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Billions more people must benefit from trade gains, experts say
A global system that leaves the top 1% as rich as the bottom 56% is overdue for reform, with women’s economic exclusion among the highest priorities.
While some countries and socio-economic groups have reaped the gains from trade in a globalized world, billions of others, including women, have been marginalized or excluded, experts told a meeting of UNCTAD’s Trade and Development Commission in Geneva, Switzerland, on 12-16 November.
This is “perhaps the most important question that we have to deal with in the world going forward into the 21st century,” said Ricardo Melendez-Ortiz, chief executive officer of the International Centre for Trade and Sustainable Development.
The resulting backlash against trade threatens the very future of the multilateral trading system. “The time is ripe to think how today’s model of trade can be more inclusive,” he said.
The distribution of world GDP has the shape of a champagne glass, said Isabel Ortiz of the International Labour Organization.
The top 1% of the world’s population – 61 million people – had the same income as the poorest 3.5 billion people or 56% of the world’s population, Ms. Ortiz said.
Policies that encouraged privatization, labour flexibility, and a diminished role for the state had contributed to rising inequality since the 1980s, she said. While there had been some progress in recent years, it had been very slow.
“At this speed, we estimate that it will take 800 years for the bottom 20% to achieve just 10% of global income,” Ms. Ortiz said.
Missed opportunities
The 2030 Agenda for Sustainable Development, endorsed by United Nations members in 2015, is an alternative way forward to promote equality, Ms. Ortiz said. Equality is key to growth and socio-political stability, and achieving it called for harmonized national and multilateral policies.
But trade had played a role in promoting prosperity, Roberta Piermartini of the World Trade Organization said. Moreover, equality between countries improved as some countries have caught up.
Two key groups – the middle or working class in developed countries as well as the very poor in developing countries – had been left out of the gains from trade, Ms. Piermartini said. Automation and competition from cheaper imports had contributed to job losses for the middle class, while the story of the very poor was one of missed opportunities.
Ms. Piermartini said that one reason for this was that people in lower income groups – including women, people living in rural areas and informal sector workers – were in parts of the economy that faced higher export tariffs. She said this shows that there was still a lot to be done with trade policy, especially concerning tariffs which were still a barrier to increased economic participation for many.
Within and between countries, the food and agricultural sector displays some of the highest levels of inequality, Carolyn Rodrigues-Birkett of the Food and Agriculture Office of the United Nations said.
“For example, the world at this current moment has over 820 million undernourished people,” she said. “On the other hand, we have 1.9 billion people that are either overweight or obese.”
Increased globalization threatens to marginalize further small farmers and others who have been left out of global value chains, Ms. Rodrigues-Birkett said. She called for more significant investment in rural development, along with a major shift in how we measure progress.
Fighting inequality
The most pressing priority was to help those in extreme poverty, Ms. Rodrigues-Birkett said, with 80% of extremely poor people living in rural areas. She also emphasized the need for greater focus on gender, since 79% of women in the Least Developed Countries – a 47-nation category – indicated that agriculture is their primary source of income.
“Focusing on gender equality is at the heart of reducing economic, social and political inequalities. The world is poorer if it does not benefit from the full contributions of women.”
Claudia Hernandez, Ambassador and Deputy Permanent Representative of the Dominican Republic to the World Trade Organization, said that competition policy had a role to play in fighting inequality.”
“It can help democratize the markets by enlarging the number of products consumers have access to, including low-income consumers," she said.
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Cut flower sector wilting under new rules, competition
Hopes by Kenya’s flower growers to exploit the lucrative United States market and stop dependence on the European market will not bear much fruit despite the recent launch of direct flights between Nairobi and New York.
In spite of optimism and excitement after national carrier Kenya Airways (KQ) started direct flights to the US in October, the airline’s business strategy of focusing on passengers as opposed to cargo has dashed the hopes of the flower industry of targeting the market that has remained elusive.
This is bad news for the industry which despite being the second leading foreign exchange earner after tea, is grappling with a myriad of challenges that are threatening the country’s position as Africa’s leading producer of cut flowers.
The sector is currently dealing with challenges ranging from a fertiliser importation crisis, increase in input taxes, delays in tax refunds, stringent phytosanitary requirements in the European Union (EU) market, new demands on fumigation by key market Australia to intensifying competition from emerging flower producers like Ethiopia, Rwanda, Uganda and Tanzania.
In the midst of these predicaments, the decision by KQ to dedicate the new route specifically to passengers, with only five tonnes allocated to cargo, means the flower industry cannot count on the national carrier to penetrate the US market.
Already most of the cargo space has been seized by Export Process Zones-based manufacturers of textiles and apparels that constitute Kenya’s main export to the US under the Africa Growth and Opportunity Act.
“There is nothing for Kenya in the US market for now,” said Clement Tulezi, the Kenya Flower Council chief executive.
He added that although KQ can decide to help the industry by introducing a dedicated cargo flight, there is the issue of the return flight flying back empty because Kenya’s main imports from the US are bulk machinery, cereals and aircraft that are shipped here.
Currently, Kenya accounts for less than one per cent of the US flower market, earning less than $10 million annually, with Colombia dominating at 70 per cent followed by Ecuador at 20 per cent. These two countries also have the advantage of proximity.
“Although Kenya cannot continue depending on the EU for sustainability, we are protecting our key markets and seeking new ones in Asia,” explained Nehemiah Chepkwony, Horticulture Crops Directorate interim head.
Flower markets
In 2017, Kenya exported 450,000 tonnes of cut flowers, with the EU providing 66 per cent of the market. Other key markets for Kenya are Japan, Australia and China while efforts are ongoing to increase presence in promising markets like Russia, Turkey, South Korea and India.
Kenya is particularly upbeat on increasing exports to China where volumes stand at 4,000 tonnes annually after President Uhuru Kenyatta signed a horticulture export deal with his Chinese counterpart President Xi Jinping when he attended the China International Import Expo recently.
Last year, the country earned a staggering $796 million from flower exports representing a 12 per cent growth from the previous year in which the sector earned $687.4 million.
In the first eight months of this year, the industry has maintained an impressive performance raking in $746.6 million, a 38 per cent increase from $539.8 million realised the same period in 2017 according to data by the Kenya National Bureau of Statistics.
Notably, 65 per cent of Kenya’s flowers are sold at the world’s largest flower auction in the Netherlands, meaning they lose identity by being branded by the buyers rather than the producers.
The country is trying to increase direct sales from the current 35 per cent to 50 per cent to enhance the visibility of the Kenyan flower brand.
Volumes
Although Kenya is basking in the continuous good performance of the cut flower industry, with land under flower cultivation increasing from to about 4,000 hectares in recent years down from 3,000 hectares, the industry is in a state of panic over mounting challenges.
“The long term survival of the industry is at stake because we have a feeling the government does not care about the industry but only cares about the taxes it generates,” stated Mr Tulezi.
He added that while 60 per cent of sales are recorded during the Christmas season and Valentine Day in February, Kenya might fail to accumulate enough volumes for these high peak seasons due to a biting shortage of soluble fertiliser, a critical input in flower farming.
As part of the war on counterfeits, the Kenya Bureau of Standards (Kebs) recently introduced 100 per cent inspection on all soluble fertiliser shipments entering the country amidst protests by industry players that the accepted trend worldwide is based on pre-shipment inspection.
“Flower farming depends on specialised fertiliser and the decision by Kebs is affecting the industry badly. We are working on resolving it,” admitted Mr Chepkwony.
Considering that Kebs lacks the internal capacity to inspect the volumes of shipments, the decision has ignited a major crisis with imports that had arrived at the port of Mombasa five months ago yet to be cleared and released.
The problem of inputs has been compounded by the move to introduce 16 per cent value added tax (VAT) on crop protection products like pesticides, a development the industry reckons will increase the cost of production and make Kenya's flowers expensive.
Although it previously costed $0.21 on average to produce one rose flower, with the new tax, it will cost $0.36. Also at play is the fact that before the tax, Kenya used to sell a kilogramme at $0.3 compared with Ethiopia that sells at $0.28 per kg.
VAT refunds
The issue of fertiliser and pesticides, however, are problems that have cropped up recently. For years, the industry has been at loggerheads with the Kenya Revenue Authority over VAT refunds, with the taxman owing some flower firms as much as $500,000 with others having not been refunded since 2013.
Yet even as it battles internal challenges, the flower industry is also under attack. To start with, the EU has continuously introduced new phytosanitary requirements that demand low concentrations of chemicals.
The requirements are forcing flower farms to seek alternatives methods of crop management, with expensive biopesticides and integrated pest management being the main options.
While overcoming these challenges is hard enough, the emergence of new cut flower producers, particularly Ethiopia, is causing jitters that Kenya’s dominance is diminishing, albeit slowly.
“Ethiopia is coming up well thanks to government subsidies but we are still 30 per cent ahead in volumes,” noted Tulezi, adding that it might take Ethiopia another 10 years to catch Kenya.
For Ethiopia, factors like availability of land, cheap labour and government incentives coupled with a vibrant logistics industry anchored by Ethiopian Airlines have provided a fertile ground for the flower industry to bloom.
Currently, the Ethiopian cut flower industry is raking in about $300 million annually and the government is targeting earnings in the region of $1 billion in the medium term.
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tralac’s Daily News Selection
Pan-African policy events starting today:
Profiled EAC event: Meeting of the Sectoral Council on Finance and Economic Affairs (19-23 November, Arusha)
WTO members adopt roadmap for reducing technical barriers to trade
11th Extraordinary Summit of the African Union: updates
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Summary of key decisions. On the structure and portfolios of the senior leadership of the AU Commission. The Assembly decided: That the new structure of the AU Commission shall be composed of eight members as follows: Chairperson, Deputy Chairperson and six Commissioners. That the portfolios of the Commissioners shall be as follows: Agriculture, Rural Development, Blue Economy and Sustainable Environment; Economic Development, Trade and Industry and Mining; Education, Science, Technology and Innovation; Infrastructure and Energy; Political Affairs, Peace and Security; Health, Humanitarian Affairs and Social Development. That the structure and portfolios of the senior leadership of the Commission shall come into effect at the end of the current tenure of the Commission in 2021.
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African Union Peace Fund: communiqué on the appointment of the Board of Trustees. The Trustees, who represent the five regions of the continent, are: Zainab Ahmed (Nigeria), Kamel Morjane (Tunisia), Elene Makonnen (Ethiopia), Tito Mboweni (South Africa), Anicet Dologuele (Central African Republic). In addition to these African members, the European Union and the United Nations will occupy two seats on the Peace Fund Board that have been allocated for international partners.
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Kenya welcomes appointment of Seychelles leader as AU Champion for Blue Economy; Egypt unveils African Union presidency plan
Botswana to start offering tourist visa-on-arrival (Xinhua)
Botswana plans to start offering tourists visas on arrival, effective on 24 November, Botswana’s Ministry of Environment, Natural Resources Conservation and Tourism said Saturday. In a telephone interview with Xinhua, the deputy Permanent Secretary in the tourism ministry, Thabang Botshoma, said Botswana is doing everything with her power to ensure that the country’s doors are open to the world. “President Masisi made the announcement when addressing the 45th meeting of the High Level Consultative Council on Thursday in Gaborone,” Botshoma said. Botshoma said the Botswanan leader has given Botswana’s Ministry of Nationality, Immigration and Gender Affairs a grace period until 24 November to amend the immigration rules and procedures to accommodate the visa-on-arrival process. Dorcas Makgato, Botswana’s Nationality, Immigration and Gender Affairs Minister confirmed the development. She said her ministry is busy amending some rules and procedures regarding the inflow of visitors into the country. [HLCC: address by Business Botswana President, Mr Gobusamang Keebine, pdf]
Building a new Zimbabwe: Targeted policies for growth and job creation (AfDB)
Kapil Kapoor (Director General, Southern Africa Region): The report is important for several reasons. First, it provides the government, the donor community, and the private sector with a detailed assessment of investment opportunities in Zimbabwe. Second, it proposes options to develop these opportunities and, in so doing, helps fill the gap created by the absence of sectoral investment priorities. Third, it can be used to inform and support the government’s dialogue with donors and the business community about further development of these sectors. Increased coordination and partnership will improve the alignment of investments with the national objectives, as set out in Zimbabwe’s pdf Transitional Stabilization Programme (2018-20) (5.18 MB) and subsequent medium-term plans. I have no doubt that the report can contribute to the overall efficiency of the development process in Zimbabwe.
Extract: Is Ethiopia’s growth model replicable in Zimbabwe? Ethiopia’s agriculture-led industriali-zation strategy is highly applicable in Zimbabwe given the countries’ similar agriculture endowments, and it can succeed there with strong government commitment and investment in essential infrastructure. Despite the many serious challenges facing Zimbabwe’s economy, this optimistic outlook rests on three factors. First, the new government’s economic recovery plan names revitalizing agriculture as a priority. Second, in addition to the traditional EU market, now accessible since the lifting of trade sanctions, South East Asia - in particular China - has emerged as a giant new market for Zimbabwe’s agricultural and horticultural exports. Third, China has emerged as both the major export market for and the biggest source of foreign direct investment in Zimbabwe’s agricultural sector.
To replicate Ethiopia’s successful agriculture-led industrialization strategy in Zimbabwe, the first step is to diversify exports and develop the agricultural processing sector. In contrast to Ethiopia, one of the major constraints facing Zimbabwe’s government is a shortage of financing. So the government’s strong commitment to financing extension services and infrastructure investment is likely constrained in the short term. But relying on the large inflow of foreign direct investment in agriculture from China and other countries presents both opportunities and challenges. For example, tobacco’s contribution to total exports increased by 6 percentage points from 2014 to 2016, possibly as a result of the massive Chinese investment (see table 9.2). [Download: pdf Building a new Zimbabwe Targeted policies for growth and job creation (2.38 MB) Note: Zimbabwe’s budget will be presented on Thursday]
Central Africa’s free trade instruments gaining traction in DR Congo (UNECA)
A total of 49 leaders from the public and private sectors of the DRC have completed a two-day training to appropriate rules of origin procedures for accrediting national industrial products into the ECCAS-CEMAC Harmonized Preferential Tariff regime. Facilitated by the sub-regional office for Central, the training took place in Kinshasa as part of a series that has already benefitted local investors and administrative officials in Cameroon, the Republic of Congo, Gabon and Chad. The series of training ultimately seeks to fully activate free trade within the ECCAS and help to operationalize the AfCFTA, whose legal instruments were signed on 21 March 2018 in Kigali, Rwanda.
Rwanda: Masaka ICD to open in January, cutting time and cost of imports to the region (The East African)
Dubai Port World will in January 2019 start operations at the first phase of its inland container depot and logistics hub in Masaka, Rwanda. It is located close to the Special Economic Zone and linked to both the Northern and Central Corridors. This will cut by half the time and costs incurred in transporting of goods. “By January next year, traders will benefit from the first phase, which covers 13 hectares and features an inland container terminal with modern warehousing space, a container yard, administrative and service buildings and a large parking area. It is a hub that provides everything that a trader needs,” said Sumeet Bhardwaj, the chief executive of Dubai Ports World Logistics Rwanda.
Tomorrow, in Lusaka: COMESA, EU to sign €53m trade facilitation programme
COMESA Secretary General Ms. Chileshe Mpundu Kapwepwe and the Head of the EU Delegation to Zambia, Ambassador Alessandro Mariani will jointly sign the agreement in the presence of the Zambia Minister for Commerce, Trade and Industry, Christopher Yaluma. The funds will be used to implement the COMESA Trade Facilitation Programme which aims at increasing intra-regional trade flows of goods, persons and services by reducing the costs/delays of imports/exports at specific border posts. It will support trade policy liberalization, infrastructure improvements, improved border management and logistics among others. Five border posts were pre-selected to begin implementing the programme due to their level of preparedness: Mwami / Mchinji (Zambia-Malawi); Galafi (Ethiopia-Djibouti); Chirundu (Zambia-Zimbabwe); Moyale (Ethiopia-Kenya) and Tunduma / Nakonde (Tanzania-Zambia).
ECA and partners to establish Continent-wide digital identities (UNECA)
The support by Omidyar Network will also be instrumental in the establishment of a Centre of Excellence on Digital Identity and Data Privacy and building the capacity of senior officials in this regard. “A Good Digital ID Platform for Africa would ensure that Small and Medium-sized Enterprises, which constitute 80% of African enterprises, benefit from this opportunity,” said ECA’s Executive Secretary, Vera Songwe. She adds that Digital ID is an important enabler for access to social and political services, as well as financial and economic inclusion. Magdi Amin, Investment Partner at Omidyar Network underscores that trade, technology, and connectivity are interconnected goals. “Just as the AfCFTA will connect Africa through trade, Africa now seeks to connect markets, services, and people through technology; the goal is that residents of Senegal and Chad will be able to transact with residents of Zambia and Mauritius without friction, with trust, and without requiring that they meet physically. This will create an African Digital Common Market.”
Kenya: Poultry players seek Xmas imports ban (Business Daily)
Association of Kenya Feed Manufacturers, Kenya Poultry Breeders and Kenya Poultry Farmers said allowing foreign poultry products’ sale in retail chains adversely affected them as well exposes the public to GMO-reared chicken. Akefema manager Humphrey Mbugua said Kenya’s poultry industry was well developed and had capacity to meet demand for poultry product during the December holidays. “Previously, we were consulted before any poultry products were imported into Kenya but the import declaration forms that disclosed source of the products are no longer in use, hence exposing us to unfair competition,” he said.
Kenya, China minerals survey spat has sector in a spin (The East African)
Investors eyeing Kenya’s mining sector will have to make do without concrete data on the country’s mineral wealth after plans for an aerial survey collapsed. In a move that plunges the Kenya Nationwide Airborne Geophysical Survey project into deeper uncertainty, mistrust of China’s prominent role in the survey has instigated a bitter falling out, prompting the Exim Bank of China to withdraw $65 million in funding. On its part, the Kenyan government has frozen the contract awarded to Chinese firm Geological Exploration Technology Institute to carry out the survey. This development exposes taxpayers to a $20 million fine for breach of contract.
Today’s Quick Links: European Council adopts conclusions on Ethiopia IGAD, IDEA sign MOU to promote sustainable peace and development Tanzania: Local assembling plant for Chinese trucks in offing Tanzania confident to lure more than 85,000 Chinese tourists Tanzania: Supporting infrastructure for Stiegler’s project nears completion Angola bets on huge offshore oil investment Nigeria seen as biggest rice buyer in 2019, behind China Qatar-South Africa trade volume touched QR1.31bn in 2017 |
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WTO members adopt roadmap for reducing technical barriers to trade
WTO members achieved a breakthrough at a 14-15 November meeting of the Committee on Technical Barriers to Trade (TBT) by agreeing on a list of recommendations that aim at reducing obstacles to trade and improving implementation of the WTO’s TBT Agreement.
Members also discussed 62 specific trade concerns at the committee meeting, including eight new concerns. In addition, the committee welcomed a new “best practices” guide for national TBT Enquiry Points.
8th Triennial review
Every three years, WTO members evaluate how they are applying the TBT Agreement. The review process started in November 2017 and was driven by members’ proposals for new work relating to specific topics addressed by the committee.
WTO members agreed on almost 30 recommendations that will improve the way members deal with standards, regulations and trade in the TBT committee.
The recommendations approved by members cover the following areas:
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Transparency:
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notifying final TBT regulations when adopted and making it easier to access them online;
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improving access to national websites that make available all adopted final regulations;
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notifying impact assessments conducted as part of regulatory processes;
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improving the quality of information in notifications such as the products affected, relevant documents, and international standards used as a basis for the regulations;
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enhancing coordination between regulators and TBT enquiry points, including through ePing.
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Testing, inspection and certification:
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work on guidelines to help regulators when choosing and designing conformity assessment procedures;
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find better ways to avoid duplicating procedures or restricting trade in the area of conformity assessment.
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Standards: Members agreed to hold a workshop on the role of gender in the development of standards. They also agreed to discuss best practices on incorporating standards by reference in regulation, taking account of existing guidelines and policy considerations.
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Marking and labelling: Members agreed to discuss how to facilitate compliance with marking and labelling requirements for products.
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Technical assistance: Members agreed to explore the feasibility of either expanding the present Standards and Trade Development Facility (STDF) to encompass measures covered by the TBT Agreement, or setting up a separate and dedicated TBT development facility
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Organizing debates in the committee: Members agreed to apply new procedures for raising specific trade concerns (STCs), on a trial basis, in order to give members more time to engage with each other and domestic stakeholders in advance of meetings
Specific trade concerns
WTO members discussed a total of 62 specific trade concerns, 8 of which were new. Below is a summary of the new concerns. A full list of the trade concerns is available in the Annex. For more information on previous trade concerns see the 19-21 June 2018 and 20-22 March 2018 meeting summaries.
European Union – Rules and procedures on compliance
China and Canada expressed concerns with proposed changes to EU rules which require exporters to identify or employ economic operators located in the EU that can provide compliance information, and to display their name and contact information on product labels. Canada and China said that this requirement would create financial and administrative burdens for exporters, particularly for small and medium sized businesses (SMEs) and the e-commerce sector. In addition, China urged the EU to keep market surveillance under the control of government authorities, and not to extend it to non-governmental bodies.
The EU said product safety and compliance is an important issue for consumers and that the proposal aims at increasing consumer trust and confidence in products bought online. The proposal introduces an updated framework for market surveillance to ensure better effectiveness in light of the growing importance of e-commerce. The EU said the proposal is under legislative discussions, and that it will keep WTO members informed of developments.
Chile – Description and labelling of milk products deriving from milk
The EU and US expressed concern with Chile’s draft law which does not allow cheeses made from powdered milk or recombined/reconstituted milk to be labelled as “cheese”, but to be labelled differently. According to the EU, this is not in line with the Codex General Standard for Cheese, CODEX STAN 283-1978. The EU said that changing labels specifically for the Chilean market would put an unnecessary burden on industries and could adversely impact trade.
Chile said the draft law is under debate in its parliament. Chile said it would keep members informed of any updates through the notification process.
Russian Federation – Labelling of various products including clothes, shoes and tobacco.
The EU expressed its concern over a new Russian measure imposing mandatory labelling on a wide range of products, including tobacco, perfumes, clothing including footwear and pharmaceutical products. The EU urged Russia to notify the measure to the WTO and to allow members to comment. Information, they said, is needed about the means of compliance so that industry could adapt.
Russia said it published a list of products for which the identification and traceability labelling will apply and the date for the introduction of this system to different products. According to Russia, the purpose of this measure is to improve trademark protection and to protect sensitive products against counterfeiting. Russia said this measure does not fall under the scope of the TBT Agreement.
Brazil – Standards of wine and derivates of grapes and wine products.
The EU expressed concerns with an amended regulation on identity and quality standards for wines. According to the EU, this regulation may cause future disruptions of EU wine exports to Brazil due to differences with standards adopted by the Paris-based International Organisation of Vine and Wine (OIV). The EU invited Brazil to consider the recommendations of the OIV when preparing its regulations on wine and to accept imported wine made according to OIV-authorized practices.
Brazil said its legislation was developed in accordance the provisions of the TBT Agreement, and that several opportunities for comment were provided. According to Brazil, comments received from the EU in the development of the measure were mostly taken on board in its final version. Brazil said that OIV standards were used as a basis for developing the measure, except when these standards were ineffective or inappropriate for the fulfilment of the legitimate objectives of the measure. Brazilian authorities also gave a 360-day transition period to allow industry time to adapt.
Chile – Chemical substances and mixtures
Mexico expressed its concern with a draft regulation under development in Chile establishing criteria for the classification, labelling and risk assessment of hazardous chemical substances and mixtures. Issues of specific concern included a lack of clarity regarding information on compliance, and the alignment of the measure with international standards (the Globally Harmonized System of Classification and Labelling of Chemicals – or GHS). Mexico asked Chile to provide the technical justification and scientific basis for the measure.
Chile noted that the regulation is not yet in force, and that the responsible regulatory agency was in the process of responding to comments received form domestic and international stakeholders. Chile also said it would keep the committee informed on further developments.
Egypt – Halal requirements for poultry parts and offal
The US said that its exporters of poultry parts and offal are unable to access the Egyptian market, despite demonstrated assurance that they comply with Egypt’s Halal and food safety standards.
Egypt responded that it is trying to strike a balance between verifying the compliance of imported goods with Halal requirements, and ensuring this does not impose excessive trade burdens on its partners. Egypt said that its authorities are facing difficulties in verifying the compliance of poultry parts with Halal requirements, including identifying the source of all imported parts and the sourcing partners. In this context, Egypt is limiting the importation to whole poultry that fully compliance with Halal requirements in order to protect consumers.
GCC – Restrictions on hazardous substances in electronic and electrical devices and equipment
The US asked for clarification from members of the Gulf Cooperation Council (GCC) regarding a draft regulation aiming at restricting the use of certain hazardous substances in electrical and electronic equipment. The US asked if each GCC member will implement the regulation separately or simultaneously, and whether the GCC Standardization Organization (GSO) technical regulation will replace national regulations currently in place, such as in the United Arab Emirates. In addition, the US inquired about the applicable conformity assessment procedures, and whether these would be recognized by other GCC countries. The EU expressed interested in the questions raised by the US.
Kuwait, on behalf of the GCC, said that the regulation is still under discussion and that the GCC and GSO will coordinate and respond to all questions raised.
Dominican Republic – Regulation on cosmetic and hygiene products
Mexico and the US expressed concern with requirements imposed by the Dominican Republic on cosmetic and hygiene products which they believe are more trade restrictive than necessary. Mexico encouraged the Dominican Republic to notify this technical draft regulation to the committee and allow for comments, and to provide the scientific basis for the measure.
The Dominican Republic said that the draft regulation covers a number of aspects such as production, quality control, marketing, storage and sale of these products to ensure that they comply with health requirements and laws in the country. This proposal was subject to national consultation and was published on the web portal of the Ministry of Health, where a number of comments were received from national and international stakeholders. The draft regulation will be revised based on those comments and will be notified to the WTO afterwards, the Dominican Republic said.
TBT Enquiry Point Guide Launched
Over 2,750 notifications related to product requirements have already been circulated in 2018, a process involving 80% of member TBT Enquiry Points. Improving the functioning of Enquiry Points is key to making transparency work.
At the committee meeting, the pdf TBT Enquiry Point Guide (1.25 MB) was launched. The guide was developed in response to a request by the TBT Committee at the end of 201, that the WTO secretariat prepare a guide on best practices for enquiry points. In 2016, the secretariat conducted an online survey for enquiry points to collect information on members’ experiences. The results of the survey formed the basis for this guide. Input was received from 66 members and one acceding country.
The guide compiles practical information on how Enquiry Points are performing their tasks and overcoming everyday challenges, drawing from the practices of members It is structured according to the tasks that an enquiry point or other governmental entity might normally undertake when implementing the TBT Agreement’s transparency provisions. The guide includes insights ranging from different models for coordination with domestic stakeholders to useful tips on how to complete the TBT notification format. This new tool supports the WTO’s TBT training and capacity-building activities for enhancing the capacity of Enquiry Points.
ePing update: notifications alert system
The committee received an update on ePing, the notification alert system for TBT and sanitary and phytosanitary (SPS) measures. ePing enables swift access to regulatory information and facilitates dialogue among the public and private sector in addressing potential trade problems at an early stage. Since its launch 2 years ago, over 5,000 users from 169 countries have registered on ePing.
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Building a new Zimbabwe: Targeted policies for growth and job creation
This report on Zimbabwe’s economic growth opportunities and trajectory was prepared at the government’s request following a political transition in November 2017.
After recent political changes, Zimbabwe is searching to break away from its disappointing development record of recent decades and identify a path toward faster growth in gross domestic product (GDP), employment, and incomes accompanied by more rapid progress in poverty reduction and other parts of the global sustainable development agenda.
But this search for a new path is undertaken in a difficult economic context, including the need to address budget and balance of payments deficits and major structural challenges such as large infrastructure gaps, an inefficient government, and inhospitable business climate.
The country has enormous potential given its natural resource endowment, public infrastructure stock, and skilled human resources. But the country has long-standing debt arrears with several development partners and lenders. While Zimbabwe cleared its arrears with the International Monetary Fund in October 2016, the country has yet to clear its arrears with the African Development Bank (AfDB) and the World Bank, a requirement for relief from sanctions and for access to development finance from multilateral development banks.
This report provides the government with alternative growth scenarios to the year 2030. It also identifies sectors for potential investment to achieve sustainable and inclusive growth. It is premised on the assumption that the arrears clearance will be expedited for economic restoration to commence.
The report is important for several reasons. First, it provides the government, the donor community, and the private sector with a detailed assessment of investment opportunities in Zimbabwe. Second, it proposes options to develop these opportunities and, in so doing, helps fill the gap created by the absence of sectoral investment priorities. Third, it can be used to inform and support the government’s dialogue with donors and the business community about further development of these sectors. Increased coordination and partnership will improve the alignment of investments with the national objectives, as set out in Zimbabwe’s pdf Transitional Stabilization Programme (2018-2020) (5.18 MB) and subsequent medium-term plans.
Overview
Zimbabwe has been undergoing political and economic transformation following the November 2017 resignation of President Robert Mugabe and the February 2018 passing of long-time opposition leader Morgan Tsvangirai. The current government remains committed to economic and structural reforms, notably to rebuild confidence by restoring private property rights, ensuring macroeconomic stability and growth, achieving fiscal consolidation, clearing external debt arrears, and improving governance and the business environment to generate broad-based growth and jobs. The government has also committed to amicable settlement arrangements, including compensation of farmers whose land was expropriated during the land reform program.
Zimbabwe’s economy continues to grapple with fiscal and monetary misalignments, chronic cash shortages, high unemployment (especially among young people), low investment and savings, industrial stagnation, reduced agricultural output, and high domestic and foreign debt (which has reduced the country’s potential to borrow from foreign financial institutions).
Zimbabwe is characterized by abundant land and natural resources, a relatively educated and skilled human capital base, and existing but inadequate physical infrastructure. The agricultural sector focuses on tobacco (for export) and food crops (for domestic consumption). Dependence on natural capital for development is high. Mining is the main driver of the economy: the country has the world’s third largest platinum reserves and is the fifth largest producer of lithium, which is essential for rechargeable batteries. The manufacturing sector has seen a rapid decline, while natural resource extraction has been rising.
Identifying opportunities for sustainable and inclusive growth
Zimbabwe has investment opportunities requiring minimal additional investment to realize medium-term growth targets. Deep structural reforms can improve Zimbabwe’s business climate and attract private investment and the return of the skilled labor force. In particular, measures are needed to increase transparency in the mining sector, strengthen property rights, reduce fears of expropriation, and control widespread corruption. The most likely possibility for longer term change is the regeneration of civil society and a renewed engagement with political powers in a positive social contract, which plays a role both in tackling economic problems and bringing positive and peaceful political reform.
With the generous endowment of natural resources, existing stock of public infrastructure, and comparatively skilled labor force, Zimbabwe has an unprecedented opportunity to join existing supply chains in Africa through the African Continental Free Trade Area. To take advantage of such opportunities the government should adopt a three-pronged strategy in the near term with agriculture as the foundation, eco-tourism as the green job generator, and special economic zones as the growth pillar.
The agricultural sector can be a foundation for inclusive growth, export diversification, and structural upgrading. The focus should be on diversifying agricultural export earnings and developing supply chain trade (processing and market access to high-value products).
Eco-friendly tourism and associated light manufacturing such as handbags and handicrafts are an engine for job creation and export growth and diversification. With Zimbabwe’s enormous natural resources endowment for tourism, targeting tourism represents possibly the quickest way to deliver growth and job creation.
Developing special economic zones as an engine and pillar for growth and diversification could improve competitiveness in first and later-stage processing of natural resources (agriculture, precious metals, and minerals) as well as manufacturing capacity (electronic and medical equipment that use the country’s reserve of precious metals). Given the right investment climate and investor interest, several sectors could be developed, including assembly lines of farm machinery, nonmotor vehicles, home appliances, and technology-intensive services (such as supply value chains and logistics). Special economic zones also provide the potential for scaling up to achieve economies of scale and generate links with the domestic economy.
New financing for development
With some established donors constrained by heavy debt and slow growth since 2015, development finance will need to “go beyond aid” to combine trade aid and investment. Financing will come less from official development assistance and more from other official flows, other official flow – like loans, and other official flow – like investments from development banks and sovereign wealth funds and new strategic investment funds in emerging economies. Developing countries’ (including China) share of global investment overtook that of high-income countries in 2015, and most new finance comes in the form of patient capital, long-term investment with a maturity of 10 years or more.
Patient capital plays an important role in financing infrastructure. Evidence of rising patient capital is reflected in the growing number of sovereign wealth funds and government-sponsored strategic investment funds established by countries such as Kazakhstan, Malaysia, Mexico, Morocco, Nigeria, the Philippines, Senegal, South Africa, and Vietnam.
Global leaders and the international development community (multilateral and bilateral donors) are looking east for new ideas, new momentum, and new financing. In recent years, China has become the largest single trading partner for Africa and a key investor and provider of aid, and a 1 percentage point increase in China’s real domestic fixed asset investment growth has tended to increase Sub-Saharan Africa’s export growth rate on average by 0.6 percentage point.
China and Zimbabwe have long had an “all-weather” friendly relationship, with mutual support, cooperation, and benefit. In particular, China has emerged as Zimbabwe’s largest aid, investment, and South-South cooperation partner in the last decade. Zimbabwe is estimated to be one of the top recipients of China’s official development assistance, receiving $3.6 billion. Zimbabwe could grasp the opportunities provided by the large number of Chinese enterprises “going global” and join existing global supply chains in food, cotton, wool, leather, footwear, garments, and assembly lines of farm machinery, motorcycles, or buses and become a light manufacturing and construction logistic center for Southern and East Africa and eventually the entire continent.
This new Country Economic Report series is produced by the Country Economics Department, in close collaboration with teams in other departments of the African Development Bank’s Vice-Presidency for Economic Governance and Knowledge Management and Office of the Chief Economist. This report was prepared by Kararach Auma George, Walter Owuor Odero, and Damoni Kitabire.
Central Africa’s free trade instruments gaining traction in DR Congo
A total of 49 leaders from the public and private sectors of the Democratic Republic of the Congo (DRC) have completed a two-day training to appropriate rules of origin procedures for accrediting national industrial products into the ECCAS-CEMAC Harmonized Preferential Tariff regime.
Facilitated by the Subregional Office for Central Africa of the UN Economic Commission for Africa (ECA), the training took place in Kinshasa as part of a series that has already benefitted local investors and administrative officials in Cameroon, the Republic of Congo, Gabon and Chad.
The series of training ultimately seeks to fully activate free trade within the ECCAS and help to operationalize the African Continental Free Trade Area (AfCFTA), whose legal instruments were signed on 21 March 2018 in Kigali, Rwanda.
The trainees are expected to use the insights from the workshop to make better use of the current preferential tariff regime in place across ECCAS countries, given that current ECCAS arrangements have removed tariffs from the intraregional export-import of items that have been locally produced and transformed, yet were little known or applied on the field.
According to the Permanent Secretary in the DRC’s Ministry of External Trade Mr Lothe Ndjombole A Ponde François, who opened the Kinshasa session, the workshop was a big opportunity for his compatriots to fully understand the workings of the ECCAS Preferential Tariff and put it to good use.
Tariff and non-tariff barriers as well as limited economic diversification and product complementarity among Central African states have contributed to the lower performance of the subregion in terms of intra-Africa trade, which stands at about 3% against the African average of 17%.
The Kinshasa training brings the number of persons trained to take advantage of the ECCAS-CEMAC Harmonized Preferential Tariff regime to boost intraregional trade in Central Africa to 261 across five countries of the subregion. Actors in the rest of the countries of the subregion will also be reached.
Funding for the activity was made possible thanks to a contribution agreement signed by the European Union (EU) and the UN Economic Commission for Africa (ECA) for the further harmonization of ECCAS and CEMAC trade policy instruments.
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11th Extraordinary Summit of the African Union: Summary of key decisions
The 11th Extraordinary Session of the African Union Summit, focusing on institutional reform of the African Union, was held in Addis Ababa from 5th to 18th November 2018.
It started with a meeting of the Permanent Representatives Committee from 5-7 November, followed by the 20th meeting of the Executive Council from 14-15 November. From 17-18 November, the AU’s apex decision making body, the Assembly, held its meeting.
The following is a summary of decisions made on the main issues.
1. On the structure and portfolios of the senior leadership of the AU Commission
The Assembly decided:
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That the new structure of the AU Commission shall be composed of eight (8) members as follows: Chairperson, Deputy Chairperson and six (6) Commissioners
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That the portfolios of the Commissioners shall be as follows:
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Agriculture, Rural Development, Blue Economy and Sustainable Environment;
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Economic Development, Trade and Industry and Mining
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Education, Science, Technology and Innovation;
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Infrastructure and Energy;
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Political Affairs, Peace & Security;
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Health, Humanitarian Affairs and Social Development;
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- That the structure and portfolios of the senior leadership of the Commission shall come into effect at the end of the current tenure of the Commission in 2021.
2. On the selection of the senior leadership of the Commission
The Assembly decided that the following key principles shall guide the selection process of the senior leadership of the Commission;
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Equitable regional representation and gender parity;
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Predictable inter and intra-regional rotation following the English alphabetical order to be applied to each senior leadership position
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Attracting and retaining Africa’s top talent;
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Accountable and effective leadership and management;
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Transparent and merit-based selection;
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The principle of rotational gender parity shall be applied to the posts of Chairperson and Deputy Chairperson; ensuring that if the Chairperson is male then the Deputy Chairperson shall be a female and vice versa
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The six (6) Commissioner level posts shall be equally distributed by gender and across the three regions that are not represented at Chairperson and Deputy Chairperson level;
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The regions with candidates that are elected to the position of the Chairperson or the Deputy Chairperson shall not be eligible for consideration for the six remaining Commissioner posts.
The Assembly established a Panel of Eminent Africans, composed of five (5) eminent personalities, one per region, to oversee the pre-selection of candidatures of the senior leadership of the Commission.
3. On the election of the Chairperson and Deputy Chairperson of the AU Commission
The Assembly decided, among others, to Amend Rule 38 of the Rules of Procedure of the AU Assembly that relates to the election of the Chairperson and Deputy Chairperson, to read as follows:
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The Assembly shall elect the Chairperson of the Commission and his/her Deputy by secret ballot and two-thirds majority of Member States eligible to vote.
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The Chairperson of the Commission and his/her Deputy shall be competent women or men with proven experience in the relevant field, commensurate leadership qualities and a good track record in government, parliament, international organizations or other relevant sectors of society.
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The selection process should ensure the appointment of the best possible candidate who embodies the highest standards of efficiency, competence and integrity as well as demonstrating a firm commitment to Pan-Africanism and the objectives, principles and values of the AU, proven managerial abilities, extensive experience in international relations and strong diplomatic and communications skills.”
The Assembly directed the Commission to align all relevant legal instruments by February 2019 and also decided to enhance the transparency and meritocracy of the current selection process.
4. On the election of the Commissioners of the AU Commission
The Assembly decided, among others that Article 13 of the Statutes of the Commission shall be amended to read as follows:
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A skills and competency based assessment and shortlisting of candidates shall be undertaken by a High Level Panel of Eminent Africans (1 per region) assisted by an independent African firm to generate a ranked pool of pre-qualified candidates nominated by the relevant AU regions from which Commissioners shall be elected and appointed by the Executive Council;
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Candidates shall be assessed through an initial review of applications and cvs. Shortlisted candidates will be invited for assessment to assess candidates against the skills and competency criteria established for the leadership posts.
Assembly directed the Commission to align all relevant legal instruments by February 2019.
5. On the mandate of the African Union Development Agency
This item referred to the pdf Decision on the Reform of the African Union (302 KB) of January 2017, which proposed the transformation of the NEPAD Planning and Coordinating Agency (NPCA) into the African Union Development Agency (AUDA). In this regard, the Assembly approved the mandate of the African Union Development Agency (AUDA) as follows:
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To coordinate and execute priority regional and continental projects to promote regional integration towards the accelerated realisation of Agenda 2063;
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To strengthen capacity of African Union Member States and regional bodies; advance knowledge-based advisory support, undertake the full range of resource mobilisation, and serve as the continent’s technical interface with all Africa's development stakeholders and development partners.
The Assembly called for the conclusion of a permanent Host Country Agreement for the African Union Development Agency (AUDA) with the Government of the Republic of South Africa.
6. On Institutional Reform of the African Peer Review Mechanism (APRM)
This item referred to, among other decisions, that adopted by 28th Ordinary Session of the Assembly Union held in Addis Ababa on the pdf Outcome of the Retreat of the Assembly of the African Union on the Institutional Reform of the AU (302 KB) , which stated that the African Peer Review Mechanism (APRM) should be strengthened to track implementation and oversee monitoring and evaluation in key governance areas on the continent.
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The Assembly stressed the need for the APR Forum to hold its ordinary sessions on the margins of the AU Summit
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It requested the AU Commission to ensure the APRM Forum is allocated and afforded adequate time to fully address its agenda
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The Assembly decided to integrate the APRM budget in the statutory Union budget funded by Member States.
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It reiterated the need to strengthen the capacity of the APRM, in collaboration with the African Governance architecture, to deliver on its extended mandate, and enhance its functional autonomy.
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The APRM was requested to present an update on the State of Governance in Africa and to report to the 32nd Ordinary Session of the Assembly scheduled to take place in February 2019.
7. Other decisions
The Assembly also made decisions on the AU sanctions regime for the non-payment of contributions. Other decisions were made on:
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The termination of appointment of the Chairperson and the Deputy Chairperson of the AUC
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Enhancing performance management at the level of senior leadership of the AUC
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Establishing an effective division of labour between the African Union, Regional Economic Communities, Member States and continental organisations
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The African Union scale of assessment and contributions.
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Communiqué on the appointment of the Board of Trustees for the African Union Peace Fund
The Chairperson of the African Union Commission, Moussa Faki Mahamat, on 16 November 2018 appointed the five African members of the Board of Trustees of the African Union Peace Fund. This decision marks a key step in the implementation of the Financing of the Union agenda, which is part of the ongoing institutional reform process.
The Trustees, who represent the five regions of the continent, are:
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Zainab Ahmed, from Nigeria, former Minister of State for Budget and National Planning, who previously served as the Executive Secretary and National Coordinator of the Nigeria Extractive Industries Transparency Initiative (NEITI);
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Kamel Morjane, from Tunisia who served as Minister of Foreign Affairs and Minister of Defence in Tunisian and held senior positions in the United Nations;
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Elene Makonnen, from Ethiopia, who has worked in various senior advisory levels with the African Development Bank, World Bank and the United Nations Economic Commission for Africa;
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Tito Mboweni, from South Africa, a former Governor of the South African Reserve Bank and currently a non-executive Director for South Africa at the New Development Bank (BRICS Development Bank); and
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Anicet Dologuele, from the Central African Republic, who served as the President of the Central African States Development Bank, as well as Prime Minister of and Minister of Economy Planning and Finance in his country.
In addition to these African members, the European Union and the United Nations will occupy two seats on the Peace Fund Board that have been allocated for international partners.
The Board of Trustees was established by the Assembly of the Union in July 2016 to ensure strategic coherence, enhanced governance, and financial and administrative oversight of the Peace Fund.
The Peace Fund will finance three key priorities: mediation and preventive diplomacy activities, institutional capacity requirements, and peace support operations.
The Chairperson of the Commission expresses his sincere appreciation to the Trustees for accepting this assignment in the spirit of service to the continent and pan-Africanism. He is confident that their proven track record in financial management, governance and investment financing will ensure that the Peace Fund will be managed in line with the highest fiduciary standards and integrity.
The Board of Trustees’ inaugural meeting took place on 16 November 2018 at the African Union Headquarters in Addis Ababa.
Remarks by President Paul Kagame at the launch of the African Union Peace Fund
A good evening to you. I am very pleased to join you today to launch the African Union’s revitalised Peace Fund. Thank you for making the time to be here, especially the Heads of State and Government here present.
Promoting peace and security is one of the core functions of our Union. However, up to this point, we have lacked a credible mechanism to fund our priority operations in this domain. We depended too extensively on external resources.
This is why the Assembly decided in 2015 to finance 25% of the African Union’s peace and security activities. The Peace Fund is the endowment for that purpose. We decided that it should reach 400 million dollars by 2021. We also directed that the Fund’s governance structures be enhanced to ensure the highest fiduciary standards.
Thanks to the diligent work of the Chairperson of the Commission, supported by the High Representative for the Peace Fund, Dr Donald Kaberuka, we are well on the way toward our goal. To date, Member State contributions stand at $60 million, the highest level since the Fund’s creation in 1993.
With the money available now, we are able to finance all of the preventative diplomacy and mediation work of the African Union’s Special Envoys and High Representatives, as well as the A.U. Liaison Offices.
Yesterday, the new Peace Fund Board of Trustees met for the first time. I would like to congratulate the Chairperson for persuading these five outstanding individuals to take on this important task for us. And I thank them for accepting.
When the endowment reaches its full strength, Africa will be in a strong position to drive the continent’s peace and security agenda toward the most appropriate solutions. As you know, Africa is pursuing a resolution at the United Nations Security Council to provide stable funding for African Union peace support operations. The relaunched Peace Fund is a critical piece of that architecture.
Many doubted that we would reach this point. And so we should indeed be proud of what has been achieved. But we must also redouble our efforts. If all outstanding obligations had been met, the Peace Fund today would stand at $100 million. I would therefore like to encourage all Member States to deliver on their assessed contributions as soon as possible.
Excellencies, Ladies and Gentlemen, this is yet another sign that the Africa we want is increasingly coming into focus and is achievable. So this is a very happy occasion and once again, I wish to congratulate everyone involved.
We are now looking forward to hearing from this distinguished panel, and I thank you all for your presence and your kind attention.
Background
I. About the AU institutional reform
The January 2017 Decision on the Institutional Reform of the African Union (AU) sets out a comprehensive AU reform agenda. It is aimed at fundamentally re-positioning the organization to meet the evolving needs of its Member States and the continent, and identifies the following core reform priorities:
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Focus on key priorities with continental scope;
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Realign African Union institutions, in order to deliver against those priorities;
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Connect the African Union to its citizens;
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Manage the business of the African Union efficiently and effectively at both the political and operational levels; and
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Finance the African Union sustainably and with the full ownership of the Member States.
The AU Peace Fund is part of the overall Financing of the Union agenda. Significant progress has been made in its operationalization. The key highlights include the following:
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Establishment of a Committee of Fifteen Ministers of Finance to oversee the AU budget;
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Following the adoption of the ‘golden rules’ for financial management at the January 2018 Summit, a credible budget process is now in place as a result of which the AU 2019 budget was reduced by 12%;
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24 Member States are at various stages of implementing the 0.2% levy to ensure predictable and self-autonomous financing of the Union;
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United Nations Security Council Resolutions 2320 and 2378 on predictable and sustainable financing of AU mandated peace support operations also represent significant progress in the drive towards delivering the AU’s long- standing position that UN assessed contributions should be used to finance AU-led peace support operations that are authorised by the UN Security Council.
II. About the Peace Fund
The Peace Fund was established in 1993 as the principal financing instrument for the peace and security activities of the Organization for African Unity. Following the establishment of the African Union, the Peace Fund became one of the five pillars of the African Peace and Security Architecture (APSA). The overall legal basis for the Peace Fund is set out in Article 22 of the Protocol on the Establishment of the Peace and Security Council.
In July 2016, the AU Assembly of Heads of State and Government decided to endow the Peace Fund with $400m in Member State contributions to be drawn from the 0.2% levy that has been instituted to finance the overall African Union budget. The full endowment level will be reached in 2021.
Since 2017, the Fund has received the highest levels of Member State contributions since the establishment of the Fund in 1993.
The AU Assembly decided to structure the Peace Fund around three thematic windows:
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Window 1: Mediation and Preventive Diplomacy;
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Window 2: Institutional Capacity; and
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Window 3: Peace Support Operations.
The relevant AU Policy Organs will have the political authority to guide the activities of the Peace Fund.
III. About the role of the Board of Trustees
A Board of Trustees, made up of five African members representing the 5 AU Regions and two international partners, has been established. The role of the Board of Trustees is to ensure strategic coherence and enhanced governance, financial and administrative oversight of the Peace Fund.
The other elements of the governance and management structure are: an Independent Evaluation Panel, which will be established to regularly review the effectiveness and impact of the Fund; an Executive Management Committee, will provide strategic management oversight of the Fund; a Fund Manager, who will manage the finances; and a Peace Fund Secretariat that will manage the day to day operations of the Fund.
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Extraordinary Summit on AU Reforms begins with the aim “to make Africa stronger and give our people the future they deserve”
The supreme organ of the African Union, the Assembly, which comprises Heads of State and Government of all the 55 African countries, began its 11th Extraordinary Session today with a call to advance the institutional reform of the Union, as events on the continent, and across the world, continue to confirm the urgency and necessity of this project.
The Assembly meeting is the culmination of the AU’s statutory meetings, and was preceded by the meetings of the Executive Council and the Permanent Representatives Committee.
The Heads of State and Government’s Assembly meeting will consider and make decisions on:
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Reform of the AU Commission (Structure and portfolios of the senior leadership of the Commission, Selection of the senior leadership of the Commission, Termination of the appointments of the senior leadership of the Commission, and administrative and financial reforms including performance management);
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Mandate of the AU Development Agency (AUDA);
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Strengthening of the African Peer Review Mechanism (APRM);
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Division of labour between the African Union, RECs and regional Mechanisms, Member States and continental organisations.
The Assembly will also consider the Report of the Chairperson of the Executive Council on the Outcome of the 19th Extraordinary Session of the Executive Council, enlarged to the Ministers in charge of African, Caribbean, and Pacific Group of States (ACP) and European Union (EU) Matters. Reports on the Pan-African Parliament and Judicial Organs, the AU Peace Fund and proposals on the New AU Scale of Assessment will also be presented.
While speaking during the opening session, the AU Commission Chairperson Mr. Moussa Faki Mahamat noted the need for the AU Commission to have a greater degree of flexibility in administrative management, so as to enable it to respond more quickly and effectively to the situations.
The AUC Chairperson underlined the importance of enhanced accountability to the Member States and absolute transparency in the conduct of the affairs of the African Union. Mr. Mahamat concluded by emphasizing that it is equally important that the Summit consolidates the progress made on the financial front.
President Paul Kagame of Rwanda, who is the Chairperson of the Union for 2018, summarized the purpose of the summit as “to advance the institutional reform of our Union. Events on our continent and across the world continue to confirm the urgency and necessity of this project. The goal is simple: To make Africa stronger and give our people the future they deserve”.
Addressing the reform of the African Union Commission, which is the secretariat of the AU, President Kagame noted that the reforms would make the Commission more effective and performance-based, now and in the future.
Ethiopia’s Prime Minister, Dr. Abiy Ahmed also addressed the Assembly’s opening session. He highlighted that Union wide reforms were necessary, not just for the sake of initiating reforms, but because it is a must. Prime Minister Ahmed also emphasized that one of the reform initiatives that is of paramount importance is equal representation of women in key decision-making and leadership positions, which has been one of the key pillars of his reforms in Ethiopia.
A summary of the summit’s key decisions will be presented at the final press conference to be held at the end of proceedings on 18th November.
Opening Address by President Paul Kagame at the 11th Extraordinary Summit of the African Union
The purpose of this Extraordinary Summit is to advance the institutional reform of our Union. Events on our continent and across the world continue to confirm the urgency and necessity of this project. The goal is simple: To make Africa stronger and give our people the future they deserve.
I am pleased to note that we are very much on course. We have passed the halfway point and the end is in sight. But there is still very important work to do. Today the Assembly will consider detailed proposals for making the Commission itself more effective and performance-based, now and in the future. This goes straight to the heart of the Reform Decision.
We would not have reached this stage without extensive collaboration and consultation between the Executive Council and the Commission, with outstanding support from the Permanent Representatives Committee along the way.
Allow me to commend the Chairperson of the Commission, Moussa Faki Mahamat, and the Reform Implementation Unit for this important achievement, without forgetting the Member State representatives at every level who have ensured fidelity to the vision set forth by the Assembly. This is exactly how we should be conducting our business.
I wish to conclude with three final points.
Excellencies, je tiens à vous remercier. It was your unwavering support that brought Africa’s candidate to head the Francophonie, Louise Mushikiwabo, to victory. This shows yet again that when we are united, nothing is impossible for Africa.
Second, we welcome the lifting of sanctions against Eritrea by the United Nations Security Council. This action will contribute to the ongoing process of normalisation in the Horn of Africa. Thanks to the leaders in this region, beginning with Prime Minister Dr Abiy Ahmed and President Isaias Afeworki of Eritrea for their courageous actions, and the other leaders who worked with them.
Finally, I wish to extend, on behalf of the African Union, condolences to the governments and people of Malawi and Tanzania for this week’s tragic loss of their peacekeepers. Our thoughts and prayers are with the families of the fallen soldiers.
I should also mention that we wish our brother, President Ali Bongo, a quick recovery and continued stability for his country, Gabon.
Excellencies, Ladies and Gentlemen, I thank you for your kind attention and look forward to a productive Summit.
Statement by the Chairperson of the African Union Commission, Moussa Faki Mahamat
This Extraordinary Summit is indeed symbolic. This is the first time, in the long history of our Continental Organisation and the attempts at reform that have marked it, that a session is devoted exclusively to this issue.
The decision adopted last July, in Nouakchott, to convene this Summit is an expression of an even more acute awareness of the need for Africa to better adjust itself to the issues of the day at stake, internal to the Continent or related to the global environment.
Consequently, I would like to pay tribute to our Heads of State and Government for their commitment to this process. President Paul Kagame deserves all our gratitude for the sense of duty with which he carries out the mandate entrusted to him by his colleagues.
May I also welcome our host, Prime Minister Abiy Ahmed, to the Headquarters of our Union. I thank him for the hospitality accorded to all the participants in this Summit and salute the proactiveness that characterises his leadership, precisely in matters of reform.
By meeting in this hall, named after an African icon, Nelson Mandela, we can congratulate ourselves on the progress made thus far. Without being exhaustive, I wish to mention the rationalisation of our working methods, the enhancement of coordination with the Regional Economic Communities, the better consideration of the gender and youth dimensions in the functioning of our Union and the steps taken on the path to financial autonomy.
It is certainly on this last point that our progress is most significant. It has been translated into an improved budgetary process, through the involvement of the Ministers of Finance, members of F15, a reduction in our dependence on international partners and a substantial increase in the contribution of the Member States to the Peace Fund.
In this regard, I am pleased to inform the Assembly of the convening of the inaugural meeting of the Board of Trustees of the Peace Fund, yesterday, at our Headquarters. Composed of personalities with remarkable career paths and representing the five Regions of our Continent, this Board is mandated to oversee the operations of the Fund.
In spite the achievement thus made, many of the projects initiated within the purview of the reform remain to be concluded. This is precisely the reason for convening this Summit.
The Permanent Representatives Committee and the Executive Council, which considered various aspects of the reform, have submitted a number of recommendations to your attention. I commend the seriousness and quality of the deliberations of these two organs.
In considering the recommendations made, it is desirable that your august body take into account the need for the African Union Commission to have a greater degree of flexibility in administrative management, to enable it respond, more expeditiously and effectively to the operational challenges related to the implementation of its responsibilities in the service of Member States. The counterpart to this increased room for action must, of course, be greater accountability to the Member States and absolute transparency in the conduct of the affairs of our Union.
It is equally important that the Summit consolidate the progress made at the level of the finance. The recommendations of the Executive Council on the strengthening of sanctions against States that are not up to date with their contributions to the budget of the Union open the way to more determined action in this area. In the same spirit, it is imperative that the process initiated for the determination of the new Scale of Assessment be finalised by February 2019, as proposed by the Executive Council.
Finally, this Summit affords us an opportunity to exchange views on other aspects of the reform, especially the enhancement of the effectiveness of the organs of our Union. The objective is to obtain your guidance to help the Reform Unit deepen the reflection, before submitting concrete proposals next February.
Institutional reform is an imperative need. It is, in fact, inseparable from the Founding Act of our Union.
It should be recalled that the African Union was established to accelerate the project of economic integration and political unity that is at the heart of Pan-Africanism. While respecting the sovereignty of our States, it is based on the premise that, in the world of today, these hard-won sovereignties can only be preserved if they are pooled.
The nature of our Union and the ambition of which Agenda 2063 is the emblem, therefore, demand that our Union constantly reinvents itself to adapt to its environment and stay its course.
This is the objective to which the various components of the reform contribute, namely:
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the search for greater efficiency in our functioning;
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the quest for financial autonomy, to pave the way for Continental renewal and full mastery of our destiny;
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the establishment of a more symbiotic relationship with African citizens, whose daily lives we must improve; and
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the imperative need to speak with one voice in the international arena.
Beyond the efforts on structures and procedures, reform is also, and above all, a matter of political will.
Indeed, the most fundamental aspect, the one that will change everything for the better, is the strength of the link that we establish between words and action, the diligence with which we implement the decisions adopted and the determination that drives us in the pursuit of the objectives laid down.
It is with such a frame of mind that we can translate the aspirations of Agenda 2063 into reality, whether it is to speed up integration, particularly through the African Continental Free Trade Area, to silence the guns by 2020 or to assert our collective power on the international scene.
One of the agenda items of the Summit is precisely our relationship with the European Union in view of the expiry of the Cotonou Agreement in 2020.
The spirit of the reform and its demands for efficiency compel us to speak with one voice on this issue, bearing in mind that any agreement with the European Union must fall within the framework of the Joint Africa-Europe Strategy, adopted in Lisbon, in 2007 and the Declaration of the Abidjan Summit of last December. The Strategy and Declaration are the foundation for a Continent-to-Continent relationship, which serves as a lever for our objective of integration and strengthens our achievements.
In launching the reform, you have raised immense hope in Africa and beyond. The steps already taken confirm our belief that we are on the road to success.
Today, the circumstances call us to mobilise our energies even more and to find, in us, the necessary strength to reach the desired destination.
I thank you for your attention.
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tralac’s Daily News Selection
Mali’s parliament yesterday, 15 November, unanimously ratified the AfCFTA Agreement. @AbdoulayeDiop8: Bravo au gouvernement & a l’Assemblée nationale du Mali pour cette prompte adoption conforme a l’engagement Panafrican de notre pays.
The 11th Extraordinary Ordinary Session of the Assembly of Heads of State and Government of the African Union takes place this weekend. From earlier this week:
Highlights from the Executive Council meeting
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Address by Chairperson of the AUC, Mr Moussa Faki Mahamat. “As you are aware, at the Nouakchott Summit, it was decided that the Executive Council convene a session enlarged to other relevant Ministers to consolidate the Common Position on Post-Cotonou arrangements with the European Union. This meeting was held in Addis Ababa on 14 September. Unfortunately the meeting was inconclusive. The main point of divergence has been the role that should be played by the AU in the negotiation of a Compact between Africa and Europe. The Chairman of the Executive Council and I will have the opportunity to report in detail on the proceedings of the meeting held last September. Suffice it, at this stage, for me to underscore that the expiry of the Cotonou Partnership Agreement affords us the opportunity to build a relationship that really takes into account our achievements in the areas of peace and security, governance and integration, and serve as a lever for the fulfilment of our aspirations as stipulated in Agenda 2063. I wish to state frankly that the old patterns certainly offer the comfort of familiarity, but they are no longer adapted to the exigencies of the time. I believe that we can, on the basis of the deliberations of your Extraordinary session, find the necessary compromise between the various concerns expressed and speak with one voice on this matter in the interest of the continent.”
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Address by Chairperson of the AU Executive Council, Dr Richard Sezibera. “Our work over the next two days will be demanding, but we can aim to complete our Executive Council Session with clear recommendations to our leaders on the AUC Reforms, AUDA’s mandate, APRM’s budget, and proposals on the division of labor among key African institutional stakeholders. We certainly owe our collective people that much. Let me conclude with a special mention of the post-Cotonou Framework, which we will briefly discuss tomorrow and further submit for consideration to the Assembly of Heads of State. Africa needs to speak with one voice, and negotiate as one. That is the only fitting way for a vibrant Africa, finally taking her rightful place in the concert of nations.” [Infographic: pdf Institutional reform of the African Union (387 KB) ]
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AUC deputy chairperson Ambassador Kwesi Quartey: 5 key takeaways of the adoption of the 2019 budget
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An AFP preview: African leaders meet for ‘last push’ on AU reforms
7th EU-South Africa summit: outcomes, statements
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Joint statement. Recognizing the EU as a significant and long term investor in South Africa, we commit to exploring all of the opportunities for investment, technical assistance including project preparation, and the improvement of business and investment climates to promote sustainable development. We agree that attracting direct investment will contribute to support growth and fight against poverty, unemployment and inequality in South Africa. Therefore we are committed to enhancing bilateral investments by improving skills for employability, and by ensuring a conducive and value-based business environment, within transparent and predictable policy and regulatory frameworks, and with the aim to ensure accountability and competitive practices. To this end, we agree to establish, where appropriate, an ad hoc multi-stakeholder dialogue on investment, with the aim of deepening strategic cooperation in key sectors. We exchanged views on land reform and the Constitutional process in South Africa and how to maintain investor confidence, promote agricultural production, improve food security and reduce poverty, as key components of our partnership.
We reiterate our commitment to respecting the WTO Agreements on Sanitary and Phytosanitary Measures and on Technical Barriers to Trade. In order to find mutually acceptable solutions to impediments to trade in agriculture, agri-food and manufactured goods, we agree to strengthen our dialogue and cooperation on TBT and SPS issues, including regionalization concerns of both the EU and South Africa. We welcome the conclusion and provisional implementation in 2016 of the EU-SADC EPA, which has created the foundation for a new and mutually beneficial economic relationship between the EU, South Africa and the other partners of the EU-SADC EPA. We also commit to work towards a prompt resolution of trade impediments – including the agriculture and agri-food sector – affecting smooth trade flows, where relevant, bilaterally and/or with other ADC EPA Member States in the framework of the EU-SADC EPA.
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Remarks by President Cyril Ramaphosa. “We have also agreed to strengthen cooperation on investment in support of economic development, infrastructure, industrialisation, skills development, small business development and entrepreneurship. We will work together to support the digital transformation of the economy in an inclusive manner by supporting digital innovation, digital infrastructure, the information society, and by fostering digital skills for all.”
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Remarks by President Donald Tusk. “South Africa is a key player, both regionally and globally, and we will step-up our cooperation accordingly, to defend our shared values and interests. These include support for multilateral solutions, including trading system, and the rules-based global order, which will be discussed in two weeks’ time at the G20 in Argentina. Next year, South Africa will be on the United Nations Security Council, providing another opportunity to enhance our cooperation on peace and security further. Also when it comes to migration. Like Europe, South Africa is a destination country for migrants and refugees. So, it is important for both of us that sending-countries take back irregular economic migrants, when requested.”
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Carien du Plessis: Amid the Brexit high drama, SA and the EU chiefs talk up trade. The “reboot” of the relationship with the European Union comes as South Africa is emerging from what Ramaphosa likes to call “difficult times”, mostly referring to former president Jacob Zuma’s final term in office which was dominated by State Capture and corruption allegations. Ramaphosa’s administration started reaching out after he took over in February, partly driven by a will to attract $100bn in foreign investment to get South Africa’s economy going again. The compact size of his delegation, consisting only of finance minister Tito Mboweni and trade and industry minister Rob Davies, clearly pointed to a business-mindedness.
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Eurostat: The EU is the third largest partner for trade in goods with Africa, behind China (the largest partner) and Japan, and in front of South Korea and the United States. Since 2015 there has been a trade in goods surplus with Africa and in 2017 the surplus was €18bn. This was lower than the peak of €28bn in 2016, due to an increase in imports from Africa – the first increase in imports from Africa to the EU since 2012. 23 EU Member States had a trade in goods surplus with Africa in 2017 – highest two were Germany (€8.3bn) and France (€5.6bn). [Download: pdf Africa-EU International trade in goods statistics (1.03 MB) ]
Illicit financial flows via trade mis-invoicing: WCO study report
The WCO’s study report, Illicit financial flows via trade mis-invoicing (pdf) is now available for public consultation. The report is the result of a successful collaboration between the WCO Secretariat, academic, intergovernmental and industry experts and a few customs administrations who provided key data to the Secretariat. The Report was endorsed by the WCO Council in June and subsequently presented to the G20 Development Working Group in July 2018, which had originally tasked the WCO with the composition of a report during the 2016 Hangzhou Summit. The report contains an overview of the current methods employed in assessing the magnitude of IFFs via trade mis-invoicing - the Price Filter Method and Partner Country Method - and features pioneering research from Global Financial Integrity and Central Michigan and Pennsylvania State universities. Additional contributions on inter-agency cooperation, best practices from the Korean Customs Administration and new technologies such as Blockchain provide a comprehensive account of the scale of IFFs and their wide-ranging impact.
Beitbridge, Chirundu: Border economies linkages to the development of trade corridors and regional value chains in SADC (GEG Africa)
There is a complex relationship between trade facilitation and local border economies. Trade facilitation is essential to keep traffic flowing through border towns and maintain their viability; but very efficient border posts also reduce the need for firms specialising in helping traders overcome hurdles at borders. The research considered this relationship as part of a broad-based approach used to engage with different stakeholders. Economic development opportunities for border economies are intimately linked to the operation of border posts. Our research highlights some of the complex linkages to be considered. The subsequent policy recommendations can be simplified into four key policy observations: [The authors: Anna Ngarachu, Christopher Wood, Heinrich Krogman, Elisha Tshuma, Dale Mudenda, Catherine Grant Makokera. Commentary: Reformed pan-Africa policies and OSBPs enable fish traders and processors to conduct easier and more equitable cross-border trade]
SADC Business Council: The voice of the private sector for regional industrialisation and integration
During a recent meeting of SADC’s National and Regional Business Apex Bodies, participating delegates officially adopted and endorsed the platform which will become the formal regional body for engaging with all SADC structures through the channels of the SADC Secretariat. “The SADC Business Council will foster a stronger working relationship between the public and private in the execution of the SADC Industrialisation Strategy and Roadmap 2015-2063. We are honoured that SADC’s National and Regional Business Apex Bodies have appointed the NEPAD Business Foundation as an interim Secretariat for the SADC Business Council until mid-2019,” said Peter Varndell, NBF’s CEO.
Advanced global workshop on government procurement and governance issues. DG Azevêdo: “The event stands out for many reasons. It is the first time that we are holding a three-day workshop of this kind here at the WTO. And it also brings a different perspective to the table. Usually our capacity building efforts in this area focus on market access issues involved in government procurement. However, this initiative focuses primarily on governance matters. We all know the importance of the government procurement sector to the global economy. Government procurement accounts for a significant proportion of GDP, on average 13-15% worldwide.”
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Joint statement of the 7th EU-South Africa Summit
EU-South Africa Summit: Strengthening the Strategic Partnership
At the 7th European Union-South Africa Summit held in Brussels on 15 November 2018, Leaders agreed on a number of steps to reinforce bilateral and regional relations, focusing on the implementation of the EU-South Africa Strategic Partnership. This includes economic and trade cooperation and pursuing the improvement of business climate and opportunities for investment and job creation which are of mutual interest.
Leaders also discussed common global challenges, such as climate change, migration, human rights, committing to pursue close cooperation both at bilateral level and on the global stage. A number of foreign and security policy issues, including building and consolidating peace, security and democracy in the African continent and at multilateral level were also raised. Leaders finally committed to work towards a prompt resolution of trade impediments affecting smooth trade flows.
Jean-Claude Juncker, President of the European Commission and Donald Tusk, President of the European Council, represented the European Union at the Summit. South Africa was represented by its President, Cyril Ramaphosa. EU High Representative for Foreign Affairs and Security Policy/Vice-President of the European Commission, Federica Mogherini, Vice-President for Jobs, Growth, Investment and Competitiveness Jyrki Katainen and Commissioner for trade Cecilia Malmström also participated, alongside several Ministers from South Africa.
President Juncker said: “The European Union, for the South African nation, is a very important trade partner. We are convinced that as a result of today's meeting we will find a common understanding on the open trade issues. South Africa and Africa are very important partners for the European Union when it comes to climate change, when it comes to multilateralism. It is in the interest of the two parties – South Africa and the European Union – to invest more. It will be done.”
In his remarks, European Council President Donald Tusk stated: “Our talks today demonstrate that, from climate change and migration to trade and security, we can develop an even stronger partnership between us, which would be a powerful example to the rest of the world.
“Today, we had a productive discussion on how to address common challenges and how to strengthen our ties. South Africa is a key player, both regionally and globally, and we will step-up our cooperation accordingly, to defend our shared values and interests. These include support for multilateral solutions, including trading system, and the rules-based global order, which will be discussed in two weeks’ time at the G20 in Argentina. Next year, South Africa will be on the United Nations Security Council, providing another opportunity to enhance our cooperation on peace and security further.
“Also when it comes to migration. South Africa is a destination country for migrants and refugees. So, it is important for both of us that sending-countries take back irregular economic migrants, when requested.
“Last but not least, we discussed Brexit. South Africa, like all our international partners, is concerned by Brexit. We updated President Ramaphosa on the state of play of negotiations, and assured him that the EU will do its utmost to keep partner countries informed and to reduce the negative impact of the Brexit process.”
President Cyril Ramaphosa, in his remarks, said: “The outcomes of this Summit support and reinforce the initiatives we have launched in South Africa to accelerate investment, create jobs and promote growth in our economy. The Summit builds on the successes of the Presidential Jobs Summit and inaugural South Africa Investment Conference held in October.
“We used the opportunity of this Summit to reinforce our ties with Europe and to obtain the EU’s support for our economic and development agenda.
“The EU is South Africa’s largest trading partner and largest foreign investor. The value of trade between South Africa and the EU has increased nearly four-fold since 2000. Over 2,000 EU companies operate in South Africa creating more than 500,000 direct and indirect jobs.
“Together with the EU, we have committed ourselves to exploring opportunities for investment, technical assistance, and the improvement of business and investment climates to promote sustainable development. We have also agreed to strengthen cooperation on investment in support of economic development, infrastructure, industrialisation, skills development, small business development and entrepreneurship.
“We will work together to support the digital transformation of the economy in an inclusive manner by supporting digital innovation, digital infrastructure, the information society, and by fostering digital skills for all. Together, these will boost overall productivity, social inclusion, living standards and an efficient use of natural resources.”
In the area of trade, President Ramaphosa continued: “We are pleased with the implementation of the Economic Partnership Agreement between the EU and the Southern African Development Community, which has created the foundation for a new and mutually beneficial economic relationship between the EU and partners in Southern Africa.
Joint statement of the 7th EU-South Africa summit
Mr. Donald Tusk, President of the European Council, Mr. Jean-Claude Juncker, President of the European Commission, and Mr. Cyril Ramaphosa, President of the Republic of South Africa, met in Brussels on 15 November 2018 for the 7th Summit between the European Union (EU) and South Africa, and noting that the last Summit took place in 2013, issued the following statement:
- We, the leaders of the European Union and South Africa, reaffirm the importance of our Strategic Partnership based on shared principles, equality and interests. We note that our meeting takes place 100 years after the birth of Nelson Mandela and is an opportunity to build on his unique legacy.
Multilateral cooperation
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We recommit to working together to support multilateralism, democracy and the rules-based global order, in particular at the United Nations and global trade fora, to jointly promote development, security and human rights for all. South Africa’s upcoming term as an elected member of the United Nations Security Council in 2019-2020 presents an opportunity to enhance cooperation on peace and security. As part of our commitment to stronger global governance, we support the process of UN reform, including efforts on the comprehensive reform of the UN Security Council and the revitalisation of the work of the General Assembly. We agree that enhanced cooperation will be vital in multilateral fora addressing global challenges and crisis situations. We agree to coordinate positions, where feasible, in view of the upcoming G20 Summit in Argentina.
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We are determined to promote free, fair and inclusive trade and the rule-based multilateral trading system with the World Trade Organization (WTO) being at its core, and serving the interest of all its members. We are deeply concerned about the systemic impact of protectionist measures that are incompatible with WTO rules and that put the multilateral trading system at risk. We commit to work together to address the root causes of the challenges faced by the multilateral trading system through strengthening the WTO with the aim of improving its effectiveness and functioning as well as overcoming the present difficulties regarding the effective functioning of the Appellate Body of the dispute settlement mechanism. We also commit to engage in discussions at the United Nations Commission on International Trade Law (UNCITRAL) on investor-state dispute settlement reform, while further engaging in discussions in other relevant fora on provisions in investment treaties especially on how to facilitate and promote more investment towards sustainable development.
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We welcome Iran’s continued commitment to the full and effective implementation of the Joint Comprehensive Plan of Action (JCPOA), as confirmed by the IAEA in thirteen reports, and in line with its obligations under the Treaty on the Non-Proliferation of Nuclear Weapons. We call on the remaining parties to the JCPOA to continue to honour their commitments under the Agreement. We recall that the JCPOA, which is working and delivering on its goal, is a key element of the global non-proliferation architecture and a significant diplomatic achievement endorsed unanimously by the UN Security Council in its Resolution 2231. We stress the importance of the preservation and continued, full and effective implementation of all aspects of the JCPOA, which includes sanctions lifting and the consequences arising from it, in the interest of regional and international peace and security. We call upon Iran to play a constructive role in the region and to refrain from any activities which are inconsistent with UN Security Council Resolution 2231.
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We share concerns about the erosion of the global norm against the production, use and stockpiling of chemical weapons. We fully support the work of the Organisation for the Prohibition of Chemical Weapons in strengthening implementation of the Chemical Weapons Convention.
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We express our joint commitment to ensuring a successful outcome for COP 24, including the Paris Agreement Work Programme and the mandated high level events, in pursuit of the objective of the United Framework Convention on Climate Change (UNFCCC). We have taken note of the latest Intergovernmental Panel on Climate Change (IPCC) special report, which unequivocally confirmed the negative impacts of climate change and indicated that global emission reductions in all sectors are crucial and that further action is needed in mitigation and adaptation, notably to reach the temperature goal as set out in the Paris Agreement.
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We commit to strengthening cooperation on migration, which requires a comprehensive international response, including to address the root causes of irregular migration. We note that safe, orderly and regular migration can contribute positively to growth and sustainable development in countries of origin, transit and destination. We take note of the discussions at the United Nations level on the Global Compact for Safe, Orderly and Regular Migration and the Global Compact on Refugees, which can contribute to strengthening the international response to migration flows and refugee situations.
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We agree to strengthen cooperation at the United Nations Human Rights Council and other multilateral fora and to continue to engage on human rights issues in the framework of the South Africa-European Union Structured Dialogue Forum on Human Rights, especially as regards the respect for, the promotion, protection and fulfilment of all universally recognised human rights and fundamental freedoms in multilateral fora, supporting the moratorium on death penalty as a first step towards its universal abolition, ensuring the full implementation of all human rights of all women and girls as an inalienable, integral and indivisible part of all human rights and fundamental freedoms, empowering women and girls and achieving gender equality, eliminating all forms of gender-based violence, protecting the rights of the child, advancing the rights of people with disabilities, as well as preventing and punishing the crime of genocide, war crimes, crimes against humanity in compliance with the international human rights law and international humanitarian law. We confirm our commitment in particular to the full and effective implementation of the Vienna Declaration and Programme of Action, the Durban Declaration and Programme of Action, the Copenhagen Declaration on Social Development, the Beijing Declaration and Platform for Action and the Programme of Action of the International Conference on Population and Development, and the outcomes of their review conferences.
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We underline the importance of reinforcing global and regional natural resources governance, including tackling illegal exploitation, in order to promote sustainable development, especially in relation to minerals and wildlife. We will take forward our joint work in the Kimberley Process, as well as in the context of CITES, and in particular its 18th Conference of the Parties in May-June 2019. We agree to step up cooperation on ocean governance building on the United Nations Convention on the Law of the Sea (UNCLOS) and follow-up to the 2018 Our Ocean Conference.
Bilateral Cooperation
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Over the past years the EU and South Africa have deepened cooperation through twenty policy dialogues in areas such as climate change, natural resources, science and technology, research and innovation, employment, education and training including digital skills, health, energy, macro-economic policies, human rights and peace and security. We welcome the revival of the South Africa-EU Forum on Environment, Climate Change, Sustainable Development and Water. In this regard we agree to further cooperate in the areas identified in the Terms of Reference of the dialogue, which include bio-diversity, circular economy and water resources management issues among others, also involving our private sector operators.
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We acknowledge the strengthening of science and technology cooperation through new strategic focus areas of cooperation, including in the marine, bioeconomy and nanotechnology sectors, while opening-up to more innovation oriented activities. This has been facilitated through several scientific exchanges as well as the signing of the Belém Statement on Atlantic Research and Innovation Cooperation; the joining of the International Bioeconomy Forum as well as through the upcoming signing of the Collaboration Arrangement with the Joint Research Centre. The area of research infrastructures remains a key area for continued cooperation. We look forward to stepping up collaboration in key areas such as open science, big data platforms, digital and Information and Communications Technology, as well as sectors linked to Industry 4.0. These are important for our joint efforts towards innovation as well as growing the necessary jobs and skills base. We welcome and support initiatives in the science and research domains that are of benefit to Africa, including the European Developing Countries Clinical Trials Partnership.
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We reaffirm our commitment to enhance cooperation towards addressing challenges of inequality and poverty, to achieving gender equality and our shared interest in fostering investments notably towards sustainable development, decent jobs, especially for young people and using a gender-sensitive approach. Our partnership should contribute to South Africa’s socio-economic transformation agenda in support of the implementation of the 2030 Agenda for Sustainable Development and the African Union’s Agenda 2063.
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Since South Africa’s first democratic elections in 1994 and the signing of the Trade, Development and Cooperation Agreement (TDCA) in 1999, the EU has supported comprehensive development assistance programmes with a total contribution to South Africa amounting to €3 billion. We agree to work towards the consolidation of gains achieved and continue to support good governance and democracy, innovation, exchange of expertise and best practices. New strategies and tools for cooperation and the use of innovative instruments such as blending and guarantees will also be considered to diversify our cooperation and enhance its effectiveness. The EU and South Africa will, amongst others, explore the opportunities provided by the EU External Investment Plan under its three pillars.
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Recognizing the EU as a significant and long term investor in South Africa, we commit to exploring all of the opportunities for investment, technical assistance including project preparation, and the improvement of business and investment climates to promote sustainable development. Acknowledging South Africa’s successful hosting of the Job Summit and Investment Conference in October 2018 that showcased new opportunities for investment in South Africa, as reflected in the Case for Investing in South Africa, and policy initiatives that are helping to create an investment-friendly environment, we agree to strengthen cooperation on investment in support of economic development, infrastructure, industrialisation, skills development, small business development and entrepreneurship in accordance with the priorities identified in South Africa’s socio-economic agenda. We support the digital transformation of the economy in an inclusive manner by supporting digital innovation, digital infrastructure, the information society, and by fostering digital skills for all, in order to boost overall productivity, social inclusion, living standards and an efficient use of natural resources.
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We agree that attracting direct investment will contribute to support growth and fight against poverty, unemployment and inequality in South Africa. Therefore we are committed to enhancing bilateral investments by improving skills for employability, and by ensuring a conducive and value-based business environment, within transparent and predictable policy and regulatory frameworks, and with the aim to ensure accountability and competitive practices. To this end, we agree to establish, where appropriate, an ad hoc multi-stakeholder dialogue on investment, with the aim of deepening strategic cooperation in key sectors.
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We exchanged views on land reform and the Constitutional process in South Africa and how to maintain investor confidence, promote agricultural production, improve food security and reduce poverty, as key components of our partnership.
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We reiterate our commitment to respecting the WTO Agreements on Sanitary and Phytosanitary (SPS) Measures and on Technical Barriers to Trade (TBT). In order to find mutually acceptable solutions to impediments to trade in agriculture, agri-food and manufactured goods, we agree to strengthen our dialogue and cooperation on TBT and SPS issues, including regionalization concerns of both the EU and South Africa.
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We welcome the conclusion and provisional implementation in 2016 of the EU-Southern African Development Community (SADC) – Economic Partnership Agreement (EPA), which has created the foundation for a new and mutually beneficial economic relationship between the EU, South Africa and the other partners of the EU-SADC EPA. We underline the benefits of the full and effective implementation of the EU-SADC EPA, including with regard to expanded and enhanced protection of Geographical Indications (GIs) as provided for in the EU-SADC EPA. The implementation of the EU-SADC-EPA in line with the development-orientated focus of the Agreement can make a significant contribution to reinforcing mutually beneficial and inclusive trade and to enhancing regional integration.
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We also commit to work towards a prompt resolution of trade impediments – including the agriculture and agri-food sector – affecting smooth trade flows, where relevant, bilaterally and/or with other SADC EPA Member States in the framework of the EU-SADC EPA.
Regional cooperation
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We confirm our commitment to a stronger and sustainable partnership between the African Union and the EU and agree to the full implementation of the outcomes of the 5th AU-EU Summit in 2017, and to continue to support and solidify the gains made by the African Union’s Agenda 2063, its First Ten Year Implementation Plan and the various African Flagship Programmes. We welcome the new Africa-Europe Alliance for Sustainable Investment and Jobs as put forward by the European Commission.
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We confirm our common resolve to reform the future relationship between the EU and the countries of the African, Caribbean and Pacific Group of States. We look forward to the successful conclusion of negotiations for a post-Cotonou Partnership Agreement that will contribute towards the attainment of the 2030 Agenda on Sustainable Development and Agenda 2063.
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We welcomed each other’s role in fostering peace and security in our respective regions and noted South Africa’s important regional and continental role in peace and security.
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We agree to identify possible areas for cooperation on Security and Defence and related matters. We further agree to explore opportunities to enhance our cooperation in peace and security, conflict prevention and in mediation, including through exchanging best practices and lessons learned from our respective engagements, and to identify opportunities for concrete operational cooperation, dedicating special attention to advancing the global Women, Peace and Security agenda, especially in promoting meaningful participation and leadership of women in peace processes.
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20th Extraordinary session of the African Union Executive Council held in Addis Ababa
The 20th Extraordinary Session of the Executive Council of the African Union (AU) opened on 14th November 2018 at the AU Headquarters in Addis Ababa, Ethiopia with calls highlighting the need for reform of the AU in order for the continental organization to achieve peace, development, and the Africa we want.
Addressing the Ministers in his opening remarks, H.E. Moussa Faki Mahamat, Chairperson of the AU Commission, welcomed the Ministers to the AU Headquarters in Addis Ababa, and pointed out that the meeting is expected to lay the foundation for the success of the first Extraordinary Summit exclusively devoted to the issue of Institutional reforms of the Union.
“At the continental level, several initiatives are underway to speed up the economic integration efforts and the end of the multifaceted acts of violence that continue to ravage different regions of Africa. These developments demand that we enhance the efficiency of our Union,” said the Chairperson of the African Union Commission.
The institutional reforms touch on all aspects of the functioning of the Union and all its organs. The outcomes of this meeting will have a lasting impact, as will be endorsed during the Assembly of Heads of States and Governments to be held on 17th and 18th, setting the path of continental renewal, said the Chairperson.
H.E Dr. Richard Sezibera, Chairperson of the Executive Council in his opening remarks, stated that “Africa’s unity and Africa speaking in one voice has proven to be a positively disruptive force in the international scene.... [T]his should be the norm more than an exception.”
As the reforms take place there is need to recognize that self-financing of the Union in a sustainable manner will be a key determinant of our accomplishments, said Dr. Sezibera.
The opening ceremony of the Executive Council, took place in the presence of the Foreign Affairs Ministers of AU Member States, AU Commissioners, Heads of the Regional Economic Communities (RECs), AUC senior officials and other invited guests. The Extraordinary Session will prepare for the 11th AU Extraordinary Summit which will be held on 17-18 November 2018.
For two days, the AU Ministers of Foreign Affairs and External Relations will consider and deliberate on the draft agenda, decisions and declarations that came out of the meeting of the Permanent Representative Committee (PRC) from 5-6 November 2018, and the outcomes of the 6th Retreat of the Executive Council held on 12-13 September 2018 on AU Institutional Reform.
The meeting will consider proposals on the reform of the structure and portfolio of the senior leadership of the AU Commission, selection of the senior leadership of the Commission, administrative and financial reforms, and the mandate of the AU Development Agency (AUDA) in line with the pdf Assembly Decision on the Transformation of the NEPAD Planning and Coordinating Agency (NPCA) into the AUDA (972 KB) .
The Ministers will also consider division of labor between the AU, RECs, continental organizations and Member States, strengthening of the African Peer Review Mechanism (APRM), Financing of the Union, and AU Peace Fund.
Furthermore, the meeting will have a briefing on the Report of the Chairperson of the Executive Council to the Assembly on the Outcome of the 19th Extraordinary Session of the Executive Council on the ACP Post-2020, and will prepare draft decisions, draft agenda and draft work program of the 11th Extraordinary Session of the Assembly, scheduled to take place 17-18 November 2018. 45 African leaders are expected to attend the 11th Extraordinary Summit of Au Heads of State.
For more on the AU reform process, please visit our African Union Resources page.
Statement of the Chairperson of the African Union Commission, H.E. Mr. Moussa Faki Mahamat
The present meeting of the Executive Council marks a new stage in the process of institutional reform of our Union. It is expected to lay the foundation for the success of the first Extraordinary Summit exclusively devoted to this issue.
The meeting is taking place in a context that deserves special attention.
At the level of the Continent, several initiatives are underway to speed up the economic integration efforts and the end of the multifaceted acts of violence that continue to ravage different regions of Africa, with their litany of suffering and death. At the international level, we are facing a worrying decline of multilateralism and the principles of solidarity that must underlie our common humanity, thus exposing the weakest to all kinds of pressures and blackmail.
These developments dictate that we enhance the efficiency of our Union. On the one hand, the ambitious projects that we have set require that we increase our performance, a capacity to effectively translate our proclamations into action. On the other hand, the ferocious international competition impose on us the need to close our ranks more than ever before and to give ourselves the collective means to make our voice heard and ensure the consideration of our interests on the world arena.
This is to stress the great importance of this meeting. Its Conclusions, as will be endorsed by the Extraordinary Summit on 17 and 18 November, will have a lasting impact on the functioning of our Union.
The ongoing institutional reform is, undoubtedly, one of the most ambitious initiatives for change ever taken by our Union. It touches upon all aspects of its functioning and concerns all its organs. Other attempts were made in the past. These, let's face it, did not live up to expectations, leaving a bitter taste of unfinished business.
It is, therefore, significant that the Heads of State and Government decided, in January 2017, in Addis Ababa, to be directly involved in this process. Obviously, the other organs of our Union have also an important role to play and I welcome their contributions.
But by taking the leadership of the reform process, our leaders clearly indicated their determination to follow up all aspects and ensure its successful conclusion. They put their credibility in the balance.
In fact, our role for all of us, you, as the Executive Council and we, as the Commission - is to contribute, as best as we can, to the success of the action initiated by the Assembly of the Union. I have no doubt that your session will be another step towards the objective to which all our efforts are geared.
The work done by the Permanent Representatives Committee, at their meeting held from 5 to 7 November 2018, will certainly facilitate your task. The PRC considered in depth many issues. This concerns the Commission, with a particular focus on streamlining the structure of its leadership and the portfolios, the method of selecting its members and measures to ensure real accountability both within the Commission and to the Member States.
It obviously behoves you to decide on the action to be taken about the suggested options. But whatever formula is chosen, it is imperative to preserve the fundamental principles that have underpinned the composition of the Commission: gender parity and equitable regional representation. Similarly, it is necessary to take into account the heavy tasks to be performed, which demand that they be properly distributed.
At the same time, I would like to welcome the recommendations made with regard to the process of transforming NEPAD into a Development Agency and the division of labour between the Continental and the Regional levels and the strengthening of the African Peer Review Mechanism.
Reform is a holistic enterprise. It cannot succeed if it is carried out in a partial manner. Its success presupposes that the objective of efficiency, priority setting and mobilisation of greater political will applies to the entire Union.
Admittedly, the implementation must be gradual, to take into account the difficulties inherent in such an exercise: methodical, to avoid falling into an unhelpful and ultimately counterproductive process and consensual, in order to win the support of all.
At the same time, it is important that the vision underpinning the reform be comprehensive, encompassing all its aspects, so that every step taken is part of an overall architecture.
In this context, it seems also as crucial that we seize the opportunity of the Extraordinary Summit to discuss issues on which the moment of decision-making has not yet come. In so doing, it provides general orientations to guide the Commission in the preparation of the studies that will be submitted to you in February 2019.
This must, particularly, be the case for the organs gradually established since 2002 to promote a Continental governance more in line with the aspirations of our peoples and likely to support the more effectively the process of integration that we have embarked upon. I am here referring to the Pan-African Parliament, the African Court and the African Commission on Human and Peoples' Rights, the Committee of Experts on the Rights of the African Child, the Advisory Board on Corruption as well as the Commission on International Law.
These organs make, each in its field, quality contributions to our collective work. Among other examples, I would like to point out, here, the work of the Commission on Human and Peoples’ Rights and the Court, of the same appellation, in promoting the observance of human rights.
In spite these achievements, there are many challenges related to the delay in the ratification of the instruments concerned, which hinders their universalization on the Continent, the low level of implementation of the decisions adopted, which undermines the credibility of the organs concerned, the lack of human and financial resources, which impede their capacity for action.
Another issue on which we must and can make progress concerns sanctions against countries that do not pay on time their statutory financial contributions. The objective is to put a definitive end to the chronic delay in the payment of the statutory financial contributions. We must all the more move forward and this issue be dealt with separately from the Scale of Assessment, which will has to be agreed upon in February 2019.
As you are aware, at the Nouakchott Summit, it was decided that the Executive Council convene a session enlarged to other relevant Ministers to consolidate the Common Position on Post-Cotonou arrangements with the European Union. This meeting was held in Addis Ababa on 14 September.
Unfortunately the meeting was inconclusive. The main point of divergence has been the role that should be played by the African Union in the negotiation of a Compact between Africa and Europe.
The Chairman of the Executive Council and I will have the opportunity to report in detail on the proceedings of the meeting held last September. Suffice it, at this stage, for me to underscore that the expiry of the Cotonou Partnership Agreement affords us the opportunity to build a relationship that really takes into account our achievements in the areas of peace and security, governance and integration, and serve as a lever for the fulfilment of our aspirations as stipulated in Agenda 2063. I wish to state frankly that the old patterns certainly offer the comfort of familiarity, but they are no longer adapted to the exigencies of the time.
I believe that we can, on the basis of the deliberations of your Extraordinary session, find the necessary compromise between the various concerns expressed and speak with one voice on this matter in the interest of the continent.
Much is expected from this meeting. Intense preparatory work has already been done, including through the Retreat that you held in early September and the meeting of the PRC at the beginning of this month.
It is important to translate into reality the expectations raised with the tangible progress on the path of Continental renewal. The Commission, as regards this ambition, will, as always, be by your side.
I thank you for your kind attention.
Speech by Dr Richard Sezibera, Chairperson of the Executive Council
It is with a deep sense of humility and commitment, that I am addressing you today as a brother and colleague. In my new capacity as Minister of Foreign Affairs and International Cooperation of Rwanda, I am honored to be steering these discussions on the African Union Reforms, which I am sure we all agree on, are in many ways a rendez-vous for our continent’s future, as well as our institution’s.
As we like to say in Rwanda, Africa’s unity and Africa’s speaking with one voice, has proven to be a positively disruptive force on the international scene. We have witnessed this lately, both at the WHO’s and Francophonie’s elections. We should resolve that these results become the norm more than the exception.
Allow me to end this introduction by saying that I see many familiar faces in this room. Friends that I have known for years and worked with in the past, friends that I truly look forward to reconnecting with, in order to advance our common AU agenda for the benefit of the African people.
We gather here today for an important task in the service of Africa. An efficient, fit for purpose AU, able to deliver on the Agenda we have agreed on, and flexible enough to innovate to meet the challenges of tomorrow.
The ongoing Institutional Reform is already registering progress in a number of areas, which AUC Chair Moussa Faki regularly reports on. I wish to commend him, the Reform Implementation Unit, and his entire team at the AU Commission, for the hard work put into seeing the reforms gradually come to fruition.
I also wish to thank Member States, for your support in ensuring that we are determinedly moving ahead. Without it, the reforms would not have reached the point at which they are today. We may have lengthy discussions at times, but they clearly remain healthy ones, aiming to achieve our objectives. We must then continue these constructive debates, while keeping in mind that time is of the essence. Let us not put off for tomorrow, what we can do today.
Our agenda today builds on exchanges held in this very room last September. The Permanent Representatives Committee (PRC) diligently prepared the current meeting, and it is only fitting that I thank our Ambassadors for providing recommendations, which we will consider in the next few minutes.
I understand that the Reform of the AU Commission (AUC) was extensively discussed, and strong support made in favor of a leaner, more efficient Commission with rationalized portfolios. I am told that the retreat in September also converged towards these same principles.
Further, we know that a lot of thinking was put into the design of recruitment and selection mechanisms, to ensure that the AUC can leverage the best minds and skills the continent has to offer, while involving Member States in the process.
In the same vein, strong accountability and performance systems are essential. Performance-based measures must be strengthened for the senior leadership and institutionalized across the entire organization, with adequate measures in place to address non-delivery.
As we design performance management mechanisms for our Commission, we must also commit to being more accountable ourselves as member States, to fulfilling our obligations, and being held to account when we don’t.
Of course, as we reform the Commission, we know that self-financing our Union in a sustainable and predictable manner will be a key determinant of our accomplishments. I am told there has been a significant reduction in our reliance on partners’ funding this year, with this trend expected to continue in the next few years.
However, for this to be sustained, we must create the necessary growth to enable us to continue to do so, starting with the ratification of the African Continental Free Trade Area; and by honoring our financial obligations, including by adopting the 0.2% levy through our national legislative bodies.
An AU Reform process goes beyond the Commission alone, even if it has been the predominant focus of our talks this year. We know that the entire institutional architecture of our Union has to be addressed.
Whether it is about organs dealing with development matters such as the African Union Development Agency (AUDA) and its pressing need for a clear mandate; about those dealing with governance objectives, such as the African Peer Review Mechanism (APRM) and related financing modalities; or whether about a strategic division of labor among the AU, Member States, RECs and other key continental institutions, there is still much to be accomplished.
Our work over the next two days will be demanding, but we can aim to complete our Executive Council Session with clear recommendations to our leaders on the AUC Reforms, AUDA’s mandate, APRM’s budget, and proposals on the division of labor among key African institutional stakeholders. We certainly owe our collective people that much.
Let me conclude with a special mention of the post-Cotonou Framework, which we will briefly discuss tomorrow and further submit for consideration to the Assembly of Heads of State. Africa needs to speak with one voice, and negotiate as one. That is the only fitting way for a vibrant Africa, finally taking her rightful place in the concert of nations.
Now we must get to work, and I wish us all fruitful deliberations.
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tralac’s Daily News Selection
AfCFTA Phase II negotiations: expert workshop concludes today in Addis (UNECA)
The AfCFTA Phase II issues are investment, competition policy, and intellectual property rights. These provide a critical complement to the Phase I topics of trade in goods and services, by helping to “ensure that the benefits from integration are not only deepened, but shared for a win-win AfCFTA”, says Mr David Luke, coordinator of the African Trade Policy Centre. Following the experts group meeting, a validation workshop is to be held, 16-19 November, to review draft chapters of the Assessing Regional Integration in Africa IX report on the theme, Next steps for the African Continental Free Trade Area. Publication of the ARIA report is scheduled for February 2019, coinciding with the launch of the AfCFTA Phase II negotiations. [ARIA: pdf Concept note, chapter outline (209 KB) ]
AUC, NEPAD rally partners for next phase of PIDA (AU)
The event (13 November) gathered representatives from GiZ, EU, Chinese Mission to the AU, and the embassies of Indonesia and Korea, representing the Group MIKTA, which is an informal partnership between Mexico, Indonesia, South Korea, Turkey and Australia. A number of key themes emerged in the main discussion, covering a wide range of issues including: strengthened involvement of the private sector in infrastructure, formulation of project selection criteria, pre-screening of projects against these criteria, support to the expert pool under the Service Delivery Mechanism for early-stage project preparation and support to the optimization of the Continental Business Network for an increased private sector engagement.
ECOWAS Ministers of Finance approve draft Supplementary Act on Community rules of origin, procedures (ECOWAS)
The final report of their meeting, which concluded on 2 November, stated that the draft supplementary Act was approved, subject to rephrasing its Article 26 to ensure that companies which already benefit from tariff preference under the old protocol do not lose it with the coming into force of the new text. Also approved is the draft Supplementary Act on Mutual Assistance and cooperation between customs administrations of ECOWAS member states and collaboration between them and ECOWAS Commission on customs matters. In addition to the draft regulation on the Change of Product Category in the ECOWAS Common External Tariff, the Ministers approved the draft Supplementary Act adopting Community Rules for the Elimination of Double Taxation with Respect to taxes on Income, Capital and Inheritance as well as the Prevention of Tax Evasion and Avoidance within the ECOWAS Member States. On the strength of the progress made, the ECOWAS Commission’s Commissioner for Finance Mrs Halima Ahmed, entreated the Ministers on the timely remittance of Community levy that is collected directly and domiciled in the ECOWAS account maintained in the various Member States. She also called for a rigorous application of the tax base.
The Ministerial Session of the EAC’s Sectoral Council on Trade, Industry, Finance and Investment takes place tomorrow, Friday
Mozambique Economic Update: Shifting to inclusive growth (World Bank)
Buoyed by a drop in inflation and the advancement of one of two major gas projects, the pdf Mozambique Economic Update: Shifting to inclusive growth (701 KB) notes that the country is more stable since the 2016 debt crisis triggered the economic slump, but growth prospects are limited. GDP growth was an average 3.8% in 2016 and 2017 and is expected to reach a slightly lower rate of 3.3% in 2018. Services such as tourism, transport and finance – all hardest hit by the crisis – have shown a modest increase in growth, the report says, however these gains were offset by slowed growth in the extractives sector. Mozambique’s growth opportunities also hinge on the recovery of consumer spending, especially in services, which had been the largest driver of growth before 2016, the report notes.
While poverty has been reduced, the MEU notes that there is more inequality as economic progress increasingly becomes less inclusive. The analysis notes several positive developments, including an acceleration in the rate of poverty reduction between 2008 and 2014, bringing poverty down from 59% of the population to 48%. However, these gains were accompanied by a widening gap between the better-off and the poor, the report says, hindering Mozambique’s progress in achieving shared prosperity and making it now among the most unequal countries in Sub-Saharan Africa. At the same time, the rate of the economy’s labor productivity growth declined as people moved away from agricultural jobs to services such as catering and retail, the report notes. “When looking back, it is clear the Mozambique’s high growth period yielded important progress for poverty reduction,” Mahdi said. “But in looking ahead at the future drivers of growth, it is even clearer that it is the quality, not just the quantity, of growth that will matter for making economic progress more inclusive.” [The Portuguese version can be accessed here]
Mauritius-India CECPA negotiations nearing conclusion (GoM)
Mauritius’s negotiations on the Comprehensive Economic Partnership Agreement with India is nearing conclusion with the 7th round of negotiations scheduled for next week. It is expected that the CECPA will be signed during the Prime Minister’s, Mr Pravind Kumar Jugnauth, visit to India in January 2019. This announcement was made yesterday by the Minister of Foreign Affairs, Regional Integration and International Trade, Mr Seetanah Lutchmeenaraidoo. He was speaking at the opening ceremony of a two-day national workshop on the state of play of the WTO.
pdf Ghana: The 2019 Budget Statement and Economic Policy of Government (902 KB) (MoF)
Mr. Speaker, this Government continues to improve the attractiveness of Ghana as an investment destination. Our efforts to improve the business environment are being recognised. Ghana’s ranking on the World Bank Ease of Doing Business report rose 6 places, from 120 to 114 out of 190 countries, and we maintained our status as the highest ranked West-African nation. In 2019, the Ministry of Trade will prioritize and fast-track the implementation of the Business Regulatory Reform programme including the Legislative and Administrative reforms to further improve Ghana’s performance in the Doing Business Index. In addition, an online Electronic Registry will be launched in 2019. It will document all business-related laws, regulations, administrative notices, procedures and fees. This will provide open and transparent access to business regulations in Ghana.
We continue to achieve marked success in our investment promotion drive. As at September, this year, the Ghana Investment Promotion Centre had registered 93% of its target of 126 businesses with foreign participation for the year. These businesses represented $2.0bn of FDI, and in 2019 the Centre is aiming to register 130 new businesses with foreign participation, attracting FDI of $2.3bn. Attracting FDI into our country is critical for growth and regional competitiveness. To make Ghana more attractive for FDI, Government intends to make Ghana a member of the Africa Trade Insurance Agency. [Ghana’s SDG Budget Baseline Report]
Republic of Congo: IMF staff completes staff visit (IMF)
Substantial progress has been achieved in the implementation of the authorities’ structural reform agenda, including the publication of a diagnostic study on governance, the introduction of a legal requirement to publish annual audited financial statements of the Congolese national oil company (SNPC), and the online publication of production sharing agreements in the oil sector. Additional progress is needed to strengthen the legal frameworks for the Commission on Transparency and the asset declarations regime, and to increase transparency in the management and accounting of oil revenues. The IMF team will continue discussions with the authorities on the remaining steps needed to bring the Republic of Congo’s request for a three-year arrangement under the Extended Credit Facility to the consideration of its Executive Board. This will require some adjustments to the 2019 Draft Budget, implementation of reforms to improve governance and transparency, and the provision of explicit assurances on financing from external official creditors, including debt relief, which is needed to restore debt sustainability.
Tanzanian cashew price hike could lead to global shortage, traders say (Reuters)
Tanzania’s plan to buy the country’s entire 2018 cashew nut crop could lead to a global shortage, with processors in Vietnam and India likely to be hit first, traders said. President John Magufuli has ordered a 94% increase to cashew nut prices to protect farmers from low prices and told his government to acquire the estimated 220,000 tonne crop after private buyers refused to buy at the higher price. Tanzanians would eat the nuts themselves if they could not sell them, Magufuli said, raising concerns that the nation’s most valuable export crop will not reach global markets. If the nuts are not sold to buyers in Vietnam waiting for them, “there is going to be a shortage” Sushant Gupta, owner of Indian-based commodity trading company ReloBridge, said. Tanzania exports 75% of East Africa’s cashew crop, the International Nut and Dried Fruit Council Foundation says and its export revenues doubled to $540m last year from $270m in 2016, official data shows.
Egyptian investments in Africa reach $10.2bn – Minister (Egypt Today)
Egyptian investments in Africa recorded $10.2bn, and African investments in Egypt hit around $2.8bn, according to Minister of Investment Sahar Nasr. Nasr noted that President Abdel Fatah al-Sisi puts the economic and investment relationships with Africa as a priority. Nasr invited the AIF audience to participate in Africa 2018 Forum (8-9 December), which will be held under the auspices of the president and will be organized by the Ministry of Investment and International Cooperation and the Regional Investment Agency of the COMESA. The minister affirmed the importance of this forum in setting priorities for development of the African continent.
Egyptian National Corporation for Investment in Africa to be established (Egypt Today)
The Cabinet, on 7 November, granted the Ministry of Agriculture and Land Reclamation, and other public institutions, approval to establish “The Egyptian National Corporation for Investment in Africa.” Parliamentarian Mohamed Saad Temraz affirmed that the committee will host representatives of the ministry in few days to explain the prospective corporation’s mission, and how it will deal with countries in the continent.
US trade with Southern Africa grows (Fresh Plaza)
The two-way agricultural trade volume between the US and countries in Southern Africa reached a record $1.5bn last year, according to most recent international ag trade report from the USDA. “South Africa is sort of the entry point, an anchor, for a lot of Africa,” said Ted McKinney, undersecretary for Trade and Foreign Agricultural Affairs at USDA, who recently visited the region on an agriculture trade mission.
India’s digital services exports hit $83bn says new survey (UNCTAD)
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Experts meet to set the stage for AfCFTA Phase II negotiations
A meeting of experts was hosted from 12-15 November 2018 by the African Union Commission (AUC), United Nations Conference on Trade and Development (UNCTAD) and the Economic Commission for Africa (ECA) in Addis Ababa at the United Nations Conference Centre to discuss the African Continental Free Trade Area (AfCFTA) Phase II issues.
The AfCFTA Phase II issues are investment, competition policy, and intellectual property rights. These provide a critical complement to the Phase I topics of trade in goods and services, by helping to “ensure that the benefits from integration are not only deepened, but shared for a win-win AfCFTA,” says Mr. David Luke, coordinator of the African Trade Policy Centre (ATPC) of ECA.
Following the experts group meeting, a validation workshop is to be held on November 16, 17 and 19 to review draft chapters of the Assessing Regional Integration in Africa (ARIA) IX, a flagship report of ECA, on the theme, “Next steps for the African Continental Free Trade Area”.
The ARIA report provides highly applied research to form the intellectual groundwork underpinning the phase II negotiations. To the greatest extent possible, the research aims to consider issues that are relevant not just to the AfCFTA now, but to future African negotiations with other trading partners and negotiations elsewhere in the world.
Assessing Regional Integration in Africa IX Report: Next steps for the African Continental Free Trade Area
Background
The African Continental Free Trade Area (AfCFTA) is a tool for driving African industrialization, economic diversification and development. It helps to promote the type of trade that produces sustainable growth, creates jobs for Africa’s youth, and fosters opportunities for nurturing Africa’s businesses and entrepreneurs.
Negotiations for establishing the AfCFTA were launched in June 2015 by the Heads of State and Government of the African Union (AU) at the 26th Ordinary Session of the AU Assembly. Ten rounds of negotiations concluded with the signing of the AfCFTA Agreement on 21 March, at the 10th Extraordinary Session of the AU Assembly, in Kigali, Rwanda, by 44 AU Member States. A further 6 Member States signed the pdf Kigali Declaration (209 KB) , reaffirming their commitment to the AfCFTA and their intention to signing it after undergoing the required domestic review processes of their respective legislatures. There remain 5 AU Member States who have not yet signed either the AfCFTA or the Kigali Declaration; several of these are, however, expected to do so later in 2018.
With the vast majority of the continent committed to the AfCFTA, the agreement will enter into force after the 22nd instrument of ratification has been deposited with the African Union Commission (AUC). State Parties to the agreement must also conclude its implementation roadmap, including the finalization of schedules of commitments and rules of origin.
Yet this concludes just the phase I negotiations of the AfCFTA. Aspiring to establish a ‘deep’ trade agreement between African countries, the Heads of State and Government of the AU also agreed that the AfCFTA should address ‘behind the border’ trade issues. The AfCFTA was hence structured with phase II negotiations on three topics: a) competition policy, b) intellectual property rights, and c) investment. Across these topics, the AfCFTA will harmonize and align policy to reduce trade costs, promote integration and realize sustainable and inclusive development across Africa.
Beyond these specific topics, digital trade and e-commerce has been further mooted as a new area in which dedicated policy alignment in Africa could be of value. The mode of trade is increasingly digital; this is appreciated in regional approaches to the digital economy in several other parts of the world, including with ASEAN’s Coordinated Committee on E-Commerce or the single digital market in the EU.
Such policies seek to address not just the opportunities of digital trade, such as reduced information costs and information asymmetries, but also the challenges, such as threats to industrialization and data ownership.
Main themes and conceptual approach
The aspiration is for the research to be highly applied: the knowledge gathered and produced should match the issues to be negotiated in the AfCFTA phase II negotiations and strive, wherever possible, to inform the content of the negotiations going forward. As such, the intention is for the research to form the intellectual groundwork underpinning the phase II negotiations. While this ensures that the report is meaningful and relevant, it is also intended that its content be timeless: to the greatest extent possible, the work will consider issues that are relevant not just to the AfCFTA now, but to future African negotiations with other trading partners and negotiations elsewhere in the world.
The topics addressed by the AfCFTA are not new. Other regional groupings, from Asia to South America and indeed sub-regions in Africa, have taken regional approaches to such issues as intellectual property rights, competition policy, investment, and digital trade and e-commerce. Drawing from this, the adopted methodology will be anchored on a combined case study and comparative analysis method, but will also draw from existing relevant research material.
The four main themes to be addressed by the report are:
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Competition policy
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Investment
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Intellectual property rights
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Digital trade and e-commerce
Across each of the four themes of the report will be two-to-three main case studies consisting of analysis in different world regions or sub-regions of Africa. These will build a discussion on the existing types of possible policies and their characteristics in each of the four subjects, as well as their developmental potential. Concluding each theme will be a comparative analysis of the case studies from which recommendations will be drawn for the specific African continental context.
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AUC Deputy Chairperson shares insights on the ongoing financial reforms of the Union
“This is a watershed moment for Africa”
At the 31st Ordinary Session of the African Union Summit held in Nouakchott, Mauritania in July 2018, a budget of US$681,485,337 was approved for the financial year 2019. The budget covers three components operational, programme and peace support operations. The Deputy Chairperson of the African Union Commission, Amb. Kwesi Quartey, shares the five key takeaways of the adoption of the 2019 budget in what he describes as a watershed moment for Africa.
1. Give us a brief on the 2019 budget of the Union
The Assembly of the Union adopted the 2019 budget for the Union at a total of US$681,485,337 at the African Union Summit held in Nouakchott, Mauritania in July 2018. This amount reflects a significant decrease of the annual budget by 12%, compared to the 2018 budget. It is also a reflection that the share of AU member states financing the budget has substantially increased compared to the partner funding in previous years. If you look at the 2019 budget, excluding the peace support operations, member states will contribute 66% of the budget while 34% is expected to be secured from our development Partners.
This increase of member states contribution has come about by implementing the decision on financing of the Union to fund the activities and agenda of the Union. Through this mechanism, we can see that the continent is gradually realizing its vision of reliable, predictable and sustainable funding of its agenda. The 2019 budget also demonstrates an enhanced process of domestic resources mobilization but most importantly, stringent measures are now in place to ensure the prudent use of these resources to meet the development needs of our Continent.
The breakdown of the 2019 budget is as follows; US$158.5 million will go into financing the operational budget of the Union, US$249.8 million will go into the program budget while US$273.3 million will finance Peace Support operations.
2. The preparation of the 2019 budget is said to be significantly different from the previous budget preparations, why is that?
The 2019 budget is different because the Union has adopted new ways of programme planning and budget process, to ensure greater accountability in line with the implementation of the decision of Financing on the Union.
This is the first time we had joint sittings of the AU Commission and organs, the Committee of Finance Ministers (F15) technical experts and the Permanent Representatives’ Committee sub-Committees of General Supervision and Coordination on Budget, Finance and Administrative matters and of Programs and Conferences, to prepare the budget. The preparation took about five weeks consecutively, looking carefully at the budget of each spending unit of the Union to ensure it complied with the nine golden rules.
During the 2019 budget, we also introduced the budget ceilings for departments and organs based on their track record on prudent execution rate, the ability to reach their targets and aligning their programmes strictly, to the priorities of the Union. This will greatly enhance the budget execution and ensure the expenditure is linked to results.
These joint sittings were also held at the ministerial level by the Committee of Ministers of Finance (F15) before the budget was presented to the Executive Council and the Assembly for adoption. The Committee of Ministers of Finance has since assumed responsibility for oversight of the African Union budget and Reserve Fund.
3. You have made reference to the nine golden rules, tell us more about that.
The nine golden rules are financial management and accountability principles adopted by the Assembly of the Union in January 2018. These rules are meant to ensure financial discipline within the Union to enable us decisively address issues of low execution rates, identify undetected wastages and instances of over-budgeting by departments or organs, as well as ensure full compliance with the African Union financial rules and regulations.
So far, we have fully implemented four of the nine golden rules. There is an interlinking factor on the application of all the nine rules with the progress in the implementation of the decision on financing of the Union and therefore we will soon have the other five rules applied.
The nine golden rules speak to the fact that;
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Member states’ contributions should cover a minimum threshold of the budget to ensure the Union’s self-sufficiency and sustainability, thereby decreasing dependence on external funding.
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The rules recognize the need for major changes to be effected to ensure revenues are predictable. This touches on elements such as the full payment of assessed contributions by Member States and partners’ contribution, for the revenue streams to be centrally coordinated.
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The rules also speak to the credibility of the AU budgeting system which must be based on a fully integrated and automated financial management system.
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As I mentioned earlier, one of the rules is the annual budget ceiling which is communicated to department and organs before they submit their budget proposals.
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Also, it is important that expenditure must at all times, be authorized for virements, surplus budgets and spending that exceeds approved budgets.
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Another key rule, is seeing to it that resource flows and transactions are reliable and efficient. Funds must be provided to departments and organs in the agreed amounts at the agreed times.
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Institutional accountability is of utmost importance, to ensure the flow of funds is tracked to service delivery units. This requires the harmonization of all the different management systems we use.
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Reporting is also an integral part of the financial management process. The Financial Rules and Regulations requires that departments and organs report all activities for which funds have been received, as part of the compliance and quarterly performance reports.
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Finally, there is also the aspect on centralizing the process for engaging partners to avoid unilateral engagements for partner funded programmes.
These rules are currently being translated into AU policy and procedures and will also be reflected in the AU’s updated Financial Rules and Procedures.
4. [With] regards to the decision on Financing of the Union, what is the progress on that since its adoption in 2016?
There is commendable progress in the collection of the 0.2% levy by member states. 11 of our member states paid their 2018 assessed contributions to the AU, either partially or in full, through the new financing arrangement. We have 24 States that are at various stages of domesticating the Kigali Decision on Financing the Union and of these, 14 are actually collecting the levy.
Let me also add that there is flexibility built into the implementation of the 0.2%. Member States have the ability to determine the appropriate form and the means they will use to implement the decision in line with their national and international obligations. It is for this reason that Member States that are, for example, members of the World Trade Organization have implemented the 0.2% levy without contravening their international trade obligations.
Also, as I mentioned earlier, the introduction of the golden rules and the joint sittings have provided stronger technical oversight of the AU budget.
Lastly, I think I would highlight the operationalization of the Peace Fund as a remarkable milestone. This year our Member States have contributed over US$55.9 million to the Peace Fund, which is the largest amount of money Member States have ever contributed to the Peace Fund since it was established in 1993.
5. What are your projections in advancing the ongoing financial reforms?
Looking at the progressive developments in Africa’s self-financing agenda, I believe this is a watershed moment for Africa. Our focus is to gradually move towards funding 100% of the Union’s operational budget, 75% of the programme budget and 25% of peace support operations by 2021, for the full ownership of the Union’s agenda.
We are working on revising the Scale of Assessment as currently, 48% of the Union’s budget is dependent on the contributions of only 5 member states under “Tier 1” of the scale of assessment. This presents clear risks to the stability of the budget. It is for this reason that in a meeting held in August 2017, Ministers of Finance recommended the introduction of ‘caps’ and ‘minima’ to our existing scale of assessment, in order to improve overall burden-sharing and risk reduction.
We also want to strengthen the sanctions regime for non-payment of contributions to ensure AU Member States payments are made on time. Under the current sanctions regimes, Member States non-payment are classified to be in default only if they are in arrears for two full years. This has led to a trend where about 33% of the assessed contributions are regularly held in arrears.
Finally, we are working towards developing a credible medium-term budget framework (2019-2021) based on revenue forecasts and capacity to spend. This will enable the Union to improve the credibility of its budget, strengthen financial management capacity and accountability and demonstrate value for money and results to its Member States. We are committed to ensure the highest standards of finance and budget management as well as seeing to it that we have a credible budget based on capacity to spend and proper revenue forecasts.
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AUC and NEPAD rally partners for next phase of PIDA
The African Union Commission and the NEPAD Planning and Coordinating Agency convened partners in Addis Ababa, Ethiopia on 13 November 2018 to rally support for the second phase of the Programme for Infrastructure Development in Africa (PIDA) Priority Action Plan (PAP), which is currently under formulation.
GIZ started its new PIDA-support phase in August 2018 with four output areas covering EURO 7 million. The objective of the meeting was to garner joint understanding of objectives and content on the next GIZ-PIDA support phase; clarify on modes of cooperation, communication, and monitoring progress; and develop a joint workplan for GIZ Support to PIDA Phase 2018-2021.
In his remarks, the Director for Infrastructure and Energy at the African Union Commission, Mr. Cheikh Bedda stated that the Coordination Meeting is happening at a strategic time in the life of PIDA.
“The implementation of the first phase, running from 2012 to 2020, has almost reached its end, engagement is well underway in the implementation of PIDA, and negotiations are ongoing for the next phase of PIDA-PAP. By bringing together all these partners, the coordination meeting provides a unique opportunity to promote collaboration and coordination on the second phase of PIDA-PAP (2020-2030),” the Director explained.
“It is therefore necessary and important for AUC, NEPAD, GiZ and all involved that their activities and programmes should be harmonised and coordinated so that we can all put our financial and human resources to achieve our common goal for PIDA. This calls for stronger partnerships and collaborations among regional, continental and international institutions as well as active engagement with our member States,” Mr. Bedda asserted.
Mr. Bedda concluded his remarks by thanking GiZ and the European Union for their continued support to the first phase of PIDA and their pledges in the formulation and eventual implementation of the second phase of PIDA PAP.
On his part, Mr. Symerre Grey-Johnson, Head of Regional Integration Infrastructure and Trade at the NEPAD Planning and Coordinating Agency, stated “this gathering is laying the groundwork for a new era of collaboration of working together that will propel us towards our common goal for PIDA.”
Mr. Grey-Johnson gave an overall presentation on PIDA and an outlook on the formulation of the next phase with an invitation to all partners in attendance to involve by listing the opportunities for further engagement on PIDA and with the objective of optimal alignment and coordination between partners.
He appealed for tangible results from PIDA that can impact the lives of Africans while emphasizing the essential importance of strengthened collaboration from PIDA’s implementing partners.
The event gathered representatives from GiZ, European Union, Chinese Mission to the African Union and the Embassies of the Republic of Indonesia and Korea, representing the Group MIKTA, which is an informal partnership between Mexico, Indonesia, South Korea, Turkey and Australia.
A number of key themes emerged in the main discussion, covering a wide range of issues including: strengthened involvement of the private sector in infrastructure, formulation of project selection criteria, pre-screening of projects against these criteria, support to the expert pool under the Service Delivery Mechanism (SDM) for early-stage project preparation and support to the optimization of the Continental Business Network (CBN) for an increased private sector engagement.
Partners lauded the AUC and the NEPAD Agency for organizing such an event early in the process of the preparation of the next phase of PIDA and they agreed that going forward there should be an effort to reduce overlaps and duplication of efforts from partners to ensure increased efficiency.
It was also agreed that AUC and NEPAD will organize bilateral meetings with each partner in the coming two months to iron out the work plan and find common areas of cooperation.
This first time gathering of these key partners to PIDA was jointly organized by the African Union Commission (AUC) and the NEPAD Planning and Coordinating Agency (NPCA). About 20 delegates were in attendance.
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Mozambique Economic Update: Less poverty, but more inequality
As Mozambique begins to emerge from a two-year economic downturn, a new World Bank report warns that the country’s fiscal outlook remains fragile.
Buoyed by a drop in inflation and the advancement of one of two major gas projects, the Mozambique Economic Update (MEU): Shifting to Inclusive Growth notes that the country is more stable since the 2016 debt crisis triggered the economic slump, but growth prospects are limited.
Gross domestic product (GDP) growth was an average 3.8% in 2016 and 2017 and is expected to reach a slightly lower rate of 3.3% in 2018. Services such as tourism, transport and finance – all hardest hit by the crisis – have shown a modest increase in growth, the report says, however these gains were offset by slowed growth in the extractives sector.
Mozambique’s growth opportunities also hinge on the recovery of consumer spending, especially in services, which had been the largest driver of growth before 2016, the report notes.
“This trend reflects the reduction in consumer purchasing power, especially for households that have seen costs go up and their incomes stay the same,” said Shireen Mahdi, World Bank Senior Country Economist for Mozambique and lead author of the report. “It also signals the private sector’s reduced capacity for growth, and the capability of the economy to generate a sufficient volume of jobs.”
A strong policy focused on reducing macroeconomic uncertainty and enhancing investment would help lay the foundation for complete recovery and more inclusive growth, the report says.
Toward Broadly Shared Growth
While poverty has been reduced, the MEU notes that there is more inequality as economic progress increasingly becomes less inclusive. The analysis notes several positive developments, including an acceleration in the rate of poverty reduction between 2008 and 2014, bringing poverty down from 59% of the population to 48%.
However, these gains were accompanied by a widening gap between the better-off and the poor, the report says, hindering Mozambique’s progress in achieving shared prosperity and making it now among the most unequal countries in Sub-Saharan Africa. At the same time, the rate of the economy’s labor productivity growth declined as people moved away from agricultural jobs to services such as catering and retail, the report notes.
“When looking back, it is clear the Mozambique’s high growth period yielded important progress for poverty reduction,” Mahdi said. “But in looking ahead at the future drivers of growth, it is even clearer that it is the quality, not just the quantity, of growth that will matter for making economic progress more inclusive.”
The report recommends broadening the country’s drivers of growth and raising productivity in sectors with the highest employment potential, which, given its size, continues to be the agricultural sector.
Additional recommendations include:
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A long-term multifaceted policy package that strengthens Mozambican firms’ competitiveness, and increases their capacity to export and invests in building skills;
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A stable and appropriate macroeconomic framework that will facilitate the advancement of this goal – including a reduction of private sector crowding out and more accessible financing instruments;
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A focus on building broad-based firm, labor and institutional capacities to create opportunities, increase productivity and sophistication across several sectors, including manufacturing, services and agriculture.
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tralac’s Daily News Selection
Today’s trade-related event postings:
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Uganda’s Ministry of Trade, this morning, launched the Uganda Trade Information Portal. A related update from Rwanda.
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The Government of Djibouti and the World Bank are, today, co-hosting a high-level event to explore the potential benefits of digital development and propose a concrete roadmap of action. The event will also highlight the need for bolder action on digital development engagement across the region.
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Policy dialogue on strategies to broaden the investor base (14-15 November, Nairobi). This CABRI dialogue aims to improve communication and mutual understanding between the supply and buy sides and will consider policies and practices that may allay investor’s concerns which could lead to more sustainable sources of financing for the public sector.
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Diarise the launch of UNCTAD’s Least Developed Countries Report (20 November)
Africa Trade Forum: Third World Network-Africa’s AfCFTA information brief
Stakeholders in the Dakar consultation were concerned about the role of technology and the overall digital economy with its potential benefits and challenges. The meeting further acknowledged that the digital economy in all its forms is central to the future of Africa’s economy and hence the imperative for Africa to develop its own space for trading without an external intermediary. The meeting also acknowledged that data is the fuel that drives the digital economy and hence African data is highly valuable, and should be kept, and exploited on the continent and therefore urged the AUC to lead on this. The Dakar consultative workshop also discussed imminent challenges and threats to the AfCFTA. Participants were concerned with the possible uneven distribution of costs and benefits. Countries with large productive capacities such as South Africa, Kenya, Egypt and Nigeria, in manufacturing may experience significant economic growth and welfare gains while small economies and LDCs may face substantial fiscal revenue losses and threats to local industries. Shrinkage of some sectors may result in unemployment. Consequently, substantial fall in budget revenues may adversely affect governments’ capacity to invest in infrastructure, education and social programs which are crucial for attaining sustainable development. [Related: Africa objects to e-commerce regulation]
Identification for Development: Uganda country diagnostic (World Bank)
The ID4D diagnostic was undertaken between November 2017 and June 2018 at the request from the Ministry of Internal Affairs of the Government of Uganda under the umbrella of the World Bank’s Identification for Development (ID4D) initiative.This work was done with excellent collaboration from NIRA’s management and personnel. Its objective was to analyze the identification ecosystem in Uganda, highlight strengths and achievements, suggest areas of improvement, and build consensus around recommendations and next steps. This was done through in-person interviews with over 40 government and private stakeholders, a field visit, and a literature review. Draft findings and recommendations were presented at a consultation workshop in August 2018, attended by over 50 experts representing 30 MDAs and private sector organizations. Feedback from the workshop is reflected in the report. [National survey and segmentation of smallholder households in Tanzania: understanding their demand for financial, agricultural, and digital solutions; e-Nigeria tasks govt on knowledge based digital economy]
Singapore Fintech Festival: keynote speeches
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Narendra Modi. With the power of fintech and the reach of digital connectivity, we have started a revolution of unprecedented speed and scale. To begin with financial inclusion has become a reality for 1.3 billion Indians. We have generated more than 1.2 billion biometric identities – called Aadhaar or foundation – in just a few years. With our Jan DhanYojana, we aimed to give a bank account to every Indian. In three years, we have opened 330 million new bank accounts. These are 330 million sources of identity, dignity and opportunities. Less than 50% of Indians had bank accounts in 2014; now, it is nearly universal. So today, more than a billion biometric identities, more than a billion bank accounts and more than a billion cell phones give India by far the biggest public infrastructure in the world. More than Rupees 3.6 lakh crore, or $50bn dollars of benefits from government have reached the people directly. In short, the Indian story shows six great benefits of fintech: Access , inclusion; connectivity; ease of living; opportunity; and, accountability.
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Christine Lagarde. When it comes to fintech, Singapore has shown exceptional vision – think of its regulatory sandbox where new ideas can be tested. Think of its Fintech Innovation Lab, and its collaboration with major central banks on cross-border payments. In this context, I would like to do three things this morning: Frame the issue in terms of the changing nature of money and the fintech revolution; Evaluate the role for central banks in this new financial landscape – especially in providing digital currency; Look at some downsides, and consider how they can be minimized. [IMF analysis: Casting light on central bank digital currencies]
President Cyril Ramaphosa’s address, today, to the European Parliament (GCIS)
Africa will continue to strengthen bonds of friendship and cooperation with the citizens of her sister continents. It is therefore a matter of great satisfaction and promise that our partnership with the European Union is as strong as it has been enduring. It is grounded in responsibility, respect and mutual accountability. The nations of the EU are a source of investment, trade, skills and knowledge, which has worked with us as South Africa in our quest to grow our economy and improve the lives of our people. As we look to the future, we will continue to count on the strength of this partnership between our countries and our peoples. It was international solidarity that enabled us to extinguish the evil system of apartheid. It was collaboration and partnership that bound the countries of Europe in a pact to never again return to the excesses and divisions of the past. Unity, partnership and solidarity are the principles that have underpinned our cooperation, across two vast and different continents, out of dark histories and into a promising new dawn. South Africa, Africa and the European Union are bound by shared values of democracy and respect for human rights.
South Africa: Potential revenue losses associated with trade misinvoicing (GFI)
Analysis of trade misinvoicing in South Africa from 2010-2014 shows that the potential average loss of revenue to the government was approximately $7.4bn per year or $37bn during the period studied, according to a new study by Global Financial Integrity. The report analyzes South Africa’s bilateral trade statistics for five year period 2010-2014 using information from United Nations Comtrade and data made available from the South African Revenue Authority. The detailed breakdown of bilateral South African trade flows allowed for the computation of trade value gaps that are the basis for trade misinvoicing estimates. Import gaps represent the difference between the value of goods South Africa reports having imported from its partner countries and the corresponding export reports by South Africa’s trade partners. Export gaps represent the difference in value between what South Africa reports as having exported and what its partners report as imported. The average annual revenue lost due to the misinvoicing of imports was $4.8bn. This amount can be further divided into its component parts: [Download: pdf South Africa: Potential Revenue Losses Associated with Trade Misinvoicing (794 KB) ]
Engineers seek fairplay in major projects in EAC (The East African)
East African Community governments are under pressure from engineers, who are seeking equal opportunity in working on infrastructure projects in the region. The engineers say that despite a Mutual Recognition Agreement which was signed by four EAC member states to ease mobility of labour and services, they are yet to venture into major projects which are currently being undertaken by foreign contractors. Kenya, Tanzania and Uganda signed the MRA in 2012 and Rwanda joined in 2016. However, Burundi and South Sudan are yet to design because they have not yet established legal and institutional frameworks that regulate and oversee engineering work.
ASEAN Investment Report 2018: foreign direct investment and the digital economy in ASEAN (UNCTAD)
FDI flows to ASEAN rose to a record level, from $123bn in 2016 to $137bn in 2017, underpinned by significant rise in investment in eight Member States. As a result, ASEAN’s share of FDI flows to developing economies rose from 18% in 2016 to 20% in 2017. Of the total FDI flows to East and South-East Asia, ASEAN’s share also increased from 31% in 2016 to 34% in 2017. Intra-ASEAN investments, the biggest contributor to FDI flows in the region, reached a new high of $27bn, or around 19% to total inflows in the region. An important development in ASEAN is the rising investment in the digital economy, which includes e-commerce, fintech, venture capital and other digital activities such as in the development of data centres and various ICT infrastructure. Foreign and ASEAN digital MNEs and ICT companies are now increasing their attention on the region.
International Debt Statistics 2019 (World Bank)
International Debt Statistics 2019 is the World Bank’s compilation of statistics covering external debt and financial flows of 121 low- and middle-income countries during 2017 and an analysis of these data. Among key developments shown in the data (pdf): Net financial flows (debt and equity) to low- and middle-income countries rose 61% in 2017 to the highest level in three years, driven by a rebound in net debt inflows; Long-term debt inflows increased by 58% in 2017 to $309bn as a result of a rise in bond issuance; While external debt burdens on average remained moderate and were little changed from 2016, one third of low- and middle-income countries had a ratio of external debt-to-GNI above 60% at end 2017 and nearly half the countries had debt-to-export ratios exceeding 150%; Equity inflows of $511bn were little changed from the previous year as a sharp rise in portfolio equity inflows offset a downturn in FDI inflows; Public sector entities in the world’s poorest countries borrowed externally on a large scale in 2017 despite rising concerns about debt sustainability. [Related World Bank blog by Evis Rucaj]
GVC participation and deep integration in Brazil (World Bank)
One avenue to raise participation in global value chains is through (deeper) preferential trade agreements, and to this end the paper characterizes the level of integration of Brazil’s current preferential trade agreements. Brazil has witnessed high growth in total domestic value added embodied in gross exports since 1995, yet it exhibits lower international engagement in global value chains, but tends to be stronger as a seller than a buyer. Most of the participation on the selling side comes from indirect linkages with domestic input sectors, and services sectors have been important for growing the indirect value added in global value chain-oriented exports. A deep integration agenda focusing not only on border measures, but also on beyond-the-border measures, would help Brazil to maximize the benefits from participation in global value chains. Other than its natural partners, Brazil should integrate with countries where global value chains are taking place.
Examining the crude details: Government audits of oil and gas project costs to maximize revenue collection (Oxfam)
The petroleum sector offers governments huge potential revenues that could be invested in poverty alleviation and inequality reduction, but those revenues must first be collected. Taxes are levied on profits, but companies may seek to reduce their taxes by deducting ineligible or exaggerated costs, often paid to related parties. Governments’ essential tool to combat petroleum cost overstatement is the right to audit costs, but there is limited data on whether governments use this right effectively. Cost auditing practices in Ghana, Kenya, and Peru suggest that governments face significant challenges. Oxfam proposes recommendations to address these challenges and ensure that governments collect the taxes owed for the exploitation of their finite, nonrenewable petroleum resources.
Impact assessment for EA oil pipeline nears completion (The Citizen)
The Environmental Social Impact Assessment report for the East Africa Crude Oil Pipeline is in the final stages and will be completed by next month. The pipeline, which links Hoima in Uganda to Tanga Port in Tanzania, is expected to cost $3.5bn and planned to have a capacity of transporting 216,000 barrels of crude oil per day. Civil society organisations in Uganda and Tanzania yesterday convened a multi-stakeholder meeting to discuss updates on progress on the pipeline development, environmental social impact assessments, resettlement frameworks, commercial arrangements and other aspects related to the pipeline roll-out. “We expect to see a massive flow of foreign direct investment in the country amid completion of the pipeline project,” Tanzania Petroleum Development Corporation’s advocate Goodluck Shirima said when he addressed the meeting.
Today’s Quick Links: Ghana’s 2019 Budget Statement will be presented tomorrow: a preview TPDF soldiers arrive in Lindi to revamp cashew nut processing plant World Bank: Economy profile of the DRC Egypt’s private sector wins big at the Africa Investment Forum India to deepen trade opportunities in Nigeria’s fashion industry |
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Africa can learn from EU: President Ramaphosa
Africa can draw lessons from the European Union’s path to integration, economic and political union, and achieving social progress, President Ramaphosa has said.
In his address to the European Parliament on Wednesday, the President said the European Union (EU) was born out of the need to end the historic divisions on that continent, to create a firm base for the construction of a new Europe rooted in solidarity and cooperation and contribute to global peace, security and development.
The President said African countries have similarly embarked upon a new path of peace, development and transformation.
“The African Union’s Agenda 2063 provides a programme for integration and prosperity on a continent that has been racked by division, exploitation and strife,” he said.
The President is currently in Strasbourg, France, on a working visit to the EU, which is set to strengthen bilateral relations.
South Africa, President Ramaphosa said, has noted the tireless work of the European Parliament to ensure that the provisions of the Lisbon Treaty on the eradication of poverty continue to underpin the EU’s approach to external development cooperation.
Since 2007, South Africa and the EU have enjoyed the mutual benefits of a Strategic Partnership that continues to play a meaningful role in our country’s economic growth.
It covers over 20 sectoral policy dialogues on diverse issues from development cooperation, science and technology, health and trade, among others.
Inter-Parliamentary meetings between the South African Parliament and the European Parliament form part of the partnership.
“The meetings have played a crucial role in strengthening SA-EU relations, contributing to a strategic partnership based on equality, shared values and issues of mutual interest,” said President Ramaphosa.
He thanked the EU and its Parliament for the role they played in South Africa’s development.
For the African continent, a lack of investment and opportunity are a threat to development.
“We therefore welcome the support of the European Union for Africa’s developmental needs through initiatives such as the European External Investment Plan, the Economic Partnership Agreement and the new Africa-European Alliance for Sustainable Investment and Jobs,” the President said.
He underscored the importance of European and African countries to work together to develop sustainable and humane responses to the challenge of irregular migration.
“This is a challenge that Europe has had to deal with in recent years. So too has South Africa and several other African countries. We need to work together to address the root causes of irregular migration, which include poverty, inequality, unemployment, economic exclusion and competition for scarce resources.”
SA, EU strengthen relations
President Cyril Ramaphosa held discussions with the President of the European Parliament, Antonio Tajani, in Strasbourg earlier on Wednesday.
The strengthening of cooperation between the continents of Africa and Europe, expansion of youth employment and the opportunities and challenges offered by immigration into Europe were at the centre of the discussions between the two leaders.
Reflecting on the historical social and cultural relations between South Africa and Europe, President Ramaphosa emphasised South Africa’s commitment to strengthen existing relations, with a focus on further expanding economic ties.
“We are renewing our bonds and strengthening our historical ties. Now is the time to chart a new path of prosperity defined by increased investment and trade between our two continents,” President Ramaphosa said.
He expressed his support for Tajani’s intention to develop an investment-led Marshall Plan for Africa, identifying minerals and minerals beneficiation, cooperation in areas of digital infrastructure, tourism and climate change as areas of cooperation.
The President further welcomed the European Parliament’s commitment to economic diplomacy. “Ours is an association of equals and friends who want to work together in partnership,” the President said.
‘A partnership of equals based on shared values’
Address by President Cyril Ramaphosa to the European Parliament
It is a great honour and a privilege to address this gathering in the centenary year of the birth of Nelson Rolihlahla Mandela, the founding father of our democratic nation, a revered statesman and a committed internationalist.
We celebrate this centenary knowing well that Nelson Mandela does not belong to us, as South Africans, alone.
He belongs to all the people across the world who hold dear to the progressive and universal values for which he stood, and to which he dedicated his life.
He belongs not only to those who lived through the tumultuous events of the last century, but also to the generations that are to follow.
We live in the world that Mandela and the many great leaders of his age made.
We are grateful to the European Union – and to the leaders and peoples of Europe – for the tributes they have paid, in many different ways, to Nelson Mandela on the occasion of the centenary of his birth.
It is testament to the universal appeal of his vision that he is as revered on this continent as he is across the African continent.
We remember with the nations of the world the centenary of the armistice that marked the end of the First World War.
We pay tribute to all those who lost their lives in that great human tragedy, including the many South Africans of all races who fought in that war and who perished on these foreign shores.
Twenty-six years ago, in the city of Maastricht, the leaders of Europe signed the historic treaty that would mark a new era in the continent’s history.
Now, more than a quarter century later, that affirmation – of democracy, of liberty, of respect for human rights, of fundamental freedoms and the rule of law – endures.
These timeless values are beacons of hope in our troubled times.
For despite our greatest efforts, the world today is blighted by conflict, poverty and under-development.
In poorer countries, there is still a lack of meaningful social progress, unrest and displacement.
The spectre of the resurgence of racism and xenophobia cloaked in the mantle of nationalism is rising, and is a cause for great concern.
Unilateralism is on the rise and threatens to undermine our collective commitment to democratic values and respect for human rights.
Now, more than ever, we turn to our great leaders for strength and inspiration as we seek to resolve the most pressing challenges of the present.
We recall their words and their actions as we reaffirm our commitment to democratic values and to upholding the rights of every human being.
It was the great statesman and friend of the anti-apartheid cause, Olof Palme, who said:
“For us, democracy is a question of human dignity. This includes the political liberties, the right to freely express our views, the right to criticise and to influence opinion. It embraces the right to health and work, to education and social security.”
This view of democracy resonates with Nelson Mandela’s vision of a global community of nations that affirms the centrality of human dignity – and strives through all means available to improve the human condition.
Just four months after his release from prison in 1990, Nelson Mandela paid his first visit to the European Parliament to receive the Sakharov Prize for Freedom of Thought.
He used this occasion to thank the leaders and people of Europe for their contribution to the liberation of South Africa.
He called on the nations of Europe to continue to stand by South Africa as we sought to rebuild our country.
We are here today to confirm that indeed the nations of Europe answered that call, with conviction and generosity.
We are here today, following in the footsteps of Mandela, to thank the people of Europe for their untiring support.
The European Union was born out of the need to end the historic divisions on the continent, to create a firm base for the construction of a new Europe rooted in solidarity and cooperation and to contribute to global peace, security and development.
The countries of Africa have similarly embarked upon a new path of peace, development and transformation.
The African Union’s Agenda 2063 provides a programme for integration and prosperity on a continent that has been racked by division, exploitation and strife.
Nelson Mandela was an ardent advocate for Pan-Africanism, and believed that the continent could only reach her full potential if her peoples were united.
In pursuing this goal, there are many lessons we can draw from the European Union’s path to integration, to economic and political union, and to achieving social progress.
South Africa notes the tireless work of the European Parliament to ensure that the provisions of the Lisbon Treaty on the eradication of poverty continue to underpin the EU’s approach to external development cooperation.
Since 2007, South Africa and the EU have enjoyed the mutual benefits of a Strategic Partnership that continues to play a meaningful role in our country’s economic growth.
It covers over 20 sectoral policy dialogues on diverse issues from development cooperation, science and technology, health, trade, education and skills development to peace, migration, security and human rights.
An integral part of this partnership are the Inter-Parliamentary meetings between the South African Parliament and the European Parliament.
These meetings have played a crucial role in strengthening SA-EU relations, contributing to a strategic partnership based on equality, shared values and issues of mutual interest.
Allow me to express our sincere appreciation for the contribution that the European Union and the European Parliament have made not only to the development of South Africa, but also towards the achievement of progress across the African continent.
Nelson Mandela led South Africa in its peaceful transition to democracy.
But he had a bigger dream, of an Africa at peace with itself and the world.
In his lifetime he supported the fledgling African Union’s efforts towards conflict prevention and resolution, peacebuilding and post-conflict reconstruction.
He would have joined us in applauding the EU’s support to the African Union’s peace and security architecture and its steadfast support for efforts to silence the guns of Africa.
He always argued that lasting peace and security on the continent will not be possible without economic development.
Without opportunity, without investment, without thriving economies that enable us all to enjoy our place in the sun, we cannot hope to have political and social stability on the African continent.
We therefore welcome the support of the European Union for Africa’s developmental needs through initiatives such as the European External Investment Plan, the Economic Partnership Agreement[s] and the new Africa-European Alliance for Sustainable Investment and Jobs.
We should strive to ensure that these approaches are developed and implemented in line with Agenda 2063 of the African Union.
We should seek to ensure that these developmental initiatives support the establishment of the Africa Continental Free Trade Area and Africa’s overall industrialisation, infrastructure development and economic transformation.
We need to work together, as the countries of Europe and Africa, to develop sustainable and humane responses to the challenge of irregular migration.
This is a challenge that Europe has had to deal with in recent years.
So too has South Africa and several other African countries.
We need to work together to address the root causes of irregular migration, which include poverty, inequality, unemployment, economic exclusion and competition for scarce resources.
This should be informed by principles of solidarity and compassion, and by an unwavering commitment to the human rights of all people.
Africa is the cradle of humankind.
It is rich in land and water, abundant in minerals and blessed with a young, vibrant population.
It is the next frontier for growth, innovation and social progress.
To realise this potential, the people of Africa must unite.
Africa will continue to strengthen bonds of friendship and cooperation with the citizens of her sister continents.
It is therefore a matter of great satisfaction and promise that our partnership with the European Union is as strong as it has been enduring.
It is grounded in responsibility, respect and mutual accountability.
The nations of the EU are a source of investment, trade, skills and knowledge, which has worked with us as South Africa in our quest to grow our economy and improve the lives of our people.
As we look to the future, we will continue to count on the strength of this partnership between our countries and our peoples.
It was international solidarity that enabled us to extinguish the evil system of apartheid.
It was collaboration and partnership that bound the countries of Europe in a pact to never again return to the excesses and divisions of the past.
Unity, partnership and solidarity are the principles that have underpinned our cooperation, across two vast and different continents, out of dark histories and into a promising new dawn.
South Africa, Africa and the European Union are bound by shared values of democracy and respect for human rights.
We share a commitment to the ideals of free and prosperous societies – societies in which all persons live together in harmony and with equal opportunities.
We owe it to our great forbearers – leaders of the calibre of Nelson Mandela – to focus on what unites us and not what divides us, on what benefits us all and not on what enriches a few.
We owe it to them to build a strategic partnership that endures, that flourishes and that, above all else, advances the cause of human dignity.
We thank you all for your friendship, solidarity, partnership and support.
I thank you.
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Transforming African economies, building SMEs capacities: Fundamental to AfCFTA success
The Senegalese capital, Dakar, witnessed a range of stakeholders from across Africa for a consultative workshop on Africa’s Continental Free Trade (AfCFTA) from 5-9th November 2018. Participants discussed and raised number of concerns fundamental to the success of the AfCFTA.
Key concerns centred on the imperative of transforming Africa’s weak economies, building the capacities of Africa’s small and medium enterprises (SMEs), enhancing participation of diverse stakeholders at all levels and elevating the role of technology in Africa’s industrial development. Others included challenges likely to emerge in the implementation of the AfCFTA as well as the threats of external agreements that could undermine the AfCFTA as a pillar of Africa’s economic integration.
Convened by the African Union Commission (AUC) and hosted by ENDA Cacid, the consultative forum brought together leading private sector players such as the Pan-African Chamber of Commerce, non-governmental organisations, women groups, youth groups, labour movement, leading policy institutions such as the United Nations Economic Commission (UNECA), academia and traditional authorities. Regional Economic Communities (RECs) such as the Economic Community of West Africa States (ECOWAS) and Economic community of Central African states (ECCAS) were represented.
One of the critical issues raised in the deliberations was the potency of the AfCFTA to transform African economies which continue to depend heavily on primary commodities. Evolving from this over dependence on primary commodities to prosperous, inclusive and strong manufacturing-based economies is fundamental in measuring the success of the AfCFTA in relation to the aspirations of Africa’s peoples.
Making a presentation, Dr Halima Noor, Senior Expert on Trade in Goods at the African Union Commission, said unless the productive capacities of African economies are boosted, as spelt out in the pdf Boosting Intra-Africa Trade (BIAT) Programme (928 KB) , the AfCFTA would not yield much for Africa.
Fundamental to the economic transformation of African economies is the role that African small and medium enterprises can play. SMEs create about 80 percent of employment in sub-Saharan Africa. Thus, the consultative forum underscored the need to identify, elevate and build the capacities-skills, finance, technology etc-of African SMEs as that would be an important part of making a difference in boosting intra-Africa trade. This is especially true at a time when about 10 to 12 million graduates enter the job market every year in Africa. Unlike the SMEs, big companies and transnational corporations operating in Africa already have the financial muscle, technology, skills and the connections to do business in Africa.
The importance of the SMEs as well as other small but numerous players cannot be over emphasized in the AfCFTA discussions. At this year’s Africa Trade Forum held in Lagos, Nigeria, from the 2nd to 3rd of November 2018, Stephen Karingi of the Economic Commission for Africa’s Regional Integration and Trade Division Director, as part of the take home message for participants, stated that “In implementing the AfCFTA, we must also make sure not to forget Micro, Small and Medium Enterprises (MSMEs), women traders, smallholder farmers and informal cross border traders, who represent the majority of Africa’s trading community, and are crucial to driving poverty reduction efforts.”
Again, stakeholders in the Dakar consultation were concerned about the role of technology and the overall digital economy with its potential benefits and challenges. The meeting further acknowledged that the digital economy in all its forms is central to the future of Africa’s economy and hence the imperative for Africa to develop its own space for trading without an external intermediary. The meeting also acknowledged that data is the fuel that drives the digital economy and hence African data is highly valuable, and should be kept, and exploited on the continent and therefore urged the African Union Commission to lead on this.
Participants also raised the need for continuous enhancement of participation of all relevant stakeholders at the national, regional and the continental levels. The African Union Commission was commended for taking steps to improve inclusivity at the continental level. However, much improvement was required at the national level also. Elevating the participation of the RECs informed by wider and broader participation at the national level was underscored as central in raising the legitimacy and ownership of the AfCFTA.
Still on the issue of consultation, a key model for enhancing participation was shared by the Nigerian Office for Trade Negotiation. The Nigerian Office for Trade Negotiations had to hold much broader consultations, in terms of the geography and actors in Nigeria, following concerns raised by the Manufacturers Associations of Nigeria (MAN) and the Nigeria Labour Congress (NLC) with regards to the process and content of the AfCFTA at the national level.
This led to President Buhari of the Federal Republic of Nigeria to hold off the signing of the AfCFTA Agreement in March this year till date. Presenting the experiences of extensive consultations in Nigeria, Ambassador Chiedu Osakwe, Chief Negotiator of Nigeria on the AfCFTA, underscored the importance of proper consultation among all stakeholders in a country.
Participants also raised issue with the Africa Business Council (ABC). The Africa Union through the formal architecture for negotiations and implementation of the AfCFTA has created an African Business Council and this attracted concerns from stakeholders.
For instance, the Executive Director of the Pan-African Chamber of Commerce, Kebour Ghenna, making an intervention at the workshop, called for a cautionary approach to the creation of structures which could undermine already established and functional structures in Africa. He noted that the Chamber of Commerce in most countries, regions and at the pan-African level, can play an effective role in terms of putting forward the concerns of the private sector within the context of the AfCFTA.
Finally. the Dakar consultative workshop also discussed imminent challenges and threats to the AfCFTA. Participants were concerned with the possible uneven distribution of costs and benefits. Countries with large productive capacities such as South Africa, Kenya, Egypt and Nigeria, in manufacturing may experience significant economic growth and welfare gains while small economies and least developed countries (LDCs) may face substantial fiscal revenue losses and threats to local industries. Shrinkage of some sectors may result in unemployment. Consequently, substantial fall in budget revenues may adversely affect governments’ capacity to invest in infrastructure, education and social programs which are crucial for attaining sustainable development.
Key threats that came up during the discussions were the Economic Partnership Agreements (EPAs) and Bilateral Investment Treaties that African governments have signed. Now there is uneven development among African countries regarding the EPAs. Also, African countries have signed several Bilateral Investment Treaties that expose them to International arbitration in relation to investment issues.
This summary of discussions from the Dakar consultation was prepared by Sylvester Bagooro at Third World Network (TWN-Africa). TWN-Africa is the Secretariat of the Africa Trade Network (ATN).