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Victor Harison, Mario Pezzini: Firms must drive Africa’s transformation (Project Syndicate)
But if the AfCFTA is to fulfill its promise, African firms will need to prepare for a new, more competitive economic landscape. Between 2000 and 2018, the African market grew by 4.6% per year, and domestic demand drove 69% of that growth. But now is the time for the continent to reach its full potential with respect to economic development, job creation, and poverty reduction. With around 22% of working-age Africans starting new businesses – compared to 19% in Latin America and 13% in Asia – Africa has the highest entrepreneurship rate in the world. But African firms will need to improve their organizational, productive, and technological capabilities. To that end, the upcoming second edition of the African Union’s flagship economic report, Africa’s Development Dynamics, produced in partnership with the OECD Development Centre, offers a three-pronged strategy for both business leaders and policymakers to follow.
While African firms now file three times more International Organization for Standardization certifications per year than they did in 2000, Malaysian firms alone filed as many certifications in 2015. Matching grants or low-cost loans, which could help more innovative firms cover the costs of certification, would be well worth the expense. Evidence from 41 African countries shows that manufacturing firms with an ISO certificate have 77% higher sales per employee, and certified services firms have 55% higher sales per employee. [The authors: Victor Harison is the African Union Commissioner for Economic Affairs; Mario Pezzini is Director of the OECD Development Centre]
Arancha González Laya: Factories are no longer the sure route to prosperity – here’s why (WEF)
When Kenyan avocado farmers are able to obtain international health and safety certification and connect to foreign retailers, it can translate to four times more money in their pockets for each avocado they sell. For pineapple producers in Benin, better branding, marketing, and packaging – together with improved physical infrastructure – opens the doors to regional and international sales far more lucrative than selling unprocessed fruit in local markets. As for services, the digital revolution has made cross-border trade feasible for everything from programming to accounting and legal services. But value addition and trade in services aren’t just about technology parks in Bangalore or call centres in Dakar. They’re about hotels in Lao People’s Democratic Republic building commercial ties to local farms and tour operators. They are about young people in refugee camps in Kenya using freelancing platforms like Upwork and Fiverr to do internet ad design for clients in other countries. The upcoming World Economic Forum on Africa meeting in Cape Town will be looking at how to maximize the contribution of digital trade to growth and job creation in sub-Saharan Africa. Ongoing talks on e-commerce at the World Trade Organization offer the prospect of international rules of the game on digital trade, enhancing predictability and reducing transaction costs for businesses of all sizes. [The author is Executive Director, International Trade Centre]
Egypt’s non-oil exports are improving but not as much as experts might have wished (Ahram)
Egypt’s non-oil exports grew 2.3% in the first half of 2019 to $13.04bn, up from $12.75bn during the same period last year, according to figures released by the General Organisation for Export and Import Control. “The growth rate is not high enough, but it is good to see progress,” Sherif Fahmy, general manager at NGage Consulting, told Al-Ahram Weekly, adding that according to the International Trade Centre’s Trade Map website there was an untapped export potential for Egypt worth $18.3bn in countries like Saudi Arabia, the UK, Italy, the US, France, Spain, Turkey, Russia and some Arab countries. Compared to other middle-income countries that started at the same level or below in the early 2000s, Egypt’s exports-to-GDP ratio remains much lower, the World Bank’s Egypt Economic Monitor July 2019 report has said. It showed that Egypt’s exports of goods fell from 17 to 5.6% of GDP between fiscal years 2006 and 2016, although they picked up again in 2018 to reach 10.3% of GDP. Egypt exported around $2bn worth of goods in fiscal year 2017-18, 65% of which were non-oil exports. Many had hoped that the floatation of the pound, which caused it to depreciate by 50%, would work in favour of Egyptian exports because it would mean they would be sold at more competitive prices. However, that improvement was only meagre.
Merged agency races to grow exports, boost Kenya’s image (Business Daily)
Kenya has unveiled a new agency to promote its brand and push for its exports across the world. The Kenya Export Promotion and Branding Agency (Keproba) resulting from the recent merger of Kenya Export Council and Brand Kenya, is a convergent point for public and private sector organisations. The Cabinet approved the merger of the two agencies in October last year as part of the national exports development strategy. Prior to that, EPC concentrated in growing export markets while Brand Kenya worked to improved the country’s image abroad. Keproba chief executive Peter Biwott said the agency’s main task will be to help Kenyan companies and self-help groups to identify foreign markets as well as ensuring local products meet set international standards.
Uganda’s agricultural ministry concerned about EU ban on Uganda’s agriculture exports (New Vision)
EU reportedly accuses Uganda of exporting poor quality products and also of shipping products that presented with high contents of poorly mixed agrochemicals used to treat or preserve them. Agriculture Minister Vincent Ssempijja revealed that the EU has resolved to audit the sector in October for compliance with international and EU Health standards. If the products fail the audit, Uganda could be slapped with a ban for non-compliance with EU Phytosanitary (plant health) standards. According to Ssempijja, Uganda has on several occasions received warning over severe chemical contamination of horticulture exports over the last four years. [EU approves Uganda’s bid to export marijuana]
South Africa’s oranges take the world by storm (City Press)
One in every 10 oranges eaten around the world now comes from South Africa. The country’s flourishing fruit industry has increasingly made up a bigger proportion of the international trade, said the Bureau for Food and Agricultural Policy in its latest agricultural outlook for the period 2018 to 2028. Citrus, grapes and pome fruits, in particular, have strengthened their market position in the past decade. Citrus’ market share has risen from 4% in 2001 to more than 10% last year, followed by table grapes (5% to 7%) and pome fruits (3% to 6%). Citrus is South Africa’s biggest and most important fruit export, according to value and volume. By the year 2028 the country could be exporting 25% more cartons than last year, said the bureau. [South Africa: Booming blueberry industry predicted to create 14 000 jobs in four years]
Mozambique: Diagnostic report on transparency, governance and corruption (IMF)
Mozambique’s economy is at a turning point, and efforts to address governance and corruption vulnerabilities can have a lasting positive impact. The current levels of public debt have caused us to take a hard look at our governance and anti-corruption framework and have prompted various reforms to address the vulnerabilities exposed in this framework. In general, the problems in our society, and specifically corruption, have been examined in detail recently and are clearly macro-critical. One study estimated the costs of corruption to Mozambique during the period 2002 to 2014 at up to $4.9bn (approximately 30% of the 2014 GDP). The impact of these costs is widespread, affecting taxpayers, public service providers, the financial and private sector, as well as Mozambique’s international reputation. These costs are especially harmful at a time when our country has been hit by a series of shocks, notably the fall in commodity prices, drought, the withdrawal of donor budget support, and, more recently, Tropical Cyclones Idai and Kenneth. At the same time, Mozambique stands poised to reap significant revenues from natural resource reserves, and our duty as the government is to ensure the responsible stewardship of those funds for both current and future generations. By taking meaningful steps now to implement the governance and anti-corruption framework in an evenhanded, consistent, and effective manner, and to support efforts toward transparency and individual and institutional accountability, as the government, we can aim to achieve enduring results. [Note: The Government of Mozambique would like to thank the IMF Legal and the IMF Fiscal Affairs Departments for providing technical assistance to the preparation of this report]
EXIM Board votes to notify Congress of proposed $5bn financing to support US exports to Mozambique LNG project
EXIM’s financing could support an estimated 16,400 American jobs over the five-year construction period, including jobs at suppliers in Texas, Pennsylvania, Georgia, New York, Tennessee, Florida, and the District of Columbia. Through follow-on sales, thousands of additional jobs may be generated across the United States. Through fees and interest earned, the transaction also could create more than $600 million in revenue for US taxpayers, according to EXIM projections. The Mozambique LNG project would begin to develop the Rovuma Basin, one of the world’s most extensive untapped reserves of natural gas. “With the backing of the Trump Administration, U.S. investment in Africa has taken on a new urgency,” said Secretary of Commerce Wilbur Ross, an ex officio member of EXIM’s board of directors. US Trade Representative Robert Lighthizer, also an ex officio member of the EXIM board: “America’s energy companies offer the best goods and services in the world.”
Eswatini: Statement issued by IMF staff on conclusion of visit (IMF)
Eswatini faces a challenging economic environment. Since 2016, rising government spending and low revenue from SACU have increased public debt and contributed to large domestic arrears. International reserves have declined, although remain broadly adequate, and real GDP growth has been sluggish. The new government that was appointed in late 2018, continues to formulate its policy agenda to address these macroeconomic challenges. In the absence of policy action, the economic outlook remains fragile. Discussions focused on recent economic developments, in particular budget execution and planning, economic prospects, and the scope for further policy action. The 2019 Article IV consultation—annual review of the economy—with Eswatini is planned for late 2019.
Today’s Quick Links: Kenya: East African Cables decries steep costs on SGR use SA retailer Shoprite takes Sh571m Stanbic loan for Kenya stores Uhuru flags off first crude oil shipment Standard Bank, Africa’s largest bank joins Marco Polo trade finance network Ghana needs skills upgrade and free trade to make automotive tax breaks work Reuters: New Congo government shows influence of former president |
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A tralac Guide to this weekend’s G7 Summit, next week’s TICAD7
The G7 starts tomorrow, concluding on Sunday: selected previews
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A Japan Times preview: Leaders from the Group of Seven democracies will gather in the seaside resort town of Biarritz beginning Saturday for what is expected to be a fractured, contentious summit due to fundamental disagreements between the US and other members over trade and climate change. Citing unnamed government sources, Japanese media outlets had reported that this year’s G7 was unlikely to issue a joint statement for the first time in its history. Another senior Japanese diplomat has said Paris, the chair of this year’s summit, appears to be trying to focus on less controversial issues this year to avoid critical confrontations among members, such as wealth inequality and issues related to Africa.
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A renewed format for the G7: The French G7 Presidency is therefore the opportunity, in 2019, to change the group format. Throughout the year, several French ministers have therefore organized working meetings with their G7 counterparts, and invited partner countries including Egypt, Mali and Mexico to take part. The President invited the following to the Biarritz G7 Summit: four partner countries, involved in protecting and promoting democratic freedoms and with a major regional influence Australia, Chile, India, South Africa), and five African partners (Burkina Faso, Senegal, Rwanda, South Africa, and the Chairperson of the AUC, Moussa Faki) to create a partnership on an equal footing with this continent of the future.
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A perspective from Kigali. Olivier Nduhungirehe, Rwanda’s State Minister in charge of the EAC at the Ministry of Foreign Affairs and International Cooperation: “He (the President) will address the topics proposed: women entrepreneurship, digital transformation and transparency in public procurement and common fight against corruption.”
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EU to pledge Africa micro-finance, security funds at G7 summit. The EU will also back an initiative by the African Development Bank to ease loans through African banks and micro-finance institutions for over 100,000 women-led businesses in Africa. It is not immediately clear how much money will go to these funds. Tusk is set to disclose figures at the summit. Aside from the money, the EU will also seek to provide further support to African states hosting some 5,000 EU co-financed troops in an area known as the Sahel.
The Seventh Tokyo International Conference on African Development (TICAD7) takes place next week in Yokohama (28-30 August). A guide to the programme, early previews, country updates:
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Japan-Africa Business Forum: 20 pre-eminent business leaders will share their experience of doing business in Africa. Speakers include Mr Tony Elumelu, one of Africa’s foremost investors and philanthropists; Mr Jacko Maree, of South Africa’s Standard Bank Group; and Mr Tewolde Gebremariam, Group CEO of Ethiopian Airlines, which has an extensive network spanning over 100 cities (including 60 African cities). The forum will focus on “African Innovation & Start-ups” and “Multilateral Business Partnership.” [Download the programme here (pdf)]
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Japan-Africa Business Expo: The Business Expo, the largest official side event, includes a “Japan Fair” to promote the attractiveness and potential of Japanese industry through the display of products, technologies and services by Japanese companies to heads of state, ranking officials and business leaders from African countries who are scheduled to visit Japan for TICAD7.
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Africa Startups Pitch: Mobile apps are now a new social infrastructure in Africa, as seen for example with the rapid spread of mobile payment such as M-Pesa. As a result, there is an increasing number of startups developing products and services targeting the previously difficult to access lower income sector of the market. JETRO is collaborating with Co-Creation Hub (CcHUB), the largest accelerator in Nigeria, for the first time to organize a pitch event featuring 10 deep-tech startups selected from over 200 applications. It will take place on 30 August.
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“Innovation” will be a major theme at TICAD7. Nigeria, with the largest population on the African continent, is looking at the potential of “Science, Technology and Innovation” development cooperation. The Nigerian government and private sector conduct “Ideathon” sessions on STI, where excellent ideas are refined into peak condition through repeated exposure in the same way as a marathon. JICA is supporting this initiative for the improvement of public services. Hideki Watanabe, a member of JICA’s STI team, comment on the potential of Nigerian start-ups’ participation in the Ideathon, and the support STI can provide going forward.
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Japan will host the launch meeting for Gavi’s third replenishment (30 August). Gavi will unveil its Investment Opportunity for the 2021-2025 period highlighting the Alliance’s ambition to build on its success by providing the most comprehensive package of protection yet.
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Japan extends loans and scholarships in tug of war over Africa. Japan will pledge over 300 billion yen ($2.84bn) in assistance to Africa at a development conference later this month, seeking to encourage transparent infrastructure development on the continent as China moves in. With Beijing extending its clout on the continent through its Belt and Road infrastructure-building initiative, Japan is eager to bolster its own role in the region through yen loans and a state-sponsored scholarship that will bring African students to Japan. Japan and the African Development Bank have been helping with the development of infrastructure and private-sector companies through their Enhanced Private Sector Assistance Initiative. The next and fourth round will involve mainly yen-denominated loans. The money will be disbursed over roughly three years as target countries tackle reforms. Japan will encourage recipients to open up to foreign investment and create legal frameworks that protect investors.
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Japan to voice concern over African nations’ debt issues at TICAD meet. Japan plans to include “concern” over excessive debt in the declaration for the Tokyo International Conference on African Development later this month, government sources said Sunday, a move aimed at calling out China’s lending practices in the region. Japan wants the post-conference declaration to include references to some African countries being saddled with debt, and touch on the importance of “high quality” infrastructure, a phrase Japan often uses to differentiate its projects from Chinese ones. Prime Minister Shinzo Abe, who will co-chair the conference, plans to announce steps to support Japanese firms that want to do business in the region, as well as measures to help African countries with fiscal consolidation, the sources said. One such measure would be to send financial experts to debt-ridden countries on multiyear missions to help improve their finances, they said. Japan, whose working-age population is rapidly shrinking, also hopes to make it easier for African students to find work in the country after graduating.
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J. Berkshire Miller: Japan is taking on China in Africa. Traditionally, Tokyo focused its efforts in Africa on soft-power diplomacy, mainly through the provision of development aid. That is changing, though, for a number of reasons. First, given its size and its domestic economic woes, Japan is finding it harder and harder to compete in terms of quantity of funding with other players on the continent, especially China. First, given its size and its domestic economic woes, Japan is finding it harder and harder to compete in terms of quantity of funding with other players on the continent, especially China. Second, Tokyo is realizing that its assistance should be more directly linked to its core foreign-policy interests, including promoting its Free and Open Indo-Pacific (FOIP) vision, in which Africa plays an important role. Despite Japan’s strong relationships in Africa, especially with Algeria, Nigeria, and South Africa, among others, it is struggling to catch up with China’s recent spending spree. Although Japan’s foreign direct investment in Africa remains substantial - as of 2017, it had a stock of $9bn in investments there - it is a fraction of that provided by China. The story is even worse when it comes to trade. Japanese exports to Africa dropped by almost half over the last decade and now sit at approximately $7bn. Meanwhile, Chinese trade has accelerated at breakneck speed, with exports surpassing $100n in 2018. It also imports nearly $100bn worth of goods from Africa.
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Japan to lend expertise to help African nations improve waste management. A nation with a high level of garbage disposal expertise, Japan is expected to declare its support for countries at TICAD7. Japan will also show what waste management initiatives African nations will be able to take in the short term while keeping down costs. The commitment comes with a move to renew a disposal site in the Hulene district of Maputo, capital of Mozambique, where in February 2018 effects from heavy rain at a dumping site caused towering piles of garbage several dozen meters high to collapse. The incident killed 16 people including children living in the vicinity. Under a model project set to be launched by the Japanese government at the Hulene district waste disposal facility possibly within the year, Japan’s Ministry of the Environment and JICA will work in tandem with UNEP. Expertise from Japan’s developments in waste disposal management that will be shared and implemented on the site includes putting large accumulations of rubbish in a low inclining pile to avoid toppling, as well as the introduction of pipework to improve drainage.
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Rwanda secures Rwf86 billion JICA loan to transform agriculture. Rwanda has borrowed 10 billion yen (Rwf86 billion) from Japan in order to tackle malnutrition through agriculture transformation. The loan agreement was signed yesterday between Uzziel Ndagijimana, Minister of Finance and Economic Planning and Shin Maruo, Chief Representative of JICA at the ministry headquarters in Kigali. Ndagijimana told reporters that it is a highly concessional loan – extended on terms substantially more generous than market loans – with an interest rate of 0.01%, to be repaid in 40 years, and a 10-year grace period. Ndagijimana said: “This programme will boost government efforts to modernise our agriculture, an area where Japan has been actively contributing. Cooperation with the government of Japan has been growing strong over the years through project support.” Ndagijimana said it was the first time the government of Japan was giving Rwanda a loan through budget support. This, he said, was evidence of the Japanese government’s trust in Rwanda’s budget support modality. The programme will start in October and run for three years.
Japan-Africa, TICAD7 Quick Links: Egypt: About 50 high level Egyptian companies and several ministers will accompany President Abdel Fattah Al-Sisi Japanese investments in Egypt hits $880m; increases by 74.3% in FY 2017/2018 JICA’s Egypt office chief representative Yoshifumi Omura discusses bilateral ties Tanzania: Japanese envoy calls for speed in work permits issuance to aid FDI Japan pledges to invest in Kenya’s blue economy Zimbabwe urged to leverage on Japan-Africa Summit Tanzania’s Bwama village: An old Japanese idea brings medicine to rural Africa DRC: Japan gives $5m in emergency aid to fight Ebola outbreak |
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The East African Business Council convened a workshop today in Nairobi to review the EAC’s Common External Tariff. Selected tweeted highlights:
@KEPSA_KENYA: The workshop is expected to establish a clear collaboration framework within the private sector and come up with consolidated options to expedite finalization of review of EAC CET. A related thread from KEPSA.
@TanzaniaCTI: “A common position in EAC CET Review will help businesses thrive and promote potential sectors in the region. We need to move away from annual reviews of CET” – Mr Allan Ngungi, Director Private Sector Advocacy
@TanzaniaCTI: “Governments in the EAC region are now paying attention to private sector recommendations. We need to use this opportunity to leverage their support” – @pmathuki
The Luanda Agreement: Rwanda, Uganda agree to mend political, trade ties (New Times)
President Paul Kagame has said that the MoU signed yesterday should be implemented in its entirety. Kagame was addressing the press in Luanda after the signing of the agreement. The MoU was signed by President Kagame and President Museveni, as well as Presidents João Lourenço (Angola), Félix Tshisekedi (DRC) and witnessed by President Sassou Nguesso (Congo-Brazzaville). On free movement of people and trade, Kagame reminded that one cannot happen without the other: “When you create a problem for people to move across the border from one side to another, then you have closed the border to people and goods. If there are difficulties going on by trade not going on across the border...when you have people who get arrested when they cross the border, that affects the movement of people, of goods and trade.” A commission for the implementation of the MoU is also expected to be established. The commission will include a minister for internal administration and heads of intelligence. “This Memorandum of Understanding is expected to take effect immediately upon signature,” reads part of the statement. [Related: What next after Angola pact?; Rwanda to open border; Rwanda border remains closed, residents upbeat]
Indonesia-Africa Infrastructure Dialogue (IAID) 2019: the presentations are now available for download. The profiled presentation is by Indonesia Eximbank (which includes details on bilateral trade, 2010-2018). “Indonesia posted a trade deficit with Africa of $1.74bn in 2018 as imports ($6.5bn) exceeded exports ($4.76bn). The main cause of Indonesia’s 2018 trade deficit with Africa are sharply rising mineral fuels/oils and iron and steel imports. Strengthening global crude oil prices in combination with the vulnerable Rupiah in 2018 imply a burden on imports. Moreover, palm oil exports (Indonesia’s main export products to Africa) fell from $2.46bn in 2017 to $2.18bn in 2018.” The Eximbank presentation also provides details of Indonesia’s exports/imports, to/from, Africa, by country; and Indonesia’s exports/imports, to/from Africa, by product.
Country Policy and Institutional Assessment Africa 2018: selected Quick Facts for Ethiopia, Ghana, Kenya, Lesotho, Malawi, Mozambique, Nigeria, Rwanda, Senegal, Tanzania, Uganda, Zimbabwe
WESGRO’s Karen Bosman: “Three key points stood out from discussions at this year’s 18th AGOA Forum – Beyond AGOA, the AfCFTA, and Prosper Africa”
Nigeria’s new cabinet: a profile of Nigeria’s new trade and investment minister, Amb Maryam Katagum
Can the AfCFTA revive Ghana’s ailing manufacturing sector?
But for the history books, nobody would have believed that Ghana was once a producer of electronics and electrical gadgets such as pressing irons, television sets and electric bulbs. The sorry state of the manufacturing sector is further amplified in the annual rate of growth and its share to total productivity, measured by GDP. Data from the Ghana Statistical Service show that the manufacturing subsector’s share of GDP averaged more than 30$ per annum in the early 2000s but has been on a consistent decline. From 13.2% of rebased GDP in 2013, it fell to 12.2% in 2018 as growth and momentum in the subsector waned. On paper, the AfCFTA opens countless opportunities for manufacturers. In reality, however, it could further flood our economy with imports, this time round, from peer African countries, and that can easily result in the drowning of our largely weak manufacturing companies.
To avoid this, the private sector needs to first whip up the government and later partner it to draw up a comprehensive policy on how the country can build the capacities of the manufacturing sector to benefit fully from the agreement. That policy must incorporate SMART (specific, measurable, attainable, relevant and timely) objectives that all of us, as a country, will work to achieve. It must also be apolitical and be made the foundation of every political party’s manifesto. Unlike other policies on industrialisation and private sector support, this policy on how we can benefit fully from the AfCFTA must be implemented by a selected group of astute experts and funded by a sustainable funding source. In that regard, it will not be out of place to levy consumers and companies and use the proceeds to transparently resource a committee or a secretariat to build the capacities of manufacturers. [Commentary by Maxwell Akalaare Adombila]
Wandile Sihlobo: African free-trade pact gives reason for hope in agriculture (Business Day)
Agriculturally, the recently launched AfCFTA is an important development, although a reduction of tariffs alone won’t necessarily encourage trade. Much work is to be done across the continent on the lack of infrastructure, costly and prohibitive border processes, corruption and weak institutions. Optimism about the pact stems from SA agricultural growth having been export-driven over the past few decades, and the rest of the continent being a key market. Over the past 10 years it has accounted for an average of 44% of SA exports, which equates to $3.9bn, up from an average of less than 30% in the prior decade. The top 10 markets were Botswana, Namibia, Mozambique, Lesotho, Eswatini, Zambia, Zimbabwe, Angola, Mauritius and Nigeria. It is the SADC that has really underpinned SA’s agricultural exports to Africa, and not so much the overall continent. This is because SADC is a tariff-free zone for SA, and existing infrastructure facilitates trade with its neighbouring countries. [The author is head of economic and agribusiness research at the Agricultural Business Chamber. Related South African agricultural trade news: Fin24: South Africa’s black-owned wines, spirits to get an EU boost; Business Day: SA’s wool sector on edge over Chinese ban due to foot-and-mouth; Business Day: SA poultry industry and government work to boost access to new export markets]
Crossovers in Botswana: women entrepreneurs who operate in male-dominated sectors (World Bank)
To build on its successful rise to upper-middle-income status, Botswana needs to diversify its economy which has been largely driven by the public sector and the diamond industry, which has created few jobs and limited spillovers. One priority for achieving this which has been highlighted in recent work is the need to raise returns to non-farm self-employment, including by improving the productivity of micro and small enterprises. This may be particularly important for women-owned businesses, with research from across the region showing that women owned businesses tend to be less profitable than their male-owned counterparts. Using data collected from microenterprises in Gaborone, Botswana, this paper finds that women who cross over into male-dominated sectors make higher profits and grow larger firms in terms of number of employees compared to women who operate businesses in female-concentrated sectors. Women’s likelihood of entering a male-dominated sector appears to be influenced by their level of education and their exposure to male-dominated sectors, including through work experience. The principal source of data for the study (pdf) is a firm-level survey carried out between October 2017 and February 2018. [The authors: Ludovica Cherchi, Daniel Kirkwood]
Zimbabwe: Government plugs clothing manufacturers rebate loopholes (The Herald)
The Government has moved to plug loopholes in the utilisation of the Clothing Manufacturers’ Rebate after some players in the garment making sector were found to have abused the facility over the past six years resulting in the state losing millions of dollars in potential tax revenue. Finance and Economic Development Minister Professor Mthuli Ncube said although the facility had assisted manufacturers to reduce production costs making local apparel competitive on the export market, some beneficiaries of the scheme were undermining tax revenue and distorting both national and regional value chains and linkages through various malpractices. These included the disposal of fabrics intended for value addition on the domestic market and transfer pricing. The decision by the Government to find ways of curbing the abuse of the facility follows revelations that some clothing manufacturers were using transfer pricing, under-invoicing and incorrect declarations to evade local taxes while taking advantage of preferential trade agreements to realise huge profits in regional markets.
Zimbabwe: Roadmap to the development of a $12bn mining industry by 2023 (GoZ)
Cabinet considered a paper by the Minister of Mines and Mining Development on the roadmap for the achievement of a $12bn mining industry in Zimbabwe by 2023, a 344% increase from $2,7bn in 2017. A detailed document which will outline the achievement of the $12bn mining industry by 2023 will be launched very shortly. Cabinet also considered some of the enablers towards the achievement of the 2023 mining milestone. Cabinet also received an update on progress in the implementation of the following mining projects:
Capital inflows to Sub-Saharan Africa: on a different path (World Bank Blogs)
What explains these different trends and why does it matter? These are the questions that lie at the heart of the analysis conducted by Calderón, Chuhan-Pole and Kubota. Our main message is twofold: one, the evolution of capital inflows shows divergent patterns for SSA and the rest of the world and another, drivers of capital flows vary by type of flow and regions. Plausible policy recommendations arising from the analysis underscore that the SSA countries need to diversify the economic and export structure, develop deeper domestic financial markets, implement policies to promote a productive business environment and create investment opportunities. To sum up, capital flow behavior for Sub-Saharan African countries is different from that of industrial countries due to different economic structures which render different transmission processes. External factors are the main drivers of gross capital inflows into Sub-Saharan Africa, while both domestic and external factors are important for industrial countries and non-SSA countries.
Jumia’s Q2 2019 report shows the future is still highly uncertain for “The Amazon of Africa”
According to the financial report, Jumia’s operating loss increased from $46.5b a year ago to $74.02m in the second quarter of 2019, mainly due to an increase in share-based compensation expense. However, adjusted EBITDA loss, as a percentage of GMV narrowed from -21.4% to -15.8% on better margins. The e-commerce platform that operates primarily in Africa also revealed on Wednesday that its second-quarter revenues improved 58.3% to $43.5m, as marketplace revenues almost doubled year-over-year. The top-line was slightly short of the street projection of $45.88m. Also, the company revealed that its gross merchandise volume grew 68.9% to $311.8m in Q2, on the back of the growth of “active consumers and spend per active consumer.” It said that the number of active customers at the end of the quarter was 4.8 million, up from 3.2 million a year ago. [Africa could emerge as the battleground between Facebook and China as digital currency race heats up]
Creative industries in the digital economy: opportunities for small states. This issue of Commonwealth Trade Hot Topics focuses on priorities for Commonwealth co-ordination of regulations and business support for creative industries in the digital economy as a strategy for mitigating the impact of the digital divide on small states. [The author: Natallie Rochester]
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2019 Indonesia-Africa Infrastructure Dialogue: updates
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Inka aims to secure Rp 7 trillion worth of order contracts from African, Asian countries. State-owned train manufacturing company PT Industri Kereta Api Indonesia (Inka) is expecting to earn Rp 7.2 trillion ($506.5m) worth of order contracts this year, including from exports of rolling stock to African and Asian countries. Inka president director Budi Noviantoro said on Monday that his company was expecting to seal deals to export rolling stock to African countries like Angola and Madagascar as well as to another Asian buyer, Sri Lanka. “Angola wants to buy 10 trains just like the ones used for the Jabodetabek commuter lines, but we are still discussing the delivery deadline,” he said at a press conference at the State-Owned Enterprises Ministry office.
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Indonesia elicits AU special envoy’s support to solve trade issues. Coordinating Maritime Affairs Minister Luhut Pandjaitan has sought the support of the AU Special Envoy for Infrastructure Raila Odinga to settle some issues that have hampered trade relations with some African nations. The minister held a meeting with the AU special envoy on the sidelines of the IAID 2019 in Nusa Dua, Bali, on Tuesday. Pandjaitan had sought Odinga’s support to finalize the free trade negotiations with Mozambique and Kenya. Pandjaitan, concurrently head of the Indonesia-Africa Infrastructure Development Task Force, opined that the African Union can serve as an entry point for cooperation with its member nations.
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During the dialogue, Indonesia proposed to negotiate Preferential Trade Agreements to boost trade with some African countries like Mauritius and Djibouti. These PTAs will reduce trade tariffs, which in turn will drive trades and contribute to economic growth.
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IAID yields 11 business deals worth $822m. The majority of the business deals are infrastructure projects, such as construction of La Tour de Goree Tower worth $250m in Dakar; a housing construction project worth $200m in Songon, Côte d’Ivoire; and a bulk liquid terminal construction project valued at $190m in Zanzibar. The three projects are to be carried out by PT Wijaya Karya (WIKA) with funding supported by Indonesia Eximbank. Other business deals include a pharmaceutical project worth $1.5m by Dexa Group (Indonesia) with Bahari Pharmacy (Tanzania); a clove leaf oil production project valued at $2.5m by PT Indesso Aroma (Indonesia) with Zanzibar State Trading Corporation; and a pharmaceutical project worth $2.5m between Kimia Farma (Indonesia) and Topwide Pharmaceutical (Nigeria).
Ghana and the AfCFTA: Technical barriers to trade must be stepping-stones – Prof Dodoo
For the AfCFTA to succeed, countries must ensure that technical barriers to trade become stepping-stones rather than obstacles, Professor Alex Dodoo says. Speaking on the operationalising of the AfCFTA in Ghana and the role of the Ghana Standards Authority, Prof Dodoo said quality and compliance to standards requirements were key in all free trade areas. He said that under the AfCFTA, African countries would continue to be confronted with the main TBT issues because of state obligations under the WTO’s agreements. Professor Dodoo said governments would introduce more and more regulatory requirements to address, among others, health, safety or environmental issues in accordance with the WTO TBT Agreement and the rights and obligation of members. Besides, consumers will demand safety and quality assurance, while the private and public authorities will continue to scrutinize imported and exported goods for compliance. He said Ghana, as the hosts of the AfCFTA Secretariat, must have deliberate policies that are supported by resources: “Ghana simply has to mainstream standards, technical regulations and conformity assessment regimes into the national strategy in order to take maximum advantage of the AfCFTA.”
Uganda forms ministerial committee to fast-track penetration into African market after AfCFTA ratification
Amelia Kyambadde, minister of trade, industry and cooperatives, told parliament on Tuesday that the committee will strategize Uganda’s competitiveness in the market, among others. “With the integration of the African continent, Uganda stands to benefit from expanded markets, stimulation of increased productivity, increase in trade and services and employment. We are immediately targeting livestock products, coffee, tea, iron and steel, among others. Services will include education, tourism, business services and infrastructure services.” Kyambadde indicated that Uganda is targeting markets in Nigeria, Ghana, Cameroon, Morocco, Algeria and Tunisia.
DTI statement: South Africa sets up national AfCFTA committee
The engagement [last week at NEDLAC] focused on a number of key developments in the local and global economy, including the new industrial strategy outlined by President Cyril Ramaphosa during the State of the Nation Address in June, and the AfCFTA, which has been ratified now by 27 African countries, including South Africa. The NEDLAC parties agreed that a national committee with sector-level task teams should identify which products South Africa could export to other African countries and what steps needed to be taken to realise such exports. The teams should also point to products that are vulnerable and develop measures to strengthen such sectors. Government officials also provided updated presentations on South Africa’s export and investment promotion services, plans to improve the ease of doing business, development of special economic zones, changes to the Competition Act, empowerment and black industrialists programmes, and the trade dimensions of the digital economy. The engagement has now resulted in a number of working groups and committees, with constituents drawn from Government, Business and Labour. These include a Ministerial Export Promotion Panel that will be constituted shortly, a Special Economic Zone reference team and a Working Committee on trade policy and the digital economy. Working groups are expected to meet during August and September.
Kenya’s business lobbies call for India export push to bridge trade deficit (Business Daily)
Business lobby groups have called for a concerted effort to address the huge trade imbalance in favour of India against Kenya. The United Business Association and the Kenya National Chamber of Commerce and Industry said India enjoys a trade surplus with Kenya because local industries lack an avenue to penetrate the Indian market. KNCCI chief executive Angela Ndambuki said Kenya needs to encourage Indian firms to set up local manufacturing bases for exporting goods back to their countries, through incentives such as export processing zones. “Strengthened business ties are key to enhanced Kenya exports to India and this could be in form of manufacturing investments that support the Big Four agenda units or their enablers,” said Ms Ndambuki at the second International Indo-Africa Business-to-Business Trade Expo in Nairobi on Monday.
South Africa: The government is launching a major new website for businesses – here’s what to expect (Business Tech)
The Department of Trade Industry plans to go live with a new business portal by October 2019. Responding during a recent parliamentary Q&A session, minister of Trade and Industry Ebrahim Patel said that the portal will be the first of its kind and significantly improve the ease of doing business in South Africa. “The new business portal will allow domestic firms to get company registration, domain name registration, B-BBEE certificate and SARS registration online at the same time,” Patel said. “In addition, Invest SA is working with UIF and the Compensation Fund to integrate these processes into a single online platform which will be a first for South Africa.” Patel said that Invest SA, with the technical support of the World Bank, has prioritised five of the ten indicators based on the Doing Business report.
Mozambique to join African Export-Import Bank (Club of Mozambique)
The Mozambican government announced yesterday that it has authorised Minister of Economy and Finance, Adriano Maleiane, to sign the country’s accession to the African Export-Import Bank (Afrexim). According to the statement issued at the end of the weekly session of the Council of Ministers, Adriano Maleiane received from the executive the approval to formalize the entry of Mozambique in that pan-African bank.
Qatar to build new port in Somalia’s Hobyo (Aljazeera)
Profiled new World Bank research reports:
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Revisiting the trade impact of the African Growth and Opportunity Act. This study examines the impact of the African Growth and Opportunity Act using the synthetic control method, a quasi-experimental approach. The novelty in the approach is that it addresses problems of estimation that are prevalent in nonexperimental methods used to analyze the impact of preferential trade agreements. The findings show that most of the eligible countries registered gains in exports due to the African Growth and Opportunity Act. However, the results are varied, and the gains were largely unsteady. Much of the gains are due to exports of petroleum and other minerals, while there are few countries that were able to expand into manufacturing and other industrial goods. The positive trade impacts were largely associated with improvements in information and communications technology infrastructure, integrity in the institutions of legal and property rights, ease of labor market regulations, and sound macroeconomic environment, including stable exchange rates and low inflation. Undue exposure to a single market, like the United States, or few commodities may have also restricted the gains from trade. Extract from the conclusion (pdf):
On redesigning the next generation of AGOA and other PTAs or in reshaping existing ones, the US and other OECD countries should consider incorporating policy commitments along with preferential access. Commitments in reforms across a range of areas to create an enabling environment for private investment and trade could enhance export capacity. The study suggests that PTAs need to be reinforced with reform-based eligibility criteria. There is a need to integrate PTAs with other efforts to deepen trade and investment between SSA countries and the US. This includes integrating AGOA with foreign aid policy instruments to effectively address the structural challenges limiting export capacity. Efforts to ease supply constraints and support the integration of African economies to global trade requires augmenting the quota-tariff-free ‘preferential’ agreements with additional instruments to strengthen the capacity and competitiveness of firms in these countries. [The authors: Woubet Kassa, Souleymane Coulibaly]
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Manufacturing in structural change in Africa. In this paper, we study cross-country patterns and trends in the share of manufacturing in national output and employment among sub-Saharan African countries. We investigate the extent to which countries differ in terms of the timing, causes, and consequences of industrialization or “deindustrialization.” Indeed, the fact that development policies are always framed, implemented and evaluated at the subregional and/or country levels suggests that the questions raised in this paper should also be addressed at finer geographic (aggregate) levels. Moreover, since countries are heterogeneous in terms of regional trade clusters, availability of skills, and natural resource endowment, it is important to exploit such richness and nuances to draw conclusions accordingly. More specifically, the analysis in this paper is organized around the following questions (pdf):
Our key finding is that deindustrialization does not appear to be the common experience of the majority of Sub-Saharan African countries. Only the Southern SSA subregion appears to have deindustrialized over the period under study. We do not, however, find evidence that this deindustrialization of the southern subregion has occurred prematurely. We also uncover meaningful geographic variation in manufacturing experience across sub-Saharan Africa, and a potential role of the Dutch disease in understanding SSA’s manufacturing experience. Although analysis of the latter hinges on the sample size of oil-exporting countries and the availability of key variables such as non-oil GDP, which are limited in this study, it suggests that future research should account for the role of the Dutch disease in studying Sub-Saharan Africa’s manufacturing experience. [The authors: Pierre Nguimkeu, Albert Zeufack]
India: Finance ministry reviewing India’s free trade agreements (Economic Times)
The finance ministry has initiated a review of India’s free trade agreement framework to assess the impact of such pacts on the overall economy. The view has been gaining ground among policymakers and industry that these free trade agreements brought little tangible benefit to India, while helping the partner country. There is also a sense that FTAs have adversely impacted India’s manufacturing, which the government is trying to boost through ‘Make in India’. The review is being carried out by the department of economic affairs along with the departments of commerce and revenue, among others. The government is keen to ensure trade agreements don’t undermine its efforts to step up manufacturing. It aims to lift the share of manufacturing in the economy to 25% from about 16% (at current prices) by 2022. Additionally, the authorities have found that sometimes imports are being diverted from the normal domestic tariff route to FTAs after the government has raised customs duty. This has run counter to the government’s policy steps aimed at discouraging imports of a particular good.
Today’s Quick Links: Second Africa Investment Forum (11-13 November): update Eighth Conference on Climate Change and Development in Africa (28–30 August): concept note (pdf) Maersk reports strong improvements in earnings in Q2 2019 |
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Next month, UNU-WIDER, in partnership with the Brookings Institution, launches its inaugural Massive Open Online Course: Industrial Policy and the Challenge for Africa
An interview with the UNECA’s Vera Songwe: Africa’s free trade area – the journey begins
Ministers of finance of member states signing on to AfCFTA have an important role to play to help countries implement the agreement. Tax and customs, for example, which are key components of AfCFTA, are matters under the ministry of finance. It’s up to the finance ministers to evaluate if, how and when revenues will increase for their countries and how these revenues will be expended. Once countries ratify the document, they have 10 years, some have 13 years, to put key policies in place to fully take advantage of AfCFTA. We expect countries to carry out a review of their macroeconomic policies, focusing on fiscal policies that are fit for purpose, and to help us not only to adapt to, and make the most of, AfCFTA, but more broadly to achieve Agenda 2063 and the 2030 Agenda for Sustainable Development. The urgent action is to create the enabling fiscal space to foster both public and private investment while ensuring economic diversification.
Nigeria: Forex ban on food importation will not affect AfCFTA – CBN’s Emefiele (Nairametrics)
Ghana and the AfCFTA: tweets from the ongoing national conference
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Ghana’s Deputy Minister of Trade and Industry, Carlos Ahenkorah: “Whether we like it or not the moment AfCFTA is enacted, goods from all over Africa will come into Ghana. Quota free and tariff free. If you are not ready you will be in trouble.”
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@ShariAnkomah: Day 2 of National Conference on AfCfta implementation with @MotiGhana pushing for greater ownership of our shipping vessels to reduce lead time between African countries. It takes 14 days to do Africa-Europe shipping but up to 28 days between Ghana and Cote d’Ivoire.
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@AboagyeTMintah: Pharmaceutical manufacturing, another big opportunity we could leverage in the Ghana-Turkey economic relationship, especially with AfCFTA on the horizon.
The Indonesia-Africa Infrastructure Dialogue began today in Bali: It is being attended by 700 representatives from businesses and governments of Indonesia and African countries.
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What is the Indonesia-Africa Infrastructure Dialogue? An extract from the concept note: Preferential trade agreement preliminary discussions and negotiations. Indonesia and several African countries will hold preliminary discussions and also start negotiations on the establishment of bilateral Preferential Trade Agreements. These discussions and negotiations will be officially launched during the opening of the IAID. Bilateral trade between Africa and Asian countries, including Indonesia is growing. The growth can be reflected through the increase of trade in 2018 that reached $11,25bn, compared to $4,77bn in 2009. In a period of only 10 years, the trade increased up to 236%. Such advancement can only be achieved by rapid development of infrastructure, both in Africa and Indonesia, as well as establishment of trade agreements and tariff reduction mechanisms.
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Arifi Saiman: Setting sights on ‘free trade’ Africa. Economic integration is moving faster under the AfCFTA, which came into force in May. Pending more ratification by member countries — 27 of its 54 signatories have done so thus far — free trade could become fully operational by July 2020. The poorest continent in the world is rapidly catching up, and Asia may have to accommodate and agree to rename this era as the Asia-Africa Century. Indonesia has caught the African fever, but with AfCFTA, it can do a lot more and faster in tapping the growing economic and business opportunities on offer. President Jokowi gave the order back in 2017, and the government has since taken initiatives to engage more with Africa. It is now up to the business world to take up the challenge. Indonesia has 17 diplomatic missions and 16 honorary consul offices in Africa that are ready to help and make it easier for Indonesian companies planning to do business there. To borrow a phrase from the box-office hit The Lion King, it’s “Hakuna matata” (no problems). [The author directs the Centre for Policy Analysis and Development on Asia Pacific and Africa Regions at the Foreign Ministry]
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Ambassador Salman Al Farisi: Indonesia and South Africa – struggle solidarity that seeks shared prosperity. South Africa is Indonesia’s largest trading partner in Africa. We are especially keen for this relationship to grow. The spirit of Bandung was essentially about South-South partnership and trade. We believe there to be great complementarities in our economies. We remain keen to share scientific expertise and are encouraged by scholarly exchanges that have been taking place largely unprompted by our governments. While manufacturing is a large part of both our economies, we are keen to grow other sectors such as tourism, beneficiation of raw materials and green technologies. In this regard, it’s worth mentioning that we also have a comprehensive strategic partnership between Indonesia and South Africa. This was signed on 17 March 2008 by then president of Indonesia, Susilo Bambang Yudhoyono and former president Thabo Mbeki. [The author is Indonesia’s ambassador to South Africa]
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Veeramalla Anjaiah: Indonesia’s increasing presence in Africa. Several Indonesian companies are already present in Africa, and many more are expected to follow after the IAID meeting. For example, state-owned construction company PT Wijaya Karya, which has projects in Algeria and Niger, is planning to sign Rp 2 trillion worth of infrastructure and construction projects soon in Zanzibar, Senegal and Ivory Coast. Privately owned Indofood, Indorama, Wings Group and Sinar Antjol have plants in African countries. There is a huge potential out there. State-owned companies like Dirgantara Indonesia regularly sell top products to African countries, backed by Indonesia Eximbank financing scheme.
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Starting the series of bilateral meeting on the side of IAID Bali 2019, FM Marsudi met Raila Odinga, High Representative of African Union for Infrastructure Development. Other Twitter updates: #IAIDBali2019, #IndonesiaAfrica, MoFA Indonesia: @Kemlu_RI
USITC’s hearing on US trade and investment with Sub-Saharan Africa: post-hearing submission by the Information Technology and Innovation Foundation (pdf)
The potential for digital duties on imports of digital products. A potential additional problem for the digital economy in SSA is that some countries (especially South Africa) want to enact duties on imports of digital products. To do this, South Africa and its like-minded partners (such as India and Indonesia) want to end a long-held WTO commitment to not enact duties on imports of digital products. Spurred on by dubious and misguided research from certain officials within UNCTAD, many SSA countries oppose efforts to negotiate new e-commerce and digital trade rules at the WTO and the extension of this moratorium on digital duties (due to be decided at the WTO ministerial conference in 2020).60 Allowing countries to enact digital duties, for example, would create the scenario where every song or movie or piece of software that is digitally delivered to a customer in another country would face a tariff, thereby putting it at a price disadvantage to local products, while also increase the price for consumers. Thankfully, Nigeria has dissented from the broader “Africa Group’s” efforts at the WTO to advocate for the end of the moratorium and an end to e-commerce and digital trade talks.
Looking ahead: Global digital trade. The United States has a few key partners in SSA to work with on efforts to set new digital trade rules at the global level. A few SSA countries - Cote d’Ivoire, Benin, Kenya, and Nigeria - have recognized the need to engage with dozens of others countries to discuss and negotiate new e-commerce and digital trade rules at the WTO. This builds on their collective membership of the WTO subgroup of developing countries — the so called “friends of e-commerce for development”— that share a common understanding of the positive impact of e-commerce and its versatility to create sustainable economic opportunities for all. In joining WTO talks, Nigeria and the other countries listed above defied their neighbors in the African Group (which includes Egypt, South Africa, and 41 other countries), who oppose negotiations because they want to enact duties on digital products and other protectionist barriers as part of “digital industrial development,” which is akin to the tried-and-failed use of tariffs and infant industry policies of the last century. [Read a summary of the submission, here]
WCO publishes an E-Commerce Package
The WCO E-Commerce Package, which has just been published, provides guidance to Customs administrations on establishing or enhancing the legislative, policy and operational framework for managing cross-border e-commerce. The Package includes the Framework of Standards on Cross-Border E-Commerce and the accompanying WCO Council Resolution adopted in June 2018, as well as various tools adopted in June 2109, supporting the effective and harmonized implementation of the various standards contained in the Framework. Given the phenomenal growth in cross-border e-commerce and its associated opportunities and challenges, Customs administrations are urged to implement the Framework of Standards in a phased manner, based on their national priorities, specificities, internal procedures, and resource availability. [Various downloads available, here]
Sources of manufacturing productivity growth in Africa (World Bank)
This paper investigates the sources of growth in manufacturing productivity in Cote D’Ivoire, Ethiopia and Tanzania in comparison with the case of Bangladesh. Based on the analysis of establishment census data since the mid-1990s, it finds that reallocation of market share between firms contributed substantially to productivity growth in each of the four countries, although to a varying extent. In Ethiopia, the impact of market share reallocations among survivors tended to be larger than those associated with increases in within-plant productivity. In addition, plant closure (or exit) boosted productivity more than new plant openings (or entry) did in the sense that the relative productivity of survivors (or continuing plants) was higher relative to that of closing plants (or exit cases) than it was relative to the productivity of newly opening plants (or new entrants). Reallocation of market share plays an important role in raising aggregate productivity in Côte d’Ivoire as well. But the pattern here is opposite to that in Ethiopia in that in Côte d’Ivoire entering (or newly opening) plants have larger impact on aggregate productivity growth than closing (or exiting) plants. Unlike the case with Cote D’Ivoire and of Ethiopia, the reallocation of market share among surviving plants is a smaller source of manufacturing productivity growth in Tanzania than the new plant openings and plant closure. [The authors: Patricia Jones, Emmanuel K.K. Lartey, Taye Mengistae, Albert Zeufack]
Today’s Quick Links: Global Alliance for Trade Facilitation and KenTrade sign partnership agreement to break down trade barriers South Sudan National Revenue Authority and TradeMark East Africa partner to modernize trade systems Ghana: Meridian Ports Services agreement worse than PDS – TUC US envoys assume key Africa posts: but not in South Africa |
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The High-Level Policy Dialogue, Harnessing the benefits of the AfCFTA for a Ghana Beyond Aid, opened today in Accra:
“Execute your watchdog role effectively”: Akufo-Addo tells regulatory agencies. Addressing the opening ceremony of the National Conference on the implementation of the AfCFTA Agreement, President Akufo-Addo said: “It is essential that the regulatory bodies rise to the occasion and be up and doing in the discharge of their duties in order to promote discipline in the activities of the private sector. Institutions such as the Bank of Ghana, the Registrar of Companies, the Securities and Exchange Commission, the National Insurance Commission, and the National Pension Regulatory Authority must see to the effective regulation and supervision of the entities within their remit. We have seen what the previous failure of regulation led to in the banking sector.”
The conference will have eight different sessions that will, amongst others, focus on putting the AfCFTA in context, the economic benefits to be derived for Ghana from the implementation of AfCFTA, analyze how the AfCFTA will contribute in practical terms to realizing the objectives of the AU’s Agenda 2063, the SDGs and a Ghana Beyond Aid. Other sessions will look at the operationalizing the AfCFTA in Ghana, discuss what actions are needed to develop and implement Ghana’s National Programme of Action for Boosting Intra-African Trade, and explore ways of boosting employment opportunities for the youth as well as enhancing the empowerment of women.
The AfCFTA and the Nigerian private sector: report of the NACCIMA-Deloitte AfCFTA Dialogue (30 July, Lagos)
Participants observed that the delay by Nigeria in acceding to the Agreement may have resulted in Nigeria losing some advantages, such as the possibility of being the host of the AfCFTA headquarters. However, Nigeria’s eventual accession was consistent with its role as the leading economy in Africa. Participants also agreed that signing the Agreement after the nation-wide consultations to pave the way for the signing was the right step and emphasized that the delay in the signing of the AfCFTA was good for the country and the continent, in as much as it helped to focus the minds of decision-makers on several shortcomings of the Agreement, as originally drafted, and that the consultative process helped to legitimize the AfCFTA in Nigeria.
Participants identified “implementation” as the real challenge in ensuring that this continent-wide trade agreement truly served as a framework to boost intra-African trade. Accordingly, they called on the National Action Committee (NAC) to take cognisance of that fact and urged NAC to support and encourage the efforts of the private sector’s deep engagement and buy-in into all areas of the Agreement, especially in the areas of free movement of persons, industrialization, value chain development, gender equality, strengthening of Regional Economic Communities, and promoting cross border trade.
On opportunities for Nigerian banks, creativity and entertainment sector, the private airlines: Participants recognized that Nigerian banks currently dominate the banking and financial sectors in West and East Africa and this was an indication of the capacity of the banks and the financial sector to compete effectively under the AFCFTA. Attention was also drawn to the entertainment and creativity sectors which is largely dominated by Nigeria as well as airline operators - which despite the tough times facing the domestic aviation sector - are now providing services across the west and other parts of Africa. This is an indication that the Nigerian private sector is well prepared can effectively play on the terrain of a vast continental market of over 2.1 billion people.
South Africa and the AfCFTA: Patel establishes national committee on new African trade agreement (Engineering News)
Trade and Industry Minister Ebrahim Patel has set up a national committee, comprising representatives from business, labour and government, to develop action plans around the new AfCFTA. The committee was set up at a strategic session between the Ministry and social partners at the National Economic, Development and Labour Council (Nedlac), and was the first session held with the new Ministry following the combination of the departments of Trade and Industry and Economic Development. The day-long session gave rise to a number of tripartite working groups to speed up actions to grow the number of jobs in the South African economy. Working groups are expected to meet during August and September.
Tripartite Free Trade Area integration agenda: Capacity building strategy developed
39th SADC Summit of Heads of State and Government: selected updates
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Extracts from the communiqué: Summit noted the overall decline in food production in the Region, for the 2018/19 crop season, and urged Member States to implement comprehensive multi-year response plans to tackle the recurrent droughts and food insecurity to boost agricultural production; Summit noted progress made on the implementation of the SADC Industrialization Strategy and approved the Protocol on Industry, which aims to promote the development of a diversified, innovative and globally competitive industrial base; Summit noted with great concern the slow growth in the intra-SADC trade levels, and that the region continues to export unprocessed raw material to the rest of the world, thereby forfeiting the potential benefits of the resource endowments. To this effect, Summit agreed to accelerate the implementation of the industrialization strategy; Summit directed the SADC Secretariat to expedite the operationalization of the SADC Disaster Preparedness and Response Mechanism as part of the regional measures to respond to effects of climate change; Summit noted that Burundi met some of the eligibility criteria for admission of new members into SADC, and that she will submit a progress report, based on which a verification Mission will be undertaken.
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Poor information sharing crippling intra-trade performance in SADC. The new Chairperson of SADC, Tanzania’s John Pombe Magufuli, has singled out poor information sharing among member states as a factor crippling intra-trade and economic performance in the region: “There are many reasons why our economies are not performing as expected, one of them being lack of information on the opportunities available in our respective countries.” He told the SADC summit that in May this year he had visited four SADC countries, three of them were affected by food shortage due to drought and other natural disasters. “It surprised me to hear that those countries were planning to import food from outside Africa while in Tanzania we were struggling to find markets for 2.5 million tonnes of our food surplus. Due to lack of information, our countries are also importing cars, sugar, and fuel very far away from our region while some SADC member states like South Africa, Mauritius and Angola, for instance, are producing the same.”
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SADC leaders sign protocol on industry development. To ensure that the Industrialisation Strategy and Road Map 2015/2063 is implemented, Dr Magufuli said they have directed the SADC Secretariat to fast-track the removal of the non-tariff barriers that impede businesses among member states. He said the secretariat was directed to speed up the removal of NTBs at borders, red tape in decision making and corruption, among others. “We have directed the secretariat to present a report during the next summit,” said Dr Magufuli. To address the challenge of funding for development projects, the summit endorsed the Regional Resource Mobilisation Framework.
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Akinwumi Adesina: “AfDB’s $13bn investment in Southern Africa is delivering strong results: Africa must not be under-ambitious!” The AfDB has invested heavily in the region with key projects including a $5bn investment in ESKOM, critical for power supply for South Africa and the SADC region. The Bank has also supported Mauritius with $114m for its St. Louis Power Plant that now provides 36% of the population with electricity. “For every dollar of paid-in capital by the region, it received about $ 19 in investments, an impressive 19:1 leverage ratio,” Adesina said in his address. “Unlocking the potential of the Inga hydropower project in the Democratic Republic of Congo must be a top priority,” Adesina urged. The Bank is supporting the establishment of a $1.2bn SADC Regional Development Fund to help mobilize domestic resources for regional infrastructure and industrialization. In May this year, the Bank approved $2m for the operationalization of this Fund, including for project preparation for agriculture, pharmaceuticals, and mining.
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SADC summit closes with 100bn/- European deal. The SADC Secretariat and the EU yesterday signed three development cooperation programmes worth over 100bn/- (euros 47 million) for a period of five years under the 11th European Development Fund. The three programmes, which will be implemented by the SADC secretariat, were listed as Support to Improving the Investment and Business Environment; Trade Facilitation Programme; and Support to Industrialisation and Productive Sectors. The SIBE Programme aims at achieving sustainable, inclusive growth and support job creation through transforming the region into a SADC investment zone, promoting intra-region investment and FDI, with a focus on SMEs. The Trade Facilitation Programme will contribute to enhancing inclusive economic development in the SADC region through deepening regional economic integration. Finally, the SIPS programme is geared to contribute to the SADC industrialisation agenda, improving the performance and growth of selected regional value chains and related services in the agro-processing and pharmaceutical sectors. [Related: SADC convenes inaugural EDF meeting on peace and security]
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Related: South Africa and Tanzania commit to greater economic cooperation. The Heads of State agreed that the second session of the South Africa-Tanzania Binational Commission would be hosted in South Africa in 2019 on a date to be agreed. The leaders also noted with satisfaction the coming into effect of the AfCFTA – an ambitious initiative to accelerate intra-continental trade and advance economic integration. Addressing the South Africa-Tanzania Business Forum, the two leaders called on their respective business communities to work together to achieve inclusive growth and development. To promote rapid industrialisation and development, they agreed on the need to enhance the ease of doing business in the two countries. President Ramaphosa said: “South Africa is ready and prepared to craft a new partnership model with Tanzania, where government and business work together to clear the way for more investment to flow between our two countries”.
Tanzania: Exports of goods, services fall in June (pdf, BoT)
In the year ending June 2019, the value of exports of goods and services declined slightly to $8,561.6m compared with $8,588.5m in the year to June 2018, driven by goods exports, particularly traditional goods exports. Value of traditional good exports declined to $515.4m from $1,125.3m in the corresponding period in 2018. The decline was observed in all traditional crops, except coffee and cotton. Meanwhile, value of non-traditional goods exports, which accounts for 80% of goods exports, increased to $3,569.7m from $3,140.1m, largely driven by gold exports (see Chart 5.1). The value of gold — that accounted for more than 40$ of non-traditional exports —grew by 18.7% to $1,743.4m on account of an increase in volume. Foreign exchange receipts from services, which accounted for about 40% of total exports, increased to $4,068m in the year to June 2019 from $3,896.6m in the corresponding period in 2018. The increase was driven by travel receipts—mainly from tourism— which grew by 7.4% to $2,488.1m owing to increase in the number of tourist arrivals (see Chart 5.2).
On imports: In the year ending June 2019, the value of goods and services imports increased by 5.5% from the levels registered in the year ending June 2018 to $10,257.6m on account of goods imports. Goods import bill increased to $8,347.0m, from $7,666.1m in the year ending June 2018, driven by import of capital goods for the ongoing infrastructure projects in the country (see Table 5.2). Meanwhile, the value of consumer goods imports declined owing to decrease in food and food stuffs import bill following good harvests during 2017/18 crop season.
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Ghana organises a High-Level Policy Dialogue on Harnessing the benefits of the AfCFTA for a Ghana beyond Aid
Ghana prepares to host the AfCFTA Secretariat
The Ministry of Trade and Industry and the Ministry of Foreign Affairs and Regional Integration and, in partnership with the Economic Commission for Africa and the African Union Commission (AUC), are organising a High-Level Conference on AfCFTA from 19-21 August 2019, at the Accra International Conference Centre, Accra, Ghana focusing on Harnessing the benefits of the African Continental Free Trade Area (AfCFTA) for a Ghana beyond Aid.
The purpose of the National Conference is to bring together key stakeholders in Ghana to discuss national strategies and programme interventions to harness the benefits of the AfCFTA. The President of the Republic of Ghana will use the opportunity to articulate his vision for the AfCFTA for a Ghana Beyond Aid.
Participants will include Senior Policy Makers, Parliamentarians, the Business Community, Academia, Representatives of Civil Society Organizations, Development Parties and the Media. The Conference will also allow deeper reflection on issues pertinent to the advancement of the economy of Ghana within the framework of the AfCFTA.
Mr. Joseph Atta-Mensah, Principal Policy Advisor, Macroeconomics and Governance Division, Economic Commission for Africa said, “In the context of the recent designation of Ghana by the African Union Summit as the host of the AfCFTA Secretariat this dialogue adresses the question of how Ghana can design and implement effective strategies and policies that will support the promotion of rapid inclusive economic growth by boosting competitiveness and job creation under the AfCFTA.”
The operational phase of the African Continental Free Trade Area (AfCFTA) was launched in Niamey, Niger on 7th July 2019 at the African Union's Extraordinary Summit, with a transition period up to 1 July 2020 when trading will begin under the deal. Ghana was selected as the country to host the secretariat of the African Continental Free Trade Area (AfCFTA), making it responsible for the overseeing the implementation of the agreement.
The country has committed to donate $10 million for the operationalisation of the AfCFTA Secretariat. Ghana was among the first group of countries to ratify the agreement on 10 May 2018, following the 21 March 2018 signature of the Agreement in Kigali, Rwanda by 44 AU member states The Agreement entered into force on 30 May 2019 after ratification by the required 22 AU member states.
Mr. David Luke, Coordinator, African Trade Policy Centre, Economic Commission for Africa explains that Ghana’s AfCFTA implementation strategy “should not only focus on promoting high and sustainable long-term growth but also ensure that the benefits of such growth are widely shared in order to reduce poverty and improve the standard of living for all in Ghana.”
The AfCFTA provides the opportunity for Africa to create the world's largest free trade area, with the potential to unite 1.3 billion people, in a $2.5 trillion economic bloc and usher in a new era of development. The main objectives of the AfCFTA are to create a continental market for goods and services, with free movement of people and capital, and pave the way for creating a Customs Union. It will also grow intra-African trade through better harmonization and coordination of trade liberalization across the continent.
The AfCFTA is further expected to enhance competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access and better reallocation of resources.
This Conference is part of a wider project aimed at deepening Africa’s trade integration through effective implementation of the AfCFTA. Financially supported by the European Union, ECA has been working with its partners including the African Union Commission (AUC), International Trade Centre (ITC), United Nations Conference on Trade and Development (UNCTAD) and a selection of independent trade experts to ensure effective AfCFTA implementation strategies.
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SADC hosts the 39th Ordinary Summit of the Heads of State and Government in Dar es Salaam, Tanzania
The 39th Ordinary Summit of the Heads of State and Government of the Southern African Development Community (SADC) was held at Julius Nyerere International Convention Centre in Dar es Salaam, United Republic of Tanzania, on the 17th and 18th August 2019. Below is the final Communiqué, available to download in English, French and Portuguese.
Communiqué of the 39th SADC Summit of Heads of State and Government
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The 39th Ordinary Summit of the Heads of State and Government of the Southern African Development Community (SADC) was held at Julius Nyerere International Convention Centre in Dar es Salaam, United Republic of Tanzania, on the 17th and 18th August 2019.
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Summit was attended by the following Heads of State and Government and/or their representatives:
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Angola: H.E. President João Manuel Gonçalves Lourenço
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Comoros: H. E. President Colonel Azali Assoumani
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DRC: H.E. President Félix Antoine Tshisekedi Tshilombo
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Madagascar: H.E. President Andry Rajoelina
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Mozambique: H.E President Felipe Jacinto Nyusi
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Namibia: H.E. President Dr Hage G. Geingob
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Seychelles: H.E. President Danny Faure
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South Africa: H.E. President Cyril Ramaphosa
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United Republic of Tanzania: H.E. President Dr. John Pombe Joseph Magufuli
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Zambia: H.E. President Edgar Chagwa Lungu
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Zimbabwe: H.E. President Emmerson Dambudzo Mnangagwa.
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Lesotho: Right Hon Prime Minister Dr. Motsoahae Thomas Thabane
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Malawi: Rt. Hon. Everton Herbet Chimulirenji – Vice President
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Eswatini: H.E. The Right Hon. Prime Minister Mandvulo Dlamini
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Botswana: Hon. Dr. Unity Dow – Minister of International Affairs and Cooperation
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Mauritius: Hon. Nandcoomar Bodha – Minister of Foreign Affairs, Regional Integration and International Trade.
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Also in attendance were H.E. Dr. Stergomena Lawrence Tax, SADC Executive Secretary; H.E. Dr. Akinwumi Adesina, President of the African Development Bank; and H.E. Dr. Vera Songwe, Executive Secretary of the United Nations Economic Commission for Africa.
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Summit expressed deep condolences to His Excellency Dr. President John Pombe Joseph Magufuli, the Government and the people of the United Republic of Tanzania and the families of the deceased following the deadly fuel tanker accident in Morogoro.
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Summit elected H.E. Dr. John Pombe Joseph Magufuli, President of the United Republic of Tanzania as Chairperson of SADC, and H.E. Filipe Jacinto Nyusi, President of the Republic of Mozambique as Incoming Chairperson of SADC.
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Summit also elected H.E. Emmerson Dambudzo Mnangagwa, President of the Republic of Zimbabwe as Chairperson of the Organ on Politics, Defence and Security Cooperation, and H.E. Dr. Mokgweetsi E.K. Masisi President of the Republic of Botswana as Incoming Chairperson of the Organ on Politics, Defence and Security Cooperation.
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Summit commended the Outgoing Chairperson of SADC, H.E. Dr. Hage G. Geingob, President of the Republic of Namibia, for his exemplary leadership during his tenure.
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Summit endorsed the Theme of the 39th Summit of Heads of State and Government, “A Conducive Environment of Inclusive and Sustainable Industrial Development, Increased Intra-Regional Trade and Job Creation”, which takes forward the SADC industrialization agenda.
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Summit noted the overall decline in food production in the Region, for the 2018/19 crop season, and urged Member States to implement comprehensive multi-year response plans to tackle the recurrent droughts and food insecurity to boost agricultural production.
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Summit noted progress made on the implementation of the SADC Industrialization Strategy and approved the Protocol on Industry, which aims to promote the development of a diversified, innovative and globally competitive industrial base.
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Summit noted with great concern the slow growth in the intra-SADC trade levels, and that the region continues to export unprocessed raw material to the rest of the world, thereby forfeiting the potential benefits of the resource endowments. To this effect, Summit agreed to accelerate the implementation of the industrialization strategy.
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Summit noted the devastating effects of tropical cyclones in the Union of Comoros, Madagascar, Malawi, Mozambique, South Africa and Zimbabwe and expressed its sympathy, and commended all Member States and International Cooperating Partners for the humanitarian support rendered to the affected Member States.
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Summit directed the SADC Secretariat to expedite the operationalization of the SADC Disaster Preparedness and Response Mechanism as part of the regional measures to respond to effects of climate change.
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Summit noted the good progress towards representation of women in politics and economic decision making and urged Member States to translate laws and policies into concrete actions, such as legislative quotas on women’s representation in politics and the application of Article 5 of the SADC Protocol on Gender and Development on Special Measures.
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Summit noted the adverse impact on the economy of Zimbabwe and the region at large, of prolonged economic sanctions imposed on Zimbabwe, and expressed solidarity with Zimbabwe, and called for the immediate lifting of the sanctions to facilitate socio-economic recovery in the country.
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Summit declared the 25th October as the date on which SADC Member States can collectively voice their disapproval of the sanctions through various activities and platforms until the sanctions are lifted.
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Summit approved Kiswahili as the Fourth SADC Official Working Language, in recognition of its contribution, Mwalimu Julius Kambarage Nyerere’s role in the liberation struggle of Southern Africa.
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Summit noted that Burundi met some of the eligibility criteria for admission of new members into SADC, and that she will submit a progress report, based on which a verification Mission will be undertaken.
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Summit approved the Protocol on Inter-State Transfer of Sentenced Offenders, whose objective is to allow for the transfer of sentenced offenders to serve their sentences in their home countries
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Summit noted the withdrawal of South Africa's signature from the Protocol on the Tribunal in the Southern African Development Community of 2014 in compliance with a Constitutional Court ruling.
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Summit welcomed the enactment of legislation to establish the National Reforms Authority (NRA) in the Kingdom of Lesotho, called upon all stakeholders in Lesotho to remain committed to the reforms process, and commended the SADC Facilitator for the effective facilitation.
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Summit noted the gravity of security challenges, especially on terrorism activities and transnational organized crime, and urged Member States to prioritize the implementation of the SADC Regional Counter Terrorism Strategy.
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Summit noted the acts of extremism and terrorism in the DRC, specifically in the Beni Province and agreed to collaborate with the International Conference of the Great Lakes Region (ICGLR), and consolidate efforts towards the towards the security stabilization in the DRC and the Great Lakes Region.
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Summit noted the gravity of maritime security threats, such as piracy, maritime terrorism, drug trafficking, and illegal carrying and trafficking of weapons and ammunition, and agreed to jointly address them as part of SADC Maritime Security Strategy.
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Summit commended the outgoing Chairperson of SADC, H.E. Dr. Hage G. Geingob, President of the Republic of Namibia, and H.E. Cyril Ramaphosa, President of the Republic of South Africa, for their outstanding leadership during the SADC Solidarity Conference with the Saharawi Arab Democratic Republic.
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Summit noted the resolutions of the SADC Solidarity Conference with the Saharawi Arab Democratic Republic (SADR)/Western Sahara and urged SADC Member States, the African Union and the United Nations, to implement the resolutions of the Conference.
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Summit called for the unconditional implementation of all UN resolutions and AU decisions on Western Sahara, which should lead to a positive, peaceful and permanent solution that meets the aspirations of the people of Western Sahara.
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Summit expressed solidarity with Saharawi Arab Democratic Republic/Western Sahara (SADR) by urging African Union Member States and other partners to ensure that the SADR is not excluded from participating in continental and international events.
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Summit directed the Secretariat to notify the African Union Commission, and the Government of Japan on the SADC Position regarding the exclusion of Saharawi Arab Democratic Republic/Western Sahara (SADR) participation in the forthcoming All African Games to be held in Morocco, and TICAD meeting to be held in Japan in August 2019.
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Summit congratulated the Comoros, Democratic Republic of Congo, Eswatini, Madagascar, Malawi and South Africa, for holding peaceful and successful elections.
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Summit directed the SADC Secretariat in collaboration with the Parliamentary Forum Secretariat to develop the model that the proposed SADC Parliament would assume, in terms of mandate, powers and functions; and to develop a Roadmap towards the transformation of the SADC Parliamentary Forum into a SADC Parliament.
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Summit noted progress made on the construction of the SADC Standby Force Regional Logistics Depot and mandated the Chairperson of the Organ to engage the African Union further on the support required for the construction of the Regional Logistics Depot.
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Summit commended the Outgoing Chairperson of SADC, H.E. Dr. Hage G. Geingob, President of the Republic of Namibia, and the Outgoing Chairperson of the Organ on Politics, Defence and Security Cooperation, H.E. Edgar Chagwa Lungu, President of the Republic of Zambia for the role they played that contributed to the peaceful elections and peaceful transfer of power, while maintaining the territorial integrity of the DRC.
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Summit commended the Republics of Angola and South Africa for providing financial and material assistance for the conduct of the 2018 Presidential Elections in the Republic of Madagascar.
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Summit commended H.E. President Filipe Jacinto Nyusi, President of the Republic of Mozambique, and Honourable Ossufo Momade, the leader of the opposition political party, RENAMO on the signing of the peace and reconciliation agreement on the 06th August 2019, paving the way for sustainable peace and revamping of economic and social development.
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Summit commended H.E. Edgar Chagwa Lungu, President of the Republic of Zambia for his leadership during his tenure as the Chairperson of the Organ on Politics, Defence and Security Cooperation.
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His Excellency President Dr. John Pombe Joseph Magufuli thanked all the Heads of State and Government for attending the 39th Ordinary Summit of SADC Heads of State and Government.
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Summit extended its appreciation to the Government and people of the United Republic of Tanzania for successfully hosting the 39th Ordinary Summit and the hospitality they provided to the delegates during the Summit period.
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Summit noted that the next Summit will take place in Maputo, Mozambique in August 2020.
Visit the SADC Resources page to download key legal and policy documents.
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South Africa and Tanzania commit to greater economic cooperation
The Republic of South Africa and the United Republic of Tanzania have committed to deepen and strengthen economic ties through expanded trade and investment with a goal of achieving decent livelihoods in both countries.
President Cyril Ramaphosa and his Tanzanian counterpart, President John Pombe Magufuli, have agreed to work together to ensure economic growth and advance peace and stability in the two countries.
President Cyril Ramaphosa undertook his first State Visit since being elected President in May 2019 to the United Republic of Tanzania from 14 to 15 August 2019.
The President completed his visit to Tanzania – where he also attended 39th Ordinary Summit of SADC Heads of State and Government – today, Sunday 18 August 2019.
During their bilateral discussions, the Presidents Ramaphosa and Magufuli exchanged views on bilateral, continental and global issues. The leaders reaffirmed their commitment to cooperate more closely on multilateral issues.
On bilateral economic relations, President Ramaphosa said: “I firmly believe that much can still be achieved to further expand our cooperation, particularly in sectors such as energy, mining development, mineral beneficiation, economic infrastructure, tourism, agro-processing, education and healthcare.”
He also encouraged the enhancement of cultural exchanges in order to promote people-to-people relations.
The Heads of State agreed that the second session of the South Africa-Tanzania Binational Commission would be hosted in South Africa in 2019 on a date to be agreed.
The leaders also noted with satisfaction the coming into effect of the Africa Continental Free Trade Area (AfCFTA) – an ambitious initiative to accelerate intracontinental trade and advance economic integration.
Addressing the South Africa-Tanzania Business Forum, the two leaders called on their respective business communities to work together to achieve inclusive growth and development.
To promote rapid industrialisation and development, they agreed on the need to enhance the ease of doing business in the two countries.
President Ramaphosa said: “South Africa is ready and prepared to craft a new partnership model with Tanzania, where government and business work together to clear the way for more investment to flow between our two countries”.
During his State Visit President Ramaphosa also undertook a visit to Morogoro where he visited and toured the Soikone University of Agriculture’s Solomon Mahlangu Campus (formerly known as the Solomon Mahlangu Freedom College – SOMAFCO).
The college situated in Mazimbu was established by the exiled ANC in 1978 and provided educational and vocational skills to young South Africans who had fled South Africa after the 1976 Soweto uprising.
The President's visit to Morogoro was the first by a sitting President of the Republic of South Africa and coincided with the 50th Anniversary of the African National Congress’s Morogoro Consultative Conference convened under the stewardship of President Oliver Tambo. It was this Consultative Conference that adopted the Strategy and Tactics document, which determined the direction of the ANC's struggle against the apartheid regime for several decades.
President Ramaphosa said: “We return here because we desire – like the people of this area and all the people of Tanzania – to see this as a place of development, of commerce, of learning and of prosperity. We want this place to have a future that is as glorious as its past. That is why we are greatly encouraged by initiatives like the SOMAFCO Future Africa Precinct, which aims to remember and celebrate our past while investing in infrastructure and economic opportunities that make a tangible difference in the lives of the people of this area.”
During this engagement in Morogoro, President Ramaphosa expressed his heartfelt condolences to the families and the people of Tanzania following the 10 August 2019 fuel tanker explosion in the area that led to the deaths of more than 70 people.
The President said: “We wish the families of those who have lost their loved ones strength as they go through this valley of darkness, as they come to terms with their loss but we also wish those who are still in the hospital a good recovery.”
Following his State Visit, President Ramaphosa led the South African delegation to the 39th Ordinary Summit of SADC Heads of State and Government held under the theme “A Conducive Business Environment for Inclusive and Sustainable Industrial Development”.
The Summit was held from 17-18 August 2019 at the Julius Nyerere International Convention Centre in the Tanzanian capital Dar es Salaam.
The theme was in line with previous SADC Summit decisions that endorsed industrialisation as the overarching priority for the region based on the SADC Industrialisation Strategy and Roadmap (2015-2063).
The Summit provided an opportunity for Heads of State and Government to be apprised on the overall implementation of the SADC work programme, including the Revised Regional Indicative Strategic Development Plan (2015-2020) and the SADC Industrialisation Strategy and Roadmap.
The Summit was also updated on the status of the region's economy, health, and food security and provided policy direction about future strategic work of SADC and the SADC post 2020 Agenda.
President Ramaphosa highlighted the importance of regional economic integration and further emphasised the need to work towards the advancement of economic integration as envisaged by the SADC Industrialisation Strategy and for the promotion and advancement of the Public-Private sector partnerships.
During the SADC Troika Summit of the Organ on Politics, Defence and Security Cooperation, in his capacity as the SADC facilitator to the Kingdom of Lesotho, President Ramaphosa presented a final report on the facilitation process to the SADC Heads of State.
Presenting his report, the President noted with great appreciation progress made towards the implementation of the reforms required for transformation in the mountain kingdom.
He commended the passing of enabling legislation for the establishment of the National Reforms Authority which is entrusted with implementing the decisions of the National Dialogue and the reform processes.
President Ramaphosa was supported by Retired Deputy Chief Justice Dikgang Moseneke and thanked him and his support team for their dedication and commitment.
The President further expressed gratitude to international partners, notably, the European Union Delegation Office to Lesotho, the United Nations Development Programme in Maseru and Tanzania retired Justice Frederick Werema, Chairperson of the SADC Oversight Committee on Lesotho for their support and assistance provided to him.
President Ramaphosa has congratulated President Magufuli on assuming the Chairmanship of SADC and is certain that under his leadership “our regional organisation, our region will continue to prosper under (his) esteemed and capable leadership”.
The President has also congratulated President Magafuli on Kiswahili being adopted as the 4th official language of communication of the SADC, in addition to English, French and Portuguese.
The next SADC Summit will take place in Maputo, Mozambique in August 2020.
President Ramaphosa congratulates Ms Sasha Maria Schwendenwein, Producer at Carte Blanche for her SADC Media Awards entry which won second prize in the TV category.
South Africa received an award during the SADC Summit on a story called “Follow the Guns” which is about the illegal trade of weapons used for the poaching of endangered rhinos.
The President was accompanied by the Minister of International Relations and Cooperation, Ms Naledi Pandor; the Minister of Defence and Military Veterans, Ms Nosiviwe Mapisa-Nqakula; Minister of Tourism, Ms Mmamoloko Kubayi Ngubane and Minister of Finance, Mr Tito Mboweni
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tralac’s Daily News Selection
The 39th SADC Ordinary Summit of Heads of State and Government starts tomorrow in Dar es Salaam. It concludes on Sunday. A selection of updates:
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SADC Council of Ministers meeting: Outgoing chairperson of the Council of Ministers of SADC, Netumbo Nandi-Ndaitwah, says SADC has made some progress in economic integration, but that more needs to be done on industrial development initiatives. pdf Nandi-Ndaitwah said this (317 KB) during the regional bloc meeting while handing over the SADC Council of Ministers chair to incoming chair, Tanzania’s Minister of Foreign Affairs and East African Cooperation, Palamagamba Kabudi. She said industrialisation remains at the core of the integration agenda of SADC and central to the diversification of regional economic growth. Therefore there is a need to prioritise trade facilitation with regard to infrastructure such as roads, rail, harbours, among others: ‘We also have to find ways of reducing transport costs and transit delays.’ Nandi-Ndaitwah says all that is necessary must be done to prepare the region to benefit from the AfCFTA.
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Palamagamba Kabudi, the Chairman of the SADC Council of Ministers and Tanzanian Minister for Foreign Affairs and East African Cooperation, said the Council of Ministers adopted the use of Kiswahili during their two-day meeting in the commercial capital Dar es Salaam. By adopting Kiswahili as an official language for SADC, the regional bloc has honored Tanzania’s founding President Julius Nyerere, the doyen of the southern African liberation struggle, pdf Kabudi said (292 KB) .
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Five policy documents and strategies launched ahead of the SADC summit. The SADC Energy Monitor, Enabling Industrialisation and Regional Integration in SADC, now in its second edition, documents progress made by Member States on implementation of SADC energy policies and initiatives. The inaugural SADC Regional Infrastructure Development Short Term Plan Assessment 2019 assesses the results achieved in implementation of the SADC Regional Infrastructure Development Master Plan Short Term Action Plan (2012-2017). The 2018 SADC Gender and Development Monitor, Women Economic Empowerment and Gender Responsive Budgeting, presents an account of progress on the implementation of regional commitments to achieve gender equality and equity in line with the revised SADC Protocol on Gender and Development. The SADC Regional Strategy on Women, Peace and Security (2018-2022) provides an overarching framework to guide implementation, monitoring, evaluation and reporting on mainstreaming gender into peace and security in the region. In response to the threat of gender violence, SADC also launched the pdf SADC Regional Strategy and Framework of Action for Addressing Gender Violence (2018-2030) (4.68 MB) .
In brief: Private sector should grab opportunities through SADC; SADC should be for stronger economic ties; Kenyan lawyer, Patrick Otieno Lumumba, calls for revival of SADC Tribunal; SADC Summit must challenge rich countries on massive financial outflows from the region; Former president Benjamin Mkapa: Invest in youth to unlock region’s potential; SADC Regional Trafficking In Persons Data Collection system deployed (pdf)
ACTSA briefing paper, The Money Drain: How trade misinvoicing and unjust debt undermine economic and social rights in Southern Africa (pdf)
JPM woos SA investors in meeting with Ramaphosa (IPPMedia)
President John Magufuli yesterday held talks with his South African counterpart Cyril Ramaphosa and used the opportunity to explain why Tanzania should be the destination of choice for investors from the Rainbow Nation. A statement released by the Directorate of Presidential Communications at the State House said the Head of State said that ongoing improvements in the ease of doing business and the historical, cordial relations between the people of the two countries makes Tanzania the place to go for South African investors. ‘Because South Africa is advanced in industrialization, President Magufuli welcomed investors from that country to come and invest in areas such as pharmaceuticals and mineral processing,’ the statement noted. ‘The government is ready to support them with all kinds of facilitation that might be needed.’
Given South Africa’s performance in tourism - 10 million versus Tanzania’s 1.5 million annually - President Magufuli also invited interested investors from there to move into the hospitality industry, it similarly noted. The president affirmed that South Africa is Tanzania’s leading business partner in SADC, accounting for 70% of Tanzania’s trade within the bloc. Last year, trade between the two countries rose to 2.687trn/- up from 2.528trl/- in 2917. ‘We have decided to import from South Africa instead of farther afield. To start with, motorcycles to be used in motorcades during the 39th SADC Ordinary Summit of Heads of State and Government have been imported from South Africa,’ the president told his visitor. For his part, President Ramaphosa said South Africans see Tanzania as their other home and promised to strengthen bilateral relations in the areas of economy, health, security and tourism, the statement said. The South African leader expressed satisfaction with how investments from his country are fairing in Tanzania, saying that currently there are 228 companies which employ 21,000 people. He extended invitation to Tanzanian investors to grab opportunities available in his country and invest. [Remarks by President Cyril Ramaphosa during State Visit, Tanzania, South Africa on plans to boost tourism via Tazara]
South Africa: dti’s new Doing Business Guides for India and Malaysia can be downloaded here.
Rwanda’s exports up by 7.5%, imports by 18% (New Times)
According to central bank data released yesterday, exports increased by 7.5% outweighed by imports which grew by 18%, leading to a wider trade deficit. ‘Traditional exports - minerals, tea and coffee - are performing negatively, but we see good performance on the non-traditional exports and this is linked to the Made in Rwanda programme,’ John Rwangombwa, the Governor of the National Bank of Rwanda, told the press after their quarterly economic review. Specifically, Rwanda registered an increase in foreign exchange receipts from foodstuffs as well as re-exports, especially petroleum products on account of improved storage capacity. Rwanda is keen on becoming a source of re-exports in the region as it also positions itself as a trade logistics hub, the Governor said. The increase in the import bill for intermediary and capital goods reflects ongoing investments in the economy particularly huge outlays on projects such as the Kigali Arena and the Hakan peat-to-power plant whose construction began last year in Gisagara District.
Kenya’s National Trade Facilitation Committee Stakeholders Forum, led by @Trade_Kenya and @Kiptoock, adopted the TFA Notification Document for Categories B and C Measures. TradeMark East Africa, with funding from DFID, partnered with @Trade_Kenya to enhance trade facilitation.
Mauritius-Mozambique Joint Permanent Commission of Cooperation: liquefied natural gas MoU signed. In a statement at the signing ceremony, Mr Nandcoomar Bodha (Minister of Public Infrastructure and Land Transport, Minister of Foreign Affairs, Regional Integration and International Trade), highlighted that Mauritius has signed a key agreement which will considerably help in its objective to become a hub in the region. Mozambique, he said, possesses the most important natural gas deposit, and with this MoU, Mozambique will be able in a few years’ time, to put a system into a place to become a gas exporting country. The Deputy Foreign Minister of Mozambique, Mrs Maria Manuela dos Santos Lucas, noted with satisfaction the outcomes of the first session of the JPCC. Mozambique, she pointed out, possesses a significant amount of natural resources but still requires the knowledge and expertise, as well as proper infrastructure, to ensure the effective utilisation of these resources. This MoU, she emphasised, will enable the country to collaborate with Mauritius to gain the necessary expertise. [MauCAS to pave the way for new electronic payment options, says Mauritian PM]
TICAD7: UNDP to promote dynamic partnerships. A key highlight of TICAD7 will be the launch and signing of a tripartite partnership agreement between UNDP, Japan International Cooperation Agency (JICA) and Japan External Trade Organization (JETRO), to promote sustainable development in Africa through enhanced partnerships with Japanese and African private sectors, and their provision of business-based solutions for the SDGs. The plan is to kick-start the launch with a pitching event of blue-chip startups from Africa and Japan to facilitate partnerships between investors/corporations.
Nigeria accounts for 20% of India’s trade in Africa, says envoy. Mr Abhay Thakur, India’s High Commissioner to Nigeria: ‘I must say we are proud to be Nigeria’s largest trading partner. Our trade grew by nearly 18% in 2018 to $14bn and Nigeria alone accounts for 20% of India’s trade in Africa. We have had a whole range of important exchanges with West Africa. We are looking forward to the first joint commission this year and also cooperation in the field of maritime security, as well as greater collaboration and growing trade between the two countries.’ He said the thriving Indian community in Nigeria numbered almost 50,000.
Analysts warn that tension could rise as a UN hearing nears on a Kenyan-Somali territorial argument. Kenya’s parliament recently called on President Uhuru Kenyatta to send troops to the Indian Ocean to protect the country’s territory from what it calls Somalia’s aggression. The threat by Kenya comes less than a month before the UN’s International Court of Justice holds a hearing on the dispute. Somali lawmaker Mohamed Omar Talha told VOA that his country would counter Kenya by sending troops of its own to the 100,000-square-kilometer (38,600-square-mile) area.
WTO’s Goods Trade Barometer suggests further weakening of goods trade into third quarter. The latest reading continues to fall well below the baseline value of 100 for the index of the renamed barometer, which features a design revamp ahead of the launch of a new Services Trade Barometer in September. The loss of momentum in goods trade has already been confirmed in previous quarters where official data are available. The barometer (pdf) suggests that below-trend expansion in merchandise trade will persist in the coming months. Sustained weakness in the barometer index was driven by below trend values in all component indices. The international air freight (91.4) and electronic components (90.7) indices showed the strongest deviations from trend, with readings well below previous releases. Indices for export orders (97.5), automobile production and sales (93.5) and agricultural raw materials (97.1) all remained below trend although they show some signs of having bottomed out. Only the index for container shipping (99.0) was close to the baseline value of 100.
Minding the gender gap in training in Sub-Saharan Africa: Five things to know. Here we draw on the findings of the recent report on The Skills Balancing Act in Sub-Saharan Africa: Investing in Skills for Productivity, Inclusivity, and Adaptability and on data from the World Bank Gender Data Portal to present five facts about young women in technical and vocational education and training in the region.
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SADC Council recommends adoption of kiSwahili
The Southern African Development Community (SADC) Council of Ministers has recommended the adoption of kiSwahili as the fourth official language of the regional body alongside English, French and Portuguese.
In his briefing to the media, the Chairperson of the SADC Council, who is also Tanzania’s Foreign Affairs Minister, Prof. Palamagamba Kabudi noted that, kiSwahili would be adopted at the level of Council and Summit, first as a language for oral communication, before eventually being adopted for written official communication within SADC.
KiSwahili is an official language of the African Union and the lingua franca in most of east Africa and parts of central and southern Africa.
This is part of several other recommendations that the SADC Council has submitted for consideration by the Summit of SADC Heads of State and Government, set for 17-18 August 2019 in Dar es Salaam, Tanzania.
The ratification of the SADC Protocol on Industry, a legal instrument that aims to improve the policy environment for industrial development and growth, is also among the recommendations submitted by Council to the 39th SADC Summit for consideration.
Once ratified, the SADC Protocol on Industry will strengthen the framework under which the pdf SADC Industrialisation Strategy and Roadmap (2015-2063) (2.34 MB) adopted in April 2015 in Harare, Zimbabwe, will be implemented.
“Industrialisation is now the focus of all the 16 members of SADC, where we believe that without industrialisation, we will not be able to sustainably develop our countries and our region,” said Kabudi.
Furthermore, Council has recommended for SADC to strengthen initiatives that accelerate the removal of sanctions against Zimbabwe.
Kabudi noted that the advent of a new dispensation and the successful holding of elections in Zimbabwe in 2018, in which Emmerson Mnangagwa was elected President, makes the continued existence of such sanctions unnecessary.
“Sanctions in Zimbabwe are causing damage and negative effects to children and women who are innocent, so we are recommending to the Summit to have a concerted effort of ensuring that those sanctions are removed.”
In March 2019, the United States government extended sanctions against Zimbabwe by another year, stating that the policies of the Zimbabwe government continue to pose “unusual and extraordinary” threats to American foreign policy.
In addition, the European Union has imposed travel restrictions and frozen the personal assets of high ranking officials within the government of Zimbabwe.
The 39th SADC Summit, which is running under the theme “A Conducive Environment for Inclusive and Sustainable Industrial Development, Increased Intra-Regional Trade and Job Creation,” will see President John Pombe Joseph Magufuli of Tanzania assume the rotating SADC chair from his Namibian counterpart, President Hage Geingob.
Tanzania last chaired SADC from 2003 to 2004, during the tenure of then President Benjamin William Mkapa.
In line with the 39th SADC Summit theme, Kabudi emphasised that SADC shall continue to prioritise youth empowerment through job creation, given the importance of this demographic group, to the region’s developmental agenda.
“About 60 percent of the population of our countries in the SADC region are young people – youth; and the only way to have sustainable development is to make sure that our youth are employed, are employable or they can employ themselves.”
He said that the implementation of the 39th SADC Summit theme will involve steps to increase intra-regional trade which has been in decline since 2017.
Figures from the SADC Secretariat show that during the period 2017 to 2018, intra-SADC imports as a percentage of total imports declined from 21.5 to 20.6 percent.
During the same period, intra-SADC exports as a percentage of the total intra-SADC exports declined from 24.7 to 22.4 percent.
“It is our objective to increase intra-trade among ourselves, where industries within the region will not only produce for consumption in their respective countries but also for consumption in the entire region,” he said.
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tralac’s Daily News Selection
Towards the AfCFTA Country Business Index: ad-hoc expert group meeting to review methodological approach
The ECA has proposed the establishment of an AfCFTA Country Business Index (ACBI) that will be used at country level to assess and monitor constraints faced by the private sector as they trade in Africa. By putting the private sector at the heart of monitoring the effectiveness of the AfCFTA, the ACBI will encourage countries to effectively implement the AfCFTA in the interest of those for whom it is designed. Having such an index that assesses and monitors trade enabling factors (including tariffs and non-tariffs measures) and induced costs faced by private sector operators will help to deepen the implementation of the AfCFTA.
The proposed ACBI intends to be a robust and unique tool for measuring and monitoring businesses’ experience with AfCFTA implementation at the country level, including identifying shortcomings and ways in which implementation can be improved. The Index will allow for cross-country comparisons to reward countries that are doing well in effectively implementing the AfCFTA, and through doing so encourage countries to develop a more conducive enabling business environment throughout the continent. The meeting (2-3 September, Addis Ababa)) will be attended by experts from member states, RECs, the private sector, academia and development institutions with interest in regional integration issues, in particular the AfCFTA. [Download: pdf Concept Note (205 KB) ]
Mark Pearson: Need for a paradigm shift of regional integration in Africa (ECDPM)
The regional integration agenda in Africa is under threat, mainly because of complacency, donor dependency and lack of ownership of the integration agenda by African countries themselves. Our research on the COMESA programme, which exemplifies these problems, has shown that: It is difficult to argue that the COMESA integration targets, along with the AEC integration targets were, prima facie, too ambitious; The top-down planning approach has its flaws but if – and only if – the implementing states have the political will to implement what has been agreed, sufficient resources are made available, and the rule of law is applied to the implementation process, a top-down approach can be an effective method of achieving integration; The timing of the African (or COMESA) integration agenda is de facto, not too ambitious; Although COMESA countries are either LDCs or lower or middle income developing countries, they could pay more to support African economic integration and could pay their own portion of the COMESA budget in full and on time. It would not be difficult for COMESA Member States to re-invigorate COMESA and for COMESA to, once again, be one of the foremost regional economic integration organisations with a good track record of integration instruments and, in the process, create additional momentum for the ACFTA. For this to happen, COMESA Member States may want to consider the following (pdf):
Johnson Nkem: Will the AfCFTA open the gateway for women in agribusiness? (International Policy Digest)
The changes in the movement of goods and services envisaged under the AfCFTA rekindles the plight of the informal economy operatives and beams the spotlight on women who have always vehemently strived to move food products around locations and across borders but often without institutional support and access rights to produce and undertake the transactions. There are emerging opportunities in designing regional food systems to enhance food security in Africa. This requires preparedness in using the market to provide the pull factor for the aggregation of interconnected information about a specific set of foods, their supply chains, and revealing the opportunities they hold in the region to enhance their production and distribution. The food economy of West Africa, for instance, is estimated to be $178bn in 2010 representing 36% of the regional GDP.
The regional food market now dominates emerging economic opportunities. This requires the preparedness in making a significant shift from subsistence-based to a market-based system for the food economy that is driven by Africa’s human resource endowment of women and youth. Leveraging on technological innovations creates new pathways and opportunities for empowering women in generating prosperity under the AfCFTA. These include raising the value from agriculture and promoting inclusivity in the development of regional value chains. Building the capabilities of women and reinforcing the establishment of women networks will strengthen their capabilities in readiness for emerging opportunities for co-creation and co-ownership of regional value chains, to expand revenue generation.
Dorothy Tuma: Why AfCFTA’s success depends on including informal, women-run enterprises (AllAfrica)
There is renewed optimism that Africa’s small and medium sized businesses could be big winners with the launch of the AfCFTA - the world’s largest such trading zone with a combined current GDP of $2.5 trillion and a market of over one billion people. Given the challenges that have prevented Africa’s SMEs from becoming competitive, however, we must ask how this will change under the AfCFTA. What does it mean to be competitive? So how will SMEs benefit from AfCFTA? Consider the typical informal business example of Jane Were (not her real name): [Note: The author chairs the East African Women in Business Platform, which represents the views of 20,000 women business owners in six partner states]
Ghana launches Automobile Bill: declares tax holidays for car assembly plants (MyJoy)
Cabinet has approved the much talked about Automobile Bill to officially give a legal framework for the assembling of vehicles in the country. For this reason, import duties on new passage vehicles, SUVs and other trucks will be increased to 35%. Launching the Automobile Bill, Trade Minister, Alan Kyeremanteng detailed the policy framework for the bill explaining that the move is to – in the long run – reduce the import of vehicles which amount to 85,000 each year costing over $1bn. What this also means is that all investors venturing into the establishment of vehicle assembly plants will enjoy corporate tax holidays. According to Mr Kyeremanteng: “The initial scope of the Ghana Automotive Development Policy is to provide the necessary framework to establish assembly and manufacturing capacity in Ghana. Fiscal incentives on new vehicles for registered assemblers will include a corporate tax holiday of 5 years for enhanced SKD Registered Assemblers”.
Ghana wants to grow more cashews: but what about unintended consequences? (The Conversation Africa)
Over at least the last decade, one of Ghana’s most vital breadbaskets has been converted into cashew nut production to feed export markets. Bono East, Bono and the Ahafo regions - previously known as the Brong Ahafo region - are being transformed by cashew production. This growth has positioned Ghana as one of the largest producers of raw cashew nuts in Africa. Cashew nut production has increased four fold across the continent since 2000. In Ghana, a number of social, economic and political circumstances in Ghana have enabled spectacular expansion. Given the current - and expected future - challenges facing Ghana’s domestic food security, there is an urgent need to critically assess agricultural development policies and donor aid initiatives. There is also an urgent need to examine export led priorities, including in particular, cashew nut sectoral planning. This will be important to ensure the lure of export led growth does not compromise local food security.
South Africa: Cheap imports a threat to SA’s cement industry (Moneyweb)
The local cement manufacturing sector has been hit by a double whammy of cheap imports together with lower demand brought on by South Africa’s flagging economic growth. Now the industry is calling out for support from government: it wants tariffs imposed on cement imports, largely from China and Vietnam, as well as special designation from the Department of Trade and Industry for government construction contracts to use local cement. The Concrete Institute, an industry body representing SA’s major cement companies including PPC, AfriSam, Lafarge, Sephaku Cement and Natal Portland Cement, is leading the call and has applied to the International Trade Administration Commission of SA for what it refers to as “safeguard action” against cheap cement imports. It has also sent a letter alerting the DTI of its plans to seek approval for “special designation” of SA-made cement to be used in state infrastructural projects. The move is along the lines of a similar agreement the struggling steel sector has already secured from the DTI. [Francois Baard: Claims about chicken tariffs incorrect]
South Africa: Special Economic Zone regime proposals ‘make no sense’ (Moneyweb)
The latest proposals to refine the Special Economic Zone regime have been described as unrealistic and unreasonable. National Treasury announced in the Taxation Laws Amendment Bill that only companies whose expansions result in a 100% increase in turnover will be eligible for the beneficial tax benefits of a SEZ. It is also proposed that only newly established businesses will qualify for the tax benefits. Duane Newman, joint MD at Cova Advisory, expressed his frustration with the latest round of proposed changes to the regime. He says it makes no sense for Treasury to stop activities it is trying to promote in the first place. He says a company cannot control its turnover – and what happens if the expansion only results in a 95% increase in the turnover; is the company then disqualified from the tax benefits?
Botswana: Choppies pulls out of SA, Mogae to step down (Mmegi)
Regional grocer, Choppies is pulling out of South Africa and has called for expressions of interest into the acquisition of its holdings. The group’s long standing chair and former president, Festus Mogae will also step down, the apparent culmination of boardroom disputes between himself and suspended CEO, Ramachandran Ottapathu. According to its last available records, Choppies, a Fast Moving Consumer Goods operator in eight African states, had 88 stores in South Africa, mainly in the country’s northwest platinum mining province. The group first entered South Africa in 2008 and rapidly built up its presence, with the stores accounting for 36% of Choppies revenues as at the half year to December 2017. In a statement to the BSE (pdf), Choppies announced it had already issued a request for Expressions of Interest to investors interested in taking all or part of its footprint in South Africa. “The board has completed a strategic review of its South African operations and has concluded that exiting the South African market is the appropriate strategic decision,” the statement reads. [Simon Allison, Dhashen Moodley: Rise and stall of Southern Africa’s most remarkable supermarket chain]
The extent of engagement in global value chains by firms in Rwanda (World Bank)
Using administrative data for an exhaustive sample of formally registered firms, reveals that the engagement of Rwandan firms in global value chains is remarkably limited. The paper documents several patterns of firm-level exports and compares firm characteristics between exporters and non-exporters. It also illustrates which firm-level characteristics are good predictors for a variety of extensive margins of export and import activities. The analysis includes firms from three goods-producing sectors, agriculture, mining, and manufacturing, but focuses mostly on manufacturing firms. The results indicate large differences between small and large exporters in terms of export market participation, type of products exported, and destinations served. GVC engagement has increased over the 2008-2016 sample period, especially for manufacturing firms, but this is a slow process with frequent set-backs. We distilled the following eight takeaway messages (pdf): [The authors: Garth Frazer, Johannes Van Biesebroeck]
Industrialization on a knife’s edge: Productivity, labor costs and the rise of manufacturing in Ethiopia (World Bank)
In this paper, I assess Ethiopia’s competitiveness and attractiveness as an investment destination by comparing the productivity and input costs faced by firms based in Ethiopia to a sample of manufacturing exporting countries. Given the current strategic importance of the garment sector, I select comparison countries that are garment exporters in Africa (Kenya), and Asia (Bangladesh, India, Vietnam). I use harmonized data from the World Bank Enterprise Survey, which enables me to construct aggregates figures for sales for worker (a measure of productivity), total labor costs, capital stock, firm size, and a somewhat noisy measure of value added. My main finding is that Ethiopia’s labor cost advantage is more than offset by low productivity with respect to all but one of the comparison countries (Bangladesh).
Ethiopia’s industrialization is thus on a knife’s edge. Its fundamentals make it competitive with respect to the countries at the bottom of the productivity distribution. In recent years, the increase in labour costs has also been modest compared to these countries. However, given the likely pressure on wages that will result from further expansion of the manufacturing sector, additional gains in productivity will be crucial in order to secure Ethiopia’s position as an attractive investment destination. The low productivity of Ethiopian firms is not explained by differences in size, capital, or sector. However, Ethiopian firms score particularly low on a measure of the quality of management. The most critical area is that related to the management of workers. In particular, the quality of selection, incentives and retention practices is lower than in all comparison countries. This suggests a need for reformed labor management practices. [The author: Stefano Caria]
Related News
tralac’s Daily News Selection
Two commentaries on intra-African trade,
pointing to the potential impact of the AfCFTA:
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Global Trade Review’s (GTR) Africa trade briefing: Rebecca Harding, CEO of Coriolis Technologies, discusses Sub-Saharan Africa’s trade performance, its projected growth and developments around intra-Africa trade. Extracts:
The fastest-growing export sectors over the last five years have been vegetable oils and grains, fruit and nuts, and automotives. Growth in each of these sectors is expected to slow in the coming years but is still positive. Across the hard commodities, the values of oil and gas, iron and steel, aluminium and rubber are set to fall, suggesting that the region will be caught in the slipstream of broader increased tariffs on these sectors imposed by the US as part of the current trade tensions. This highlights an important point: Africa is an emerging market, and this is perhaps more important than the fact that it is dependent on commodities for its exports. There is a huge amount of potential for growth because it has a young and motivated population and policies that are beginning to focus on the importance of driving this growth through intra-regional trade. But while pan-African infrastructure development remains patchy, and there are trade tensions between the two biggest trading nations globally, Africa will continue to face challenges in terms of driving its exports. One country that appears to be breaking loose from its dependency on commodities is Ethiopia. While its top sector exports are dominated by soft commodities and precious metals, since 2013 its exports of machinery and components have grown by over 16% annually, its exports of footwear by 14% and its exports of electrical products and equipment by nearly 10%. Its largest African trading partner is Somalia, and although China is also an important partner, Ethiopia’s exports to China have slowed slightly since 2014.
Of more interest, perhaps, is the alternative infrastructure that is emerging around electronics and computing. Machinery and components, imports of which include computers and data storage, is Africa’s largest import sector after mineral fuels and is expected to reach a value of around $48bn by 2023. Similarly, electrical machinery is the fourth-largest import sector and is also expected to grow to a value of approximately $40bn by 2023. These are sectors which improve communication and enable moves towards a stronger manufacturing base.
All of this, along with the increase in fertiliser imports projected for the next five years (as seen previously in Figure 5) suggests that Africa is beginning, albeit slowly, to focus its intra-African trade around supplying its needs for food. This is a positive development because it ensures the sustainability of growth rather than reliance on trade with larger partners from outside the region. The numbers are small, and the picture is incomplete because data reporting is poor, but even so, this may be the beginning of an encouraging pattern. [Related analysis by Dr Ted George: Why is so little value added in Africa’s soft commodity value chain?]
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Fitch Solutions Macro Research on the AfCFTA: Attractive opportunities, but few winners over the next decade
Countries with strong trade diversification scores and robust industrial sectors will also see viable opportunities to expand the scope of trade. According to the Fitch Solutions Trade Diversification Index, in Africa the countries with the most diverse baskets of goods traded and trade partner mixes are Egypt, South Africa, Togo, Senegal, Morocco, Mauritius, Kenya, Rwanda, Tanzania, Côte d’Ivoire, Senegal and Ghana. These countries are not heavily reliant on a small basket of primary goods exports, generally have the region’s strongest agricultural and services sectors and have a wide array of regional and global trade partners. This highlights the flexibility of their trade and investment environments which will enable them to adjust to shifting regional and global trade trends.
Small- and medium-sized enterprises that account for around 80% of all trade on the continent will benefit from increasing formalisation and streamlining of trade procedures and governance. Additionally, the telecommunications and financial sectors could see gains as digital payments will be needed to carry out the larger volume of transactions. Overall, businesses in Egypt, Morocco, South Africa and, to a lesser extent, Ghana, Ethiopia and Kenya are likely to be the best positioned to benefit from the agreement in the short-to-medium term.
According to UNCTAD, enhanced trade facilitation could boost intra-African trade to approximately 21.9% of total trade by 2022, compared to 15.5% without it. According to the latest available data from Trade Map, Africa’s total exports to the world stood at $476.6bn in 2018, while total imports stood at $548.6bn. Africa has maintained persistent trade deficits with the rest of the world for years which can be attributed to the low complexity of regional value chains and onerous tariff and non-tariff barriers. As a result, the majority of Africa’s import sources are outside of the continent. The continent’s top import sources are China (which accounted for 17.2% of Africa’s imports), followed by France (5.4%), the US (5.1%), Germany 4.7%) and India (4.6%).
In an African context, only South Africa and Nigeria are in the top 20 import source markets for Africa. South Africa is ranked sixth accounting for 4.5% of Africa’s total global imports with an estimated regional export total of USD25.6bn in 2018, and Nigeria is ranked 20th globally with a low 1.4% share. On a regional scale the top 10 supplying markets for Africa are South Africa (accounting for 38.9% of total regional imports), followed by Nigeria, Egypt, Côte d’Ivoire, Morocco, Zambia, DRC, Uganda, Eswatini and Mozambique. [Note: The analysis, written by Chiedza Madzima, can be accessed after an easy registration process]
EAC updates:
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EAC Secretariat press statement. Our attention has been drawn to issues raised in a story by The East African Newspaper headlined EAC staff desert stations over pay. At the outset, I wish to clarify that this is a newspaper that we have a lot of respect for at the Community. However, there were glaring errors of fact and accuracy in the article. We wish to clarify the issues raised by the paper as follows: Alleged desertion by staff of their duty stations due to non-payment of salaries; Delay by partner states in remitting their annual contributions to the Community; The Community is on track towards attaining its vision of an integrated East Africa.
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UNCTAD to conduct survey on regional trade, non-tariff barriers. East Africa’s intra-regional trade has fallen to 0.2% of global trade due to persistent trade disputes and barriers. UNCTAD has now launched a study on the impact of non-tariff barriers on trade. The study was announced after a meeting between Kenya and Tanzania called to resolve outstanding NTBs in July failed to take off. The EastAfrican has learnt that UNCTAD is looking for national consultancies from Kenya, Uganda, Tanzania, Rwanda and Burundi to come up with a report on NTBs for each country. The national reports will then be compiled into a regional document. Unctad Secretary-General Mukhisa Kituyi confirmed that the study is underway, but it was too early to discuss it. “I will comment when we have the results of the survey.”
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Highlights of the 3rd Trade and Business facilitation Symposium: Enhancing trade facilitation along the Northern Corridor. In her opening remarks, Minister Amelia Kyambadde noted that the main objective of the symposium was to bring together different stakeholders involved in trade facilitation to discuss and exchange views and provide an opportunity to address existing and emerging the challenges faced in the export and import trade. The Minister further reiterated that Government of Uganda remains committed to the EAC Regional Integration processes and putting in place measures to facilitate trade noting that the fact that this symposium is taking place at Mombasa Port, which is the main port connecting the hinterland to international markets is manifestation of the thrust on enhancing trade with our land locked Country. Since 2015, Transit Traffic cleared through the port has witnessed a growth of 6.5%. As of today, Mombasa port has recorded a container growth 14.3%, of this 75% of the transit traffic is destined for the Ugandan market; making Uganda the second largest user of the Port after the Republic of Kenya. [Related symposium updates: Uganda flags hurdles hurting smooth trade with Kenya, Logistics inefficiencies cost shs3 trillion annually, consumers bear the burden; Ugandan traders urged to take advantage of Mombasa port expansion]
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LAPSSET envisaged to boost Africa’s economic integration. The AUC’s High Representative for Infrastructure Development in Africa, Raila Odinga, stated that a strong case has been made to the AU on the LAPSSET Corridor Project’s strategic position to connect not only Ethiopia and South Sudan, but also connecting to Central African Republic (Bangui) and Cameroon, terminating at Port of Douala. This forms an equatorial land bridge of both road and rail across the African continent, connecting the Indian Ocean at Lamu Port, to the Atlantic Ocean. [Kenya seeking Ksh 2.5 trillion to help fund stranded Lapsset port project]
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All set for revamped Kisumu port launch. Transport Cabinet Secretary James Macharia said on Tuesday that the growing demand for oil products in the region is expected give impetus to efforts at reviving the revamped port ahead of its opening tomorrow. President Uhuru Kenyatta and his Ugandan counterpart Yoweri Museveni, Tanzania’s Pombe Magufuli and Felix Tshisekedi of the DRC are expected to open the port upgraded at a cost of Sh3 billion. Macharia said as a long-term solution, the state is still considering an extension of the Standard Gauge Railway from Naivasha or the revival of the old metre-gauge railway, if the latter plan takes too long. The option of connecting the SGR to old Naivasha-Malaba metre gauge, he said, was just an interim measure. “We had to look at the economics, but if the SGR (connection) takes too long, the Nakuru-Kisumu line remains an option we can turn to because Kisumu is part of the Northern Corridor,” said the CS in an interview. He said the move by Uganda to build a similar jetty as the one by the Kenya Pipeline Company in Kisumu was key in reigniting the triangular trade between Kisumu, Jinja and Mwanza.
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Timelines for EAC single currency to be revised. EAC member states are set to start discussions on revising the timelines for the start of the single currency regime, after realising that it would be difficult to set up the necessary institutions and achieve the set macroeconomic benchmarks with only five years to the 2024 deadline. Bank of Uganda Governor, Emmanuel Tumusiime-Mutebile, said several challenges stand in the way of fully implementing the East African Monetary Union Protocol. He said it is important for the region to assess the practicability of the current timelines, which require member countries to comply with macroeconomic convergence criteria at least three years before the single currency regime starts. He said there has been significant progress towards the EAMU Protocol in terms of harmonisation of monetary policy frameworks, exchange rate policies, rules and practices governing bank supervision, and payment systems. “However, there have been delays in realising targets set out in the EAMU roadmap and there are several challenges that could further impede the full implementation of EAMU Protocol. It is therefore imperative that we assess the realism of the timelines,” Mr Tumusiime-Mutebile said at the 23rd Ordinary Meeting of the EAC Monetary Affairs Committee in Kigali last month.
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Kenya’s Nicholas Nesbitt re-elected as EABC business group Chair. The East African Business Council, Thursday, re-elected Nicholas Nesbitt from Kenya as Chairman, during the 20th EABC AGM held in Nairobi. Nesbitt is the Chairman of the Kenya Private Sector Alliance, and was first elected to the EABC helm in June 2018 during the body’s 19th annual general meeting. The annual meeting also elected Rwanda’s Denis Karera, Uganda’s Mwine Jim Kabeho and Tanzania’s Salum Shamte as vice-chairs and members of the EABC executive committee to strategically guide its mission to promote sustainable private sector driven growth. Nesbitt urged EAC governments to enhance public-private dialogue and formulate policies that will solve logistical challenges, fix fragmented value chains, and enhance value addition of products in the region to be competitive in light of the AfCFTA.
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How Rwandan businesses could benefit from newly launched KCB’s Biashara Club. Businesses and enterprises who will become members of Biashara Club, a club launched by KCB Bank Rwanda Plc will enjoy a range of benefits including training, links to markets and business counterparts across the world. The club which started with about 400 entrepreneurs of the bank’s micro, small, and middle enterprise businesses is intended to grow and strengthen their customer relationships according to Innocent Ntwari, the Senior Manager in charge of Personal Banking and Channels at KCB Rwanda. The KCB Biashara Business Club will essentially provide a platform for the growth of the Bank’s SMEs by offering business solutions and advisory services to the entrepreneurs whilst leveraging on the expertise of the Bank’s strategic partnerships.
Nigeria’s president tells cenbank to stop providing FX for food (Reuters)
Nigeria’s President Muhammadu Buhari has told the central bank to stop providing funding for food imports, his spokesman said in a statement on Tuesday, a move that has raised questions about the bank’s independence. “President Muhammadu Buhari disclosed that he has directed the Central Bank of Nigeria to stop providing foreign exchange for importation of food into the country,” Tuesday’s statement said. “Don’t give a cent to anybody to import food into the country,” Buhari said, according to the statement, which said that the call was in line with efforts to bring about a “steady improvement in agricultural production, and attainment of full food security”. The latest move comes only weeks after Central Bank Governor Godwin Emefiele in July said the bank would ban access to foreign exchange to import milk.
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United Republic of Tanzania assumes Chairpersonship of SADC Council of Ministers
Hon. Professor Palamagamba John Kabudi, Minister of Foreign Affairs and East African Cooperation of the United Republic of Tanzania, on 13 August 2019 assumed Chairpersonship of the Southern African Development Community (SADC) Council of Ministers, taking over from Hon. Netumbo Nandi-Ndaitwah, Deputy Prime Minister and Minister for International Relations and Cooperation of the Republic of Namibia.
In his acceptance speech, Hon. Prof. Kabudi expressed gratitude to Outgoing Chairperson of SADC Council of Ministers for steering activities of SADC over the last one year and pledged to build on the remarkable achievements made under the leadership of the Republic of Namibia.
Hon Prof. Kabudi said, in the course of operationalization of the theme, A Conducive Environment for Inclusive and Sustainable Industrial Development, Increased Intra-Regional Trade and Job Creation, the United Republic of Tanzania will place emphasis on the need to access and improve the region’s investment and business environment in the light of industrialization.
The Outgoing Chairperson, Hon. Netumbo Nandi-Ndaitwah, congratulated Hon. Prof Kabudi on assuming the Chairpersonship of the SADC Council of Ministers and expressed Namibia’s readiness to work with him in steering SADC to greater heights. She also thanked the SADC Secretariat, under the leadership of Her Excellency Dr Stergomena Lawrence Tax for the cooperation and support during her tenure.
She said industrialisation remains at the core of the integration agenda of SADC and central to the diversification of regional economic growth and called on the region to prioritise trade facilitation with regard to infrastructure such as roads, rails and harbors, while finding ways of reducing transport costs and transit delays in the region.
She highlighted that, in line with the 38th SADC Summit theme, Promoting Infrastructure Development and Youth Empowerment for Sustainable Development, the Republic of Namibia championed youth empowerment programmes, recognising that the youth are the most valuable asset needed to drive industrialisation in the region. On this note, Hon Nandi-Ndaitwah emphasised the need to implement the SADC Regional Programme on Youth Innovation and Entrepreneurship which seeks to accelerate youth development and empowerment through active youth participation.
On her part, H.E. Dr Tax thanked the Outgoing Chairperson of the SADC Council of Ministers for her guidance and dedication in pushing forward SADC development and integration and for leading the Council of Ministers with passion and sense of purpose during her tenure.
H.E. Dr Tax assured, Hon. Prof. Kabudi, of the Secretariat’s firm commitment and support to facilitate his work during his tenure as the Chairperson of Council. She expressed optimism that the Council of Ministers, under the leadership of Hon. Prof. Kabudi will continue to advance SADC values and principles.
The SADC Executive Secretary underscored that the SADC region will remain seized with the implementation of the SADC Industrialisation Strategy and Roadmap, whose milestones in the 2019/2019 financial year include the long awaited profiling of the regional agro-processing value chains whereby 14 product-specific value chains were selected; the launch of SADC Business Council, development of a Regional Mining Vision and draft Protocol on Industry.
During the opening ceremony, the SADC Council of Ministers and invited guests observed a moment of silence in memory of over 70 people who lost their lives on 10 August 2019 following a tragic fuel tanker accident in Morogoro, the United Republic of Tanzania.
Related News
“EAC Staff desert stations over pay”: EAC Press Statement – Clarification of issues
Our attention has been drawn to issues raised in a story by The East African Newspaper edition of 10th – 16th August, 2019 headlined “EAC Staff desert stations over pay”.
At the outset, I wish to clarify that this is a newspaper that we have a lot of respect for at the Community. However, there were glaring errors of fact and accuracy in the article. We wish to clarify the issues raised by the paper as follows:
1. Alleged Desertion by Staff of their Duty Stations due to non-payment of salaries
We can confirm that staff salaries for all EAC Organs and Institutions for the month of July 2019 have been fully paid.
On the issue of some members of staff being out of duty station, we wish to clarify that in accordance with Article 71 of The Treaty, EAC Programmes and Projects are coordinated by the EAC Secretariat with staff undertaking official missions within the Partner States. Judges of the East African Court of Justice and the Members of the East African Legislative Assembly come to Arusha as and when there is business to be transacted as per the respective Organ’s approved Calendar of Activities.
Staff who are out of station are either on annual leave or on official duties in the Partner States. Out of the 400 members of staff at the three EAC Organs based in Arusha, 14 are on annual leave, one is on maternity leave, while 11 are on official missions in the Partner States. It is therefore not true that some members of staff have moved back to their home countries due to non-payment of salaries. Contrary to the claims by The East African, the entire Community is operating normally with all staff of Organs and Institutions on duty.
2. Delay by Partner States in remitting their annual contributions to the Community
We wish to clarify that the EAC normally starts receiving disbursements from the Partner States from the month of August each financial year. This is occasioned by the budgeting processes such as debates in the National Assemblies and approvals for disbursements in the Partner States which in some cases takes up to three months after the commencement of the Financial Year.
At the start of every Financial Year, the Community usually experiences liquidity challenges as it awaits the finalization of the budget approval processes by the Partner States which dictates the disbursement of funds to the EAC through the Ministries responsible for EAC Affairs.
Partner States are expected to make their respective disbursements after the finalization of their national budget approval processes. Further to this, the EAC Financial Rules and Regulations require that Partner States should have disbursed the total financial year contribution by the end of the 2nd Quarter of the Financial Year (31st December every year).
3. The Community is on track towards attaining its vision of an integrated East Africa
The EAC Partner States with the foresightedness of the Heads of State are fully committed to the success of the regional integration agenda. The 19th Summit of the EAC Heads of State held in Kampala, Uganda on 23rd February, 2019 deliberated on the status of the EAC integration and directed the Council of Ministers to take appropriate measures to: fully implement the Single Customs Territory; fast-track full implementation of the Common Market Protocol; fast-track implementation of the Monetary Union, and; make preparations for the drafting of the Constitution of the EAC Political Confederation as a transitional model to the Political Federation. The commitment of the Heads of State has enabled the EAC to attain several achievements including:
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good political will and climate within the EAC region;
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the EAC regularly holds key statutory meetings of her governance Organs. The Heads of State Summit meets twice in a year, the Council of Ministers meets on a quarterly basis to give policy guidance, Sector-Specific Sectoral Councils meet twice a year
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at the bilateral level, Heads of State within the region meet to commission and launch regional projects e.g. the One Stop Border Posts, roads and railways, ports, energy, health, etc.
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joint cooperation initiatives in defence, small and micro enterprises (SMEs); arts and culture; sports; East African International e-passport; EAC One Area Mobile Network, etc.
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the continued financial support from Partner States – despite the financial challenges faced by each Partner State, Partner States have continued to fulfill their financial obligations to the EAC;
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continued collaboration and support from various Development Partners across all the four pillars of the integration process.
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the strides taken in attaining the four pillars of the integration process, namely Customs Union, Common Market, Monetary Union and Political Federation;
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Customs Union – EAC is now a Single Customs Territory, 15 One Stop Border Posts operationalized, Authorised Economic Operator, Time-bound removal of Non-tariff Barriers, leading in the implementation of the EAC-COMESA-SADC Tripartite Free Trade Area in addition to the African Continental Free Trade Area (AfCFTA)
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Common Market – health projects, education, food security, international e-passport, Mutual Recognition Agreements, Single Tourist Visa, promotion of cultural industries, trade in services
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Monetary Union – enactment of two regional laws to support the establishment of institutions to implement the Monetary Union by 2024 (East African Monetary Institute and East African Statistics Bureau), Financial Sector Development and Regionalization, Payments and Settlements Systems Infrastructure in the Partner States ongoing in all Partner States
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Political Federation – the EAC is in the process of drafting a constitution for the EAC Political Confederation as a transitional model to the Political Federation. The 20th Summit of the EAC Heads of State held on 1st February, 2019 in Arusha, Tanzania appointed 12 Constitutional Lawyers (three from each Partner State) to draft the constitution for the EAC Political Confederation within a period of six (6) months. The Committee of Experts to draft the Constitutions for the Political Confederation will be launched in Kampala, Uganda on 19th August, 2019 by President Yoweri Museveni. The Summit further directed the Council of Ministers to report back to 21st Summit of Heads of State.
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growth of EAC to accommodate an expanded mandate – establishment of new institutions and Centres of Excellence e.g. the East African Health Research Commission, East African Science and Technology Commission, EAC Competition Authority, East African Kiswahili Commission, East African Centre for Renewable Energy and Energy Efficiency, among other institutions.
It is because of these many achievements that the EAC has been rated as the best performing regional economic bloc in Africa by the African Development Bank (2018) and the UN Economic Commission for Africa (2017).
The strides and successes the EAC has achieved over the years will be celebrated during the Community’s 20th anniversary which will be marked on the 30th November, 2019 under the theme EAC @ 20: Deepening Integration; Widening Cooperation.
The EAC therefore holds an indispensable and critical position in leading the region to attain the Community’s Vision 2050, the UN Sustainable Development Goals and the African Union Agenda 2063. Hence, the EAC will continue to lead the integration agenda in Africa.
The EAC integration process as enshrined in the Treaty is therefore on track.
Eng. Steven Mlote, DSG
Deputy Secretary General
(Planning & Infrastructure)
For: The Secretary General
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SADC develops regional industry protocol
A legal instrument that aims to improve the policy environment for industrial development and support implementation will be presented for approval by the 39th SADC Summit that meets 17-18 August in Dar es Salaam, United Republic of Tanzania.
The acting Director for Industrial Development and Trade at the SADC Secretariat, Calicious Tutalife told journalists ahead of the Heads of State and Government Summit that the instrument – the SADC Protocol on Industry – was cleared by regional Ministers responsible for Justice/Attorneys-General in July, and is thus ready for endorsement by the leaders.
“We are looking forward to the protocol being signed during the 39th SADC Summit,” Tutalife said, adding that the draft protocol was validated by the Ministerial Task Force on Regional Economic Integration in June.
The process of approval of a regional legal instrument in SADC requires, first, signing, and then ratification, a process that differs from country to country.
A protocol “enters into force” following ratification by two-thirds of SADC Member States. This advances the regional law from being a stated intention to actual application.
Those member states that join after a protocol has entered into force are said to “accede” to the protocol.
It is envisaged that the Protocol will be ratified by the required minimum number of SADC Member States by 2020 to facilitate the implementation and advancement of the industrialization agenda in southern Africa.
Once ratified, the SADC Protocol on Industry will become a stand-alone and binding legal instrument that will entrench and give legal effect to the pdf SADC Industrialisation Strategy and Roadmap (2.34 MB) and its related Cost-Action Plan and will ensure adequate coordination, monitoring and evaluation of implementation.
The SADC Industrialization Strategy and Roadmap, adopted in April 2015 in Harare, Zimbabwe, seeks to achieve major economic and technological transformation at national and regional levels to accelerate economic growth through industrial development.
The development of an industrialization strategy and roadmap was in realization that most SADC Member States continue to be among the poorest in the world despite abundant natural resources as the majority of them export these in their raw or unprocessed form.
A pdf Costed Action Plan for the Strategy covering 2015-2030 (1.51 MB) was approved in March 2017 in Ezulwini, the Kingdom of Eswatini, and details the key actions, with reference to the three pillars of the strategy and the requisite activities, as well as the key enablers needed to unlock the region’s industrial potential.
In this regard, the development of a regional industry protocol is expected to strengthen the economies of countries in SADC and ensure that they are driven by industrial development and not based on exports of raw resources.
The SADC Protocol on Industry will also strengthen the level of industrial development in the region and facilitate the harmonisation of policies and strategies in member states.
Where member states already have such policies and strategies, these will be reviewed and aligned to the SADC Industrialisation Strategy and Roadmap.
The 39th SADC Summit, which will see President John Pombe Joseph Magufuli of Tanzania assume the rotating SADC chair from his Namibian counterpart, Hage Geingob is running under the theme “A Conducive Environment for Inclusive and Sustainable Industrial Development, Increased Intra-Regional Trade and Job Creation.”
Industrialization is a top priority for southern Africa, and since 2014 all SADC summits have focused on how the region can attain industrial development.
The pdf Revised Regional Indicative Strategic Development Plan (RISDP) (1.04 MB) also recognises the importance of industrial development in the diversification and deeper integration of regional economies.
As per the theme of the 39th SADC Summit, member states will between August 2019 and August 2020 focus on creating a conducive environment to allow the private sector and other citizens of the region to actively participate in and fully benefit from measures aimed at advancing the industrialization agenda.
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Featured tweet, @jattamensah: Ghana, with the AU and the ECA, will host a conference on the implementation of the AfCFTA from 19-21 August (Accra). The keynote speaker is the prime minister @NAkufoAddo. A number Ghanaian Ministers will be in attendance. This will be great!
SADC Summit: previews and updates
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South Africa’s Minister of International Relations and Cooperation, Dr Naledi Pandor: The Summit will provide an opportunity for Heads of State and Government to be apprised on the overall implementation of the SADC work programme, including the pdf Revised Regional Indicative Strategic Development Plan (2015-2020) (1.04 MB) and the pdf SADC Industrialisation Strategy and Roadmap (2.34 MB) . The Summit will be updated on the status of the region’s economy, health, and food security. It will provide policy direction about future strategic work of SADC and the SADC post 2020 Agenda. The Chair of the SADC Organ on Politics, Defence and Security Cooperation (Zambia) will also present a report on the status of regional peace and security.
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East or South? ‘Inevitable’ dual membership for Dar. There is no conflict of interest in Tanzania’s dual membership to SADC and the EAC, former President Jakaya Kikwete has said. “It’s all about integration and we are set to benefit rather than lose from the two blocs,” the former Tanzanian head of state reiterated on Friday. In a special interview ahead of the 39th Session of the SADC Heads of State and Government Summit, Dr Kikwete explained why dual membership was not only inevitable, but also strategic for Tanzania. He said Tanzania did not join SADC, but formed the regional bloc together with the frontline states in 1979, at a time the former EAC had collapsed two years earlier. “We are in both groups also because of history. We cannot not detach ourselves from either bloc given the benefits,” he said at his Msasani office in the commercial capital. The former president was also quick to point out that that SADC and EAC were not rivals competing for markets, but partners spearheading the agenda for deeper integration and trade in Africa. Turning to SADC, he called on the member states to ensure the organisation’s Gaberone-based secretariat was not overwhelmed by a host of sectoral projects.
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pdf 4th Annual SADC Industrialisation Week - Dar es Salaam Declaration. (337 KB) Legal framework harmonization tops SADC Industrialisation Week recommendations. Reading a declaration during the closure of the 4th Annual SADC Industrialization Week in Dar es Salaam on Thursday evening, Executive Secretary of the SADC Business Council, Peter Varndell insisted that the bloc to improve infrastructure as a basis for successful value chain development in the region. Varndell said that the development of regional value chains in priority sectors with drive industrialization and engagement of the private sector: “Countries should revisit the issue of work permits for member states.” He noted that to develop regional value chains, there should be improved coordination of small and medium scale entrepreneurs through facilitation of communication and linkages to access markets. SMEs must be trained on simplification of procedures and requirements such as licensing and registration: “The private sector in the SADC region must be stimulated to embrace financing of infrastructure development. Attraction of private sector investments is only possible through reduction of risks in infrastructure development.”
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On energy infrastructure and gas, the council urged member states to prioritize support for the development of a Regional Gas Program, and conduct individual country assessment of policies and gas utilization master plans to confirm the state of readiness for development of a Regional Gas Program.
Varndell noted that member states should reduce roadblocks and other non-tariff barriers within SADC countries to speed up delivery and reduce costs of pharmaceutical goods, particularly cold chain stock and harmonize medicine registration policies. “The bloc has to make use of the ZAZIBONA initiative to create a pathway for speedy registration of innovative medicines and create a platform for private sector engagement,” he said, referring to ZAZIBONA as a SADC collaborative medicine registration process, while it originally covered the countries mentioned in its abbreviation, namely South Africa, Zimbabwe, Botswana and Namibia. He said member states should introduce duty free systems on the import of raw and packaging materials, provide incentives for local manufacturing, establish pooled procurement on raw materials and medical equipment to promote local pharmaceutical manufacturing.
Commenting on barriers to trade, he said that SADC structures should consult the private sector in identifying and solving non-tariff barriers that pose an obstacle to industrial development. “Countries should continue harmonizing standards as well as conformity assessment procedures to conform to the World Trade Organization’s Technical Barriers to Trade Agreement protocol and therefore facilitate trade within the region. SADC should also facilitate national standards bodies to work closely with SMEs since they are the major players in most production and value chains, and align their quality principles with those at international level.”
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SADC Business Council chair spells out his vision. Removing bottlenecks affecting business in SADC is top on the agenda for the regional bloc’s new business council chairman. Mr Salum Shamte, the new chair, said he would hit the ground running by addressing non-tariff barriers. He will also seek to promote intra-trade within the bloc by formalising the informal sectors. “NTBs still affect trade flow in the bloc. This is attributed to lack of political will among some member states” noted Mr Shamte, who doubles as the Tanzania Private Sector Foundation. Officially launched this year, the Council aims at fostering a stronger working relationship between the public and private sector in the execution of the SADC Industrialisation Strategy and Roadmap 2015-2063. On Thursday, SADC members tasked the council to engage regional, national and local policy organs of the bloc in efforts to improve the business environment. Mr Shamte said he would be chairing five or six meetings with the SADC Secretariat on improvement of business climate: “Hopefully, we will have a pact.”
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SADC is in the process of creating multiple emergency response teams to help users online against cybercrime, a senior official with the bloc said on Monday. “Cybercrime is becoming a serious concern in the region like elsewhere across the world,” said Mapolao Mokoena, SADC Director of Infrastructure and Services.
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The SADC Secretariat has urged member states to devise better strategies in tackling food security in the region. Domingos Gove, the secretariat’s director of food, agriculture and natural resources, said during the last crop season, it was only South Africa and Zambia in the 16-nation bloc that had enough food. The rest registered food deficits, largely due to poor rains and cyclones that hit Mozambique, Zimbabwe, Malawi, Madagascar and Comoro. “The rainfall situation for agriculture has been bad for the entire region, the lowest to be registered for the last 15 years in the crop season,” said Mr Gove. He was speaking ahead of the 39th Heads of State and Government Ordinary Summit slated for 17-18 August in Dar es Salaam. “If you look into the food balance sheets produced by each of the member states, the balance in South Africa and Zambia is too small to supply all the countries that are in deficit,” said Mr Gove.
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SADC member states join forces to help DR Congo fight Ebola. Jorge Cardoso, director of the Organ on Politics, Defense and Security Affairs of the SADC Secretariat, said health ministers from the regional grouping’s member states met recently to discuss how best to help the DRC fight the deadly virus. “The fight against Ebola is on the agenda of the SADC security portfolio,” Cardoso told a media briefing in the business capital, Dar es Salaam, ahead of the 39th Ordinary SADC Summit of Heads of State and Government. He said the SADC health ministers have recommended interventions of helping the DRC in the fight against Ebola. The recommendations will compliment efforts being taken by other international partners, including the World Health Organization, Cardoso said.
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SADC Trade in Wildlife Information Exchange workshop report. The mandate for the establishment of the SADC-Trade in Wildlife Information eXchange (SADC-TWIX) emanates from the SADC Law Enforcement and Anti-Poaching (LEAP) Strategy that was approved by Ministers responsible for Environment and Natural Resources in 2015 and endorsed by the Joint Committee of Ministers of Environment and Natural Resources and of the Organ on Politics, Defense and Security Cooperation in 2017. The overall objective of the SADC LEAP Strategy is to significantly reduce the level of poaching and illegal trade in wild fauna and flora and enhance law enforcement capacity in the SADC Region by 2021. The LEAP strategy explicitly identifies the establishment of a TWIX system, an Internet tool for information exchange amongst the law enforcement agencies in the region, as one of its key deliverables. It was against this background, and to maintain the momentum built during the scoping missions and based on the high level of expectation and need for the TWIX system to become operational, that a regional workshop (pdf) formally to launch the system was convened on the 9th and 10th April in Johannesburg.
Paul Akiwumi: Why Angola must foster entrepreneurship and diversify its economy (UNCTAD)
Entrepreneurship in Angola displays typical signs of trauma from years of conflict and distortionary effects of oil dependence. Converting entrepreneurs’ risk-averse mindset to a risk-ready one is crucial. Otherwise, they may not respond as expected to market signals and policy support and so would not take advantage of market opportunities. A policy approach to growing sectors or industries is likely to yield superior results for Angola and other commodity-dependent countries, rather than one that targets specific issues such as small and medium-sized enterprises and women’s entrepreneurship in isolation. President Lourenço’s government will need to tackle perceptions that pro-business policies are superficial and serve old political realities. An excellent place to start is the myriad of existing mechanisms: the critical policy action is to reassess, rationalize, consolidate and improve them. An “Angolization” programme launched in 2002 has, by many accounts, enjoyed tremendous success in building local human capital for the oil sector. But consolidating that success will require developing a critical mass of local managers. Fundamentally, policymakers in Angola need to get deeply acquainted with their entrepreneurs and know the kind they wish to nurture. It is crucial to be transparent about the criteria for choosing firms and activities to foster, but also about the performance which is required from them in exchange for the support received. [The author is Director of UNCTAD’s Division for Africa, LDCs and Special Programmes]
Kyle Navis, W. Gyude Moore: Here’s what Ethiopia needs to become Africa’s next tech hub (CGD)
Ethiopia has its sights set on becoming Africa’s next tech hub, rivalling Nairobi, Lagos, and Cape Town. President Abiy Ahmed has enacted progressive policies in business, finance, and telecoms, and for a decade, Ethiopia’s economy has averaged 10.3% growth driven by industry, construction, and services. That growth has translated into both urban and rural poverty reduction. But in its quest for digital supremacy, Ethiopia will need to take steps to create an enabling environment for the digital startup sector, which across Africa is driven in large part by fintech. But Ethiopia lacks the communication and financial infrastructure needed to enable digital innovation, and faces significant obstacles in challenging Kenya, (which processed $38bn in transactions last year), Ghana (Africa’s fastest growing mobile money market) or Nigeria (where mobile carrier MTN recently received a banking license). As a start, TechCrunch points out that Ethiopia must address a substantial internet connectivity gap before it can realistically aspire to attract major investment in digital startups. Even with expended internet connectivity, the next challenge ahead for Ethiopia will be providing identification—a key enabler of the digital economy—to more of its citizens.
ID is foundational for getting a mobile phone and a bank account, and you will need both to make digital payments. And entering the fintech space of mobile money requires a mobile phone and access to a minimum of 2G coverage. Each of the requirements stacks onto another. Unfortunately, Ethiopia is a straggler in providing these crucial tools, while its biggest African competitor in the digital space, Kenya, enjoys very strong adoption rates. The Venn diagrams below compare Ethiopia and Kenya in ID, money accounts, and mobile phone ownership among adults. Where just over one in five Ethiopian adults have all three, almost three-quarters of Kenyans do. A thriving digital startup ecosystem will need the means to access customers, and Kenya has a massive head start in providing these basics.
New strategy to revamp Uganda’s textile sector (The East African)
Uganda has completed the development of a strategy for its cotton, textiles and apparels sector that could generate 50,000 new jobs and $650m in additional export revenues over the next eight years. The strategy, which is also supposed to feed into the third edition of the National Development Plan NDPIII, should result in increased fibre cotton production, scale up domestic value addition and create employment. Besides the need to address structural and policy bottlenecks that currently hamper development of the cotton value chain, there will be a need to establish five new vertically integrated textile mills. In addition to increasing value to Uganda’s cotton output, the factories would employ 50,000 workers earning a combined $50m annually. The strategy proposes to revive the cotton production value chain and investment in export-oriented apparel as well as garment production factories that would initially rely on imported fabric.
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The 39th Ordinary Summit of the Heads of State and Government of SADC, and preceding meetings, starts tomorrow in Dar es Salaam, ending on 18 August
Funding the AfCFTA Secretariat: AU, AfDB sign $4.8m institutional support grant
JETRO Global Trade and Investment Report 2019: The fluctuating international economic order and global business in the future
The total number of free trade agreements in force in the world (including customs unions and preferential trade agreements) as of the end of June 2019 was 314, up from 307 in the same period of last year (research by JETRO). The coverage ratio of Japan’s enacted FTAs has increased significantly from 23.4% in the previous year to 36.7% with the entry into force of TPP-11 and the Japan-EU EPA.
Global venture capital (VC) investment reached $254.3bn in 2018. When comparing VC investment as a percentage of GDP, that for the US (0.4%), and Israel (0.378%) is more than 10 times higher than other major developed countries like Japan (0.036%). While the ratio for major developed countries overall has been climbing, it has only seen minute growth in Japan. [Download the Key Points version, pdf]
South Africa’s Standard Bank says focus on rest of Africa is paying off (Business Day)
Standard Bank Group said on Thursday that a better contribution from banking in the rest of Africa helped the lender grow profits in the first half of 2019, even as loan write-offs climbed and its joint venture with ICBC was hobbled by a client going bankrupt. “Standard Bank Group’s African-focused strategy has delivered continued headline earnings growth, driven by the strong underlying momentum in our core operations,” the continent’s biggest lender said. The rest of Africa contributed 34% of banking headline earnings, from 32% in the first half of 2018. Group CEO Sim Tshabalala said the proportion of profit from the rest of Africa would probably continue to rise. [African telecoms group MTN says divestment plan on track after first-half sales]
Cameroon’s cocoa bean exports up 26% this season (Nasdaq)
Cameroon’s 2018/19 cocoa bean exports jumped 26% to 214,825 tonnes from 170,981 tonnes, National Office of Cocoa and Coffee data seen by Reuters showed on Thursday. Bean grinding in the central African country rose to 58,552 tonnes this season, against 53,403 tonnes last season, the regulator said. Cocoa bean arrivals at Cameroon’s main port of Douala stood at 264,254 tonnes by the end of the 2018/19 season on July 15, up 4.2% from the previous season’s 253,510 tonnes, the ONCC data showed. Cameroon is the third-largest cocoa producer in Africa - behind Ivory Coast and Ghana - and the world’s fifth-largest.
Ethiopia earns $142m in exports from Chinese built industrial parks (Xinhua)
Hana Arayaselassie, Deputy Ethiopia Investment Commissioner, said $142m in export value was earned during the Ethiopian fiscal Year 2018/19, which ended on 7 July, reported state media outlet Ethiopia News Agency. Arayaselassie, said the construction and commissioning of the Chinese built Ethiopia-Djibouti electrified rail line in January 2018 has contributed to boosting landlocked Ethiopia’s export ambitions, by transporting speedily and efficiently cargo from industrial parks in mainland Ethiopia to ports in Djibouti. Ethiopia is constructing or has commissioned around 12 industrial parks across the country, part of a broad economic strategy to make the country a light manufacturing hub in Africa by 2025. Nine of the industrial parks are located in close proximity to the 756 kms Ethiopia-Djibouti electrified rail line, which since being commissioned in January 2018 has been hailed for boosting landlocked Ethiopia’s foreign trade. [Ethiopia grants first financial services licence to foreign firm]
Ethiopia-Djibouti transport corridor: AfDB, Ethiopia sign agreement for first phase (AfDB)
The government of Ethiopia and the African Development Bank Group have signed a $98m grant agreement from the African Development Fund to help finance phase one of the Ethiopia–Djibouti Road Transport Corridor Project. The total cost of the project is $255m, comprising an ADF grant of $98m to the government of Ethiopia, an ADF grant of $5.3m to the government of Djibouti and a co-financing contribution of $151m by the government of Ethiopia. The project will kick off in 2020 and be implemented over a five-year period.
The East African Business Council held their 20th AGM in Nairobi today: tweeted perspectives by CS Adan Mohamed. The EAC is a strong regional bloc that is the most integrated on the continent, that has seen a lot of growth over the years. The private sector in the region continues to play a critical role in economic development. The journey of East Africa so far is positive. We need to stick together as EAC in order to compete at the global stage. Our combined market size is an important tool in negotiating on trade and investments. We must make ourselves attractive on our Ease of Doing Business agenda, infrastructure development and other enablers that support business growth. The future role of the East African Business Council should usher in a more dynamic and strengthened self regulation mechanism for the private sector, that focuses on critical issues that will be game changers for the region.
Related: Kenya’s CS for Industry, Trade and Cooperatives, Peter Munya, wants the National Trading Corporation to set up regional trading houses in the EAC on a pilot basis to boost exports.
Hong Kong pursues trade, investment deals in Kenya (The Star)
The Hong Kong Trade Development Council is leading a delegation of 10 top companies, which arrived in the country on Monday,on a six-day business mission with a key focus on Nairobi and Mombasa. On Tuesday, the delegation led by its regional director of Middle East and Africa, Daniel Lam, held talks with the Kenya National Chamber of Commerce and Industry on possible areas of collaboration and investment. Meanwhile, Lam has noted that this year, trade between Kenya and Hong Kong has grown by 16% and exports ratings have risen by 12% respectively.
UNCTAD’s port Liner Shipping Connectivity Index: Shanghai tops ranking of world’s best-connected ports. The Chinese port garnered a connectivity score of 134 points, followed by the ports of Singapore (124.63 points), Pusan (114.45 points) in Korea and Ningbo (114.35 points), also in China. The index is set at 100 for the best-connected port in 2006, which was Hong Kong, China. Besides the Asian ports, the other ports on the top 10 list are those of Antwerp (94 points) in Belgium and Rotterdam (93 points) in the Netherlands. None of the ports in the top 20 list are from Africa, Latin America, North America or Australasia. “A container port’s performance is a critical factor that can determine transport costs and, by extension, trade competitiveness,” said UNCTAD’s director of technology and logistics, Shamika N. Sirimanne. The port LSCI, which now provides data on more than 900 ports dating back to 2006, is generated using the same methodology as that for the recently released country-level LSCI produced by UNCTAD in collaboration with MDSTransmodal. Africa – Both geography and port reforms matter:
The best- connected ports in Africa are those located at the north-eastern, north-western and southern edges of the continent, i.e. ports in Morocco, Egypt and South Africa. In comparison, western African ports display relatively lower connectivity levels given their location outside the trajectory of major north-south and east-west shipping routes. Mombasa (Kenya) and Dar es Salaam (Tanzania) connect Burundi, Rwanda and Uganda to overseas markets through dedicated corridors; however, they remain highly congested. [What can be done to improve a port’s connectivity? The following seven policy measures are key to enhancing port connectivity]
Zimbabwe: Analysis of spatial patterns of settlement, internal migration, and welfare inequality (World Bank)
This report aims to assess the spatial dimensions of settlement, internal migration, and welfare inequality in Zimbabwe, explore their relationship and implications, and identify policy options for addressing spatial disparities in social outcomes. It is exploratory in nature and identifies areas for further research to continue to unravel the drivers of the pattern that is observed. The study (pdf) looks at where people are today (chapter 2), unpacks urbanization trends, and reviews population density and connectivity (chapter 3). Chapter 4 assesses the reasons behind the spatial settlement patterns and looks at Zimbabwe’s historical land allocation, land reform, and economic crisis in the 2000s. Chapter 5 discusses the consequences of this spatial distribution of the population in terms of poverty, nonfarm employment, and service delivery outcomes. Chapter 6 discusses policy implications.
Exploring accessibility to employment opportunities in African cities: a first benchmark (World Bank)
This paper presents an analysis of transit accessibility to employment for 11 African cities. The use of identical methodologies and similar data sets allows for the creation of the first benchmark to compare accessibility across urban areas in Africa through different metrics and visuals. The study shows how the spatial pattern of land use and transport systems perform in connecting people to employment opportunities in these various settings. This first comparable benchmark is achieved by overcoming two significant data hurdles that are common in many developing country cities and in Africa in particular: (i) the scarcity of information on the distribution of employment and (ii) the lack of information on transit routes and travel times.
The relationship between international connectivity and economic activity: World Bank, LinkedIn research (World Bank)
Using a combination of LinkedIn and World Bank data, we’ve found that global value chain participation is strongly correlated to the number of international relationships between employees in a sector. What that looks like in our data: a 1% increase in a sector’s international connections on LinkedIn is associated with 0.8-0.9% increase in exports, imports, and other measures of global value chain participation. While this isn’t a causal link, it does tell us that that growing professional networks are complementary to the expansion of global value chains. These findings raise an important point for the policy community: there is a strong case for investing in infrastructure that facilitates information flow across workers, firms, and countries -- whether it is expanding broadband access or investing in training workers with digital literacy skills.
Today’s Quick Links: Nigeria: In five years, palm oil imports gulp N504bn Zambia, Rwanda propose a business summit for Africa’s great lakes region Peace consolidation in West Africa: statement by the President of the Security Council, Poland’s Joanna Wronecka Minister Ayorkor Botchway: Ghanaians with ordinary passports need visas to enter South Africa Mauritius: Action plan for low carbon and resource efficient accommodation launched IPCC’s special report on climate change and land |
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Featured tweet, @Yadeyemi: The AU is developing a continental trade facilitation strategy with a concrete implementation plan involving ICT, logistics, SMEs, NTBs, etc, the AU told experts at the WCO workshop yesterday in Pretoria.
Selected AfCFTA updates:
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Towards an AfroChampions fund to finance the AfCFTA. The AfroChampions Initiative has launched a private sector investment framework to secure financing for the AfCFTA. This has been launched on the occasion of a high-level meeting convened in partnership with Dr Mahamudu Bawumia, vice-president of Ghana, which brought together investors, financing institutions and sovereign and private funds. Albert Muchanga, the AU’s commissioner for trade and industry: “The AfCFTA private sector investment and financing framework is a very thorough approach: monitoring the AfCFTA agreement’s legal implementation, defining certification criteria qualifying projects eligible for funding, mobilising the private sector in Africa and a process to coordinate with the public authorities.” Ali Mufuruki, vice-president of the AfroChampions Club for the East Africa Region: “To address reluctance and concerns about the AfCFTA, we must demonstrate that it is a major and tangible opportunity for all stakeholders, whether states or companies regardless of size, civil society or individual citizens of the African continent.”
The participants in the Accra session defined at the end of their workshop a detailed roadmap, including various milestones over the next 18 months. Among the major dates is the presentation of the dedicated fund, scheduled for the fourth quarter of 2019 for the next AfroChampions Boma, the first benchmark and a follow-up report on the AfCFTA implementation and the organization of an exhibition on ‘Made in Africa’ early 2020.
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Four African trade unions advocate tighter rules to protect African markets. Trade unions from four African countries are advocating the adoption of tighter rules to safeguard African markets for local products in the implementation of the AfCFTA agreement. The Trade Union Congress (TUC) Ghana, the Nigeria Labour Congress, the Congress of South Africa Trade Unions and the Central Organisation of Trade Unions of Kenya, argued that the rules were necessary to deal with the risk of capture of the African market by the advanced countries which already have trade agreements with several African countries. Addressing a press conference in Accra yesterday, Dr Yaw Baah, Secretary General of TUC, said that the associations were committed to work with the various trade ministries and governments to ensure that the AfCTA increased intra-African trade and investment to promote economic growth and employment creation. The press conference followed a four-day Trilateral Trade Union Cooperation meeting between the four trade associations. [Ghanaian Times editorial comment: AfCFTA needs robust rules to safeguard African markets]
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A twitter thread from @AUTradeIndustry on the AfCFTA and the private sector: During the 18th AGOA Forum 2019 in Abidjan, the AUC’s Commissioner for Trade & Industry, Ambassador Muchanga, discussed key issues with the private sector. The private sector will be able to participate in the AfCFTA process. Amb Muchanga informed the audience that African Ministers of Trade have decided that the Pan-African Trade and Investment Policy Committee (PAFTRAC) will transition to become the African Business Council. The private sector expressed the need to be involved in the discussion on rules of origin, development of schedules of tariff concessions for trade in goods, schedules of specific commitments for trade in services, harmonization to the extent possible of products to be liberalized.
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US, AU statement on the development of the African Continental Free Trade Area: full text
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The AU has announced that its AfCFTA app is now available for download from the Google Play Store
AGOA Forum 2019: a final set of postings
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South Africa calls for digitisation as strategy to unify African economies. Africa can address the challenges of geography with a smart digital strategy that can connect economies and help industrialise the continent. This was the message from Minister of Trade and Industry, Mr Ebrahim Patel at a dialogue in Côte d’Ivoire. Minister Patel was co-chairing a session with the US Deputy Trade Representative, Ambassador CJ Mahoney. “Data is to the 21st century what oil and steel was to the 20th century. Africa must become more than a consumer market for digital services produced elsewhere. We must become innovators and producers too, exporting services and building capabilities,” he said. However, Patel noted that the process of digitisation was uneven as many countries, including those in Africa, lag behind and contribute to a digital divide: “Technology is a potential platform for leap-frogging. Securing its benefits and realising its promise, will require well-designed and purposeful public policy measures to promote data for development. It also requires a deep partnership with entrepreneurs and young people who develop the technologies that are changing our world.” Patel noted that governments needed to consider appropriate public policy, legislative and regulatory measures that may include competition, tax, labour market, SME-promotion, privacy and national security measures.
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Virginia Blaser: AGOA’s positive impact felt in the Cape. Today, the US is the Western Cape’s top foreign direct investor and directly contributes to almost 100 foreign direct investment projects worth $2.3bn (R34.24bn). This US investment has created more than 8 000 jobs in the province. In the past six years alone, Western Cape exports to the US have doubled, reaching more than $688m of goods to the US in 2018. It is clear that, despite the geographic distance between us, our economies are growing together. Indeed, the US is the third largest export market for goods from the Western Cape, behind only Namibia and the UK. These exports are facilitated, in part, by the African Growth and Opportunity Act, which allows duty-free exports of more than 6 500 goods from Africa to the US. [The author is the US Consul-General (Cape Town)]
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Ms Susan Muhwezi, the Ugandan president’s advisor on AGOA, has called for a more integrated infrastructural network, increased investment in green energy and reduction in the cost of financing for Africa to reap from trade with the United States: “Transport infrastructure is essential for movement of raw materials to production areas and conveying finished products to markets or consumption areas. Besides the roads, we must aim at interconnecting Africa within itself, Africa with America and Africa with the rest of the world using mainly the railway and air transport, as well as water transport.” Addressing the AGOA Forum, Ms Muhwezi cited some of the challenges underpinning the trade such as the cost of financing which “remains very high in most African countries and this inhibits private sector participation in the development initiatives on the continent.” Ms Muhwezi said investors would find it easier to penetrate and operate in Africa if they were able to find ready and capable business partners: “With many African companies falling short largely due to financing constraints orchestrated by the high cost of financing, this remains far from the reality.”
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USTDA announces US industry partners for Access Africa initiative. Partners include Palo Alto Networks, Inc., the Corporate Council on Africa, Intel Corporation, Cisco Systems, Inc., General Electric Company, Symantec Corporation, and Adaptrum, Inc. Acting Deputy Director Todd Abrajano made the announcement at AGOA Forum 2019. “The commitment by these private sector leaders to partner with USTDA on Access Africa is a clear illustration of the interest and presence of U.S. industry in Africa’s ICT sector,” said Abrajano. “As our Access Africa partner list grows, so will America’s role as Africa’s most important ICT sector partner.”
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Related: The US Grains Council is working to expand markets and programs into East and West Africa using resources from the Agricultural Trade Promotion program. Kurt Shultz, senior director of global strategies with the US Grains Council, says more than half of the global population growth will occur in Africa by 2050. “Africa and the Middle East will account for 57% of the growth in world coarse grain imports through 2026,” he says. “This is driven by changing demographics and urbanization. This all leads to increasing growth in demand for livestock products.” The US Grains Council is building on longtime programs in North Africa. Shultz says the U.S. Grains Council works where the market does not.
CFA Franc turning 75: Central African countries under pressure (Euler Hermes)
In 2020, the CFA Franc is turning 75 years old. The currency, used in two African regions, is backed by the French treasury and pegged to the Euro. Though the 2014 commodity price slump revealed vulnerabilities, the situation is not comparable with 1994, when the CFA Franc was devalued by -50% in Western (WAEMU) and Central (CEMAC) CFA Franc areas. Yet, divergence among members calls for cautious optimism about the stability of the currency. Looking at today’s trade integration, mobility of the workforce, currency misalignment, debt sustainability and buffers of foreign exchange reserves in the zone (Optimum Currency Area criteria), we find that (pdf):
The CEMAC area is under pressure. Our model shows intra-zone trade is -USD200mn below what common borders, language and currency should provide for. There is evidence of currency overvaluation in the region (mainly in CAR, Gabon and the Congo Republic) as a result of lower oil prices. This has led to an increase of public debt and a fall in the foreign reserves-to-M2 ratio below the 20% threshold in Congo Rep. and Chad. In spite of these fragilities, a breakup or devaluation in the next five years is unlikely. If oil prices were to fall to USD 30/bl for long, the area would not be able to avoid a devaluation, but a breakup will remain unlikely. CFA Franc membership is an institutional fix that grants price stability to its members. Any exit would be a political choice, not an economic one.
IOC, IORA updates:
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Ministerial Retreat on the Future of the IOC: Several strategic decisions pertaining to the future and vocation of the Indian Ocean Commission that were taken during the ‘Ministerial Retreat on the Future of the IOC‘ were discussed during a press conference at the seat of the Ministry of Foreign Affairs, Regional Integration and International Trade, in Port-Louis. The Minister of Public Infrastructure and Land Transport, Minister of Foreign Affairs, Regional Integration and International Trade, Mr Nandcoomar Bodha, elaborated on the outcomes of the Retreat ( 1-3 August, Moroni, Comoros). Foreign Ministers and Heads of Delegation of the Member States attending the Retreat, decreed that the IOC must get closer to the concerns and expectations of the people of the islands; that the organisation’s development projects must ensure that they directly affect the life of the communities of the Indian Ocean region, and called for more connectivity between the islands and people in the area to advance regional integration. In addition to efforts to improve maritime, air and digital connections between the islands, they wished for citizens of the member countries to move freely within the region. The idea of transforming the IOC into the Indian Ocean Community was also discussed during the Retreat and will be subject to further reflection within the organisation with the help of experts.
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Mauritius will lead a Working Group on Trade and Investment in September 2019, organised by the Indian Ocean Rim Association. Trade and Investment are important parts of the focus area of IORA as economic cooperation is one of its key areas and, as such, the working group will focus on strengthening collaboration among the 22 member states in the scaling of their economic interaction.
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3rd IORA Blue Economy Ministerial Conference (4–5 September, Dhaka): Promoting sustainable blue economy. The conference will adopt the Dhaka Declaration, and other outcome documents, illustrating the commitment of IORA Member States to strengthen and deepen cooperation on Blue Economy priority areas in the years ahead.
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Related: The first session of the Joint Permanent Commission of Cooperation between Mauritius and Mozambique begins tomorrow, concluding on Friday.
Four women from Sub-Saharan Africa are among 20 female business leaders profiled in a publication by IFC for their professional success, despite facing formidable challenges. The SSA inclusions are Ghana’s Nora Bannerman, Kenya’s Wambui Mbesa, South Africa’s Soula Proxenos, Uganda’s Anne Kabagambe. The publication, Trailblazers – Portraits of female business leadership in emerging and frontier markets, highlights the personal and professional journeys of female business leaders from emerging and frontier markets. A recent IFC study of women on company boards in Ghana (pdf) found that more gender-diverse boards tend to demonstrate higher performance - reflected by returns on assets and growth in sales. Yet, nearly one quarter of Ghanaian companies have no women on their boards. Across Sub-Saharan Africa, women hold an average of 14 percent of board positions, while globally women hold only 15 percent of board seats and 4 percent of CEO and board chair positions.
Today’s Quick Links: The AfDB on Egypt: Combined mid-term review country strategy paper 2015-2019 and country portfolio performance review Namibia inaugurates R4.2bn Chinese-built port terminal Ronak Gopaldas: Does Mauritius have an identity crisis? African Food Security Leadership Dialogue: Key organizations sign deal on food security South Africa: Mondo Mazwai to head competition tribunal Stanbic Bank Uganda records Shs134b half-year profits Asian Development Blog: Why it matters that one of the region’s biggest trade deals, the ACFTA, is being upgraded HIPC Initiative and Multilateral Debt Relief Initiative: IMF posts a statistical update OECD: The impacts of climate change mitigation policies in agriculture - finding the balance (pdf) |
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Joint Statement between the United States of America and the African Union concerning the development of the African Continental Free Trade Area
Deputy United States Trade Representative C.J. Mahoney and African Union Commission Commissioner for Trade and Industry Albert Muchanga on 5 August 2019 signed a joint statement concerning trade between the United States and the African Union at the opening ceremony of the 2019 African Growth and Opportunity Act (AGOA) Forum. The text of the Joint Statement is below:
The United States and the African Union share a common goal of enhancing the African Union’s efforts to increase continental trade and investment under the African Continental Free Trade Area (the “AfCFTA”).
The United States and the African Union share a mutual desire and common goal to deepen dialogue and cooperation on trade and investment matters and to increase trade and investment between the United States of America and Africa.
The United States recognizes the African Union’s expression of interest to work closely together to identify ways the United States can cooperate on the development of the AfCFTA. The United States recognizes that one of the African Union’s principal aims is to promote sustainable development as well as the integration of African economies.
The United States and the African Union intend to work together with respect to the AfCFTA to promote a sound trade policy environment, regional economies of scale, and the increased flow of goods and services on the continent in order to increase both continental trade and investment, as well as trade and investment between the United States and Africa.
The United States and the African Union intend to jointly identify subject areas related to the ongoing negotiation and implementation of the AfCFTA as subjects for cooperation and for possible technical assistance and capacity building.
The United States and the African Union intend to work together to develop activities that support these priority objectives.
The United States and the African Union share a mutual desire to pursue deeper trade and investment ties beyond the African Growth and Opportunity Act, which is scheduled to expire in 2025, eventually leading to a continental trade partnership between the United States and Africa that supports regional integration.
Signed at Abidjan, Côte d’Ivoire, August 5, 2019, in the English language.