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Global Financial Integrity releases new study on trade misinvoicing in South Africa
Trade misinvoicing in South Africa leads to massive revenue losses
Analysis of trade misinvoicing in South Africa from 2010-2014 shows that the potential average loss of revenue to the government was approximately $7.4 billion per year or $37 billion during the period studied, according to a new study by Global Financial Integrity.
The report, South Africa: Potential Revenue Losses Associated with Trade Misinvoicing, 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 $4.8 billion. This amount can be further divided into its component parts: uncollected VAT tax ($2.1 billion), customs duties ($596 million), and corporate income tax ($2.1 billion). Lost revenue due to misinvoiced exports was $2.6 billion on average each year which is related to lower than expected corporate income taxes.
Related GFI reports
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Nigeria: Potential revenue losses associated with trade misinvoicing
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Kenya: Potential Revenue Losses Associated with Trade Misinvoicing
Total misinvoicing gaps related to imports can be broken down by under-invoicing ($16.3 billion) and over-invoicing ($9.8 billion). It should be noted that these figures represent the estimated value of the gap between what was reported by South Africa and its trading partners.
The loss in government revenue is a subset of these amounts and is based on VAT tax rates (12.9 percent), customs duties (3.7 percent), corporate income taxes (21.7 percent), and royalties (1 percent) which are then applied to the value gap. Export misinvoicing gaps were a massive $11.6 billion for export under-invoicing and $8.6 billion for export over-invoicing annually. Lost corporate income taxes and royalties are then applied to export under-invoicing amounts to calculate lost government revenue.
The study examined trade data from the South African Revenue Service in order to conduct an in-depth examination of import under-invoicing. This process analyzed approximately 7.4 million trade transactions which included more than 8,200 commodity types for the period 2010-2015.
A key conclusion is that goods categories with a preponderance of under-invoicing tend to be associated with higher effective tax rates than other classes of imports. The data show that the top five categories for potential revenue loss related to import under-invoicing are machinery, knitted apparel, electrical machinery, non-knitted apparel, and vehicles. Three of these commodities (machinery, electrical machinery, and vehicles) are among the most commonly imported goods into South Africa.
Trade misinvoicing occurs in four ways: under-invoicing of imports or exports, and over-invoicing of imports or exports. In the case of import under-invoicing fewer VAT taxes and customs duties are collected due to the lower valuation of goods. When import over-invoicing occurs (i.e. when companies pay more than would normally be expected for a product), corporate revenues are lower and therefore less income tax is paid. In export under-invoicing the exporting company collects less revenue than would be anticipated and therefore reports lower income. Thus, it pays less income tax. Corporate royalties are also lower.
The report was published with the generous support of the Ford Foundation.
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Regional Risks for Doing Business 2018 (WEF)
Of the 34 countries in sub-Saharan Africa that we surveyed, “unemployment and underemployment” was identified as the most pressing concern for businesses in 22 of them. No other region recorded anything like this level of consensus among respondents, highlighting the profound challenges that the region faces on this issue, particularly in light of the demographic changes that lie ahead. The second-highest risk cited by businesses across sub-Saharan Africa is “failure of national governance”. Although this risk came top in only two countries (Ethiopia, Mozambique), it ranked in the top five for a further 18 countries, including the region’s largest economies (Nigeria, South Africa). [WEF: These are the top risks for doing business around the world]
Africa Group statement: 10th Session of the Trade and Development Commission (UNCTAD)
The African Group notes with appreciation the UNCTAD-UNEP collaboration that helped the Northern Corridor to develop its Green Freight Programme. This programme is now integrated into the NCTTA Master Plan and will be mainstreamed into the NCTTCA’s long term Sustainable Freight Transport Strategy. The Group also takes note in particular of the current work aimed at helping the Central Corridor articulate its Sustainable Freight Transport strategy that will be integrated in the Central Corridor Transit Transport Facilitation Agency Master Plan. The African Group welcomes the new collaboration between UNCTAD and the Islamic Development Bank relating to the commercialization and the management of the Trans-Saharan Road corridor linking Algeria, Tunisia, Niger, Nigeria, Mali and Chad. [Download: pdf Statement by Sudan on behalf of the African Group (422 KB) ]
AfCFTA, EPAs and Brexit: Africa needs holistic integration (BusinessDay)
So, my message at the GTR Africa conference was that Africa must integrate internally, by making AfCFTA work, and externally, by engaging constructively with Europe on the EPAs and with a post-Brexit open Britain. Africa must, of course, not ignore America, China, India, Japan and other major trading nations! In other words, Africa must integrate holistically! In a world of interconnected yet sovereign nations, free trade agreements are the guaranteed means of securing market access for a country’s exports, gaining access to cheap, valuable imports, and attracting foreign investment and capital. But FTAs are also powerful tools for incentivising domestic policy and institutional reforms and for signalling to the outside world that a country is open for business. When a country enters into meaningful FTAs it necessarily undertakes pro-market reforms, which assure foreign investors of its business-friendliness.
But Africa is reluctant to undergo radical policy and institutional transformation needed to make it business and investment friendly and, so, has failed to integrate internally, let alone externally, through deep and comprehensive FTAs. Indeed, Africa is the only continent that has failed to participate in meaningful FTAs. As a result, it is, perversely, signalling to the rest of the world that it is not a good place to do business. This was evident from the views of participants at the GTR Africa conference: [The author: Olu Fasan. Related commentary: Vera Songwe, Mamadou Biteye on the AfCFTA]
In Africa, more not fewer people will work in agriculture (World Bank Blog)
That Africa’s agricultural labor force continues to rise in numbers while the share declines is therefore not anomalous. Quite the opposite—an absolute net flow of labor out of agriculture would be extraordinary given the size of the agricultural labor force relative to the receiving sectors of services, construction, manufacturing and mining. Even as these sectors grow and absorb labor, they are not yet large enough to support a net reduction in number of people employed in agriculture. The period of absolute increase and relative decline in Africa’s agricultural labor force is likely to be prolonged given Africa’s slow demographic transition and the associated slow per capita income growth. Out of the slightly larger than 3 percentage points annual increase in Sub-Saharan Africa’s demand for food (in volume), about 2.6 points still come from population growth; the remainder from urbanization and income growth. [The authors: Luc Christiaenson, Karen Brooks]
Towards the African Governance Report: Institutional architecture to address illicit financial flows from Africa (UNECA)
The report will draw on insights from ECA’s previous work on illicit financial flows to provide a more systematic, comprehensive and in-depth treatment of how African countries can best develop and use institutions to tackle IFFs. The meeting, this week in Addis Ababa, will review, discuss and provide feedback and inputs, which will validate and enrich the content and structure of the concept note and lay the groundwork for the preparation of the report.
The political economy of South Sudan (AfDB)
The report provides the AfDB with a tool defining the entry points for dialogue and development interventions with South Sudan’s Transitional Government of National Unity. The political economy of South Sudan is characterized by six realities (pdf): (1) overwhelming opportunities in the non-oil sector that remain untapped due to political and civil insecurity; (2) high dependence on oil, which accounts for about 90% of government revenue, 95% of total exports and more than half of the country’s GDP; (3) political and security challenges that drain government resources and constrain foreign and domestic direct investments, and create macroeconomic instability; (4) poor economic and social infrastructure, limiting economic productivity and diversification; (5) diversion of attention by development partners to humanitarian support since the 2013 conflict; and (6) governance challenges and limited political will and capacity to make the necessary institutional changes.
IOM Trends Analysis: Most Horn of Africa migrants move within region (IOM)
Nearly 400,000 migrant movements were recorded in Djibouti, Ethiopia and Somalia during the first six months of 2018 – an average of 2,000 or more individuals per day. It is an active migration zone, characterized by what is considered “mixed” migration – or the movement of different population groups for a variety of reasons. A slim majority (51%) of these individuals are moving from, but also within, the Horn of Africa, followed by about 36 per cent whose movements are towards the Gulf Cooperation Council countries on the eastern route – through Djibouti, Somaliland and Puntland. Smaller movements are being tracked along the Southern Route (to South Africa) and the Northern Route (to Egypt and Israel), about 8 and 5%, respectively. These are a few of the findings detailed in a new report, pdf A Region on the Move (7.24 MB) . [Various downloads available; Related: IDA funding for refugees and hosts: 5 ways to improve and why we need more]
Bribes, beatings and gridlock at ports choke Nigeria’s economy (Bloomberg)
It can take 20 days to clear products, compared with 48 hours in neighboring Benin and Ghana, according to the LCCI. The cost of moving a container from Apapa to other parts of Lagos has soared to as much as 700,000 naira ($1,930) from about 150,000 naira two years ago as trucking firms put up their prices to make up for the delays, according to the Nigerian Shippers’ Council. It’s taken a toll on the companies of Aliko Dangote, Africa’s richest man. Dangote Cement Plc, Nigeria’s biggest listed firm, may cancel plans to build an export terminal at Apapa because of the congestion, Chief Executive Officer Joe Makoju said on a call with investors last month. Dangote Sugar Refinery Plc blamed a fall in third-quarter profit partly on the bottleneck there, which it said was leading to more smuggling of sugar through Nigeria’s land borders.
Nigeria’s FG is committed to expanding export of locally produced goods, services – Udoma (SundiaPost)
In line with government’s commitment towards expanding exports of locally produced goods and services as well as implementation of some critical aspects of the Plan, Minister of Budget and National Planning, Senator Udoma Udo, said a National Committee on Export Promotion has started implementing the Zero Oil Plan, as set out in the ERGP. The NCEP, the minister said, is working in close collaboration with the State Governments to promote the establishment of Domestic Export Warehouse and Aggregation Centres in each of the six geo-political zones of the country. “The Committee is also promoting Project MINE - ‘Made-in-Nigeria for Export’. Under Project MINE, the SEZs will be used as the mechanism for making Nigeria the pre-eminent manufacturing hub in Sub-Saharan Africa and a major exporter of Made-in-Nigeria goods and services regionally and globally.”
Kenya’s sugar import rises but production increases too (The East African)
The country imported more than 135,000 tonnes of sugar from Comesa and the EAC, out of the 189,000 tonnes it imported in the nine months to September, a significant reduction from the 933,000 tonnes of sugar it imported last year, of which only 300,000 tonnes was from Community countries. “Within the nine months to September, Comesa-FTA countries supplied Kenya with 84,127 tonnes, while 5,000 tonnes came from Comesa Non-FTA. The EAC provided 51,285 tonnes, with the majority being from Uganda, whereas imports from the rest of the world were 49,208 tonnes,” the latest report from the Sugar Directorate shows. There was also a slight rise in sugar exports in the nine months of this year to 1,947 tonnes against 363 tonnes in the same period last year. [Taskforce to salvage Kenya’s cane sector]
Tanzania: Govt keeps its word on saga over cashewnuts (IPPMedia)
Following the president’s intervention, the Lindi-based Bucco Investment Holdings factory will now be in the hands of the military. Speaking soon after swearing in newly appointed ministers and deputy ministers as well as Law Reform Commission chairman Judge (rtd) January Msoffe, President Magufuli said the Tanzania Agricultural Development Bank would buy the nuts at 3,300/- per kg, compared with the 3,000/- set by the government for auctions. Prime Minister Kassim Majaliwa, who hails from the cashewnut-producing Lindi Region, earlier told the president that some 15 companies had by yesterday confirmed that they would buy the stock from farmers at 3,000/- per kg. President Magufuli also warned that a thorough audit would be carried to gauge the performance of all boards, which include the cotton board, the pyrethrum board and the coffee board as well as the Cereals and Other Produce Board of Tanzania. President Magufuli also declared that the Tanzania Investment Centre would henceforth be a wing of the Prime Minister’s Office for enhanced performance.
South Africa needs an ‘explicit’ digital industrial policy (Engineering News)
Trade and Industry Minister Dr Rob Davies is warning that unless South Africa develops an “explicit digital industrial policy” there is no guarantee that the potential benefits of the so-called Fourth Industrial Revolution will outweigh the disadvantages. South Africa has had an official industrial policy since 2009, but the policy does not fully capture the technological advances that are disrupting primary, secondary and service sectors internationally. Speaking at a digital industrial policy colloquium in Pretoria, hosted by the Industrial Development Think Tank, Davies said digital technologies were transforming all industries, from farming to manufacturing. “There are a number of people around, either free-market fundamentalists, or ‘techie wow-wows’, who will tell us that every industrial revolution has winners and losers, but that, in the end, there were more winners. I don’t think we can take it for granted that that is going to be the case; we are actually going to have to work to make sure it happens in an inclusive way.” [2018 Internet Governance Forum, in Paris: summary of address by UN SG António Guterres]
South Africa: Industrial parks can be turned into Special Economic Zones if properly supported (dti)
The Director-General of the Department of Trade and Industry, Mr Lionel October, says with proper infrastructure, utilities, and management, the 26 approved Industrial Parks across South Africa can in future, become Special Economic Zones that can contribute immensely to the economy of the country and create jobs. October was speaking at the opening of the two-day Industrial Parks Symposium. “We must propose to cabinet what is it that we want to see out of these parks and eventually they must have the same benefits and support as the SEZs. We can also find a way to fast track this process so that they too can be managed efficiently and businesses can be clustered together.”
Today’s Quick Links: Kansas Department of Agriculture participated in a trade mission to South Africa Kenya’s stevia farmers to benefit from trade deal with China Gabon Special Economic Zone: Afreximbank’s revolving trade financing facility to CDC Gabon IMF’s Zambia end-of-mission statement OECD’s Global Forum on Competition: (i) Benefits and challenges of regional competition agreements (revised, pdf); (ii) Annexure: Inventory of provisions in regional competition agreements (pdf) IMF analysis of China’s rebalancing: recent progress, prospects and policies |
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SADC increases the voice of private sector for regional industrialisation and integration
The SADC region is poised for accelerated regional integration and growth. Current efforts to ensure such development include the implementation of the SADC Industrialisation Strategy and Roadmap 2015-2063 and the Regional Indicative Strategic Development Plan (RISDP).
These extensive frameworks are enabling critical role players for socio-economic development to coordinate their activities with the aim of achieving set goals and targets.
In the past, a major challenge with executing regional frameworks that require public-private collaborative efforts has been limited engagement between business and government role players during the development of policies that facilitate such activities.
During a recent meeting of SADC’s National and Regional Business Apex Bodies themed the SADC Business Council Founding Meeting, 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 (NBF) as an interim Secretariat for the SADC Business Council until mid-2019,” said Peter Varndell, NBF’s CEO.
The SADC Business Council will build on the successes and achievements of the Southern Africa Business Forum (SABF) particularly the Pharmaceutical working group and the hosting of the annual SADC Industrialisation Week (SIW) events over the past three years.
NBF projects and programmes are going to allow the SADC Business Council to leapfrog in terms of milestones as its activities will piggy back on the success of the Secretariat. These projects include the North-South Rail Corridor (NSC) which is focused on the optimisation, rehabilitation and upgrade of the railway network for the corridor which runs from the mining district of Kolwezi in the DRC to the ports of Durban and Richards Bay in South Africa and the SADC Regional Gas Task Force which is a multi-stakeholder platform for public-private sector dialogue designed to enable and support the monetization of the natural gas resources within the SADC region among others.
During the SADC Business Council Founding Meeting, which was organised by the NBF, Southern Africa Trust and supported by the SADC Secretariat and European Union, SADC’s National and Regional Business Apex Bodies agreed on the composition of the SADC Business Council’s Steering Committee, operational purpose and overall objectives in the short term.
“The SADC Business Council’s vision is to centralise high level public-private dialogue aimed at steering a successful regional market driven economy that supports growth, development and wealth creation. Much of the Council’s immediate activities will include lobbying for businesses and boosting the capacity of local private sector at regional level. This means advocating for an enabling and competitive business environment as well as supporting and strengthening local institutions and organisations”, said Ulrich Klins, Southern Africa Trust’s Public-Private Partnerships Manager.
The Council will have a wide scope in focus which will include advocating for more efficient protocols on trade; labour; employer-employment relations as well as foster SMME development in the region. The SADC Business Council is also going to allow for a more organised process of learning and sharing of experiences across the region as well as facilitating the efficient trickling down of regional policies at national level in SADC countries.
The SADC Business Council is going to increase the voice of private sector within the structures of government, allowing for early stage input in policy development. The Council will also table private sector proposals and action plans in support of government efforts aimed at regional industrialisation and integration as well as mobilise private sector resources to support SADC’s socio-economic development.
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From unemployment to growing cyber-risk: business executives in different regions have different worries
There are significant differences in risk perceptions across the eight regions covered in the World Economic Forum’s Regional Risks for Doing Business report.
Over 12,000 executives highlighted concerns ranging from economic to political, societal and technological. Unemployment, failure of national governance and energy price shocks were among the top worries of executives across various regions.
Cyber-attacks are the number one risk in Europe, East Asia and the Pacific and North America. This points to growing concerns about technological risks – cyber-attacks were the top risk in two regions, according to the 2017 survey (East Asia and the Pacific and North America), and only one region in 2016 (North America).
Failure of national governance ranked number one in Latin America and South Asia, highlighting the costs of political strains that have been evident in much of the world in recent years. In the energy-rich regions of Eurasia and Middle East and North Africa, energy price shocks were ranked as the top risk to doing business. Unemployment was perceived as the top risk for doing business in sub-Saharan Africa, representing mostly the absence of demand in the region.
“Given the current geopolitical uncertainty globally, cooperation within and among regions is of critical importance. Understanding the evolving risks in different regions is therefore top of mind for business leaders,” said Mirek Dusek, Deputy Head of Geopolitical and Regional Agendas and Member of the Executive Committee at the World Economic Forum.
“By drilling down to regional and country-level data, this new Regional Risks for Doing Business report allows us to gauge how risk sentiment is evolving around the world. Cyber-attacks are increasing in prominence, but it is striking how many business leaders point to unemployment and national governance as the most pressing risks for doing business in their countries,” said Aengus Collins, Head of Global Risks and the Geopolitical Agenda at the World Economic Forum.
“Cyber-attacks are seen as the number one risk for doing business in markets that account for 50% of global GDP. This strongly suggests that governments and businesses need to strengthen cyber security and resilience in order to maintain confidence in a highly connected digital economy,” said Lori Bailey, Global Head of Cyber Risk, Zurich Insurance Group, and Member of the Forum’s Global Future Council on Cybersecurity.
“While large cyber-attacks are the number one concern of executives in advanced economies there is growing apprehension about the potential for national governance failures in emerging markets,” said John Drzik, President of Global Risk and Digital at Marsh. “Across the globe, businesses are also concerned with rising geopolitical friction that has already resulted in rising tariffs and sanctions and which could further fuel the growing threat of expropriation or political violence.”
Methodology
The findings of the Regional Risks for Doing Business report are based on 12,548 responses from executives in 140 economies. Respondents were asked to select “the five global risks that you believe to be of most concern for doing business in your country within the next 10 years”. This question is included in the annual Executive Opinion Survey, which is a part of the World Economic Forum’s Global Competitiveness Report.
The latest edition of the survey was carried out from January to June 2018. Business leaders were asked to choose up to five risks from a list of 30, including terrorist attacks, extreme weather events and state collapse or crisis.
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IOM Trends Analysis: Most Horn of Africa migrants move within region
Nearly 400,000 migrant movements were recorded in Djibouti, Ethiopia and Somalia during the first six months of 2018 – an average of 2,000 or more individuals per day.
It is an active migration zone, characterized by what is considered “mixed” migration – or the movement of different population groups for a variety of reasons.
A slim majority (51%) of these individuals are moving from, but also within, the Horn of Africa, followed by about 36 per cent whose movements are towards the Gulf Cooperation Council countries on the eastern route – through Djibouti, Somaliland and Puntland.
Smaller movements are being tracked along the Southern Route (to South Africa) and the Northern Route (to Egypt and Israel), about 8 and 5 per cent, respectively.
IOM also recorded over 50,000 arrivals in Yemen during the first half of 2018, which is consistent with the 90,000-100,000 rates of arrivals from Africa annually to Yemen during recent years.
These are a few of the findings detailed in a new report, entitled A Region on the Move, that provides mid-year trend analyses of the main events and key population mobility patterns across the East and Horn of Africa (EHoA) region. The report provides evidence-based insights into major displacement crises and migration trends observed during the first six months of 2018.
Among the major highlights:
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Some 970,000 Ethiopians were forced to flee their homes between April and June (2018) following inter-communal conflict in the areas between the Southern Nations, Nationalities, and Peoples’ Region (SNNPR) and the Oromia Region;
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Somalia continues to be affected by protracted and new displacements, with an estimated 2.6 million internally displaced persons as of May 2018;
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Burundian refugees continue to return from Tanzania, with a total of 27,184 recorded during the first seven months of 2018, bringing the total number of returns to 45,180 since the process began in September 2017;
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Eritrea and Ethiopia signed a landmark declaration of peace and friendship on 9 July, followed by a joint declaration between Eritrea and Somalia that affirmed a mutual commitment to foster regional peace, stability and economic integration;
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In another important milestone, the African Union adopted a Protocol on Free Movement of Persons in Africa in January 2018.
These and other trends in migrant movements are studied by the Regional Data Hub (RDH) for the EHoA, established at the beginning of 2018. The RDH aims to support evidence-based, strategic and policy-level discussions on migration through a combined set of initiatives that build on IOM’s extensive migration portfolio in the East and Horn of Africa region.
This includes establishing a baseline for regional migration flows, increasing information management capacity across countries to strengthen data consolidation, quality control and conducting research on mixed migration to publish timely and relevant reports and trend analyses.
Commenting on the operations of the RDH, IOM Regional Director Jeffrey Labovitz said: “The data hub is a flagship initiative to inform practitioners and partners on mobility. We saw a gap in the consolidation and dissemination of information and our aim is to provide a reference point in the region on migration.”
The cornerstone of the RDH is the Displacement Tracking Matrix (DTM), used by IOM to regularly track and monitor displacement and population mobility, as well as provide critical information to decision-makers and responders during and in the aftermath of crises, and contribute to a better understanding of population flows.
In the EHoA, the DTM is implemented across six countries: Burundi, Djibouti, Ethiopia, Somalia, South Sudan and Uganda. It has the widest coverage of primary data collection on internal displacement and migration in the region.
Funding for the RDH was largely provided through the EU-IOM Joint Initiative for Migrant Protection and Reintegration in the Horn of Africa. More commonly known as the ‘Joint Initiative’, the project facilitates orderly, safe, regular and responsible migration management through the development of rights-based and development-focused procedures and processes.
The Joint Initiative, backed by the EU Trust Fund for Africa, covers and has been set up in close cooperation with a total of 26 African countries.
The full list of related publications can be found here.
A Region on the Move: Mid-year trends report – January to June, 2018
Thus far, 2018 has been historic in many ways. Eritrea and Ethiopia signed a landmark declaration of peace and friendship on 9 July, casting aside decades of hostility in a matter of weeks. The announcement of the end to the state of war was met by widespread jubilation in both countries, and was matched by concrete acts of rapprochement, which included reopening telephone and air links as well as the Eritrean embassy in Ethiopia. Later in July, Eritrea and Somalia announced a restoration of diplomatic relations through a joint declaration that affirmed a mutual commitment to foster regional peace, stability and economic integration.
This was followed, in September, by a high level ministerial meeting between Ethiopia, Somalia and Eritrea that culminated in a joint declaration on comprehensive cooperation between the three countries that will see closer political, economic, social and cultural ties and improved coordination to promote regional peace and security and contribute to economic integration in the region. Shortly after, two border posts reopened between Eritrea and Ethiopia that had previously been closed for 20 years.
These unexpected, but much-welcomed, détentes are rare breakthroughs in a region that has been beset by insecurity and challenging diplomatic relations for decades.
In another important milestone, the African Union adopted a pdf Protocol on Free Movement of Persons in Africa (3.80 MB) in January 2018. Its adoption has been described as a turning point in the continent’s complex history, which has seen the maintenance of colonial borders that have largely impeded intra-Africa mobility. If challenges in its implementation can be overcome, the Protocol is expected to bring about greater intra-Africa trade, commerce, tourism and labour mobility, among other benefits.
Yet, despite these important developments, it can be said that much has stayed the same. Displacement levels remain high with little indication of falling: an estimated 4.6 million refugees and asylum seekers as well as 13.5 million internally displaced persons (IDPs) are hosted in the greater region. And, like in previous years, the factors forcing people from their homes continue to relate to conflict and insecurity as well as environmental challenges, such as flooding.
Meanwhile, tens of thousands of Horn of Africa migrants continue to make dangerous, irregular journeys eastwards to Gulf Cooperation Council countries, northwards to Europe, and southwards to Southern Africa in the pursuit of better economic opportunities or in the hope of finding asylum.
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Kenya-China trade relations: tweeted updates
@Kiptoock: Today in Beijing, Zhang Jiwen-Vice Minister of Customs of China and myself signed protocol allowing market access of STEVIA from Kenya to China. This comes 3 days after signing of Sanitary and Phytosanitary MOU. Our famers are strongly urged to take advantage of this market opportunity. @Trade_Kenya: The signing was as a result of long and comprehensive risk analysis by the Kenya Plant Health Inspectorate Service in collaboration with General Administration of Customs, China.
Meeting updates:
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UNCTAD’s Trade and Development Commission, tenth session, starts today in Geneva. In particular, the Commission will consider the reports of the Intergovernmental Group of Experts on Competition Law and Policy and the Intergovernmental Group of Experts on Consumer Protection Law and Policy.
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The 7th EU-South Africa 2018 Summit takes place on Thursday in Brussels. Discussions will focus on five areas: economic, trade and investment cooperation; development cooperation; global challenges, such as climate change, migration and human rights; multilateralism and cooperation in multilateral fora; the situation in the neighborhoods of each partner. The summit is held in the framework of the EU-South Africa Strategic Partnership, signed in 2007. DIRCO: South Africa is the only African country, and one of 10 countries globally, that has a Strategic Partnership with the EU. EC: Trade between the EU and South Africa.
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Profiled EAC trade and infrastructure meetings: Meeting of the Sectoral Council on Trade, Industry, Finance & Investment (12-16 November, Arusha); World Bank Implementation Support Mission (12-16 November, Arusha); 15th EAC Air Transport Subcommittee (13-16 November, Entebbe); Meeting of the Railway Task Force (15-17 November, Dar es Salaam)
Future drivers of growth in Rwanda: innovation, integration, agglomeration, and competition (World Bank)
Rapid economic growth is Rwanda’s overarching development goal – a strategic choice to anchor its long-term vision. Vision 2050 encapsulates this choice with long-term, income-based goals that aim for upper-middle-income status by 2035 and high-income status by 2050. With this vision, Rwanda has aligned itself with the successful East Asian economies that began their development journey with a similar quest for high growth. The prioritization of long-term growth recognizes an important truth – sustained growth does not just happen, especially in a global landscape marked by forces of technology, trade, and tremendous competition. It requires a combination of leadership, social cohesion, and deep investments in core capabilities – of people, firms, and institutions – to harness the opportunities on offer. The implications of different growth pathways are staggering. At its current pace of growth (4% per capita), Rwanda will barely cross the threshold for lower middle-income status by 2035. At growth of 7% per capita, average income would reach US$2,400 (2017 prices). To become an upper-middle-income country by 2035, Rwanda will need to grow at more than 10% per capita. In 2035, the economic landscape of Rwanda could resemble that of present-day Bangladesh or, alternatively, surpass that of today’s Vietnam or even Georgia and Indonesia.
Africa Investment Forum overviews:
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Africa Investment Forum exceeds expectations, participants unanimously agree. The Africa Investment Forum ended on a high note with the closing panel comprising heads of development finance institutions unanimously lauding the unique initiative, calling it an exceptional gathering that “exceeded all expectations.” President of the AfDB, Akinwumi Adesina, told the more than 1,000 delegates: “The needle is shifting, pointing to the right direction, pointing to Africa. I am thankful for the investors, I am thankful for the confidence they have in Africa. Africa has grown up. Africa is not going to be developed by aid. It will be developed by investment and I think you are beginning to see it.” At midday Friday, of 61 transactions valued at $40.4bn tabled for discussions in boardroom sessions, 45 deals worth over $32bn secured investment interest. Final numbers will be disclosed in the coming days.
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SA’s IDC and AfDB sign loan agreement to ramp up industrial and infrastructure development in Africa. An assessment on the impact of the previous facility ($200m), indicated that collaboration between the Bank and IDC resulted in the creation and retention of over 15,000 jobs in selected sectors including agro-industries, logistics, transport and other industrial infrastructure across multiple countries - Senegal, Zimbabwe, Mozambique and Swaziland, among others.
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G20 Compact with Africa assesses role in facilitating private sector investments. “You can see the Compact with Africa as a brand. If you are a foreign investor, that ensures you have a sound and safe environment to invest in Africa because the Compact countries commit themselves to reforms and rule-based systems where investors are welcome and find the environment that is needed to do business,” said Wolfgang Schmidt, State Secretary of the Federal Ministry of Finance, Germany. The G20 Compact with Africa also aims to be one of the main drivers of transformation on the continent. One of its objectives is to fast track the number of countries joining CwA within the next three years.
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US OPIC signs $100m loan deal with Africell. African telecoms firm Africell on Friday signed a $100m loan agreement to fund an expansion of its communications infrastructure with U.S. development financier the Overseas Private Investment Corporation. The deal was signed on the sidelines of the African Development Bank’s Africa Investment Forum in Johannesburg, and forms part of the OPIC’s $1 billion investment in African infrastructure and technology launched earlier in 2018. Africell’s chief investment officer Ian Paterson told journalists at the signing of the deal that the financing would be used in the markets where the company is already operating rather than expansion into new markets. “We will be looking to invest the proceeds to expand our networks, develop new products and services, really using the platform of customers we have today and trying to layer on more value added services to them,” he said. Africell boasts 12 million customers in Sierra Leone, Gambia, Democratic Republic of Congo and Uganda. [Related Reuters coverage of the AIF: France’s EDF signs deal for 1.2 bln euro Cameroon hydro project; Morocco’s Attijariwafa bank to eye new Africa acquisitions from late 2019]
Tanzania: JPM sacks 2 ministers in cashews fallout, appoints new trade minister (The Citizen)
President John Magufuli yesterday sacked two key ministers and disbanded the board of directors of the Cashewnut Board of Tanzania in a fallout over the crisis now bedeviling the cashew nut subsector. The ministers dropped in the cabinet mini-reshufle are Dr Charles Tizeba (Agriculture) and Charles Mwijage (Industry and Trade). A brief statement issued at 6pm yesterday said President Magufuli had also annulled the appointment of CBT chairperson Anna Abdallah and disbanded the Board. Joseph George Kakunda (MP for Sikonge-CCM) has been appointed new Industries and Trade minister. The President made the mini-reshuffle a few hours after he inspected 75 trucks from the Tanzania People’s Defence Force’s transport unit, and ordered the army to be on standby to buy cashew nuts if the price war fails to end by Monday evening. On Friday, Prime Minister Kassim Majaliwa said if buyers failed to purchase the thousands of tonnes of cashew nuts the government would intervene and buy the produce.
So far a small portion of the cashew nuts on offer has been purchased in the auctions that were held several times in Lindi and Mtwara, leaving close to 200,000 tonnes lying idle in warehouses. The buyers, it seems, are not ready to buy the produce for Sh3,000 a kilo. Speaking after inspecting the trucks, President Magufuli said the army would be deployed to Lindi, Mtwara, Ruvuma, Coast and Tanga regions. “They will collaborate with the National Cereals and Produce Board in purchasing all cashews at Sh3,000 per kilo and the funds are available,” he said. Only 14 out of 37 firms registered to purchase cashew nut participated in the just suspended auctions, it emerged yesterday.
Tanzania: Chinese investors eye mega projects in Bagamoyo SEZ (The Citizen)
EPZA and the Tanzania Ports Authority have partnered with China Merchant Holding International and Oman’s State Government Reserve Fund as strategic investors in developing an industrial park and port within the Bagamoyo SEZ. Beijing Urban Development vice president Wang Kai said the Bagamoyo projects, especially the proposed port, would play a key role in the export of goods from Tanzania to China’s Jiangsu Province and other global markets. “The port will be the driver of other mega investment projects to be implemented in the Bagamoyo SEZ,” he said, adding that their visit was aimed at familiarising themselves with the Bagamoyo SEZ master plan and policies governing investment in agriculture. They were also looking into the possibility of establishing direct links between the proposed Bagamoyo Port and Xuawei Port in Lianyungang City, Jiangsu Province. The Bagamoyo SEZ, which covers an area of 9,000 hectares, is on course to be the largest project to be implemented in Coast Region. Latest figures from EPZA show that investments in export processing zones and special economic zones have grown to over $1.29bn.
Paris Peace Forum: Buhari urges world leaders to impose stringent actions on illicit financial flows (Premium Times)
The Nigerian President warned that continuous impunity will encourage more pilfering of countries’ resources to the detriment of poor and vulnerable populace. Speaking at the first edition of the Paris Peace Forum, held on the sidelines of the Centenary of Armistice Day, Mr Buhari said Nigeria had strengthened its laws and institutions to fight corruption, fast-track recovery of stolen assets and punish offenders, urging more commitment from governments and international institutions. “Our experience in Nigeria is that financial crimes, such as corruption and fraudulent activities, generate enormous unlawful profits which often prove so lucrative that the threat of a jail term is not sufficient to deter perpetrators. A more powerful deterrent is to ensure that profits and assets generated from illicit financial flows and corruption are recovered and returned to countries of origin. This is not to under-estimate the value of strong institutions. It only indicates that asset recovery represents significant deterrence compared to the traditional focus on obtaining conviction by the law enforcement agencies of the countries of origin.” [Full text of President Buhari’s speech]
ECOWAS President calls for increased cooperation with the USA
The President of the Commission of ECOWAS, Jean-Claude Kassi Brou, has called for increased cooperation with the government of the USA in a bid to ensure political stability, peace, security and economic development in the West Africa. He made this call while receiving the Assistant Secretary of State for African Affairs Tibor Nagy and the US Ambassador to Nigeria, Stuart Symington during a courtesy visit at the Commission’s headquarters in Abuja, Nigeria on 9th November 2018. President Brou also informed the US delegation of the Commission’s commitment to improve inter regional trade which currently stands at 15% for formal trade and its steps to provide assistance for Member States in order to arrive at a common regional position on the African Continental free Trade Area. On his part, Mr. Tibor Nagy stated that indeed ECOWAS has made giant strides in the political affairs of its Member States and described the West African bloc as an example which other Regional Economic Communities should emulate. He reiterated the commitment of the United States to support initiatives that will create a conducive environment for foreign investments to thrive in West Africa. He stated that the United States through its International Development Finance Corporation to the tune of $60 billion will assist developing countries improve their infrastructure and economies. [Tibor P. Nagy: The enduring partnership between the United States and Nigeria]
Today’s Quick Links: Bloomberg: Lesotho stops selling wool and mohair in South Africa, sets up auction at home Tanzania: TALIRI launches campaign against mycotoxins in animal production Afreximbank, China Exim exchange joint initiatives memo |
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Africa Investment Forum exceeds expectations, participants unanimously agree
The curtain fell on a three-day marathon investment marketplace, on Friday, with transactions worth billions of dollars sealed.
The inaugural Africa Investment Forum ended on a high note with the closing panel comprising heads of Development Finance Institutions (DFIs) unanimously lauding the unique initiative, calling it an exceptional gathering that “exceeded all expectations”.
President of the African Development Bank, Akinwumi Adesina told the more than 1,000 delegates, “The needle is shifting, pointing to the right direction, pointing to Africa. I am thankful for the investors, I am thankful for the confidence they have in Africa. Africa has grown up. Africa is not going to be developed by aid. It will be developed by investment and I think you are beginning to see it.”
Participants from DFIs, institutional investors, sovereign wealth, equity and private sector CEOs from across the continent congregated in Johannesburg, South Africa to attend the first ever transaction-based Forum on the continent.
At midday Friday, of 61 transactions valued at US$40.4 billion tabled for discussions in boardroom sessions, 45 deals worth over US$32 billion secured investment interest. Final numbers will be disclosed in the coming days.
President Adesina described the outcome of $32 billion worth of transactions as a big success. “I could not be happier... but we don’t want to congratulate ourselves. The responsibility that lies on our shoulders is so huge. This is just the beginning.”
The presence of seven African heads of state and heads of governments also sent a strong signal to global investors that Africa’s leadership is committed to creating a conducive business environment for investment to land on a smooth runway.
President Cyril Ramaphosa of the Republic of South Africa; President Sahle-Work Zewde of Ethiopia, President Alpha Conde of the Republic of Guinea; President Macky Sall of Senegal; President Nana Dankwa Akufo-Addo of Ghana made the trip to South Africa for the Forum.
Other officials included the Vice President of Nigeria, Yemi Osinbajo; the Prime Ministers of Rwanda, Edouard Ngirente and Cameroon, Philémon Yang, as well as ministers representing the Kingdom of Morocco, Cote d’Ivoire, Tanzania, Niger, and Gabon. In attendance also were Governors and Board members of the African Development Bank.
Ethiopia’s President Sahlework Zewde, first woman President to hold that position in the country, told delegates at the official opening ceremony: “The Africa Investment Forum is fundamental to changing the narrative on Africa. Looking at Africa only through the lens of peace and security is not getting us anywhere. We have to address perceived risk (on the continent) and have to change this mindset.”
Energy, infrastructure, food and agribusiness opportunities and transactions attracted high-level from global and African investors, positioning the Forum as the next big investment frontier, and on Global and African investors’ radars.
Africa-to-Africa investment emerged as a key take away from the Forum. Gauteng Premier David Makhura highlighted $6 billion worth of South African deals signed, and the $2.6 billion MOU signing with Ghana for a Skytrain project in Accra.
“We are very proud that South African companies are investing in other African countries. This is very fulfilling,” Makhura said.
Several investors and participants are looking forward to next year’s edition: “It’s actually quite heartwarming to see what we have witnessed here over the past two days... If we start with 80%, imagine what we will do in the next five years. With this kind of start, African people have every reason to be hopeful,” said Patrick Dlamini, CEO, Development Bank of South Africa.
The African Development Bank convened forum, in partnership with the Africa Export-Import Bank, Africa Finance Corporation, Africa50, Development Bank of Southern Africa, European Investment Bank, Islamic Development Bank, and Trade and Development Bank, brought together global and continental investors, leading private sector leaders, development finance institutions, globally recognizes sports executives, and a number of young tech entrepreneurs.
The next edition of the Africa Investment Forum is scheduled for November 2019.
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tralac’s Daily News Selection
Forthcoming African trade, infrastructure and industrialisation policy events
Linked to implementing the WTO’s TFA and the AU’s AfCFTA
(i) Southern Africa: Border agency cooperation workshop (14-16 November, Cape Town). The purpose of the workshop is to improve border agency cooperation at the national and regional levels as provided in articles 8, 10 and 11 of the WTO’s Trade Facilitation Agreement. Better border agency cooperation can play a key role in facilitating cross-border trade, as it leads to a reduction in time and costs for the import, export and transit of goods. Specifically, the workshop will seek to raise awareness on the linkages between the TFA and sanitary and phytosanitary measures, and explore ways in which coordinating border clearance processes can facilitate trade, while ensuring/reinforcing human, animal or plant life and health. Attention will also be given to improving cooperation among border agencies in transit countries. Discussions are expected to generate input for country action plans and help increase TFA notifications relevant to border agency cooperation. The agenda can be accessed here.
(ii) Africa Industrialization Week 2018: Promoting regional value chains in Africa (18-23 November, Addis Ababa). The AIW2018 will also among other things, promote the implementation of the Accelerated Industrial Development of Africa, the Pharmaceutical Manufacturing Plan for Africa, the SME Strategy, the Boosting Intra-African Trade and the African Continental Free Trade Area and the UN General Assembly’s Third Industrial Development Decade for Africa in the context of Agenda 2063. The 1st AU-NEPAD Africa Pharma Conference will be the flagship event of the Africa Industrialization Week. This event is co-organized by the Department of Trade and Industry, the Department of Social Affairs and the NEPAD agency. Side events during the week include: Continental forum on regional value chains and mobilizing African manufacturer’s (to support the linkage of Africa Regional Value Chains to the Global Value Supply); The second symposium on SEZs and green industrialization; A workshop on Africa Enterprise Network, catalyzing SMEs and start-ups productivity; A workshop on youth entrepreneurship to reduce migration, Youth and women empowerment in enterprise development; and a Workshop on Financing Industrialization; EIB-UNIDO Africa Day 2018: sustainable industrialization in Africa. [Note: The above event follows the 11th Extraordinary Session of the Assembly of the Heads of State and Government of the African Union (17-18 November, Addis Ababa)]
(iii) Implementing the AfCFTA in Eastern Africa: from vision to action (20-22 November, Kigali). The historic signing of the African Continental Free Trade Area agreement in Kigali, in March 2018, provides hope that we can consolidate the creation of a truly integrated market across the region and strengthen regional value chains. To fully utilize the opportunities of the AfCFTA, the ICE will focus on the discussion of national and regional AfCFTA strategies complementary to the broader trade policy. Among the themes to be discussed: An overview of the region – macro-economic and social conditions in Eastern Africa; Implementing the AfCFTA – first things first?; Trade facilitation and manufacturing – how to leverage new opportunities in intra-African trade; Gender perspectives on the AfCFTA; Services trade and the AfCFTA; Beyond Trade: implementing the Protocol on the Free Movement of People.
Profiled workshop documentation: (i) pdf The AfCFTA: from vision to action in East Africa (979 KB) ; (ii) pdf Macro-economic and social developments in Eastern Africa 2019: towards the implementation of the AfCFTA in Eastern Africa (1.13 MB) (executive summary). Extract: The AfCFTA is not only about trade but creating access, free movement of people, goods and services. Most countries in Eastern Africa have a better trade balance in services than merchandise trade. Five of the fourteen countries actually enjoy positive balances in services (Djibouti, Kenya, Madagascar Tanzania, and Seychelles), compared with only one (DRC) with a positive balance in merchandise trade. Kenya and Tanzania, for instance, had a net service trade balance of over $1.6bn and $2.1bn in 2017. Intra-African liberalization of services trade could harbour great benefits for Eastern Africa. Intraregional tourism, an example of growing intra-regional trade in services, has been gaining prominence. With intra-African migration on the rise, the Agreement on Free Movement of Persons, which was signed by only half of African Member States, is particularly important. A more open continental labour market would go a long way towards addressing skill-shortages that constrain the growth of important strategic sectors of our economies.
(iv) A reminder of 2018 PIDA Week (26-28 November, Victoria Falls, Zimbabwe)
Sierra Leone: Parliament ratifies AfCFTA (Parliament of Sierra Leone)
The Parliament of Sierra Leone, on Wednesday 7 November, debated and ratified with unanimity the African Continental Free Trade Area Agreement, aimed at promoting trade liberalization in Africa. Speaking prior to ratification, the Minister of Trade and Industry Peter Bayuku Konte’ highlighted the importance of the agreement. Making his submission, the Leader of NGC, Hon. Kandeh Yumkella said that the agreement was important for Africa and the African Union. He said the AU is “moving from a political organization to an economic one”. Speaking on the need for ratifying the agreement, Dr. Yumkella said that “it had been debated and deliberated upon in the Pan-African Parliament for enactment and domestication in other national parliaments in Africa”. The Leader of C4C, Hon. Saa Emerson Lamina recalled that, as a nember of the ACP-EU Parliament, a lot of deliberation had been done on the agreement geared towards smoothening bilateral trade liberalization for Africa. The Leader of the Opposition, Hon. Chernor R.M Bah recalled that the ECOWAS Parliament had spent ten days in Abidjan deliberating on the need for a free trade agreement for Africa, whilst encouraging the Ministry of Trade to do all within its power to ensure that Sierra Leone derive huge benefits from the free trade Agreement.
African Parliamentary Union: Buhari seeks law to promote ease of doing business, private sector growth (BusinessDay)
President Muhammadu Buhari , on Thursday, charged Speakers of the African Parliamentary Union, on the need to pass legislation that will promote ease of doing business and private sector growth in the continent. The President, who noted that the dynamics of global trade are changing fast, said foreign direct investment is a key index of economic performance. President Buhari said: ”Africa cannot afford to be caught off guard, as we have to navigate these uncertain economic times with realistic plans in which the private sector is key. Barriers that restrict ease of doing business and private sector growth must be addressed by legislation and it is hoped that your resolutions will aid the efforts of African governments in developing a more robust private sector to attract necessary investments in our economy.”
Stephen Chan: Will US-China trade war ruin Africa or offer new opportunities? National leaders must decide. (The Conversation)
For Africa, it means business with China remains a reality. This relationship has, however, taken on two key new characteristics of late. The first is that China expects its loans to be repaid. Indeed, there is no doubt that a new fiscal propriety is now expected by the Chinese. The second, very closely connected development – and one which curiously seems not to have been noticed or taken seriously by African leaders – is that increasingly Chinese liquidity is made available not on a state-to-state basis but on a Chinese bank to African state basis. [Standard Bank’s David-Bohra: Africa’s infrastructure gaps are an investment opportunity waiting to happen]
Regional economic development in SADC: taking stock and looking ahead (SAIIA)
However, to successfully establish itself as a viable investment hub, the region must prioritise the coordination and harmonisation of regulatory frameworks and industrialisation efforts. The latest trend towards increased collaboration on a continental level hints at a new approach to achieve economic integration. However, since the required willingness for cooperation in regional economic communities is questionable, it remains to be seen whether the successful implementation of a continental free trade agreement is feasible.
Ghana: Contractors, private businesses look up to first IMF-free budget (Ghanaweb)
The 2019 national budget, due to be presented to Parliament next week by Finance Minister Ken Ofori-Atta, will be the first presented by the incumbent President Nana Akufo-Addo administration which will be free of direct and heavy influence from the International Monetary Fund. Consequently, government contractors and suppliers as well as other enterprises, institutions and individuals who rely heavily on government spending for their economic fortunes are hopeful that public expenditure will be increased in 2019 as the IMF departs with its laser focus on demand management. The incumbent government came to power on the promise that it would replace demand management with supply side economics aimed at increasing national production. The country will, early next year, exit the IMF’s Extended Credit Facility programme under which an estimated $918 million has been sought over three years from the programme with attached conditions.
2019 Aid for Trade Global Review: launch of Aid for Trade monitoring and evaluation exercise (WTO)
The Aid for Trade monitoring and evaluation exercise was launched at a meeting of the WTO Committee on Trade and Development on 6 November 2018. WTO members and Aid for Trade partners may submit self-assessment questionnaires up to 31 December 2018 to assist preparations for the 2019 Aid for Trade Global Review. In the margins of the meeting, two workshops discussed key aspects of the pdf Aid for Trade Work Programme 2018-2019 (257 KB) , which aims to help developing countries – particularly least-developed countries – build the supply-side capacity and trade-related infrastructure they need to better implement and benefit from WTO agreements and to expand their trade. The first workshop, Industrialization, economic diversification and structural transformation, highlighted global trends in economic diversification and industrialization. The second workshop, Economic diversification and empowerment with a focus on youth and women, presented various empowerment programmes, initiatives and policies implemented at the international and regional levels. [Profiled presentation from the first workshop: Ethiopia’s growth model: becoming a lower-middle-income country – 2025 (pdf)]
International crime gangs amass ‘staggering’ profits in conflict zones (UN)
During a Tuesday briefing to the Security Council, Ms Tuesday Reitano, Deputy Director of the Global Initiative Against Transnational Organized Crime, described the problem as a “global and accelerating phenomenon, and a threat to international peace and security,” that, in conflict areas alone, is generating around $31.5bn in illicit profits. The link between conflict areas and organized crime was described by Ms Reitano as undeniable: she added that the scale of money being illicitly generated by organized crime in these areas is “staggering.” This phenomenon, said Ms. Reitano, is actually sustaining conflicts worldwide, with illegal exploitation and taxation of gold, oil and other natural resources overtaking traditional “threat finance” sectors, such as kidnapping for ransom and drug trafficking. The actual combatants in conflict zones only receive a small fraction of illicit funds:
Today’s Quick Links: AIF: Ghana, South Africa agree to begin Sky Train Project in Accra Lusophone Africa sets sight on $5bn in projects at AIF MTN is said to near Nigeria deal over $8.1bn dispute WTO seminar on intellectual property and knowledge flows in a digital era (5-6 November) |
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Sierra Leone: Parliament ratifies the African Continental Free Trade Area Agreement
The Parliament of Sierra Leone on Wednesday, 7th November 2018 debated and ratified with unanimity the African Continental Free Trade Area (AfCFTA) Agreement, aimed at promoting trade liberalization in Africa.
Speaking prior to ratification, the Minister of Trade and Industry Peter Bayuku Konte’ highlighted the importance of the free trade Agreement. He also said that the Agreement will cover an African market of 1.2 billion people and a gross domestic product of $2.5 trillion across all 55 Member States of the African Union.
He furthered that in relation to a number of participating countries “it will be the world’s largest free trade area since the formation of the World Trade Organization”. He said the Agreement will progressively eliminate tariffs on intra- African trade, aimed at making trade easier for businesses within the continent.
Making his submission on the Agreement, the Leader of NGC, Hon. Kandeh Yumkella said that the Agreement is important for Africa and the African Union. He also said that the AU is “moving from a political organization to an economic one”. Speaking on the need for ratifying the Agreement, Dr. Yumkella said that “it had been debated and deliberated upon in the Pan-African Parliament for enactment and domestication in other national parliaments in Africa”.
The Leader of C4C, Hon. Saa Emerson Lamina supported the ratification of the Agreement and commended the Government of President Bio for signing it. He recalled that as a Member of the ACP-EU Parliament a lot of deliberations had been done on the Agreement geared towards smoothening bilateral trade liberalization for Africa.
In rounding up the debate, the Leader of the Opposition, Hon. Chernor R.M Bah welcomed the initiative of the Government by signing the free trade Agreement. He also recalled that the ECOWAS Parliament had spent ten days in Abidjan deliberating on the need for a free trade Agreement for Africa, whilst encouraging the Ministry of Trade to do all within its power to ensure that Sierra Leone derive huge benefits from the free trade Agreement.
In concluding the debate, the Leader of Government Business, Hon. Sidie M. Tunis described the Agreement as “important for the development of the country, especially in the area of Small and Medium Enterprises”. He also said that the Agreement is good for Africa, particularly for the development and promotion of trade in Sierra Leone.
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Implementing the African Continental Free Trade Area in Eastern Africa: From vision to action
22nd Meeting of the Intergovernmental Committee of Experts of the Sub-regional Office for Eastern Africa
In partnership with the Government of Rwanda, the United Nations Economic Commission for Africa (ECA) is holding a three-day Intergovernmental Committee of Experts (ICE) Conference on 20-22 November 2018 in Kigali to help reach a regional consensus on how to move forward with the implementation of the AfCFTA.
Over 250 participants – senior government officials, experts and representatives from the private sector – from the 14 Member States served by the Office for Eastern Africa will attend the meeting, which will be held on the theme “Implementing the African Continental Free Trade Area in Eastern Africa: From Vision to Action”.
Africa is already the leading trading partner for the EAC member states. But East African countries need to do more to tap into the dynamism of regional markets, especially at a time when global growth is still precarious and much of the world is concerned about the consequences of trade wars and disputes.
ECA simulation work suggests that East Africa exports to Africa would increase by 31 percent if tariffs are eliminated on intra-African trade, and provide a welfare boost of US$1.4 billion. Pointedly, it would provide a significant stimulus to manufacturing sectors, particularly agro-industry.
The historic signing of the African Continental Free Trade Area (AfCFTA) Agreement in Kigali in March 2018 provides hope that we can consolidate the creation of a truly integrated market across the region and strengthen regional value chains. To fully utilize the opportunities of the AfCFTA, the ICE will focus on the discussion of national and regional AfCFTA strategies complementary to the broader trade policy.
Among the themes and topics to be discussed will be:
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pdf Overview of the Region: Macroeconomic and Social Conditions in Eastern Africa 2019 (1.13 MB)
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pdf Towards Energy Security in Eastern Africa: Maximising the Gains from the AfCFTA (266 KB)
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pdf Promoting services trade within the AfCFTA: The Sustainable Financing of Tourism (273 KB)
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pdf Beyond Trade: Implementing the Protocol on the Free Movement of People (277 KB)
The 14 countries served by the ECA Sub-Regional Office for Eastern Africa are: Burundi, Comoros, Democratic Republic of Congo, Djibouti, Ethiopia, Eritrea, Kenya, Madagascar, Rwanda, Seychelles, Somalia, South Sudan, Tanzania and Uganda.
Background
The ICE is a body set up by the General Assembly of the United Nations and is the statutory organ of the ECA Office for Eastern Africa. It includes representatives of the fourteen member States served by the office, as well as Regional Economic Communities (RECs) and Intergovernmental Organizations (IGOs) of the subregion, development partners, research centres and other stakeholders. The composition of the current ICE bureau includes Comoros (Chair), Rwanda (First Vice Chair), DR Congo (Second Vice Chair), and South Sudan (Secretary).
The ICE meets annually on a rotational basis in the different countries covered by the office. The objectives are three-fold:
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To define and review the implementation of the work programme of the SRO-EA;
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To discuss key issues and challenges pertaining to the economic and social development of the region, with the view to making appropriate recommendations;
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As a forum to strengthen partnerships and cooperation between stakeholders to sustain regional integration and accelerate the pace of economic development.
The last five ICEs were held in Comoros (2017 – “Accelerating Structural Transformation in Eastern Africa: Catalysts and Constraints”), Kenya (2016 – “Institutions, Decentralizations and Structural Transformation in Eastern Africa”), Madagascar (2015 – “Harnessing the Blue Economy for the Development of Eastern Africa”), DR Congo (2014 – “National Champions, Foreign Direct Investment and Structural Transformation in Eastern Africa”) and Uganda (2013 – “Energy Access and Security in Eastern Africa”).
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tralac’s Daily News Selection
Featured trade policy tweet, @CohenOnAfrica: US government withdrawal of AGOA privileges from Mauritania due to reports of slavery is essentially symbolic – trade with Mauritania is small in volume. Important to maintain a strong relationship with the country, which has the best track record in Africa in counter-terrorism.
The Nordic-Africa Business Summit 2018 is taking place today in Oslo. Profiled panel: Africa’s Gateway to Investment and Trade. The programme can be accessed here.
Institutional reform of the African Union is the major focus of the 11th AU Extraordinary Summit underway in Addis Ababa
Africa Investment Forum: latest press releases. Keynote address by President Cyril Ramaphosa: Economic integration – whether at continental or regional level – will further deepen the inter-connectedness of African economies. The fortunes of any one country will be even more closely dependent on the fortunes of all countries. As South Africa, this informs our approach to investment and development. We have launched an ambitious investment drive to raise $100bn in new investment over the next five years. This is vital to reigniting growth in our economy and creating jobs on a far greater scale. Two weeks ago, we held the inaugural South Africa Investment Conference here in Johannesburg, where several companies announced new investments to a total value of R290bn. Any investment in South Africa is an investment in Africa. [Gauteng premier David Makhura: This is the right time to host the Africa Investment Forum]
Regional integration and non-tariff measures in ECOWAS (UNCTAD)
This study provides an institutional overview of NTMs and an assessment of its impacts on regional integration in West Africa. It is part of a global initiative, the Global transparency in trade Initiative, jointly implemented by the Bank, UNCTAD, ITC and the World Bank to improve transparency in and access to trade data. ECOWAS was the first region in Africa in which the partners systematically mapped, collected, organized and analyzed all NTM data, including non-tariff barriers and behind-the-border regulations such as SPS measures and TBTs. The report utilizes innovative methods to assess regulatory convergence and evaluate the impact of NTMs from an economic, legal and institutional perspective. From the analysis, clear policy recommendations are identified for policy makers in ECOWAS and their development partners. Extract:
The incidence of quantitative restrictions in ECOWAS is low on average but these restrictions tend to be concentrated in some countries and important sectors and have significant impacts where they appear, increasing product prices by almost 50%. The number of technical measures (including SPS and TBT) varies as well across countries, being relatively high in the economically more developed countries and low in most of the least developed countries in ECOWAS. Each single measure tends to increase product prices by about 1.5%. Regulatory convergence is beneficial for ECOWAS countries and can reduce trade restrictions by over 25% only by aligning existing measures. This could increase intra-ECOWAS trade by 15% and increase income in ECOWAS countries by $300m annually. A higher reduction of trade costs can be achieved through further regulatory convergence. Regulatory convergence towards international standards has the highest benefits for ECOWAS for both intraregional trade and export competitiveness. Converging towards international standards increases intraregional trade by 14%and income in ECOWAS by $1.57bn annually. [Download: pdf Regional Integration and Non-Tariff Measures in ECOWAS (957 KB) ]
NANT commends ECOWAS for its role in resolving trade dispute (ECOWAS)
The Vice President of the Commission of ECOWAS, Madam Finda Koroma, urged a delegation from the National Association of Nigerian Traders to have confidence in the Commission to handle disputes among member states and community citizens in line with ECOWAS protocols and utmost neutrality. Madam Koroma made this statement on 7 November in Abuja, while receiving the President of the NANT, Ken Ukaoha, who led a delegation to thank and show appreciation to the Commission for the role it played in the re-opening of over 400 shops and businesses belonging to Nigerians in Ghana. Mr Ukaoha expressed his delight with the fact that after the association made its grievances known to the Commission, its management moved swiftly to ensure that the shops and businesses were re-opened as a result of a meeting between the Nigerian President Muhammadu Buhari and his Ghanaian counterpart Nana Akufo-Addo on the margins of the United Nations General Assembly which was held in September 2018.
South Africa: New Africa, global trade, investment and industrialisation strategy framework approved (GCIS)
Cabinet approved the Strategy Framework for the pursuit of South Africa’s strategic economic interests globally as it relates to trade, investment and industrialisation. The strategy aims to ensure that international engagements serve the country’s domestic policy imperatives such as poverty alleviation, unemployment and inequality. The strategy advocates that South Africa pursue development integration in the rest of Africa supported by an investment led strategy and build strategic alliances to advance its agenda. It also consolidates its trade and investment relations with developed countries and pursues inward investments, skills and technology transfer and value–added exports. [Shabby South Africa ‘misses the boat’ at China trade fair]
Kenya-China trade relations: tweeted updates by @Trade_Kenya
Today in Shanghai, a bilateral meeting between the Ministry of Commerce, People’s Republic of China and the Ministry of Industry, Trade and Cooperatives, Republic of Kenya was held on the sidelines of the China International Import Expo. In furtherance of the political goodwill and their commitment to create market access, the two Ministers signed the Memorandum of Understanding on the establishment of a Working Group on Promoting Trade. Furthermore, the two sides also agreed that the Agreement on Sanitary and Phytosanitary cooperation between Kenya and People’s Republic of China will be signed as soon as China legal procedures are finalized. The signing of the MoU will facilitate the opening up of Kenya’s export of agricultural commodities to People’s Republic of China. [KNCCI chairman Kiprono Kittony asks Kenyans to learn Chinese]
Debt sustainability in developing countries is deteriorating fast (UNCTAD)
UNCTAD Deputy Secretary-General Isabelle Durant agreed that the facts were worrying. “By the end of 2017, the ratio of global debt to global GDP was almost one-third higher than it was on the eve of the world’s worst global financial crisis in 2008. The world’s outstanding debt accounts for more than three times the world’s GDP, the main concern being the growth of non-financial corporate debt.” She said that the debt-to-GDP ratio exceeded 70% in a fifth of emerging and middle-income countries and was more than 60% in low-income countries. “This leads to the following observation: in mid-2018, the number of low-income developing countries in over-indebtedness or at high risk of it reached 31 – as against 13 in 2013. The number has practically tripled!” Ms. Durant said.
Extracts from the background paper: pdf Financing for development – debt and debt sustainability and interrelated systemic issues (704 KB) : An immediate implication of rising debt ratios are higher debt service burdens, even under favourable financing conditions. For developing and transition countries as a group, the debt-service-to-export ratio rose from 8.7% in 2011 – its lowest point since the onset of the global financial crisis – to 15.4%in 2016. In 2017, this fell to 13.6%, largely due to a recovery of some commodity prices since mid-2016. In the least developed countries, this ratio also saw a pronounced increase from 4.1% in 2008 to almost 10% in 2017, and in sub-Saharan Africa it more than tripled from 3.8% in 2011 to 12.9% in 2017. In poorer economies, interest payments as a percentage of government revenue more than doubled from 5.7% in 2008 to 14% in 2017, and to 18.5% in sub-Saharan Africa, reaching as much as 30% of tax revenue in some sub-Saharan economies.
Throughout the 2000s, there has also been a marked shift from public and publicly guaranteed towards private non-guaranteed debt, with the share of private non-guaranteed debt in developing country external debt rising from 28% to almost half of total external debt between 2000 and 2009. Initially led by South and South-East Asian economies, this pattern of debt composition spread to sub-Saharan Africa, where the share of private non-guaranteed debt in total long-term external debt stocks increased sevenfold in the first 15 years of the millennium, from $10bn to $70bn. Non-financial corporate debt in emerging market economies has now risen to over $30 trillion or just under 95% of combined GDP, surpassing comparable levels for developed markets.
Aubrey Hruby: The future of development finance (Atlantic Center)
The BUILD Act has big implications for African markets, in which demographic growth has fueled an employment crisis and funding for entrepreneurial ventures remains painfully limited. A new issue brief by Africa Center Senior Fellow Aubrey Hruby, The future of development finance (pdf), suggests that the new USDFC can catalyze job creation and conflict-prevention efforts while countering China’s rise – but only if policymakers create an agency prepared for future market realities. Hruby also recommends that the new USDFC should prioritize investments in areas of US competitiveness, such as finance, management services, and entertainment, rather than in Chinese-dominated sectors such as infrastructure. Hruby’s brief offers the policymakers tasked with creating the USDFC in the next 120 days with a practical outline for creating a development finance institution capable of capturing the accelerating returns of the African marketplace.
The Power Africa Transmission Roadmap identifies 10 major immediate opportunities for regional power trade in East, West, and Southern Africa. These opportunities reflect current or projected imbalances in power supply/demand, and have an economic rationale, i.e., importing power would be cheaper for a given country than generating it domestically or resorting to emergency power generation. Specifically:
Two opportunities in East Africa: Exports to Tanzania (EKTZ line) and Southern Africa, and sub-regional trade in the Nile Basin (NELSAP power interconnections). Four opportunities in Southern Africa: Central corridor from South Africa to the DRC; integrating Malawi into the power pool; western corridor delivering power to Namibia; and bringing new power capacity to the region (e.g., Mozambique). Four opportunities in West Africa: Interconnection of the Senegal-Guinea axis (OMVG line); addressing power deficits in landlocked countries (e.g., Burkina Faso); enabling Côte d’Ivoire to export to the West (CLSG line); and addressing regional imbalances in the eastern Gulf of Guinea.
Africa-Europe Partnership: speech by Vice-President Federica Mogherini (EU)
And so I come to the real centre of our cooperation and I close on this. Beyond migration, beyond security, our cooperation is now driven by two main goals: create good jobs and good opportunities for the African youth and engage constantly with the young people of Africa. I am happy to see here youth representatives because the rhetoric, the narrative of you being the future for Africa is simply not matching reality. You are the present of the continent and the only way to get it right is to let you influence the policies we are putting in place. We have established as European Union, together with the African Union, initiatives to have the young generations of Africa and of Europe and of the diaspora heard and to get their voices, that are very clear and loud, to the decision making process. We have established in particular an [AU-EU] Youth Plug-In Initiative that created an opportunity for young people to create proposals on concrete projects. I am happy to say that next week in Paris they will be at the [Paris] Peace Forum to present their ideas to world leaders and influencers, to make these projects reality and some of them are supported by the European Union.
OFID Quarterly: Africa – a bright future? (pdf)
Third “1+6” Roundtable: statement (World Bank)
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South African President Cyril Ramaphosa addresses the inaugural Africa Investment Forum
Keynote address by President Cyril Ramaphosa at the Opening Plenary
It gives me great pleasure to welcome you to South Africa for this, the inaugural Africa Investment Forum.
I wish to commend the African Development Bank, the continent’s pre-eminent financial institution, for convening this Forum, and to thank the bank for choosing to host it here in Johannesburg.
The Africa Investment Forum is a significant milestone in our quest to reshape the fortunes of the African continent.
The Forum is a platform for African governments and businesses, continental and international financial institutions, and other development partners, to focus on the critical task of making Africa the next global frontier in investment.
Over these few days, we will share experiences and best practice.
We will outline strategies for growing our economies.
And, most importantly, we will connect financial institutions, project sponsors, institutional investors and other stakeholders with a view to concluding transactions.
Africa is a continent on the rise.
It has experienced significant growth over the last two decades, fuelled in part by improved governance and the deepening of democracy.
Rising incomes have seen the growth of the middle class and an increase in consumer spending.
With substantial urban growth, ready internet access, abundant resources and a large youthful population, African countries have enormous potential to leverage the technological advances of the Fourth Industrial Revolution.
They have the potential to forge a new world of work that fosters innovation and entrepreneurship.
To realise this potential, Africa needs to invest in the skills, capabilities and well-being of its people.
It needs to improve governance and promote peace and stability.
Most importantly, if Africa is to seize the opportunities of the future, it needs to mobilise large scale, sustained investment, especially in infrastructure.
African governments cannot do this without business.
The private sector and private markets are key players in the African investment landscape, supported by the lending capacity of financial institutions, both on the continent and beyond.
If we are to unlock and sustain the flow of capital to Africa, we need to drive the economic reforms necessary to create an enabling business environment.
To be globally competitive, to become investment destinations of choice, we need to resolve the problems that keep investors away.
We have to address governance challenges such as policy uncertainty, financial mismanagement and corruption.
As African leaders, we must demonstrate a firm commitment to act against corruption both within public institutions and the private sector.
We must deal with burdensome red tape, provide policy and regulatory certainty, and strengthen our financial institutions.
The Africa Investment Forum provides a welcome platform for us to outline the work we are doing to create a more enabling environment for investors in Africa.
It is also an opportunity for us to listen to the concerns and suggestions of business leaders, to draw lessons, and to act.
This Forum is aligned to the key aspiration of the African Union’s Agenda 2063 of a prosperous and integrated Africa, characterised by inclusive growth and sustainable development.
Agenda 2063 has a resource mobilisation strategy that relies on the identification and expansion of investment partnerships to propel growth.
The economic transformation of the continent is dependent on all our efforts to move industrial and infrastructure projects to bankable stages, to raise capital and to accelerate the financial closure of deals.
International partnerships such as the G20 Compact with Africa can make an important contribution to this growth, while offering investors significant opportunities to do business across the continent.
The Compact is geared towards strengthening macroeconomic, business and financing frameworks across the continent to promote private investment from companies in G20 countries.
The potential of this initiative was evident in Berlin last week, where a diverse range of investors announced plans to invest in various projects in participating African countries.
African integration is key to attracting investment and growing our respective economies.
The adoption of the African Continental Free Trade Area agreement in March this year is a historic development that has the potential to fundamentally change African economies.
The expansion of intra-African trade through the Continental Free Trade Area will contribute to better policy harmonisation and trade liberalisation and facilitation regimes.
It should enhance industry competitiveness, expand continental market access and lead to the better allocation of resources.
This is good for investors, who will have access to a market of more than 1.2 billion people and a combined GDP of more than $3.4 trillion.
Economic integration – whether at continental or regional level – will further deepen the inter-connectedness of African economies.
The fortunes of any one country will be even more closely dependent on the fortunes of all countries.
As South Africa, this informs our approach to investment and development.
We have launched an ambitious investment drive to raise $100 billion in new investment over the next 5 years.
This is vital to reigniting growth in our economy and creating jobs on a far greater scale.
Two weeks ago, we held the inaugural South Africa Investment Conference here in Johannesburg, where several companies announced new investments to a total value of R290 billion.
Any investment in South Africa is an investment in Africa.
With its diversified economy and manufacturing base, advanced infrastructure and large workforce, and sophisticated telecommunications and financial sectors, South Africa has long been an important destination on the continent for foreign investors.
Our strategic position offers opportunities for investors wanting to do business in the rest of the continent.
We firmly believe that the growth of any one African economy presents opportunities for its neighbours – creating new markets for goods and services, increasing trade opportunities and expanding potential for intra-African investment.
It is for this reason that in 2016 the South African government launched an agency in the Department of Trade and Industry called Trade Invest Africa.
It gives effect to our conviction that sustainable growth in South Africa cannot be separated from growth in the rest of the African continent.
Trade Invest Africa is tasked with facilitating outward investments by South African entities to the rest of Africa through targeted financial and non-financial support.
Our approach is informed by a realisation that trade integration alone will not bring sufficient economic benefits.
Our approach seeks to address industrial capacity and infrastructure development alongside the implementation of free trade arrangements.
To extract the real value of a Continental Free Trade Area, we need to have the means to produce the goods that we want to trade.
We need factories, affordable energy, reliable water supplies, universal broadband and integrated supply chains.
We also need the roads, railway lines, harbours and air networks that are essential to move these goods.
And the people who will produce and transport these goods need decent housing in sustainable communities.
They needs schools, universities, clinics and hospitals.
It is vital therefore that we take an integrated approach to economic development both within countries and across the continent.
It is up to us to harness the power of initiatives such as the Africa Investment Forum that bring together business, financial institutions and governments in a single marketplace.
It is only through partnerships that we can succeed, and through mobilising our collective resources that we can have the financial means to do what we have set out to achieve.
This Forum is laying the ground work for a new era of collaboration that will propel us towards our goal of a prosperous, united and integrated continent.
We continue to be inspired by the optimism and resolve of the citizens of our great nations.
It is the interests of these citizens that we must value above all else.
It is their wellbeing and their prosperity to which we must dedicate our every effort and our every capability.
That is why we need investment, why we need partnership, and why we have all gathered here today for this inaugural Africa Investment Forum.
I thank you.
Remarks by President Cyril Ramaphosa at the Welcome Dinner of the Inaugural Africa Investment Forum
7 November 2018
It is my pleasure to welcome you to South Africa and to this, the inaugural Africa Investment Forum.
This Forum, with its strategic focus on leveraging public private partnerships to drive investment on the continent, gives us great cause for optimism.
Among the key aspirations of the African Union’s Agenda 2063 is that of a prosperous and integrated continent based on inclusive growth and sustainable development.
African integration speaks to the free movement of people, to the deepening of intra-African trade, and to cooperation across borders on infrastructure development.
Importantly, it speaks to strengthening the capacity of continental financial institutions such as the African Development Bank to power Africa’s growth.
African integration is key to attracting investment and growing our respective economies.
It is an imperative if we are to fully harness the potential of our citizens.
In July this year, South Africa joined 44 other countries in signing the African Continental Free Trade Area agreement.
The agreement will pave the way for greater inter-regional trade, increased investment and faster industrialisation.
This Forum therefore comes at a critical and timely juncture.
Earlier this year the World Bank forecast that 6 out of the 10 fastest growing economies for 2018 would be in Africa.
With a youthful and tech-savvy population, vast resources and diverse investment opportunities across a range of sectors such as agriculture, mining, telecoms and to energy, Africa is ideally positioned to drive global growth.
The pace with which new technologies have been embraced by the young people of this continent suggests that Africa has the potential to effectively seize the opportunities of the Fourth Industrial Revolution.
Numerous studies have shown that developing countries, many of which are in Africa, are suited for so-called leapfrog development.
We have seen, for example, the spectacular growth of mobile banking technology in African countries, wholly bypassing traditional banking systems that have been inaccessible to rural communities.
In other instances, renewable energy investment has seen some African communities bypass conventional energy grids.
By harnessing the potential of technology and by mobilising investment from the private sector, African societies can be at the forefront of innovation and progress.
To do this, we must confront some of the perceptions that exist about investing in African countries.
There are concerns that barriers to entry are high, regulatory red tape is overly burdensome, and governance challenges make investing in African economies risky.
It should not be difficult to do business in Africa, and yet, as investors often tell us, it has been.
If we are to unlock capital flows, we have to develop sound policy and regulatory environments, strengthen our financial institutions, improve governance and deal decisively with corruption.
Providing policy certainty and consistency is critical if we are to realise the levels of investment we seek.
This is why the African Development Bank should be commended for convening this Forum as a platform of engagement between African governments, the private sector and continental and international financial institutions.
Tomorrow you will be hearing from leaders from across the continent about the concrete actions we are undertaking in our respective countries to create a business-friendly environment that catalyses investment.
But the Africa Investment Forum is about more than just discussing ways to unlock obstacles to further investment.
We are bringing tangible, real projects to the table.
Africa will not be able to raise the $130 billion or more that it needs each year to meet its infrastructure requirements, without massive private sector investment in the continent’s development.
It is not only the people of Africa who stand to benefit.
Governments and the private sector should form relationships of mutual benefit, because Africa holds significant and untapped potential for investors.
For investors looking to diversify their portfolios, Africa is a continent where opportunities are immense and the returns on investment are significant – whether it is investing in climate smart agriculture in Nyando, Kenya; in an automotive manufacturing plant in Port Elizabeth, South Africa; in a hydroelectric dam on the Congo River; or in a tech start-up in Lagos.
We will be using this platform to showcase the opportunities that exist.
We will be using it to highlight what we are doing to remove the bottlenecks that stand in the way of greater investment into our respective countries.
We hope that the deliberations here will be robust, spirited and, above all, results-oriented.
I’d like to welcome you once again to our country, and encourage you to take advantage of your time here to see as much of South Africa as you can.
We are justifiably proud that we continue to attract high numbers of tourists to our shores, and we trust that for those visiting for the first time that it will not be your last.
This year South Africa marks the centenary of the birth of the founder of our nation, Nelson Mandela.
He was a legendary statesman, an exemplary leader, and an ardent pan-Africanist.
He never tired of emphasising the inextricable links between the struggles and fortunes of South Africa, and those of the rest of the continent. And, he always advocated for a more integrated continent.
In presenting the Africa Peace Award to the nation of Mozambique in 1997, President Mandela said:
“The time for Africa’s renewal, for our continent to occupy the pedestal of the successful, has come to pass. Africa yearns and deserves to redeem her glory; to reassert her centuries-old contribution to economics, politics, culture and the arts, and once more to be a pioneer in the many fields of human endeavour.”
The convening of the Africa Investment Forum is but one of the many means by which we as African leaders seek to develop our continent, improve the conditions of her people, and enhance her prosperity.
In this we know we can count on the domestic and international business and investor community to work with us, side by side.
A strong prosperous Africa, driven by the energies of its citizens is in the interest – and reach – of us all.
I thank you.
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Institutional reform of the African Union is the major focus of the 11th AU Extraordinary Summit underway in Addis Ababa
Under the framework of the 11th African Union Extraordinary Summit, the AU Permanent Representatives Committee (PRC) officially opened on Monday 5th November 2018, at the AU headquarters in Addis Ababa.
The meeting brought together the Permanent Representatives of the 55 AU member states based in Addis Ababa and key AU officials, among others.
Over two days, the PRC session considered and deliberated on issues related to the AU Institutional Reform process, including reform of the AU Commission. Deliberations focused on the structure and portfolios of the senior leadership of the Commission, selection of the senior leadership of the Commission, as well as administrative and financial reforms.
In his opening remarks, H.E. Moussa Faki Mahamat, Chairperson of the AU Commission, reiterated that since the launching of the AU reform process in January 2017, significant progress has been made in its implementation. He mentioned in particular the introduction of quotas for youth and women, the rationalisation of working methods and the slow but steady progress towards financial autonomy.
The Chairperson added that the results thus achieved demonstrate, if need be, the relevance of the vision of the African leaders when they agreed to set the institutional reforms in motion.
“The rationalisation of our working methods has resulted in greater efficiency in the conduct of the affairs of our Union. Progress towards financial autonomy has established the conditions for greater ownership of our policies and efforts. The ongoing improvement in the representation of youths and women in the Commission will inject greater dynamism and innovation within it. At the same time, it must be recognised that much remains to be done,” he added.
Highlighting the issues to be considered by the PRC meeting, the Chairperson noted that it is important to keep in mind the reasons for which the reform was initiated.
“Basically, it is about giving us, through the Union, the human, material, financial and political means to meet the strong and legitimate expectations of our States and our peoples. Agenda 2063, which serves as a compass in this new phase of the pan-African movement, obliges us to accelerate integration, to put an end to the poverty and underdevelopment afflicting our populations; to silence the weapons and thus put an end to the suffering of all kinds generated by the conflicts; and to ensure that Africa speaks with one voice in the international arena to better defend its interests and work towards a more just and inclusive world order.”
He concluded that such ambitious objectives of Agenda 2063 require, for their realization, a more functional and efficient Union.
Over the two days of their meeting, the ambassadors also discussed the mandate of the AU Development Agency (AUDA), currently known as the New Partnership for Africa’s Development (NEPAD). In this regard, the Chairperson recalled that the governance structure of AUDA was validated at the July summit, which was held in Nouakchott, Mauritania.
The PRC meeting was also expected to discuss financing the African Union, the AU Peace Fund, and the division of labor between the AU, RECs, continental organizations and Member States. They evaluated Africa’s strategic partnerships and consider the report of the Chairperson of the Commission on the Outcome of the Extraordinary Session of the Executive Council on the ACP post-2020.
There were also discussions around organs of the Union, including the African Peer Review Mechanism (APRM), the African Court on Human and Peoples’ Rights, the African Commission on Human and Peoples’ Rights, the Pan-African Parliament, as well as strengthening of the Peace and Security Council (PSC).
Additionally, the PRC meeting prepared the agenda of the 11th AU Extraordinary Assembly with appropriate recommendations for consideration by the 20th Extraordinary Session of the Executive Council, scheduled to take place from 14-15 November 2018.
For more on the AU reform process, please visit our African Union Resources page.
Meeting of the Permanent Representatives Committee on the Institutional Reform: Statement of the Chairperson of the Commission of the African Union
This session of the Permanent Representatives Committee marks an important stage on the way leading to the Extraordinary Summit that will bring together our leaders on 17 and 18 November 2018 in Addis Ababa, on the crucial issue of the institutional reform of our Union. In fact, it will make it possible to adequately prepare the meeting of the Executive Council of 14 November, which will precede the Summit itself.
Your deliberations will be informed by the conclusions of the Retreat of the Executive Council, held here, in Addis Ababa, in early September, as well as by the brainstorming meeting you held as a prelude to the said Retreat.
Furthermore, the Commission has submitted a Report which, taking into account the work already done, states concrete proposals on the way forward.
In short, your organ has many materials to feed into its discussions. As this is a process endorsed by the highest authority of our Union, I have no doubt that you will wholeheartedly do everything in your power to help arrive at the desired destination.
May I seize this opportunity to reiterate my appreciation to all the Permanent Representatives here present for their commitment. I commend the work that your body does on a daily basis, to advance our Continental agenda, including the institutional reform of our Union.
Since the launching of the reform process in January 2017, significant progress has been made in its implementation. I mention in particular the introduction of quotas for youths and women, the rationalisation of our working methods and the slow but steady progress towards financial autonomy.
The Nouakchott Summit, last July, marked further progress. Thus, it validated the new governance structure of the New Partnership for Africa’s Development, which will become the African Union's Development Agency.
The Summit also resulted in establishing the credibility of our budget process. The decrease in the budget for the 2019 financial year, without being an end in itself, was the culmination of this process. In this context, I am pleased to note the reduction in the level of our dependence on international partners.
The results thus achieved demonstrate, if need be, the relevance of the vision that imbued our leaders when they agreed to set the institutional reform in motion.
The rationalisation of our working methods has resulted in greater efficiency in the conduct of the affairs of our Union. Progress towards financial autonomy has established the conditions for greater ownership of our policies and efforts. The ongoing improvement in the representation of youths and women in the Commission will inject greater dynamism and innovation within it.
At the same time, it must be recognised that much remains to be done.
The decision adopted in Nouakchott to convene an Extraordinary session on the institutional reform of our Union is an expression of the strong political will of our Heads of State and Government.
Drawing lesson from past attempts at reform, our leaders want to ensure that the efforts made in the wake of the decision taken at the Addis Ababa Summit, in January 2017, do not get bogged down in endless procedural debates, that the reform take the path, alas already borrowed in the past, promises without tomorrow.
Africa simply can not afford to fall into hesitation and procrastination.
The legitimate demands of our peoples' effectiveness, their demands for results and the urgency of their needs, especially the youth, leave us no choice but to persevere in the chosen path. I take this opportunity to inform you that I have just appointed a Youth Envoy, surrounded by a Youth Advisory Council, whose members I have also appointed.
We have to go further and tighten our ranks because the international context is very difficult, characterized by the return of force in unilateralism in both political and economic spheres.
Several issues are on the agenda of the Extraordinary Summit: the reform of the Commission, the division of labor between the Union and the Regional Economic Communities, the strengthening of the role of the Peer Review Mechanism and the the effectiveness of many of the Union's bodies, including the Peace and Security Council, as well as the streamlining of our international partnerships.
It is also expected that financial issues will be discussed in the light of ongoing processes on the scale of contributions and sanctions for non-compliance by Member States with their obligations in this area.
The report submitted to you includes detailed proposals on each of these issues. It is up to you to enrich them so that, at the end of the Summit, we can collectively take new steps in our quest for a more effective institution adapted to the goals assigned to it.
I would like, particularly with regard to the reform of the Commission, to stress the crucial importance of this issue. The Commission is supposed to be the driving force of our Union. The capacity of our Union to carry out the many tasks that have been opened up depends on its ability to fully assume its immense responsibilities.
In considering these different issues, it is important to keep in mind the reasons for which the reform was initiated. Basically, it is about giving us, through the Union, the human, material, financial and political means to meet the strong and legitimate expectations of our States and our peoples.
The 2063 Agenda, which serves us as a compass in this new phase of the Pan-African movement, obliges us to accelerate integration, to put an end to the poverty and underdevelopment afflicting our populations; to silence the weapons and thus put an end to the suffering of all kinds generated by the conflicts; and to ensure that Africa speaks with one voice in the international arena to better defend its interests and work towards a more just and inclusive world order.
You will agree with me that such ambitious objectives require, for their realization, a more functional and efficient Union. This is the challenge of the reform.
This is to say the heaviness of the task that awaits you in the days to come. I am sure your deliberations will live up to the stakes.
I thank you for your kind attention.
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Africa-Europe Partnership: A vision beyond migration
Speech by High Representative/Vice-President Federica Mogherini during the S&D 2018 Africa Week
This is the third important meeting that the [S&D – Socialists & Democrats in the European Parliament] Group promotes on Africa and I think that it is almost revolutionary these days to have a conversation on our partnership with Africa beyond migration. I know that in this room this goes without saying, this seems self-evident, that we cannot even imagine having a partnership with a continent based on one issue – yet very relevant but one only.
I think that having the courage and the vision of saying “we have to work and we need to work” on our partnership beyond migration, with Africa, with the European Union on your side, is exactly the right political message to send, so thank you for this. I think this is exactly the kind of message we need in Europe today.
Yesterday, I know you celebrated Nelson Mandela’s one hundred years. He was a man who managed to inspire entire generations all across the world. His fight for freedom and justice was first and foremost for the people of his country – indeed a revolution – but it soon became a symbol of something much bigger. And all of a sudden, the story of one man and one country started to speak to the whole world, and brought change across the world.
Madiba’s liberation and his election sent a message of hope that touched the hearts and the minds of people all across the globe. It was a message of democracy, a message of social justice, equal opportunities for all – beyond ethnicity, beyond faith and social background.
But it was also a message of reconciliation, inside countries and among countries. He imagined a world where all countries had the same rights, and where international relations could be and had to be based on cooperation and partnership. At that moment in time, Africa was at the centre of the world with this inspiring revolutionary message. Mandela’s ideas inspired for sure my generation but also many others. I would say it gave us strength and courage to face things that were perceived as impossible.
My favourite quote from him is that “Everything seems impossible until it is done”, and I think this is something we should keep in mind especially in Europe nowadays. But today international relations are not the same that Mandela used to imagine. We face the return to a more dangerous way of interpreting, understanding, living global politics: a way of interpreting international relations based not on cooperation and partnership, not on win-win solutions, but more and more often as a power game, as a zero sum game.
Many of us have the feeling that there is little hope to move towards a more cooperative global order, and it is indeed very difficult in these days to be optimistic and to stay optimistic. Still, a big part of the world’s future, but also the world’s present, depends on Africa, and also depends on our partnership. I know that Africa does not always perceives itself as a major global player, well it is. Look at the numbers, look at the demography, look at the richness – natural resources, of the people. You are a big global player and together, Europe and Africa, can shape the features of international relations in quite a revolutionary way.
I often say that maybe for someone like me that comes from a place that geographically is quite close to Africa, it is natural. But today, it is all of the European Union that is aware of the strategic importance of the European-African partnership. It was probably not the case a few years ago, but today this is reality. I often make reference to an anecdote that explains very well how close we are: only 17 kilometres away. I had to fly from Tunis, Africa to Malta that at the time was holding the European Union presidency, and I was flying South – if you fly from Tunis to Valletta, you are flying South.
This to say that even the paradigm of a North-South divide, nowadays, is something we need to challenge together. We cannot do it alone as Europeans, I think you cannot do it alone as Africans, but I think, this is the challenge we are facing together. And this would be a service that we do not only to our people, but also to the rest of the world. Africa has a role to play and has a responsibility when it comes to shaping international relations. This not just because most of the world’s demographic growth is happening inside Africa, it is also about an idea of international relations and global politics.
In our daily engagements, we are showing that a more cooperative governance of global affairs is not just possible – it is – but it is actually the only effective way to deal with the challenges of our times: a) a global governance that is based on cooperation inside the regions. Africa is experiencing on a daily basis a strengthening of its regional and sub-regional organisations that inspires many of us. It is also inspired by much of what we have done in Europe, but this is a continuous learning process in which we exchange experiences, so a governance based on cooperation inside the regions and among the regions.
I am happy to say that in these years we have invested so much in our relations with the sub-regional organisations and with the African Union in an unprecedented manner: b) a governance that has inclusive growth and the fight against inequalities as its core objectives. We do not say that often but I think this is it and we have to face reality as it is. We often talk about the root causes of migration, namely poverty, climate change. Let us call things with their names. We are talking about inequalities: an unequal distribution of wealth and resources around the world. This is what we are talking about when we talk about the root causes of migration – also conflicts and crises, and many of them are caused exactly by inequalities and unequal distribution of resources.
We together can promote the idea – that we share as Africans and Europeans – that it is a false illusion to think that if my neighbour is strong in a sense of competition this creates a problem. I think we have understood from our history, both in Africa and in Europe, that if my neighbour has a problem I also have a problem. And the best way to invest in my strength is investing in my neighbour’s strength. This is how the European Union was built, after having experienced centuries of conflict, competition and wars, and I believe this is the lesson that also the African continent has learned over its history.
This is the kind of cooperation we have started to establish with Africa in these years. Beyond the donor-recipient relation, we went from the idea of having projects for Africa, which is something good and that we continue to do, to the idea of working with Africa, as I was saying, towards our common interests.
It is true that part of our work these years has focused on migration and particularly on fighting traffickers and helping people free themselves from traffickers. I think this is a common interest we share. We finally realised that the management of migration flows is not a South-North divide but it is a common interest to manage together. It is a complex challenge – also because most of the African countries are at the same time countries of origin, of transit and of destination nowadays.
So we have a common challenge to deal with and only together we can do it. I can give you the example: last year during the Summit we had with the African Union in Abidjan we decided that we wanted to tackle the awful situation in the detention centres in Libya. We established a joint task force – European Union, United Nations, African Union – and we managed in a few months to liberate tens of thousands of men and women from the detention centres and bring them back home safely with the support they need to start their lives again. This was made possible exactly because of our partnership, of cooperation. Europe would have not done it alone, Africa would not have done it alone and the United Nations neither.
Out of this cooperation, out of this partnership we managed to bring results and this needs to continue because we might fall into the illusion that this is done – it is not. We need to sustain the work that has been started. This is just one starting point of our cooperation.
I know our time is limited. But let me mention one other important point that is at the centre of our work, which is the work on security. We are exploring new ways to cooperate for our common security. Our cooperation with the G5 Sahel in this respect is particularly innovative.
We started from a very basic idea that no one knows Africa’s true security needs better than the people of Africa and so our African partners are now defining their needs and the strategy and we are giving our support to their initiatives, like in the G5 Sahel because that is also in our own interest. Sustainable security is essential for sustainable development and this is a pressing need. Yet, this is definitely not enough to guarantee a better present and a better future for Africans.
And so I come to the real centre of our cooperation and I close on this. Beyond migration, beyond security, our cooperation is now driven by two main goals: create good jobs and good opportunities for the African youth and engage constantly with the young people of Africa. I am happy to see here youth representatives because the rhetoric, the narrative of you being the future for Africa is simply not matching reality. You are the present of the continent and the only way to get it right is to let you influence the policies we are putting in place.
We have established as European Union, together with the African Union, initiatives to have the young generations of Africa and of Europe and of the diaspora heard and to get their voices, that are very clear and loud, to the decision making process. We have established in particular an [AU-EU] Youth Plug-In Initiative that created an opportunity for young people to create proposals on concrete projects. I am happy to say that next week in Paris they will be at the [Paris] Peace Forum to present their ideas to world leaders and influencers, to make these projects reality and some of them are supported by the European Union.
Let me finish by saying that I am proud of the work that we have started. It is still a long way to go. It will require a lot of political courage, determination, also resources, partnership, patience from time to time but I think we are on the right track to change the paradigm from the old traditional partnership based only on development cooperation to an equal partnership of friends. But let me say more than friends: brothers and sisters.
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Debt sustainability in developing countries is deteriorating fast
Urgent talks on a looming global debt crisis take place in Geneva at the second session of the Intergovernmental Group of Experts on Financing for Development on 7-9 November 2018.
Underlining the seriousness and urgency of debt trends that imperil the 2030 Agenda for Sustainable Development and could precipitate a new financial crisis, Ambassador Salim Baddoura of Lebanon, president of the UNCTAD Trade and Development Board, opened the second session of the IGE on Financing for Development in Geneva on 7 November. “Debt sustainability in developing countries is deteriorating fast,” he said.
UNCTAD Deputy Secretary-General Isabelle Durant agreed that the facts were worrying.
“By the end of 2017, the ratio of global debt to global GDP was almost one-third higher than it was on the eve of the world's worst global financial crisis in 2008,” she said. “The world’s outstanding debt accounts for more than three times the world’s GDP, the main concern being the growth of non-financial corporate debt.”
She said that the debt-to-GDP ratio exceeded 70% in a fifth of emerging and middle-income countries and was more than 60% in low-income countries.
“This leads to the following observation: in mid-2018, the number of low-income developing countries in over-indebtedness or at high risk of it reached 31 – as against 13 in 2013. The number has practically tripled!” Ms. Durant said.
Rude awakening
“It is in this uncertain and fragile financial context and in a global macroeconomic environment whose priority does not seem to be the financing of development that we face the challenges of implementing the pdf Addis Ababa Action Agenda (873 KB) ,” she said, referring to a 2016 plan that outlined the means of paying for the 2030 Agenda for Sustainable Development.
“The international community is, however, aware of the urgent need for decisive and multilateral actions and investments to achieve the Sustainable Development Goals,” Ms. Durant said. “At UNCTAD, we are continually striving for consensus and action on this issue.”
Some of the central concerns of the Addis Ababa Action Agenda, such as, for example, vulnerability and debt sustainability in developing countries, improving prevention and crisis preparedness, strengthening development cooperation, the consideration of environmental challenges and reforms of global economic governance must become priorities, Ms. Durant said.
“The financial context requires this – if we want to avoid a rude awakening,” she said.
Richard Kozul-Wright, UNCTAD’s director of globalization and development strategies, said debt was the common thread that linked the decade since the financial crisis and the coming decade before the 2030 Agenda is set to be achieved.
Referring to the detailed background paper prepared by UNCTAD for the meeting, he said that debt was the “glue” of hyperglobalization and recalled developing country debt crises during the last three decades.
“The kinds of systemic problems that debt poses require systemic solutions,” he said.
Equitable and inclusive
The chair of the meeting, Paul Oquist, Nicaragua’s Minister of National Policies, took aim at the “financialization” of the world economy, which he called “treacherous” for its offer of easy money with strings attached.
He said that a more equitable and inclusive global trading system was part of the answer, and he looked to the meeting to propose ideas and policy alternatives that could avert or solve a developing country debt crisis.
The vice-chair, Nozipho Joyce Mxakato-Diseko, South Africa’s ambassador to the United Nations in Geneva, recalled Nelson Mandela’s admiration for UNCTAD as a key forum for exploring urgent questions for developing countries, including indebtedness.
She outlined the many facets of the problem and said that the international community must reflect on a more balanced monetary and financial system while ensuring “policy space” that allows countries room for maneuver.
Long-term systemic reform
Maria Fernanda Espinosa Garcés, president of the United Nations General Assembly, said in a video statement that in the last ten years external debt had risen at an average annual rate of 8.5% for developing countries, and now totalled $7.6 trillion.
Debt as a way of financing sustainable development was risky, and governments must be well-informed to balance such risks, she said. The work of this meeting strengthened United Nations leadership on this issue in New York and Geneva, she added.
Ambassador Baddoura noted that the Addis Ababa Action Agenda also recognized that the international financial architecture required long-term systemic reform so that indebted countries could transform their financial health.
Sessions at the meeting focussed on the current landscape of rising debt burdens and linked vulnerabilities in developing countries, systemic reforms, the “middle-income trap” and multilateral policy priorities and options.
Inga Rhonda King, president of the United Nations Economic and Social Council (ECOSOC), said in a video statement that deliberations from this meeting would feed into crucial financing for development follow-up talks at ECOSOC in New York in April 2019.
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Regional integration and non-tariff measures in the Economic Community of West African States (ECOWAS)
This report examines non-tariff measures (NTMs) from an economic and an institutional perspective in the context of the regional integration process in West Africa, driven simultaneously by the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU).
The regional integration process in West Africa is driven by ECOWAS and WAEMU. The elimination of tariff and non-tariff barriers to trade is at the core of their respective programs with the aim of fostering freer trade and the free movement of the factors of production.
However, as for most of Africa’s regional integration arrangements, the focus of ECOWAS and WAEMU has primarily been on border measures and tariffs. Originally, more concern was given to the prominence of tariff barriers which dramatically hindered all integration efforts.
While tariffs were undeniably an important barrier, economic analysis indicates that tariffs have gone down. NTMs, including behind-the-border measures, are more important than tariffs in inhibiting intraregional trade as they substantially raise the costs of doing business. Intra-ECOWAS trade is further undermined by the persistence of non-tariff barriers (NTBs), particularly quantitative restrictions.
This report is based on the analysis of NTMs data that were collected by the United Nations Conference on Trade and Development (UNCTAD) and the African Development Bank (AfDB) in 13 ECOWAS countries as well as an institutional analysis. The purpose of this report is to provide policy options to national and regional policy makers from the ECOWAS region to support deep regional integration based on the reduction of non-tariff barriers (NTBs) and regulatory cooperation.
Foreword
Regional integration presents unique opportunities to drive Africa’s transformation and development. ECOWAS is among the major African Regional Economic Communities that has been shaping the evolution of regional integration in Western Africa. From better crisis prevention and management, financial and macroeconomic integration, to free movement of people, the list of achievements by ECOWAS is long since its formation in 1975.
Today, the establishment of a functioning common market is among ECOWAS’ top priorities. The ECOWAS Treaty states that the common market should be ensured through “… liberalization of trade among Member States by [..] removing non-tariff barriers to establish a free trade area at the community level [… and] the removal, among Member States, of obstacles to the free movement of [.] goods”.
Although tariffs have been widely reduced, effective market access and integration also requires addressing non-tariff measures (NTMs). NTMs are policy measures other than tariffs that can potentially hinder trade. They refer to regulations whose primary objective is to protect health and the environment such as Sanitary and Phytosanitary (SPS) measures or Technical Barriers to Trade (TBTs) but which directly or indirectly distort trade.
This study provides an institutional overview of NTMs and an assessment of its impacts on regional integration in West Africa. It is part of a global initiative titled the “Global Transparency in Trade Initiative” jointly implemented by the Bank, UNCTAD, ITC and the World Bank to improve transparency in and access to trade data.
ECOWAS was the first region in Africa in which the partners systematically mapped, collected, organized and analyzed all NTM data, including non-tariff barriers and behind-the-border regulations such as SPS measures and TBTs.
The report utilizes innovative methods to assess regulatory convergence and evaluate the impact of NTMs from an economic, legal and institutional perspective. From the analysis, clear policy recommendations are identified for policy makers in ECOWAS and their development partners.
Today, diverse stakeholders use the database for various reasons. For example, traders use it to identify the import and export regulations that they must comply with. Policymakers and negotiators use it to streamline and negotiate NTMs while researchers make use of the data to assess the impact of NTMs on trade and sustainable development.
It is the expectation of the Bank and UNCTAD that by facilitating access to information on NTMs, the report shall assist ECOWAS member States in their efforts to boost trade and economic integration.
This report was prepared by UNCTAD in close collaboration between the African Development Bank and the United Nations Conference on Trade and Development.
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tralac’s Daily News Selection
Released today: Infrastructure Financing Trends in Africa – 2017
Extracts (pdf): Overall commitments to Africa’s infrastructure from all sources increased to $81.6bn in 2017 from $66.9bn in 2016. Though fewer ICA members reported data this year than in the past, this is the highest level of directly comparable commitments reported since 2010. Factors driving the higher commitments include a $13bn increase in identified Chinese investments from $6.4bn to $19.4bn, and a $3.7bn increase in African national and sub-national government spending from $30.7bn to $34.4bn.
According to the World Bank’s Private Participation in Infrastructure Project Database, the value of projects with private sector participation reaching financial close in 2017 totalled $5.2bn, an increase from the $3.6bn reported in 2016. Of this, $2.3bn (44.8%) was privately financed.
With commitments of $34bn, the transport sector continued to be the largest beneficiary of infrastructure commitments in 2017 by a significant margin. Financing of transport infrastructure was equal to 41.7% of all funding. As with previous years, most of the $20.1bn was provided by African national or subnational governments. The energy sector, which recorded $24.8bn of investments in 2017, accounted for 30.4% of the total. The water sector accounted for $13.2bn (16.2%),followed by multi-sector investments, which registered $5.1bn (6.3%).
Public and private stakeholders consulted in the preparation of this report said the main reasons for Africa’s infrastructure deficit centre not on a lack of funds but a lack of bankable projects. As noted in previous years, countries with sound institutional arrangements are attracting public and private sector finance. Subsectors attracting investment include renewable energy generation, ports and maritime activities and mobile telephony. [Ibrahim Mayaki: We must find alternatives to state funding of infrastructure]
Africa Investment Forum: African development changes course from aid to investment (SAnews.gov.za)
African Presidents have been saluted at the inaugural Africa Investment Forum for embracing the continent’s economic growth project, with event organisers on Wednesday saying this will go a long way in attracting tangible investment. At a panel discussion on the first day of three-day forum at the Sandton Convention Centre, African Development Bank (AfDB) President Akinwumi Adesina emphasised that the Africa Investment Forum is not an event but a platform on which African governments, the private sector, project promoters and investors can converge to give impetus to a number of crucial deals. It’s all about transactions, the AfDB head said.
Africa Trade Forum: Private sector crucial to successful AfCFTA implementation (UNECA)
The 2018 Africa Trade Forum ended in Lagos, with delegates agreeing that while governments need to set a conducive environment through collective and coordinated actions for the successful implementation of the AfCFTA, the private sector should to be the main driver of the AfCFTA. They also agreed that complementary interventions to boost competitiveness and reduce the high costs of doing business on the African continent would be crucial to ensure win-win gains from the AfCFTA – these will require proactive policies and programmes in the areas of infrastructure, financing, skills development, trade facilitation and quality infrastructure. “In implementing the AfCFTA we must also make sure not to forget 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,” ECA’s Regional Integration and Trade Division Director, Stephen Karingi said in summing up the major takeaways from the Forum. On the next steps, Mr Karingi said the ECA, with financial support of the EU, was offering technical assistance to support Member States in developing comprehensive AfCFTA National Implementation Strategies. These strategies will:
Ethiopia: Company perspectives on non-tariff measures (ITC)
Ethiopia’s export sector has grown rapidly in recent years, but the country’s businesses would be performing even better in international markets were they not held back by an array of non-tariff measures. According to a new survey (pdf) of Ethiopian exporters, importers and producers by the International Trade Centre, 96% of trading companies report difficulties related to the application and implementation of NTMs. Exports are much more affected than imports: 90% of exporting companies report facing burdensome NTMs, while only 56% of importing companies report such problems. The NTM Business Survey (pdf) focuses on six economic sectors: coffee, oilseeds, other agricultural products, textiles, leather products, and other manufacturing. Among them, leather products are the most affected by NTM-related obstacles. Many of the obstacles reported by Ethiopian traders relate to domestic policies and procedures.
Costly import compliance demands blunt Kenya’s regional competitiveness (Business Daily)
Costly and lengthy border compliance procedures for imports threaten Kenya’s competitiveness in the region, a new World Bank report showed, pilling pressure for further review of the country’s customs and inspections systems. Border compliance entails a raft of procedures including customs clearance and inspections by other regulatory agencies. The World Bank’s Doing Business 2019 report indicated that the costs when importing to Kenya stood at about Sh84,466.2 ($833), which is higher compared with the Sub-Saharan Africa’s average of Sh69,388.02 ($684.3). The average time it takes an importer to comply with regulations is also a concern because it would take a trader about 180 hours to do so---way above SSA’s 126.3 hours. “It tells you we are doing badly in terms of the time taken to clear cargo. It shows that government interventions are taking longer and this is impacting on cost of clearing goods,” Mr William Ojonyo, chairman of the Kenya International Freight and Warehousing Association said.
African air passenger traffic, air freight results for September (IATA)
African airlines posted a 6.0% rise in RPKs in September, down from 6.8% in August. Capacity rose 4.9% and load factor edged up 0.8 percentage point to 74.6%. The healthy growth is taking place against an increasingly challenging economic backdrop for the region’s largest economies, South Africa and Nigeria. African carriers saw freight demand contract by 2.1% in September 2018, compared to the same month last year. This was the sixth time in seven months that demand contracted. Capacity increased by 6.2% year-on-year. After a peak in demand at the end of 2017, seasonally-adjusted international freight volumes have stopped declining and recovered sharply in recent months. However, they remain 6% lower than the November 2017 peak. Demand conditions on all key markets to/ from Africa remain weak.
Measuring travel services in West Africa (UNCTAD)
UNCTAD statistical experts met with tourism and travel specialists from the World Tourism Organization to discuss the travel element of trade-in-services in West African Monetary Union countries during the second meeting of the working group on Measuring the Sustainability of Tourism in Madrid (24–25 October). UEMOA members are Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. “Travel services pose a particular set of challenges,” UNCTAD’s Ms Barnat said. “That’s because unlike most services transactions, which can be measured using enterprise surveys, international travel can only really be measured at national borders.” She proposed that UNCTAD collaborate with UNWTO to implement a joint questionnaire on travel that addresses the needs of trade-in-services and Measuring Sustainability in Tourism initiative. The collaboration offers an opportunity to not only collect harmonized data across the eight UEMOA countries – and perhaps other regions in the future – but to also harmonize or align data collection for both sustainable tourism and the travel part of trade-in-services.
Namibia’s implementation of WTO TFA: WCO diagnostic mission
At the request of the Namibia Customs & Excise Directorate, the WCO conducted a diagnostic support mission (22-26 October) focused on the implementation of the WTO Trade Facilitation Agreement. It is envisaged that the subsequent WCO diagnostic report, containing a series of tailored recommendations, will provide the framework by which NCE and the WCO can engage further in support of TFA implementation as part of a broader Customs modernization and reform agenda.
East African countries urged to engage youth in regional decision-making body (New Times)
EAC member states on Monday called for enough political space for young people to actively take part in the regional decision-making body so that their voices can be easily heard. Charles Njoroge, EAC Deputy Secretary General in charge of Political Federation, made the call when speaking at the first High Level EAC Youth Ambassadors Dialogue on Regional Integration 2018. The theme is “Harnessing young people’s participation in the political process.” The dialogue brought on board 80 youth from Tanzania, Kenya, Uganda, Rwanda and Burundi.
Wandile Sihlobo: Who is buying South African beef?
While not amongst the top exported products, the South African beef industry has made some inroads in terms of exports in the past couple of years. This is clear from Figure 1. In fact, South Africa is typically a net exporter of beef (chilled and frozen) and recorded a positive trade balance of R203m in the period between 2012 and 2016. In terms of volumes, medium-term trends show a sharp increase in overall beef exports, from 14 634 tons in 2012 to 39 135 tons in 2016. Frozen beef exports increased from 2 921 tons in 2012 to 18 067 tons in 2016 – a 5-fold increase. Meanwhile, fresh/chilled beef exports increased from 11 714 tons to 21 068 tons over the same period. Above all, Jordan, UAE, Kuwait, Mozambique, Swaziland, Namibia, Lesotho, Mauritius and Angola are important markets for the South African beef industry as they account for over 90% of its exports by value.
Kenya, South Africa to launch long-term multiple travel visas (News24)
Long-term visas will become available for South Africans wanting to travel to Kenya and Kenyans wanting to visit South Africa as of 1 December. The announcement was made by Home Affairs Minister Malusi Gigaba and his Kenyan counterpart Interior Minister Fred Matiang’i on Monday after the two held bilateral talks. The Kenyan minister said he believed relaxing visa requirements would lead to the most “seamless interaction between South Africa and Kenya in history.” South Africa’s home affairs minister, in turn, thanked Kenya for its efforts in preventing illegal immigrants from making their way to the country. “I thanked the minister for the work they continue to do to repel a lot of illegal immigrants destined for South Africa, on a daily basis hundreds of people are being stopped in Kenya who are destined for South Africa.”
Nigeria summons Ghanaian envoy over closure of 400 Nigerian shops (Ghanaweb)
Nigeria’s Federal Government has summoned the High Commissioner of Ghana to Nigeria, Ambassador Rashid Bawa, over the closure of over 400 Nigerian shops in Ghana. Foreign Affairs Minister, Geoffrey Onyeama, said the Ghanaian envoy was invited to explain the treatment of Nigerian traders in his country. The closure of over 400 Nigerian businesses had sparked protest by the National Association of Nigerian Traders, NANTS, and Nigerian Union of Traders Association, Ghana, NUTAG. Onyeama said a committee was being set up at the highest level in Nigeria to look into the matter and to look at how government can respond to the situation.
Emerging, developing economies to face challenges if global inflation rises (World Bank)
Further upward acceleration of global inflation from record low levels may impair efforts in emerging and developing economies to sustain the low inflation environment achieved over the past several decades, the World Bank said in a groundbreaking examination of inflation in the emerging and developing world. The adverse effects of high inflation can fall disproportionately on the poor, who hold most of their assets in cash and rely heavily on wage income, welfare benefits, and pensions, the World Bank said in Inflation in emerging and developing economies: evolution, drivers, and policies (pdf). To investigate the impact of inflation on emerging and developing economies, the World Bank’s Prospects Group has produced the first wide-ranging analysis of inflation and its implications for these economies in a long time. The new study also includes a global inflation dataset that covers more than 175 countries over 1970-2017. The study documents the confluence of structural and policy factors that have fostered low global inflation over the past five decades. Foremost among these has been unprecedented international trade and financial market integration.
Today’s Quick Links: Uber and Taxify in Africa: good work or a race to the bottom? Jokkolabs partnership grows AfriLabs network to 135 hubs EAC steps up construction of unified border posts World Bank’s economy profile of Libya, Egypt AfDB, key UN partners push for improved gender statistics Jacqueline Andall: Women, migration, and cross-border trade in Africa World Bank blog: Making room for Africa’s urban billion |
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Africa Investment Forum kicks off: African development changes course from aid to investment
African Presidents have been saluted at the inaugural Africa Investment Forum (AIF) for embracing the continent’s economic growth project, with event organisers on Wednesday saying this will go a long way in attracting tangible investment.
The African Development Bank’s (AfDB) Africa Investment Forum, which is a world-class initiative positioned to transform the continent’s economy and infrastructure development landscape, kicked off on Wednesday morning. The three-day event is being held at the Sandton Convention Centre in Johannesburg under the theme ‘All set for Africa’s first investment marketplace’.
At a panel discussion this morning, AfDB President Akinwumi Adesina described the current crop of African leaders as being the chief executive officers of their countries. “African leaders are doing business differently. We are seeing our leaders as CEOs of their own corporations, if you will,” he said.
Adesina emphasised that the Africa Investment Forum is not an event but a platform on which African governments, the private sector, project promoters and investors can converge to give impetus to a number of crucial deals. It’s all about transactions, the AfDB head added.
“This is not a show and tell event. We are coming together to develop quality bankable projects, to make sure that we can de-risk those projects and fast track the closure of those deals so we can collectively work together to ensure that the policy, and the legal and regulatory environment happens,” said Adesina.
He assured delegates that working together, the African continent will fast track development. “We are not here to discuss aid. We are here to discuss investment because every country develops through investment.”
Several Heads of State and Government from across the African continent are expected to attend the forum. Among those expected to attend are Angola’s Joao Lourenco, Benin’s Patrice Talon, Cameroon’s Paul Biya, Kenya’s Uhuru Kenyatta, Nigeria’s Muhammadu Buhari and Rwanda’s Paul Kagame. President Cyril Ramaphosa will address a gala dinner on Wednesday.
The forum provides an open platform to multilateral institutions, governments and the private sector to improve the pipeline of projects that can transform the continent. About 28 boardroom sessions will deliberate on 61 bankable projects worth $40 billion across the continent. Working with several global partners and stakeholders, the bank hopes to make the forum the springboard for African economic transformation.
For South Africa, the forum complements the government’s various initiatives to support economic recovery, increase domestic and international investment, and create and protect jobs.
Gauteng Premier David Makhura in his address said the province and South Africa were fully behind efforts to aggressively attract investment.
“South Africa is poised for great times ahead. President Cyril Ramaphosa has identified investment as one of the centrepieces of his Presidency. Two weeks ago, he hosted the Investment Conference and R290 billion was raised out of that. We are convinced that this conference builds momentum around investment.
“It is time for the continent to move away from aid to investment. It is time for Africa to transition to prosperity and we believe this must be achieved by this generation. Aid places Africa in a dependency trap. We know that today, Africa is the investment frontier so the Africa Investment Forum is in many ways the Davos of Africa.
“On behalf of government and policy makers, we also want things to be done differently. We have to ensure policy certainty in the African environment for investors. There is a host of other things that we need to fix. We have to ease the way of doing business and the regulatory environment. We have to fix public institutions,” Makhura said.
The Premier said there are additional projects provincial government wants investors to look at in Gauteng, as well as in the rest of the country.
“We are not here just to talk − we want transactions. We’ve got projects that are ready to be looked at. We want to leave here counting the investments that this forum has brought into our economy,” he said. “We want something off the forum, we want jobs to be created. We want Africa to showcase what we can do.”
According to the AfDB, the forum will be 100% transaction-based. The focus is on structuring deals, screening and enhancing projects, attracting co-investors, and facilitating transactions to unlock Africa’s multi-billion dollar investment opportunities.
Patrick Dlamini, the chief executive of the Development Bank of Southern Africa (DBSA), said it is critical for the continent to begin to reflect on what lies ahead for its future.
“It is key that we begin to understand that things happen because leadership has been provided. When there is leadership, you feel the difference. When there is leadership, you feel people begin to have hope because they can see that things are coming and their lives are going to change for the better.
“When we speak of leadership 2022... it’s this type of leadership coming together, making things happen for the continent,” he said.
Although brimming with investment opportunities, the AfDB says there is an urgent need to bridge the gap between Africa’s available capital and bankable projects.
Financing Africa’s development needs will require an estimated US$600-700 billion per annum. Of this, about US$130-170 billion a year is needed for infrastructure, according to the AfDB’s African Economic Outlook 2018.
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Funding for Africa’s infrastructure grows by 22%, ICA shows as Africa Investment Forum opens
Funding commitments to Africa’s infrastructure development rose by 22% in 2017, the Infrastructure Consortium for Africa announced today.
Published on the first day of the Africa Investment Forum, the ICA’s Infrastructure Financing Trends in Africa 2017 report shows that commitments to develop Africa’s infrastructure increased to $81.6 billion in 2017 from US$66.9 billion in 2016.
The 2017 figure is the highest reported since 2010, and the ICA’s research shows that the main factors behind the growth include a $13 billion increase in identified Chinese commitments and a $3.7 billion increase in African government spending.
Mr Mike Salawou, ICA Coordinator and Manager, Infrastructure Partnerships, at the African Development Bank, commented: “Over the years the Infrastructure Financing Trends in Africa report has become an important document for presenting, in a consistent manner, how finance is being mobilised to develop the continent’s infrastructure.
“The report’s publication this year on the first day of the Africa Investment Forum is extremely timely. While the 22% increase in financial commitments in 2017 is very welcome, the report also serves to highlight the size of Africa’s infrastructure financing gap – an important issue that the forum will address,” Salawou said.
The report highlighted the following key findings from 2017:
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Overall commitments to Africa’s infrastructure development, from all reported sources, rose 22% in 2017 to $81.6bn from $66.9bn in 2016;
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Total African state spending on infrastructure, at both national and sub-national level, increased from $30.7bn in 2016 to $34.4bn in 2017;
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Chinese investment jumped substantially in 2017, to $19.4bn from $6.4bn in 2016. Chinese funding has fluctuated substantially over recent years, with the 2016 figure of $6.4bn following a high of $20.9bn in 2015 and a low of $3.1bn in 2014;
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ICA members reported commitments of $19.7bn to African infrastructure projects in 2017, an increase of 5% from the $18.6bn reported in 2016. This represents one of the highest commitments since the ICA began collecting data in 2010, only slightly below the 2015 high of $19.8bn;
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Commitments to African infrastructure development by non-ICA members (bilateral and multilateral, excluding China) reached $5.8bn in 2017. Of this, the Arab Coordination Group committed $3bn, compared with $5.5bn in 2016 and $4.4bn in 2015;
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The value of projects with private sector participation reaching financial close in 2017 totalled $5.2bn, an increase from the $3.6bn reported in 2016. Of this, $2.3bn (44.8%) was privately financed;
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With commitments of $34bn, the transport sector continued to be the largest beneficiary of infrastructure commitments in 2017, accounting for nearly 42% of all funding. The energy sector, which recorded $24.8bn of investments in 2017, accounted for 30.4% of the total funding. The water sector accounted for $13.2bn (16.2%), followed by multi-sector investments, which registered $5.1bn (6.3%). Commitments to the ICT sector stood at $2.3bn (2.8%);
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Of the $81.6bn committed to Africa’s infrastructure development in 2017, West Africa received $22bn of commitments, followed by North Africa with $15.9bn and East Africa with $15.8bn. Southern Africa (excluding South Africa) received $12.2bn, South Africa $8.7bn and Central Africa $6bn.
The inaugural Africa Investment Forum takes place from 7 to 9 November 2018 in Johannesburg, South Africa, offering a platform for sourcing funding for bankable African projects, brokering infrastructure deals and providing innovative financial solutions.
The event will attract key global companies, financial players, and public officials who will address the continent’s critical infrastructure investment gaps.
Infrastructure Financing Trends in Africa 2017 can be downloaded from the ICA website.
Infrastructure Financing Trends 2017
The ICA’s annual report on Infrastructure Financing Trends in Africa identifies how resources are being mobilised to make an impact on Africa’s infrastructure development. The report covers all sources of infrastructure financing – including multilateral and bilateral donors, African state spending, development banks and the private sector.
One of the issues addressed in the 2017 report is African state spending on infrastructure development. The methodology for collecting and compiling data on state spending for infrastructure has been improved for this report, enabling it to capture spending not only at a federal level but also at a sub-national level (e.g. by local governments and utilities) without the risk of double-counting.
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Private sector crucial to successful AfCFTA implementation, Africa Trade Forum delegates agree
The 2018 Africa Trade Forum ended in Lagos, Nigeria, with delegates agreeing that while governments need to set a conducive environment through collective and coordinated actions for the successful implementation of the African Continental Free Trade Area, the private sector should to be the main driver of the AfCFTA.
They also agreed that complementary interventions to boost competitiveness and reduce the high costs of doing business on the African continent would be crucial to ensure win-win gains from the AfCFTA – these will require proactive policies and programmes in the areas of infrastructure, financing, skills development, trade facilitation and quality infrastructure.
“In implementing the AfCFTA we must also make sure not to forget 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,” Economic Commission for Africa’s Regional Integration and Trade Division Director, Stephen Karingi said in summing up the major takeaways from the Forum.
Delegates agreed the establishment of new business models, including renewable energy mini grids, was key to ensure efficient and sustainable access to electricity and help fill the existing gap.
“The recommendation is that we should promote new and reinforce existent sub-regional power pools within the continent,” Mr. Karingi said.
Data, delegates agreed, was critical for the implementation of the AfCFTA. Countries, regional economic communities and the African Union Commission need to understand trade patterns to determine the correct strategies. Data is also central to the monitoring of the AfCFTA.
“Africa needs to design a data economy strategy to ensure that it is not vulnerable through data exposure caused by data storage in other regions. The combination of data and technology can address the challenges around formalisation of trade,” added Mr. Karingi in his closing remarks.
On agriculture, delegates said the AfCFTA by integrating African economies, offers opportunities for the continent to reduce its food imports from the rest of the World by increasing intra-African trade of processed agro-food products. For this to happen, effective implementation of the Agreement is key, in addition to removing non-tariff barriers to trade. Critical to this is to create an environment that will support small farmers and small producers (SMEs) to have timely access to markets, both output and input markets.
On the next steps, Mr. Karingi said the ECA with financial support of the EU was offering technical assistance to support Member States in developing comprehensive AfCFTA National Implementation Strategies. These strategies will:
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Identify new opportunities for diversification, industrialization and value chain development;
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Identify current constraints to intra-African trade which must be addressed;
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Recommend steps required for each country to take full advantage of national, regional and global markets in the AfCFTA context;
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Align to existing policy frameworks at the national, regional and continental levels; and
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Adopt a nationally-driven multi-stakeholder participatory approach.
Consensus
The Forum highlighted the crucial importance of advocacy, consultations and consensus-building on the continent around its major programmes.
Mr. Karingi thanked Nigeria and the Government of Lagos State for hosting the forum and for their dedicated support and collaboration in the lead up to this Forum.
“Although Nigeria has not yet signed the AfCFTA, it is in many ways many steps ahead in ensuring that the Agreement is a real game changer for economic transformation and development,” he said.
For her part, Rockefeller Foundation’s Vice President, Global Policy and Advocacy, Christine Heenan, emphasized the importance of partnerships in ensuring the AfCFTA was a real game changer in Africa.
She said an online poll commissioned by Rockefeller was very compelling with more than 83 percent of respondents from across the continent saying the AfCFTA was important for Africa’s development. The poll is open until December 31.
“Engaging stakeholders remains very important,” she said, adding the poll meant a lot in terms of inclusivity of common African voices in the implementation of the African Continental Free Trade Agreement.
The Rockefeller Foundation, Ms. Heenan said, believed and relied on its partners for collective action that leads to progress on the continent.
In his closing remarks AUC’s Trade and Industry Commissioner, Albert Muchanga said six African countries have not yet signed the AFCFTA but two were expected to do so by December.
“African countries have resolved and are committed to making the AfCFTA a reality and there is no going back. We have to continually beat the challenges and use opportunities to come up with solutions,” he said.
Ambassafor Chiedu Osakwe, Nigeria’s Chief Trade Negotiator, said to build a free trade area, Africa has to be at ease with the process of sincere debates on its trade policies.
“The European Union dealt with a lot of continuous debate for a long period of time. African countries need to work on consensus building, being at ease with challenges on ideas, methodologies and processes in order to be at ease with the negotiations process,” Ambassador Osakwe said.
The Africa Trade Forum, which was held under the theme; AfCFTA Ratification and implementation: A game changer for African economies, was co-organized by the ECA, the Rockefeller Foundation, and the Nigerian government in collaboration with the AUC.