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Developing countries to play greater role in OECD/G20 efforts to curb corporate tax avoidance
The OECD released on 12 November 2014 its new Strategy for Deepening Developing Country Engagement in the Base Erosion and Profit Shifting (BEPS) Project, which will strengthen their involvement in the decision-making processes and bring them to the heart of the technical work. The BEPS Project aims to create a coherent set of international tax rules to end the erosion of national tax bases and the artificial shifting of profits to jurisdictions solely to avoid paying tax.
The strategy has three key elements:
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Building on their engagement in the earlier phase of the BEPS Project, about 10 developing countries, including Albania, Jamaica, Kenya, Peru, Philippines, Senegal and Tunisia, will be invited to participate in meetings of the key BEPS decision making body – the Committee on Fiscal Affairs (CFA) – and its technical working groups. Several other developing countries are expected to confirm their participation in the CFA or the technical working groups in the coming weeks.
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Five regionally organised networks of tax policy and administration officials will be established, to coordinate an ongoing and more structured dialogue with a broader group of developing countries on BEPS issues. Building on the effective BEPS consultations that took place in 2013 and 2014; these networks will strengthen the involvement of developing countries in Asia, Africa, Central Europe and the Middle East, Latin America and the Caribbean, and Francophone countries.
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Support for capacity building to address BEPS issues in developing countries is imperative. The regional networks will play an important role in the development of toolkits needed to support the practical implementation of the BEPS measures and as well as some of the priority issues for developing countries (tax incentives and transfer pricing comparable data) which are outside the BEPS Action Plan. The regional networks will also be a forum for interested developing countries to discuss the negotiation and implementation of the multilateral instrument under Action 15 of the BEPS Project.
The African Tax Administration Forum (ATAF) and the Inter-American Centre for Tax Administration (CIAT) will continue to play a critical rolein leading regional discussions on the BEPS priority issues for developing countries. They will help ensure those views are reflected in discussions on the development of the BEPS measures and the practical tools for supporting implementation. They will also be invited to join the meetings of the CFA and the technical working groups, together with the international organisations (the IMF, the World Bank Group and the UN), which already participate.
A two-part report from the G20 Development Working Group shows that BEPS issues pose acute problems for developing countries, most of which have lower tax bases than advanced economies and raise a far higher share of tax revenues from corporate taxes than developed countries. The report drew extensively on engagement with developing countries: more than 80 developing countries and other non-OECD/non-G20 economies were consulted through four in-depth regional consultations and five thematic global fora in the first phase of the BEPS Project.
The report was presented last September to the G20 Finance Ministers who called on the OECD to develop a new structured dialogue process for deepening developing country engagement in tackling BEPS issues and ensuring that their concerns are addressed. Developing countries have consistently recognised the importance of addressing base erosion and profit shifting as part of wider measures to increase domestic resource mobilisation, in order to promote stable economic growth and invest in infrastructure, education and health, among other government priorities.
A two-day workshop in December 2014 will allow developing countries interested in participating in the BEPS work of the Committee on Fiscal Affairs (CFA) and its technical working groups to discuss the practical aspects of deepened engagement in the Project, as well as their priority issues. At the same time, the donor community will meet to discuss plans to ensure that developing countries have the resources necessary to engage in the BEPS project effectively.
The OECD released last September its first recommendations towards coherent international tax rules to end the erosion of national tax bases and the artificial shifting of profits to jurisdictions to avoid paying tax. The recommendations were endorsed by G20 Finance Ministers during a meeting in Cairns, Australia last September and will be discussed during the Leaders’ Summit that will take place on 15-16 November in Brisbane.
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G20 leaders meet to discuss global economics
The weak global economic climate will come under the spotlight when members of the Group of 20 countries meet in Brisbane, Australia from 15 to 16 November.
The G20 Leaders’ Summit will take place at the Brisbane Convention and Exhibition Centre where 4 000 officials from member countries, including a delegation from South Africa led by President Jacob Zuma, will thrash out a wide range of global economic issues to try and find solutions to improve people’s lives.
According to a statement from The Presidency of South Africa, the focus of the summit will be on how the G20, both collectively and individually, can take additional measures to significantly raise global growth by implementing policies aimed at lifting GDP by more than 2% over the next five years.
G20 to promote collective growth
“The G20 member countries have agreed to take concrete actions to promote this collective growth ambition, including measures on investment, competition, trade and employment.
“To achieve this, individual G20 member countries have developed country-specific growth strategies, which will form the basis of a proposed G20 Brisbane Action Plan, to be submitted to Leaders for endorsement,” according to the statement.
A day before the start of the official summit, CEOs of major companies from G20 countries will engage with G20 leaders to discuss economic issues. On the first day of the summit Australia’s Prime Minister Tony Abbott will host an informal retreat where leaders from the G20 countries will deliberate on current challenges and economic reform priorities.
BRICS leaders meeting
On the sidelines of the G20 Leaders’ Summit, BRICS Leaders are expected to meet “to reflect” on the progress made with regard to the implementation of the 2014 Fortaleza Declaration. The meeting is expected to focus on the establishment of the New Development Bank and its Africa Regional Centre.
South Africa (the only African member of the G20) will use the opportunity presented by both the G20 Leaders’ Summit and the BRICS Leaders meeting to issues of particular concern to South Africa and the rest of Africa.
Of note, South Africa has set a national growth target of 5% by 2019 and is implementing various measures and interventions “to jump-start the economy”, according to The Presidency. “In particular, the implementation of a National Development Plan is key to achieving South Africa’s own national growth target and also in addressing the challenges of poverty eradication, job creation and inequality,” The Presidency said.
About Group of 20
According to the G20 website the G20 is the premier forum for its 19 countries plus the European Union. Each year, the G20 president invites several guest countries each year to its annual meeting.
The G20 was formed in 1999 as a meeting of Finance Ministers and Central Bank Governors in the aftermath of the Asian financial crisis. Later on in 2008, the first G20 Leaders’ Summit was held and the forum played a key role in helping member countries respond to the global financial crisis. Since then, G20 leaders have met eight times.
In the last five years, the G20 has played a critical role in restoring economic stability in the world economy and is fully working on growing national economies. “With the world now free from immediate economic crisis, the G20 can increasingly shift its attention to driving practical actions that will lead to sustained global growth,” says the website.
The G20 is supported by international organisations, including the Financial Stability Board, the International Labour Organisation, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the United Nations, the World Bank and the World Trade Organization.
Five countries bid to host SADC renewable energy centre
At least five countries are vying for the right to host the proposed regional centre for the promotion of renewable energy in southern Africa.
According to a recent meeting of the Southern African Development Community (SADC) Energy Thematic Group held in Botswana, bids to host the proposed SADC Regional Centre for Renewable Energy and Energy Efficiency (SACREE) have been received from Botswana, Mozambique, Namibia, South Africa and Zimbabwe.
South Africa’s bid is, however, subject to parliamentary approval.
Head of the SADC Directorate on Infrastructure and Services, Remigious Makumbe said establishment of SACREE, including the choice of the host country, was awaiting the holding of the annual SADC Energy Ministers meeting.
The SADC Energy Ministers meeting was scheduled for September, but was postponed after Malawi said it was not able to host the meeting due to various challenges. Mauritius has been approached to serve as alternative host.
The decision of the ministers would be forwarded to the SADC Council in February 2015, which would give final approval.
The establishment of SACREE is expected to increase the uptake of clean energy in southern Africa, enabling the region to address its energy challenges.
SADC has been experiencing power shortages dating as far back as 2006 due to a combination of factors, including the lack of investment in the energy sector.
This is despite the fact that the region has an abundance of energy sources, particularly renewable energy, which, if fully harnessed, could greatly boost power generation in the region.
In this regard, SADC countries have intensified efforts on how to exploit renewable energy resources such as wind, hydropower and solar.
The proposed centre would, among other things, promote market-based adoption of renewable energy and energy efficiency technologies and services in SADC member states.
The centre is expected to contribute substantially to the development of thriving regional renewable energy and energy efficiency markets through knowledge sharing and technical advice in the areas of policy and regulation, technology cooperation, capacity development, as well as investment promotion.
Various cooperating partners such as the Austrian Development Agency and the United Nations Industrial Development Organization (UNIDO) have pledged to provide financial support to the centre for the first three years. After that, the centre should be self-sustaining.
Establishment of the centre is expected to be carried out in three phases, the first of which involves the selection of a host country and establishment of the SACREE Secretariat.
The management team will be headed by an executive director appointed by the executive board and will consist of various levels of permanent staff to be complemented by consultants and seconded international staff as may be deemed necessary from time to time.
The Preparatory Phase, that was initially expected to run from January-October 2014, would also see the creation and inauguration of the SACREE executive board and technical committees.
The composition of the executive board and technical committee will be agreed upon by member states.
The First Operational Phase is now expected to run from the end of 2014-2017 during which the centre will primarily focus on developing renewable energy programmes for the region and resource mobilisation.
The Second Operational Phase, from 2018-2021, will focus on activities to ensure sustainability of the centre after the exit of international cooperating partners such as UNIDO.
Establishment of the SACREE is expected to see a gradual increase in the uptake of cleaner energy sources that could result in reduced carbon emissions in line with the global trends towards clean and alternative energy sources.
Renewable energy sources are less polluting to the environment compared to fossil fuels such as coal.
Furthermore, fossil fuels will not last forever, hence the need for southern Africa to prepare for the future by intensifying efforts to harness its huge renewable energy resources.
According to the African Development Bank (AfDB), the region has the potential to become a “gold mine” for renewable energy due to the abundant solar and wind resources that are now hugely sought after by international investors in their quest for clean energy.
For example, the overall hydropower potential in SADC countries is estimated at about 1,080 terawatt hours per year (TWh/year) but capacity being utilised at present is just under 31 TWh/year. A terawatt is equal to one million megawatts.
The SADC region is also hugely endowed with watercourses such as the Congo and Zambezi, with the Inga Dam situated on the Congo River having the potential to produce about 40,000 MW of electricity, according to SAPP.
With regard to geothermal, the United Nations Environment Programme and the Global Environment Facility estimate that about 4,000MW of electricity is available along the Rift Valley in the United Republic of Tanzania, Malawi and Mozambique.
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US and China strike deal on carbon cuts in push for global climate change pact
Barack Obama aims for reduction of a quarter or more by 2025, while Xi Jinping sets goal for emissions to fall after 2030
The United States and China have unveiled a secretly negotiated deal to reduce their greenhouse gas output, with China agreeing to cap emissions for the first time and the US committing to deep reductions by 2025.
The pledges in an agreement struck between President Barack Obama and his Chinese counterpart, Xi Jingping, provide an important boost to international efforts to reach a global deal on reducing emissions beyond 2020 at a United Nations meeting in Paris next year.
China, the biggest emitter of greenhouse gases in the world, has agreed to cap its output by 2030 or earlier if possible. Previously China had only ever pledged to reduce the rapid rate of growth in its emissions. Now it has also promised to increase its use of energy from zero-emission sources to 20% by 2030.
The United States has pledged to cut its emissions to 26-28% below 2005 levels by 2025.
The European Union has already endorsed a binding 40% greenhouse gas emissions reduction target by 2030.
Speaking at a joint press conference at the Great Hall of the People, Obama said: “As the world’s largest economies and greatest emitters of greenhouse gases we have special responsibility to lead the global effort against climate change. I am proud we can announce a historic agreement. I commend President Xi, his team and the Chinese government for their making to slow, peak and then reverse China’s carbon emissions.”
He said the US emissions reductions goal was “ambitious but achievable” and would double the pace at which it is reducing carbon emissions.
“This is a major milestone in US-China relations and shows what is possible when we work together on an urgent global challenge.”
He added that they hoped “to encourage all major economies to be ambitious and all developed and developing countries to work across divides” so that an agreement could be reached at the climate change talks in Paris in December next year.
Xi Jinping said: “We agreed to make sure international climate change negotiations will reach agreement as scheduled at the Paris conference in 2015 and agreed to deepen practical co-operation on clean energy, environmental protection and other areas.”
China’s target to expand energy from zero-emission sources to around 20% by 2030 was “notable”, a White House statement said. “It will require China to deploy an additional 800-1,000 gigawatts of nuclear, wind, solar and other zero-emission generation capacity by 2030 – more than all the coal-fired power plants that exist in China today and close to total current electricity generation capacity in the United States.”
The UN’s climate chief, Christiana Figueres, said: “These two crucial countries have today announced important pathways towards a better and more secure future for humankind.”
Herman Van Rompuy, the president of the European Council, and Jean-Claude Juncker, the European Commission president, urged other countries to show their hand on emissions cuts: “We welcome the announcement today by the presidents of the United States and China on their respective post-2020 actions on climate change.
“The announcements to date cover around half of the global emissions. We urge others, especially the G20 members, to announce their targets in the first half of 2015 and transparently. Only then we can assess together if our collective efforts will allow us to fulfil the goal of keeping global temperature increases well below 2C.”
The new US goal will double the pace of carbon pollution reduction, though the Republican-controlled Congress is likely to oppose Obama’s climate change efforts.
The US Senate’s new Republican leader, Mitch McConnell, was quick to criticise the Beijing pact. “This unrealistic plan, that the president would dump on his successor, would ensure higher utility rates and far fewer jobs,” he said.
Administration officials argue the new target is achievable under existing laws.
Emissions of G20 countries. Photograph: Nick Evershed/Guardian Australia
Frances Beinecke, president of US-based environmental group the Natural Resources Defence Council, said: “These landmark commitments to curtail carbon pollution are a necessary, critical step forward in the global fight against climate change. We look forward to working with both governments to strengthen their efforts because we are confident that both can achieve even greater reductions.”
Senior US administration officials said the commitments, the result of months of dialogue between the world’s top two carbon emitters, would encourage other nations to make pledges and deliver “a shot of momentum” into negotiations for a new global agreement set to go into force in 2020.
Tao Wang, climate scholar at the Tsinghua-Carnegie Center for Global Policy in Beijing, said: “It is a very good sign for both countries and injects strong momentum [into negotiations] but the targets are not ambitious enough and there is room for both countries to negotiate an improvement.
“That figure isn’t high because China aims to reach about 15% by 2020, so it is only a five percentage point increase in 10 years, and given the huge growth in renewables it should be higher.”
Andrew Steer, president of the World Resources Institute, which promotes sustainable resource management, said the announcements would “inject a jolt of momentum in the lead up to a global climate agreement in Paris”.
“It’s a new day to have the leaders of the US and China stand shoulder to shoulder and make significant commitments to curb their country’s emissions,” he said.
Li Shuo, of Greenpeace East Asia, said the announcement showed that the world’s “two biggest emitters have come to the realisation that they are bound together and have to take actions together”.
At the Warsaw climate talks in 2013 nations were encouraged to draw up post-2020 climate plans by the first quarter of 2015, ahead of the final negotiations for a post-2020 global pact late in the year.
The White House statement said: “Together the US and China account for over one-third of global greenhouse gas emissions. Today’s joint announcement, the culmination of months of bilateral dialogue, highlights the critical role the two countries must play in addressing climate change.
“The actions they announced are part of the longer range effort to achieve the deep decarbonisation of the global economy over time. These actions will also inject momentum into the global climate negotiations on the road to reaching a successful new climate agreement next year in Paris.”
» Fact Sheet: U.S.-China Joint Announcement on Climate Change and Clean Energy Cooperation
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Lower trade and higher poverty rate are cousins
“Nigeria is not just a place to set up a business. The country is a big and growing market. Investing in Nigeria is tantamount to connecting to a big market.”
The relationship between trade and poverty is inverted. Countries with higher proportions of global trade tend to have less of poverty. Conversely, countries which contribute the least to global trade have higher poverty rates. This shows the importance of good trade policies in reducing poverty rates and increasing prosperity. Also, this shows why there is intense competition for export markets even by countries that already control significant share of global trade. Little wonder trade facilitation has become an economic policy of great importance.
Development experts can’t agree more. Jim Yong Kim, the World Bank president, said in a recent statement that “trade is a critical component to ending poverty and boosting shared prosperity”. The foregoing therefore suggests that developing countries have to trade their way out of poverty. For African countries to reduce poverty, they must increase their share of global trade. But how to bring this about is anything but easy.
Trade challenge
Sub-Saharan Africa is reputed to be the least developed region of the world. The SSA region is also the least integrated into the global economy through trade. Since the 1960s, the share of sub-Saharan Africa in international trade has become progressively smaller: less than 5 percent for all merchandise and 3 percent for agricultural products in 2010 (World Foundation for Agriculture and Rurality 2012). Trade within the SSA region is also dismal. Tariff and non-tariff barriers have been obstacles to intra-regional trade. Although the higher hurdles are non-tariff barriers, the ECOWAS goal of free movement of person and goods across member countries remains more of a wish than reality.
Exports from Africa are mainly mineral resources and agricultural produce. With very low industrial base, the commodities are exported to other regions of the world and returned later to the continent as costlier finished products. This trade pattern results in “jobless growth” in the exporting countries when the prices of the commodities are high in the international market. The jobs that are created and sustained during commodity boom are mainly in the countries that “refine” and turn the commodities to finished products through industrial activities.
But when prices of commodities are depressed, fiscal shocks are transmitted through the trade channel to the exporting countries, with severe human and economic implications. Apart from being pro-cyclical, trade in commodities is generally noted for volatility of current account positions and exertion of pressure on the exchange rate. The persistence of weak or negative growth in Europe and slower growth in China has dented economic growth in countries that depend very much on the export markets including Germany. But this does not build a case against active play in the export markets; it probably asserts the importance of domestic consumption as a cushion during a period of weaker exports.
Export diversification
Having established the role of trade in reducing poverty on the one hand, and the deleterious effects of export of mainly primary products on the other, it therefore means that the way to reduce poverty in developing countries is through export diversification by boosting industrial activities. Gaining a mileage in export diversification does entail formalisation of informal trade. To achieve this, empowerment of small- and medium-scale enterprises (SMEs) is of utmost importance, both in itself and in gaining more share of global trade.
The key problem with informal trade is that it deprives policymakers of the major tool of policymaking, which is data. Informal trade usually takes place off the radar, making data gathering and processing virtually impossible. But policymakers need to know areas where it is important to scale up positive results in trade activities. Understanding the obstacles that confront informal sector operators will aid intervention and eventually prepare the operators toward making due contribution to fiscal policy by coming under the tax net.
SME incubation
Evidently, the President Goodluck Jonathan administration has identified the SME sector as critical for boosting economic growth and job creation. On its part, the Nigerian Export-Import Bank (NEXIM Bank) is aware of the potentials of Nigerian SMEs. They can leverage domestic consumption using access to over 170 million population to harness opportunities in foreign markets. Accordingly, our interventions are now geared towards such firms that we believe are relatively well-structured to be able to stabilise their operations and then foray into external markets.
Several programmes under this administration are incubating the SME segment for a major turnaround. In the traditional areas of providing infrastructure and electricity power, the country is seen to have made big leaps in policy formulation and execution, notwithstanding the milestones that are yet to be reached. Most recent perhaps is the launch of the N220 billion SME fund in August by the Central Bank of Nigeria (CBN). Specific programmes under the Agricultural Transformation Agenda, infrastructural development for ICT utilisation, local content development in oil and gas, the programme of industrialisation as encapsulated in the National Enterprise Development Programme (NEDEP) and the Nigerian Industrial Revolution Programme (NIRP) all speak of the resolve of President Jonathan to use the instrumentality of state policy to mediate market performance and SME growth. On-going implementation of the programmes is concomitant with job creation, which is vital for eradication of extreme poverty.
Unmasking poverty
Poverty eradication has once again climbed to the top of global development policy agenda. The World Bank and the International Monetary Fund (IMF) have announced twin programmes of ending extreme poverty and boosting shared prosperity by 2030. Feelers from post-2015 policy debates suggest that global development goals will focus on eradication of extreme poverty, going forward, from next year. In the meantime, reports from some global institutions are making some important prescriptions on poverty reduction.
A recent publication by United Nations Conference on Trade and Development (UNCTAD) – ‘Trade Policies, Household Welfare and Poverty Alleviation: Case Studies from the Virtual Institute Academic Network’ – strongly associates trade and poverty, offering policymakers insights on what it called “pro-poor trade policies”. Another new literature which focuses on economic growth – a sine qua non for poverty reduction – reaffirms what we already know: that export diversification is the “gateway” to higher growth. To achieve export diversification, however, Chris Papageorgiou, Lisa Kolovich and Sean Nolan, all of the IMF, identify manufacturing of high quality products as a necessity. They suggest therefore that the world has gone past the Chinese industrialisation model of producing cheap and low quality products to unleash price competition in the export market. Accordingly, Papageorgiou and his colleagues listed human capital, infrastructure, institutional quality, financial deepening and proximity to markets as drivers of export diversification. These are very important recommendations which are familiar but which cannot be overemphasised. I will therefore run commentaries on them in the context of the Nigerian policy environment and readiness for trade as I conclude this piece.
Quality products: The Nigerian middle class and wealthy Nigerians are noted to be pretty sophisticated. As such, an industrial development model that manufactures cheap and inferior products would be mis-targeted at Nigerians with means. Nowhere is this recognised more than in the cable manufacturing industry where Nigerian cables are noted for higher quality than some imported brands. Once known for exporting inferior products, China has been reforming its industrial policy to emphasise the manufacturing of high quality products. This is the direction Nigeria should go to ensure we can trade in the global market of today and not of yesterday.
Human capital: Within a practical framework, multi-level support for human capital development has been a key goal of this administration. School enrolment has improved generally. Specific programmes have targeted areas that had lagged behind due to past neglect. Tertiary education is being strengthened to be able to absorb more university candidates.
Another area that has benefitted from government’s programme of industrial development is vocational education. For example, there are ongoing efforts to develop skills that will support growth in the power sector and automobile production and assembly plants. Also, the Subsidy Reinvestment and Empowerment Programme (SURE-P) embeds training for skill acquisitions in the areas of public works, including road construction and maintenance, railway rehabilitation and dredging.
Infrastructure: The foregoing already highlights the fact that the country is moving in the right direction with infrastructure development. The pace may be slow, but there is no doubt that we will attain a tipping point sooner than later. At that point, it will become more obvious to global investors that so-called infrastructure deficiency in Nigeria represents investment opportunities which are being harnessed. This is a key lesson we have taken from the implementation of the power sector reform.
Institutional quality: The truth is evident that Nigeria is building and strengthening its institutions again. As a constitutional democracy, the governance framework is stable and predictable. Market regulators do their jobs without the fear of any political backlash. This is what has helped to put in place a sustainable path for the turnaround of our financial market, since the introduction of reforms in 2004. NEXIM Bank itself is an institution that has been revamped as part of government decision to strengthen public sector institutions and support private sector actors.
Financial deepening: There is perhaps no other country or jurisdiction that has introduced more far-reaching reforms in its financial market than Nigeria over the past 10 years. The proliferation of marginal banks has given way to stronger and sounder private sector financial institutions including “mega” banks. A poorly-organised and unfunded pension system has given way to the contributory system that has exceeded N4.5 trillion ($24 billion) in pension asset. Yet regulation and innovation have continued to characterise the Nigerian financial system, including the capital market.
Proximity to markets: Nigeria is not just a place to set up a business. The country is a big and growing market. Investing in Nigeria is tantamount to connecting to a big market. Nevertheless, the country is also well-linked to the sub-regional markets by all popular means – road, sea and air – except by rail.
As the country continues to develop capacity for trade through economic diversification, it is expected that the poverty rate will continue to fall.
Roberts U. Orya is the CEO of the Nigerian Export Import Bank (NEXIM)
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For up to 800 million rural poor, a strong World Bank commitment to agriculture
Close to 800 million people around the world – or 78 percent of the world’s poor people – live in rural areas and rely on farming, livestock, aquaculture and other agricultural work to put food on their plates and make a living. One of them is Adekalie Kamara, a rice farmer in Sierra Leone who is counting on more productive farming methods to “give me hope of a good reward for my hard work.” Meanwhile, Jan Agha, an Afghan farmer is improving his livestock business to help feed his eleven children. “We are learning better ways to feed, protect and clean our animals. We are getting richer, too.”
For Adekalie, Jan Agha, and millions of others, agriculture is the starting point for their pathway out of poverty. Long acknowledged as one of the most powerful tools for raising the incomes of very poor people, agriculture is integral to ending poverty and boosting shared prosperity for the world’s poorest.
But agriculture is not just important to the rural poor. It is also critical to fighting hunger, tackling malnutrition and boosting food security for a population that is expected to reach 9 billion by 2050. Agriculture also creates jobs – on farms, in markets, and throughout the farm-to-table food chain. And because agriculture is one of the sectors that is most vulnerable to extreme weather and one of the largest contributors to greenhouse gases – it is also important in the fight against climate change.
The World Bank Group has steadily increased its investments in agriculture over the years. In 2014, the Bank Group made $8.3 billion in new commitments to agriculture, establishing itself as a leading financier of the agriculture sector. The majority of Bank lending goes to increasing productivity, food security and improving access to markets. The Bank’s work in agriculture is also aimed at helping farmers cope with risks, reducing gender inequality, making agriculture more environmentally sustainable and advancing climate-smart agriculture.
“Agriculture must become part of the solution to many of the world’s most pressing development problems,” said Juergen Voegele, Senior Director of the World Bank’s Agriculture Global Practice. “It is important for developing countries because of its potential positive impact on everything from job creation and food security, to fighting climate change. When done sustainably, agriculture not only grows economies, but also improves the daily lives of the world’s poorest people.”
» Related: The West Africa Agricultural Productivity Program: A Major Boost for Agriculture in Mali
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Record number of new trade concerns raised in standards committee in 2014
A record-breaking number of new trade concerns, mostly dealing with issues such as the protection of health and the environment, were raised by WTO members at the Technical Barriers to Trade Committee on 4-6 November 2014 – more than at any other meeting since 2009. For 2014, more new trade concerns have been raised than in any other year since the establishment of the WTO in 1995 and three-quarters of the concerns were expressed by developing countries.
Specific trade concerns
Since its first meeting, members have used the WTO Technical Barriers to Trade (TBT) Committee as a forum to discuss issues related to specific measures (such as technical regulations, standards and other requirements) maintained by other members. These “specific trade concerns” (or, simply, “STCs”) take up most of the Committee’s agenda. Essentially, members raise STCs to find out more about the scope and implementation of each other’s regulations in light of the core TBT obligations (for example, regulating health without unnecessarily disrupting trade). The discussion is mostly about measures in the pipeline, but can also be about the implementation of existing measures.
This multilateral review of measures is an example of how the WTO’s regular work can have a positive, and sometimes relatively quick, impact on everyday life. Members often express their concerns based on the impact that a proposed regulation by another member may have on their consumers and companies. And it is not uncommon for such concerns to be heard and taken into consideration. STCs are, in a sense, a bridge between the WTO and the “real world”.
Many such “real world” discussions were highlighted during last week’s TBT Committee meeting. For example, nutrition labelling, present in the everyday life of consumers, was in focus - in particular, various proposals relating to health claims such as “traffic-light” nutrition labelling, consisting of adding a label with a red or green “traffic light” according to the healthiness of the content of food products. Tobacco was also high on the agenda, with a record number of four measures on so-called plain packaging being discussed. Discussions also addressed a wider range of products, including electronics, automotive parts, chemicals, food and beverages, alcohol, cosmetics and pharmaceuticals, and toys. Of the 53 concerns raised in this meeting, 18 were new, with the others recurring from previous meetings.
Number of trade concerns raised per year in the TBT Committee
Note: The number of “new concerns” is the total number of distinct STCs raised for the first time during the year. “Old concerns” is the total number of distinct concerns that have been raised in previous years and reverted to during the year.
The TBT Committee meetings are also an important opportunity for cooperation between WTO members’ regulatory counterparts on approaches to address shared policy objectives, including the protection of health and the environment (to name two of the most frequent types of measures dealt with by the Committee). Discussions help members consult and align standards and regulations before they become entrenched in legislation. Members also use the Committee to raise the “heat” on certain matters, to seek alliances or otherwise simply to provide an early warning that a measure currently being envisaged is likely to be problematic. The subject matter is detailed and technical in nature and driven by capital-based experts. Hence, the approach is rather more practical than legal. Engagement is wide – particularly by developing countries. Out of the 85 measures addressed in the 2014 discussion, developing countries expressed concern with respect to 63 of them (around 75 per cent). Although STCs are resolved in the TBT discussions, there is no formal procedure for the reporting on settlements, unlike in the WTO Sanitary and Phytosanitary Measures (SPS) Committee.
Currently, TBT Committee meetings span almost a full week, including bilateral consultations, thematic sessions on specific subjects and the formal meeting itself. Members have three regular meetings per year, and, interspersed between these, at least three informal preparatory meetings – usually about a month before the formal meeting.
Good practices in regulation
In this meeting, although they came closer to finalizing a voluntary list of steps and mechanisms that may be used in developing and applying regulations – known as “good regulatory practices” – WTO members could not resolve the difference that emerged in June 2014 about whether a detailed disclaimer is needed to ensure countries are shielded from legal challenge in the WTO’s dispute settlement system.
Information sharing via thematic session
Information is a vital part of dealing with technical barriers to trade. This latest in a series of “thematic” discussions (document G/TBT/GEN/174) included presentations on practices in conformity assessment – the various measures taken by manufacturers, customers, regulatory authorities and independent third parties to assess that a product or service meets standards or technical regulations.
An EU representative noted that in the European Union, conformity assessment and market surveillance – activities and measures taken by public authorities to ensure that products comply with the requirements set out in the relevant legislation for the protection of health, safety or other public interests – functions are strictly separated and the manufacturer or importer holds responsibility for the product liability.
A representative from South Africa reported on recent developments in Africa in the field of quality infrastructure, including the Pan-African Quality Infrastructure, which coordinates regional efforts on metrology, standardization and accreditation of conformity assessment services.
The National Institute of Standards and Technology (NIST) presented the Quality Infrastructure Council of the Americas launched by the Organization of American States (OAS) to ease access for OAS member states to internationally recognized quality infrastructure services.
The Bureau International des Poids et des Mesures (BIPM) presented the role of metrology in conformity assessment procedures as the “science and practice of measurement” and the importance for international trade of a common understanding and application of metrology worldwide.
Presentations were also made on regional and international initiatives to underline the importance of working together in various fora to promote good practice in regulatory cooperation and technical assistance.
The Asia-Pacific Economic Cooperation (APEC) reported on advancements in e-rulemaking, particularly the APEC Leaders’ 2011 call for strengthening the implementation of good regulatory practices by conducting public consultations, ensuring internal coordination of regulatory work and assessing the impact of regulations.
A representative from New Zealand presented APEC’s efforts to improve regulatory coherence, thus facilitating trade in wine across APEC countries, including a joint initiative by the World Wine Trade Group and the APEC Wine Regulatory Forum.
The WTO Secretariat made a presentation on the Standards and Trade Development Facility (STDF), a global initiative to help developing countries establish and implement SPS standards towards health protection and increase their ability to gain or maintain access to international markets.
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Russia authorizes several SA firms to resume seafood exports
South Africa will be able to restart seafood exports to Russia, which had been suspended over two decades ago, after several seafood companies have been granted rights by Russian authorities to supply canned and frozen fish.
A total of 12 companies have been authorised to export their products to the Russian market, as it was posted in the Russian veterinary and phytosanitary service’s website.
The firms being allowed to supply seafood are: Abagold Ltd, Compass Challenger, GSA Trades Pty Ltd, Harvest Atlantic Peace, Irvin & Johnson Limited, Kaytrad Coldstore, Laverne, Marine Products, Pioneer Fishing Pty Ltd, Sea Vuna Fishing Company Pty Ltd and Viking Fishing Co Pty Ltd, SouthAfrica.info informed.
Some news sources relate this decision to Russia’s needs to look elsewhere for food sources following the trade ban imposed on several Western countries as a response to the sanctions it received over Ukraine.
“Since the late 1990s, this is the first time South African fish will be exported to Russia on a commercial basis,” chief executive of the Cape Town-based Sea Harvest Felix Ratheb told Reuters.
Ratheb added that the first exports to Russia were expected in early 2015 and would begin at about 500 tonnes a year, worth between ZAR 25 million-ZAR 40 million (USD 2.2 million-USD 3.5 million).
Both countries have held trade relations since 1990s and exports-imports have been strengthened.
Bilateral trade in the January to November 2013 period increased by 22.1 per cent to USD 998 million, compared to USD 817 million from January to November 2012.
Meanwhile, Russia’s exports increased by 59.1 per cent to USD 260.5 million from USD 163.7 million in January to November 2012, and imports grew by 12.9 per cent to USD 737.5 million.
Mutual investments between the two countries are also massive. Russian investments in South Africa reached over USD 1 billion in the last year.
Major Russian exports to South Africa comprise chemical and agro-industrial products, precious and base metals, coking coal, fertilisers, machinery, equipment, vehicles, tools, textiles, footwear and mineral products.
On the other hand, South African exports to Russia are dominated by fruit, mineral products, machinery, equipment, vehicles, chemical products, precious and base metals, raw hides, textiles and footwear.
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US and China agree to eliminate technology trade tariffs in landmark Beijing deal
China and the US have agreed to eliminate tariffs on a host of technology products – a move which could add $190bn to global GDP.
The two trading powers overcame a succession of longstanding disagreements over the Information Technology Agreement (ITA), an existing trade deal which represents 97% of the world’s trade in IT products.
The 78-nation ITA has been in existence since 1996, but efforts to expand it had been frustrated by Chinese resistance. It’s thought that with China and the US coming to what President Barack Obama described as “an understanding” in Beijing overnight, the rest of the WTO members signed up to the ITA will move swiftly to approve measures to reduce trade tariffs.
Obama said the understanding would “contribute to a rapid conclusion to the broader negotiations in Geneva”.
The agreement, signed at the Asia-Pacific Economic (Apec) Summit in Beijing, was described by the US Trade Representative Michael Froman as the first major WTO tariff cutting initiative in 17 years.
“We’re going to take what’s been achieved here in Beijing back to Geneva to work with our WTO partners. While we don’t take anything for granted, we’re hopeful that we’ll be able to work quickly,” he told reporters.
Talks had broken down in 2013 after China refused to remove tariffs on up to 200 kinds of technology products. It’s understood that most of these will now be removed, after US negotiators convinced China, by some distance the largest exporter of technology goods, that it stands to benefit greatly from the deal.
The USTR website says that among those technologies included in the agreement are “medical equipment, GPS devices, video game consoles, computer software and next generation semiconductors”.
Froman described the ITA development as “encouraging” for US-China relations and said it could be make sales worth $1tn tariff-free and create 60,000 jobs in the US. The deal could be ratified by December.
In a statement welcoming the agreement, the executive vice-president of the US Chamber of Commerce Myron Brilliant said: “With so many new products created since the ITA was concluded two decades ago, expanding the agreement’s coverage is imperative. With trade in tech goods surpassing $4tn annually, the commercial significance of these negotiations is obvious.”
This is likely to be viewed as one of the most substantive outcomes of the Apec Summit in Beijing. In the weeks preceding it, there had been much speculation as to how much trade liberalisation could be achieved, with many plurilateral discussions reaching stalemate.
Dieter Ernst, senior fellow at the East West Centre, a research organisation based in Hawaii, had warned of the importance of making a breakthrough, writing: “The stalemate in ITA-2 negotiations signals a possible roadblock to progressive trade liberalisation in high-tech industries.
“Mega-developing countries like India and China have enough resources to cope with a possible stalemate of ITA-2 negotiations... but for the majority of developing countries, such stalled and incomplete trade liberalisation could have quite serious consequences, depriving them of speedy access to critical productivity-enhancing information technologies.”
The news from Beijing, then, will be welcomed by those keen to see a more liberal trading environment.
» Azevêdo hails breakthrough on the WTO’s Information Technology Agreement
WTO Director-General Roberto Azevêdo praised Chinese and US negotiators for reaching an understanding that paves the way to an expeditious conclusion of the expanded Information Technology Agreement. He said: “I strongly welcome the announcement of this breakthrough, which represents a significant step forward in the negotiations on an expansion of the ITA.” Read more here.
Highlights of the understanding to develop the Information Technology Agreement (ITA):
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Next generation semiconductors – Tariffs up to 25% reduced to zero.
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Magnetic Resonance Imaging (MRI) machines – Tariffs up to 8% reduced to zero.
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Computed Tomography (CT) scanners – Tariffs up to 8% reduced to zero.
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Global Positioning System (GPS) devices – Tariffs up to 8% reduced to zero.
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Printed matter/cards to download software and games – Tariffs up to 10% reduced to zero.
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Printer ink cartridges – Tariffs up to 25% reduced to zero.
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Static converters and inductors – Tariffs up to 10% reduced to zero.
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Loudspeakers – Tariffs up to 30% reduced to zero.
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Software media, such as solid state drives – Tariffs up to 30% reduced to zero.
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Video game consoles – Tariffs up to 30% reduced to zero.
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An expanded ITA would also eliminate import duties on a range of additional technology products including high-tech medical devices, video cameras, and an array of high-tech ICT testing instruments.
Source: USTR website
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Climate Change Conference kicks off in Dar es Salaam
Some of the world’s leading experts on Climate Change have joined the country’s decision makers and opinion leaders gathered today in Tanzania’s business capital to participate in a major two-day conference to deliberate on climate resilient economic growth.
Under President Kikwete’s leadership, Tanzania has been playing a leading role globally in defining the regional climate change agenda, and the country has recently consolidated its position with the 2013 adoption of the National Climate Change Strategy and the Zanzibar Climate Change Strategy in addition to other key interventions such as the 2014 Agriculture Climate Resilience Plan.
Coming on the heels of the New York Climate Summit in September and just prior to the next round of global climate negotiations, which will be held in Lima this December, the goal of the Dar es Salaam conference is to fast-track action on climate change here at home at all levels of society. The conference has attracted more than 140 participants including key decision makers, thought leaders, and innovators from around the world who will discuss and propose practical actions on what needs to be done to position Tanzania’s policies, plans, and investments towards an inclusive, resilient growth trajectory.
“This conference is a great opportunity for dialogue on how Tanzania’s development pathway can flourish despite the changing climate,” says Philippe Dongier, the World Bank Country Director for Tanzania. “It is tempting to imagine that we are located remotely from the climate change phenomenon but this is erroneous. Climate change will affect all Tanzanians – be they in the growing urban areas, where populations are expected to triple by 2030, and climate-related flooding is expected to increase; along the coast, where changing wind and temperature patterns are leading to erosion and marine impacts; or in agricultural areas where rising temperatures will affect crop survival and livelihoods.”
The poverty rate in Tanzania is currently estimated at about 28% of the population with the majority of the poor living in rural areas where they are entirely dependent on climate-dependent natural resources. As an example, agriculture, a dominant sector of the economy, generates 25% of GDP and 24% of exports and is the mainstay of 75-80% of livelihoods in the country – including the majority of the poor, who are largely smallholder farmers dependent on rainfed agriculture. Climate change is expected to result in changing weather patterns, which could have important impacts on this rainfed agriculture: rainfall decreases of 10% have been correlated with a 2% decrease in national GDP, and temperature rise of 2°C could reduce maize yields by 13% and rice by over 7%.
“Tanzania has begun to take important actions in addressing the risks associated with climate change. We are proud to be working with the Vice President’s Office Division of Environment and the UK Department for International Development in supporting this important conference, which highlights the work being done in the country and areas for future action,” said Ann Jeannette Glauber, World Bank Senior Environmental Specialist.
The conference was opened by His Excellency Dr. Mohammed Gharib Bilal, the Vice President of the United Republic of Tanzania, with closing remarks by PM Pinda and will feature several special guest speakers.
» Tanzania’s 2014-2025 Energy Reform Roadmap to Success (Africa Outlook Magazine)
» Powering Africa: Tanzania 2014 Conference (Dar es Salaam, 13-14 November 2014)
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Solid and adequate land policies, if implemented, could catalyze Africa’s transformation
The inaugural Conference on Land Policy in Africa opened Tuesday evening at the African Union Headquarters in Ethiopia with a strong call for a robust deepening of land governance on the continent and an appeal for promoting policy and regulatory environments that advance large scale agricultural production and productivity. Organized around the theme: “The next decade of land policy in Africa: Ensuring agricultural development and inclusive growth” the 11-14 November conference is in line with the 2014 African Union year of Agriculture and food security.
African Union Commissioner for Rural Economy and Agriculture, Rhoda Tumusiime, emphasized that Agriculture is still a key driver of Africa’s economic transformation, with the prime responsibility of providing employment opportunities for a rapidly growing and predominantly youth population, sustainable livelihoods and poverty reduction.
“We are proud that Africa is the only continent that has defined its own agenda for land policy. This conference is timely and allows us to track progress in the implementation of the AU declaration on land,” she said.
Ethiopian Minister of Agriculture, Mr. Tefera Debrew challenged governments on the situation of low productivity and food security in the midst of substantial land resources, stating, “it is not acceptable”. He called on AU member states to “diligently implement the African Union-led continental frameworks and guiding principles as they could reverse the situation if implemented”.
In his remarks, Stephen Karingi, Director of the Regional Integration and Trade Division at the Economic Commission for Africa (ECA) stressed the need to improve the governance of land resources on the continent. “Property rights need to be clarified, land rights of African people, including rights of women and pastoral communities need to be secured and Africa needs to enhance its land use planning and sustainable land management,” he said.
Karingi called on African governments and other institutions on the continent to promote effective and efficient land administration systems based on good governance of land resources. He cited examples from other parts of the world, where land development has allowed countries to have more productive agriculture and ensure food security and even food export.
Kafui Afiwa Kuwonu of Women in Law and Development in Africa (WILDAf) spelt out how civil society organisations intend to use the platform provided by this conference: to share experiences and to challenge policymakers, but also to inspire participants to forge ahead with implementation and to be part of the solution: “we commit to disseminate information on land policy and collaborate in efforts and to share best practices,” she promised.
Josephine Ngure, Resident Representative of the African Development Bank to Ethiopia reiterated that land policy development and accompanying policy frameworks are critical for Africa’s transformation.
“Land in Africa is not simply an economic and environmental asset but also a social, cultural, spiritual resource and a social identity.” She noted that land problems must be addressed, if sustainable development in Africa is to be realized.
For her part, Aisa Kirabo Kacyira, Deputy Executive Secretary of UN-Habitat declared, “Leadership is needed where the common good is in conflict with the private good – and land is such an area that calls for leadership.” She said that the engagements at this conference, between policy makers, practitioners, civil society and academics, are crucial for strengthening such leadership.
Ambassador Gary Quince, head of European Union Delegation to Ethiopia and to the African Union, emphasized the partnership and collaboration that has been forged between the EU and AU, with the EU now supporting land tenure programmes currently in ten countries. Quince pointed out that, since the AU Declaration was adopted five years ago, Africa has enjoyed good economic growth, and the importance of agriculture has been recognized.
She however stressed the need to look at the challenges that are emerging, such as the upsurge of conflict across Africa and the related displacement of many thousands of people from their land and livelihoods.
The conference is organized by the Land Policy initiative, a tripartite consortium comprising the United Nations Economic Commission for Africa, the African Union Commission, and the Africa Development Bank.
Background
About 60 percent of the population on the continent derive their livelihood and income from farming, livestock production, fisheries and aquaculture, agro-forestry and other agricultural related activities. Looking ahead, if Africa is to meet the challenge of feeding an additional 1.6 billion people by 2050, an integrated approach to addressing land problems, as well as other challenges that have negative impacts in the agricultural sector is essential.
The Guiding Principles on Large Scale Land Based Investment, endorsed by Heads of State in April 2014, are to be officially launched on the second day of the conference, on the morning of Wednesday 12 November 2014.
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West Africa ‘on brink’ of major food crisis in wake of Ebola outbreak – UN expert
As Ebola continues to ravage West Africa, leaving more than 4,000 people dead, the region is now on the brink of a major food crisis, the United Nations Special Rapporteur on the right to food warned on 11 November 2014.
“While the countries hardest hit by the Ebola crisis struggle to contain the devastating virus, they now face a new challenge with experts predicting that over a million people in the region need food aid to allay shortages,” Ms. Hilal Elver said in a statement.
Agriculture, the main economic activity in West Africa with two thirds of the population dependent on farming, has taken a severe toll since the Ebola outbreak hit earlier this year.
The closure of border and sea crossings, a reduction in regional trade, along with a decline in foreign investment has left regional countries in a precarious food situation and farmers in disarray.
“Farmers in West Africa have been severely affected by this crisis, with fear and panic resulting in many having abandoned their farms, this in turn has led to a disruption in food production and a soaring rise in food prices,” Ms. Elver noted.
Staple crops such as rice and maize will reportedly be scaled back due to shortages in farm labour with potential “catastrophic” effect on food security, she added.
Ms. Elver also expressed her deep concern at reports suggesting that, in some cases, communities are facing food shortages due to poor road accessibility, while others have been threatening to evade quarantine because of lack of food supplies.
“In situations where Governments have imposed quarantine on communities or requested for self-quarantine, access to food should be strictly ensured,” urged the human rights expert.
The Special Rapporteur called on the international community to do everything in its power to ensure that the already existing food shortages in these countries, are mitigated, adding that immediate measures must be taken to ensure food security to stricken communities.
Ms. Elver, a Research Professor at the University of California, Santa Barbara, was appointed Special Rapporteur on the Right to Food by the Human Rights Council in 2014.
Special Rapporteurs are part of the Special Procedures of the Human Rights Council, the largest body of independent experts in the UN Human Rights system. They are not UN staff, do not receive a salary for their work and are independent from any government or organization.
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The pros and cons of SADC Gateway Port
Namport’s prospective N$30 billion ‘SADC Gateway Port’ will have enormous economic benefits for Namibia, but there are serious social and environmental consequences to be considered.
Logistics, economic and environmental experts last Thursday at Walvis Bay presented their opinions about the benefits and impacts of such a massive project during a business breakfast hosted by the Hanns Seidel Foundation in collaboration with the Municipality of Walvis Bay, the Economic Association of Namibia (EAN) and the Namibia Institute for Democracy.
The first phase of the project is expected to start in 2015, a year ahead of schedule. The new port, which will be the size of the current Walvis Bay harbour, will be situated five kilometres north of Kuisebmond, and is aimed at catering for commodity exports and importers from landlocked SADC countries.
It will include the largest, most modern ship and rig repair yard on the west African coast. It will have one of the largest gas and oil supply bases in the region; an undercover dry bulk terminal that can handle more than 100 million tonnes per year; a large vehicle import terminal; multi-purpose and break bulk terminal; liquid bulk terminals consisting of large tank farms and tanker berths; and a container terminal believed to be able to handle two million units per year. The port will also be linked to the municipal heavy industrial area behind Dune 7 with a new road and rail, as well as conveyer system.
Clive Smith of the Walvis Bay Corridor Group said the development of logistics in Namibia was key to Vision 2030 and crucial to the development of other key economic sectors.
The new port will result in the development of several ‘super hubs’ in key locations in Namibia along the main corridors linking Namibia to its SADC neighbours. These hubs will stimulate economic activity in the various regions, mitigating rural migration of the labour force to Windhoek and the coast.
Smith admitted that there will be impacts that need planning and management.
He said there was currently 700 000 tonnes of cargo transported from Walvis Bay to the interior. This required 170 trucks daily to transport the cargo. In about ten years, this volume could increase to 4,5 million tonnes, which will require 750 trucks daily using the road infrastructure, or 15 trains per day if the railway-lines are in place.
Social economic impacts could include influx of workers to Walvis Bay that will put pressure on town services and resources, while environmental impacts will come from large-scale dredging and construction; increased vessel and cargo traffic, and industrial operations.
EAN’s Matthew Mirecki said the construction of the port will boost the procuring of goods and services from local businesses, while in the long run the port will “open business in the region”.
He said the combined GDP of landlocked SADC nations that will use the port was about N$2,36 trillion while annual exports and imports from these countries are increasing between 5 and 7%.
Mirecki suggested that there was enormous economic potential for Namibia and that Namibia’s logistics infrastructure was better than most SADC nations.
“Namibia should however not compare itself to the rest of sub-Sahara but rather to the best in the world because that is what customers will be looking at,” he said.
Namibian Coast Conservation and Management (Nacoma) project coordinator Rod Braby said the environmental impact was a concern in the light of Namibia’s aim to be Africa’s top tourism destination.
“We have the tools to do this properly, and our government wants a win-win situation, but it’s not always possible. At least we can try and mitigate the impacts,” he said.
For Namibia to be the top tourism destination, it must keep its wide open spaces, pristine environment and its unique biodiversity, Braby said.
He said the impact of dredging, construction and vessel activity could impact on aquaculture and the behaviour of marine birds and mammals, which could put a dent on marine eco-tourism.
According to him it was crucial that the monitoring of activities be done throughout the development of the port to ensure that impacts are kept to the minimum.
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Politics, not economics, is at play... Indonesia wants more trade with Namibia
Indonesia, with a GDP of over US$1.3 trillion (N$15 trillion), believes it is inconceivable that its trade with Namibia is only worth N$37 million annually.
The Asian country says its political and diplomatic ties with Namibia are excellent, but this is not reflected in the trade volumes between the two nations.
Annual trade between the two countries currently stands at US$3.3 (N$37.2 million) with Namibia importing sardines, bath soap, hand-held tractors and wooden furniture while Indonesia imports fish oil, animal skins and distillate fuel.
Lasro Simbolon, the Indonesian Director for African Affairs, visited Namibia last week accompanied by a deputy director for economic affairs and a senior mines and energy official, among other Indonesian delegates.
The visit that included Aris Munandar (foreign affairs), Laode Sulaiman (mines and energy) and Gatot Sutrisno a delegate from CV Karya Hidup Sentosa, a hand-tractor maker, lasted from last week Wednesday until Sunday.
During the stopover, the Indonesian director and his delegation conversed with foreign affairs officials and also interacted with top officials from the NCCI.
“In the ministry of foreign affairs (in Indonesia) this visit is very important on our part,” declared Simbolon.
“The purpose is to push more and more concrete cooperation. Actually we have enjoyed an excellent and cordial bilateral cooperation,” he said.
“Ours is a relationship between two special friends, it’s very historic and it has a very strong political attachment,” he said in the wide-ranging interview that took place in Windhoek.
“Already we have a number of mechanisms in place in terms of policy instruments to enhance this cooperation.”
“But we feel there is a need to push it more and more to transform these political attachments into concrete and fruitful relations in the interest of our people here in Namibia and Indonesia.”
Responding to a question regarding the fact Indonesia has a GDP of over US$1.3 trillion but its economic footprints are not present in Namibia, he responded, “…this is a question to both Indonesian authorities and Namibian authorities and I think as I said in terms of political bonds our relationship is excellent, there is strong solidarity but economically we should do more.”
“I think Namibia and Indonesia should sit together to open the existing possibilities and I think more trade missions from Namibia should visit Indonesia – of course with the endorsement and facilitation by Namibian authorities,” further elaborated Simbolon.
He said the visit could see Namibia receive its share of Indonesian investments regarding the fact that about twenty Indonesian firms have already invested in soap and detergent making and in pharmaceuticals in Nigeria.
Already, Indonesian firms capitalising on their government’s business friendly trade policies have also invested heavily in numerous businesses in South Africa, in Mozambique, in Ethiopia and in Ghana among others.
Simbolon, whose government encourages Indonesian companies “to go international and to invest all over the world,” equally exhorted the government of Namibia “…to be more proactive and approach their Indonesian counterparts to tell them to invest here.”
After the weeklong visit, Simbolon wants the two countries to blot out the existing bottlenecks and challenges prevailing in the form of tariffs and non-tariffs so that trade is enhanced “because the potential is there and I think our economies are complimentary in nature.”
One of the existing choke points regarding two-way trade, according to him regards the image of Africa with some quarter of Indonesian society still using old benchmarks to assess the image of Africa.
“The image of Africa is still very much influenced by the image of the past which is not a true representation of the Africa today. Africa has made a lot of progress in terms of stability and good governance and Africa today is rising and there are a lot of business opportunities, it is a golden continent,” Simbolon told New Era on Friday.
Apart from strengthening the existing solidarity between the two countries, Simbolon says this process is two-way “because we also learn from our partners like Namibia.”
Indonesia is renowned for high quality fabrics and it makes Batik, the shirts that assumed global prestige after the late South African leader Nelson Mandela wore them.
Indonesia is the largest producer of crude palm oil (CPO) and its derivates such as cooking oil, lotion, soap and it also produces paper and high-quality electronics.
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Chifungula keen on mining audit
Auditor General Anna Chifungula says the extent of corruption in the mining industry requires serious intervention.
In an interview following a Millennium Development Goals (MDG) report which classified Zambian copper among three other African natural resources exploited in illicit financial flows amounting to a total of 57.9 per cent, Chifungula said illegality and high rates of illicit financial flows in the extractive industry need to be curbed.
“We were told at a meeting that I attended [recently] where Zambia was given one of the worst examples where we have really been exploited; in Zambia, you will find that even the bribes that those mining companies pay to government officials are regarded as ‘administrative expenses.’ Now, if administrative expenses are paid, we should know what type of administrative expenses they [mining entities] pay,” she said.
On Friday, Parliamentary Public Accounts Committee (PAC) chairperson Vincent Mwale called for involvement of the Auditor General’s office in the mining sector to validate reports they present to the government in a bid to enhance transparency.
But Chifungula said her office requires capacity and expertise to audit the mines.
“With the help of the Extractive Industries Transparency Initiative (EITI), a number of training interventions are taking place. I have around 22 officers in the revenue department who are learning how to carry out that process. Hopefully, around April 2015, we will definitely be competent and ready to start,” she said.
Chifungula said the involvement of her office in auditing mining houses will help reduce illegality in the sector.
The MDG report identified Zambia as one of four African countries whose natural resources remain continuously exploited through illicit financial flows that end up in some of the world’s top five destinations, including China and Saudi Arabia.
Meanwhile, PF chairman for mines, Wylbur Simuusa, said in a separate interview that the involvement of the Auditor General’s office in auditing mining houses is a progressive measure capable of receiving broad political support and acceptance.
“What is clear is that there is suspicion and counter-accusation, so for me, the only thing that can clear that is an audit of the mines,” said Simuusa who is also agriculture minister and Nchanga member of parliament.
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EU asks Nigeria to sign trade deal
A delegation of the European Union, EU, to Nigeria on Tuesday appealed to the Federal Government to sign the Economic Partnership Agreement (EPA) to enhance the export of Nigerian products to Europe.
The delegation’s Public Affairs Officer, Ugo Sokari-George, made the appeal while speaking with the News Agency of Nigeria at the ongoing Lagos International Trade Fair at the Tafawa Balewa Square, TBS, Lagos.
Mrs. Sokari-George said that signing of the agreement would be of immense benefit to the nation’s economy.
The EPA is a free trade agreement between countries in the EU and developing economies in Africa and Asia.
The aim is to foster mutually beneficial trade cooperation among the member countries.
According to her, developing countries that signed the EPA are enjoying various trade preferences on exports, as offered by the EU.
“Signing the EPA implies that trade restrictions will be relaxed to accommodate export goods from Nigeria.
“As a result, the increased exports will ensure the growth of the real sector and resulting in economic growth,” she said.
Mrs. Sokari-George, however, noted that there was a need for Nigerian entrepreneurs to upgrade the quality of their products to meet international standards.
“We can only explore the openness of the EU market to develop export opportunities for standard and quality products.
“The EU is available at the trade fair to guide entrepreneurs interested in exporting their products to Europe.
“We are here (trade fair) to advise you on how to meet the necessary requirements and documentations that will facilitate exports to Europe,” she said.
The fair which started on Nov. 7 will end on Nov. 16.
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Take advantage of factoring as trade finance tool, African businesses urged
Legislators and regulators should assist African businesses to take advantage of the benefits of factoring as a trade finance instrument by creating enabling environments for the flourishing of the instrument, the African Export-Import Bank (Afreximbank) has urged.
Speaking in Lusaka Saturday, at the end of a one-day seminar on factoring organised by the Bank for legislators and regulators from southern, eastern and northern Africa, Bank’s Executive Vice President in charge of Business Development and Corporate Banking Benedict Oramah said the legislators and regulators had a critical role to play in developing appropriate enabling laws to allow factoring to flourish on the continent.
Earlier, in an opening address read by Dr. Oramah, Afreximbank President Jean-Louis Ekra had said the absence of enabling laws and regulations was an important impediment to the expansion of factoring in Africa and had significant negative implication on the ability of SMEs to participate in Africa’s gradually expanding value chain.
“If we want SMEs to form the bulwark of the new Africa we are all looking forward to, we must work towards expanding factoring in the continent,” an Afreximbank statement made available to PANA Sunday quoted Mr. Ekra as telling the participants.
According to him, the seminar was aimed at creating awareness about the impediment posed by the absence of enabling laws and regulations and at introducing lawmakers and regulators to best practices in regulating factoring business.
He said that with recent socio-economic developments, Africa was gradually becoming the next frontier for factoring business, noting that despite volumes being significantly lower than in other regions, at only 1 per cent of the global total, the volume of factoring business in Africa had risen four folds from about five billion Euros in 2000 to about 23 billion Euros in 2012.
Declaring the seminar open, Dr. Michael Gondwe, Governor of the Bank of Zambia, had said given the challenging and highly competitive global trading environment and the evolving nature of international trade finance, better use of opportunities available for factoring could be achieved through acquisition of knowledge and skills.
That would, in turn, increase Africa’s share of global factoring business and enable factors to receive the full benefits provided by factoring.
Dr. Gondwe noted that because factoring helped corporate entities and SMEs that were performing well to gain access to credit without having to offer collateral or provide security other than the receivables generated in the normal course of their business, the instrument offered solutions for unlocking economic development and supporting African SMEs operating in export value chains.
The seminar, which was attended by about 80 legislators and regulators, sought to heighten awareness about factoring in Africa and to begin the groundwork toward a facilitative legal and regulatory environment across the continent.
Factoring is a trade finance tool under which a seller assigns his receivables (invoice) on a transaction to a factor who pays him an agreed value. The factor assumes ownership of the receivables and then collects the actual payment for the service/product from the buyer.
A similar seminar for regulators and lawmakers from West and Central Africa was organised by the Bank in Nigeria's economic capital city of Lagos in June.
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EU-Africa free trade agreement ‘destroys’ development policy, says Merkel advisor
German Chancellor Angela Merkel’s Africa Commissioner, Günter Nooke issued harsh criticism of the EU’s joint free trade deal with multiple African countries, claiming the EPA counteracts Europe’s development policy efforts, EurActiv Germany reports.
“Economic negotiations should not destroy what has been built up on the other side in the Development Ministry”, the German government’s Africa Commissioner Günter Nooke commented in an interview with German public broadcaster ARD on Tuesday (4 November).
Germany and Europe contribute large sums of tax money toward various development programmes in Africa, Nooke explained, but the economic agreement with African states cancels out these efforts.
The Economic Partnership Agreement (EPA) between the EU and several African states encourages African countries to open up to 83% of their markets to European imports. Meanwhile tariffs and fees are planned to be gradually eliminated.
In exchange, African states receive customs-free access to the European market. But many African countries are still resisting the EPA, amid concerns that they might lose their competitive trade advantage opposite European companies.
Kenya is among the countries that refused to sign. In response, the EU imposed import tariffs on multiple Kenyan products effective from 1 October. Media has reported that the measure led to numerous layoffs in several African firms.
Under this pressure, Nairobi finally snapped two weeks ago, and added its signature to the trade agreement.
Andrew Mold, the UN’s economic analyst for east Africa, said he sees the African economy as being threatened by the agreement in the long-term.
“The African countries cannot compete with an economy like Germany’s. As a result, free trade and EU imports endanger existing industries, and future industries do not even materialise because they are exposed to competition from the EU,” Mold commented.
MEP Gahler: “EPA strengthens African markets”
Meanwhile, centre-right MEP Michael Gahler defended the EPA, saying it offers African countries the chance to strengthen their own markets. In addition, the Christian Democrat pointed out, the agreement plans to create “flexible mechanisms”. African governments are not obliged to implement precise requirements until after 20 years, he pointed out.
For Kenya, the agreement is an opportunity to catch up with Europe, Gahler contended at the EurActiv Workshop “Europe+Kenya” in Berlin.
“Kenya should use this time to do its homework,” Gahler said, by building up its infrastructure, strengthening the rule of law and fighting corruption.
The European Commission has emphasised that 20% of domestic African products will remain protected in the long-term. In conjunction with development aid, the EPA could help partner countries create jobs and increase political dialogue with the EU, the Commission indicated.
MEP Gahler echoed the Commission’s opinion. “We Europeans have experienced, first-hand, how much prosperity is brought on by the free movement of goods. We want to help African regions take similar steps,” the centre-right politician said.
Thanks to various foreign trade agreements, Europe’s former colonies have enjoyed preferential access to the European market for many decades. In turn, they barely had to open their own markets.
But the World Trade Organization (WTO) declared this one-sided market opening unlawful in 2000. In response, the EU concluded the Cotonou Agreement in 2007 with 79 African countries (AKP countries). Since then, Europeans have been in negotiations with Africans over the corresponding free trade agreements.
Ska Keller: “We are pointing a gun at their chest”
37 less developed countries receive customs-free access to the European market even without the free trade agreement. The EU concluded the so-called “Everything but Arms” Agreement with these states. Under the agreement, they are allowed to export all products, other than weapons, into the EU without having to pay tariffs. As a result, these countries do not face economic consequences if they choose not to join the EPA.
But according to Green MEP Ska Keller, the EPA hurts regional trade, and does not leave partner countries any room to develop their own industries, create jobs and thereby pull people out of poverty. “Developing countries have a gun pointed at their chest – either they sign or their market access to the EU is restricted,” Keller said, “the EPA is the opposite of development cooperation.”
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Time to upscale renewable energy
It is no longer a secret. The world is fast running out of traditional energy sources such as coal. Furthermore, emissions from these fossil fuels have increased climate warming and caused environmental damage.
Therefore, the global community needs to start preparing for the future by embracing the use of renewable energy services and sources.
In addition to being affordable, secure and reliable, renewable energy will not be depleted and is less polluting to the environment compared to fossil energy.
Meeting in Frankfurt, Germany for the International Conference on Solar Energy Technology in Development Cooperation, energy experts said it was time the world up-scaled the use of renewable energy sources to ensure that socio-economic development is sustained.
“To significantly decrease the greenhouse gas emissions, the only possible way is to rely on energy systems based on renewable energy sources,” Werner Weiss, managing director of the Institute for Sustainable Technologies, said.
He added that the world, particularly Africa, has an abundance of renewable energy sources, which needs to be tapped to improve access to energy for all.
According to the African Development Bank (AfDB), southern African alone has the potential to become a “gold mine” for renewable energy due to the abundant solar and wind resources that are now hugely sought after by international investors in their quest for clean energy.
For example, the overall hydropower potential in the Southern African Development Community (SADC) is estimated at about 1,080 terawatt hours per year (TWh/year) but capacity being utilised at present is just under 31 TWh/year. A terawatt is equal to one million megawatts.
The SADC region is also hugely endowed with watercourses such as the Congo and Zambezi, with the Inga Dam situated on the Congo River having the potential to produce about 40,000 megawatts (MW) of electricity, according to the Southern African Power Pol (SAPP).
With regard to geothermal, the United Nations Environment Programme (UNEP) and the Global Environment Facility estimate that about 4,000MW of electricity is available along the Rift Valley in Tanzania, Malawi and Mozambique.
Research coordinator for the Renewable Energy Policy Network for the 21st Century (REN21), Rana Adib said it was pleasing to note that Africa and most developing countries were fast embracing renewable energy.
She said exploring renewable energy sources is generally a complex and expensive process but is nevertheless important for socio-economic development.
There is, therefore, need for the private sector to partner with governments because the latter alone cannot improve access to energy.
“Partnership between the private sector and government is very critical in increasing the uptake of renewable energy,” Adib said.
Other energy experts attending the conference said it was also important for Africa to craft attractive policies that lure investors into the energy sector.
These incentives include a predictable and stable regulatory environment, access to finance, as well as economic stability.
In a separate interview, Technical Advisor to the SADC Secretariat Energy Division, Wolfgang Moser said efforts are underway to establish the SADC Centre for Renewable Energy and Energy Efficiency (SACREEE).
The proposed centre would, among other things, spearhead the promotion of renewable energy development in the region.
SACREE is expected to contribute substantially to the development of thriving regional renewable energy and energy efficiency markets through knowledge sharing and technical advice in the areas of policy and regulation, technology cooperation, capacity development, as well as investment promotion.
The International Conference on Solar Energy Technology in Development Cooperation ran from 6-7 November in Frankfurt, Germany.
A number of energy experts from Africa and other developing countries took part in the conference that aims to discuss and share knowledge and experiences on how to boost the uptake of solar energy and technologies.
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Inaugural Conference on Land Policy in Africa to be held in Addis Ababa
The inaugural Conference on Land Policy in Africa (CLPA) will be held from 11 to 14 November 2014, at the African Union Conference Center, in Addis Ababa, Ethiopia. The CLPA 2014 is organized by the Land Policy Initiative (LPI), a joint initiative of the African Union Commission (AUC), the United Nations Economic Commission for Africa (ECA), and the African Development Bank (AfDB), under the theme “The next decade of land policy in Africa: ensuring agricultural development and inclusive growth”.
The overall goal of the Conference is to strengthen advocacy for comprehensive land policy, and to deepen capacity for land policy in Africa through improved access to knowledge and information.
The CLPA is intended to have a catalytic effect in creating a platform for presenting research activities and focusing the attention of Governments, parliamentarians, farmers, researchers, civil society, private sector, land practitioners (surveyors, mapping companies, administrators), and development partners on the issues and status of land policy development and implementation in Africa.
The Conference will thus meet the need of African stakeholders for a continental platform on land, and will complement existing global initiatives. This will support evidence-based land policymaking and implementation, including showcasing emerging and promising practices, and facilitating networking among land experts and land professionals in Africa.
The Conference adopts a scientific approach to capture a broad range of emerging knowledge, and generate interest in current land policy themes from a wide range of African policy actors - within academia and beyond.
The theme of the inaugural CLPA is in support of the declaration by the Africa Union of 2014 as “Year of Agriculture and Food Security in Africa”. The Conference proceedings will focus on related specific sub-themes, including: inclusive agricultural growth; development and implementation of land governance frameworks; women’s land rights; securing land rights under different tenure regimes; emerging best practices in developing and implementing land policies; and land administration.
The Conference will bring together key stakeholders including representatives of AU Member States, development partners, private sector, civil society, regional economic communities (RECs), researchers and academia, NGOs, and agencies with an established track record of engagement with land policy issues.
The CLPA 2014 is organized by the AU-ECA-AfDB Land Policy Initiative with support of the European Union (EU), the Swiss Agency for Development and Cooperation (SDC), UN-Habitat, the Food and Agriculture Organization of the United Nations (FAO), and the Forum for Agricultural Research in Africa (FARA). The event is organized under the guidance of a Scientific Committee comprising prominent experts on land policy from Africa and other parts of the world. The Conference benefits the support of the Government of the Federal Democratic Republic of Ethiopia.
The Land Policy Initiative was established in 2006 as a joint initiative of the African Union Commission (AUC), the United Nations Economic Commission for Africa (ECA), and the African Development Bank (AfDB). To date some of the key achievements of the LPI include the development of a Framework and Guidelines on Land Policy in Africa (F&G), adopted by the African Ministers responsible for land in April 2009, and further endorsed by African Heads of State and Government through the Declaration on Land Issues and Challenges in Africa during the Thirteenth Ordinary Session of the Assembly of the African Union, in July 2009. The F&G intends to facilitate the development and implementation of national land policies that foster economic growth and secure livelihoods of African people. The LPI is currently in the second phase of its activities, which focus on assisting Member States to implement the AU Declaration on Land in accordance with the F&G.