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2nd EAC Development Partners Forum held in Arusha
The 2nd East African Community Development Partners Consultative Forum aimed at promoting better coordination of development support to the EAC by various development partners was held on 23 October 2018 at the EAC Headquarters in Arusha, Tanzania.
The forum sought to foster synergies and leverage available resources while avoiding duplication of efforts in financing EAC programmes and projects.
Addressing the forum, the EAC Secretary General, Amb. Liberat Mfumukeko saidover the last five years, Development Partners had committed about $500 million direct and technical support to various aspects of the EAC integration.
“With this revamped collaboration, the EAC has been able to progress the integration agenda with remarkable speed,” said the Secretary General.
He diclsosed that the main contributors to the EAC Development Programmes include Germany, the USA through USAID East Africa, the European Union (EU), and the African Development Bank. The total German contribution to EAC amounts to €286,541,354.42; USAID $237,823,555; and the EU €65,000,000.
Amb. Mfumukeko expressed EAC appreciation for the approval of the African Development Bank (AfDB) Regional Integration Strategy Paper for Eastern Africa (EA-RISP 2018-22), in which EAC Projects worth about US$2 billion have been considered in the RISP indicative operational programme. This includes loans to the EAC Partner States for regional programmes and grant to the EAC.
The Secretary General said that the EAC has transformed itself from a loose co-operation framework into a fast-emerging, solid and dynamic regional economic bloc. He added that the EAC has evolved strong institutions and vigorous programme delivery, which are already making an impact on the economies of the region.
Amb. Mfumukeko disclosed to the participants that the EAC has been ranked as first among the eight (8) Regional Economic Communities (RECs) from the recently released Africa Regional Integration Index Report launched in Addis Ababa through the collaboration between the UN Economic Commission for Africa (ECA), the AfDB and the African Union Commission (AUC).
He however called for more partnerships with the business community and, in particular, the East African Business Council in industrial development through investment in private sector development, improvement of doing business environment and finally an enhance.
On his part, the head of Delegation of the European Union, Amb. Roeland van de Geer, said the forum is valuable for Development Partners to ensure an alignment of their respective cooperation programmes with those of the EAC.
He appreciated the willingness of the EAC Secretariat to engage on sector specific priority areas particularly on key regional priorities given the wide and ambitious portfolio of EAC.
Amb. Roeland emphasized the need for involving all EAC institutions and representatives of key regional non-state actors including the private sector in the forum to share their valuable experience of regional integration.
Amb. Roeland assured the EAC that all Development Partners are willing to support the key priorities of as EAC articulated in the pdf 5th EAC Development Strategy (1.44 MB) endorsed in February 2018.
In his remarks, Mr. Marcellin Ndong Ntah, the lead Economist from the African Development Bank said the Development Partners Consultative Forum promotes the principle of ownership of the development assistance that may be availed to the EAC and its Partner states to drive Region’s development agenda.
Mr. Ndong hailed the EAC for establishing the forum noting that it would enable better coordination of development assistance by Development Partners to the Community.
The 2nd EAC Development Partners Consultative Forum was attended by Ambassadors accredited to the EAC; Members of the Proposed EAC Development Partners Group; Other EAC Development Partners and Representatives from EAC Organs and Institutions, among others.
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South Africa welcomes product exclusion for some steel and aluminium products from the Section 232 duties
The US Department of Commerce has granted product exemptions for imports of 161 aluminium and 36 steel products from the Section 232 duties that the United States imposed against foreign imports.
On 8 March 2018, President Trump signed a Proclamation imposing a 10 percent ad valorem tariff on imports of aluminium articles and a 25 percent ad valorem tariff on imports of steel articles for national security purposes. The product exemptions are applicable to companies whose buyers in the United States made requests to the Commerce Department for the products to be excluded from the Section 232 duties.
The Government of South Africa made submissions to the US Government requesting a country exemption from Section 232 duties. In addition, South Africa urged the domestic exporters of steel and aluminium to encourage their buyers and distributors to consider applying for product exemption.
In line with Government’s commitment to remain engaged with the US authorities on country exemption, Minister Davies met with United States Trade Representative Ambassador Lighthizer and Secretary of Commerce Wilbur Ross on the margins of the AGOA Forum in July 2018 in Washington D.C. Minister Davies welcomes these positive developments as a step towards normalising trade relations between South Africa and the US.
Over 800 US companies are represented in South Africa and the trade between the Parties is relatively balanced with total trade reaching R161.4 billion in 2017.
The exemption of some of the aluminium and steel lines confirms that South Africa remains a source of strategic primary and secondary products used in further value added manufacturing in the US, does not threaten US national security and contributes to jobs in both countries.
The products that have been exempted for aluminium include aluminium foil and aluminium plates, sheets and strip. In relation to steel, the products include the hot rolled bars, hot rolled sheets, cold rolled sheets, plates cut and plates in coils. The exemption of these products will contribute towards ensuring that jobs in companies producing these products are retained.
Minister Davies thanks the South African and US companies, as well as Members of Congress that have lobbied for the exemption of South Africa from all Section 232 duties. South Africa continues to encourage its domestic exporters to engage US buyers to consider requesting product exemption from Section 232 duties of all imports from South Africa.
While South Africa welcomes this important relief to our exports, Government remains engaged with the US Government and continues to request a country exemption.
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tralac’s Daily News Selection
(i) @AdanMohamedCS: President Kenyatta has commissioned the Cabinet Subcommittee for EAC issues, comprising of myself and colleagues from Treasury, Foreign Affairs, Security, Trade, and the AG’s office. This allows Kenya to seek a common approach & speak with one voice around regional issues. I am pleased to announce that textile and steel products from Kenya can now access the regional market for Tanzania and Burundi respectively. This has been achieved as result of continuous engagements with member states and the EAC secretariat.
(ii) @riverosatITC: 21 trade and investment promotion organisations in Africa sharing best practices and networking before kicking off #WTPO18 in Paris
(iii) @alvinmosioma: We must recognize that @ATAFtax has outgrown its original mandate of tax admin. It’s time to consider upgrading ATAF’s role to become Africa’s supreme body on tax policy. A role that it’s already playing. #ATAF5GA
Raila Odinga’s Duke University lecture: Africa – a time for sustained optimism?
I am aware that the Asian miracle was driven by exports of manufactured goods to open and growing markets in Europe, US and Japan. Such a favorable environment does not exist today. Manufacturing in Africa has actually been declining by 2% annually. Some say that as China upgrades its economic structure, a huge room will be left open for basic light manufacturing for Africa. But even if it does, I doubt that low value products can be a basis for closing the huge gap between Africa and the developed and emerging economies. Therefore, we will not create an African miracle by emulating the East Asian model. I envision that our own African growth model will drive an African miracle. Sustained high economic growth in the continent will be driven by African unity and political and economic integration. I am not advocating an inward-looking protectionist policy here. I am aware that such policy failed in Latin America decades ago. African markets will remain open to every country in the world. Indeed, we will promote free and fair trade. But, the main driver will be the growth of African markets. Let me give you an example:
I said earlier that intra-continental trade will be a major driver of economic growth in Africa. I am aware that people cannot trade unless huge infrastructure deficits in the continents are addressed. It is estimated that the cost of transport in Africa is on average 50-175% higher than other parts of the world. Let me repeat. The insufficient infrastructure networks across the continent have limited cross-border flows of trade, capital, information, and people. It has drastically affected Africa’s growth and broader development performance and regional integration. Improving land transportation is an imperative to development. That is why last week; I accepted the appointment by the Africa Union Commission as High Representative for Infrastructure Development Championing to spearhead the modernization and upgrading of selected Trans African Highway Corridors and their missing links. [Delivered at Duke University, 23 October]
Pan-African MPs pledge to support AfCFTA ratification (New Times)
Members of the Pan-African Parliament have backed President Paul Kagame’s call for the August House to throw their weight behind the speedy ratification of the AfCFTA. PAP members who spoke to The New Times in an exclusive interviews welcomed Kagame’s call.
MP Julius Malema (South Africa): “We agree with him entirely. The more we fast-track the process of free trade and the movement of persons in the continent, the better because ours should be to strive for one Africa and one trading arrangement. We support entirely what the Chairperson said; we know that many countries have not signed and many of them are not showing a lot of interest in speeding up the process towards free trade and free movement of persons in the continent but we are confident that, gradually, we’ll get there.” MP Barbara Rwodzi (Zimbabwe): “I think it is a great move for the Chairman of the African Union to come and ask for the fast-tracking of free trade in Africa. Why? I feel that though Africa is one family and we should open up to each other in terms of trade, the economy of Africa has to be driven by Africans”.
pdf Zimbabwe’s 2019 pre-budget strategy paper (3.66 MB) (GoZ)
Transitional Stabilisation Programme: October 2018 – December 2020 The 2019 national budget represents the first steps in the implementation of the Transitional Stabilisation Programme, focusing on stabilising the macro-economy and the financial sector, while at the same time removing investment bottlenecks. Further, the Budget will identify quick-wins for stimulating exports and growth, setting the necessary foundation for longer term developmental thrust under future National Development Strategies: 202-2025 and 2026-2030. [Download: pdf Transitional Stabilisation Programme Reforms Agenda, October 2018 – December 2020 (5.18 MB) ]
Budget balance. The 2019 Budget Strategy Paper proposes drastic reduction of the budget deficit to 5.2% of GDP in 2019, and subsequently to 3.5% in 2020 and 3.1% of GDP by 2021, making us comply with the SADC threshold of below 3% of GDP.
Domestic economy. Under the New Dispensation, there is gradual restoration of business confidence, with many investment enquiries from all continents. During the first half of 2018, the Zimbabwe Investment Authority received 165 applications worth $15.8bn, over and above other investment enquiries with various line ministries and other individual companies. Government is pursuing the various investment inquiries with the objective of increasing the share of external investment from $1.8bn anticipated in 2018 to over $2bn in 2019.
External sector. During the first half of 2018, merchandise exports stood at $2.2bn, a 15.1%, increase from $1.9bn realised over the corresponding period in 2017. Merchandise imports for the period January to June 2018 amounted to $3.4bn, a 28.3% increase from $2.7bn realised over the comparative period in 2017, as shown in figure below. Resultantly, the first half of 2018 experienced trade deficit of $1.4 billion, reflecting a worsening position compared to the first half of 2017 deficit of $789m.
Zimbabwe: Govt to float $500m bond for Beitbridge-Chirundu road (Zimbabwe Independent)
Government will float a $500m bond to raise capital for rehabilitation of the Beitbridge-Harare-Chirundu highway, while renegotiating a $2,7bn road-dualisation deal with Chinese contractor Anhui Foreign Economic Construction Group Limited (Afecc) as the project takes yet another twist, the Zimbabwe Independent can reveal. [Zimbabwe, Zambia sign four agreements: towards a OSBP at Victoria Falls]
Kenya and the IMF: updates
pdf 2018 Article IV Consultation report (1.21 MB) An extract from Box 3 – Strengthening international corporate taxation. The overall parameters of Kenya’s current international tax regime are quite sound, but several important steps could be taken to improve the regime going forward. This will be necessary to avoid the likely increase in leakage from the tax base that can be expected as a result of increasing cross-border inbound investment, and from constraints on cross border taxation arising from a widening tax treaty network. A transparent treaty policy that uses cost-benefit analysis to assess the need for a treaty is essential to preserve the integrity of Kenya’s treaty network. To restrict revenue leakage through payment of inter-group technical, management and professional service fees, future treaties should include a separate technical services article (following the Seychelles Treaty Article 13 model). To limit incentives for treaty shopping, a limitation of benefits (LOB) provision restricting use of a DTT to entities that have a sufficient economic nexus to justify the source country tax concessions given up by Kenya should be included. If Kenya were to adopt the Multilateral Legal Instrument an LOB provision would be added to existing treaties. Finally, many of Kenya’s treaties do not include the necessary provisions to make effective the relatively recent additions to the ITA designed to permit taxation of indirect offshore transfers of interest in Kenyan immovable assets.
South Africa’s new finance minister, Tito Mboweni, delivered the 2018 Medium Term Budget Policy Statement this afternoon. Access the extensive documentation here.
Huawei’s PEACE cable enters manufacturing stage (Total Telecom)
2018 World Investment Forum: updates
(i) Governments, businesses ‘walk the talk’ for investment in sustainable development. The opening day of the Forum also saw agencies from Bahrain, India, Lesotho and South Africa win top laurels at the UN Investment Promotion Awards for excellence in advancing investments in critical socio-economic sectors. According to an UNCTAD news release, the Bahrain Economic Development Board, Invest India, Lesotho National Development Corporation, and InvestSA from South Africa won awards for boosting technology education, promoting renewable energy, employment, and waste-to-nutrient recycling, respectively.
(ii) Globalization backlash is clear but leaders say cooperation is key. UNCTAD Secretary-General Mukhisa Kituyi said the political divide between the winners and losers of globalization could imperil not only global economic growth but efforts to manage climate change, migration and security. “The stakes are high,” he said, explaining that, while investment flows had been stagnant for a decade, flows were acutely needed in sectors that boost development. Dr. Kituyi said policy responses were needed to unlock money that was trapped in the system but not channelled toward investments that brought the most benefit to the most people.
Abdul Hamid, President of the People’s Republic of Bangladesh, said globalization was not a recent phenomenon, but its “discontents” were. Technological change had boosted industrial and economic activity, but the dividends had not been spread equitably, he said. Investment tended to sail into safe harbours but not necessarily to where it was most needed: policies needed to be adjusted to ameliorate this, and new ideas injected into the design of the global investment architecture, including for Least Developed Countries like Bangladesh.
(iii) UN Sustainable Stock Exchanges initiative report. The sustainability issues identified by the SDGs can create financially material risks and opportunities for investors and may pose threats to the resilience of the entire financial system, so the report provides an extensive overview of sustainable finance around the world with 35 examples from 19 markets. The report examines how, within security regulator’s existing mandates, action is being taken on sustainability-related risks and opportunities. An advisory group of nearly 70 capital market experts from around the world – regulators, exchanges, investors – contributed to the report.
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Africa: A time for sustained optimism?
Public Lecture by Rt. Hon. Raila Odinga at Duke University
It is always a great pleasure and honor to speak in a prestigious academic institution. It gives me an opportunity to share my vision of Africa with the next generations of leaders across the globe.
This is a vision I have developed through decades of struggle for democracy, justice and pursuit of equality and prosperity for all Africans.
These interactions also provide time for reflection away from the constant hassle of politics at home. As you well know, politics is rewarding to the extent that it makes nations great. But at times, it can also be extremely brutal both to the politician and the nation.
I therefore like listening to both accomplished and aspiring scholars to enrich my thoughts on the way forward for my country, Kenya and for Africa and I must admit I have benefitted immensely from these engagements and I know the experience in Duke can only make the experience better.
I thank the Duke University, and my host, Dr. Giovanni Zelnada, the Director of the Duke Center for International and Global studies, for this opportunity.
Today, I will argue that an African Miracle is possible. It is slowly but steadily taking shape as the continent addresses the critical issues that have held it back.
I do not use the term “miracle” lightly. The World Bank assembled a group of most prominent economists and constituted the Commission on Growth and Development in 2006. The team reported that since 1950, only 13 countries sustained economic growth at 7 percent or higher for 25 years. These 13 countries are all from East Asia, except a few, that include Brazil and, importantly, Botswana.
The Commission reports that “some people view these cases as ‘economic miracles,’ events impossible to explain and unlikely to be repeated.”
I am adhering to the same high standard of a miracle when I state that an African miracle is possible.
Many of you might find my view puzzling. After all, globalization, that fueled economic growth over the last seven decades, appears to be ending.
The principle of multilateralism, that underpins the current world economic order, is also under attack.
And Democracy, that in my view underwrites long-term social and economic stability, appears to be in retreat worldwide.
There have been some setbacks in Africa too.
According to a report of Credit Suisse, Africa’s share of world wealth is not even 1 per cent.
Wealth per household in Africa actually fell by 1.9 per cent from 2016 to 2017 whereas it rose by 8.8 per cent here in North America.
It is hard to imagine that an economic regime that allows such monstrous inequality can be sustained. It will surely cause a populist revolt in one form or another. Migration from Africa to Europe is a manifestation of such tension.
So you may ask, what is then the source of this Afro-optimism amid such global pessimism? You may also say “we heard this African miracle story about 15 years ago. But it proved short-lived.”
And you are actually right to doubt. The collapse of commodity boom revealed that Africa is still vulnerable to a downturn of commodity prices.
I am aware that the Asian miracle was driven by exports of manufactured goods to open and growing markets in Europe, U.S. and Japan. Such a favorable environment does not exist today. Manufacturing in Africa has actually been declining by 2 per cent annually. Some say that as China upgrades its economic structure, a huge room will be left open for basic light manufacturing for Africa.
But even if it does, I doubt that low value products can be a basis for closing the huge gap between Africa and the developed and emerging economies.
Therefore, we will not create an African miracle by emulating the East Asian model. I envision that our own African growth model will drive an African miracle. Sustained high economic growth in the continent will be driven by African unity and political and economic integration.
I am not advocating an inward-looking protectionist policy here. I am aware that such policy failed in Latin America decades ago.
African markets will remain open to every country in the world. Indeed, we will promote free and fair trade. But, the main driver will be the growth of African markets. Let me give you an example.
In Africa, intra-continental travelers are often bound to illogical and time-consuming routes via Europe and the Middle East when flying between African countries. The International Air Transport Association (IATA) projects that if just 12 key African countries opened their markets and increased intra-continent connectivity, an extra 155,000 jobs and US$1.3 billion in annual GDP would be created in those countries.
In January this year, the African Union (AU) launched the Single African Air Transport Market (SAATM) to transform intra-African air travel, lower costs and increase connectivity.
Under the SAATM, African countries have already relaxed visa restrictions for African citizens. We also launched an African Union Passport for heads of states and senior officials in 2006, and we plan to distribute it to all Africans by 2020.
Let me underscore that the SAATM is only one of several components of Agenda 2063 whose guiding vision is the creation of “An integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in international arena.”
I, like many African leaders, fully subscribe to this Vision.
As you know, Africa’s intra-regional trade is very small. In 2016, intra-African exports made up only 18 percent of total exports of African countries. This compares poorly to 59 per cent for intra-Asia and 69 per cent for intra-Europe exports. The figures for imports are similar.
In 2017, intra-regional exports of sub-Saharan Africa amounted to only $68.8 billion. The continent’s GDP was $1,648.8 billion. So, intra-regional exports were a pitiful 4.17 per cent of GDP.
If we triple intra-regional exports, we can increase the continent’s GDP by more than 8 percentage points. This will go a long way to achieve a 7 per cent economic growth.
In March this year, 44 African nations signed the Continental Free Trade Agreement (AfCFTA) under which the nations commit to cut tariffs on 90 percent of goods.
This is a big progress considering that there have been multitudes of overlapping sub-regional trade agreements and customs unions. AfCFTA now creates geographically the largest free trade zone in the global economy.
The United Nations Economic Commission for Africa (UNECA) projects that the simplification of border controls and the drops in duties and other costs will boost intra-regional trade by 52 per cent in five years. We still have work to do at the highest political level to complete AfCFTA.
Eleven (11) African nations have yet to sign the agreement, and this includes the continent’s two largest economies, i.e., South Africa and Nigeria. But I am confident that both countries will come on board as they regain sound economic footing following the next elections – Nigeria in early 2019 and South Africa in 2020.
The political will and determination to fully implement the AfCFTA exists. Once implemented, it will be the catalyst that moves the region toward high levels of intra-regional trade.
The foundation for development lies in a well-educated and healthy cadre of human beings. Africa’s population is young and growing fastest in the world.
In the coming decades, Africa’s population will double to some two billion people, and many of them will be under 18. This could bring tremendous opportunities for economic growth. Young Africans are tremendously entrepreneurial, talented and dynamic.
These young Africans could harness new technologies and ignite a new dynamism for growth but only if they are well educated, trained and healthy. Here too, Africa is making a major stride.
The working age population (age 15-64), who either had no formal education at all or did not complete primary school, declined from nearly 90 per cent in 1960 to less than 50 per cent in 2010. The working age population with primary and secondary education completed rose from about 10 per cent to more than 40 per cent over the same period.
Granted that the quality of education, particularly in the primary and secondary levels is unsatisfactory. Also, too many young children grow stunted because of inadequate care and nutrition during their first 1000 days of life.
We, African leaders, are now keenly aware of these challenges. It will take time, given limited financial resources and qualified teachers available. But, in a decade or two, you will see major progress in overcoming the challenges of quality of education and care in early childhood too.
We will harness diversity in careers and jobs. We will encourage entrepreneurship, arts and sports. We will encourage venture capital.
Realizing an African miracle, i.e., sustaining economic growth at 7 per cent per year, of course requires investment. The World Bank, IMF, World Economic Forum and our American friends have been telling us to implement reforms to make it easier to do business.
Many African countries have made important reforms to do so and I am sure that other African countries will follow.
But, is this how China and India have succeeded in attracting huge amounts of foreign investment? I hear that having a very large market – and expectations of an even bigger market – and a well-educated and disciplined labor force is the key to attract investment.
This is exactly what we are doing in Africa through the establishment of a pan African common market with strong regional infrastructure and through our commitment to education.
Our commitment to education includes higher education, in particular in science and technology. This requires the transfer of science and technology from the West, including from universities.
I therefore support strong collaboration between universities in the U.S. and our counterparts in Africa.
Africa should not be forever destined to be an exporter of unprocessed mineral and agricultural resources. We need money and technology for value-addition of our resources. This will be the basis for industrialization of the African continent.
I said earlier that intra-continental trade will be a major driver of economic growth in Africa. I am aware that people cannot trade unless huge infrastructure deficits in the continents are addressed. It is estimated that the cost of transport in Africa is on average 50-175 per cent higher than other parts of the world.
Let me repeat. The insufficient infrastructure networks across the continent have limited cross-border flows of trade, capital, information, and people. It has drastically affected Africa’s growth and broader development performance and regional integration. Improving land transportation is an imperative to development.
That is why last week; I accepted the appointment by the Africa Union Commission as High Representative for Infrastructure Development Championing to spearhead the modernization and upgrading of selected Trans African Highway Corridors and their missing links.
One of my main tasks will be to garner political buy in and ownership of member states as well as ownership of regional economic communities.
I strongly believe that the existence of a reliable infrastructure of roads and railways, running North to South, East to West of Africa, is critical to opening up the Continent and making it the gateway to the 21st century. You must have heard of the Trans-African Highway; the hugely ambitious, grand project, launched in 1971.
It is a network of nine highways which, when connected, will cover a combined total of 60,000 kilometers across the continent. One of them will stretch 8,000 kilometers between Cairo and Dakar; another for 8,000 kilometers between Cairo and Cape Town; a third for 6,000 kilometers between Lagos and Mombasa; and a fourth for 4,700 kilometers between Dakar and Lagos.
Only one of nine highways has been completed so far. That is the Trans-Sahelian Highway, which runs 4,500 kilometers between Dakar in Senegal and N’Djamena in Chad. Although the others are only partially finished, countries are progressively opening them section-by-section. It is just one example of what we plan to complete.
There are also gigantic steps forward in rail transport as the new vision of Africa takes shape.
One of those steps is a modern rail line between Ethiopia and Djibouti that has recently been opened.
Another big project is the East African Rail Master Plan. This is a proposal to rejuvenate lines among Kenya, Uganda, Rwanda, South Sudan and Ethiopia. It is estimated to cost $13.8 billion.
The first section was inaugurated in June this year, covering Nairobi and Mombasa.
With the support of all the relevant institutions and offices of the AU Commission and the Continent’s partners, I will make full use of my position as the AU High Representative for Infrastructure Development to push Africa closer to the realization of the dreams of our founding fathers.
Our founding fathers envisaged a united and interconnected Continent that enjoys easy movement of goods and its citizens.
As we build strong infrastructure and human capital, I am confident that Africa will accelerate and sustain higher economic growth. But, growth that enriches only the rich is not what we want. We must ensure lasting peace and stability, that requires shared prosperity.
One of the biggest threats to the shared prosperity is Corruption.
I accept that it has been difficult to fight corruption on the continent. I admit that even in Kenya, where I have joined President Kenyatta in waging a campaign against corruption, many remain skeptical. But I see a turning point. Now, in most African countries, people’s voice can no longer be ignored.
My friend, President John Magufuli of Tanzania, won the election for the ruling CCM party, riding on the wave of public discontent about corruption and he has since made huge gains toward eradicating the crime.
In Kenya too, we have taken strong actions against corruption, and will continue to do so. Our actions are having a strong positive impact.
Alongside fighting corruption, we must renew faith in democracy. As a true and strong believer in democracy, I urge Europe and U.S. not to forsake the democratic values and sanctity of human right for the sake of partnership in anti-terrorism or for interest of their own private businesses.
Democracy will enable our people to believe in policies and ideologies instead of ethnic affiliation, or what we call “negative ethnicity”.
Kenya nearly broke apart in 2007-2008 because of ethnic driven politics. The country was on an edge once again following the last election in 2017.
Kenyans are now saying ‘we cannot continue living like this. We can’t continue living as Kikuyus, Luos, Kalenjins, Luhyas, Kisii, miji Kenda, etc.” It has to stop. Tanzanians have done it right from independence to date. It is Kenya’s turn to do it.
When I sat down with my partner in the Grand Coalition Government former President Mwai Kibaki a few months ago, he was struggling to understand why Africans go to international forums, talk boldly and loudly about continental unity, then go back home and start fighting tribe against another. It is curious and puzzling indeed.
I sat down with President Kenyatta and agreed to launch a new journey, to a new Kenya; a Kenya where elections are not civil wars, where winners and losers embrace and where corruption is not a way of life. We also agreed to set up a taskforce to deal with issues we identified to be holding the country and to prevent their recurrence in future.
And we will be urging other African leaders to follow our example. We need your support as leaders in academia and as diaspora. We need America’s support by standing up for, not against the ideals of democracy.
Then we will deliver the African dream, which will propel the world into a better and more prosperous and secure 21st century.
For all my life, I have been a Pan-Africanist and an Afro-optimist. My Afro-optimism never waiver. It remains stronger today than ever before.
Thank you.
Pan-African MPs pledge to support AfCFTA ratification
Members of the Pan-African Parliament (PAP) have backed Rwandan President Paul Kagame’s call for the August House to throw their weight behind the speedy ratification of the African Continental Free Trade Agreement (AfCFTA).
Opening the two-week session of the legislative body of the African Union in Kigali on Monday, the Chairperson of the AU sought the support of the House in the speedy ratification of the AfCFTA, the protocol on the free movement of persons, and other key pillars of Agenda 2063.
Agenda 2063 is a strategic framework for the socio-economic transformation of the continent. So far, 48 countries have signed the AfCFTA agreement but only about five have ratified it.
PAP members who spoke to The New Times in an exclusive interviews welcomed Kagame’s call.
Julius Malema (South Africa) said: “We agree with him entirely. The more we fast-track the process of free trade and the movement of persons in the continent, the better because ours should be to strive for one Africa and one trading arrangement.”
“We support entirely what the Chairperson said; we know that many countries have not signed and many of them are not showing a lot of interest in speeding up the process towards free trade and free movement of persons in the continent but we are confident that, gradually, we’ll get there,” said the leader of the Economic Freedom Fighters (EFF), a South African opposition party.
Malema reasoned that Agenda 2063 will be achieved through small interventions that are being made. For instance, he added, the AU Chairperson’s intervention and stand on free trade “is one step in the right direction”.
“We are now seeing leaders of the continent committing that Africa should trade with itself in order to grow its economy because it has got sufficient potential to ensure that we maximise the [benefit] from our own natural and mineral resources,” Malema said.
MP Thomas Solomon Segepoh (Sierra Leone) said Kagame’s appeal to PAP “was in order.”
“It is unfortunate that not all Heads of State are seeing what he is seeing. As a matter of fact, the free trade agreement, in Africa particularly, is the best thing to do for the peoples of Africa because if Africa has to develop we must not have barriers when it comes to trade. We must not have inhibiting factors, you know, to our interactions, especially when it comes to trade.”
Segepoh, who is the Deputy Speaker of Sierra Leone’s Parliament, also told The New Times that Kagame as Chair of the AU, could also have a better appeal to his colleagues.
“I know, of course, he is relying on members of parliament to lobby, in a way. But he is also in a strong position as Chairman to have the best appeal to his colleagues.”
MP Loide Lucky Kasingo (Namibia) said: “It is very good because you see, I am from a very small country [Namibia], in size, of five million people and if this happens it will benefit all those small countries to ensure future Africa trading within itself rather than trading with Europe as sometimes the things [from Europe] are very expensive”.
“The continental free trade agreement is good for Africa. Trade barriers should be removed and should go hand in gloves with the movement of goods and persons”.
MP Barbara Rwodzi (Zimbabwe) said: “I think it is a great move for the Chairman of the African Union to come and ask for the fast-tracking of free trade in Africa. Why? I feel that though Africa is one family and we should open up to each other in terms of trade, the economy of Africa has to be driven by Africans”.
Rwodzi, a Zimbabwean lawmaker with vast business experience, said that it “is very critical for all the economies in Africa to easily trade with each other” and emphasised that it is through national legislatures that such agendas can be pushed to fruition.
MP Jean Népomuscène Sindikubwabo (Rwanda) explained that the AfCFTA ratification process has to go through each African country’s national parliament and, as such, PAP members have a vital role to play.
“We think lawmakers in the Pan-African parliament can play a positive role back home in their respective countries,” said Sindikubwabo.
“Many of us are very influential back home. But we don’t seem to be doing much. So, let us pull up our socks and do something,” observed MP Fidèle Rwigamba (Rwanda).
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Globalization backlash is clear but leaders say cooperation is key
At World Investment Forum, four presidents, two prime ministers and four corporate leaders are downcast at splintering global scene but remain bullish about investment.
The international political climate may be turning against globalization and threatening economic growth, but there is still a chance to channel money into sectors that can boost prosperity in poor countries, political and corporate leaders said at a Global Leaders Investment Summit during the World Investment Forum in Geneva, Switzerland, on 23 October.
The summit convened heads of state, government and giant corporations to share their vision of the future of multilateralism and how to ensure that a backlash against globalization does not derail the Sustainable Development Goals.
UNCTAD Secretary-General Mukhisa Kituyi said the political divide between the winners and losers of globalization could imperil not only global economic growth but efforts to manage climate change, migration and security.
“The stakes are high,” he said, explaining that, while investment flows had been stagnant for a decade, flows were acutely needed in sectors that boost development. Dr. Kituyi said policy responses were needed to unlock money that was trapped in the system but not channelled toward investments that brought the most benefit to the most people.
Abdul Hamid, President of the People’s Republic of Bangladesh, said globalization was not a recent phenomenon, but its “discontents” were. Technological change had boosted industrial and economic activity, but the dividends had not been spread equitably, he said.
A better tomorrow
Investment tended to sail into safe harbours but not necessarily to where it was most needed: policies needed to be adjusted to ameliorate this, and new ideas injected into the design of the global investment architecture, including for Least Developed Countries like Bangladesh.
“We must act today for a better a tomorrow!” President Hamid said.
Khaltmaagiin Battulga, President of Mongolia, said that despite the adoption of the Sustainable Development Goals in 2015, political and economic developments since were pushing them “off the edge of a cliff” unless urgent action was taken.
For landlocked developing states like Mongolia, foreign direct investment was a vital ingredient in its national development plan, and it had been increasing in recent years. More was needed, however, in sectors like agriculture, renewable energy and tourism, he said.
“Today we find ourselves at the crossroads in the future of humankind. Are we going forward or backwards?” said President Battulga, noting that the World Investment Forum was just the venue to answer such questions.
Milo Ðukanovic, President of Montenegro, said the market economy did not divide countries into large or small but into successful and unsuccessful, and it was a nation’s commitment to upholding the rules that determined this distinction. In this respect, Montenegro was a team player in the multilateral system and committed to building a progressive and transparent investment climate based on clear rules. This approach was bearing fruit, with $5.5 billion invested in South East Europe, including Montenegro, in 2017.
Novartis’ chief executive officer, Vasant Narasimhan, said the goal of the pharmaceutical giant was to “reimagine medicine” and that it made significant investments all around the world in order to do this.
Virtuous cycles
Novartis was committed to creating “innovation ecosystems” and “investment virtuous cycles” in developing countries, he said. In Hyderabad, India, for example, it employed more than 5,000 people working in drug development and administration – thanks to a commitment from the local mayor.
Paul Bulcke, chair of Nestlé, defended globalization. “An integrated world is better than a disintegrated world,” while it was clear not everyone had benefitted, the project of free trade and globalization “was not done yet”, he said.
The private sector sought the “maximum output in the most efficient way” and this energy could be put to the common good if the public sector created “an enabling environment” that was “stable over time”.
Nestle had 450 factories in almost 100 countries and was making billion-dollar investments all over the developing world, with a commitment to creating shared value, he underscored.
Hage Geingob, President of the Republic of Namibia, echoed the concerns of his fellow leaders but made a special appeal on behalf of African countries, particularly concerning investment in infrastructure. Inclusivity spelt peace and prosperity, and the reverse was true, he said, leading to the inexorable conclusion that multilateralism, midwifed by the United Nations, was the only course his country would pursue.
Rule of law
The Prime Minister of the Kingdom of Cambodia, Samdech Akka Moha Sena Padei Techo Hun Sen, said his country was remained open, as it had for two decades, for inward investment in strategic sectors. His government planned to improve hard and soft infrastructure, enhance trading terms and train up its people to attract further investments, he said. He called on development partners to help Least Developed Countries like Cambodia to do their utmost in promoting sustainable development through investment.
Kocho Angjushev, Deputy Prime Minister of the Former Yugoslav Republic of Macedonia, meanwhile said that the rule of law and stability were paramount if a small nation like his was to attract enough investment. This was achieved by joining regional partners in security and political structures, on the one hand, he said and reforming domestic legal and regulatory regimes on the other. His government was committed to improving trade and infrastructure links with Europe and the world, he added.
The World Federation of Exchanges’ chief executive officer, Nandini Sukumar, said that her members – stock, commodities and derivatives exchanges – was home to 45,000 companies which were participants in the “real economy”. High on the agenda for international investors were regulatory coherence across borders, now under threat from nationalism, cybersecurity and systemic risk.
Roland Chalons-Browne, Siemens Financial Services chief executive officer – “the man with the money” according to moderator Nisha Pillai – said that tit-for-tat tariff tensions between China and the United States were not helping the investment climate. He said investing in developing countries was critical not least to create opportunities for people who might otherwise migrate to find better conditions elsewhere.
Siemens Financial Services was an institutional investor in many large infrastructure projects, such as a power generation drive in Egypt, that were dynamic job creators, Mr. Chalons-Browne said. He said that liquidity in the market was often held by funds that were risk averse and were not necessarily interested in the very long-term investment commitment that infrastructure often required.
Related News
tralac’s Daily News Selection
The Canada-Africa Chamber of Business, Accelerating Africa conference, began today in Toronto
Starting tomorrow, in Kigali: The 2018 Mid-Term Review of the African Development Fund
Update on the Pan-African Private Sector Trade and Investment Committee: Nigeria’s Professor Patrick Utomi, founder of the Centre for Value in Leadership, has been elected as the first Chair-person of PAFTRAC, for a two-year term. He will be supported by vice-chairpersons drawn from different regions.
Carlos Lopes: The untapped potential of EU-Africa trade (Project Syndicate)
But what about Africa? The continent’s trade with the EU is already massive: together, African countries represent the EU’s third-largest trading partner, after the United States and China, accounting for nearly 7% of total extra-EU trade in goods, including 7% of imports and 8% of exports. And though the EU ran a persistent trade deficit with Africa in 2000-2014, it ran a €22bn ($25.5bn) surplus in 2015 and a €22.7bn surplus in 2016. Africa’s trade with the EU is triple that of, say, Canada, which amounted to €94.7bn in 2016. With the Comprehensive Economic and Trade Agreement, annual EU-Canada trade is expected to increase by at least 8%, or some €12bn. But that is still the equivalent of just half the EU’s trade volume with Egypt alone. Similarly, the EU’s future free-trade agreement with New Zealand agreement could increase bilateral trade by about 36%, yet that increase would still amount to less than half the volume of goods that the EU now trades with Tunisia. In the case of Australia, the expected increase of around one-third in trade volume represents the bulk of trade with Egypt. Africa’s share of EU trade could increase even further, given the continent’s impressive economic prospects.
France seeks to boost trade ties with Africa: the Ambition Africa conference closes today (RFI)
French and African business leaders gathered in Paris on Monday for a two-day conference to explore new opportunities with Africa, amid intense competition from China and a host of other countries. However, France’s hopes for greater trade ties are still being hindered by negative perceptions of the African continent. Finding common ground to iron out some of these misunderstandings and ensure France becomes a hub for Africa, was one of the primary aims of Monday’s Ambition Africa conference held at the French Finance Ministry. Yet this keen interest in the African continent contrasts with France’s indifference a decade ago.
“French companies left,” points out Mossadeck Bally, CEO of Azalaihotels, a chain of 5 star hotels across the continent. “They thought that the continent didn’t have a future.” Now, they’re coming back, but to a very different landscape. “The continent is open for business. But if they [France] come back, they will have to adjust, because today you have African business entrepreneurs who are very savvy investors. And you also have investors from China, India, Turkey, Portugal, Brazil, the whole world now is looking towards Africa, because it’s the last frontier.” [Ambition Africa 2018: Green economy at the centre of Africa-France business event; AFD Group launches large-scale programme, Transforming financial systems for climate: a total of 17 developing and emerging countries will benefit from this support, with a strong focus on Africa]
President Kagame’s address to the Pan African Parliament
The impact of your work in this body is multiplied by your dual role as members of your respective national legislatures. We count on you to be strong advocates for African integration. More specifically, I would like to ask for your support for the speedy ratification of the AfCFTA agreement, the Protocol on the Free Movement of Persons, and other key pillars of Agenda 2063. The entry into force of these historic compacts will do more than almost anything else to accelerate economic growth and shatter outdated perceptions of our continent. We cannot afford to squander the momentum we have gained. But we need your help to communicate more effectively with constituents and stakeholders in civil society about the importance of these agreements for the well-being of our citizens and our economies.
President Buhari inaugurates Committee for Impact and Readiness Assessment of the African Continental Free Trade Area
For those of you who are in business, I am sure you will all agree that Africa’s trading landscape, as it stands, is multifaceted. For us in Nigeria, our vision for intra-Africa trade is for the free movement of “made in Africa goods”. This means the goods and services must have significant African content in terms of raw materials and value addition to the production and service processes. Therefore, the Continental Free Trade Area must be packaged and implemented to achieve this vision. This is the only way the majority of Africans will positively benefit from it. We cannot go back to the days of signing agreements without understanding and planning for the consequences of such actions. And our country being the worse off. Your task as members of the AfCFTA Impact and Readiness Assessment Committee is to address the issues raised during the nationwide stakeholder consultations on the AfCFTA. You are expected to develop short, medium and long-term measures that will address any challenges arising therefrom. I look forward to receiving from you in 12 weeks, a clear roadmap for Nigeria as it relates to the AfCFTA.
South Africa-United Arab Emirates Joint Commission: communiqué (Dirco)
Sub-Committee 1: Economic, trade and investment cooperation. The UAE side requested for progress on the Bilateral Investment Treaty, which was initialed by both sides in 2007. The South African side provided a background on its investment policy reforms and agreed to provide the UAE with the Protection of Investment Act, 2015 (Act No. 22 of 2015) and the subordinate legislation on the Regulations on Mediation Rules. The South African side agreed to hold technical discussions in the UAE during November 2018. The dates will be communicated and confirmed through diplomatic channels. The South African side is keen to look into the modalities of the creation of a Special Investment Fund in light of the $10bn that was announced by the United Arab Emirates during the State Visit of President Ramaphosa.
Country updates
tralacBlog: Zimbabwe ratifies the WTO Trade Facilitation Agreement – what does this mean for Zimbabwe?
On 17 October 2018, Zimbabwe deposited with the WTO Secretariat its instrument of ratification of the WTO Trade Facilitation Agreement, becoming the 139th (and 31st African) WTO Member State to ratify the Agreement. Extract: Ultimately, Zimbabwe would have to implement all the provisions of the TFA. The country is said to have notified its Category B and C provisions, but the information is not yet recorded on the TFA Facility Notification List updated on 15 October 2018. [The author: tralac’s Talkmore Chidede]
Zimbabwe: CZI press statement on the current economic situation
The last two weeks have seen a dramatic collapse in confidence in the RTGS (real-time gross settlement) currency and spiralling parallel market exchange rates. The uncertainty over the value of RTGS has led to some businesses closing and others refusing RTGS money. Businesses are preferring to hold onto their stock whilst awaiting clarification on the value of RTGS. We have also seen the prices of commodities increasing in the market even where the producers have not increased prices. We note that this is a result of the imbalance between RTGS and Nostro accounts driven by the fiscal deficit and its financing through the creation of RTGS money. We recognise that any turnaround measures should start by addressing the fiscal deficit. We welcome the following measures as highlighted in the Transitional Stabilisation Programme and implore government to implement these immediately: [Note: Various downloads available]
Tanzania: TPSF set to conduct major public private dialogue (IPPMedia)
The Tanzania Private Sector Foundation is set to hold major national public dialogue that will bring together key state and private sector leaders to discuss the sector’s contribution to the country’s economic growth. To be organized collaboratively with the Tanzania Chamber of Commerce, Industry and Agriculture, the dialogue, set for 4 December this year, also aims to bring to light major challenges thwarting private sector and its impact to the development of the national economy. [Low prices fuel coffee smuggling to neighbouring countries]
Kenya: How private sugar millers flourish as public factories squirm in debt (Business Daily)
Re-thinking production to boost circular economies (UNEP)
Re-thinking how we manufacture industrial products and deal with them at the end of their useful life could provide breakthrough environmental, social and economic benefits, according to new research from the International Resource Panel. If products were re-manufactured, comprehensively re-furbished, repaired and directly re-used, the amount of new material needed could be significantly reduced – by 80-98% for re-manufacturing, 82-99% for comprehensive refurbishing, and 94-99% for repair. The report, released at the World Circular Economy Forum, says the adoption of these “value-retention processes” could also reduce greenhouse gas emissions in some sectors by 79 to 99%. These sectors examined in the report are automotive parts, heavy-duty offload machinery (for example, diggers and excavators), and industrial printing equipment. But there is significant potential beyond these sectors for further reductions. [Various downloads available]
Rebooting a digital solution to trade finance (Associated Press)
A new report from Bain & Company and HSBC, Rebooting a digital solution to trade finance, finds that blockchain could increase global trade volumes by $1.1 trillion by 2026, off the current base of $16 trillion. Additionally, blockchain-based solutions could provide a $2bn annual revenue lift in documentary trade financing by 2026 for the global banking industry, on top of $7.7bn in annual revenue without blockchain. This lift in revenue would come from banks financing more documentary trade transactions, attracting new business not currently participating in cross-border trade, and companies shifting select transactions from open account to documentary for greater risk mitigation. [ICC: The importance of fostering incremental innovation (pdf)]
Today’s Quick Links: EALA: Report on the public hearings on the EAC Counter-trafficking in Persons Bill, 2016 (pdf) Mauritius signs three loan agreements with Saudi Fund for Development OECD’s West African Papers series: Political settlements with jihadists in Algeria and the Sahel Strategy for Norway’s efforts in the Sahel region, 2018-2020 (pdf) Introducing the online guide to the World Development Indicators: a new way to discover data on development OECD’s Freedom of Investment Roundtable 28: summary of discussion (pdf) |
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President Buhari inaugurates Committee for Impact and Readiness Assessment of the African Continental Free Trade Area
President Muhammmadu Buhari on Monday, 22 October charged the Presidential Committee for Impact and Readiness Assessment of the African Continental Free Trade Area to address risks associated with signing the AfCFTA agreement.
While inaugurating the committee at the Council Chamber, Presidential Villa in Abuja, President Buhari charged members to address issues raised during the nationwide stakeholder sensitization consultations set up to advise government on Nigeria’s membership of the AfCFTA.
The Committee has a 12-week mandate to produce a clear roadmap for Nigeria as it relates to the AfCFTA. “We cannot go back to the days of signing agreements without understanding and planning for the consequences of such actions,” Buhari said.
Address by His Excellency Muhammadu Buhari, President of the Federal Republic of Nigeria
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It is my pleasure to be here with you in this inauguration ceremony. Let me begin by saying that Nigeria today, is the largest economy in Africa. We are also the most populous nation blessed with vast natural resources.
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For too long, our domestic productive capabilities were neglected in favour of imports. Nigeria was using its hard-earned oil revenues to create jobs offshore instead of developing the manufacturing potential of our very vibrant, young and dynamic population.
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Many of our challenges today, whether relating to security, unemployment or corruption are rooted in the fact that we have not been able to domesticate the production of our most basic requirements. The recent recession, which was as a result of our over dependence on external factors, is a clear case of why Nigerians must now aspire to self-sufficiency.
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The pdf Economic Recovery and Growth Plan (ERGP) (6.59 MB) introduced by this administration focuses on the revival of key job creating and import substitution sectors such as agriculture, mining, manufacturing and services.
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To ensure the ERGP is seamlessly implemented, we commenced a number of structural reforms through the Presidential Enabling Business Environment Council; the Industrial Policy and Competitiveness Advisory Council; and, the Nigerian Office for Trade Negotiations.
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Ladies and gentlemen, the benefits of these reforms are being felt as our economic policies are creating meaningful jobs for our young population, assuring national food security and improving the competitiveness of our economy to position export trade as an engine for economic growth.
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However, while we must look inwards for certain solutions, we have not lost sight of regional and international trends, especially on trade where global dynamics are shifting and changing at a rapid rate.
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This means that as we plan for the long term, we must also be flexible enough to respond to short-term shocks that could upset our economic diversification and backward integration plans.
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It is against this background that we are gathered here today on the subject of the African Continental Free Trade Area Agreement (AfCFTA) which was introduced early in the year.
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The creation of this free trade area is a worthy and commendable idea. Clearly, the population, resources, geographical spread and other theoretical trade indicators of the continent highlight the tremendous potential that exist if we can crack the various barriers that hinder intra-African trade.
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However, although this assertion makes easy sense in theory, the reality of doing business in Africa poses its own peculiar challenges.
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You will all recall that some months ago, the Vice President at an event reminded Nigerians that the concept of free trade implies a fundamental assumption of the level and competitive playing field that is fair.
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For those of you who are in business, I am sure you will all agree that Africa’s trading landscape, as it stands, is multifaceted.
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For us in Nigeria, our vision for intra-Africa trade is for the free movement of “made in Africa goods”. This means the goods and services must have significant African content in terms of raw materials and value addition to the production and service processes.
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Therefore, the Continental Free Trade Area must be packaged and implemented to achieve this vision. This is the only way the majority of Africans will positively benefit from it.
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A few months ago, I directed a nationwide stakeholder engagement on the AfCFTA to understand the true impact of this agreement on Nigeria and Nigerians considering the existing domestic and regional policies as it relates to trade.
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From these consultations, the key issues raised by stakeholders were:
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Abuse of rules of origin,
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Smuggling arising from difficulties in border controls,
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Un-quantified impacts of legacy preferential trade agreements;
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Low capacity and capabilities of local business to conduct international trade,
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Cost of finance,
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Insufficient energy; and
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Transport logistics infrastructure, to mention a few.
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Our ERGP is addressing these issues. Nonetheless, we are determined to break away from the past practice of committing Nigeria to treaties without a definite implementation plan to actualize the expected benefits while mitigating the risks.
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We cannot go back to the days of signing agreements without understanding and planning for the consequences of such actions. And our country being the worse off.
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Your task as members of the AfCFTA Impact and Readiness Assessment Committee is to address the issues raised during the nationwide stakeholder consultations on the AfCFTA.
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You are expected to develop short, medium and long-term measures that will address any challenges arising therefrom.
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I look forward to receiving from you in 12 weeks, a clear roadmap for Nigeria as it relates to the AfCFTA.
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I wish you fruitful deliberations and I am happy to inaugurate this Committee.
I thank you and may God bless our country.
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First Ordinary Session of the Fifth Pan-African Parliament kicks off with renewed call for stronger African integration
The first ordinary session of the fifth Parliament of the Pan-African Parliament kicked off officially on Monday, 22 October 2018 at the Kigali Convention Centre in Rwanda, where legislators from across the continent convened to dissect matters pertaining to the continent’s progress.
Held under the theme, “Winning the Fight against Corruption: A Sustainable Path to Africa’s Transformation”, the first ordinary session of the Pan-African Parliament received a keynote address from Rwanda’s President Paul Kagame, who doubles as the Chairperson of the African Union.
In his address, President Paul Kagame called on Pan-African legislators to ensure the speedy ratification of the African Continental Free Trade Agreement (AfCFTA) by member states.
“I ask for your support for a speedy ratification of the AfCFTA, the Protocol on the Free Movement of Persons, and other key pillars of Agenda 2063. The entry into force of these historic compacts will do more than almost anything else to accelerate economic growth and shatter outdated perceptions of our continent. We cannot afford to squander the momentum we have gained,” President Kagame said.
He added: “We need your help to communicate more effectively with constituents and stakeholders in civil society about the importance of these agreements for the well-being of our citizens and our economies.”
The AfCFTA – which was signed by 48 African states in July – is the world’s largest bloc, boasting a combined population of more than one billion people and a combined gross domestic product of more than US$3.4 trillion.
Once ratified, the AfCFTA is estimated to bring about long-term gains of about US$16 billion annually to Africa through the elimination of tariffs, free movement of people and goods across the continent.
The AU Chairperson further noted that the African Union is a healthier and more financially independent body than it was before, having slashed its annual budget by 14 percent and having more member states contributed their share of funds.
“Important changes are underway on our continent, and in the wider world, and we have to be ready to meet them. Working together is the only way to give Africa’s position the weight it should have in the wider geopolitical context,” President Kagame said.
“We must meet the imperative of good governance with innovations and solutions drawn from Africa’s rich experiences and cultures, even as we remain open to benefiting from the best global insights.
President of the Pan-African Parliament, Hon. Roger Nkodo Dang, told the assembly that fighting corruption across the continent must be paramount for regional integration to work.
“Illicit financial aided by corruption are responsible for capital flight from Africa of up to $50 billion,“ he said. “Corruption is a challenge that we should all be concerned about. It is up to us as legislators to work hard and fight against this evil that leads to poverty and underdevelopment.”
Speakers of parliaments of the Congo, Djibouti, Gabon, Mozambique, Tanzania, the East African Legislative Assembly (EALA) as well the director of the Heavenly Culture World Peace Restoration of Light (HWPL) presented messages of solidarity. The speakers also unanimously hailed Rwanda’s Louise Mushikiwabo for her successful election to the position of Secretary General of the International Organization of the Francophonie (OIF).
They said that Ms Mushikiwabo’s election represents a unified and stronger Africa that is taking centre-stage on global issues. The Pan-African Parliament also swore in 16 new members from countries that include Chad, Comoros, Liberia, Rwanda, Sierra Leone and Zimbabwe.
President Kagame addresses the First Ordinary Session of the 5th Pan-African Parliament
I want to wish a good morning to all of you, and a very warm welcome to Kigali. We are honoured to serve as host for the First Ordinary Session of the Fifth Parliament. Please consider Rwanda as your home during the weeks ahead. I hope that your busy schedule will allow you to get to know our country and our people.
I wish to thank you for the work that you do. The Pan-African Parliament serves as a point of connection joining Africa’s legislators, and the citizens they represent, to the African Union Organs.
I therefore commend the breadth of your agenda for this session, including a model law on disability, a conference on women’s rights, as well as substantive reports on nutrition, corruption, election observation, and the African Peer Review Mechanism.
The impact of your work in this body is multiplied by your dual role as members of your respective national legislatures. We count on you to be strong advocates for African integration.
More specifically, I would like to ask for your support for the speedy ratification of the African Continental Free Trade Agreement, the Protocol on the Free Movement of Persons, and other key pillars of Agenda 2063.
The entry into force of these historic compacts will do more than almost anything else to accelerate economic growth and shatter outdated perceptions of our continent. We cannot afford to squander the momentum we have gained.
But we need your help to communicate more effectively with constituents and stakeholders in civil society about the importance of these agreements for the well-being of our citizens and our economies.
Let me say a few more words about the state of Africa and the African Union. Important changes are underway on our continent, and in the wider world, and we have to be ready to meet them. It is about getting our house in order, doing what is right for our people, and speaking with one voice to advance Africa’s interests. Working together is the only way to give Africa’s position the weight it should have in the wider geopolitical context.
At the same time, illusions of moral hierarchy that divided continents and peoples are crumbling rapidly, as we have been seeing. Responsibility for Africa’s security and prosperity is, and should be, firmly in our hands. We must meet the imperative of good governance with innovations and solutions drawn from Africa’s rich experiences and cultures, even as we remain open to benefiting from the best global insights.
This reality is the background to the financial and institutional reform of the African Union that has been underway for the last few years. As a result, our Union is stronger than ever. Next year’s budget is 12 per cent smaller, while the share of funds supplied by Member States has significantly increased.
Contributions to the Peace Fund are running at the highest level since its creation in 1993, allowing Africa and our partners to push for an ambitious new partnership with the United Nations that will provide stable funding for peace support operations.
Next month, we will convene in Addis Ababa for an Extraordinary Summit to finalise implementation of the institutional reform, where we have also seen good progress this year. We very much welcome your active participation and engagement in this process.
You are much more than interested observers. I would like to take this opportunity to call on the Pan-African Parliament to play a bigger role in monitoring and accompanying political progress on our continent and holding institutions to account for the commitments that have been made to Africa’s citizens.
Excellencies, Honourable Members of the Pan-African Parliament, I wish you productive deliberations and I thank you for your kind attention.
Related News
tralac’s Daily News Selection
(i) The East African Legislative Assembly resumed its sitting in Arusha this morning: it continues until 10 November. This week’s EAC calendar of events can be accessed here.
(ii) SADC Investment Forum (23 October, Moscow). An interview with SADC Executive Secretary, Dr Stergomena Lawrence Tax
(iii) Ambassador Tibor Nagy (Assistant Secretary of State for Africa) on US relations in Africa – trade, investment and the future of engagement (29 October, Chatham House)
Development of a SADC Protocol on Statistics: SADC posts an EOI request by individual consultants. This assignment (pdf) consists of reviewing relevant SADC policy and legal instruments as well as the current and future state of statistical developments in order to inform the development of a Protocol on Statistics to be adopted and ratified for implementation by SADC Member States.
Think development – Think WIDER (13-15 September, Helsinki): selected Africa-related sessions, presentations:
Industries without smokestacks: industrialization in Africa reconsidered (chaired by John Page); Made in Africa (chaired by Carol Newman); Africa’s youth (chaired by James Thurlow); Africa’s lions (chaired by Haroon Bhorat); Growth and poverty in sub-Saharan Africa (chaired by Andy McKay); Taxation, data, and development (chaired by Jukka Pirttilä); Enterprise development (chaired by John Rand)
Pan-African Private Sector Trade and Investment Committee: update (AU)
PAFTRAC was launched at an inaugural meeting in Accra, on 3 December 2011. However, following the launch limited activity has taken place on the initiative. With the recent rise in global trade tensions and creeping protectionism in the post-Doha round of trade negotiations, coupled with the negotiations towards the AfCFTA, the EPA with the EU, the probability of expiration of AGOA in 2025, and other ongoing trade and investment negotiations; a working group that included Afreximbank, the AUC, the International Trade Centre, Afro-Champions, Ecobank, the Pan-African Chamber of Commerce and Industry, and the African Development Bank, spearheaded the revival of the initiative. Membership is drawn from leading private sector institutions and corporates across Africa, as well as from a range of continental and regional institutions. PAFTRAC will therefore provide a framework to facilitate African private sector participation and engagement in trade and investment issues, including trade and investment policy formulation and trade negotiations in support of sustainable development of African economies in line with Agenda 2063. It is anticipated that PAFTRAC could serve as a stepping-stone toward the establishment of the African Business Council, which is envisaged under the AfCFTA Architecture.
Ghana only trades two percent with Africa – GEPA (GhanaWeb)
Latest research findings indicate that trade activities between Ghana and other African trading partners stands at only two per cent out of the 141 trading partners of GEPA. This implies that Ghana’s trade with Africa is very minimal as compared to major export communities. Director of Research at the Ghana Export Promotion Authority, Mr Maxwell Kusi, made these revelations during the 78th National Exporters’ Forum launch on the 2017 Non-Traditional Exports Statistics held in Accra. The 2016 reports however show that trading between Ghana and ECOWAS was the highest, attaining 24%. However, in 2017, it was overtaken by the EU. The swift turn in the 2017 report was largely due to economic barriers that exist among African nations. Mr Kusi noted that for GEPA to achieve its set target of $5.3bn in export earnings in 2021, all stakeholders need to put in extra effort. The distribution chart puts the EU on top with 46%. Other countries, including China, scored 24% whiles other developed countries including USA, Switzerland and Japan were at eight per cent.
Speaking at the launch of the conference, Deputy Minister for Trade, Carlos Ahenkorah stated that despite the trade gains, it was surprising to learn Ghana’s trade with rest of Africa is not encouraging. “Ghana rose 13 places in the World Bank Trade Report from 167 in 2016 to 154 in 2016 under the Ghana National Single Window. Similarly, improvements were registered in the World Bank Registered Performance Index where Ghana rose 12 places from 100 in 2014 to 88 in 2016. But despite all these gains into the ECOWAS markets and all markets outside the sub-region, it is sad to note that Ghana’s trade with the rest of Africa is minimal.” [GEPA launches 2017 Non-Traditional Export Performance statistics and Buyer Portal; 57% of cocoa beans imported into Switzerland are from Ghana]
Raila Odinga appointed as the AU High Representative for Infrastructure Development (AU)
The High Representative will work to support and strengthen the efforts of the Commission’s relevant Departments and those of NEPAD, within the framework of the Program for Infrastructure Development in Africa. In the discharge of his mandate, and building on the work and leadership of the PIDA Presidential Infrastructure Champion Initiative, the High Representative will pay particular attention to the missing links along the transnational highway corridors identified as part of the Trans-African Highways Network, with a view to facilitating their development and modernization. He will also focus on the continental high-speed train, which is one of the flagship projects of the First Ten-Year Implementation Plan of Agenda 2063, in the context of the relevant African Union decisions. He will interact with the current Champions of related African Union initiatives and seek their guidance, to ensure the required synergy and coherence. [Commentaries: Uhuru’s hand in Raila’s AU appointment, Five presidents who sealed Raila’s appointment as AU special envoy]
Kenya: Industry recommends sectoral strategies to achieve the Big Four Agenda (KAM)
The Kenya Association of Manufacturers has launched a report that seeks to identify cross-cutting constraints to growth, possible solutions, and sector-specific interventions to unlock the manufacturing sector’s growth potential. The report, featuring 14 of the key manufacturing sub-sectors that constitute the industry, provides a critical submission in the development of policy and strategy for the revival of the manufacturing sector under the Big Four Agenda. Extract (pdf):
Despite the static nature of the manufacturing sector with regards to its overall role in the economy, there have been significant shifts in the production levels of various manufacturing sub-sectors over the last ten years alone. This is an important consideration in any economic analysis of the manufacturing sector. Often, the sector tends to be homogenised as one unit of analysis, but the under-currents of different sub-sectors must be dissected to develop a holistic view of its performance and role in the economy.
The graph below shows the difference in manufacturing production for the various sub-sectors of manufacturing between 2008 and 2017. This is based on data extrapolated from the KNBS Quantum Index for manufacturing that has also been used in other section of the report. The ensuing sections of this report intend to provide an overview of each sub-sector of manufacturing as individual units of analysis in their own right, to provide the aforementioned holistic view of the manufacturing sector’s performance and role in the economy. [KAM: Give tax breaks to regain exports market]
Kenya: Uhuru takes charge of coffee sector reforms committee (The Standard)
The Coffee Sector Implementation Committee is expected to move its operations from the National Housing Insurance Fund building to the President’s office, with a directive that it submits to him quarterly reports. “The committee shall be domiciled in the Executive Office of the President,” said Head of Public Service Joseph Kinyua in a gazette notice Friday. He said the committee, expected to coordinate and provide strategic leadership in implementation of the coffee sub-sector reforms, will submit monthly reports to the Cabinet Secretary for Industry, Trade and Cooperatives. The extension of the committee’s term comes at a time when a section of politicians are seeking a ban on exports of unprocessed coffee to boost farmers’ earnings in the country. President Uhuru has mandated the committee appointed in October 2016 and chaired by Joseph Kieyah to oversee reforms aimed at turning around the ailing sector by implementing recommendations by a coffee taskforce. [Related: Uhuru orders cane farmers to be paid Sh2.6bn arrears, Uhuru says Mandago, Kiunjuri to lead taskforce on maize]
Tanzania: How lack of standards on horticultural crops impacts exports (IPPMedia)
A lack of national standards for horticultural crops in Tanzania has negatively impacted on the access to regional and international markets, says Tanzania Horticulture Association CEO Jacqueline Mkindi in an interview with Correspondent Joseph Kithama. Excerpts:
Ghana: Local cement manufacturers call on Standards Authority to investigate Chinese producers (GhanaWeb)
The Cement Manufacturers Association of Ghana has appealed to the Ghana Standards Authority to, as a matter of urgency, investigate into the quality of the cement being produced in the country by Chinese companies. A letter dated 16 October, and signed by the Executive Secretary of CMAG, Rev. Dr. George Dawson-Ahmoah, cited two of such companies in Tema and Ejisu – where the quality of their cement products is questionable. The letter further confirmed that individual cement companies have sampled some of these products and the results are so alarming. “That explains why the prices of cement products by the Chinese companies are ridiculously lower in market. They are really cutting corners, and this must be checked.”
Ghana: Private equity and venture capital ecosystem study (World Bank)
This paper discusses the landscape for private equity and venture capital financing in Ghana. It provides an overview of the private equity and venture capital market in the country, describing key players, including funds, fund managers, investors, and public sector entities. The paper provides an analysis of key market drivers and impediments, as well as legal, regulatory, and taxation drivers and impediments that affect Ghana’s private equity and venture capital industry.
At the WTO: India protests move to launch plurilateral negotiations at global trade body (Mint)
India has inveighed against a “new round” of trade talks without “a system of enforcement of existing rules” at the global trade body, after a group of industrialized and developing countries intensified their efforts to launch plurilateral negotiations on controversial issues at the 12th ministerial conference in Astana, Kazakhstan, said people familiar with the development. The Astana meeting, which will be held on 8-11 June 2020, could radically change the character of the World Trade Organization from multilateral to plurilateral (involving two or more countries) for pursuing certain issues, which are being currently opposed by a large majority of countries, said trade envoys, preferring anonymity.
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Kenyan Industry recommends sectoral strategies to achieve the Big Four Agenda
The Kenya Association of Manufacturers (KAM) has launched a report that seeks to identify cross-cutting constraints to growth, possible solutions, and sector-specific interventions to unlock the manufacturing sector’s growth potential.
The report, which features 14 of the key manufacturing sub-sectors that constitute the industry, provides a critical submission in the development of policy and strategy for the revival of the manufacturing sector under the Big Four Agenda.
Speaking during the launch, KAM Chairman Mr Sachen Gudka highlighted that the report is designed to assist Government in its quest to revamp the manufacturing sector. Adding that, the report whose information was sort from KAM members, shall form a baseline for reference in the industry.
“The low and declining shares in manufacturing, industrial and exporting sectors in GDP constitute a major challenge to economic growth, as stated in the Medium-Term Plan 3 Concept Note. Our engagements in the development of the Sector Deep Dive Report revealed that there is a very high possibility of value chain integration, if some sector specific proposals are considered.
Value addition promotes the growth of backward and forward linkages, and in the process creates the much-needed productive jobs for the youth, and equally, increases the purchasing power of citizens,” said Mr Gudka.
Also at the launch, KAM Ag. CEO and Head of Membership Development, Mr Tobias Alando reiterate the pivotal role of industry in stimulating economic growth and wealth generation in the world. He further stated that the declaration of manufacturing as a top priority investment area for the country to drive economic growth has seen manufacturers and the government engage more towards this goal.
“KAM remains a key partner to the National Government as it sets out to promote the growth and competitiveness of industry. It is also important that we continue to promote exports. Export is key for job creation and the growth of any country’s economy. In order to push our exports, Kenya needs to undertake coordinated action to promote exports and to secure market access for our locally produced goods and services,” concluded Mr Alando.
Through a direct, industry-led research process, this report aggregates the expert opinions inherent in KAM’s member base and places it within the context of wider studies on manufacturing in Kenya to provide a critical submission in the development of policy and strategy for the revival of the manufacturing sector under the Big 4 Agenda.
The manufacturing sub sectors discussed in the report include: Food & Beverage, Agricultural and Fresh Produce, Paper and Board, Timber and Furniture, Building, Mining and Construction, Textiles and Apparels, Leather and Footware, Chemical and Allied, Pharmaceuticals and Medical Equipment, Energy, Electricals and Electronics, Metal & Allied, Plastics and Rubber, Automotive and SMEs.
The Manufacturing in Kenya Under the ‘Big 4 Agenda’: A Sector Deep-dive Report is published by the Kenya Association of Manufacturers and Kenya Business Guide.
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CZI Press Statement on the current economic situation in Zimbabwe
Despite that the challenges the economy is currently facing, we believe the economy has been performing very well as noted by the upward review of GDP growth by IMF and if we all do the right things, we will continue on this growth path.
The last two weeks have seen a dramatic collapse in confidence in the RTGS (real-time gross settlement) currency and spiralling parallel market exchange rates. The uncertainty over the value of RTGS has led to some businesses closing and others refusing RTGS money. Businesses are preferring to hold onto their stock whilst awaiting clarification on the value of RTGS.
We have also seen the prices of commodities increasing in the market even where the producers have not increased prices.
We note that this is a result of the imbalance between RTGS and Nostro accounts driven by the fiscal deficit and its financing through the creation of RTGS money.
We recognise that any turnaround measures should start by addressing the fiscal deficit. We welcome the following measures as highlighted in the Transitional Stabilisation Programme and implore government to implement these immediately:
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Expenditure reduction through measures including right sizing public employment; cutting travel expenses; reducing fuel benefits; and curtailing vehicle acquisition.
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Issuing Treasury Bills through market based auctions, and limiting new release to the minimum required for fiscal purposes.
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Limiting the over-draft with the Reserve Bank to the Statutory level permitted by law.
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Accelerating the restructuring and privatisation of state owned enterprises.
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Eliminating budgetary subventions to state owned enterprises and using instruments such as government guarantees to support them where justified.
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Retiring all civil service staff at retirement age and above
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Moving to a market-based foreign exchange allocation system.
Government has come up with a sound fiscal adjustment programme. In order to give the market confidence that the programme shall be implemented successfully, government must publish relevant data timeously.
Given the critically low confidence levels in the economy we recommend the publication of the above start as soon as possible.
The proposed 2% transaction tax is designed to close the fiscal deficit and restore confidence in the RTGS system.
As matter of principle economies are not developed through over-taxation. However, we recognise that this tax was aimed at widening the tax base. CZI was therefore initially opposed to an uncapped 2% tax and had proposed a cap which would achieve the aim of widening the tax base without over taxation.
However, given the gravity of the current crisis in confidence, we recognise that it is vital that the fiscal deficit is dealt with immediately.
The 2% tax, as subsequently modified by the Minister of Finance on 5 October, with further adjustments in consultation with the private sector, should go a long way towards closing the fiscal deficit and restoring stability to the economy.
We therefore recognise the necessity of this tax as a short term shock therapy measure.
The alternative is to have incomes further eroded by run-away inflation,increased shortages and a general decline in well-being.We therefore call on all stakeholders to accept this painful necessity to stabilise the economy.
We also call on Government to play its full part in stabilising the economy and sharing the associated pain by implementing the measures outlined in the TSP and returning to a zero deficit position as soon as possible.
Given that through this tax, we are inflicting pain on the entire economy and assuming collective responsibility to correct government errors of the past, the government is obligated to be fully transparent by accounting for the collections and use of the 2% tax.
We must point out that this tax is not sustainable over any extended period of time as it taxes each stage of the value chain and negatively affects the growth and competitiveness of value chains.
We propose that the tax expires by December 2019 at which point we expect that Government would have adjusted its expenditure mix to match collections and more targeted ways of broadening the tax base will have been developed. In order to demonstrate sincerity on the part of government and give the market confidence that this is indeed only a short term shock therapy measure, the enabling legislation for this tax should be explicitly time-bound.
All sectors should be allowed to reflect this cost in their pricing.
Turning to the issue of supply of basic commodities, as long as adequate supply of official foreign exchange is made available, prices will remain affordable and our members will be working day and night to ensure product supply.
We would urge that all future policy pronouncements be done after a process of consultation. A formal multi-stakeholder review process should be established immediately to track progress on the implementation of the Transitional Stabilisation Programme.
Transitional Stabilisation Programme
Reforms Agenda, October 2018 – December 2020
“Towards a Prosperous & Empowered Upper Middle Income Society by 2030”
The holding of a free, fair, credible and peaceful election on 30 July 2018, ushered in the Second Republic, allowing me to constitute its first Government. Our immediate task is walking the talk with regards to fulfilling the electoral promises and commitments we made during campaigns for office.
First and foremost, is embarking on the implementation of national development policy initiatives and programmes to transform our economy to realise Vision 2030, the UN Sustainable Development Goals, and the AU Agenda 2063.
This is a reflection of the collective determination and aspiration of the people of Zimbabwe for a Prosperous and Empowered Upper Middle Income Society by 2030.
This Transitional Stabilisation Programme, over October 2018 – December 2020, prioritises fiscal consolidation, economic stabilisation, and stimulation of growth and creation of employment.
Adoption and implementation of prudent fiscal and complementary monetary policies will anchor return of investor confidence lost over the past two decades, stabilising the macroeconomic environment, which is conducive for opening up to more business.
The Transitional Stabilisation Programme outlines policies, strategies and projects that guide Zimbabwe’s social and economic development interventions up to December 2020, simultaneously targeting immediate quick-wins and laying a robust base for economic growth for the period 2021-2030.
The Economic growth envisaged during the Programme period will inevitably be driven by the private sector, with Government facilitating a supportive macro-economic and business environment.
Focus will be on value addition and beneficiation, to realise higher value exports, and cushioning the economy from the vagaries of international commodity price fluctuations associated with over-dependence on export of raw commodities.
The success of the Programme will not depend on Government efforts alone, but on a coordinated collaborative multi-stakeholder approach.
This is critical if we are to overcome and redress the underlying challenges arising from economic fragility, joblessness, inequality and poverty.
This Programme, therefore, recognises the need for empowerment of women and youths, while also bringing to the fore key issues that improve the welfare of the historically marginalised groups, including people facing physical challenges.
I am, therefore, making a strong appeal to all stakeholders that we all put the Elections behind us, and collaboratively participate fully in the reconstruction of our economy.
On my part, I undertake to provide the political will needed to ensure full implementation of the Programme, mindful that this will entail pain and need for sacrificing short term gains for longer term prosperity.
Everyone has a responsibility in this economic reconstruction endeavour. This includes the academia, faith based and civil society organisations, embracing their grassroots structures and advocacy towards complementing Government efforts, and the media, central to the dissemination of information and general citizenry awareness.
Also critical will be our people in the Diaspora, whose participation in economic transformation initiatives goes beyond contribution through remittances and philanthropic work, and is targeted to include skills transfer and involvement in arising domestic investment opportunities.
Our Cooperating Partners will also be critical as efforts by my Government to re-engage the world gather momentum, including re-establishment of relations with the international financial community, critical to complementing domestic efforts to mobilise resources and build up development capacity.
Most importantly, the need for transparency and accountability by all stakeholders and citizens will be key for the transformation of the economy and realising the aspirations of Vision 2030.
I, therefore, commend the Transitional Stabilisation Programme for October 2018 – December 2020 to the people of Zimbabwe, and I urge all stakeholders to fully support its implementation.
I thank you.
President of the Republic of Zimbabwe
5 October 2018, Harare
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Press briefing on the Pan-African Private Sector Trade and Investment Committee
The Pan-African Private Sector Trade and Investment Committee is an advocacy platform to support implementation of the African Continental Free Trade Area (AfCFTA), enhance African private sector participation in trade and investment policy formulation (including negotiations and implementation of trade agreements), and to galvanize the views of the African private sector on the ground and transmit those to policy makers.
The initiative originated from a meeting organized jointly by the World Trade Organization (WTO) and the African Development Bank (AfDB) on “Trade Finance and Trade Facilitation in Africa”, held on 27th October 2010 in Tunis, where it was recognized that there was limited private sector participation and engagement in trade policy issues in Africa, particularly in trade policy making and trade negotiations.
At this meeting, a consultative group (“the Working Group”) comprising of African Export-Import Bank (Afreximbank), Ecobank Transnational Inc. (ETI or ECOBANK), International Trade Centre (ITC), and the Investment Climate Facility (ICF) was established and mandated to propose a framework for African private sector involvement in trade policy matters, including multilateral trade negotiations.
PAFTRAC was subsequently launched at an inaugural meeting in Accra, Ghana, on the 3rd of December 2011. Afreximbank was assigned the responsibility of providing temporary secretarial support to the Committee in furtherance of the goals of PAFTRAC. However, following the launch limited activity has taken place on the initiative.
With the recent rise in global trade tensions and creeping protectionism in the post-Doha round of trade negotiations, coupled with the negotiations towards the African Continental Free Trade Area (AfCFTA), the Economic Partnership Agreements with EU, the probability of expiration of AGOA in 2025, and other ongoing trade and investment negotiations; a Working Group that included Afreximbank, the African Union Commission, the International Trade Centre, Afro-Champions, Ecobank, the Pan-African Chamber of Commerce and Industry, and the African Development Bank spearheaded the revival of the initiative.
Membership of the Committee is drawn from leading private sector institutions and corporates across Africa, as well as from a range of continental and regional institutions, including: (i) Business organizations and traders with a significant continental footprint; (ii) Regional and sub-regional business associations and councils; (iii) Chambers of commerce; (iv) Industry associations; (v) Financial institutions; (vi) Professional, and policy research institutions; and (vii) Other relevant entities and strategic partners involved with trade and investment issues.
Purpose
To ensure the success of the AfCFTA and other trade and investment agreements being negotiated and concluded, it is imperative that the private sector be engaged in their design, negotiation and implementation. The success of these agreements hinges on the private sector as the agreements are always secured for the private sector actors who are looked upon for the implementation. It is the private sector that are the direct investors of capital; that are the producers / manufacturers, marketers / distributors and consumers of goods and services.
To this end, it is critical for the private sector to be involved in the negotiations, design and implementation of such agreements as they are the ones most directly affected by them. It is with this in mind that PAFTRAC is being reconstituted as a platform for organized private sector involvement in trade and investment issues.
PAFTRAC will therefore provide a framework to facilitate African Private Sector participation and engagement in trade and investment issues in Africa, including trade and investment policy formulation and trade negotiations in support of sustainable development of African economies in line with Agenda 2063. It is anticipated that PAFTRAC could serve as a stepping-stone toward the establishment of the African Business Council, which is envisaged under the AfCFTA Architecture.
Objectives
The specific objectives of the Committee include:
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Providing a platform for synthesizing and harmonizing the views of the African private sector on trade and investment issues, and to encourage a shared understanding of the benefits of trade and investment policies;
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Serving as a vehicle through which the views of the African private sector will be brought to bear on trade and investment policy issues at the Pan-African level, including its contribution to the African Union Conference of Ministers of Trade;
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Promoting dialogue on trade and investment matters between Governments and the private sector, in support of the growth of both extra- and intra-African trade and cross-border investment;
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Enhancing advocacy and supporting policy actions and recommendations of the private sector on trade and investment issues at the national, trade corridor, regional and multilateral levels;
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Assisting in mobilizing resources for trade and investment as well as on capacity-building that will enable the acquisition of skills and knowledge by the private sector in Africa with a view to dealing more effectively with trade and investment issues; and
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Facilitating research on trade issues, including extra-and intra-African trade flows, trade finance, technology, and the implications of trade and investment policies and measures on African economies and private sector development in Africa.
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GEPA launches 2017 Non-Traditional Export Performance statistics and Buyer Portal
Under the auspices of the Ministry of Trade and Industry, the Ghana Export Promotion Authority (GEPA) hosted the 78th National Exporters’ Forum, an interactive platform for discourse on issues affecting companies in the non-traditional export sector.
The forum a vital part of the many activities organized by GEPA witnessed the launch of the Non-Traditional Export performance statistics for 2017 and the Buyer Portal of the GEPA Market Hub.
Having held the forum since 1987, amidst discussions and the need to find solutions to challenges has led to a myriad of achievements notable among which are the establishment of the GEPA Export School, introduction of the National Awards for Export Achievement Scheme; creation of the Export Development and Investment Fund now EXIM Bank; expansion of ECOWAS Market and the establishment of refrigerated fruit terminal at our ports.
The Chief Executive Officer of GEPA, Madam Afua Asabea Asare, welcomed stakeholders in the export fraternity to the Forum recounting strategic interventions undertaken over the past year to improve and eventually eliminate supply side constraints and increase contribution of Non-Traditional Exports (NTEs) from the current US$2.55 billion to US$5.3 billion by the end of 2021.
Ms. Asare expressed GEPAs readiness to work with various stakeholders of the export sector and expressed her gratitude to all partners and stakeholders for the diverse and immeasurable roles they have played towards the strengthening of the export sector and the consequent improvement in the foreign exchange position of the country. She further intimated that without exports, the economy would be thrown out of gear.
Hon. Carlos Kinsgley Ahenkorah, Deputy Minister of Trade and Industry and Member of Parliament for Tema West Constituency, who represented the Minister Hon. Alan Kwadwo Kyerematen, reemphasized the need for the realignment of EXIM Bank’s activities towards export promotion.
“I said it here last year and I repeat it again this year... until the activities of the EXIM Bank are realigned to export promotion, little achievement would be made in the export sector of this country,” the Minister said.
He opined that the Exim Bank, formerly EDAIF, was instituted fundamentally to finance and develop the export sector. But over the years, this has seen a deviation. This prevarication he believes vitiates the very essence of export development and promotion, and should be rectified as soon as practicable.
The Director for Research and International Cooperation at the GEPA, Mr Maxwell Osei-Kusi, presented highlights of the 2017 Non-Traditional Export Performance statistics. His presentation was preceded by a presentation by Mrs. Agnes Adjei-Sam, Director of Marketing and Promotion on the practicable solutions obtained in respect of last year’s challenges presented by exporters. The Manager of the GEPA Market Hub, Mr Abdallah Banda gave a snapshot presentation on the Market Hub and how it serves the needs of the various publics, as the information and resource platform for export trade information.
Other speakers of the day included Hon. Nana Asiamah Dokua, Deputy Minister for Information and MP for Akwapim South, Hon. Collins Ntim, Deputy Minister for Local Government and Rural Development and MP for Offinso North, Mrs. Grace Akrofi, Board Member of GEPA and Special Advisor to the Governor of the Bank of Ghana, Mrs. Kate Abbeo, Deputy Executive Secretary of the Ghana Free Zones Authority among other distinguished guests, partners and stakeholders.
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tralac’s Daily News Selection
Ethiopia and Rwanda, this week, announced gender parity cabinets. The key Trade and Industry portfolio in both countries is now headed by a woman: Mrs Fetlework Gebregziabher and Mrs Soraya Hakuziyaremye, in Ethiopia and Rwanda, respectively.
Multi-media: How Uganda’s new bridge across the Nile will transform regional trade
Exporter of the Year 2018 – Winners (Cape Chamber)
The dynamics of South African investment in the rest of Africa (GEG Africa)
Historically South Africa has been one of the largest investors in Africa. Yet in recent years it has been facing growing competition from other investors – both from outside Africa (notably, China) and from other African countries. South African policy makers need to respond to the changing investment climate on the continent from an informed base. Yet there have been few (especially recent) studies on South Africa’s investment presence or performance in other African countries. To address this gap, an extensive ‘scoping analysis’ was conducted to probe the investment activities of South Africa’s largest publicly listed companies in other African countries. This policy brief summarises the main findings from the analysis, supported by a review of FDI and trade data.
Extracts: South African investment into the rest of the continent is seen as overtly market- (and profit-) seeking. That is, South African investors are motivated to invest in African economies in order to diversify or expand their markets, or to improve their profit margins. This is in contrast to investment that is resource-seeking in nature, which aims to secure resources for extraction.
There are a number of countries in which there is a significant sectoral representation of South African firms. For example, the scoping exercise revealed that in Ghana, Namibia and Zambia, there are South African companies from 14 different ‘supersectors’ operating in those countries. Overall, there are 13 countries in which there is a company presence from 10 or more different sectors. Figure 4 indicates that the total number of identified investments by the largest companies listed on the JSE is dominated by the telecommunications and chemical sectors, which have invested in over 24 and 23 African countries respectively. Furthermore, producers of industrial goods and services, banks and retailers have invested in over 15 different countries across Africa. It is clear that service-oriented (and secondary/manufacturing) sectors, rather than resource-based sectors, have attracted South African investment to the rest of the continent.
South Africa’s agricultural trade: market access permits and export quotas for 2019
The Department of Agriculture, Forestry and Fisheries (DAFF) has issued two new notices concerning procedures for the application, administration and allocation of export quotas under the SADC-EU EPA and market access permits under the WTO Marrakesh Agreement.
Doing Business in Nigeria 2018: subnational doing business report (World Bank)
This fourth report of the Doing Business in Nigeria series updates the data for 36 states and FCT Abuja and measures progress since 2014 in four regulatory areas: starting a business, dealing with construction permits, registering property and enforcing contracts. It also incorporates measures of regulatory quality in the latter three indicators. No single Nigerian state dominates the indicator rankings across all areas benchmarked. The results show that most states, if not all, have something to showcase and something to learn. The states that lagged behind in 2010 have been improving and narrowing the gap in regulatory efficiency with the better-performing states.
In the past four years, 29 Nigerian states implemented 43 reforms across the four areas benchmarked, with Kaduna, Enugu, Abia, Lagos and Anambra showing the largest advance toward the global good practice frontier. Most reforms were federally driven in the area of starting a business, and most were focused on the efficiency of processes rather than the quality of regulations. Location still matters for local entrepreneurs wanting to start and operate a business in Nigeria, as large differences exist in the regulatory environment throughout the country. For example, incorporating a new business can take more than six weeks in Adamawa and just 10 days in Abuja. [Download: pdf Doing Business in Nigeria 2018 World Bank (8.22 MB) ]
Exports diversification and employment in Africa (UNCTAD)
The present paper seeks to answer several questions: Is there a relationship between export diversification and employment generally and particularly in Africa and least developed countries? What does the theoretical and empirical literature reveal about the relationship? Assuming that export diversification is potentially an important positive determinant of employment creation in Africa and least developed countries, then what are the appropriate policies for increasing it? Extract:
Africa has consistently performed worst on export diversification. The evidence on export concentration (Chart 3) reveals a substantially lower (higher) level of export diversification (concentration) in Africa, compared with the other developing regions of Asia and the Americas. Furthermore, while diversification in these regions has remained about the same level since the mid-1990s, it actually shows a downward trend for the African region. The use of the bilateral export concentration index corroborates this observation (Chart 4).
There are a number of developing countries (Korea, Brazil, Thailand) that have made significant progress on export diversification over the years and have reaped the benefits of its positive effect on employment. Some of these countries were either on the same socioeconomic development level with most African countries a few decades ago or on lower levels of economic progress compared to Africa. Today, they have made steady progress, overtaken African countries and continue to make significant progress. These countries offer insightful lessons for African countries and LDCs. A few of these examples are highlighted. [Download: pdf Export Diversification and Employment in Africa (4.04 MB) ]
USAID’s Country Roadmaps are a small, early step on the journey to self-reliance (CGD)
USAID Administrator Mark Green regularly underscores his view that the goal of foreign assistance is to end its need to exist. Consistent with that objective, Green is spearheading a shift in how USAID works to better support partner countries’ ability to plan, implement, and finance their own development. The agency is calling this new country-centered approach the Journey to Self-Reliance, and - as we’ve discussed previously – it incorporates a number of worthwhile elements. Last week, the agency came out with its first major, visible Journey to Self-Reliance product – a series of country “roadmaps” that use 17 indicators to plot low- and middle-income countries’ “commitment” to and “capacity” for self-reliance. [Profiled Country Roadmaps: South Africa, Rwanda, Kenya, Botswana, Ethiopia, Lesotho, Ghana, Nigeria]
Part of the roadmaps’ limitation is that the indicators don’t speak well to the kinds of reform conversations USAID often has. While USAID’s policy engagement does sometimes take the form of big, broad governance statements (e.g., respect civil liberties, conduct free and fair elections), much of its policy conversations are more narrow and specific to the sectors USAID invests in (e.g., revisions to an energy law, supporting the government’s adoption of a WHO-recommended treatment protocol for HIV) - things that aren’t captured in the indicators. Even when an indicator does capture a particular policy area a mission might want to highlight, a policy conversation requires being able to say more about why a country performs the way it does than a top-line number can give. Diving into the underlying data to parse out this kind of information can be difficult and time-consuming and may overtax busy mission staff (though USAID is developing some Washington-based support).
There’s also a risk that the roadmaps hinder policy dialogue by suggesting relatively good performance in an area the mission is pushing the country to improve, or by sparking defensiveness among country counterparts at being presented with an unfavorable assessment and/or something a host country perceives to be prescriptive (the data tool isn’t meant to be prescriptive, of course, but “roadmap” is a tricky name with its “this is how you get there” implications). [The author: Sarah Rose]
This week at the WTO
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Official perspectives, discussions: WTO membership meeting: Debate on WTO reform should reflect all perspectives – DG Azevêdo; Committee on Rules of Origin: WTO members review use, application of preferential rules of origin for LDCs; Services Council: Poorest countries call for review of preferential access for exporters of services; WTO General Council sets date of next Ministerial Council (8-11 June 2020, Astana, Kazakhstan); DG Azevêdo’s address to the inaugural International Trade Banquet (London); An IMF interview with Roberto Azevêdo: Trade is not the problem
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News updates: US asks for WTO panel over metals tariff retaliation; Brazil, China sugar trade scuffle brought before WTO; New Zealand government statement on next week’s talks in Canada on WTO reform: 13 countries to attend; Kenya joins push for WTO reforms; India pulls up WTO secretariat over comprehensive reforms call; Taiwan quits ‘developing economy’ status in WTO with eye on China
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Exporter of the Year 2018 – Winners
The annual Exporter of the Year Competition celebrates the vital role exporters play in the economy of the Western Cape. The competition is designed to honour and promote large and small businesses that have proved their excellence in tough international markets and to inspire other ambitious companies to export their goods and services.
Exporter of the Year 2018
Research Unit, a firm which manufactures designer handbags, and All Women Recycling, which makes gifts and gadgets from used plastic, were the big winners at last night’s ECIC/Exporter of the Year competition Awards dinner.
The competition, which is in its 28th year, is organised by the Cape Chamber of Commerce and Industry and sponsored by the Export Credit Insurance Corporation.
For the first time in the history of the competition, one firm, Research Unit, won four awards while All Women Recycling won three.
Research Unit was the overall winner of the ECIC/Cape Chamber award as well as winners of the Transnet Port Terminals award for Manufacturing, the Small Exporter category and the Innovation award. All Women Recycling won the Finex SA award for the best non-engineering exporter, the Cape Chamber award for Design, and the Nedbank award for Transformation.
Folio Online, a translation service, won the Gerald Wolman award for excellence in doing business in Africa.
The overall winners were announced at a Gala Dinner at the Westin Hotel, Cape Town on the 18th of October 2018. Certificates were also presented to three outstanding business women from the International Women’s Entrepreneurial Challenge Awardees: Dr Birgit Andrag of By den Weg, Jill Byssche of Neo Trading, and Mentee-Denise Stubbs of Thokozani Winelands Hospitality.
The finalists for the 2018 Exporter of the Year were, in alphabetical order:
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All Women Recycling make and sell a variety of gifts and gadgets made from plastic waste.
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Ayama SA make and export wine.
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Caffenu make cleaning capsules for coffee machines.
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Cape Cookies manufactures confectionary.
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ELE Trading market and export fresh produce.
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Folio Online a translation service for Africa and the world.
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Kallos Exporters procure and distribute fruit and vegetables.
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Research Unit manufacture stylish leather handbags.
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Tradewinds Parasols make patio umbrellas and shades.
The 11 finalists competed in seven categories. An overall winner is presented for the best engineering or manufacturing company, the best non-engineering or non-manufacturing company, and the best small exporter; and trophies for Excellence in doing business in Africa, Design, Innovation, and Transformation.
Trudi Hartzenberg, tralac Executive Director, served as a judge in this year’s competition. tralac was a finalist in the 2014 Exporter of the Year competition.
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Nigerian states step up reform agenda to improve business climate for domestic firms, World Bank report finds
Nigerian states are making strides to improve the ease of doing business for domestic small and medium enterprises, finds the latest edition of the World Bank’s Doing Business in Nigeria report.
The report, the 4th in the subnational series on Nigeria, covers 36 states and the capital city of Abuja. It analyzes business regulations in four Doing Business areas: Starting a Business, Dealing with Construction Permits, Registering Property, and Enforcing Contracts.
In the past four years since the last report was issued, 29 Nigerian states have implemented 43 reforms. The majority of those reforms are in the area of Starting a Business – 28 states enacted changes to improve business incorporation. While no state performs well across all areas benchmarked, Kaduna, Enugu, Abia, Lagos and Anambra made the biggest strides in improving their business regulations.
Several states lagging in 2010 are now narrowing the gap in regulatory efficiency with the better-performing states. Across all indicators, the gap in time difference between lagging states and better-performing ones has been cut by at least one-third.
Location still matters for local entrepreneurs wanting to start and operate a business in Nigeria, as large differences exist in the regulatory environment throughout the country. For example, incorporating a new business can take more than six weeks in Adamawa and just 10 days in Abuja.
“It is encouraging to note that the private sector acknowledges the business environment reform agenda initiated at the Federal level is trickling down to several states,” said Rachid Benmessaoud, Country Director, World Bank Nigeria.
“While these findings are encouraging, substantial variation remains across the country. Going forward it will be critical for the states to engage in peer learning and put in place the institutional mechanisms that will ensure continuous improvement and the sustainability of reforms.”
On average, it now takes 26 days to incorporate a new business, compared to 34 days in 2010. Abuja remains the easiest place to start a business. The improvements have been the result of introduction of an electronic platform by the federal Corporate Affairs Commission. The online platform enhances speed and transparency of the business registration process. As a result, it takes less time to start a business in states which have adopted the online platform.
Reform efforts to improve construction permitting slowed – only three states implemented reforms in the past four years. Nevertheless, Niger, Kano and Jigawa surpass even some of the advanced economies in the world in terms of streamlined and expeditious processes for obtaining a building permit.
Nigeria is one of the most difficult and expensive places to register property in the world. On average, it takes 12 procedures, 74 days and costs 15.3 percent of the value of the property to transfer land. Kaduna implemented some landmark reforms catapulting the state to the top spot in Nigeria for ease of registering property.
In the area of Enforcing Contracts, Kaduna, Bauchi and Jigawa are the best performing states. However, the quality of judicial processes and the efficiency of resolving a commercial dispute vary widely, with the greatest differences seen in the time to complete the trial and judgment phase.
“The acceleration in the pace of business reforms to reduce the time, cost and complexity of bureaucratic processes is a welcome step in the right direction,” said Rita Ramalho, Senior Manager of the Global Indicators Group at the World Bank.
“However, federal-level initiatives will need to be matched by state and local efforts to spread the benefits more uniformly across the country and help bring much-needed prosperity. We hope this report will serve as a roadmap for reform at the subnational level.”
Doing Business in Nigeria 2018 is the fourth report of the subnational Doing Business series in Nigeria. The first edition was published in 2008, with subsequent editions released in 2010 and 2014. The report was produced by the World Bank Group at the request of the Government of Nigeria, in collaboration with the Enabling Business Environment Secretariat (EBES) of Nigeria’s Presidential Enabling Business Environment Council (PEBEC) and the Federal Ministry of Industry, Trade and Investment (FMITI).
The project was funded by UK Aid from the UK government, the World Bank Competitive Industries and Innovation Program and the World Bank-assisted Growth and Employment (GEM) Project at FMITI. The subnational Doing Business work is based on the same methodology as the global Doing Business report published annually by the World Bank Group.
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Export diversification and employment in Africa
There is a general consensus that trade has high potential to foster inclusive growth and create employment.
Thus, classical trade theorists recommended active trade participation for both developed and developing countries based on comparative advantage. They also recommended that countries should specialize in producing and exporting commodities for which they have comparative advantage, while importing those for which they lack comparative advantage.
Hence, exports specialization was touted as being economically preferable to diversification. However, more recent theoretical and empirical studies have emphasized the importance of export diversification, rather than export specialization or concentration.
Key reasons for this paradigm shift include the likelihood that export diversification favorably influences the pattern of growth and structural transformation that countries and regions experience, coupled with the fact that diversification increases a country’s ability to meet objectives such as job creation and improvements in income distribution.
A strong link is deemed to exist between the poor state of export diversification and the dismal nature of employment creation in developing countries, especially in Africa. Indeed, there is a major concern that the pattern of African exports manifests instability that has been found to be independently growth-inhibiting.
Concurrently, sub-Saharan Africa currently has one of the highest levels of unemployment in the world, with its 2010-2014 average official unemployment rate of 8%, in contrast with 3.9% in South Asia and 4.4% in East Asia and Pacific (ILO, 2017). Meanwhile, SSA’s ‘vulnerable employment’ in 2016 stood at 68.0 percent, compared with the global average of 42.9%.
Thus, the present paper seeks to answer three main questions:
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Is there a relationship between export diversification and employment generally and particularly in Africa and least developed countries (LDCs)?
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What does the theoretical and empirical literature reveal about the relationship?
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Assuming that export diversification is potentially an important positive determinant of employment creation in Africa and least developed countries, then what are the appropriate policies for increasing it?
Executive summary
The stylized facts on export diversification and employment in Africa reveal the following: (1) Africa lags behind other developing regions on global exports performance; (2) the share of global exports is lowest for Africa amongst the developing regions; (3) exports in SSA countries exhibit a high degree of dependence on few primary agricultural or mineral exports; (4) Africa has consistently performed worst on export diversification; (5) Africa has one of the highest levels of unemployment in the world, accompanied by a low level of job creation; (6) the youth are the highest victim of unemployment in Africa; and (7) the dominance of the informal sector of African economies generates vulnerable employment.
While the theoretical literature seems equivocal on the effects of export diversification on employment, the empirical literature related to Africa and LDCs appears inconclusive and tend to differ across countries. Some of the factors that may be responsible for this inconclusiveness may include measures of variables employed, estimation techniques, control variables used, and the period of coverage. Given the nature and structure of African economies and those of LDCs, large informality and disproportionate effects across gender and age groups pose additional challenges in empirically assessing the relationship.
From the literature review and empirical findings, the author identifies for Africa and LDCs generally a number of challenges and opportunities associated with export diversification and employment. Among the opportunities are: innovative continental and regional initiatives, global market access initiatives, emergence of new and highly promising sectors, trade-related technical assistance initiatives, and increased economic cooperation with emerging developing countries. Conversely, the challenges include: poor infrastructure, lack of finance especially for small and medium-sized exporters, governments’ export policy inconsistencies and incompleteness, complicated export systems, corruption and corrupt practices, the high cost of doing business, limited market access, and weak export competitiveness.
Africa has several lessons to learn from other developing countries that have made significant progress on export diversification over the years and have reaped the benefits of its positive effect on employment. The lesson from South Korea is the need for government to undertake deliberate export diversification policy. Critical to the success of such policy is government’s role in strengthening the capabilities of firms. The Brazilian experience underscores the importance of the use of financial instruments as tools for promoting export diversification, including: credit, export credit insurance, advance payment under foreign exchange contract, and strong institutional support and investment in R&D. From Thailand comes the lesson that government should focus on leveraging the dynamism of the private sector and need for strategic approach to export diversification. Above all, however, providing an environment conducive for efficient private sector participation in the economy is critical.
Arising from the overall findings of the paper are several recommendations for the respective stakeholders. Governments of African countries should: develop a capable, accountable, developmental and transformational state; focus on developing strategic national and regional infrastructure; prioritize financing for export-oriented firms; focus on developing and integrating African economies into the global value chain; strengthen the institutional and regulatory framework; support SMEs to access export markets; initiate industrial development policies that are capable of facilitating vertical and horizontal export diversification; and invest in human capital development that is complementary to other productive capital.
Continental, regional and sub-regional institutions should take the lead in coordinating regional infrastructure development, assist LDCs to initiate continental export diversification policy, promote trade facilitation, and deploy innovative options for export financing. Private sector businesses need to take full advantage of export-promoting incentives of the government, and initiate public-private partnerships in export diversification projects and infrastructure financing.
Finally, external development partners are enjoined to employ official development assistance (ODA) to help build exportpromoting and diversifying capabilities, as well as use their political leverage to create a greater level-playing field globally for African countries and LDCs.
This paper was prepared by Augustin Fosu, Professor at the University of Ghana. The paper was presented at a side-event during the 2018 Africa Think Tank Summit held in Accra, Ghana from 5-7 April, organised jointly by UNCTAD and the African Capacity Building Foundation (ACBF).
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tralac’s Daily News Selection
A new tralac Trade Brief: Intra-African trade – focusing on trade within Regional Economic Communities
This paper gives an overview of the trade within the eight RECs recognised by the African Union: AMU, CEN-SAD, COMESA, EAC, ECCAS, ECOWAS, IGAD and SADC. In assessing intra-REC African trade, it is important to consider the impacts of multiple memberships where bilateral trade occurs between members in more than one REC, which leads to double counting. The authors find that such double counting has amounted to 7% of intra-REC exports and 9% of intra-REC imports since 2001. The analysis in this paper thus offers some insight into the amount of intra-African trade happening outside the RECs. [The authors: Talkmore Chidede, Ron Sandrey]
Between gatekeeper and gateway: Taking advantage of regional and global value chains by addressing barriers to South Africa’s trade competitiveness (MTI Global Practice, World Bank)
This paper (pdf) provides an overview of South Africa’s recent trade outcomes, as well as its trade policy framework, and assesses the causes of its disappointing performance. In turn, it suggests changes to trade-related policies as well as the governance and management of these policies. The paper focuses in depth on three specific trade-related constraints: transport costs, the institutional governance of trade tariffs and export promotion, and overall economic policy uncertainty. The paper proceeds to argue that the South African government would benefit from aligning its trade strategy, commercial and economic diplomacy and industrial policy with the dual objective of providing both the engine for a “Factory Southern Africa” that encompasses the rest of the SADC region, and of being the region’s gateway to the rest of the world. Since South African firms will not be able to drive this approach on their own, this necessarily means forging policies and institutions that encourage investments into South Africa and the SADC region, and working with neighbors to maximize the development of regional value chains that result from such investments. [The authors: Peter Draper, Jakob Engel, Heinrich Krogman, Anna Ngarachu, Lesley Wentworth]
South Africa Investment Conference: update from the Inter-Ministerial Committee (GCIS)
Over the past six months, the President’s investment envoys have engaged in over 150 dialogues with the both domestic and international investors. These engagements have achieved three broad aspects critical to achieving our objectives for the investment drive: (i) The Investment Envoys have contributed to an ‘issues log’, which is a collation of proposals on how government can re-orient policy to stimulate economic growth and increase investor confidence. Government has already established an inter-ministerial committee that is working around the clock to leverage this feedback to improve the ease of doing business; (ii) An investment pipeline has been collated, which is a collection of projects that either have a funding gap or have been delayed due to red tape or administrative delays. Some of these projects will be showcased at the Investment Conference for consideration by investors; (iii) The investment envoys, together with InvestSA, have facilitated the resolution of specific issues related to regulatory permits or licenses, delayed decision-making, work visas and guidance regarding B-BBEE equity equivalent requirements. Through this initiative a total of 45 bankable projects will be announced which are ready for implementation. These projects are in manufacturing, green economy, infrastructure, agro-processing, minerals beneficiation, mining, oil and gas, and property development. The projects are projected to be to the value of R150bn. [Download: pdf The case for investing in South Africa: Executive summary (1.34 MB) ]
Does South Africa need its own export-import bank? (SAIIA)
The paper (pdf) shows the extent and depth of this market, demonstrating that there is sufficient trade finance for domestic and international trade currently. Its main finding is that there is a fully-fledged trade finance market in South Africa that compares well with international export and import markets. Two state institutions – the Industrial Development Corporation and the Export Credit Insurance Corporation – provide funding for trade and trade insurance facilities respectively. They compete with various private providers of trade finance solutions and distinguish themselves by having a higher risk appetite than their private counterparts thereby enabling access to these facilities by high risk trade participants. The trade finance market in South Africa is therefore considered to be sufficiently financed and well established. A new state-owned ECA is thus unnecessary and unfeasible, considering the country’s current fiscal constraints. However, a concerted effort is needed to improve the financing of small and medium-sized enterprises involved in cross-border trade activities since they are still finding it challenging to access this market. A final recommendation is for the IDC and ECIC to become drivers of growth in the SME space by providing streamlined trade finance solutions. [The authors: Cyril Prinsloo, Palesa Shipalana, Zinhle Ngidi]
UNCTAD’s Commodities at a Glance: Special issue on coffee in East Africa
Current global supply does not match the projected demand. This poses challenges but also opportunities for East African and other coffee producing countries. For coffee-producing East African countries to capture greater value from coffee production, they will need to implement an agricultural transformation agenda comprising the following five elements: Reinforcing good agricultural practices; Fostering the establishment of coffee farmers’ associations; Strengthening producers’ bargaining power; Promoting regional bodies, such as the African Fine Coffees Association; and Making financing available (e.g. prefinancing, investment and early purchase contracts). This report is structured as follows [Download: pdf Commodities at a glance: Special issue on coffee in East Africa (3.80 MB) ]:
Section II provides a brief history of coffee, from the remote tropical forests of Ethiopia where coffee was first “discovered” to the current globilized commodity, traded and consumed all over the world. Section III describes the coffee value chain, from tree to cup. Section IV introduces the East African coffee scene. Section V is devoted to two country case studies, focusing on the contrasting cases of Burundi and Ethiopia. Finally, the last section outlines the challenges and opportunities associated with the coffee sector in producing countries, with a focus on East Africa. Extract: Ethiopian coffee is exported to about 50 countries around the world. The EU is the most important destination (Figure 21). At country level, Germany is the destination for about one third of Ethiopia’s total coffee exports, followed by Saudi Arabia which accounts for 12%. [Related: African production and trade of coffee and tea in perspective: What are the implications for continental trade liberalisation? (tralac)]
World Bank’s biennial Poverty and Shared Prosperity Report: Piecing together the poverty puzzle
The report finds that the incomes of the poorest 40% grew in 70 of the 91 economies monitored. In more than half of the economies, their incomes grew faster than the average, meaning they were getting a bigger share of the economic pie. However, progress in sharing prosperity lagged in some regions of the world. The report also warns that data needed to assess shared prosperity is weakest in the very countries that most need it to improve. Only one in four low-income countries and four of the 35 recognized fragile and conflict-affected states have data on shared prosperity data over time. Extract [Download: pdf Poverty and Shared Prosperity 2018 (5.77 MB) ]:
Sub-Saharan Africa now accounts for most of the world’s poor, and – unlike most of the rest of the world – the total number of poor there is increasing. The number of people living in poverty in the region has grown from an estimated 278 million in 1990 to 413 million in 2015. Whereas the average poverty rate for other regions was below 13% as of 2015, it stood at about 41% in Sub-Saharan Africa. Of the world’s 28 poorest countries, 27 are in Sub-Saharan Africa, all with poverty rates above 30%. In short, extreme poverty is increasingly becoming a Sub-Saharan African problem.
African countries have struggled partly because of their high reliance on extractive industries that have weaker ties to the incomes of the poor, the prevalence of conflict, and their vulnerability to natural disasters such as droughts. Despite faster growth in some African economies, such as Burkina Faso and Rwanda, the region has also struggled to improve shared prosperity. The bottom 40 in the dozen Sub-Saharan African countries covered by the indicator saw their incomes rise by an average of 1.8% per year in 2010-15 (slightly below the global average of 1.9% per year). More worrying, however, is that the incomes of the bottom 40 shrank in a third of those 12 countries. [Infographic: Completing the poverty puzzle]
Mobilization of tax revenues in Africa: state of play and policy options (Africa Growth Initiative, Brookings)
The regional aggregate masks significant heterogeneity in performance. As shown in Figure 2 (pdf) , for several economies, revenues are below 10% of GDP. Non-resource tax revenues are particularly low in resource intensive economies, pointing to great scope for more revenue mobilization in the non-resource sectors of these economies. For example, in Chad, Equatorial Guinea, and Nigeria, revenues from non-resource sectors are only about 5% of GDP or less. The excess reliance on resource revenues exacerbates the effect of declines in commodity prices on these economies. In contrast, Lesotho, Namibia, South Africa, and Swaziland have all been more successful, with revenue collection comparable to or even exceeding the OECD average. Figure 4, Estimated tax revenue gaps for sub-Saharan African countries as a percent of GDP, displays the gaps between tax capacity and tax revenue collection by country. Significant heterogeneity in tax gaps exist across the region. At the country level, the gaps are largest for Equatorial Guinea, Nigeria, Chad (9 percentage points or higher) and smallest for Liberia, Mozambique, and Togo – two percentage points or less. [The authors: Brahima Sangafowa Coulibaly, Dhruv Gandhi]
Let’s be real: The informal sector and the gig economy are the future, and the present, of work in Africa (CGD)
Is this a disaster for Africa? Will the informal sector lose its ability to generate livelihoods as both goods and services become automated? It’s not clear which way the market will swing, but we already see digital platforms starting to change the very nature of what it means to be informal or formal. Until now, enterprises were (more or less) either in the informal sector or in the formal sector. Yet the digital world allows a business to take on formality in small, accessible, low-cost steps that match company needs – more of a ladder to climb than a cliff to scale, as illustrated in Figure 2.
African workers are in gig employment already. Following dozens of households every two weeks for a year, BFA has conducted financial diaries studies in Kenya, Tanzania, Mozambique, South Africa, India, and Mexico. These financial diaries illuminate the lives of people on low incomes, one transaction at a time. What we’ve learned is that they have a lot of income sources in the course of a year, ranging from two in India to eight in rural Tanzania and Pakistan (see Figure 3). [The authors: Amolo Ng’weno, David Porteous]
Vera Songwe tells African ambassadors: ECA aiming to become Africa’s premier think tank (UNECA)
As part of the proposed reform agenda, the Executive Secretary plans to create a private sector division, focusing on the business environment with respect to energy, infrastructure services, financial sector and capital market development. In addition, the issues of poverty and inequality, as well as governance, will receive added attention in dedicated sections. Ms Songwe said the retreat was an opportunity for the ECA’s senior team to listen to the permanent representatives, build a stronger relationship between Addis and the member states and ensure that country and continental priorities were aligned and consistent with those of the African Union. “This retreat is the first of its kind, but we hope to build on it to ensure ECA delivers value to its member states and the AU.”
SADC, Tanzania sign MoU on pooled procurement services of pharmaceuticals (SADC)
SADC’s Executive Secretary, Dr Stergomena Lawrence Tax, described the signing of the MoU as a significant step in the implementation of the SADC Pooled Procurement Services (SPPS), which is anticipated to reduce the prices of pharmaceuticals and medical supplies by 40% by allowing SADC Member States to share pricing and supplier information to enable them negotiate for better prices for high quality medicines from suppliers. Dr Tax called on Tanzania’s MSD to fast-track all the necessary procedures to facilitate the operationalisation of the SPPS, as agreed by the SADC Ministers of Health and Ministers Responsible for HIV and AIDS at their meeting in November 2017.
Today’s Quick Links: Mauritius: Government is determined to revitalise the tea sector, states Prime Minister Statement of the Chairperson of the AUC on the appointment of a parity Government in Ethiopia Ministers endorse continental report on population and development issues in Africa The 7 Dakar Principles: Multi-sectoral coordination for effective delivery on nutrition Europe, Asia leaders prep for high-level summit, with trade and cooperation to headline agenda SWIFT gpi White Paper: Towards frictionless cross-border payments WCO’s advanced customs valuation workshop for Rwanda WCO News N°87: October 2018 SAIIA: Ties between African countries and China are complex: understanding this matters |
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South Africa to showcase investment opportunities
Inaugural South Africa Investment Conference marks a step change in the government’s approach to engaging with the domestic and international business community
Next week’s much-anticipated inaugural South Africa Investment Conference will be a platform for the country to woo investors and showcase a more coherent narrative about the direction of the country’s economy, according to Economic Development Minister Ebrahim Patel, addressing the media on Thursday on preparations ahead of the event.
Under the theme ‘Accelerating Growth by Building Partnerships’, the conference will be held from 25-27 October 2018 at the Sandton Convention Centre in Johannesburg. The event’s keynote address will be made by the President of the Republic of South Africa, who will be joined by eminent political and business leaders throughout the conference.
South Africa is open for business and the most diversified African economy, with a host of unique comparative advantages and unique features as an investment destination and trade partner. Patel said the aim of the conference is to market the compelling opportunities in the country so as to encourage investments and create jobs.
The conference will also be an opportunity to take further the many discussions and issues that came up during the Jobs Summit, FOCAC and BRICS Summit and now talk to people with resources who can invest in South Africa.
The country’s first Investment Conference will provide a platform to showcase growth and investment prospects in an economy with vast potential and enormous resources. Investors will have the opportunity to hear from – and engage with – government representatives on its progress towards political and economic renewal, strengthening the credibility of public institutions and unlocking the latent potential and innovative spirit of South Africa’s economy.
The conference will also present domestic and international businesses with a portfolio of investment projects in several sectors. Sessions will bring together both foreign and local investors the respective ministers to work out what can be done practically to boost investment. About 50 investment experts are expected to attend and lead discussions.
While the summit will focus on the economy as a whole, delegates will drill down to key areas where there is a scope for growth. The conference is thus also a platform for information exchanges between government, local and international businesses on the country’s most exciting investment opportunities.
Statement by the Inter-Ministerial Committee on the South African Investment Conference 2018
The Investment Conference follows a commitment made by the President during the State of the Nation Address in February this year. The aim of the conference is to market the compelling investment opportunities in our country so as to encourage investments and create jobs.
The current negative economic climate – characterised by a technical recession worsened by rising oil prices, tense relations between US and major economies, and weakening investor sentiment towards emerging economies – has made it even more important to take steps to reinvigorate the economy.
This conference is a key milestone in the country’s bold ambition to raise at least US$100 billion in new investment over the next five years and one of a series of initiatives being undertaken by government to ensure economic recovery and growth, and to create jobs and prevent further job losses.
In April this year, President Ramaphosa appointed four investment envoys: former Minister of Finance, Trevor Manuel; the former Deputy Minister of Finance, Mcebisi Jonas; businesswoman, Phumzile Langeni; and veteran businessman, Jaco Maree.
In September, in response to negative growth in the first half of the year, President Ramaphosa announced a stimulus and recovery plan to ignite economic activity, restore investor confidence, prevent further job losses and create much needed jobs.
Through the stimulus and recovery plan, Government is introducing immediate economic reforms to provide policy certainty and unlock growth in key sectors. Some of the reforms include a review of regulations on the travel of minors, expanding the list of countries not requiring visas for travel to South Africa and implementation of electronic visas.
The revised Mining Charter has been finalised after widespread consultation with communities, labour and industry players. Government has decided not to proceed with the Mineral and Petroleum Resources Development Act Amendment Bill and intends to draft separate legislation for the oil and gas industry. Government is reviewing various administrative prices, starting with electricity, port and rail tariffs. [...]
The Investment Conference builds on the recent Presidential Jobs Summit, where labour, business, government and the community constituency adopted a ground breaking Framework Agreement to prevent further job losses, create jobs and support companies in distress. The pdf Framework Agreement (946 KB) serves as an enabler for the creation of an estimated 275 000 additional jobs annually, especially for the youth.
Over the past six months, the President’s investment envoys have engaged in over 150 dialogues with the both domestic and international investors. These interactions have helped to facilitate open communication on the investment climate and on the opportunities for investment that could be unlocked through partnership.
The investment envoys have met with local and international business leaders individually, through business associations and foreign missions. These engagements have achieved three broad aspects critical to achieving our objectives for the investment drive:
The Investment Envoys have contributed to an ‘issues log’, which is a collation of proposals on how government can re-orient policy to stimulate economic growth and increase investor confidence. Government has already established an inter-ministerial committee that is working around the clock to leverage this feedback to improve the ease of doing business;
An investment pipeline has been collated, which is a collection of projects that either have a funding gap or have been delayed due to red tape or administrative delays. Some of these projects will be showcased at the Investment Conference for consideration by investors;
The investment envoys, together with InvestSA, have facilitated the resolution of specific issues related to regulatory permits or licenses, delayed decision-making, work visas and guidance regarding B-BBEE equity equivalent requirements.
Through this initiative a total of 45 bankable projects will be announced which are ready for implementation. These projects are in manufacturing, green economy, infrastructure, agro-processing, minerals beneficiation, mining, oil and gas, and property development. The projects are projected to be to the value of R150 billion.
It is against this backdrop that President Ramaphosa has extended invitations to a select number of CEOs, investors and leaders of civil society to provide a platform to showcase growth and investment prospects in an economy with vast potential and enormous resources. At least one thousand delegates are expected to attend the conference.
Government will use the opportunity to engage with investors and share the progress it is making in its journey towards political and economic recovery. This requires strengthening the credibility of our public institutions and unlocking the latent potential and innovative spirit of South Africa’s economy.
On 26 October, President Ramaphosa will open the conference, followed by a presentation of a case for investment in South Africa. The presentation will be followed by the announcement of bankable projects and then plenary will break into commissions around agriculture, agro-processing, mining and manufacturing, transport, energy and water.
The conference will be preceded by a series of networking events on 25 October, including a networking cocktail, a performance at the Theatre on the Square and an art exhibition.
On 27 October 2018, President Ramaphosa will lead a walkabout along Vilakazi Street in Soweto with both investors and the general public. The aim of the walkabout is to showcase the vibrancy of the township economy. The investors will thereafter have an opportunity to hold business-to-business and business-to-government bilateral meetings.
Government calls upon all sectors of society to rally behind this bold initiative to stimulate economic growth and create jobs for all in our communities.