those funds. Both legislative chambers will have Republican majorities as of January, while facing off against a Democratic White House.
No agreement on technology, finance linkages
Talks under the COP on linkages between the UNFCCC’s Technology Mechanism – tasked with boosting action on climate technology development and transfer – and the operating entities of its Financial Mechanism also continued last week based on a mandate granted in 2012.
On Wednesday, a draft text on this item was proposed by the co-facilitators, but some key paragraphs remained divisive. These involved the delivery of climate finance for technology projects and actions in developing countries as well as collaboration between the Technology Mechanism and the Green Climate Fund as it develops its operational modalities. The meeting closed with no text forwarded to the COP.
Disagreement on the degree of formalisation in linking these two Convention bodies reportedly proved to be the key source of contention, according to observers of the process.
The need to secure financial support to ensure the effective operation of the Technology Mechanism was among the key messages identified during the COP’s first week in the adoption of the joint annual report of the Technology Executive Committee (TEC) and the Climate Technology Centre and Network (CTCN), which together make up the Technology Mechanism.
Intellectual property rights (IPRs), which have traditionally been among the more contentious issues in UNFCCC technology negotiations, are likely to surface in ADP talks next year.
Response measures
Haggling on some unresolved issues under other UNFCCC work streams, the Subsidiary Body for Implementation (SBI) and Subsidiary Body for Scientific and Technological Advice (SBSTA), continued into the second week.
Parties remained divided by the COP’s end on how to continue work in a forum on the impact of the implementation of response measures, whose mandate expired last year.
Past disagreements on whether to establish a mechanism for enhanced action on response measures resurfaced in Lima, proposed by the G77/China, various sources informed BioRes. Proponents of the so-called mechanism have said it could exist in addition to the forum to facilitate the implementation of actions to address the negative social and economic consequences in third countries by measures taken to tackle climate change.
After attempts failed to find common ground throughout the week, parties agreed to continue work next June in Bonn, Germany at the subsidiary bodies’ forty-second session with a view to recommending a decision for adoption in Paris.
On that occasion, parties will continue working on a bracketed draft text with various options for the way forward, which was the outcome of the Lima talks’ first week.
“Loss and damage” mechanism set up
After extended talks, SBSTA-SBI delegates also eventually signed off on criteria for membership of an executive committee and two-year work plan for the Warsaw International Mechanism for Loss and Damage, established at last year’s COP.
Georgia, however, expressed a reservation based on some disagreement on the rules governing the composition of the executive committee regarding two rotating non-Annex I seats.
The COP Presidency suggested non-Annex I regional groups continue talks on coming to a “gentleman’s agreement” on these arrangements, with the meet adopting the Warsaw Mechanism Provisions based on this understanding.
Next steps
The next session of the ADP is scheduled for 8-13 February in Geneva, Switzerland.
Algeria’s Ahmed Djoghlaf and the US’ Daniel Reifsnyder will become the ADP’s new co-chairs and will focus on steering the group's discussions through the conclusion of their mandate next year.
According to Sunday’s decision, parties in a position to do so should submit their INDCs by next March, with other parties doing so well in advance of the Paris meet and by 1 October according to various sections in the ADP decision.
A COP decision also confirmed that a November 2016 climate meet will be hosted by Morocco, with the country’s environment minister Hakima El Haiti suggesting that the meet would focus on a review of climate action based on the hoped-for Paris deal.
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Let’s make sure 2015 will be a year to remember for the WTO – Azevêdo
Director-General Roberto Azevêdo told the General Council on 10 December that “2015 is going to be a big year for the WTO” with the celebration of its 20th anniversary and the holding of its 10th Ministerial Conference. He also said that “we have real deadlines to meet”, including developing the work programme on the remaining Doha Round issues by the end of July 2015. Negotiating chairs, he said, are convening the first round of meetings towards meeting this goal.
Thank you Mr Chairman.
As the Chairman of the TNC I’d like to welcome again Minister Laporte and the delegation from the Seychelles.
And I would like to offer a warm welcome to the new permanent representatives who are here for the first time, and the representatives of non-resident delegations who are here taking part in Geneva Week.
It is an honour to have each of you with us today, participating in this important meeting of the General Council.
Less than two weeks ago we held a Special General Council meeting at which we took the decisions which broke the impasse on the implementation of the Bali package, and put our work back on track.
The task before us now is to deliver on the commitments that we made there.
I won’t repeat what I said at that meeting again today.
Rather, I will simply report on the progress we have already made, and take a brief look at the work that lies ahead.
We have already had some good news, as we have received the first valid instrument of acceptance for the Trade Facilitation Protocol.
It was deposited on Monday by Hong Kong, China.
This is a very positive step – and I congratulate Hong Kong, China for moving so quickly.
I think this shows that members are serious about delivering on the decisions taken in recent days and on regaining the momentum that we had earlier in the year.
I hope that other members will gain inspiration from this and will soon be able to follow Hong Kong, China’s lead.
In addition, we have seen an increase in interest in the Trade Facilitation Agreement Facility now that it is operational – including from donors. And we are actively working with donor Members to raise additional funds.
We are also in the process of developing a new website for the Facility to provide greater transparency, better donor information, and easier access to the support on offer.
The site should be up and running early next year. For now information will be posted on the Trade Facilitation page on the WTO website.
And our partners in this work are continuing to offer support. The World Bank, for example, has had approaches from 30 countries for its funds which are specific to the Trade Facilitation Agreement.
So there has been a lot of activity in this particular area already.
I am just sharing some positive news on issues that relate to my responsibilities here. The General Council chair will discuss the implementation of each of the Bali decisions in detail under the next item on the agenda.
I want to focus now on the work program on the remaining DDA issues.
Our new deadline for developing the work program of July 2015 already looms large.
As I announced at the Special General Council, we have restarted consultations through the Negotiating Bodies.
I have met with the Negotiating Chairs twice already since then.
So I will now give you a brief report on their work so far.
The Committee on Agriculture in Special Session met in an open-ended session last week to discuss the organisation of the future work program across all aspects of its mandate. This includes the Decisions taken by the Special General Council on Public Stockholding for Food Security Purposes.
The chair concluded that intensive discussions would be required to advance work on a permanent solution for the public stockholding issue as well as on the work program on all three Doha pillars of agriculture.
He asked Members to reflect carefully over the break on the challenges for next year and to engage with each other and with their capitals on the issues that need to be taken forward.
A more detailed report will be circulated in document JOB/AG/31 to update more fully on the discussion at last week’s meeting. And the Chair will be convening further meetings in the New Year.
On Non-Agricultural Markets Access, the Chair has scheduled an open-ended meeting on Monday 15 December. To facilitate discussions at the meeting, he has also issued a report on the work done in the first half of the year, which was circulated as document JOB/MA/114. I think that many of the questions raised by the Chair during the first half of 2014, and which are reflected in this report, remain valid today.
Following the 15 December meeting, the Chair will plan for additional meetings and consultations in the New Year.
In the Special Session of the Council for Trade in Services, the chair has started consulting with Members in different configurations.
An informal meeting will be held on Wednesday 17 December to take stock of the current situation and exchange views.
Moving on, the Chair of the Special Session of the Committee on Trade and Development has held a round of informal consultations with the proponents.
I understand that they are now continuing their work towards finalising a number of Agreement-specific proposals which they would wish to see as the basis of the work program for the Special Session.
As a first step, the proponents intend to table a submission comprising a list of the provisions where they would like to see work being done. Substantive proposals explaining the rationale, and the problems identified, are expected to be submitted at the second stage.
Given that we have very little time, the chair urges the proponents to submit their list of provisions and the corresponding proposals as soon as possible, so that substantive discussions can start in the CTD.
The Chair of the Special Session is planning to hold an informal open-ended meeting of the CTD SS in the last week of January to take stock of the situation.
Turning now to the Special Session of the Council for TRIPS, an informal open-ended meeting will be held this Friday, 12 December.
The meeting will discuss how delegations would like to move the GI Register negotiations forward, and how they should be reflected in the work program.
Turning to Rules, the Chairman has convened an informal, open-ended consultation meeting for next Tuesday, 16 December.
He has asked the Group to consider whether it should resume its work now – and, if so, in what format, and with what objective – keeping in mind that the Group could be expected to contribute to the overall progress on negotiations at any time.
Turning to the Special Session of the Committee on Trade and Environment, the chair will convene an informal open-ended meeting on Wednesday 17 December to discuss how Members can contribute to an effective and clearly-defined work program.
In addition, on the suggestion of several delegations, the Chair intends to brief members on the organization of an information session regarding the mandate on multilateral environmental agreements.
In convening this meeting, the Chair of the Special Session would like to encourage us to keep in mind that 2015 will be a significant year for the environment as the UN Climate Change Conference will be held in Paris, starting in November. And therefore it would be important for the WTO to send an appropriate signal in this regard.
Lastly, the DSU negotiations.
Work has been continuing here, including in the autumn, as part of a Member-driven process to identify possible flexibilities and clarify the options in each area of the negotiations.
Consultations will continue on how we can translate the progress made this year into concrete outcomes.
So that concludes my review of activity in the negotiating groups.
I think it’s clear that Members are beginning to reengage and put our work back on track.
By the end of December most of the chairs will have convened meetings on the way forward – and further meetings are being planned for January.
We need to keep building on this momentum.
And in my view there are some ingredients which we will need if we want to be successful.
One first ingredient will be to maintain a sense of urgency. If we are to meet our July deadline we really don’t have any time to spare.
Second, when it comes to the substance, I think we need to take an approach that is reasonable and pragmatic.
I urge you to focus a critical eye on what is truly, truly important for you now – but also to think about what is doable.
I am not trying to suggest what you should do, or what materials you should use, but I am saying that members should try to set reasonable goals.
We can achieve a great deal here, but if we over-reach then we will get bogged-down once again – and I think that is the worst-case scenario for everyone.
Third, we need a very high degree of engagement from all delegations. That includes ensuring that your capitals are tuned in to our discussions. Their engagement and readiness to make important political calls on how we move forward will be crucial.
Fourth, while members’ engagement will need to be deep and detailed, it must also be broad.
Agriculture, Non-Agricultural Market Access and Services are all on the table now – and these continue to be our core issues. But, having said that, we must also make sure that we are fully engaged outside these core areas as well.
So instead of trying to sequence our engagement, I think it is essential that we seek now to meaningfully engage across all of the issues and all of the negotiating groups.
We need to be exploring issues and looking at options for progress in all of our negotiating areas so that we are ready in all of them as July gets closer.
So, in my view, these are the key ingredients that we need at this stage if we are going to keep building momentum going into the New Year and create the conditions for success.
We need urgent, horizontal and reasonable but full engagement across the board.
And I will do all I can to facilitate this.
To this end, I plan to hold informal TNC meetings in Room W at the Heads of Delegations level – starting on 21 January. How often and on which issues, we will decide as we go along.
I want these meetings to be focused and business-like, aimed at moving our work forward.
There will, of course, continue to be our regular TNC meetings and, as I have already outlined, the intensification of work taking place in each of the Negotiating Groups will be vital to our ability to make progress.
2015 is going to be a big year for the WTO. We have important work to do and real deadlines to meet. We will hold our 10th Ministerial Conference. We will celebrate our 20th anniversary.
So let’s make sure that it’s a year to remember.
This concludes my report. Thank you, Mr Chairman.
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Rwanda’s inclusive policies are benefiting nation’s poorest
Rwanda’s economic performance since the turn of the century has been remarkable. Strong policies have played a key role in maintaining annual GDP growth at around 8 percent since 2000, IMF staff said in a regular review of the East African nation’s economy.
Moreover, the poorest have benefited strongly from the growth performance over this period, with per capita consumption growing faster at the lower end of the distribution of consumption.
IMF staff noted that the Rwandan economy is recovering from a weak agricultural performance and delays in project implementation, with growth bouncing back to 6 percent in 2014 from 4 ½ percent in 2013, and inflation well contained at 3 percent in 2014. The IMF staff report projected growth of about 6 percent in 2015, while inflation is expected to converge next year to the authorities’ target of 5 percent.
The government has been successful in lowering poverty, with the poverty headcount ratio – the number of people below a basic needs poverty line as a proportion of the population – falling from 60 percent to 45 percent between 2000 and 2011. The government has targeted the agricultural sector, employment, and gender in its goal of sharing the fruits of its sustained high growth performance more widely.
Better farm productivity
Policies that have contributed to improved agricultural productivity and output can be grouped into four categories, and many of these are ongoing.
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Improved access to inputs and markets through a government subsidy program for fertilizer and seed and the establishment of regional markets to allow farmers to deliver their products promptly
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Community-based models focused on educating farmers on land use and improving capacity building at the grassroots level
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Private sector engagement through the provisioning of agricultural inputs and auxiliary services such as post-harvest management and better control of seasonal factors
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Financial inclusion through access to finance initiatives run by banks and provision of financial support at the beginning of the season in return for trading output.
Shifting jobs market
Concurrently, the government is targeting the strengthening of the labor market to harness the potential provided by Rwanda’s shifting employment demographics. The transformation of the Rwandan economy has been more rapid than many others on the continent with a larger decline in the share of agriculture in employment.
However, most of the shift in employment has gone into low value-added services with the change in the employment share of industry barely positive. This contrasts with the experience in many low-income Asian countries that have managed to raise their industrial employment share considerably during the transformation process.
With a large demographic surge ahead, the government is developing policies to promote the growth of household enterprises and small and medium-sized businesses. These include
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Skills development through a revamp of the government’s numerous labor training schemes and the introduction of an informal apprenticeship system providing master trainers and craftsmen the tools to transfer hands-on skills;
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Practical entrepreneurship for small and medium-sized businesses through mentoring and coaching by business development advisors and better access to finance and business services; and
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Introduction of sector specialists in all districts, who can pinpoint successful projects and boost the household enterprise sector.
Gender imbalances
There is a strong gender component to the government’s policies. The labor participation rate is similar for men and women, while Rwanda has the world’s highest female participation in the two chambers of parliament, at 53 percent in 2013. Moreover, net attendance rates and completion rates in primary education are higher for girls than for boys.
These outcomes reflect an approach that involves affirmative action to correct gender-related imbalances, gender mainstreaming, and the integration of a gender perspective in policies, activities, and budgets in all sectors.
The government’s Economic Development and Poverty Reduction Strategy for 2013-18 is focused on economic transformation, rural development, and youth employment. Indeed, the authorities hope to attain a poverty rate of 30 percent by the end of the strategy period (see chart). Continued implementation of these policies, as well as a successful transition to a mode of economic development that is led by the private sector, will make sizeable inroads in achieving this ambitious objective.
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South Africa strives to revive growth, cut exposure to risks
South Africa can celebrate significant progress in its first 20 years of democracy, but faces the challenge of reviving a weak economy and addressing elevated vulnerabilities the IMF said in its 2014 review of the country’s economy.
As the government’s Twenty Year Review notes, South Africa “has emerged from its deeply divided and violent past into a peaceful, robust, and vibrant democracy that has made major strides in improving the lives of its citizens.” Income levels have increased, access to education and health care has improved, and strong institutions and policy frameworks have delivered macroeconomic stability.
Yet the country faces difficult challenges. Real GDP growth is projected to fall to 1.4 percent this year, the lowest since 2010, and recover to only 2.1 percent in 2015, assuming some normalization in industrial relations. About a quarter of South Africans and half of its youth remain unemployed.
The current account and fiscal deficits are elevated relative to other emerging markets. Going forward, the consumption-driven growth model of the past few years is unlikely to be sustainable and headwinds stem from tighter global financial conditions, the uneven global recovery, reduced policy space, and softer commodity prices.
Structural constraints
As in many emerging markets, weak external demand and soft commodity prices contributed to South Africa’s economic downturn, but deep-seated structural factors also played an important role. An increase in workdays lost to strikes and increasingly binding supply bottlenecks, especially in electricity provision, were important factors behind South Africa’s growth underperformance, in addition to long-standing rigidities in product and labor markets, poor education outcomes, and apartheid legacies (see chart).
Unless these structural constraints are relieved, South Africa is likely to struggle to grow above 2-2½ percent per year, well below what is required to create sufficient jobs to lower unemployment.
Sources of resilience
Poor export performance and robust imports despite a large currency depreciation have kept the current account deficit above 5 percent of GDP. This, combined with low foreign direct investment, makes South Africa vulnerable to a pullback by foreign investors.
After years of accommodation, government debt has risen sharply. These vulnerabilities, however, are mitigated by the floating exchange rate, a favorable currency and maturity composition of debt, and the large domestic institutional investor base.
In an accompanying assessment of the South African financial sector, IMF staff found that risks are elevated given the challenging operating environment but are also manageable thanks to high capital adequacy buffers and strong supervision.
Nevertheless, downside risks dominate. More strikes and further delays in relieving electricity shortages are the key domestic risks. Also, South Africa, like other emerging markets reliant on external financing, remains vulnerable to tighter global financing conditions, lower world economic growth, and weaker commodity prices.
More fiscal measures
Notwithstanding the weak economy, the government’s 2014 Medium-Term Budget Policy Statement concluded that “fiscal consolidation can no longer be postponed.” The envisaged consolidation is significant, but additional measures may be needed to stabilize debt at the 50 percent of GDP level projected by the government.
Inflation remains close to the upper end of the South African Reserve Bank’s target range, but inflation momentum is slowing and the recent fall in oil prices may allow monetary policy to remain accommodative for longer. Nevertheless, over the medium term, real interest rates will have to rise to encourage domestic savings and address vulnerabilities.
Infrastructure projects
Constrained policy space means structural reforms are the only way for South Africa to boost job-rich growth. Ongoing infrastructure projects are key, but should be complemented by increased private participation to ease pressure on public sector balance sheets.
Steps to normalize labor relations are vital and could be accomplished in a social bargain to raise product market competition and increase labor market inclusiveness. These reforms are not only critical to raise growth and job creation, but also to rebalance the economy toward exports and investment and to increase scope for countercyclical macro policies.
As Finance Minister Nhlanhla Nene recently noted, “…the biggest constraints to a faster rate of growth are domestic factors, in other words things that are within our powers to fix.”
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WTO talks on duty-free trade in IT goods collapse
Talks on cutting trade tariffs on hundreds of information technology products collapsed on Friday, delaying and potentially scuppering a deal estimated to be worth $1 trillion to global trade.
“We are disappointed not to be celebrating a deal this week. We missed a big opportunity,” U.S. Ambassador Michael Punke said at the World Trade Organization (WTO).
The talks aimed to update the WTO’s 17-year-old Information Technology Agreement, which guarantees zero-tariff and duty-free trade on hundreds of products, adding about 200 more products to the list.
Several participants blamed the failure on a deadlock between China and South Korea over liquid crystal display (LCD) screens.
“The participants have significantly reduced the gaps on expanding the coverage of the ITA agreement in recent days, but unfortunately it has not been possible to finalize the negotiations this week,” WTO Director General Roberto Azevedo said in a statement.
Participants are expected to reconvene in 2015 to see if they can overcome the blockage.
“Manufacturers urge negotiators to come back to the table as early as possible in the new year to agree to a strong product list in order to unlock much-needed growth opportunities for manufacturers and their workers,” said Linda Dempsey, vice president of international economic affairs at the U.S. National Association of Manufacturers.
South Korea, home to top LCD producer LG Display Co Ltd, wanted LCD screens included in the deal, participants said.
But China, which wants to foster its own LCD industry, refused, demanding that all countries accept the same terms that it agreed bilaterally with the United States last month after a long-standing stalemate.
One trade official involved in the talks said South Korea had offered a number of concessions, but there had been no reciprocal move by China. Other countries also offered changes to try to entice China to make the last small step needed for a deal, the official said.
Another trade diplomat said South Korea had asked China to include accumulator batteries on the list, but Beijing said no. “They couldn’t move the last few centimeters,” he said, adding that both sides were equally to blame for the collapse.
Chinese officials were not available for comment.
Although Friday’s deadline for finishing the negotiation was artificially imposed, U.S. Ambassador Punke had said the talks’ “success or failure” would be decided this week. His European Union counterpart, Angelos Pangratis, said: “Later it will not be easier. ... Now is the moment.”
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Kenya, Uganda flower earnings wilt as Tanzania exports bloom
Kenya is projecting a 10 per cent drop in earnings from its flower exports as East Africa’s cut-flower industry registers another year of mixed returns.
Uganda expects earnings to stay flat, as growers blame high production costs and taxes on flowers by the European Union. Tanzania, on the other hand, expects a 10 per cent increase in earnings owing to improved market access.
The EU had imposed an 8.5 per cent tax on Kenya’s flower exports pending its reinstatement on the list of countries eligible for duty-free access to the EU market, subsequent to signing the Economic Partnership Agreement with the EAC past the agreed deadline of October 1, 2014.
The blocs signed the EPA in mid-October in Brussels.
Jane Ngige, the chief executive officer of the Kenya Flower Council, said the country is expecting a 10 per cent reduction in earnings from last year. This is as a result of high production costs following the government’s decision to introduce a withholding tax on consultancy services to the industry, and import duties by the EU.
Ms Ngige said the increased costs would result in a 10 to 15 per cent reduction in volumes.
“With import duty now being imposed on Kenya’s flower exports for accessing the EU starting October 1, we are unlikely to earn the same income as last year. We anticipate a reduction in earnings as well as the export volumes,” she said.
She added that relief would only come after Kenya is reinstated to the list of countries whose products are allowed to enter the European market duty-free. The process is expected to be completed by the end of December.
Kenya earned Ksh45 billion ($491.4 million) from 123,000 tonnes of flowers last year, with the European market accounting for 40 per cent of the country’s horticulture exports.
Uganda has blamed the oversupply of flowers in the international market for its flat earnings. The executive director of the Uganda Flower Exporters Association, Juliet Musoke, told The EastAfrican that Uganda expects to earn $46 million from 7,000 tonnes of flowers, almost the same volume and value as last year.
“Earnings from flower exports are likely to remain the same because business has not been good in the past three months. There’s either a high supply of flowers at the international market or consumers now prefer other types of flowers,” said Ms Musoke.
Uganda aims to increase the area under flowers from 250 to 450 hectares, and push earnings to $50 million annually. Tanzania is projecting a 10.4 per cent rise in earnings, to $414 million, based on improvements in the economic environment, and Kenya’s move to lift the ban on Tanzania’s flower exports passing through Jomo Kenyatta International Airport last year.
Rwanda, which currently produces 1.4 million stems of summer flowers per year, mainly for the local market, is aims to increase production to 54 million stems per year, the level of output that will allow it to break into the international market. When those targets are achieved, the country projects earnings of $9.83 million from flower exports.
The Rwandan government plans to increase the land under flower production to 115 hectares in the next five years, to sustain local and export markets that are growing at 4.4 per cent per annum.
According to officials from the Ministry of Agriculture, the large volume of flower production will cushion the economy against the widening export-import gap.
“Cut flower exports should reduce the imbalance in trade,” Minister of Agriculture Tony Nsanganira said.
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Ghana, Kenya bolster historic ties with new pacts
President John Dramani Mahama and his Kenyan host, President Uhuru Kenyatta, have supervised the signing of seven key agreements to strengthen the bonds of friendship and cooperation between the two nations, at the conclusion of a three-day state visit of the Ghanaian leader.
Two of the agreements, which were signed at the State House in Nairobi, centred on the development of partnerships in Air Services and Trade, whilst five Memorandums of Understanding, (MOUs), were signed on Tourism, Agriculture, Energy, Oil and Gas, Information and Communications Technologies, (ICTs), and Education.
Some elements of the agreements include efforts to reduce the cost of doing business between the two countries, cooperation in tourism training, and the exchange of technical information in agriculture.
In bilateral discussions preceding the signing ceremony, the two leaders exchanged ideas on the need to establish Double Taxation Agreements between the two nations and how to protect investments in each other’s country.
They further discussed how Ghana and Kenya could serve as effective sub-regional aviation hubs in West and East Africa respectively. President Mahama congratulated his Kenyan host on the recent decision of the International Criminal Court, (ICC), to drop charges of crime against humanity and genocide levelled against him over the killing of more than 1000 people during the 2007 elections.
President Mahama, who is Chair of the Economic Community of West African States, (ECOWAS) noted that Kenya, as the largest economy in East Africa, and Ghana, as the second largest economy in West Africa, could forge stronger partnerships that boost intra-African trade and deliver jobs, opportunities and prosperity to the people of both nations.
The Kenyan leader, who is the current Chair of the East Africa Community (EAC) commended President Mahama on his leadership as Chair of ECOWAS, especially in addressing terrorism and insecurity, fighting the Ebola outbreak disease in some West African countries and also assisting the people of Burkina Faso to return their nation to a state of normalcy after the citizens uprising that resulted in the resignation of President Blaise Compaore.
“We are architects of a future our forefathers only imagined. It is our duty to work for the greater good of our people,” he said.
“Despite the cordial relations between our two countries the level of economic engagement has been wanting even though a steady growth in trade has been recorded recently. Let us take advantage of the agreements signed today.”
The two Presidents characterized the visit as the re-opening of a new and promising chapter in Ghana-Kenya relations, to build on the warm, deep and historic pre-independence bonds established by Ghana’s first President, Dr Kwame Nkrumah and Kenya’s founding President, Mzee Jomo Kenyatta. President Kenyatta thanked President Mahama for undertaking this historic three-day state visit, which is the first ever by a sitting Ghanaian Head of State.
In his response, President Mahama extended a reciprocal invitation to his host to undertake a state visit Ghana at a date to be agreed by both Governments soon. On arrival at State House, President Mahama inspected a guard of honour mounted by troops from the Kenya Defence Forces and received a twenty-one gun salute.
Earlier on Friday morning, President Mahama laid a wreath at the Mausoleum of the late Kenyan President Mzee Jomo Kenyatta, during a solemn ceremony. The two Presidents also toured the vast compound of the Kenya National Youth Service, where thousands of Kenyan youth are trained and deployed every year into various sectors and communities.
The leaders inspected heavy equipment and trucks that are used for the construction of boreholes and roads, in deprived communities, such as the Kibera slum area in Nairobi.
President Mahama, who also served as a Special Guest of Honour at Kenya’s 51st Independence anniversary celebrations (or Jamhuri) Day on Friday, 12th December, leaves Kenya on Sunday, 14th December 2014.
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General Council approves Seychelles’ WTO membership, only ratification left
WTO members adopted Seychelles’ WTO terms of entry at the General Council meeting on 10 December 2014. Seychelles will have until 1 June 2015 to ratify the deal to formally become a WTO member 30 days after it notifies the ratification to the WTO Director-General.
The deal – the Protocol on the Accession of the Republic of Seychelles – was officially signed on the margins of the General Council by WTO Director-General Roberto Azevêdo and Seychelles’ Minister of Finance, Trade and Investment, Pierre Laporte, and is subject to domestic ratification by Seychelles’ Parliament.
WTO members congratulated Seychelles while acknowledging that the accession process was long and challenging for a small island developing state like Seychelles. Seychelles’ accession to the WTO will strengthen the multilateral trading system and advance the WTO closer to the goal of trade universality, members stressed.
In his address to the membership, DG Azevêdo paid special tribute to the government of Seychelles for this “historic achievement” and for sending “a clear signal to all its trading partners that it is ready to engage fully in the multilateral trading system and in the global economy. Seychelles’ accession is another sign of the continued importance of the multilateral trading system.” His full speech is available here.
“Today is a historic day for Seychelles”, Minister Laporte declared. “WTO membership will bring immense benefits to our economy, from businesses to consumers. The Seychelles Government and its People have been looking forward for so long to be part of this international family. ”
His full speech is available here.
Ms Hilda Al-Hinai (Oman), Chairperson of the Working Party on the Accession of Seychelles, paid tribute to WTO members and to the delegation of Seychelles for the “continuous efforts, goodwill and spirit of compromise shown all around, particularly in the critical final stages. With the acceptance of each new member, the community of most-favoured nations continues to grow stronger and moves ever closer to becoming truly global.”
Seychelles originally applied for WTO membership in 1995 and the Working Party concluded the negotiations on 17 October 2014. The list of Seychelles’ commitments is available here.