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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.
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Development billions channelled through tax havens
Public institutions providing finance to businesses in developing countries are channelling billions of euros through secretive tax havens, a report published today (4 November) has found.
Development Finance Institutions (DFIs) in Europe and the World Bank’s lending arm, the International Finance Corporation (IFC), are playing an increasingly dominant role in funding development.
DFIs support private companies in developing countries directly by providing loans or buying shares, or indirectly by supporting financial intermediaries such as commercial banks and private equity funds, which then on-lend or invest in enterprises.
But many of the intermediaries are based in the world’s most secretive tax jurisdictions, according to the report Going Offshore, published on 4 November by the European Network on Debt and Development (Eurodad).
Report author Mathieu Vervynckt said it was strange that DFIs route so much financial support through tax havens when developing countries lose hundreds of billions of euros every year through company tax evasion and avoidance.
“DFIs are essentially providing income and legitimacy to the offshore industry,” he said.
Supporters of the use of havens argue that they have a stable legal and regulatory framework designed for financial services and that their use prevents double taxation, when income is taxed twice by two jurisdictions.
Offshore financial centres are sometimes the only feasible way for pooling much needed capital for investment in risky regions such as Africa where there are weak legal and regulatory systems, they claim.
Tax evasion by multinationals has risen up the political agenda since the financial crisis. Cash-strapped EU countries are not willing to overlook much-needed revenue lost through tax dodging.
“The current political momentum towards tax justice presents DFIs with a great opportunity to set an example of best practice in establishing the highest standards of responsible finance,” the report said.
Report findings
The report examined 14 national DFIs and three international DFIs, the European Investment Bank, the European Bank for Reconstruction and Development and the IFC.
It also compared investments to countries on the Tax Justice Network’s Financial Secrecy Index, which ranks countries according to their tax secrecy and activities.
It found that:
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By the end of 2013, two thirds of the fund investments, 118 out of 157, made by the UK’s DFI, the Commonwealth Development Corporation (CDC), were through jurisdictions in the top 20 of the index
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Between 2000 and 2013, these funds received a total of $3.8 billion (€3.04 billion) in original CDC commitments, including $553 million (€442.56 million) in 2013 alone
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Of the 46 investment projects involving German DFI Deutsche Investitions- und Entwicklungsgesellschaft, as of 31 December 2012, at least seven were structured through major tax havens such as the Cayman Islands and Mauritius
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30 of the 42 investment funds used by the Belgian Investment Company for Developing Countries were domiciled in tax havens. As of 4 June this year, the investments were worth €163 million
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By the end of 2013, Norway’s Norfund invested $339 million (€267 million) through jurisdictions on the FSI’s top 20
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Between 2009 and 2013, the IFC supported financial intermediaries registered in tax havens listed in the top 20 FSI jurisdictions listed under the FSI, to the tune of €1.7 billion.
Eurodad criticised the European Investment Bank for not disclosing the countries where the companies it invests in are domiciled. That made it very difficult to judge the extent of its use of tax havens. The EIB was asked to comment yesterday and the story will be updated once a response is received.
A spokesman for the UK’s CDC said, "Businesses we support employ over one million people in developing countries and last year paid over €2.94 billion in local taxes.
“CDC requires the businesses we invest in to pay all taxes that are due of them and avoids making investments in jurisdictions that are not compliant with the OECD’s internationally agreed standards on tax transparency.”
Call for transparency and intergovernmental tax body
The report conceded that most DFIs have standards to govern the use of tax havens but said they were not easily accessible to the public
The standards are based on the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes. Many developing countries were excluded from the forum, Eurodad said, and it mostly focused on bank secrecy rather than corporate tax dodging.
The NGO called for the creation of a United Nations intergovernmental tax body to ensure developing countries can participate equally in the global reform of tax rules. This should take over from the OECD as the main forum for international tax cooperation.
Eurodad wants DFIs to ensure the funds they invest in are registered in the county of operation. They should also only back companies and funds that are willing to publicly disclose information about their owners and report back to the DFI their financial accounts on a country by country basis.
Vervynckt said, “We are urging these institutions to stop supporting companies that use tax havens and make sure that details of all operations are open to the public. It’s only right to demand that [DFIs] should be accountable to the taxpayers that pay for them and the people in the developing countries that they are supposed to help.”
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Sitharaman sees hope for trade facilitation in WTO talks
Commerce minister makes strong case for food subsidy to poor
India on Sunday exuded confidence that the current impasse over the Trade Facilitation Agreement (TFA) and food security in the World Trade Organization (WTO) would be resolved but also indicated such a resolution might not come soon as it stood firm on its stance over food subsidy to the poor.
Commerce and industry minister Nirmala Sitharaman also castigated the Bali package, signed during the previous United Progressive Alliance regime, as distorted and imperfect, hurting the sovereign rights of India to feed its poor and procure from farmers living on subsistence farming.
Addressing the India Global Forum here, she rejected suggestions given by some countries in the October talks in the WTO that a resolution to the problem be found out by some countries, leaving others.
The forum was organised by the International Institute of Strategic Studies and Observer Research Foundation.
An implementation of the TFA, as agreed in Bali, was derailed in the July talks after India asked the WTO members to also ink an agreement on food subsidies given to the poor.
“I have seen that between July and now, there is greater understanding, there is greater appreciation, and engagement with the WTO. The Prime Minister’s visit to the US gives us a feeling that the US is also greatly appreciative of what we are narrating. I hope that there will be a solution because multilateralism will have to remain sustained and be empowered,” Sitharaman said.
After July, talks in October in the General Council also failed. Now, the council will meet in December. WTO director-general Roberto Azevedo had said in October that even if an agreement on the TFA was inked tomorrow, the deadline to implement it by December can’t be met.
For any resolution of the logjam, the US and Europe would have to agree to India’s stand on food security.
“We are with you on the TFA but be sure you understand our case. Otherwise, these very economies will come back to us and lecture us that the Government of India does not take care of the starving millions. We want no such lectures. We will take care of our starving millions,” Sitharaman said.
She added that India’s demands are legitimate, requiring peace clause to be extended and then permanent solution to the food subsidies problems be found.
“Therefore, please extend the peace clause and then find a permanent solution, then make us tweak it till 2017, these are legitimate demands.”
According to the WTO’s agreed formula, food subsidies have to be capped at 10 per cent of total agriculture production at 1986-88 prices for developing countries.
The UPA government had signed the TFA in Bali under a peace clause that gave developing countries exemption from the 10 per cent until 2017. It came at a time when India has been preparing to roll out the Food Security Act, which gives cheap food to 67 per cent of the population.
“We want you to understand that let the peace clause co-exist until such time that you don’t get us a permanent solution,” Sithraman said.
Pointing out that the 10 per cent cap on subsidies is based on 1986-88 prices, she said: “Is that right? Do you agree on that? Any sensible economist would think there is something wrong here.”
The commerce and industry minister also reminded the West that it also gives food subsidy, but doesn’t call it so and doesn’t bring it on the table.
“From the Uruguay round, the subsidy to farmers being given by the United States of America or the European Union are not on the table for discussion. We are not insisting to get them on the table but let us remind the world that it is a fact.”
Sitharaman reminded the WTO that decisions have to be taken on a consensus basis. “You are not going to isolate any one decision and isolate any one country. Decisions are not about one country but all issues. This is a principle which guides the WTO. How could you then isolate trade facilitation and say all of us want that trade facilitation?”
She reminded the developed world that after getting the TFA package in Bali, it forgot about the developing world. “After having got it, would you come back to us and say our problems are taken care of. I want to address yours, which is essentially feeding the poor or procuring from the poor farmers?”
The minister said these arguments are not intended to weaken the WTO, these are arguments to remind the WTO of its own stated principles. “You will not agree on any one thing, till you agree on everything. But in Bali, we forgot that golden principle.”
The minister also asked the WTO to change the way it engages with the emerging market economies and recognise the fact that solutions to the problems in advanced world lay in the hands of the Expanded Middle East. “Concerns emerging from different parts of the world are more important now because many of the solutions with which bodies have moved all the while are now fairly jaded. Economies elsewhere provide solutions not for themselves only but also provide hope for Europe and the US.”
Azevedo recently said some members sought the implementation of the TFA as a plurilateral pact as part of the three alternatives to end the impasse over food security.
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Obama says momentum building on ‘historic’ trans-Pacific trade deal
U.S. President Barack Obama said on Monday he sees momentum building for a Washington-backed free trade agreement in the Asia-Pacific, after arriving in Beijing on the first leg of an eight-day Asia tour.
U.S officials have ruled out a major announcement on the ambitious 12-country Trans-Pacific Partnership (TPP) in Beijing, where Obama will attend the Asia-Pacific Economic Cooperation (APEC) forum and hold talks with Chinese President Xi Jinping.
But business leaders attending the APEC forum have been looking for signs of progress on the TPP, especially as China is pushing for a separate trade liberalization framework called the Free Trade Area of the Asia Pacific (FTAAP).
Obama said the TPP, in a deadlock largely due to disagreement between the United States and Japan over how widely Japan will open its doors to farm exports, had the potential to be an “historic achievement”.
“During the past few weeks our teams have made good progress in resolving several outstanding issues regarding a potential agreement. Today is an opportunity for us at the political level to break some remaining logjams,” Obama said at a meeting of TPP leaders at the U.S. embassy.
“What we are seeing is momentum building around a Trans-Pacific Partnership that can spur greater economic growth, spur greater jobs growth, set high standards for trade and investment throughout the Asia-Pacific.”
Some see a proposed study on the FTAAP plan, which will be presented to APEC leaders for approval this week, as a way to divert attention from the TPP, which excludes China.
TPP leaders said in a statement issued after the meeting that they remained open to including “other regional partners that are prepared to adopt its high standards”.
Xi said FTAAP “does not go against existing free trade arrangements which are potential pathways to realize FTAAP’s goals”, state news agency Xinhua reported.
FTAAP can be an “aggregation” of existing free trade agreements, Xi said, adding that the aim was to consolidate regional integration and define long-term goals.
In a concession by Beijing, two sources with direct knowledge of negotiations said the APEC leaders’ declaration to be issued on Tuesday had been revised to drop a deadline for the completion of FTAAP negotiations, initially set at 2025.
Also, the declaration would call for a “collective strategic study” on FTAAP to be conducted within two years instead of a “feasibility study” which would have marked the start of FTAAP negotiations, the sources told Reuters.
Asked if this was a setback for China, one source said: “It’s too strong a word. They have to compromise... find consensus. It’s part of a process.”
STRIKING A BALANCE
Obama arrived in China seeking to show renewed commitment to his administration’s much-touted strategic ”pivot” toward Asia, widely seen as an effort to counter China’s rising influence. The TPP is at the economic core of that rebalancing effort.
His challenge will be to overcome scepticism among some Asian allies as to whether the United States can fully engage with the region at a time when it is preoccupied with global crises ranging from the fight against Islamic State militants in Iraq and Syria, the spread of Ebola and the conflict in Ukraine.
At the same time, the drubbing Obama’s Democrats took in last week’s midterm congressional elections will hardly strengthen his position in talks with China or with allies in the region. Many may see him as a diminished leader on the world stage in the final two years of his presidency.
Although negotiations on the TPP have been slow-moving, one of the areas where a new Republican-controlled Congress might actually help Obama is by easing passage should a trade deal be reached.
Some trade experts note that reaching agreement before U.S. presidential electioneering picks up next summer could be crucial to avoiding U.S. domestic political hurdles.
The TPP would establish a free-trade bloc stretching from Vietnam to Chile and Japan, encompassing about 800 million people and almost 40 percent of the global economy.
Obama’s focus on Asia business ties on the first day of his visit underscored his efforts to strike a balance between seeking deeper economic cooperation with a rising China while also challenging Beijing with the U.S. pursuit of the TPP.
For his part, Obama comes to China boasting a resurgent U.S. economy. This could give him added economic clout as he attends regional summits in Beijing and Myanmar and a G20 summit in Brisbane this week, even if his political capital at home appears to have waned.
» 2014 APEC Ministerial Meeting – Joint Ministerial Statement (Beijing, 8 November 2014)
» Remarks by President Obama at APEC CEO Summit (Beijing, 10 November 2014)
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ECOWAS slammed over delay in adoption of single currency
Some analysts have slammed the Economic Community of West African States (ECOWAS) for its frequent postponement of the deadline for the adoption of a single currency.
The new deadline for ECOWAS for the adoption of a common currency is 2020.
The Head of ECOWAS national unit of Ghana, Bonaventure Adjavor, disclosed this in Nigeria during a meeting of the commission on strategic planning framework for 2016-2020.
But some analyst say this is close to impossible to achieve.
ECOWAS has on six occasions postponed the deadline because member states have not been able to meet the set criteria. First it was 2000, then 2005, 2010, 2014, 2015 and now 2020.
For the single currency to be achieved there are basically four primary convergence criteria, along with six secondary ones, that need to be achieved.
The primary criteria are a single digit inflation rate at the end of each year; a fiscal deficit of no more than 4 per cent of the GDP, central bank deficit financing of not more than 10 per cent of the previous year’s tax revenues, and having gross external reserves that can give a country import cover for a minimum of three months.
Until the recent economic turbulence, Ghana for example was on course having achieved a single digit inflation for a period.
Analysts argue that the dream of having a common currency may just be a mirage.
Banking analyst with Osei Tutu II Centre for Executive Education and Research, Nana Otuo Acheampong tells Citi Business News the 2020 deadline cannot be met.
“There is little that one can make of it than just to say that it is a pie in the sky. In my recommendation, it may be difficult to meet the criteria that we set.”
According to Nana Otuo Acheampong “the four primary criteria, none of the countries involved has met any of them. Then we have got the six secondary criteria which is going to be more difficult to meet. So unless there are some revolutionary of economic policies, it is going to be difficult.”
He said if history is anything to go by, the deadline may be postponed again. “It was 2000, postponed to 2005, then 2010, to 2014, 2015 and now to 2020. Where is the political will to be able to move things in such as a way that we meet the criteria?”
Meanwhile currency analyst and Head of Research at Group Ndoum, Samuel Ampah says ECOWAS is being over ambitious with its plan. According to him, member states should work at a number of fundamental issues before.
“There are so many things that we need to build up before we start thinking about the eco. One is infrastructure. If you look at the ECOWAS countries that are trying to get the single currency, infrastructure is a big problem.”
According to him, “Two is the issue to do with manpower, we really have to build our manpower systems very well. Three, we need to make sure that we don’t have political interferences. The issue that happened to Burkina Faso is a clear indication that if we should go with the eco, we might have a problem.”
Samuel Ampah also said trade among member states must be enhanced before ECOWAS gets the common currency.
“Talking about trade, we should look at removing all the trade barriers. We have a lot of trade barriers in Africa, and that is not going to help us.”
“I believe these are the key things we should look at before we will look at getting a single currency. In the European community, they were able to work at all these, before they were able to get the Euro”, he concluded.
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EU says Yes to Kenya biotech food exports
The European Union has rescinded its earlier statement that Kenyan farmers will find it difficult to find market in the EU if the country adopts genetically modified crops.
The Head of Rural Development and Agriculture at the EU Dominique Davoux Friday said they have no problem importing GM products from countries that meet the set guidelines.
The official, who spoke on behalf of the EU Head of Delegation to Kenya, Ambassador Briet Lodewijk, said the envoy had been quoted out of context when early this year, he reportedly said the trading bloc would not accept GM products from Kenya.
“The position of EU is that we have a list of GMO products to be imported into the EU space. If Kenya contributes there, it will have access to the market,” he said during a press conference in Nairobi.
Mr Briet said the EU has authorised the importation of 58 genetically modified crops including GM maize, soya, oilseed rape, sugar beet and cotton.
Friday’s forum was organised by The Kenya University Biotechnology Consortium in collaboration with the Open Forum on Agricultural Biotechnology in Africa and the International Service for the Acquisition of Agri-biotech Applications.
The meeting was attended by researchers, policy makers, MPs the private sector.
Busia Woman Representative Florence Mutua, who last month led MPs in a fact-finding mission in Europe, urged for an unconditional lifting of the ban.
“Why are developed countries that are able to feed their people coercing us to remain backward? In Spain we met farmers growing GM maize.”
Ms Mutua said lifting the ban would open the door for the commercialisation of BT cotton, which has been proved to be several times more cost-effective than traditional cotton.
“It is illogical to associate cancer with GM technology yet there are so many Kenyans dying now of cancer yet there is no genetically modified ones in the country. Even cellphones faced opposition due to myths when they came to Kenya,” she said.
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Failed Mozambican deal hits SA firms
South African blue-chip companies have ended up on the wrong side of a soured R3.7-billion Mozambican port deal, including Esor Franki and law firm Bowman Gilfillan.
South African taxpayers also look set to lose out as the Development Bank of SA has already sunk $1.5-million into the deal to construct a port at the Pemba oilfield terminal project.
The story is that the government of Mozambique awarded a South African company, Muyake SA, the contract to build the port in 2012. Muyake set up a company called Gingone Logistics, and began working on the project.
It hired SA firms to do the work – including Johannesburg-based project managers Prop 5 Corporation, Esorfranki, NRM Consulting, Hatch Goba, DDJ Law, Bowman Gilfillan and AS Nonyane.
But Muyake then discovered that ENH Integrated Logistics had swooped in and grabbed the contract. ENH is 51% owned by Mozambique’s government. The other 49% is owned by a murky entity called Orlean Invest Nigeria, in partnership with Sonangol Integrated Logistics Services, according to the Mozambique Mining & Energy Post.
The South African firms were then booted off the project, according to a court order.
Now Muyake has filed papers in Mozambican courts demanding $143.9-million from the government, arguing that the state-owned port authority Portos De Cabo Delgado SA was reneging on an out of court deal that was agreed after Muyake discovered it had been sidelined.
According to that “settlement”, Muyake was to be included in the new concept with ENH, and refunded its costs.
Muyake’s claim includes $8.8-million for services performed in the “promotion and implementation” of the project, $25-million for services performed in line with contracts between Muyake and the South African firms, and $110-million for future profits that have now been lost.
In all, Muyake owes the other SA firms $63.2-million, of which it has already paid just more than $25-million.
Prop 5 CEO Mbali Swana says in a letter to Muyake CEO Simao Muhai dated July 25 that Muyake owes other SA firms $63.2-million but has not yet paid $36.5-million, which excludes the costs of winding up the contracts.
Said Swana: “The sudden termination of the contracts and suspension of the project has the undesired effect of terminating the cash flow provided by the Development Bank of Southern Africa. Service providers and contractors are out of pocket.”
“They have not been paid for a long period, and there is no indication that you are ready to make such payments. You have therefore left us with no option but to demand that you honour your payment obligations.”
The Development Bank of Southern Africa, which is funded by South African taxpayers’ money, released $1.5-million as a “project preparation facility” out of a total $6.6-million it had committed to give, according to a letter of demand seen by Business Times.
The project would have been a big deal for the South Africans as the port authority has a lease to run the terminals at the Bay of Pemba and in Palma for over 30 years – which is expected to become a regional hotspot for Mozambique’s booming natural gas industry.
Mozambique has one of the world’s largest natural gas reserves with 170-trillion cubic feet discovered already, while the natural gas sector is expected to attract capital inflows worth over $70-billion in the next decade, according to Esperança Bias, minister for mineral resources.
Extensive documents confirm that Muyake had got the contract, but a statement was released to the media in April saying “the licence would be issued in favour of a foreign third party with prejudice to the complainant”, Muyake said.
Swana said in an interview the business was worth $330-million, and two private equity players had been approached to take up stakes in Gingone Logistics, a special purpose vehicle, created for the project.
“In April, we suspected that something was not right,” he said. The project was stymied a month and a half from financial close.
“We never got to draw the [DBSA] loan. [The port authority] understood there was a time limit. They frustrated the project for six months from December to June,” Swana said.
But the South African companies, perhaps wary of offending a foreign government, are treading lightly. Muhai referred enquiries to Prop 5.
Bowman Gilfillan, which conducted a legal review which determined that Gingone still legally had the rights to the project, was also not keen to comment.
Anne McAllister, a director at Bowman Gillfillan, said she could not discuss client matters.
The DBSA was also initially reluctant to comment.
It has since confirmed its involvement but said less than a quarter of the approved funds were disbursed.
Its current exposure to the project was less than 0.025% of DBSA’s total assets, it said.
The DBSA had also reviewed agreements between the parties and was comfortable that Muyake was considered the preferred bidder.
But it said that the government of Mozambique held the right to award the concession to whomever. The DBSA had reviewed the settlement agreement.
“It goes without saying the costs incurred by Muyake would include the facility provided to it by the DBSA.
“The DBSA will continue to monitor this matter and seek repayment of the funds disbursed to Muyake as and when it is appropriate to do so,” the bank said.
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Kenya to sign convention that curbs tax fraud
Kenya plans to pursue individuals who use offshore companies to evade taxes and commit other economic crimes, after the government announced it will endorse an international convention that targets such offenders.
The government said the decision to sign the Organisation for Economic Co-operation and Development (OECD)-Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters is aimed at promoting transparency in tax matters.
The announcement was made at the recent 7th meeting of the Global Forum on Transparency and Exchange of Information for Purposes held in Berlin.
The meeting sanctioned the inclusion in the terms of reference of a requirement for tax authorities to maintain beneficial ownership information.
Kenya Revenue Authority Commissioner-General John Njiraini was among the officials who represented government in the meeting.
Keeping records
“The convention facilitates international co-operation for a better operation of national tax laws, while respecting the fundamental rights of taxpayers,” Mr Njiraini said.
Keeping records of who holds beneficial interest would lift the veil on shadowy figures behind cross-owned companies that abet tax evasion and illicit activities like drug and human trafficking.
A statement from the KRA said Finance Cabinet Secretary Henry Rotich has pledged to sign the convention.
The Convention will not only make it possible to reveal the names of tax evaders, but also make it easier for the government to pursue them within and outside the country.
The agreement is the most comprehensive multilateral instrument available for all forms of co-operation to tackle tax evasion and avoidance.
Exchange of information
Mr Njiraini said Kenya has joined a continental initiative designed to create awareness among African states on the benefits of the current international co-operation on the exchange of information that would help governments to collect revenue domestically.
Kenya has in the past found it difficult to pursue offshore companies accused of involvement in questionable deals. In addition, getting information on the real owners of some holding companies doing business in the country has been difficult.
A case in point that caused controversy a few years ago is the ownership of Mobitelea Ventures, a company that previously owned 12.5 per cent of Vodafone Kenya Ltd, a 40 per cent shareholder of Kenya’s largest mobile company Safaricom.
In 2007, an investigation by a parliamentary committee failed to establish whether the Guernsey registered company’s owners included local politicians who may have used their influence to facilitate Vodafone’s original $20 million investment in Safaricom in 2000.
At the time, Vodafone refused a formal request from the parliamentary committee to reveal who owned Mobitelea, insisting that the company was its chosen partner in Kenya.
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World Bank supports new actions to improve connectivity of Land-locked Countries
Landlocked countries can improve their connectivity by strengthening cooperation with their transit neighbors and other global partners, as well as pursuing specific actions to reduce trade and transport costs while expanding broadband coverage.
This was one of the main conclusions of the Second United Nations Conference on Landlocked Developing Countries (LLDCs), hosted by the government of Austria in Vienna from November 3-5. The UN Conference also adopted a new Program of Action for LLDCs to be implemented over the next decade.
The Program of Action establishes six priorities, including:
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Fundamental transit policy issues
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Infrastructure development and maintenance
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International trade and trade facilitation
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Regional integration and cooperation
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Structural economic transformation; and
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The means of implementation
The World Bank’s delegation was led by Senior Director for Transport and ICT Global Practice, Pierre Guislain, who strongly welcomed and supported the new Program of Action for LLDCs.
“The World Bank will actively support LLDCs and their transit neighbors through programs that work towards the reduction of transport and trade costs along the main trade routes important to LLDCs,” Guislain said in a statement delivered at the plenary of the conference.
Guislain also mentioned the importance of strengthening the transport and logistics sectors by phasing out anti-competitive practices; improving intermodal connections, especially at the interface between ports and rail or roads, as well as in the aviation sector; and expanding broadband coverage.
Landlocked developing countries are home to 440 million people, but represent only about one percent of world trade, due to inherent geographic disadvantages compared to countries with seacoasts and deep-sea ports.
“Despite some gains in the past decade, these 32 countries remain marginalized in the global economy, facing costs of trade that are 70 percent higher than transit coastal countries,” Guislain explained at the conference’s plenary. “Most LLDCs are also in the ‘bottom billion’, with an average real GDP per capita of $800, compared with $2,800 for transit countries.”
In order to help address some of the challenges land-locked countries face, the World Bank Group provides more than $2 billion per year in investments and technical assistance projects. Some of these projects, for example, include major regional transport corridor programs in Central Asia or broadband fiber connectivity for landlocked countries in Africa.
In addition to funding ‘hard’ infrastructure, the Bank also works with clients on the policy interventions that underpin many of today’s LLDC success stories: from customs reform to better regulation of trucking and other transport segments.
The World Bank also encouraged landlocked and transit countries to follow the UN Broadband Commission’s recommendations, in particular the adoption of a national broadband strategy and making broadband affordable to all through adequate regulatory and market reforms.
“Allow me to reiterate our strong commitment to work with you as clients and partners of the World Bank Group towards our common goal of ending extreme poverty and bolstering shared prosperity in the landlocked developing countries of the world,” Guislain concluded.
Report: Improving Trade and Transport for Landlocked Countries
Context: The Almaty Programme of Action
Most landlocked developing countries (LLDCs) face specific constraints imposed by geography. They remain on the periphery of major markets. They exhibit lower per capita income compared to their transit neighbors, and they are usually dependent on their transit neighbors’ markets, infrastructure and institutions.
The Almaty Programme of Action, adopted by the United Nations in 2003, recognized that landlocked developing countries have specific needs in reducing their trade costs and promoting growth. The program and its implementation, including the support of international agencies like the World Bank, have been very much focused on connecting LLDCs to markets and the promotion of infrastructure complemented by “soft” investment, especially in measures facilitating trade, transportation, and transit.
This publication, Improving Trade and Transport for Landlocked Developing Countries: A Ten-Year Review, anticipates a renewal of the Programme of Action in November 2014. It reviews the progress to date of the initiative and provides an analysis of the current situation, constraints, and priorities of LLDCs. It also discusses potential solutions to reducing LLDCs’ access costs, and the contributions of the World Bank Group to that effort.
Priorities Going Forward
For the next decade, policy makers and development practitioners need to maintain focus in several areas to reduce trade costs and promote growth.
Infrastructure
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To ensure the most efficient infrastructure cost recovery and maintenance of roads, LLDCs should adopt a vignette toll system.
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For the railway system, one of the potential solutions is to connect railway infrastructure efforts with the extractive industry and require mining companies to raise capital for infrastructure buildings and maintenance. This would help LLDCs to achieve greater economies of scale.
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Scheduled maintenance is highly desirable to prevent higher costs of deferring repairs.
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It is important to explore innovative means to mobilize additional funds to build and maintain existing transport infrastructure, e.g. concessions or cross-border investment packages. Overall, LLDCs should make investments only when traffic is expected to achieve economies of scale to cover the operating costs.
Trade Facilitation
Despite significant progresses in trade facilitation, many challenges remain, especially in better integrating border management and facilitation of procedures beyond customs (interventions of other control agencies). The Bali Trade Facilitation Agreement offers help to LLDCs that rely on transit through third countries to access ports. However, it offers only a partial solution because its main focus is limited to customs administration, use of an IT system, and access to information. The Bali TF Agreement describes some aspects of the governance mechanism including establishment of a new Trade Facilitation Committee and possible subsidiary institutions, but much of it still needs to be finalized. The actual benefits of this FTA package will depend on the swift ratification of the agreement.
Reform of the Trucking Sector and Implementation of Transit Regimes
Finally, a push is overdue in two related areas, which are by nature regional and cross border: reform of the trucking sector and implementation of transit regimes. In most LLDCs, trucking remains a main mode of freight transportation so a system similar to an International Road Transport (TIR) system, in which customs control is operated in an internationally harmonized manner, would benefit many LLDCs. There have been some reforms to transit regimes, including initiatives to govern the cross-border movement of transport vehicles, but these have only achieved partial success. The new efforts should focus on improving the transit regime, reforming transport market regulation, optimizing multimodal and railroad potential, and exploring air cargo transportation.
More decisive action is needed to seriously address implementation barriers and to improve efficiency of transit systems, following the TIR or European transit principles. These should include:
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Removing market distortions for international trucking and promoting incentives for quality and compliance (such measures can be complemented by capacity building);
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Implementing a single international transit document (“carnet”) within a region, without resubmission at each border;
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Developing a proper regional IT system that allows initiation, tracing, and termination across border of transit operation (Central America has implemented such as system recently, the TIM); and
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Enacting a common guarantee system, the details of which would depend on the regional architecture of financial services.
Download the report below.
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Treasury seeks reforms to deal with weak economy, low budget spend
Kenya’s rebased economy will not grow as fast as initially projected, a paper tabled by Treasury Secretary Henry Rotich shows.
Instead of the 5.8 per cent growth rate on which the national budget was based, Treasury now expects the economy to grow by between 5.0 per cent and 5.5 per cent.
This drop will impact revenue the government expects to raise as well as spending allocations for various sectors; the Treasury generally relies on growth assumptions to set the revenue it expects to raise for government spending.
In a memorandum to the Cabinet in September, Rotich expressed concern about the weak economic performance in the first quarter of the year, which he blamed on poor rains and the impact of insecurity on the tourism sector.
The Budget Review and Outlook Paper (BROP) will be submitted to Parliament on Cabinet approval. The paper has three objectives.
One is to inform Parliament how government spent public money in the previous year, including whether the targeted revenue approved was raised and expenditures made as promised.
Budget implementation
Two, it will inform Parliament how the implementation of the last budget and today’s economic landscape are affecting the implementation of the current budget and makes the case for revisions in the Supplementary Estimates.
Lastly, it sets spending limits for the various sectors and ministries to be considered by the planners of the 2015/16 budget.
In the paper, Mr Rotich has asked the Cabinet to direct relevant bodies to respect the proposed limits to ensure that projects included in the budget are have the lowest cost but the greatest impact.
Rotich’s memorandum also seeks approval for a raft of new measures meant to generate greater tax revenue, cut wasteful spending and require ministries and counties to implement, at the very least, 80 per cent of their budgets.
Among measures likely to be adopted before the next budget is implemented are tax reforms.
Rotich is seeking the complete automation of KRA’s services and the introduction of two new tax bills to Parliament to strengthen tax administration.
Duplicated roles
Once biometric registration of civil servants is complete, the government intends to eliminate duplicated roles and redundancies to free cash to be spent on other essential services.
Ministries, departments and agencies as well as county governments have shown poor absorption rates of their allocated budgets.
Counties, for example, only used 58 per cent of their allocation; most of it was spent on wages. Only 21 per cent was reported spent on development, which goes against government policy that at least 30 per cent or revenue should be spent on development.
“There will be enforcement of a project implementation performance benchmark of at least 80 per cent, expenditure tracking and a value-for-money audit,” Mr Rotich notes in the paper.
Lastly, the CS intends to implement a government payment gateway and the use of the IFMIS (Integrated Financial Management Information System) as the sole end-to-end platform used by government for its financial operations.
The BROP indicates the government missed its target on both revenue and expenditures and identifies those responsible for the under-performance.
While the Kenya Revenue Authority raised its targeted Sh917 billion, ministries, departments and agencies that were supposed to come up with appropriations-in-aid of Sh63 billion booked only Sh28 billion.
Under-spending
The difference is attributed to under-reporting by ministries, especially Education, under which universities fall.
Government ministry under-spending by Sh150 billion has been attributed to the lack of capacity, procurement issues and delays.
The ministries of Education and Health, as well as the Teacher’s Service Commission, gobbled up 42 per cent of recurrent expenditure.
The Defence and National Coordination ministries took another 27 per cent.
Transport and Infrastructure was the biggest spender of development funds, followed by Energy and Petroleum, and Devolution and Planning. Nonetheless, money spent on development projects at the county level was not captured in the review.
While noting that this year’s economic performance has been weak, Treasury projects much higher growth from 2016 upwards of 6.3 per cent.
Higher budget
It identifies irrigated farming, geothermal power, affordable house loans and ICT among the drivers of this growth, with the petroleum sector contributing to growth further down the line.
Rotich in his memorandum warns that poor budget execution means the base for the next budget is reduced.
The next budget is expected to be Sh1.67 trillion, up from the Sh1.59 trillion allocated in the current budget, with government revenues expected to Sh1.35 trillion.
Recurrent expenditure will rise to Sh914 billion while development expenditure will rise to Sh505 billion.
The deficit of Sh250 billion will be financed through borrowing Sh114 billion (external) Sh133 billion (internal). There is no mention of privatisation of government entities.
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Communiqué of Africa Business Initiative Response to Ebola
At an historic meeting on 8 November 2014, the African Union together with African Development Bank, the United Nations Economic Commission for Africa and leading businesses in Africa committed to join forces to create and support a funding mechanism to deal with the Ebola outbreak and its consequences.
To date, the Ebola virus disease has devastated communities, infecting more than 13,700 people and killing over 4,900. While the global response to the current crisis has increased in recent weeks, there is still a critical need for additional competencies to care for those infected, strengthen local health systems and prevent the disease spreading.
African business leaders at the Roundtable comprised CEOs from different sectors, including banking, telecommunications, mining, energy, services and manufacturing, among others. They agreed to establish a fund under the auspices of the African Union Foundation through a facility managed by the African Development Bank, to boost efforts to equip, train and deploy African health workers to fight the epidemic.
At the meeting, participants saluted Governments, International Organizations, Institutions, NGOs and businesses that have been at the frontlines of the Ebola response, and agreed to urgently scale up the deployment of health workers in the three most affected countries: Liberia, Sierra Leone and Guinea. They also noted with appreciation that a number of African countries to date have pledged over 2,000 trained health workers to support the efforts in West Africa, with additional commitments expected.
Responding to appeals from these countries, leading companies in Africa, present at the Roundtable, committed logistical support, in kind contributions and over $28 million as part of the first wave of pledges. In addition, a number of businesses represented in the meeting undertook to immediately consult with their governance structures and will announce their pledges to this effort in the next few days. Roundtable participants further called on the private sector across Africa to join them in this effort. Businesses also agreed to leverage their resources and capacity to help galvanize citizen action around a ‘United Against Ebola’ campaign, and to provide individuals across Africa and globally with an opportunity to contribute.
These funds will be used to support an African medical corps – including doctors, nurses and lab technicians – to care for those infected with Ebola, strengthen the capacity of local health services and staff Ebola treatment centres in Liberia, Sierra Leone and Guinea. These resources will be deployed in the framework of the African Union Support to Ebola Outbreak in West Africa (ASEOWA), in close coordination with the national taskforces in the Ebola-affected countries and the United Nations Mission for Ebola Emergency Response (UNMEER). The resources mobilized will be part of a longer term program to build Africa’s capacity to deal with such outbreaks in the future.
Moreover, participants decided that the Africa Business Roundtable would become an annual meeting of the African Union to help solidify collaboration with the private sector in Africa on key development issues facing the region.
Business leaders agreed on a follow up mechanism to implement the commitments made at today’s meeting, reach out to other business entities, monitor the roadmap and agreed to act with urgency.
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Exports of poorest countries rebounded in 2013 but their trade share remains marginal
The exports of goods and commercial services from least developed countries (LDCs) increased by 5.2% last year but the total share of LDCs in world trade remains marginal, the LDC sub-committee heard on 6 November 2014.
The WTO Secretariat presented to the sub-committee its annual report on LDCs’ market access. The report notes that in 2013 the total value of LDC exports of goods and commercial services grew by 5.2%, more than twice the world average (2.5%). However, the total share of LDC trade still remains marginal at around 1.23% of the world’s total.
The LDCs also face a higher trade deficit as imports increased more than exports in 2013. Moreover, LDC exports are concentrated in a handful of products and sectors. Developing economies have also become more important as the destination market of LDC exports, receiving 55% of total LDC exports in 2013, up from 40% in 2000.
Evolution of LDC exports of goods and commercial services, 2000-2013
(Index, 2000=100)
Source: WTO Secretariat.
The report focuses in particular on LDCs’ trade in services. It notes that travel receipts, estimated at $14.2 billion in 2013, continue to account for the majority of LDC exports of commercial services. Transport exports, which reached US$ 7.5 billion in 2013, are an important source of revenue in particular for African LDCs.
Structure of LDC commercial services exports, 2013
(Percentage shares)
Source: WTO-UNCTAD estimates.
The report provides an overview of the market access for LDC products in developing and developed economies as well as the non-tariff measures that affect access to these markets.
Uganda (representing the LDC group) highlighted the challenges faced by LDCs, and called upon members to open up markets for LDC products and to increase aid for trade to LDCs. It also welcomed the report’s analysis of LDCs’ trade in services and urged members to put the WTO 2011 LDC Services Waiver decision into action. LDCs called for the full implementation of duty-free and quota-free market access for LDC products.
A number of members took active part in the discussion and provided specific comments on the report, which will be taken into account in a revised version.
Preferential rules of origin
The sub-committee heard a report by the WTO Secretariat on the first annual review of preferential rules of origin, which had been conducted by the Committee on Rules of Origin in line with the Bali Ministerial Decision.
Uganda and Nepal underlined the importance of simplified rules of origin to facilitate LDC exports. They also highlighted a document (G/RO/W/148) that the LDC group had submitted to the Rules of Origin Committee on the challenges faced by LDCs in complying with preferential rules of origin.
The Bali decision on preferential rules of origin provides a set of guidelines for members to formulate their rules of origin for LDCs in a transparent, simple and objective manner. Rules of origin are the criteria needed to determine the national source of a product. To benefit from duty-free and quota-free market access, exporters from an LDC need to comply with the criteria set by the importing country to determine where the product was made.
Standards and Trade Development Facility
The sub-committee heard a presentation by the Standards and Trade Development Facility (STDF), a global partnership that supports developing countries in complying with sanitary and heath standards. One project mentioned in the presentation was a joint study with the Enhanced Integrated Framework (EIF), the LDCs’ Aid for Trade programme, which analysed how sanitary and health standards are being considered in the assessment of LDCs’ export competitiveness and constraints.
Uganda welcomed the STDF’s work which has assisted many LDCs in articulating their development needs. It also welcomed the fact that over half of the STDF’s funding goes to LDCs.
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New global tourism initiative to ‘steer industry onto a truly sustainable path’ – UN
Tourism is one of the largest and fastest-growing economic sectors in the world contributing 9 per cent to global GDP, accounting for one in 11 jobs worldwide and for 6 per cent of global exports, the United Nations World Tourism Organization (UNWTO) reported on 6 November 2014 as it launched a programme aiming to catalyze a shift to more sustainable tourism.
The Sustainable Tourism Programme of the Ten-Year Framework of Programmes on Sustainable Consumption and Production Patterns (10YFP) introduced at the World Travel Market in London last week will be spearheaded by the UNWTO, the Governments of France, Morocco and the Republic of Korea, with the support of UN Environment Programme (UNEP).
“This important initiative is about steering the industry onto a truly sustainable path – one that echoes to the challenge of our time: namely the fostering of a global Green Economy that thrives on the interest, rather than the capital,” said UNEP Executive Director Achim Steiner in a statement.
It is estimated that by 2030, there will be 1.8 billion international tourism arrivals annually. If not sustainably managed, tourism can deplete natural resources leading to water shortages, loss of biodiversity, land degradation and contribute to climate change and pollution. Tourism’s contribution to global warming is estimated at 5 per cent of global CO2 emissions.
“As tourism continues to grow, so too will the pressures on the environment and wildlife. Without proper management and protection, as well as investments in greening the sector, ecosystems and thousands of magnificent species will suffer,” Mr. Steiner said.
UNEP’s 2011 Green Economy Report revealed that under a “business-as-usual” scenario, projected tourism growth rates to 2050 will result in increases in energy consumption by 154 per cent, greenhouse gas emissions by 131 per cent, water consumption by 152 per cent, and solid waste disposal by 251 per cent.
UNWTO Secretary-General Taleb Rifai said, “As the leading organization for tourism, the World Tourism Organization seeks to maximize tourism’s contribution to development while minimizing its negative impacts.”
Already, in the Galapagos Islands and Palau, visitors pay an entry tax to protected areas, which are sometimes referred to as ‘green fees.’ The revenues generated from these fees – which in Palau’s case is $1.3 million annually since 2009 – are used to support conservation and sustainable human development.
The 10YFP Sustainable Tourism Programme will aim to achieve major shifts in tourism policies and stimulate greater sustainability within the tourism supply chain. A collaborative initiative, the programme aims to improve resource efficiency, management effectiveness, and the use of new technologies to promote sustainable consumption and production patterns in this key sector.
Meanwhile, the three countries leading the initiative have already taken steps to promote sustainable tourism. As the most visited tourism destination in the world receiving 85 million tourists a year, France recognizes sustainable tourism as fundamental to preserving its heritage.
And Morocco is hoping to capitalize on its natural and cultural advantages in a way that will yield the most sustainable social and economic benefits to all Moroccans. The Government of the Republic of Korea has already integrated principles of sustainability into its tourism policies and is accelerating programme implementation nationally.
The 10YFP was established after Heads of State, meeting at the UN Conference on Sustainable Development (Rio+20) conference in 2012, agreed that sustainable consumption production was a cornerstone of development, and an important contributor to poverty alleviation and the transition to low-carbon green economies.
The Life Cycle Approach to Tourism Development
The Programme on Sustainable Tourism including Eco-Tourism will apply life cycle approaches to development, particularly to tourism planning, investment, operations and management, promotion and marketing, production and consumption of sustainable goods and services, and monitoring and evaluation.
The 10YFP Sustainable Tourism Programme: Transitioning to the Next Decade
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IFC launches $450 million initiative to spur private sector trade and investment in Ebola-affected countries
IFC, a member of the World Bank Group, on 5 November 2014 announced a package of at least $450 million in commercial financing that will enable trade, investment, and employment in Guinea, Liberia and Sierra Leone. The private sector initiative will include $250 million in rapid response projects, and at least $200 million in investment projects planned to support post-epidemic economic recovery. The IFC initiative is part of the World Bank Group’s broad effort to provide support during the Ebola epidemic and prepare for economic recovery in the countries most affected by the crisis.
The initiative includes a $75 million Ebola Emergency Liquidity Facility to fund critical imports for Ebola-affected countries. This rapid response program was approved by IFC’s board last week. It will initially be made available to fund six existing IFC client banks, and could be extended to additional banks. The facility will support the import of basic goods, including energy, food and agricultural commodities, and other manufacturing goods.
“Ebola is a humanitarian crisis first and foremost, but it’s also an economic disaster for Guinea, Liberia, and Sierra Leone. That’s why in addition to our emergency aid we will do all we can to help support the private sector in these countries to build back their businesses,” said Jim Yong Kim, president of the World Bank Group. “The fear swirling around Ebola has the potential to do long-term harm to businesses globally, and especially in the Ebola-affected countries. Our private sector arm – IFC – will find ways to help boost trade and investment in West Africa, which will be essential to ensure that private companies continue to operate and sustain employment under difficult circumstances.”
In addition to the liquidity facility, IFC’s rapid response includes a program begun in October to reach 800 small and medium enterprises in Guinea, Liberia, and Sierra Leone to help ensure business continuity during the crisis. The program will provide medical and hygiene supplies; related literature; and training on preventive measures.
In another project Cordaid of the Netherlands will provide $4.6 million in new financing to IFC’s West Africa Venture Fund, focusing on small and medium enterprises in Sierra Leone and Liberia. Further rapid response projects are under consideration.
“IFC intends to take risks in an ambitious effort to provide commercial financing in the months ahead, and to support recovery as the Ebola epidemic comes under control,” said Jin-Yong Cai, IFC Executive Vice President and CEO. “IFC will find and create opportunities to encourage private investors to play a large role in the recovery of markets directly and indirectly affected by the ongoing Ebola outbreak in West Africa.”
The World Bank Group is mobilizing nearly $1.0 billion for the three countries hardest hit by the Ebola crisis, including $400 million announced in August and September 2014 for the emergency response, and another $100 million announced in October 2014 to help speed up the deployment of foreign health workers to countries. Of the previously announced $500 million, $117 million has already been disbursed. This support – coordinated closely with the United Nations and other international and country partners – will assist the affected countries in treating the sick, providing essential food and water to Ebola-affected households, coping with the economic and social impact of the crisis, and starting to improve their public health systems to build up resilience and preparedness for potential future outbreaks. The World Bank Group also recently released a report that said that if the virus continues to surge in the three worst-affected countries and spreads to neighboring countries, the two-year regional financial impact could reach $32.6 billion by the end of 2015.
To find out more about the World Bank Group’s Ebola response, visit www.worldbank.org/ebola.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in about 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and boost shared prosperity. In FY14, we provided more than $22 billion in financing to improve lives in developing countries and tackle the most urgent challenges of development.
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WTO report says restrictive trade measures continue to rise in G-20 economies
Restrictive trade measures introduced by G-20 economies since 2008 continue to rise, according to the latest WTO report on recent trade developments issued on 6 November 2014. Given the continuing uncertainties in the global economy, the report stresses the need for countries to show restraint in imposing new measures and to eliminate more of the existing measures.
The report says that of the 1,244 restrictive measures recorded since the onset of the crisis in 2008, only 282 have been removed. Over the past year, the number of restrictive measures in place has increased by 12 per cent. However, the number of restrictive measures affecting exports declined significantly from mid-May to mid-October 2014. The report also underlines that the overall trade policy response to the crisis has been significantly more muted than originally expected.
Key Findings of WTO Report on G-20 Trade Measures
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This report shows that the stock of restrictive trade measures introduced by G-20 economies since 2008 continues to rise despite the pledge to roll back any new protectionist measures that may have arisen.
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Continuing uncertainties in the global economy underline the need for G20 economies to show restraint in the imposition of new measures and to effectively eliminate existing ones.
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Of the 1,244 restrictive measures recorded by this exercise since the onset of the crisis in 2008, only 282 have been removed. The total number of restrictive measures still in place now stands at 962 – up by 12% from the end of the reporting period in November 2013.
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G-20 economies applied 93 new trade‑restrictive measures during the period between mid‑May and mid-October. This equates to over 18 new measures per month, which is unchanged compared to the previous period. A positive development saw the number of restrictive measures affecting exports decline significantly during the period.
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G-20 economies introduced 79 trade‑liberalizing measures during the period under review. Measured per month this figure is also unchanged compared to the previous period.
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Greater transparency is needed from G-20 members in order to improve the understanding of the operation and effects of non-tariff barriers to trade. These behind-the-border measures include regulatory measures and subsidies.
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While this report shows that the stock of new trade‑restrictive measures has continued to rise, it also supports the conclusion that the overall trade policy response to the 2008 crisis has been significantly more muted than expected based on previous crises. The multilateral trading system has acted as an effective backstop against protectionism.
Executive Summary of WTO Report on G-20 Trade Measures
This is the twelfth report on G-20 trade measures. With continuing global economic uncertainty and sluggish trade growth, it remains of concern that the stock of restrictive trade measures introduced by G-20 economies since 2008 has continued to increase during the period between mid-May 2014 and mid-October 2014. Prevailing global economic conditions mean that this is not a time for complacency in the international trading system. The G-20 economies must take decisive action to reduce this stock of trade restrictions by showing restraint in the imposition of new measures and by effectively eliminating existing ones.
Of the 1,244 restrictions recorded by this exercise since the onset of the crisis in 2008, only 282 have been removed. Thus, the total number of those restrictive measures still in place now stands at 962 – up by 12% from the end of the reporting period in November 2013. Of course, this report does not capture the restrictive measures which were in place before the crisis and those subsequently removed. Nevertheless, the combination of the continuing addition of new restrictive measures and a relatively low removal rate runs counter to the G-20 pledge to roll back any new protectionist measures that may have arisen. An interesting question will also arise in the years ahead regarding how trade remedy measures will be affected by the operation of sunset clauses that provide for reviews of such measures after five years.
The report finds that the pace of introduction of new trade‑restrictive measures by the G-20 in the period between mid-May and mid-October remained unchanged from the previous reporting periods. More encouragingly, G-20 economies have adopted significantly fewer restrictive export measures. On a similar positive note, looking specifically at tariff measures, the number of import tariff liberalization measures introduced by G-20 economies during the period far exceeded the number of tariff increases.
G-20 economies applied 93 new trade‑restrictive measures during this five-month period, compared with 112 during the previous six months. As in previous periods, trade‑remedy measures account for more than 50% of these measures, followed by other restrictive import measures and restrictive measures affecting exports. In terms of trade coverage, the trade remedy actions and other restrictive import measures applied by G-20 economies during the period under review constitute 0.8% of the value of G-20 merchandise imports and 0.6% of the value of world merchandise imports. This amounts to around US$ 118 billion. Further, the import‑restrictive measures recorded since October 2008 that remain in place cover around 4.1% of the value of world merchandise imports and around 5.3% of the value of G-20 imports. This amounts to US$ 757.0 billion.
G-20 economies also applied 79 trade‑liberalizing measures, both temporary and permanent in nature, during the period under review. In terms of trade coverage, import‑liberalizing measures account for 2.6% of the value of G-20 merchandise imports and 2.0% of the value of world merchandise imports. This amounts to some US$ 370 billion – almost three times the trade value of the new trade‑restrictive measures. This relatively positive development in the area of trade‑liberalizing measures should not distract from the concerns about the accumulation of trade restrictions.
In addition, adequate information on behind-the-border measures, including regulatory measures and subsidies, is still lacking. Non-tariff measures applied by a number of G-20 economies have been the subject of recent debate in various WTO bodies. Some consider that these types of measures have become more prominent in recent years, compared to conventional border measures, and therefore the need to increase the quality of the information available is paramount. To deliver on this and enhance our understanding of the operation and effects of non-tariff barriers to trade, G-20 Members should look to provide greater transparency in this area.
Overall, this report supports the conclusion that despite the continuing increase in the stock of new trade‑restrictive measures recorded since 2008, the trade policy reaction to the 2008 global economic and financial crisis has been more muted than expected based on previous crises. This shows that the multilateral trading system has acted as an effective backstop against protectionism. However, it is clear that the system can do more to drive economic growth, sustainable recovery and development. World trade has grown more slowly than expected since the June 2014 report, due largely to slow and uneven economic growth in both developed and developing economies. On current forecasts trade growth will remain below average in 2014 and 2015. The removal of remaining trade‑restrictive measures combined with further multilateral trade liberalization would be a powerful policy response.
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Ministers of Central African countries are taking a decisive step toward the creation of a green economy
The ministers of Central African countries are taking a decisive step toward the creation of a green economy, with a focus on the timber industry
The government of the DRC announces a $3 million contribution to kickstart the Fund for the Green Economy in Central Africa
The organizers of the Conference of Ministers of ECCAS on the Fund for the Green Economy in Central Africa and the structural transformation of the economy of natural resources announced on 31 October 2014 that the ministers from the region have adopted a text establishing the Fund for the Green Economy in Central Africa.
At the opening of the conference, the Vice Prime Minister of Defense and Veterans of the Democratic Republic of Congo (DRC), Mr. Tambo Loaba, announced a $3 million contribution from his country to start the Fund for the Green Economy in Central Africa (FEVAC).
“Concerning the financing of FEVAC, the Democratic Republic of Congo supports its creation and commits $3 million for its establishment beginning in 2015,” said Mr. Loaba in his address.
This decision marks a first giant step toward the effective initiation of a global restructuring of the Central African economy, based on the natural resource economy and the timber industry in particular.
“Today, for the first time, Central Africa has placed the environment within the core economic structure of the countries in the region,” emphasized Dr. Honoré Tabuna, Biodiversity Valuation and Environmental Economics expert and the conference coordinator. “We are finally reaching the final stages and practical implementation of a process that began in Rio in 1992. We must now talk about the economy in order to establish a new balance of sustainable development based on a green economy in Central Africa,” he added.
Held from October 27-30 in Kinshasa, the conference brought together the Central African Ministers of Finance, Foreign Affairs, and Forestry as well as several experts in green economy and the timber industry.
It was hosted by the ECCAS as part of the Program for the Management of Vulnerable Ecosystems in Central Africa (under ECOFAC), the result of a joint effort with the European Union, which provides financial support within the framework of the EU Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan.
“A Shift toward a Green Economy Represents a Positive Economic Turn”
Today, the timber industry serves as an example, showing the true decision makers in the countries of Central Africa that a shift toward a green economy represents a positive economic turn for the region’s economy as a whole.
The joint presence of the Ministers of Forestry and Finance of Central African countries provides a new opportunity to demonstrate that the green economy is not simply a concern for environmental experts, but also for the economists of each government.
It’s key to note that the move of major regional actors to create a new “motor” for the green economy provides support to countries combating illegal logging while also encouraging good forest governance. This important movement for the green economy, which depends on the progressive commitment of the Ministers of Finance, will bring regional changes and attract investments to help the countries working with the FLEGT and which have signed voluntary agreements with the EU.
The Voluntary Partnership Agreements (VPAs) are bilateral trade agreements between the EU and a timber-exporting country. The VPA is underpinned by the development and implementation of a timber licensing scheme by the partner country. All of the lumber exported to the EU must abide by the regulations of this scheme. Moreover, each EU country is responsible for keeping unauthorized lumber out of the market.
“The objective is to give a greater voice to the Ministers of the Environment who, thus far, have received only a small share of the budget, far less than the Ministers of Commerce or Energy who benefit from revenue generated by their activities. We must show that natural resources are much more lucrative,” said Aimé Nianogo, IUCN Regional Director for West Africa.
The Timber Industry and the Impact of Market Regulation Programs
Indeed, timber- and forestry-related issues lie naturally at the heart of the implementation of the Green Economy System in Central Africa: the timber industry, which has long represented a gateway to international markets, is currently benefiting from major advances provided by market regulation programs, such as the EU Timber Regulation, but also the Lacey Act in the United States and the Australian Illegal Logging Prohibition Act.
These regulations and agreements, like those of the FLEGT, open new, more reliable, and better-regulated markets, the revenues of which can be better distributed thanks to improved governance. Indeed, changing the economic system to allow for the development of the green economy requires fundamental governmental restructuring. “That is one of the major obstacles that still risks hindering the best intentions and positions of even the most sincere decision makers,” said Aimé Nianogo.
The Ministers of Forestry also had the opportunity to convince their own Ministers of Finance of the importance of paying attention to issues relating to the timber industry and its development. Clearly, these are not simply national but also regional concerns, as regional Ministers of Forestry met to discuss these issues with Ministers of Finance.
Transforming the Economic Model to Address Regional Issues
One of the major objectives for Central African countries is primarily to change an economic model that broadly relies on subsoil natural resources: minerals, oil, and gas.
These resources provide the region with significantly positive growth, at nearly 6%, but this growth does not benefit the entire population. Indeed, some regions are afflicted by a poverty rate of up to 70%.
“Our studies show that the timber industry could weigh 3% to 8% in the largest economies in the region and would generate a large number of jobs, which is a major concern for several countries in the region,” Nianogo said.
The conference provides the opportunity to vote on several projects meant to build a foundation for the green economy system to be financed by the new Fund for the Green Economy.
These projects fulfill regional objectives for the development of the natural resource economy in a framework that corresponds to the objectives and recommendations established over the past twenty years by the Rio and Rio+20 conferences. They allow for the development of local, national, regional, and international economic circuits that create job opportunities for populations that have been excluded up until now.
“The projects must be approved and distributed among the countries according to their interest in achieving the set objectives, not just according to their individual desires as a function of their capabilities and hopes of earning profits in the long term,” reminds Aimé Nianogo. “We’ll undoubtedly have to provide support for the less dynamic countries or those lacking the necessary expertise to establish solid projects so that they can also benefit from an evolution that must extend throughout the entire region.”
The text adopted at Kinshasa will be presented at the conference to be held in N’djamena, Chad, where the Heads of State will be able to express their commitment to the precise and concrete measures it contains.
» Read the Press Statement (French)
Distributed by APO (African Press Organization) on behalf of the Economic Community of Central African States (ECCAS).
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China topples India as main exporter to Kenya
China has overtaken India to become Kenya’s top source of imported goods, newly released data show.
The world’s most populous nation grew its exports to Kenya by 37.9 per cent to Sh178.6 billion in the first nine months of this year or 14.8 per cent of Kenya’s total imports, according to data from the Kenya National Bureau of Statistics (KNBS).
That growth allowed China to topple India from the position it has occupied for the past three years.
The KNBS data show that India’s share of Kenya’s total imports of Sh1.2 trillion in the nine months dropped to 13.8 per cent, with a slower growth of 4.4 per cent in the value of its merchandise to Sh166.3 billion.
The quarter three data also captures the falling fortunes of the United Arab Emirates given that the Middle East nation had also been a top source of imports.
It has now been relegated to position four behind the US, which has aggressively increased exports to Kenya since April.
Imports from the US including planes, energy equipment and health kits stood at Sh120 billion compared to UAE’s Sh79.9 billion.
The relegation of UAE has been linked to a decline in Kenya’s intake of petroleum products that form the bulk of Abu Dhabi’s exports and traders’ shift to Turkey and China as source of goods from Dubai.
China’s rise is expected to intensify its battle with its Asian rival India that has recently made major inroads into Kenya with big-ticket contracts in healthcare and energy sectors.
Kenya mainly imports textiles, pharmaceuticals, industrial machinery, vehicles, electronic, motorcycles, tuk tuks and semi-processed goods from India.
Key items imported from China include heavy machinery, electronics, vehicles, textiles and a range of household goods.
The two Asian nations entrenched their presence in country with intense economic diplomacy that started with President Mwai Kibaki’s election in 2002.
The rivalry has benefited Kenya in terms of foreign direct investments, a wider variety of consumer goods and opened new sources of technical and financial assistance.
Though the India-China rivalry has played out as a battle of the Asian giants, the biggest losers have been the traditional Western trading partners such as Britain whose share of the Kenyan market has been steadily declining.
India’s Exim Bank has, for instance, helped Indian companies export cement and sugar to Kenya with the provision of guarantees or letters of credit through PTA Bank.
China, the biggest beneficiary of Kenya’s massive infrastructure projects, has also been expanding its reach to broadcasting, telecoms, textiles and the general consumer goods markets.
Over the past decade, Chinese firms have won contracts to build some of the largest infrastructure projects in Kenya, including the upgrade of Thika Road at a cost of Sh27 billion and Sh447 billion construction of the new Mombasa-Nairobi railway.
Though the two Asian powers have realised steady growth of their exports to Kenya, Nairobi has only marginally expanded the value of trade with them, resulting in a huge trade imbalance.
This is because Kenya’s commercial engagement with the Asian nations is mainly pegged on low-value primary commodities like tea, coffee and hides.
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Africa’s transforming energy sector demands new approach from industry players
The global energy industry is undergoing a seismic shift, in part driven by development of new, unconventional sources of energy, such as shale gas, tight oils, coal seam gas and oil sands.
In turn, this is requiring logistics executives to rethink traditional energy supply chain models and implement a highly integrated approach, to drive down logistics costs and enhance profit margins. This is according to DHL, the world’s leading logistics company, who have released a white paper on the dynamics, challenges and opportunities that are shaping the current energy sector.
Jonathan Shortis, Vice President – Energy Sector EMEA (Europe, the Middle East and Africa): DHL Customer Solutions & Innovation, says that the need and desire to explore new geographies and develop new technologies to reach and extract unconventional gas reserves has become ever more apparent. “While growth in the conventional energy sector currently hovers around 1 to 2 percent per annum, the unconventional segment is booming.”
The BP Energy Outlook 2030 predicts that shale gas production will triple, and that tight oil production will increase more than six-fold by 2030. Unlike conventional oils though, unconventional extraction demands higher and continuous investment.
In terms of Africa’s energy sector, Shortis says that there has been significant growth in oil and gas exploration and production, on the continent in recent years. “There is no sign of Africa’s exploration activity slowing down, and the continent is expected to continue on its growth path as its attractiveness as an investment destination for the sector becomes ever more apparent due to its untapped resources and potential of new discoveries.”
He adds however that, as in many other parts of the world, the development of unconventional reserves in the region is still in its infancy. “While there is a view that reserves in areas such as North Africa (Morocco, Algeria, Libya) and South Africa are substantial, little development has taken place.”
The white paper explains that due to the ongoing shift in geographies of energy production and demand, energy companies are required to adjust their approach to supply chain management.
Shortis explains that from a supply chain perspective, both conventional and unconventional energy companies face an intriguing set of challenges. “Supply chains supporting conventional energy market, are still developing as companies have had to expand into ever more inaccessible and remote locations to support the growth in global demand. In such areas, conventional energy faces the same challenge as unconventional, and that is to establish and maintain a robust infrastructure to support production in undeveloped and/or remote geographies.”
Shortis says that executives quoted in the white paper admit that energy companies often struggle to deal with the complexity of the supply chain and that they are challenged by a lack of visibility and predictability when they are working with multiple stakeholders at numerous drilling locations.
“To address this issue, leading companies are adopting an end-to-end supply chain operating model, instituting a data-driven, integrated solution that connects all stakeholders in the chain. This solution blends state-of-the-art visibility and analytics with best-practice process management to achieve bottom line results,” concludes Shortis.
The white paper, titled Building the smarter energy supply chain, is based on research by Lisa Harrington, Associate Director at the Supply Chain Management Center of the Robert H. Smith School of Business, University of Maryland.
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Djibouti turns to its peers for advice on reaching its goals
Djibouti is preparing for the future. The small country on the Horn of Africa has outlined an ambitious set of goals it hopes to achieve over the next two decades. These goals are the result of careful research, assisted by the World Bank, to identify under-exploited sectors of the economy with the potential to generate sustainable growth. The results of the exercise were collected in a document, ‘Djibouti Vision 2035’ that serves as the government’s blueprint for development.
Ilyas Moussa Dawaleh, Djibouti’s Minister of Economy and Finance, in charge of Industry, recently recalled that at independence in 1977 his country had only one high school, one street and two doctors. Djibouti has since taken advantage of its strategic position at the mouth of the Red Sea, along one of the world’s busiest shipping lanes, to develop an important maritime port and establish the foundations for a burgeoning commercial hub.
Djibouti still faces high levels of poverty, and is committed to doing much more to promote economic growth and the job creation and shared prosperity that come with it. The World Bank study (“A new growth model for Djibouti”) that underpins ‘Djibouti Vision 2035’ highlighted the following promising areas: transport and logistics, telecommunications, tourism, fisheries, and light industry. “Djibouti needs to get over that ‘hump,’” observed Shanta Devarajan, World Bank Chief Economist for the Middle East and North Africa Region, “where you turn yourself from a natural resource based economy into a dynamic manufacturing and service center.”
It was precisely to get over that ‘hump,’ that Djibouti turned to its peers for advice. In assisting with the preparation of the report, the World Bank also identified a number of countries with similar characteristics to Djibouti that had success in achieving similar goals. The World Bank and the government worked together to host a south to south exchange of knowledge, in which representatives of Cape Verde, Dubai and Mauritius were invited to Djibouti to share their valuable experiences.
An event was organized that drew over 300 local and foreign participants from government, development partners, the private sector, civil society, and academia. The government used the opportunity to launch ‘Djibouti Vision 2035’. In his opening speech, the Prime Minister of Djibouti, Abdoulkhader Kamil Mohamed reaffirmed the commitment to reinforcing strengths and diversifying the economy as the key ingredients of the country’s development plan.
One of the most valuable lessons to emerge from the south to south exchange of knowledge, according to World Bank Resident Representative in Djibouti, Homa-Zahra Fotouhi was that countries not only share similar goals, but also face similar obstacles. Djibouti, she noted, is small country with high energy costs – but so too are Cape Verde and Mauritius. Yet Mauritius has made significant progress in diversifying its economy and Cape Verde has successfully developed its tourism sector. These were the lessons each came to share.
The level of attendance and engagement at the event was unprecedented for Djibouti. It reflected the interest on the part of the country’s private sector and civil society to learn from the experiences of other countries, and to be central players in the design and implementation of Djibouti’s development strategy. This resonated with another overarching lesson from the event, on the importance of building a broad consensus around specific goals.
The cases of Mauritius and Cape Verde – which recorded significant improvements in the space of a few years – particularly demonstrate the importance of transparency, good governance and competition to promote economic diversification and encourage job creation. These are the basic elements of a formula that could bring Djibouti a step closer to reducing poverty and achieving sustainable and inclusive growth for the benefit of the entire population.
The event also provided the government with specific advice on each of he areas it plans to focus on. The government will convert this advice into concrete actions for the realization of ‘Djibouti Vision 2035’, and for establishing a broad consensus around the goal of accelerated development.
“In the next 20 years we would like Djibouti to reach the level of Singapore or Dubai,” said Youssouf Moussa Dawaleh, President of the Djibouti Chamber of Commerce, “we can get there if we work together.”
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Africa on the rise, with trade set to be worth billions to Irish exporters
Trade between Africa and Ireland is expected to reach €24bn by the end of the decade, Trade and Development Minister Sean Sherlock told a conference recently.
The minister said the Government wants to complement Ireland’s traditional commitment in Africa, which has been focused largely on aid and development, with an economic commitment.
More than 300 business people, along with diplomats and members of the African community came together on 30 October 2014 for the Africa-Ireland Economic Forum.
Several Irish companies are already operating on the continent, including Kerry, Guinness, ESB International and Glanbia.
There are an increasing number of Irish chief executives targeting Africa as a potential export market, experts have said.
Enterprise Ireland’s Kevin Sherry told the forum that Africa has been home to eight of the world’s 15 fastest-growing economies since 2000, with GDP on the continent hitting $2 trillion (€1.6 trillion) last year – more than India’s. That growth is forecast to continue, but there are very real risks.
The International Monetary Fund (IMF) has forecast Africa will repeat 2013’s growth rate of 5.1pc this year and then accelerate next year as infrastructure investments boost efficiency, and the service sectors and agriculture flourish.
The 2015 forecast was an improvement on the 5.5pc growth for the overall region projected by the IMF in April. But the outlook is overshadowed by the dire situation in Guinea, Liberia, and Sierra Leone, where the Ebola outbreak is “exacting a heavy human and economic toll.”
Growth in South Africa, the continent’s most advanced economy, had been lacklustre, hit by strikes, low business confidence and tight electricity supply, the IMF said. But it believes a “muted recovery” could take hold next year. Nigeria, by contrast, is booming. It’s the continent’s top oil producer and overtook South Africa as the biggest economy this year.
Mr Sherlock said Africa, collectively, was on the rise.
“It is important now that we grasp opportunities and have the vision to see where they can take us and work toward developing strong and equal trade and investment partnerships with African countries,” he said.
President Michael D Higgins begins a three-week trip to the Continent tomorrow, visiting Malawi, Ethiopia and South Africa. In the last three years, Irish goods exports to sub-Saharan African has jumped by a quarter and is up 27pc for the entire continent. Exports by Enterprise Ireland-supported companies to Africa last year totalled €550m. That’s expected to increase to €800m by the end of 2016. To coincide with the forum, the Irish Exporters Association has established an African Business Forum.
Colm O’Callaghan, tax director with accountancy giant PwC, which is supporting the initiative, said 13pc of Irish chief executives confirmed that they are targeting Africa as an export market.
“Whether you are an large Irish multinational or an indigenous Irish SME looking for new markets, Africa holds the potential, scale and opportunity for growth,” he said.
“However, when internationalising your business to Africa, you need to do your homework. Proper advance market research and having the right structures and people in place will ultimately help equip the business to maximise the opportunities that Africa has to offer.”