Search News Results
Press briefing on US policy in Africa with Assistant Secretary of State for the Bureau of African Affairs
Remarks by Tibor P. Nagy, Jr. via teleconference in Nairobi, Kenya, 6 December 2018
MODERATOR: Good afternoon to everyone from the U.S. Department of State’s Africa Regional Media Hub. I’d like to welcome our participants dialing in from across the continent and thank you all for joining the discussion. Today we are very pleased to be joined from Nairobi, Kenya by the Assistant Secretary of State for the Bureau of African Affairs, Tibor P. Nagy, Jr. Assistant Secretary Nagy will discuss U.S. policy in Africa, as well as outcomes on his current travel through the region.
We’ll begin today’s call with opening remarks from Assistant Secretary Nagy, and then we will turn to your questions.
ASST. SEC. NAGY: Thanks so much, Brian. Good afternoon, everybody. Bonjour, tout le monde. It’s a pleasure to be with you. I am in the process of concluding my second African trip. This time we visited Ethiopia, Djibouti, Eritrea, interestingly, and we’re finishing up in Kenya. We will be returning to Washington over the weekend.
I especially wanted to come out to East Africa second; if you remember, my last trip was to West Africa, but I wanted to visit East Africa to – number one – personally see some of the positive and very exciting developments going on in the Horn of Africa, thanks to the opening in Ethiopia both for their external relations and some of the internal opening that Prime Minister Abiy has been pursuing. And also, beyond that, I wanted to visit traditional U.S. partners, such as Kenya and Djibouti, and take a look at the close partnerships and bilateral relations that we have.
And I’ll be happy to answer your questions in a minute, but I have been just so encouraged by what I have seen, the positive changes going on, and for the first time in my career, to be able to engage directly with the leadership of Eritrea about the possibility of much better relations in the future. So I don’t want to monopolize the time; I wanted to give it to you. With that, I’ll stop and I’ll be delighted to take your questions. Thank you.
MODERATOR: Thank you, Assistant Secretary Nagy. We will begin the question and answer portion of the call. When we call on you to ask a question, if you could provide your name and affiliation, and limit yourself, if you would, to one question covering the Assistant Secretary’s trip, as well as Africa policy.
You mentioned, sir, your visit to Eritrea and we have a question from Radio France International in Kenya, asking: Did you raise the dire human rights record with the Eritrean government, and what was their response?
ASST. SEC. NAGY: We discussed the full range of interests between the two countries, both externally and internally. I’m not going to go into any specifics, but rest assured that the human rights considerations are very much a part of U.S. consideration in our bilateral relationship with Eritrea.
Overall, let me say this about Eritrea: our intention is, hopefully, to get to the point where our relations with Eritrea are just as warm and cordial as our relations with Ethiopia, because both countries are vitally important. In many respects they complement each other, so that is the goal that we are pursuing. It will be step-by-step. It will obviously take time, but we felt that this initial opening dialogue was very important. Thank you very much.
MODERATOR: Our next question, again in advance, comes from Geoff Hill. He is with the Washington Times and is currently in Poland at the COP24 meetings. He notes that the United States, India, and South Africa have all stated they will continue to use coal for energy production, but seeking to burn it cleaner. And his question is, will the United States share its know-how in clean coal technology?
ASST. SEC. NAGY: Okay, on that one I’m sorry. I am not an expert on energy policy. I follow African issues very closely, so I don’t want to be misinterpreted or go off in the wrong direction, so on that one I will have to – in the words of American football – punt. Sorry.
MODERATOR: We will continue with questions we have received in advance, the next question coming from here in South Africa, from Bloomberg. Prinesha Naidoo asks about the Africa Growth and Opportunity Act eligibility review and would like to ask you, sir, when that review will be made public. When is the announcement expected?
ASST. SEC. NAGY: Sorry, I wish I could respond to that with a specific date, but that I do not know. We are absolutely discussing some next steps after AGOA, related to pursuing possibly some free trade agreements, some bilateral free trade agreements, that would be complementary to the Africa-wide continental free trade agreement. But as far as the specific date goes for the review, I do not know that at this time. Thank you.
MODERATOR: We will turn next to Bloomberg; I think we have Prinesha Naidoo on the line. We asked a question on your behalf about AGOA, but go ahead and introduce yourself and ask your question.
QUESTION: Thank you, yes, this is Prinesha Naidoo from Bloomberg. I just want to follow up on the AGOA question, whether the review has been completed already and if you can also provide some more information on what these bilateral free trade agreements would be, that would complement it.
ASST. SEC. NAGY: Okay, could you repeat the part on AGOA? Because I’m not sure I got what you were asking about AGOA.
QUESTION: Has the annual review for the countries’ eligibility to participate in the AGOA program been finalized already?
ASST. SEC. NAGY: That I really don’t know. I will have to check when I get back, so I wish I could give you a full answer on that. On the free trade agreements, here’s the background on that. Currently, the United States of America has no – that’s no – free trade agreements with any sub-Saharan African country. The only one we have with the continent of Africa is with Morocco, so this administration is very eager to pursue the first ever free trade agreement with a sub-Saharan country, which in effect would serve as a model.
So we’re going through the process now of talking to a number of countries to try to decide which one would be an ideal country for a model, and you know there would be many considerations for such, but part of my visit to Addis Ababa was two parts: it was both bilateral with the Ethiopian government, but it was also with the African Union, and while I was there for the African Union, we had our annual high-level dialogue, and the whole issue of a U.S. free trade agreement versus a continent-wide free trade agreement came up for considerable discussion, and we kept emphasizing the point that absolutely we support – the United States supports – the continent-wide free trade agreement, because we support Africa’s attempts at regionalization, sub-regionalization, and continental consolidation.
So we don’t want it to be in any way conflicting with or competitive with; we want it to be complementary to. So we’ll be undertaking bilateral discussions with potential countries, and then we’ll make a selection and take it from there. Thank you.
MODERATOR: Thank you, sir. We have time, I think, for just one more question. Kevin Kelley, if you’re still on the line, go ahead and ask your question.
QUESTION: Yeah, hi, here I am. Thanks, Brian, and thank you again, Secretary Nagy. So I want to ask a general question about U.S. policy toward Africa. The Clinton administration, its signature initiative in Africa was AGOA. The younger President Bush’s signature initiative was PEPFAR, the very successful anti-AIDS program. And the Obama administration has Power Africa and Feed the Future. I’m wondering if the Trump administration is contemplating some sort of signature program in Africa that would be remembered as a, say, major contribution to U.S.-Africa relations. Thank you.
ASST. SEC. NAGY: Sure. I think in the very near future we will be rolling out a formal Africa policy, but what I can tell you now: I think a good indication was the recent passage and the signage by the president of the BUILD Act, which I think is extremely significant because it doubles the investable assets of the Overseas Private Investment Corporation from $30 billion to $60 billion. Much of that will be directed at the developing world, i.e., Africa, and it will provide a tremendous amount of flexibility, and not just for American companies, but for others to undertake bankable projects.
So I think that you can see that a lot of that focus is going to be on bringing foreign direct investment to Africa, because as we all know, that for an area to truly, truly develop, it requires tremendous amounts of outside direct investment. You know, we can talk about the development assistance, but there is never really enough money in any kind of development assistance to actually develop the country, but there’s a tremendous amount of foreign direct investment out there looking for a place to invest, and as I have told a number of African leaders, I will be delighted to push U.S. investors towards Africa; I need their help in pulling them by establishing an environment which is friendly to investors and what we call a “level playing field” so American businesses can have the same chance as businesses from other places, and a rules-based system.
So I think what I want is by the end of the administration that we can say that some of the countries in Africa will have made tremendous progress towards actually developing and not eternally being developing, but to get to “developed.” Thank you very much.
MODERATOR: Thank you, Assistant Secretary Nagy. That’s all the time we have. Sir, do you have any final words before we conclude?
ASST. SEC. NAGY: No. Thanks so much for doing this. Hopefully I will get around to the entire continent before my first year is up as Assistant Secretary. I’m into it five months now; we’ve visited two regions, we remain with central Africa and southern Africa for the next two trips, and I’ll visit as many countries as possible. Thanks so much.
MODERATOR: Thank you again, Assistant Secretary Nagy. We very much appreciate you taking time out of your busy schedule, while you’re visiting the continent. Again, Assistant Secretary Nagy joined us from Nairobi, Kenya. That concludes today’s call.
Related News
Linking policies on development and trade
Germany’s Federal Government has announced a Development Investment Fund. The new scheme can become an important milestone for realigning cooperation with Africa – towards dovetailing aid and trade, increasing private-sector involvement and self-sustaining economic development in African countries.
Poor infrastructure is a major obstacle to doing business in African countries – both for local and for international enterprises. But infrastructure – for transport, energy or water, for instance – costs a lot of money. It cannot be financed solely from national budgets or official development assistance (ODA). Private investment is needed for local economies to grow, livelihoods to be generated and people to lead independent lives.
Foreign direct investment does not automatically result in more local jobs, of course. Even so, it is absolutely essential. In 2017, €36 billion were invested in African countries, mostly in Egypt, Ethiopia, Nigeria and Morocco. That sum was a mere 2.9% of global foreign investment. By contrast, €434 billion flowed into Asia.
The major corporate investors in Africa are based in the US, UK and France as well as in China and South Africa. Even firms based in the city-states Singapore and Hong Kong invest more in Africa than Germany’s private sector, which still hesitates to engage with Africa. A lack of suitable financing options, risk protection and political support are bemoaned by many German companies, especially small and medium-sized ones.
Many of the thousand German companies which are active in Africa are actually very successful. Interest in Europe’s neighbouring continent certainly exists. At the end of October, the German-African Business Association (Afrika-Verein der deutschen Wirtschaft) staged an investor conference in cooperation with the Sub-Saharan Africa Initiative of German Business (SAFRI).
The event attracted a hundred companies. Between them, they plan projects worth an investment volume of €500 million. The projects will create 13,000 jobs in 11 partner countries of the G20’s Compact with Africa. They are Benin, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo and Tunisia. Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) supports some of the ventures through its Special Initiative for Training and Employment.
And yet German involvement does not reflect the country’s economic weight. Smart action could increase the €1 billion worth of projects currently in the pipeline across Africa several fold. For that to happen, small and mid-sized enterprises (SMEs) need to see Africa as an attractive investment destination.
The Development Investment Fund could offer the right leverage, making a key contribution to creating more jobs for African youth. Items that have long been on the SME wish list include accessible and less expensive guarantees for exports, for project development and for investments. It is good that governmental Hermes export-credit guarantees will become available for additional countries.
To better cushion investors’ risks, it equally makes sense to reduce Hermes’ costs and client excesses. It is helpful, moreover, that the Fund will make financing available for smaller projects than in the past. This will not only benefit German companies; African enterprises will also be able to access capital and grow.
Africa needs private-sector involvement to leap out of poverty and become integrated into the global economy. We must support the continent’s catch-up process, harnessing the current momentum. Judiciously linking policies on development and foreign trade is the right way forward – for better infrastructure and more investment in African countries.
Christoph Kannengießer is the chief executive of the German-African Business Association (Afrika-Verein der deutschen Wirtschaft).
German Development Ministry expands reform partnerships
On 30 October, German Development Minister Gerd Müller launched negotiations with Ethiopia, Morocco and Senegal on reform partnerships. He announced the plans at the G20 Investment Summit in Berlin organised by the German-African Business Association and SAFRI.
Minister Müller said, “The reform partnerships illustrate the new focus of Germany’s development cooperation. We concentrate on private investment, vocational education and employment, so as to make sure that Africa’s young people have a future in Africa.
“This requires efforts by the countries of Africa to improve the general environment: good governance, development of tax authorities and supreme audit institutions, legal certainty, anti-corruption and democracy. If governments wish to join the reform partnerships, they have to take action in all these fields.
“Ethiopia, Morocco and Senegal have made progress in these areas, so that we are now able to start negotiations with them on specific reform objectives within the framework of the partnerships. Once the negotiations have been concluded, we will commit further funding in support of these objectives. What is new about the reform partnerships is that the funding will only be disbursed after the reform steps have been implemented.”
Through the reform partnerships, the German government fills the Marshall Plan with Africa and the G20 “Compact with Africa” initiative with life. The German Development Ministry (BMZ) supports particularly reform-minded countries in improving the environment for private-sector involvement so as to create more jobs. Countries chosen for reform partnerships are characterised, in particular, by good governance, compliance with human rights standards and efforts to promote private-sector development.
In June 2017, the BMZ entered into the first three reform partnerships with Tunisia, Ghana and Côte d’Ivoire, committing itself to provide increased support to the three countries. In their turn, they have committed themselves to specific milestones in the area of the rule of law and in key areas for private-sector development. For example, Tunisia has reformed and expanded its anti-corruption authority, enabling it to investigate more cases.
It has also reformed the government credit guarantee fund in order to make it possible for banks to provide finance for small and medium-sized enterprises and for start-ups. If the country continues to implement the reforms that have been agreed, Germany will likely be able to disburse the first 100 million euros at the end of this year.
In Ghana, the reform partnership focuses on the energy sector. The share of renewable energy is to be brought from less than one per cent to ten per cent. To that end, Ghana is undertaking various efforts, including the revision of its renewable energy act by the end of this year. If it implements this and other reforms, Germany will provide 100 million euros in support of the energy sector.
Related News
tralac’s Daily News Selection
Getting to 22: Namibia, South Africa ratify the AfCFTA
-
@AmbMuchanga: More great news on AfCFTA ratification! The National Assembly of Namibia has approved the ratification of the AfCFTA Agreement. Only 40.9% more ratifications left for the Agreement to enter into force. Africa is moving, in the right direction and at the required speed.
-
South Africa’s Minister of Trade and Industry, Dr Rob Davies, has welcomed the ratification of the Agreement establishing the AfCFTA by Parliament. Minister Davies says South Africa is expected to deposit the instrument of ratification during the 32nd Ordinary Session of the Assembly of the African Union in February 2019.
Continental workshop on Trade and Gender 2018 (16 December, Cairo)
In 2017, the ECA embarked on a comparative assessment of the status of gender mainstreaming in trade at the level of RECs, to identify success stories and challenges for incorporating gender considerations into trade policy. The 2017 Continental Workshop on Trade and Gender served as a platform for RECs and gender experts to share related experiences. As a follow-up to that meeting, further data collection on gender mainstreaming good practices was carried out in the form of missions by representatives of ECA to several REC headquarters during 2018. The pdf 2018 Continental Workshop (111 KB) will present key findings of the study and a way forward for member States, RECs and their development partners in the gender-sensitive implementation of the AfCFTA agreement. Experts will discuss various topics, including the alignment of proposed measures with the current policy frameworks of RECs, comparative strengths and weaknesses, existing and potential partners, and collaboration opportunities for RECs. [Note: This workshop will be one of five UNECA side events organised during the Intra-African Trade Fair. Concept notes for each workshop can be downloaded here]
AEC2018: Africa’s private sector can be major driver for regional integration (UNECA)
Stephen Karingi (ECA’s Director Regional Integration and Trade Division) emphasised the need to invest in information and technology to drive regional and continental integration. While Africa is already tapping into the possibilities created by digitalization and the mobile revolution, it is also the region that lags most behind in terms of the ability to engage in and benefit from e-commerce and the digital economy. “Half of Africa’s population won’t enjoy benefits of the AfCFTA because they have no IDs. We can harness the power of the private sector in the AfCFTA through digital identification,” Mr. Karingi said. For instance, three quarters of the African population are yet to start using the Internet. And in the UNCTAD B2C E-commerce Index 2017, the regional average index value for Africa was 28 compared with the world average of 54.
South African trade facilitation updates: as per the cabinet statement issued this morning
The cabinet approved the One-Stop Border Post National Framework for implementation. “The OSBP will enhance trade facilitation without compromising national security or revenue collection through the efficient movement of goods, persons and services between South Africa and the adjoining states of Botswana, Lesotho, Namibia, Mozambique and Zimbabwe.”
Cabinet ratified a decision of the Minister of Trade and Industry, Dr Rob Davies, to designate the Nkomazi SEZ and to grant a SEZ licence to the Mpumalanga Provincial Government’s Department of Economic Development and Tourism. “The Nkomazi SEZ will be positioned as an ‘agro-processing hub’ using green energy and forms part of the Maputo Development Corridor project.”
Cabinet approved that the National Treasury and Financial Intelligence Centre will coordinate South Africa’s preparation for the national risk assessment and upcoming mutual evaluation process which commences in mid-April 2019.
Cabinet approved the publication of the streamlined White Paper on Home Affairs for public comment. “The White Paper argues that for South Africa to fully realise the potential of the Fourth Industrial Revolution, the DHA must play a critical enabling role in citizen empowerment, inclusive development, efficient government and national security.” [President Ramaphosa: Launch of Atlantis Special Economic Zone]
Mozambican Customs announce new app for valuation of imported goods (Club of Mozambique)
The Mozambican Customs software platform used by importers is getting a new application to determine the value of goods, the system operator has announced. It is “a customs valuation system associated with a commodity database called eValuator” which should “facilitate trade, as it will reduce the time spent in disputes related to the value of goods,” the project manager of the JUE Guilherme Mambo says. “This tool will make it easier to know exactly what method customs use to determine the value and consequent calculation of customs duties,” said Dixon Chongo, representative of the Chamber of Customs Brokers and of the Confederation of Economic Associations of Mozambique, the country’s largest employers association, also quoted in the communiqué. “We felt a certain abitrariness on the part of the customs, with the value of the goods being adjusted upwards without any clear explanation being given.”
Mozambique: Over 50% of 2019 budget deficit funded by loans (Club of Mozambique)
Ethiopia and the IMF: Article IV and Selected Issues reports
-
IMF Executive Board concludes 2018 Article IV Consultation. Directors stressed that implementation of structural reforms is critical to promoting competitive markets and improving the investment climate to catalyze private investment. Privatizations, public private partnerships with adequate safeguards, and removal of obstacles to private investment could support renewed growth momentum while attracting foreign resources and know how. Directors underscored the importance of addressing data gaps and delays to improve the quality of statistics. They welcomed Ethiopia’s decision to join the African Continental Free Trade Agreement and looked forward to progress toward World Trade Organization membership. Directors also welcomed the joint analysis conducted with UN Women which shows that further reducing gender disparities would yield large economic benefits over time and commended the authorities’ efforts in this direction.
-
pdf 2018 Article IV Consultation (2.60 MB) . The Debt Sustainability Assessment (DSA) shows that Ethiopia remains at high risk of debt distress owing to its small export base. Public and publicly-guaranteed external debt breaches the thresholds for the present value of debt-to-exports and debt service-to-exports in the baseline. Debt service payments are expected to increase in the coming years, as grace periods on non-concessional debt acquired in the past expire. The MOFEC has announced that no new projects will be financed with non-concessional debt in 2018/19.
Ethiopian authorities’ views: The authorities agreed that the external position remains vulnerable but consider that the conditions for a sustained export take-off are now in place. This should lead to higher growth in the baseline and reduce risks. In addition, the normalization of the political environment should see an increase in FDI and remittance flows from the diaspora. Thus, they continue to view the DSA as overstating risks and considered that there was a strong case for the use of judgment to override the mechanical signal from the framework.
IMF Staff appraisal: While Ethiopia has maintained high and inclusive growth, its public sector-led development is reaching its limits, exacerbating external imbalances and public debt vulnerabilities. The DSA shows Ethiopia remains at high risk of debt distress; the exchange rate is overvalued; and international reserves are thin. Sustained policies to reduce public sector’s external borrowing and imports have substantially narrowed external imbalances in recent years. Going forward, the policy mix of tighter fiscal and monetary policies and exchange rate flexibility would help address external and domestic imbalances, while structural reforms to strengthen competitiveness and foster private investment would help support economic growth and job creation.
-
pdf Selected Issues: Women and the economy in Ethiopia (1.13 MB) . We quantify the macroeconomic returns to closing gaps in labor force participation and education levels between men and women using different statistical and theoretical approaches. The findings suggest that, eliminating gender gaps in both educational attainment and the rate of formal employment could increase output in Ethiopia over time by over 24%.
Ethiopia to establish customs police to fight contraband trade (Ezega)
The Council of Ministers recently approved a proclamation for the establishment of the customs police as part of the fight against illegal trade that has been flourishing over the years. The new customs police will operate under the Federal Police of Ethiopia. Ethiopian Minister of Revenues, Adanech Abebe, said the new police force will specifically work to control contraband trade, which is significantly affecting the country’s economy and a threat to the country. Illicit trades are also believed to be abusing Incentives that the nation introduced to attract more investments, such duty free and tax-exempt equipment. The Minister of Revenue cited 55 international hotels using the tax-free privilege in a very small rural town in Afar regional state of Ethiopia. [Chinese market “huge potential" for Ethiopian products]
Angola and the IMF (@PaulWallace123): Christine Lagarde will visit Angola just before Christmas as the IMF and the government negotiate what’s likely to be a $4.5bn three-year funding programme, according to the OPEC member’s finance ministry.
Kenya’s ambitious plan to provide electricity to all citizens by 2022 (World Bank)
The government today launched the Kenya National Electrification Strategy. Developed in partnership with the World Bank, KNES provides a roadmap to achieving universal access to electricity for all Kenyans by 2022. With the help of the geospatial tool, the strategy has identified least-cost options for bringing electricity to households and businesses throughout the country. Alongside the KNES launch, the government also launched The Electricity Sector Investment Prospectus which presents the investment opportunities in the energy sector over the next 5 years valued at about $14.8bn.
SA-Tunisia Business Council mooted to boost trade and investment (dti)
SA’s Deputy Minister of Trade and Industry, Mr Bulelani Magwanishe has received the assurance of Tunisian business people that they are committed to the establishment of the joint South Africa-Tunisia Business Council. The President of the Tunisia-Africa Business Council, Mr Bassem Loukil, said opportunities were available for Tunisian and South African companies to explore jointly the automotive, pharmaceutical, agriculture and tourism sectors of the Tunisian economy. The President of the Tunis Chamber of Commerce and Industries, Mr Mournir Mouakhar, gave his association’s commitment to mobilise its members work towards increasing his country’s trade and investment with SA. “We are also looking at the development of business relations among South African, Tunisian and French companies. The fact that Tunisia has become a member of COMESA means that businesspeople in the two regions will be able to work closely together and contribute in stimulating intra-Africa trade and investment.”
UNCTAD Handbook of Statistics 2018: Growth of global goods exports to reach 10.4% in 2018
- - -
Related News
South African Parliament approves the Agreement Establishing the African Continental Free Trade Area (AfCFTA)
The Minister of Trade and Industry, Dr Rob Davies, has welcomed the ratification of the Agreement Establishing the African Continental Free Trade Area (AfCFTA) by Parliament.
The AfCFTA was launched during an Extra-Ordinary Summit of African Union Heads of State and Government on 21 March 2018 in Kigali, Rwanda. South Africa signed the Agreement during the 31st Ordinary Session of the Assembly of the African Union on 1 July 2018 in Nouakchott, Mauritania.
Thus far, 49 countries have signed the Agreement and Kenya, Ghana, Rwanda, Eswatini, Chad, Niger, Sierra Leone, Uganda and Guinea Conakry have deposited their instruments of Ratification.
Minister Davies says South Africa is expected to deposit the instrument of ratification during the 32nd Ordinary Session of the Assembly of the African Union in February 2019. The Agreement will enter into force once twenty-two Member States have deposited their instruments of Ratification.
“The African Continental Free Trade Area-AfCFTA, comprises of 55 African countries and, once entered into force, will constitute the largest Free Trade Area globally. As a flagship project of the African Union’s Agenda 2063: The Africa We Want, the AfCFTA aims to build an integrated market in Africa that will see a market of over 1 billion people with a combined GDP of approximately US$3.3 trillion,” Minister Davies said.
The United Nations Economic Commission for Africa estimates that the AfCFTA will increase intra-Africa trade from the current 10%-16% to approximately 52% by the year 2022.
Davies adds that the AfCFTA is anchored on the development integration approach, which places emphasis on market integration, infrastructure development, and industrial development; in order to boost intra-Africa trade and support the continental development imperatives of sustainable economic growth.
“In support of these objectives, the AfCFTA Agreement covers both goods and services under Phase I and will include Investment, Intellectual Property and Competition under Phase II of the negotiations,” indicates Minister Davies.
Minister Davies stated that the African Continental Free Trade Area will create a single set of rules for trade and investment among all African countries and provides legal certainty for traders and investors through the harmonisation of trade regimes.
“It also facilitates intra-Africa investment and increases the continent’s prospects of stimulating industrialisation, employment, income generation and poverty reduction,” Minister Davies highlighted.
Related News
AEC2018: Africa’s private sector can be major driver for regional integration
Africa’s growing and vibrant private sector can be a major driver of the regional integration across the continent, according to leading experts at the ongoing 2018 African Economic Conference (AEC) in Kigali, Rwanda.
However, this will require more efforts by the public sector to improve the environment for doing business in Africa, including making additional investments in both soft and hard infrastructure to reduce the cost of doing business, Non-Tariff Barriers (NTBs) as well as harmonising policies and standards.
In addition, governments have to do more to facilitate building viable value chains for agriculture, commodities and services.
“Governments have to play a catalytic role to attract private investment,” said Ms. Claire Akamanzi, the Chief Executive Officer of Rwanda Development Board during a high level panel under the theme, Leverage private sector for Africa’s integration.
Ms. Akamanzi pointed out that the government of Rwanda has made deliberate efforts to support the private sector by implementing several reforms aimed at not only to easing doing business in the country but also to making its economy competitive.
Rwanda is ranked the 2nd easiest place to do business in sub- Saharan Africa after Mauritius, the 1st in the East African region and the 41st globally out of the 190 economies assessed in this year’s World Bank Doing Business report.
Public private partnerships, Ms. Akamanzi argued, remain a priority in promoting a private sector led economy in order to achieve all the set targets that will maintain Rwanda’s competitive position globally.
Professor John Struthers, Director, Centre for African Research on Enterprise and Economic Development, School of Business and Enterprise, University of West of Scotland, underscored the need to develop regional value chains to facilitate greater integration into global value chains.
This is because most African countries are highly under-represented in global value chains (GVCs) although their participation has significantly increased over the course of the last decade.
“I see the glass half-full,” Prof Struthers said, pointing out that Africa despite the existing challenges, progress is being made, citing the ongoing construction of 6,000km Trans-African highway project linking Kenya (Mombasa) and Nigeria (Lagos) by road and the recently launched Djibouti Highway to Ethiopia.
For his part, Mr. Stephen Karingi, Director Regional Integration and Trade Division at the Economic Commission for Africa (ECA), emphasised the need to invest in information and technology to drive regional and continental integration.
While Africa is already tapping into the possibilities created by digitalization and the mobile revolution. At the same time, it is also the region that lags most behind in terms of the ability to engage in and benefit from e-commerce and the digital economy.
“Half of Africa's population won't enjoy benefits of the AfCFTA because they have no IDs. We can harness the power of the private sector in the AfCFTA through digital identification,” Mr. Karingi said.
For instance, three quarters of the African population are yet to start using the Internet. And in the UNCTAD B2C E-commerce Index 2017, the regional average index value for Africa was 28 compared with the world average of 54.
In his remarks, Ambassador Nkopane Monyane, Principal Secretary of the Ministry of Police and Public Safety of Lesotho and former Ambassador of Lesotho to the WTO, emphasised the need to invest and improve the quality of products produced on the African continent.
“Excellence should be the basis of everything that we do,” he said, pointing out that Africa was a resource rich continent.
Mr. Papa Secka, Director General, The Gambia Standards Bureau, underscored the need to step up investments infrastructure to enhance the quality of products produced on the continent as well as harmonising standards to reduce non-tariff barriers to facilitate the private sector.
“There is a need to address non-tariff barriers to the extent that companies can be efficient and competitive. Countries have to build regulations based on standards,” he said, emphasising that harmonisation of standards at continental level was crucial to facilitate regional trade.
The annual African Economic Conference is the continent’s leading forum fostering dialogue and knowledge exchange in the search for solutions to the development challenges of Africa. It brings together leading academics, high ranking government representatives and development practitioners from across the globe.
Sessions over the three-day meeting are examining the social, cultural and political frameworks for successful integration, building on the landmark signing this year of the Africa Free Trade Agreement, the world’s potentially biggest free trade agreement, which aims to create a single continental market for goods and services, with free movement of business persons and investments across Africa.
Participants are also looking at the role of the private sector and civil society institutions.
The 2018 African Economic Conference is being held under the theme, Regional and continental integration for Africa’s development.
Related News
IMF Executive Board 2018 Article IV Consultation with Ethiopia
Ethiopia has built on its strong track record of development over more than a decade.
Growth slowed in 2017/18, but remained high while the current account deficit continued to narrow, the IMF says in its recent report on the economic health of Ethiopia. The sub-Saharan country is embarking on its next phase of economic and social development – supported by reforms and powered by the private sector.
Over the last decade, high growth has led to a significant reduction in poverty and improved living standards for many Ethiopians.
The country’s large infrastructure investments are beginning to bear fruit and the provision of public services such as education and health has increased dramatically.
As a result, the population has enjoyed important welfare gains. For example, the number of maternal deaths per 100,000 live births fell radically from 1,080 in 1995 to 353 in 2015 and the proportion of people living in poverty fell from over 45 percent in 1995 to around 23 percent in 2015.
Recovering growth after a dip
In 2017/18, Ethiopia’s economic growth dipped to 7.7 percent due to reduced government public expenditure aimed at tackling the growing current account deficit and indebtedness. Political uncertainty and severe foreign exchange shortages also dampened growth.
As the political climate settles and investment recovers, growth is expected to recover to 8.5 percent this fiscal year, and the current account deficit should continue to narrow. In their report, IMF staff say they expect inflation – which currently exceeds the single-digit authorities’ target – to continue to fall due to an appropriately tight monetary policy.
Risks to medium-term outlook
Despite positive developments, the large external imbalances and the public debt burden are constraining future growth and pose risks to the medium-term outlook.
While debt is sustainable in the medium term, Ethiopia remains at high risk of debt distress. To mitigate those risks, restrained public sector borrowing – particularly on non-concessional loans – while protecting pro-poor spending programs, will be key, say IMF economists. At the same time, the government will need to mobilize tax revenues and raise exports to reduce vulnerabilities over the medium term.
Since his election, Prime Minister Abiy has created space for a more inclusive political dialogue and has taken steps to bring stability to the region. On the economic front, the new government has announced an ambitious reform program for the country aimed at opening the economy to private investment and competition to support sustainable growth.
Developing an open and inclusive economy
The new legal framework for public-private partnerships can play an important role in strengthening growth by promoting private sector development and the provision of public services, while reducing government costs, says the report. It also calls for privatization and removal of barriers to private investment in key sectors, which supports policy announcements by the government.
The government also wants to develop the domestic financial system. An important first step will be to introduce a market for government securities with market-determined interest rates. This will allow the central bank to reduce direct financing of the government and increase the effectiveness of monetary policy in maintaining low and stable inflation.
Reforms to support continued development
In their report, IMF staff encourage the authorities to review the strategy and financial model of the government’s development lending agency – the Development Bank of Ethiopia – which has seen lower-than-expected returns to its investments in recent years. A more flexible system for the exchange rate is also needed to increase foreign exchange reserves, improve external competitiveness, and increase the availability of foreign exchange. This would support the country’s continued development.
Analysis carried out jointly by IMF staff and UN Women finds that the government’s agenda of promoting gender equality could yield large economic benefits over time. Closing gender gaps in educational attainment, formal labor force participation rates, and access to quality land and other resources are key to realizing these benefits.
The new government has made progress in this area. They have appointed a gender balanced cabinet, while women have been placed in key decision-making positions, including the presidency and the head of the Supreme Court.
Executive Board Assessment
Executive Directors agreed with the thrust of the staff appraisal. They noted that Ethiopia has maintained high and inclusive growth for more than a decade, achieving commendable progress in reducing poverty and improving living standards. However, the public sector led development strategy is reaching its limits, exacerbating external imbalances and raising public debt vulnerabilities. Directors commended the authorities for tightening macroeconomic policies to address these challenges. They welcomed the authorities’ ambitious reform program aimed at catalyzing private investment and driving sustainable growth as set out in the Growth and Transformation Plan II.
Directors underscored the need for fiscal consolidation and higher revenue, through tax policy and administrative measures, further prioritization of public projects, reductions in the borrowing requirements of state owned enterprises (SOEs) and phasing out of implicit subsidies. Rationalization of tax exemptions and excise reform would help in this regard. Further improvements in public financial management and SOE governance and transparency are also warranted.
Given the risks posed by the high debt burden, Directors called for strengthening public debt sustainability. They noted the efforts at reprofiling of non-concessional debt and welcomed the authorities’ intention to contract new debt at concessional terms. Directors commended the authorities for their plans to protect social and pro poor spending.
Directors noted that the tighter monetary stance announced by the National Bank of Ethiopia (NBE) for 2018/19 is warranted to bring inflation down to target. This stance should be supported by restrictive public-sector credit policies, including gradually phasing out central bank financing of the budget. Exchange rate flexibility would help strengthen competitiveness, reduce foreign exchange shortages and support reserve accumulation. Directors recommended the elimination of the remaining exchange restrictions on current transactions.
Directors noted that financial sector reforms would increase the effectiveness of monetary policy and support development goals. These reforms should include the development of a market for government securities with market determined interest rates. Until this market develops, NBE bills should be used solely to manage liquidity in the banking system and delinked from funding of the Development Bank of Ethiopia which needs to complete a comprehensive financial assessment. Directors noted that channeling the payment of taxes through banks could deepen financial intermediation, reduce opportunities for corruption and improve the business climate. Gradual opening of the financial sector to foreign investors could improve services and transfer technology and know how. Directors also noted that continued efforts are required to strengthen the AML/CFT framework.
Directors stressed that implementation of structural reforms is critical to promoting competitive markets and improving the investment climate to catalyze private investment. Privatizations, public private partnerships with adequate safeguards, and removal of obstacles to private investment could support renewed growth momentum while attracting foreign resources and know how. Directors underscored the importance of addressing data gaps and delays to improve the quality of statistics. They welcomed Ethiopia’s decision to join the African Continental Free Trade Agreement and looked forward to progress toward World Trade Organization membership. Directors also welcomed the joint analysis conducted with UN Women which shows that further reducing gender disparities would yield large economic benefits over time and commended the authorities’ efforts in this direction.
Related News
Growth of global goods exports to reach 10.4% in 2018
Newly released UNCTAD Handbook of Statistics 2018 offers up-to-date, reliable trade figures in an era of uncertainty.
Global merchandise exports could grow by 10.4% this year, hitting almost $19.6 trillion, according to the UNCTAD Handbook of Statistics 2018, published on 5 December.
The figures are the result of “nowcasts” based on the most recent information provided by a large number of economic indicators. This follows substantial growth in 2017 when global trade in goods increased by 10% (after two years of decline). The “nowcast” for global trade in services indicates a growth of 9.5% in 2018.
The 2018 “nowcasts” are the first in the Handbook’s 50-year history and thought to be unique among available trade statistics.
“Nowcasting – or to use the more technical term, contemporaneous forecasting – allows us to provide figures for the last months of 2018 to obtain a year-end figure and before the official figures are available in the first months of 2019,” UNCTAD’s chief statistician Steve MacFeely said.
“In an era of uncertainty, with swirling fears of trade wars, reliable statistical information is more indispensable than ever,” Mr. MacFeely said.
“The UNCTAD Handbook of Statistics is a critical tool for informing policies and recommendations that may commit countries for many years as they strive to integrate into the world economy and improve the living standards of their populations,” he said.
The 2018 Handbook underlines that factors contributing to the surge in the value of world trade in 2017 are linked to an upswing of global GDP growth (3.1%), combined with increasing commodity prices (+17.7%), especially for fuels (+26.1%) and minerals, ores and metals (+12.2%), as shown by UNCTAD’s constantly-updated free market commodity price index. Similar factors were at play during 2018.
The Handbook highlights the decreasing trade imbalances between developed and developing economies in recent years.
Trade war slowdown
The surge in the value of world trade in 2017 and 2018 was also evident in the steady growth of maritime transport indicators (also compiled by UNCTAD): world seaborne trade (the volumes of goods loaded and unloaded at the world’s seaports) grew by 4% in 2017, and container port throughput (the volume of containers handled on ports) climbed by 6% in the same year.
A detailed analysis of recent trends in the “nowcast” models shows that there were significant indications of a slowdown in the second half of 2018, despite thriving trade in goods and services during the first half of the year.
“A cooling global economic outlook and adjusted expectations due to recent protectionist trade measures could explain this reverse trend,” Mr. MacFeely said.
UNCTAD nowcasted three separate variables or indicators: total merchandise trade, total services trade, and total global GDP.
The approach responds to an increased demand for up-to-date information on global international trade, its impact on economic or political developments, and for guidance on policy responses.
Published annually since 1968, the UNCTAD Handbook of Statistics provides an overview of a broad spectrum of data relevant to international trade and economic development. Now produced in an entirely revised format, it provides a snapshot of the large amount of data publicly available on the UNCTADstat portal.
Related News
tralac’s Daily News Selection
tralac in the news at AEC2018: ”We have learned a lot of lessons,” Trudi Hartzenberg, Executive Director of the Trade Law Centre, said. “We have a window to build capacity… most implementation is done at national level… there is lot that existing (free-trade areas) can bring.”
African flagship report launches: Fifth African Governance Report (AGR-V) emphasises need to improve governance of Africa’s abundant natural resources; 2018 African SDG report calls for critical investments in urbanization
Demand analysis for tourism in African local communities (World Bank)
The report is concerned with tourism products and services that are delivered by and/or based in local communities in Africa. The report uses the term Community-Based Tourism (or CBT) and is further defined as: Accommodation homestays in ‘underserved’ areas (remote areas, poorer neighborhoods, marginalized or informal settlements); Experiences within these communities, such as guided walks, tours, classes, etc. There is very limited data on CBT in established and emerging African destinations (pdf): CBT experiences with Homestay Accommodation are present in Morocco and South Africa, Africa’s two leading countries for inbound visitor arrivals, although numbers are far fewer than in Asia or the Americas. CBT products are more limited in developing tourism destinations such as Ethiopia, Senegal, and Zambia. Where there is less alternative visitor accommodation available, CBT products are emerging. Recent research conducted to identify the CBT products offered in Ethiopia, Senegal, and Zambia by European tour operators, showed that homestay, village or camping accommodation was used most frequently in Zambia (accounting for around 40% of the nights offered on tours). This number was more than double the amount used in Senegal (19%) and Ethiopia (15%). However, the accommodation offered in Zambia involved limited interaction with local communities, and Ethiopia offered the highest proportion of immersive CBT experiences.
Stalled by a flooded market Chinese automakers pursue Africa ambitions (The National)
Nigeria alone imports around 150,000 used cars a year, according to PriceWaterhouse Coopers. These vehicles cost around 10% of a new car and present a formidable market hurdle to companies trying to compete. “If African countries are serious about industrialisation, they have to put a stop to the dumping of cheap cars, especially those over five years old,” says Martyn Davies, MD of Emerging Markets & Africa at Deloitte South Africa. Mr Davies is working with several African governments, including Nigeria, helping to devise a policy framework that will stem the flow of cheap used cars. This, he says, will help assemblers open new factories in African countries that will create jobs and skills locally.
“Nigeria and Africa at large, has the potential to perform well for the automotive industry,” General Manager of GAC Motors, Yu Jun said. “We are willing to make the necessary investments to ensure our Nigerians customers – and those in the wider region – become familiar with our brand.” Mr Jun said GAC would for now concentrate on developing its brand locally, before expanding beyond Nigeria. “We’ll first establish ourselves in the Nigerian market, then look to which others offer the best opportunity: Ethiopia, Algeria, Egypt, etcetera.”
UAE, India agree to collaborate on African aid projects: starting with Ethiopia’s IT centre of excellence (The National)
Southern African trade facilitation updates:
-
WCO, SACU celebrate successful conclusion of the regional customs modernization programme. On 15-16 November, the SACU Secretariat hosted the WCO and the five SACU Customs administrations in Windhoek to reflect on the achievements, challenges and lessons learned and to receive the project deliverables as the project comes to an end in December 2018. Over the past five years and through the delivery of 114 activities (including 96 on-site activities), the project has achieved tangible results in the areas of IT connectivity, trade facilitation, risk management and legislative reform. In particular, the SACU region has developed its own regional framework for IT Connectivity, based on the WCO Data Model and Globally Networked Customs, and South Africa and Swaziland have now entered into live data exchange. The SACU region has also developed a framework for its Regional Preferred Trader Programme (scheme and operating manuals), covering 76 operators, and has trained a critical mass of Preferred Trader auditors to effectively roll out the programme at regional level. Thanks to the Project’s momentum, the SACU Member States were all also able to ratify Annex E to the SACU Treaty during the lifetime of the SACU-Connect Project and to modernize their Customs legislative framework. [Speeches: pdf SACU Executive Secretary, Ms Paulina M. Elago (45 KB) ; pdf Namibia’s PS of Finance, Ms Ericah B. Shafudah (33 KB) ; pdf Botswana’s Commissioner of Customs, Mr Phodiso Valashia (26 KB) ]
Note: The 50th meeting of the SACU Commission is being held at the Royal Swazi Spa Convention Center. It is chaired by Mrs Tsolo Motena, Principal Secretary in the Ministry of Finance, Lesotho.
The next tralac monthly Newsletter will focus on SACU. Click here to subscribe.
-
Lesotho’s WTO TFA implementation. At the request of the Lesotho Revenue Authority, the WCO conducted a diagnostic support mission on the implementation of the WTO Trade Facilitation Agreement from 19-23 November 2018, in Maseru. The scoping mission included discussions with different units of the LRA as well as other key stakeholders including the Ministry of Trade and Industry, Cooperatives and Marketing, the Private Sector Foundation of Lesotho, the Chamber of Commerce, the Association of Lesotho Employers, and the Lesotho Nation Trade Facilitation Committee inter alia. As a result of the mission, a comprehensive assessment was made of the current needs in Lesotho with regards to implementing the TFA.
-
South Africa’s average port tariffs to fall 6% next year. South Africa’s ports regulator said its average tariffs for the 2019/20 financial year will decrease by 6.27%, although coal export charges will rise, a statement seen by Reuters on Wednesday said. The coal dry bulk export cargo dues will increase by 10% from 1 April next year to 31 March 31 in 2020, while the RoRo or “roll on, roll off” cargo dues, which include the automotive sector, will decrease by a similar amount.
-
Delays in commencing works on the Harare-Beitbridge highway dualisation have forced the Zimbabwean government to segment plans for its rehabilitation and expansion of the road, which has been plagued by numerous fatal road crashes involving buses, minibus taxis, private cars and haulage trucks. Addressing chiefs at the 2018 annual chiefs conference in Kadoma, President Emmerson Mnangagwa said the government had to withdraw a tender that had been awarded to Austrian firm Geiger International after it had “spent close to year making promises that they will start work soon”. Acting information minister, Mangaliso Ndlovu, told journalists Tuesday evening that the Cabinet had decided to segment the road project into nine sections. The 582 km Harare-Beitbridge highway is part of the north-south corridor linking the southern port of Durban with other Sadc and Common Market for Eastern and Southern Africa, facilitating trade within the region.
Tanzania trade and industrial policy updates:
-
Permanent Secretary in the Prime Minister’s Office, (Policy and Coordination), Prof Faustin Kamuzora yesterday affirmed government’s commitment to creating an environment that is friendly to doing business and attractive to investors. In a press briefing after the first meeting of the TNB’s Business Environment Working Group, Prof Kamuzora, who chairs the committee, assured the public that the group will work very hard and leave no stone unturned in looking for solutions to problems and challenges that stand in the way of doing efficient business and that undermine investment efforts. “Civil service performance, policy and legislation challenges are reasons that have made it very difficult for people who want to start business or invest in this country. This committee is going to study critically all these irritants and recommend their eradication so that they become history in this country,” the PS said, confidently adding that this national obligation cannot be evaded.
-
This is what govt plans to do with cashew harvest: contingency plan. According to the newly-appointed Minister for Agriculture, Japhet Hasunga, the government intends to implement a ‘plan B’ that will involve exporting the raw cashew now being purchased from local farmers for processing abroad in case the revival of a factory that was recently repossessed by the state from private owners flops. “We basically have two alternatives. First we are going to look into local capacity to process the raw cashew nuts. But if our capacity falls short, we are going to look for a contractor outside the country to do the cashew processsing work for us and we will take our kernel (processed nut),” Hasunga told the Financial Times. As the government mulls with in-country processing of raw cashews, some bankers have warned that the country’s shilling could depreciate due to a halt of cashew exports.
-
Fahad Awadh, co-founder of the YYTZ Agro-Processing factory joined CNBC Africa to discuss sustainable ways to put an end to the cashew nut crisis. Excerpts
-
Dr Reginald Mengi invites Chinese firms into crop processing, smelting plants; Talks on LNG project set to proceed
South Africa: The recession ends as GDP climbs by 2,2% (Stats SA)
The South African economy grew by 2,2% quarter-on-quarter (seasonally adjusted and annualised) in the third quarter of 2018, bringing to an end the country’s second recession since 1994. Higher contributions to growth in a number of industries – most notably in manufacturing, transport as well as finance and business services – were enough to lift economic growth back into positive territory. The rise in economic activity in the third quarter follows two consecutive quarters of negative growth, which is a widely recognised indicator of recession. The economy slumped by 2,6% in the first quarter of 2018 and a further 0,4%1 in the second quarter. Manufacturing was the main driver of positive growth in the third quarter. [Download: pdf Statistical release (401 KB) and pdf Media presentation (1.84 MB) ; Carbon tax will mean more trade, not less – Treasury]
Central African Republic formalises Afreximbank membership
Speaking during a ceremony at the Bank’s Cairo headquarters, Claude Rameaux Bireau, Minister of State and Economic Adviser to the President, who led a five-member delegation, said that Central African Republic had very high expectations from Afreximbank and looked forward to strengthened cooperation with the institution. Mr Bireau said the CAR would move quickly to take up shareholding in the Bank and announced that the government was already working with the African Development Bank to support it in that regard.
Egypt: World Bank’s $1bn programme to support Egypt’s second generation reform programme
The Private Sector Development for Inclusive Growth development policy financing will help finance the government’s own economic development program, ‘Egypt Takes Off.’ The program is designed to support three of the government’s key objectives of job creation, improving government performance and raising living standards. The DPF is focused on reforms to improve the business environment, with an emphasis on ensuring small businesses have access to finance and new financial technology such as digital payments, along with opportunities to bid for government contracts; while empowering local governorates and districts for local investment planning.
Top 10 business risks facing mining and metals in 2019-20 (EY Africa)
- - -
Related News
tralac in the news ~ AEC2018: Moving the AfCFTA agreement ahead with quick win solutions
A total of 44 African nations signed the landmark African Continental Free Trade Area agreement earlier this year, with only 12 out of the required 22 countries ratifying the accord, but policy makers say there is time enough – and practical solutions – to move the process ahead.
The African Continental Free Trade Area (AfCFTA) aims to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union.
African countries could use the time in the run up to March 2019, the deadline for ratification, to strengthen their capacity in the legislative and tariff instruments required for the process and other “low hanging fruit” measures, presenters at a panel session during the 2018 African Economic Conference, currently underway in Kigali, Rwanda, told delegates.
“We have learned a lot of lessons,” Dr. Trudi Hartzenberg, Executive Director of the Trade Law Centre said. “We have a window to build capacity… most implementation is done at national level… there is lot that existing (free-trade areas) can bring,” she said.
The signing of AfCFTA, with its potential to create the largest free-trade area in the world – uniting fifty-four African countries with a combined population of more than one billion people and a combined gross domestic product of more than US$3.4 trillion – has also engendered much debate about the challenges of harmonizing disparate tax, fiscal and regulatory regimes as well as the varied socio-political make-up of nations on the continent.
But Rwanda, which has taken bold leadership of the integrate Africa agenda, argues that the benefits outweigh the losses.
Noting that Rwanda was one of the first countries to sign AfCFTA, the country’s Minister of Trade and Industry Soraya Hakuziyaremye, one of the panelists, said it was imperative for the country to champion regional integration and African integration.
“We understand the benefit,” she said, adding that she preferred using the term “land-linked,” rather than landlocked, to describe her native Rwanda.
“Africa cannot afford not to be part of a larger bloc advocating for a common market,” she said.
The Minister and Hartzenberg were part of a panel entitled “What next after the Launch of AfCFTA?”.
The session, moderated by African Development Bank Director of Regional Integration Moona Mupotola, also included Prof. Ademola Oyejide, Emeritus Professor of Economics, University of Ibadan and Professor Olu Ajakaiye, Executive Chairman, African Center for Shared Development and Capacity Building.
The experts looked at the costs of integration: the downside for smaller economies and the absence of Nigeria – Africa’s largest economy.
“Nigeria is the big elephant in the room,” Oyidije said. According to the professor, although Nigeria had always led Africa in regional integration, in the case of AfCFTA, “the costs are too high relative to the benefits.”
Returning to the topic of the March 2019 ratification deadline, Hartzenberg said it would serve as a good time for countries to “take advantage and prepare a comprehensive implementation strategy with detailed work plans.”
“Expectations are high the private sector is waiting,” she said. “We should not hold back in terms of preparatory work for implementation.”
Raising the issue of freedom of movement, Hakuziyaremye said it was a vital component for integration and possible to implement if the will was there.
African countries currently attracting the most Foreign Direct Investment, including Rwanda, have a robust visa openness policy, the Minister said. Rwanda announced at the beginning of this year, an entry visa on arrival for travelers from all African countries.
Prior to the panel session, there was a short presentation of the Africa Visa Openness Index 2018, which measures how open African countries are when it comes to visas by looking at what they ask of citizens from other countries in Africa when they travel.
This year’s report, authored by the African Development Bank and the Africa Union Commission, has already been published via an online launch on 27 November.
Thousands of African youths yearning to study, tour and travel across the continent, can only do so if they can move freely, Jean-Guy Afrika, a Principal Policy Expert at the African Development Bank, said.
Highlights of the 2018 Visa Openness Index revealed improvement in the ease of movement across the continent.
Related News
2018 African SDG report calls for critical investments in urbanization
The 2018 Africa Sustainable Development Report calls on African governments to prioritize investments in water, sanitation and urbanization in order to leverage the health outcomes and productivity of the continent’s citizens.
The biannual report, jointly produced by the UN Economic Commission for Africa, the African Development Bank (AfDB) and the United Nations Development Programme (UNDP), shows that the proportion of Africans with access to safe water excluding North Africa, was 23.7 percent; barely one third of the global average of 71 per cent.
To improve the situation, governments must strengthen their capacities for urban planning and management to unleash the potential of African cities and overcome emerging challenges including climate change, droughts and floods.
The findings of the 2018 SDG Report were unveiled by ECA’s Macroeconomic Policy Division Director, Adam Elhiraika, and discussed at length by participants at the African Economic Conference hosted by the ECA, AfDB and the UNDP, in Kigali, Rwanda.
“We need to strengthen capacities for and integrate urban planning into national development planning to unleash the transformative potential of African cities to drive inclusive and sustainable economic prosperity,” said Mr. Elhiraika, adding investing in data and analysis on urban trends and impacts of social, economic and environmental dimensions of sustainable development was also crucial.
For his part, Chidozie Emenuga, Chief Economist at the AfDB, said: “Access to safe drinking water and improved sanitation is improving but remains very low in Africa. There is need to integrate urbanization in national development planning, ensure policy coherence between urban and macroeconomic policies and develop more data on economic and environmental areas.”
“The potential of Africa’s rapidly growing cities and urban settlements to drive economic growth and social inclusion has not been fully tapped. We need to tap the potential in urbanization by providing incentives to investments in sanitation, renewable energy and improve access to electricity.”
He was complimented by Ayodele Odusola, the Chief Economist and Head of Strategy and Analysis at the UNDP Regional Bureau for Africa, who said that strengthening science, technology and innovation systems will offer vital leverage to the development of urban cities on the continent.
“Robust innovation systems that drive urbanisation and sanitation require a sound infrastructure that connects the science community and researchers to the private sector and the government. This in turn is vital for the achievement of the Sustainable Development Goals and Agenda 2063,” Mr. Odusola said.
Evidence is provided in the 2018 SDG Report, showing that countries such as Kenya, Morocco, South Africa and Tunisia, which rank high on science and innovation in Africa, invest a relatively higher share of their GDP in research and development than their peers.
Africa SDG Index and Dashboards 2018
The Sustainable Development Goals (SDGs) are a universal agenda, calling on all nations to pursue economic development, social inclusion, and environmental sustainability, on the basis of good governance. This report creates, for the first time, a measurement of progress on the SDGs tailored specifically to African countries.
The Africa SDG Index is a tool for local and national governments, academia, and civil society to take ownership over African development trajectories and for revitalizing partnerships to achieve sustainable development. The Africa SDG Index and Dashboards Report can support national governments in tracking progress and narrating their own development priorities, but important gaps remain.
Investing in the improvement of statistical systems contributes to better informed policies, faster response times to pressing issues, increased civic engagement, and of course, markedly improved transparency and accountability. Recognizing this reality is an important part of this report, and we hope to see African governments move towards enhancing national statistical monitoring systems.
The report is also a call to action for governments to focus efforts on the SDGs with new information on where they stand. The Dashboards should help each African country identify priorities for action, understand key implementation challenges, and identify the gaps that must be closed in order to achieve the SDGs by 2030.
Download: pdf Africa SDG Index and Dashboards Report 2018 (4.92 MB)
Related News
AGR-V launched in Kigali; emphasises need to improve governance of Africa’s abundant natural resources
The fifth edition of the African Governance Report (AGR-V) was launched and discussed by delegates attending the 2018 African Economic Conference in Kigali, Rwanda, on Tuesday.
The report, produced by the United Nations Economic Commission for Africa (ECA), examines efforts made to improve the governance of Africa’s abundant natural resources.
AGR-V, entitled “Natural Resource Governance and Domestic Revenue Mobilization for Structural Transformation”, builds on the themes and recommendations of previous African Governance Reports which place good economic governance at the centre of Africa’s structural transformation.
“There is urgent need to sustainably manage Africa’s diverse natural resources, including land and water for agriculture, forests, minerals, oil and gas,” ECA’s Macroeconomic Policy Division Director, Adam Elhiraika said in his presentation.
“The direct exploitation of natural resources has dominated economic activity, with benefits not being channelled down to everyone; and this has to change.”
The report says that if well managed and sustainably exploited, natural resources have the potential to drastically improve domestic revenue mobilization and promotion of economic diversification across Africa.
It says Africa has been slow to convert its natural resources endowments to tangible development outcomes.
The ECA Director said good natural resource governance required good institutions both formal and informal.
“Africa has been slow due to weaknesses in governance and the wider capacities of the African state. Hence, a capable state with legitimacy and political will is needed to minimize harm from exploiting resources and to maximize positive development outcomes,” he said.
Many African countries are applying concurrent governance frameworks backed by donor countries and international institutions, adding a layer of externally oriented accountability that does not always support mutual reinforcement of domestic institutions and regimes, said Mr. Elhiraika in his presentation.
“Ownership rights to natural resources is one of the challenges of good resource governance in Africa. In many countries ownership rights are vested in the State in trust for the community. However, this ownership arrangement is a means of control by the political elite and with widespread opacity in the management of resources,” he added.
Natural resources are major contributors to public domestic revenue in Africa, largely expressing the structural dependence of resource-rich African economies on one or a few raw material export commodities and hence their vulnerability to price and demand volatility.
As part of wider governance reforms for the natural resource sector, greater engagement of the private sector is required to optimize resources from natural resource rents and expand revenue base, the report says.
Moreover, it adds, the decision-making chain of government should follow the entire value chain from information on resource deposits, to deal making, development, extraction, downstream value addition and project closure.
Mr. Elhiraika said good natural resource governance must be underpinned by resource based development planning.
AGR-V emphasizes the need to strengthen natural resource governance institutions and frameworks for the enhancement of domestic revenue mobilization, promotion of economic diversification, and ultimately, structural transformation.
The fifth edition of the Report is based on empirical evidence drawn from case studies done in Botswana, Cameroon, Côte d’Ivoire, Egypt, Madagascar, Nigeria, Uganda and Tanzania. The case studies address four broad issues; resource-rich African countries and their inability to transform their economies; institutions for improving the development impact of Africa’s natural resources; development planning and African policy outcomes; and raising of domestic revenue in Africa.
Related News
WCO and SACU region celebrate successful conclusion of the regional Customs Modernization Programme
Back in 2014, the World Customs Organization (WCO), the Southern African Customs Union (SACU) Secretariat and the five Customs administrations of the SACU region (Botswana, Lesotho, Namibia, South Africa and Swaziland*) embarked on a partnership to support effective implementation of the five-year SACU Customs Modernization Programme.
The partnership came to be known as the WCO-SACU Connect Project and benefitted from the generous financial support of the Government of Sweden.
On 15-16 November 2018, the SACU Secretariat hosted the WCO and the five SACU Customs administrations in Windhoek, Namibia in order to reflect on the achievements, challenges and lessons learned and to receive the Project deliverables as the Project comes to an end in December 2018.
Over the past five years and through the delivery of 114 activities (including 96 on-site activities), the Project has achieved tangible results in the areas of IT Connectivity, Trade Facilitation, Risk Management and Legislative Reform.
In particular, the SACU region has developed its own regional framework for IT Connectivity, based on the WCO Data Model and Globally Networked Customs (GNC), and South Africa and Swaziland have now entered into live data exchange.
The SACU region has also developed a framework for its Regional Preferred Trader Programme (scheme and operating manuals), covering 76 operators, and has trained a critical mass of Preferred Trader auditors to effectively roll out the programme at regional level.
In terms of Risk Management, the SACU region has developed and effectively implemented a Regional Risk Management Package. This has led to the successful completion of three regional enforcement operations resulting in significant seizures and remarkable levels of revenue recovery.
Thanks to the Project’s momentum, the SACU Member States were all also able to ratify Annex E to the SACU Treaty during the lifetime of the SACU-Connect Project and to modernize their Customs legislative framework.
The SACU Secretariat reported that all the Project structures, such as the Regional Working Groups and the Steering Committee, will now be mainstreamed into SACU structures, hence ensuring the sustainability and impact of the Project’s benefits beyond 2018.
In handing over the Project deliverables, the WCO reaffirmed its commitment to continued collaborate with the SACU Secretariat under the MoU signed in 2010 while SACU Member States remain entitled to benefit from WCO support by the virtue of their membership to the organisation.
* Swaziland was renamed the Kingdom of Eswatini in April 2018, marking 50 years of independence.
Opening Remarks by SACU Executive Secretary, Ms. Paulina M. Elago
This ceremony marks the end of the WCO-SACU Connect Project which is a SACU Regional Customs Modernisation Programme. The Project was implemented as a collaboration between SACU Member States, WCO and the Swedish International Development Cooperation Agency (Sida).
The project started in 2008 and was implemented in two phases, respectively in 2008 to 2013; and 2014 to 2018. Today we will receive the presentation of the outcomes of the WCO-SACU Connect Project covering the period from February 2014 to December 2018.
This ceremony takes places at the backdrop of the rapidly changing trading environment, which is necessitated by the advent of the fast-paced technological advancements and innovation.
In this regard, the main topical issues in international currently is the 4th industrial revolution. As we follow the developments, it is clear that international trade will be revolutionised in the near future. Some of the new innovations that are disrupting the international trade landscape globally include:
-
Blockchain Technology that is used to seamlessly facilitate payments of trade transactions called Letters of Credits;
-
Artificial Intelligence and Machine learning that is used for e-commerce to translate languages and respond to queries in the preferred language, manage the truck traffic at the ports, and also to optimise routes for trade shipping;
-
Trading Service via Digital Platforms which connects sellers and buyers virtually. Goods and services are exchanged with ease without physical interaction;
-
3D Printing which allows computers to process material for manufacturing purposes; and
-
Mobile Payments are changing methods used by buyers to connect to the markets.
These new global developments in international trade environment propels nations to promote seamless movement of goods and services; efficient, transparent and predictable trading environment; internationally accepted norms and standards; and “Just In Time” delivery of products from manufacturer to the consumer.
SACU is not spared from the impact of these global developments. However, the current reality is that Trade Facilitation Stakeholders are still seized with complex and burdensome procedures; high transactional cost of trade, excessive documentary requirements, lack of predictability, transparency, and lack of inter-Agency coordination.
Globally, the Ease of Doing Business Index by the World Bank provide a ranking of 190 countries over time. Currently the ranking for the SACU Member States is as follows:
|
2017 ranking
|
2018 ranking
|
Botswana
|
71
|
81
|
Eswatini
|
111
|
112
|
Lesotho
|
100
|
104
|
Namibia
|
108
|
106
|
South Africa
|
74
|
106
|
The above rankings for SACU Member States reveal that there is still a lot that could be done to enhance the ease of doing business in SACU. On trading across the border indicator, targeted improvements could be done through developing initiatives that focus on the following:
-
Release and clearance of goods;
-
Border cooperation;
-
Procedures on importation and exportation of goods;
-
Freedom of transit;
-
Customs cooperation; and
-
Development and implementation of tools such at the Time Release Study to monitor and evaluate performance constantly.
As we are aware, the SACU Customs Modernisation Programme has been the flagship Programme for Trade Facilitation in SACU. To date, it is encouraging to note the achievements and the substantive progress achieved under the WCO-SACU Connect Project.
I am glad to note that the following regional Frameworks were concluded under Phase II of the collaboration between the WCO and SACU, which was renamed “WCO-SACU Connect Project” in 2014:
-
Model Bilateral Arrangement to facilitate automatic exchange of information;
-
Preferred Trader Programme Engagement Strategy;
-
Preferred Trader Programme Training Manuals on Risk Management and Audit for Customs Officials;
-
Preferred Trader Programme Internal and External Manuals to guide Customs Officials and Traders on implementation of the Preferred Traders Programme;
-
IT Connectivity Blue Print;
-
IT Connectivity Utility Block “Your Export Is My Entry;
-
IT Connectivity Unique Consignment Reference;
-
Regional Customs Risk Management and Enforcement Strategy;
-
Regional Customs Compliance Management Strategy; and
-
Three (3) Joint Customs Enforcement Operations targeting alcohol, tobacco, and textile and clothing.
These achievements and the outcomes of the WCO-SACU Connect Project lays the foundation to strengthen collaboration and cooperation on Trade Facilitation in SACU.
In this regard, the full implementation of the regional Frameworks will lead to constant modernisation and reforms of Customs Systems, Procedures, Processes, Policies and Legislation in the SACU Member States. This will result in advance on the technological capabilities and reduction of inefficiencies related to the burdensome requirements to move goods across the borders.
In addition, the SACU Member States are currently reviewing the SACU Trade Facilitation Programme under the Work Programme of the Ministerial Task Teams. The objective of the review is to develop a Comprehensive Trade Facilitation Programme which include initiatives such as the One Stop Border Posts; Standards and behind the border issues. This therefore necessitates coordination and collaboration amongst key Stakeholders mandated to facilitate cross border trade in SACU.
Therefore, Customs Administrations occupy an important space in Trade Facilitation work in SACU. Thus there is need to take the opportunity to fully partake in the review of the SACU Trade Facilitation Programme to contribute towards the review of the SACU Trade Facilitation Programme to so that it responds to the cross border trade demands.
In conclusion, as SACU we are looking forward to receiving the outcomes of the WCO-SACU Connect Projects which SACU Member States will use as a basis to strengthen regional collaboration on Customs Modernisation. As the Secretariat we are ready to facilitate the continued implementation of the SACU Customs Modernisation Programme.
Related News
South Africa: The recession ends as GDP climbs by 2,2%
The South African economy grew by 2,2% quarter-on-quarter (seasonally adjusted and annualised) in the third quarter of 2018, bringing to an end the country’s second recession since 1994.
Higher contributions to growth in a number of industries – most notably in manufacturing, transport as well as finance and business services – were enough to lift economic growth back into positive territory.
The rise in economic activity in the third quarter follows two consecutive quarters of negative growth, which is a widely recognised indicator of recession. The economy slumped by 2,6% in the first quarter of 2018 and a further 0,4% in the second quarter.
Manufacturing was the main driver of positive growth in the third quarter. The industry grew by 7,5%, largely as a result of increased production of basic iron and steel, metal products and machinery; wood and paper; petroleum products; and motor vehicles. This is the largest jump in manufacturing production since the second quarter of 2016.
After contracting in the second quarter, the transport, storage and communication industry rebounded by 5,7% in the third quarter, making it the second largest contributor to overall growth. An increase in freight transportation underpinned the rise in activity. This is the largest quarter-on-quarter increase for transport, storage and communication since the third quarter of 2007.
The finance, real estate and business services industry was another strong supporter of GDP growth, edging up by 2,3%. It was specifically the activities related to financial intermediation, insurance and real estate which performed better in the third quarter, contributing to the rise.
The agriculture industry bounced back from two consecutive quarters of negative growth to record a 6,5% rise in the third quarter. Strong growth in the production of field crops, horticultural cultivation and animal products contributed to the rebound.
The mining industry was the biggest detractor from economic growth, declining by 8,8%. Lower production levels were recorded for platinum group metals, iron ore, gold, copper and nickel.
Key facts from the third quarter 2018 GDP release:
-
Expenditure on GDP increased by 2,3% in the third quarter of 2018.
-
Gross fixed capital formation fell by 5,1% in the third quarter, largely as a result of declining investment in construction works, transport equipment, and non-residential buildings.
-
Households spent more on food, beverages and household furnishings in the third quarter, driving up household final consumption expenditure by 1,6%.
-
Unadjusted real GDP (measured by production) was up by 0,8% in the first nine months of 2018, compared with the first nine months of 2017.
Expenditure on GDP
Expenditure on real gross domestic product grew by 2,3% in the third quarter of 2018.
Household final consumption expenditure increased by 1,6% in the third quarter, contributing 1,0 percentage point to total growth. The main contributors to growth in HFCE were expenditures on food and non-alcoholic beverages (5,3% and contributing 1,0 percentage point), furnishings, household equipment and maintenance (6,6% and contributing 0,5 of a percentage point), clothing (5,0% and contributing 0,3 of a percentage point) and alcoholic beverages and tobacco (7,3% and contributing 0,3 of a percentage point).
Final consumption expenditure by general government increased by 2,2%. Increases in spending on goods and services and compensation of employees were reported in the third quarter.
Gross fixed capital formation decreased by 5,1%. The main contributors to the decline were activities associated with construction works, transport equipment, non-residential buildings and transfer costs.
There was a R12,7 billion buildup of inventories in the third quarter of 2018. Large increases were reported in manufacturing and trade.
Net exports contributed negatively to growth in expenditure on GDP. Exports of goods and services were up 24,2%, largely influenced by increasing trade in vehicles and transport equipment, base metals, vegetable products and precious metals.
Imports of goods and services increased by 26,7%, driven largely by an increase in imports of machinery and electrical equipment, vehicles and transport equipment, chemical products and mineral products.
Related News
tralac’s Daily News Selection
Some keynote, Q1 2019, African trade policy discussions to diarise:
-
Trade Policy Review for the East African Community (20, 22 March 2019, Geneva). This will be the only African trade policy review during the 2019 cycle.
-
Conference of African Ministers of Finance, Planning and Economic Development (20-26 March 2019, Morocco). The theme: Fiscal policy, trade and the private sector in the digital era – a strategy for Africa.
African Economic Conference 2018: updates
(i) Africa’s “easy decade” of accelerated economic growth is coming to an end, and only accelerated job creation and integration will ensure sustainable growth and development across the continent, says renowned economist. This is indicated by Professor Paul Collier, one of the world’s most influential development economists. Dr Collier, Professor of Economics and Public Policy in the Blavatnik School of Government, was delivering a keynote address at the African Economic Conference 2018 during a high-level panel on ‘Drivers, opportunities and lessons for Africa’s integration’. Collier added that connectivity between African countries will unlock the potential of many countries, and this connectivity has to be in terms of both physical transport and political ideology. “Small countries are doomed to poverty unless they have open markets and free societies. And yet, the typical African country is small, with closed markets. That is a disastrous combination. So the African Continental Free Trade Area is a very important step forward.”
Professor Ademola Oyejide, Emeritus Professor of Economics at the University of Ibadan and Chairman of the Centre for Trade and Development Initiatives, noted that regional integration must drive overall continental integration. “We should not destroy regional economic communities by protectionism and unnecessary barriers to trade. We as African leaders are not in the business of designing theoretical regional programmes: we expect real progress from the regional blocs.”
(ii) African countries must leverage their strengths to accelerate drive towards integration: Speaking during the opening ceremony, Claudine Uwera, Rwanda’s Minister of State in charge of Economic Planning said: “Africa's integration is no longer a choice. It's a must for the continent and its people. To become the global player that it deserves to be, Africa should integrate speedily.” Experts agree that a self-reliant approach that emphasizes intra-African trade, would not only help deepen regional economic integration, but contribute significantly to sustainable economic growth, job creation, poverty reduction, and inflow of foreign direct investment.
(iii) ECA Deputy Executive Secretary Giovanie Biha issued an impassioned plea for countries that are yet to sign the historic AfCFTA to do so while also urging those that have already signed to ratify the accord so it can go into force. In her opening remarks to the 2018 African Economic Conference, Ms Biha said it was time everyone interested in Africa’s future, and the continent taking its rightful place on the global arena, galvanized around the AfCFTA. Ms Biha said for the AfCFTA to “Leave no one behind”, the agreement needs to be approached strategically. “For the AfCFTA to truly deliver on expected transformative objectives, it will be necessary to ensure that the benefits are indeed shared. This includes a special attention on gender equality, among other issues of inclusiveness, in the AfCFTA process.” [Download: pdf Statement by Ms Giovanie Biha (327 KB) ]
(iii) Continental and regional integration for Africa’s development: statement by Ahunna Eziakonwa (UNDP Assistant Administrator and Regional Director for Africa). Africa must not shy away from addressing the potential costs of integration. Regional and continental integration is not without costs. One of them is trade diversion, which displaces low cost products from non-members by higher cost products from the integrating countries. Revenue loss associated through tariff cuts and indirectly from shift away from imports from non-member states that are subject to tariffs is another. The third is preventing cross-border crimes that could be associated to free movement of people and capital. Strategies and mechanisms to ensure these costs are mitigated must be put in place for the benefits for regional integration to be maximized.
Africa Data Center Association: launch details (Trade Arabia)
Initiated by Schneider Electric, the Africa Data Center Association, a non-profit, Pan-African professional association, was launched at BroadGroup’s inaugural Datacloud Africa Leadership Summit, in Marrakech. During the summit, more than 50 members joined the founding members of the association, which now has 30 data centre operators and 30 partners and suppliers; Fatoumata Sarr Dieng, director of wholesales at Sonatel, Orange, was elected as the new president. Other board members are the secretary general, Ayotunde Coker of Rack Centre, Nigeria; and the treasurer, Wouter Van Hulten of Paix Data Centres, Ghana. Dieng said: “Our new association has three main objectives. First, we want to put our assets in Africa together, to hold our data in Africa. Second, we want to solve the issue of latency time and connectivity we have currently on the continent. Finally, we want to become a major actor in the new digital economy.” [Africa Fintech festival begins in Lagos]
World Customs Organisation’s policy commission: India’s Jaitley pitches for easing trade barriers
Union Finance and Corporate Affairs Minister Arun Jaitley: “From the point of view of consumers, they are entitled to goods and services that are indeed the best and most cost-competitive… No nation can manufacture all products or specialise in all forms of services. And therefore, trading across the barriers of nations is an economic imperative of the time.” Revenue Secretary Ajay Bhushan Pandey: “While all assistance is to be given for legitimate cross-border trade, dangers posed by illicit trade are too damaging to be ignored. The key challenge for the Customs today is to arrive at a convergence of facilitation and enforcement. The economic frauds cut at the very roots of our nation and must be dealt with severely.” [WCO: India’s trade facilitation measures remarkable]
China: Customs clearance times to be halved by 2021 (China Economic Net)
China’s General Administration of Customs aims to cut average clearance times in half by the end of 2021, and implement more measures for speedier imports and exports, said an official on Friday. “The general clearance time has been shortened by over 40% for eight weeks in a row,” said Zhang Guangzhi, a member of the Party group of General Administration of Customs, in a press briefing. According to GAC, by the end of October, the average import clearance process took 50.14 hours, nearly half the 97.39 hours seen last December. Export clearance times meanwhile took 6.3 hours on average in October. Zhang said the GAC will continue to implement the 20 measures to optimize the business environment for cross-border trade the State Council put forward earlier this year, including optimizing the process, increasing efficiency, and lowering costs. China Customs has entered into mutual recognition agreements with nine business organizations and 36 countries and regions, including the European Union, South Korea and Singapore. [China to adjust cross-border e-commerce import policies]
A new tax framework for the digital economy (ICC)
In light of the prominence of this topic, ICC has convened a group of business experts to develop a policy framework of internationally established tax principles for consideration in determining relevant policies to address the taxation of the digitalised economy. The framework is intended to help define the contours of a suitable tax framework for the digitalised economy that encourages business activities, job creation and economic growth. It also reinforces the need to build a coherent international regulatory framework for world business which builds on principles that can accommodate continued evolution in digitalised business models.
Malaysia’s Digital Free Trade Zone initiative: Government aims for e-commerce sector to achieve 20% growth in 2020 (Malaysian Reserve)
The e-commerce industry is set to achieve an annual growth rate of 20% in 2020, an increase from 14.3% growth in 2017, with the support of the country’s investment on the fourth industrial revolution. Deputy International Trade and Industry Minister, Dr Ong Kian Ming, said the industry contributed RM85.8 billion to the country’s GDP last year, a figure measured for a period of seven years. He said currently, there are only 5,000 SMMEs that have participated in the Digital Free Trade Zone initiative, an amount that is incomparable to the current state of Malaysia’s SME sector. “The platform has only received 5,000 SMEs in the system and we want to include as many SMEs as possible, because DFTZ itself has been a successful platform over the past couple of years. If we can increase the number to at least half of the current SME presence in Malaysia, (then) we are on the right track to achieve the growth rate and contribution target.”
OECD Jobs Strategy: Good jobs for all in a changing world of work
Governments need to do more to help workers and firms adapt to the fast-changing world of work and drive inclusive growth, according to the new OECD Jobs Strategy. New evidence in the report reveals that countries that promote job quantity, quality and inclusiveness – such as Denmark, Iceland, Norway and Sweden – perform better than those which focus predominantly on market flexibility. While flexibility and adaptability are essential to stimulate the creation of high-quality jobs in an ever more dynamic environment, the gains and costs need to be fairly shared between businesses and workers, according to the OECD. [Various downloads, including country findings]
Developing countries and services in the New Industrial Paradigm (World Bank)
The traditional export-led manufacturing model provided the twin benefits of productivity gains and job creation for unskilled labor in the past. Over the past two decades, however, the peak shares of manufacturing in value added and employment across a range of developing economies occurred at lower levels of per capita income compared to their high-income, early-industrializer precursors. Looking ahead, there is a concern whether labor-saving technologies associated with Industry 4.0 - such as robotics, the Internet of Things, and 3-D printing - will make it even more difficult for lower-income countries to have a significant role in global manufacturing. Can services-led development be an alternative? This paper provides a conceptual framework to inform the discussion, drawing on available empirical evidence from the literature on the subject.
States diverge, cities converge: Drivers of local growth catch-up in India (World Bank)
This paper takes a fresh look at growth convergence in India, combining insights from macroeconomics and urban economics. It departs from the existing literature in three ways. The quality of state-level governance has a significant impact on local growth, but variations in city governance are only mildly relevant. The share of medium and large firms plays a role, but the sectoral structure of economic activity does not. And the coverage of primary education is an important predictor of subsequent growth, but not that of other levels of education. Strong convergence at the local level can be reconciled with lack of convergence at the state level if low-income states fail to generate enough locations with the “right” characteristics.
Today’s Quick Links: WCO publishes new tool to assist in prevention of illicit trafficking of cultural heritage India, UAE sign currency swap deal and MOU for development co-operation in Africa Yes, China is Kenya’s biggest trading partner: but it’s not a balanced trade Global Trade Review: A ‘new’ Zimbabwe? Solar pioneer Piccard and UNCTAD to power up African green energy FAO Director-General calls for transformative changes to our food systems UN flagship report: Disability and Development 2018 Prime Minister May: G20 House of Commons statement How important are EU exports for jobs in the EU? (pdf) EU exports to the world: effects on employment (pdf); effects on income (pdf) |
Related News
AEC2018: African countries must leverage their strengths to accelerate drive towards integration
Participants at the 13th African Economic Conference have called for African countries to leverage the full range of their strengths and resources to accelerate the region’s drive towards continental integration.
The 2018 AEC, on the theme “Regional and Continental Integration for Africa’s Development”, is jointly organized by the United Nations Development Programme, the United Nations Economic Commission for Africa, and the African Development Bank. The conference follows the launch of the African Continental Free Trade Area (AfCFTA) eight months ago in Kigali.
Speaking during the opening ceremony, Claudine Uwera, Rwanda’s Minister of State in charge of Economic Planning said: “Africa's integration is no longer a choice. It's a must for the continent and its people. To become the global player that it deserves to be, Africa should integrate speedily.”
Experts agree that a self-reliant approach that emphasizes intra-African trade, would not only help deepen regional economic integration, but contribute significantly to sustainable economic growth, job creation, poverty reduction, and inflow of foreign direct investment.
The African Continental Free Trade Area treaty signed in March 2018 by 44 countries is seen as the most ambitious effort to form what has the potential to be the world’s biggest free trade agreement which aims to create a single continental market of goods and services, with free movement of business persons and investments across Africa.
Estimates are that if Africa were to increase its share of global trade from 2% to 3%, the one percentage point increase would result in an annual additional income of about US$70 billion.
Ahunna Eziakonwa, UNDP Regional Director for Africa, observed: “African countries need to collaborate more effectively in devising public policies that can create skills, foster innovation and technological advancement, facilitate labour mobility and access to productive assets including land and finance.”
Speaking on the urgency of ratifying the AfCFTA, Giovanie Biha, ECA Deputy Executive Secretary, said: “It’s time to ratify AfCFTA, the more ambitious the liberalization, the higher will be the gains in terms of increase in GDP and exports.”
The need for African economies to adopt innovative approaches to finance integration and especially infrastructure development also emphasised.
Gabriel Negatu, Director General of the African Development Bank, stated: “We are committed to continue supporting Africa’s integration agenda for it will lead to sustained growth and allow the continent to withstand external pressures; enable African companies to grow and become global giants.”
AEC 2018 debates are focusing on four main themes: Conceptual underpinning of Africa’s integration; Infrastructure and institution for Africa’s integration; Leveraging private sector for Africa’s integration; Partnerships for effective integration that address impediments to Africa’s regional and continental integration.
The high points of the conference include the launch of three significant reports: the 2018 Visa Openness Index; the 2018 Africa Sustainable Development Report; and the African Governance Report V on Tuesday, 4 December 2018.
Related News
Success and challenges in the implementation of the 2030 Agenda for Middle Income Countries
High level meeting on middle income countries
Remarks delivered by Abdoulaye Mar Dieye, United Nations Assistant Secretary-General and Director of the UNDP Bureau for Policy and Programme Support
As we have now just concluded the G20 Buenos Aires Summit, and as we will be deep diving, the next 10 days, in Katowice, to map forward the implementation of the Paris Climate Agreement, the moment is quite auspicious to reflect on how the Middle Income Countries (MICs), a group which represents one third of global GDP, could continue to be leading forces in shaping and moving forward the international development agenda.
Our meeting today is then very timely.
But we must be mindful that the MICs concept presents a definitional challenge by itself. As a mono-dimensional (revenue factor) categorization of a complex reality; and bracketing in a single entity a huge variety of countries (103 countries), with a wide variance in contexts, such a definitional challenge can be a limiting factor by itself; as it may lead to too generic policy prescriptions. A more adequate taxonomy would have been using relatively more complex and comprehensive indicators such as HDIs. We must one day get out of that “simplistic arithmetic trap” which the MIC definition is! The real question is how countries can keep transitioning up and forward on the sustainable development ladder.
It is true though that the journey from lower income to higher Income country is long and tedious Historically, those economies that graduated from lower-middle income to upper-middle income did it in about 55 years. Likewise, it took 15 years, on average, for an economy to graduate from upper-middle income to high income. This is a very steep climb. The world must move to a more accelerated tempo.
I would like to commend Panama who joined the high income category, for the first time, this year!
Stagnation in middle-income often happens when countries are too rich to compete with low-cost producers elsewhere, but too poor to invest in activities with higher value-added. While this is a concern for many countries making the transition to middle-income, they can get trapped also for three other reasons, which will also guide our policy response.
First, the dependency syndrome: Countries can get stuck if they rely too much on the comparative advantages that brought them to middle-income status in the first place. Many MICs continue to have undiversified economies and they remain excessively dependent on one or two commodity exports, which can lead to high levels of volatility in investment. It is critical to diversify into new, sustainable, job-rich, productive sectors to transform economies.
Second, the middle income blues syndrome: This is particularly the case where vertical (across people) and horizontal (across groups) inequalities are high or increasing. People should be given opportunities for stronger economic, political, cultural and social inclusiveness. Not doing so can strain the social contract and affect social cohesion; this is a recipe for political instabilities, civil unrests and economic disruptions.
Third, the Jekyll and Hyde syndrome: Some middle-income countries present two very different faces. Low levels of human development, including high level of poverty, often persist with high economic growth . It is therefore critical to build an economy that is driven by educated and healthy people, with the skills needed to make the transition to high income. Productivity and skills need to be improved to enhance international competitiveness, create jobs, and the ability to access, use and develop new technologies is increasingly important in today’s world. Systematic and systemic innovation will be critical in constantly improving productivity.
Countries can avoid the middle-income trap and accelerate their growth and development path. They can do it through deliberate and determined policies, steered and backed by policy strong institutions; and producing policies aiming at tackling these three syndromes; they can do it by diversifying their economies to create more and better jobs, by creating conditions for broadly shared development gains and by opening up space for political debate and civic engagement.
While we are here to discuss the sustainable development challenges of middle-income countries, and how we can strengthen our support to them as the United Nations system and development partners, it is also important to celebrate the incredible human development progress realized by many over recent years. For example, since 1990 average global HDI levels have increased by 22 percent reflecting that on average people in MIC are living longer, are more educated and have greater income.
On financing for development, there is also much to commend. Many have access to international capital markets and can attract Foreign Direct Investment. It is also predominantly middle-income countries that have been able to access and make use of new innovations in finance, such as blended finance or Green Bonds to support key investment priorities. For example, supported by UNDP and the World Bank, Indonesia recently issued a Green Sukuk, and Fiji also issued a Green Bond in 2017, the first for a small island developing state. Mexico City has issued a municipal Green Bond to support investments in clean urban transportation.
On domestic resource mobilization – which is the largest and most important source of financing for sustainable development – progress remains slow for middle-income countries (though there are important differences between countries); tax revenues as a percent of GDP have remained largely stagnant at about 12 percent on average over the last decade. And empirical studies show that we need to go beyond 13% tax over GDP ratios to have significant impact on growth (IMF) and beyond 24% to trigger accelerated growth (UNCTAD).
How can we as development partners support middle-income countries to address some of these challenges? Our support also needs to be responsive to the diverse realities which middle-income countries face.
Middle-income countries are in the lead and have a clear role to play to, for example, boost efforts to mobilize more domestic resources for development, and ensure resources are used effectively and target vulnerable and marginalized populations. Some of our work at UNDP supports countries to improve the quality of public expenditure and ensure budgets are SDG-aligned. Through initiatives such as Tax Inspectors Without Borders, which UNDP implements jointly with the OECD, we are supporting many middle-income countries to build the capacities of their tax administrations in to expand their fiscal space. This includes countries such as Botswana, Egypt, Jamaica and Costa Rica.
Because domestic resources and aid can’t do it all, strengthening private finance will be key. Yet financing costs can still be prohibitively high for some middle-income countries; investors still perceive higher risk in newer markets and investment sectors. Middle-income countries still need support to develop a high-quality investment pipeline. For this reason, UNDP launched, in September, this year an Initiative called SDG Impact. SDG Impact will provide investors and businesses with much-needed country-level data and develop SDG investment roadmaps. We aim to connect investors with business opportunities that will deliver a real SDG impact, provide market intelligence, and provide a UNDP managed certification for investors and enterprises to authenticate alignment with the SDG Impact standards.
Let me conclude by reaffirming that accelerated development is possible. It requires sustained focus in systematically and simultaneously addressing challenges related to Inequalities, Innovation and Inclusion. That virtuous triangle is the recipe to overcome Sisyphus climbs in moving development forward.
Related News
COP24: Paris Agreement takes center stage as climate negotiations open in Poland
The core business of the 24th Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP24) opened on Monday, 3 December 2018 in Katowice, Poland.
At the Katowice Conference Centre, more than 20,000 people all over the world are expected to gather to push for effective climate deal.
There is a remarkable level of expectation at COP24. Stakeholders expect this year’s climate talks to rekindle the momentum around climate finance and commitment to limit global temperature increase to 1.5 degrees. It is a case, no less, of agreeing on the ways and means to give the pdf Paris Agreement (505 KB) real force, so that the commitments made do not remain a forlorn hope.
Developed countries have pledged to increase climate financing for developing countries to $100 billion by 2020. Developing countries, including the 54 African countries, are expecting clearer commitments on this financing promise from the advanced countries.
And yet, only about 30 Heads of State and Government, essentially from Africa, the European Union and Small Island States made the journey to Katowice for the opening of COP24. The presidents of Nigeria, Benin, Senegal, Botswana, Mauritania and Congo, for example, are present in this climate talks.
On the other hand, none of the leaders of the G20 member states, who are responsible for 80% of global greenhouse gas emissions, seem to have listed Katowice as a priority on its diplomatic agenda.
General feeling of climate emergency
The world is at a crossroads. The reality of climate change is clear and its impact increasingly being felt in various ways. In early October, the Intergovernmental Panel on Climate Change (IPCC) published an alarming report, which reveals that at the current rate of warming, the 1.5°C threshold will be breached between 2030 and 2052.
In mid-November, a study published in Nature Climate Change modelled the extreme concurrent disasters to which humanity will be exposed by 2100, if we fail to drastically reduce greenhouse gas emissions.
On the eve of the opening of COP24, the World Meteorological Organization (WMO) reiterated that “if current trends in the concentration of greenhouse gases continue, the average surface temperature of the globe is set to increase by 3 to 5 degrees Celsius by the end of the twenty-first century”.
Such scenarios do not bode well for Africa, which is bearing the brunt of the effects of climate change. In other words, Africa needs to unite all its advocacy efforts and strength to fight climate change and counter its effects.
At COP24, the African Development Bank (AfDB) will therefore pursue its advocacy work and mission to help the countries of Africa address the issue of climate change and begin their transitions towards green growth and low-carbon development.
Africa, on the front line of climate change impact
The degree of urgency is especially acute in the case of Africa, one of the regions of the world most vulnerable to the effects of climate change, as evidenced again by the terrible drought in East Africa in 2017 and the drought endured by South Africa in 2018. In the 10-year period from 1995 to 2015, the African continent has suffered 136 episodes of drought, 77 of which have been in East Africa alone.
Drought, flood, rising sea levels, extreme weather events that threaten people’s food security, “climate migrants” – the list goes on, and the “bill” for climate change proves a high one for the African continent, despite its contributing less than 4% of world greenhouse gas emissions.
Of the 10 countries in the world considered most threatened by climate change, 7 are in Africa: Central African Republic, Chad, Eritrea, Ethiopia, Nigeria, Sierra Leone and South Sudan. And climate change is even responsible for shaving off 1.4 points of GDP in Africa every year.
As the president of the African Development Bank, Akinwumi Adesina, has repeatedly said, it is urgent to act. At stake: the future of the continent – and its development and most importantly, the survival of the entire planet.
MDBs announce a joint framework for aligning their activities with the goals of the Paris Agreement
Nine Multilateral Development Banks (MDBs) on Monday announced a joint framework for aligning their activities with the goals of the Paris Agreement, reinforcing their commitment to combat climate change.
In a joint declaration, the MDBs committed to working together in six key areas considered central to meeting the goals of the Agreement, which aims to limit the increase in global temperatures to well below 2°C, pursuing efforts for 1.5°C.
“The global development agenda is at a pivotal point,” the joint declaration says. “There is international consensus on the urgent need to ensure that policy engagements and financial flows are consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”
The MDBs and the International Development Finance Club (IDFC) had already pledged in December 2017 to align financial flows with the objectives of the Paris Agreement. “To realise this vision, we are working together to develop a dedicated approach,” the joint MDB declaration adds.
The MDBs plan to break their joint approach down into practical work on six core Paris Alignment areas – the building blocks – including: aligning their operations against mitigation and climate-resilience goals; ramping up climate finance; capacity building support for countries and other clients; plus an emphasis on climate reporting.
This approach builds on the on-going MDB contribution to climate finance, which, in 2017, amounted to US$35 billion to tackle climate change in developing and emerging economies, mobilising an additional US$52 billion from private and public sector sources.
The MDBs will report back to next year’s COP25 gathering on their progress under the six building blocks.
Africa Day at COP24
The opening day of the COP24 Leader’s Summit was marked by the celebration of Africa Day, a joint initiative of the African Development Bank (AfDB), the African Union Commission (AUC), the United Nations Economic Commission for Africa (UN-ECA) and the New Partnership for Africa’s Development (NEPAD).
This year’s event was held under the theme, “The Africa Nationally Determined Contributions (NDC) Hub: Going further and faster with NDC implementation in support of Agenda 2063”, and was jointly organized by the four Pan-African institutions along with the Kingdom of Lesotho and the Republic of Gabon, and with the participation of the Pan-African Parliament (PAP) and the African Risk Capacity (ARC).
The event sought to focus on how to ensure that all development partners deepen their partnerships and commitments to deliver concrete actions and resources towards providing effective and adequate means of implementation for African countries to deliver their NDC targets and enable the implementation of the Paris Agreement.
The programme comprised several highlights, including a high-level statement by H.E. Mr. Regis Immongault, Minister of Foreign Affairs of Gabon on behalf of H.E. Mr. Ali Bongo Ondimba, President of Gabon and Coordinator of the Committee of African Heads of State and Government on Climate Change; and H.E Amb. Josefa Sacko, Commissioner for Rural Economy and Agriculture, who also represented H.E. Mr. Moussa Faki Mahamat, Chairperson of the AUC.
A high level Ministerial panel and a Parliamentary dialogue provided a platform for detailed discussions on this year’s theme and Africa’s position at COP24. The last segment of the Africa Day was an expert panel discussion from various technical institutions on the theme of the day.
Some excerpts to the opening included H.E. Immongault who stressed on the outcomes of COP24 to facilitate development in Africa. To that effect, he emphasised the implementation of NDCs in Africa with strong partnership.
“I also extend appreciations for the Africa NDC Partnership Hub for reaching out to Partners to support Africa. In this regard, I wish to urge more Partners to come on board to support the African countries in the implementation of the NDCs for the achievement of the Paris Agreement in Africa,” he added.
H.E Amb. Josefa Sacko, Commissioner for Rural Economy and Agriculture stated that African countries have demonstrated over the years and remain committed to tackling climate change and its impacts. “Countries in Africa continue to suffer from the adverse impacts of climate change with the costs of climate change threatening the realization of the Aspirations of Agenda 2063, ‘The Africa we want’.
“Climate change is also partially to blame for increased migration of African youths to Europe through the deadly Mediterranean Sea as it is shrinking livelihood opportunities”. She further underlined on the link between climate change and conflicts in Africa as demonstrated by ‘Boko Haram’ insurgency in Western and Central Africa partly as a result of the shrinking of Lake Chad.
“As Parliamentarians we carry the hopes, aspirations and concerns of the peoples of Africa. Africa Day accorded us an opportunity to emphasize the need for parties to adopt concrete actions towards effective and adequate implementation of the Paris Agreement, especially in the context of the African Climate Legislation Initiative (ACLI),” said Hon. Kone Dognon, Chairperson of the Pan-African Parliament Committee of Rural Economy, Agriculture, Natural Resources and Environment.
Speaking at the opening ceremony, Dr. Anthony Nyong, Director of Climate Change and Green Growth, representing the President of the African Development Bank Group said, “African countries require significant resources to meet their Paris Agreement commitments.
“The Africa NDC Hub hosted at the African Development Bank, represents a concerted effort by development partner institutions to leverage each other’s comparative advantage in mobilizing resources necessary for Africa to embark on a low-carbon and climate-resilient development pathway.”
In a statement read on her behalf by Dr James Murombedzi, Officer in Charge of the African Climate Policy Centre, the Executive Secretary of the UNECA, Dr Vera Songwe, said that “the United Nations Economic Commission for Africa is implementing organizational reforms which will deepen engagement with the public and private sectors and ensure that public policy provides incentives for the private sector to contribute to the implementation of the NDCs and to take advantage of the investment opportunities offered by the transition to carbon neutral development pathways.”
Background
Africa Day is organized at the request of African Heads of State and Government and has been held at every COP since COP17 in Durban.
Three years after the Paris Agreement was signed at COP21, Africa continues to consolidate its efforts, focusing particularly on partnerships to ensure that African nations are able to pursue a low-carbon and climate-resilient development path through the implementation of their Nationally Determined Contributions (NDCs).
This calls for the developed countries to meet their responsibilities and commitments the Paris Agreement, especially with regards to providing new and additional funding at scale. This is in line with the roadmap for the Africa Agenda 2063 – ‘The Africa we want’, the UN’s Sustainable Development Goals (SDGs) and the African Development Bank’s High 5s.
The Africa Nationally Determined Contributions Hub (Africa NDC Hub) was launched on Africa Day during COP23. Africa NDC Hub is a support platform set up by the African Development Bank with support from intergovernmental pan-African institutions (AUC, UNECA, NEPAD, AMCEN) and has drawn together a dozen other development partners.
The Africa NDC hub works in collaboration with the global NDC Partnership to deliver targeted support to African countries as they implement their NDCs.
The Africa NDC Hub with Secretariat hosted by the AfDB, has now developed a roadmap for coordinated support to Member States with long-term climate actions based on country-driven processes aligned with the Paris Agreement, the UN 2030 Agenda for Sustainable Development and the Africa Agenda 2063; an increased mobilization of means of implementation and advocacy; and Enhanced advocacy and effective partnerships for NDC implementation.
As of November 2018, 49 African countries out of 54 had ratified their NDCs – representing 90% of African nations. This demonstrates the continent’s level of awareness of and commitment to fight climate change. It is estimated that Africa would need about US$3 trillion to implement the adaptation and mitigation targets in their NDCs by 2030.
Despite this huge need, Sub-Saharan Africa received an average of US$12 billion per year in 2015/16. There is urgency to shift the billions to trillions. The inability of African countries to deliver their NDC targets will endanger the global ability to meet the goals of the Paris Agreement.
The Africa Day discussions focused on how to ensure that all development partners deepen their partnerships and commitments to deliver concrete actions and resources towards providing effective and adequate means of implementation (finance, capacity building, and technology development and transfer) for African countries to deliver their NDC targets and enable the achievement of the Paris Agreement goals.
Related News
ICC: Tax policy for the digital economy
In an era of unprecedented digital transformation, taxation of the digitalised economy is a leading topic on the global tax agenda
Proposals at regional and national level have ensued in recent months, as governments around the world have proposed varying solutions. ICC supports a harmonised approach to ensure that international tax rules remain relevant and applicable in an increasingly digitalised global economy and holds the view that any measures should seek an alignment with global efforts. ICC recommends that any change of international rules or principles should be done through a comprehensive, coherent and co-ordinated approach.
The digital economy is not only revolutionising the way businesses operate but also creates new opportunities for global growth and prosperity. If nurtured appropriately, technological advances and digital connectivity can spur innovation in business models, business networking and knowledge transfer while also facilitating access to international markets for businesses large and small, old and new.
“The digitalisation of the economy raises challenging issues,” said Christian Kaeser, Chair of the ICC Commission on Taxation and Global Head of Tax at Siemens. “ICC underlines the need for countries to collectively discuss and address the tax challenges arising from digitalisation, through mutual consensus, and reiterates that any solutions should be long-term and have broad adoption by countries to allow for seamless application for business.”
A new tax framework for the digital economy
In light of the prominence of this topic, ICC has convened a group of business experts to develop a policy framework of internationally established tax principles for consideration in determining relevant policies to address the taxation of the digitalised economy.
The framework is intended to help define the contours of a suitable tax framework for the digitalised economy that encourages business activities, job creation and economic growth. It also reinforces the need to build a coherent international regulatory framework for world business which builds on principles that can accommodate continued evolution in digitalised business models.
As digitalisation continues to be an important driver for global economic growth, policies related to taxation of the digitalised economy should seek to promote, and not hinder, economic growth and cross-border trade and investment.
ICC welcomes, in principle, the multilateral approach by the Organisation for Economic Cooperation and Development (OECD), with the global engagement of more than 110 OECD Inclusive Framework members, to build consensus to address the taxation of the digitalised economy.
The OECD Interim Report “Tax challenges arising from digitalisation” released to G20 leaders earlier this year recognises that there are technical and complex questions regarding taxing rights and profit allocation and that in-depth analysis and a collaborative effort is required to address these challenges.
In its pdf Report to G20 Leaders (1.41 MB) at the G20 Summit in December 2018 in Buenos Aires, the OECD Secretary General expresses his hope that at the next G20 Summit the Leaders will be able to “celebrate an agreement on the what and how of a long-term solution to be delivered in 2020.”
As European finance ministers convene on 4 December to decide on the proposed digital services tax (DST), ICC – representing over 45 million companies globally – strongly recommends that instead, any measures being considered be aligned with global efforts to ensure consistency and coherence and to avoid double and over-taxation.
Also anticipated this week is the meeting of the OECD Task Force on the Digital Economy to advance discussions on the issue. ICC echoes the view that any tax reforms should be both practicable and effective in facilitating greater consistency internationally.
ICC remains committed to providing knowledge and expertise on behalf of business with a view towards determining a long-term global solution to address taxation of the digitalised economy.
Related News
AEC2018: Africa must focus on its big resource – its young people, experts urge
Professor Paul Collier, one of the world’s most influential development economists, warns that Africa’s “easy decade” of accelerated economic growth is coming to an end, and only accelerated job creation and integration will ensure sustainable growth and development across the continent.
Dr. Collier, Professor of Economics and Public Policy in the Blavatnik School of Government at the University of Oxford, was delivering a keynote address at the African Economic Conference 2018, hosted by the African Development Bank in Kigali, Rwanda.
He was speaking Monday 3rd December 2018 on the first day of the Conference at a high-level panel on “Drivers, Opportunities and Lessons for Africa’s integration”, comprising experts as well as high-level policymakers, who provided their reflections and perceptions on regional and continental integration.
“Africa’s easy decade is over; but the last decade of African growth was not sustainable. Now Africa must focus on its big resource – its young people. No other continent has anything like such a huge influx of young labour. Productive jobs are the priority,” Collier said.
“Young people can’t create priority jobs by themselves. Those jobs have to be created, so the prime task of policymakers in Africa over the next decade is to create productive jobs for young people at a rate that has never happened before.”
Collier added that connectivity between African countries will unlock the potential of many countries, and this connectivity has to be in terms of both physical transport and political ideology.
“Small countries are doomed to poverty unless they have open markets and free societies. And yet, the typical African country is small, with closed markets. That is a disastrous combination. So the African Continental Free Trade Area is a very important step forward,” he said.
The African Development Bank has pledged full support to the Continental Free Trade Area as part of its High 5 strategy to Integrate Africa and has invested more than $20 million over the past five years to support the institutional and human capacities of the Continental Free Trade Area Secretariat.
Another high-level panelist, Professor Ademola Oyejide, the Emeritus Professor of Economics, University of Ibadan and Chairman of the Centre for Trade and Development Initiatives, noted that regional integration must drive overall continental integration.
“We should not destroy regional economic communities by protectionism and unnecessary barriers to trade. We as African leaders are not in the business of designing theoretical regional programmes: we expect real progress from the regional blocs,” he said.
Professor Klaus Zimmermann, President of the Global Labor Organization, added, “Africa is now on the right path and has to move in the direction of the AfCFTA. One of the most important playing cards in this game is the people of Africa.”
A common message from other high-level panelists, such as Prof. Emmanuel Nnadozie, the Executive Secretary of the African Capacity Building Foundation, was that governments must adopt policies to enable their countries to achieve economic diversification and reduce their dependence on primary commodities.
The Continental Free Trade Area is expected to boost intra-African trade by up to $35 billion per year, creating a 52% increase in trade by 2022; and a vital $10 billion decrease in imports to Africa.
In addition, the African Development Bank Group is accelerating the impact of its flagship pdf Jobs for Youth in Africa (JfYA) Strategy (2016-2025) (1.69 MB) designed to support African countries in overcoming youth unemployment and underemployment. The goal of the strategy is to create 25 million jobs for African youth over the next decade and to equip 50 million youth with employability and entrepreneurial skills.
Related News
tralac’s Daily News Selection
African trade events to diarise: African Ministers of Trade meeting (12-13 December, Cairo); 1st SADCSTAN workshop to adopt Harmonised Transport Standards (10-14 December, South Africa)
Events currently underway: In Nairobi: AERC’s 49th Biannual Plenary and Research Workshops. Notes from the plenary: The looming debt crisis in Africa; In Kigali: African Economic Conference 2018 on the theme Regional and continental integration for Africa’s development; In Geneva: Investment, Enterprise and Development Commission
The African International Economic Law Network has issued a call for papers: details here
Featured trade policy resource: TradeVistas. Twitter: @Trade_Vistas
Kevin O’Neil: Want free trade to be a game-changer for Africa? Build digital platforms (Rockefeller Foundation)
At the Africa Trade Forum 2018 in Lagos earlier this month, speaker after speaker described the AfCFTA as a “game changer” for Africa. However, they also cautioned that much hard work lies ahead to make that promise a reality. In particular, the role of technology in facilitating trade and making sure all Africans benefit from it came up again and again. Helping governments use technology to better serve their citizens is one of the core objectives of the Data and Technology team at The Rockefeller Foundation, so I listened with great interest as free trade in Africa was presented as a technological challenge rather than confined only to the realm of policy or politics. As I see it now, here are four main ways technology can play a pivotal role in realizing AfCFTA’s promise: Reducing friction at the borders; Tracking imports from outside the continent; Creating a “digital single market”; Bridging revenue gaps. [The author is Associate Director, The Rockefeller Foundation]
Developing new trade opportunities through digital channels (ITC)
Two new online platforms designed to facilitate trade and business opportunities for companies are now available through a partnership between the ITC and the West African Economic and Monetary Union. Presented in Abidjan, during a regional meeting on the role of digital solutions in trade, the ConnectUEMOA and the Trade Obstacles Alert Mechanism platforms will contribute to the development of a more efficient commercial system by incorporating online solutions. The ConnectUEMOA platform offers the user – seller or buyer – the possibility to both explore commercial opportunities as well as promote their own activities in the region and beyond. It offers enterprises a unique access point to a virtual marketplace whereby they can register their profiles, products and services. Digital solutions have a central role to play in facilitating the way trade is done today,’ said ITC Executive Director Arancha González. ‘It allows for more inclusive trade for the 21st century whereby communication and connection are powerful tools for enterprises, notably in Africa.’
Africa can meet $300bn annual cost of development plan: Afreximbank’s president
Addressing guests at the World Youth Forum 2018 organised recently in Sharm El Sheikh, Prof. Oramah noted that Africa’s foreign exchange reserves currently stood at almost $500bn and had consistently been above that figure until the commodity price shock in 2015/2016. The continent also had about $800bn under management by pension funds in the 12 African countries where the market was most developed, with that figure forecast to rise to $1.1 trillion by 2020, continued the President. In addition, Africa received $63bn in migrant remittances annually, showing that the continent had more than $1 trillion that it could use to finance the $300bn of investment that was required. He said that the challenge was that the reserves were sitting outside Africa, earning little or nothing, and that when African countries tried to borrow the same money, they ended up paying very high rates. Prof. Oramah said that the continent needed to look inward, asking, “Why can’t we do something about it? Why can’t we recycle some of our money? Why can’t we do what some of the Asian countries have done?”
Botswana: New visa policy draw-card for Chinese (The Patriot)
Botswana is about to experience a surge in Chinese tourists following the relaxation of visa regulations, if trends from similar developments are anything to go by. When Morocco declared a visa exception in June 2016 the number of Chinese travellers to the country zoomed by 440%, Tunisia’s Chinese arrivals surged 215% when they did the same in February 2017 and, closer home, Angola saw a surge of 85% when they simplified their visa application procedures in January 2018. This was revealed by Olivier Ponti, Vice President of Insights for ForwardKeys, who presented his findings at the first Africa Leaders Forum organised by the World Travel and Tourism Council in Cape Town.
Ghana: Export-import indices to be implemented next year (Today)
Ghana has received support from development partners such as the World Bank and ECOWAS to start the process of implementing export and import indices, effective January, 2019. The move has been necessitated by the assessments done during continuous visits by technical team from the aforementioned partners who have not been impressed with Ghana’s export data. This will enable the state to index and measure the value of total goods that are imported and exported in order to have accurate data which reflects the performance of the economy with regards to international trade in real terms. A chunk of Ghana’s export data declared by freight forwarders are classified as “others”, a practice which experts in the trade industry say has made it increasingly difficult to measure data because it does not give the precise output on particular items that have been declared.
Ghana: National transport policy review reaches final stage (Ghanaian Times)
The review of the 2008 National Transport Policy is in its completion stage following a final national stakeholder’s consultative workshop, held in Accra yesterday. The draft policy, which covers roads and highways, railways and aviation, is expected to be submitted to Cabinet for approval. After its 10th year of implementation, the policy was subject to review for the necessary changes to refocus it in line with changing strategic objectives and emerging issues in the transport sector. Opening the workshop, Minister of Transport, Kwaku Ofori Asiamah, said the policy, which was developed in 2008, was to provide guidance for the holistic and strategic development of the transport and logistics sector. This he explained would support the Ghana Gateway Project, designed to make the country a gateway to the West African sub-region to facilitate trade and foreign investments.
Nairobi now says no to Ethiopian Airlines extra route request (Business Daily)
The Kenya Civil Aviation Authority has denied Ethiopian Airlines a licence to operate scheduled passenger flights on the Johannesburg-Nairobi–Brussels route, saving Kenya Airways from an imminent battle for passengers in the African airspace. KCAA admitted that the Ethiopian carrier had been denied a licence to operate passenger business from South Africa through the Kenyan airspace but declined to disclose what informed the decision. Ethiopian Airlines wanted to fly B757 aircraft on the new route if allowed to operate out of Nairobi. “KCAA denied Ethiopian Airline the licence it applied for. Only Ethiopia Airlines can apply to be informed of the reasons,” KCAA director-general Gilbert Kibe said in a short text message.
South Africa’s tobacco turf wars: SARS must take steps to put an end to the illicit trade debacle (Daily Maverick)
There is little doubt that the illicit trade of cigarettes does exist in South Africa. But the findings presented by TISA need to be considered in the context of all the developments around the tobacco industry in the last six years. There are a few issues to consider.
Kenya: M-Pesa to send cash direct to China’s WeChat users (Business Daily)
The partnership between Family Bank Limited and London-based financial technology firm SimbaPay will enable the 23,946,174 active M-Pesa users in Kenya to send money to over 1 billion active WeChat subscribers in China. To send the money, Kenyans will use an M-Pesa Paybill number belonging to Family Bank and enter the phone number of the recipient in China as the account number. The recipient will then access the money on their mobile wallet. The cost of the transactions will vary on a sliding scale. The cost of sending $80 (Sh8,198), for instance, will be Sh350.
Kenya tops in African banks bad loan study (Business Daily)
From around the globe
Azevêdo welcomes G20 leaders’ commitment to improve the functioning of the WTO
“This has been a very productive G20 summit. I have heard firm support for trade and the WTO throughout my meetings with leaders in Buenos Aires and heard a range of ideas about strengthening our work. This is reflected in the leaders’ declaration, which I strongly welcome. The declaration represents a very important moment in tackling the current challenges in global trade. With this statement, the leaders underline the vital importance of trade and of the multilateral trading system in supporting growth, productivity, innovation, job creation and development. They call for improvements and “necessary reforms” to the functioning of the WTO to ensure that it can continue playing this essential role. I will work with WTO members to take this forward in the interests of all.”
The declaration agreed by the G20 leaders is available here. The key paragraph on trade issues is as follows: “International trade and investment are important engines of growth, productivity, innovation, job creation and development. We recognize the contribution that the multilateral trading system has made to that end. The system is currently falling short of its objectives and there is room for improvement. We therefore support the necessary reform of the WTO to improve its functioning. We will review progress at our next Summit.”
Post-MC11 trade agenda for the Least Developed Countries (Commonwealth)
Drawing on the negotiations and other developments that transpired in the run up to MC11 and thereafter, the paper underlines four core directions to be considered while giving shape to a revamped LDC agenda. First, the de facto dissolution of the DDA entails that LDCs pick the issues from the Doha Agenda with the most potential, such as sectoral issues. Second, the LDC group should strategically remain engaged with the new issues, particularly in negotiations on fishery subsidies and e-commerce. Third, as regards governance and structural issues, LDCs need to marshal their strength against any attempt to weaken the dispute settlement system, and need to take a strategic approach to find a balance between Doha Round negotiations and plurilateral discussions. Finally, the LDCs should strengthen Aid for Trade inputs to ensure their smooth and sustainable graduation out of the LDC group.
Making EU trade in services work for all
This report is the result of a collaborative initiative involving enterprise ministries in Denmark, Finland, Ireland, and the Czech Republic. It makes a compelling case for the future growth potential of the European Services Sector if action is taken to reduce restrictions and barriers to cross border trade in services. Copenhagen Economics were commissioned to undertake this study on behalf of the four Member States. It identifies an evidence base for the imperative of making greater progress in making the Single Market a reality for Services and sets out a call for six actions to address this. These include actions at both European level, for the Commission, and at national level, for the Member States.