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ECOWAS: National experts validate draft Supplementary Acts on community rules of origin
Regional experts have validated the draft supplementary Act fixing community rules of origin and procedures applicable to goods originating in the Economic Community of West African States (ECOWAS).
When adopted, the validation would among others repeal and replace Protocol A/P.1/01/03 dated 31 January 2003 which had defined the notion of products originating in ECOWAS Member States.
The review and validation are geared towards strengthening the ECOWAS Free Trade Area (FTA) and the idea of having flexible rules of origin in the region.
Alongside the revision of the community rules and procedures, the ECOWAS Commission hopes to update the recognition of origin through the exertions of the national experts in line with the region’s current economic situation.
This is in addition to the simplification of the origin recognition procedure by addressing all the issues that either appear to slow down the procedures or have become obstacles including the facilitation of the Free Movement of Goods with new provisions on the certification of origin.
During the meeting, presentations were made and appraisals given by the experts who also examined the draft regulation on procedures for recognition and the certification of goods of Community origin in the ECOWAS region, with a careful consideration given to the texts article by article.
Broadly, through the various articles, the national experts examined how sufficiently processed or transformed were the products under consideration, the notion of originating industrial products, identification of originating industrial products, goods manufactured in free zones or under suspense or end-use procedures, principle of territoriality, Sets, the proof of Community Origin, Validity of the Proof of Origin, Control of the Proof of the Community Origin, repeal, Dispute resolution.
A major work done by the national experts also included the examination of the draft regulation on procedures for recognition and certification of goods of Community origin in the ECOWAS region. The draft was presented by the ECOWAS Commission.
The draft document seeks (when adopted) to abrogate and replace the Regulation C/REG.3/4/02 of 23rd April 2002 establishing procedure for the approval of originating products to benefit from the ECOWAS Trade Liberalization Scheme as well as Regulation C/REG.4/4/02 of 23rd April 2002 adopting a certificate of origin of originating products of the Community.
Following the review of articles, participants made other proposals for the improvement of the draft regulation which are to be sent to Member States for further inputs.
Wrapping up the Three-Day meeting, the chair of session and Director of ECOWAS National Unit of the Nigerian Ministry of Foreign Affairs Mr. Musa Nuhu thanked the delegates for the seriousness with which they participated in the work.
The head, Free Movement Division of the West African Economic and Monetary Union (WAEMU) Mr. Aboubakar Sidiki Cisse praised the participants for the quality of the deliberation and the professionalism
On his part, the ECOWAS Commission’s Director of Customs Mr. Salifou Tiemtoré, who represented the Commissioner, Trade, Customs and Free Movement, congratulated participants for the meeting’s achievements. He also thanked WAEMU Commission for its participation.
The work of the national experts on the Supplementary Act is expected to be presented to the meeting of Directors-General for onward consideration by the Ministers of Finance of the region.
All 15 Member states, the ECOWAS Commission, the WAEMU Commission and the German Development Agency (GIZ) were also represented at the meeting.
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Boosting farm productivity in Africa through the sustainable use of machines
New African Union-FAO framework also aims to create new jobs while reducing reliance on manual labor
FAO and the African Union on 5 October 2018 launched a new framework document that aims to increase agricultural efficiency and reduce drudgery by helping countries in Africa to develop strategies for sustainable farm mechanization.
The Sustainable Agricultural Mechanization: A Framework for Africa (SAMA) is the result of discussions with policy makers from AU member states, the AU Commission, FAO and key partners. It offers a detailed look at the history of machinery in Africa, and points the way towards addressing challenges and creating new opportunities to assure the successful adoption of mechanization.
“Doubling agricultural productivity and eliminating hunger and malnutrition in Africa by 2025 will be no more than a mirage unless mechanization is accorded utmost importance,” AU Commissioner for Rural Economy and Agriculture, Josefa Sacko, said at the launch of the framework at FAO.
Remarkably more than three-fourths of farmers in sub-Saharan Africa prepare their lands using only hand tools, a practice that entails poor productivity, repels youth and is incompatible with the continent’s Zero Hunger goal.
“Farmers in Africa should be able to use modern agricultural technology, both digital and mechanical, to boost the agricultural sector in a sustainable way,” said FAO Deputy Director-General Maria Helena Semedo.
The new framework identifies 10 priorities for AU member states to include in their national plans, ranging from the need for a stable supply of machine spare parts and innovative financing mechanisms, and the importance of regional collaborations that allow for cross-border hiring services.
The framework notes that successful national mechanization strategies will address key sustainability issues including gender, youth, environmental protection and the overarching principle that farming must be profitable. It also emphasizes that these strategies should cover the entire agrifood value chain, including harvesting, handling, processing and food safety aspects, with an eye to reducing food losses, boosting rural employment and bolstering the links between farmers and consumers.
Past, present and future
While tractors are used to prepare land on over 60 percent of cultivated lands in Asia, the corresponding figure for Sub-Saharan Africa is around 5 percent. Moreover, the use of draught animals in sub-Saharan Africa is minimal outside of Ethiopia – due in considerable measure to the tsetse fly – so almost all the work is done manually.
One result is that many African farmers deploy low-yielding techniques and may prefer slash-and-burn methods.
Today smaller and more affordable machinery, such as two-wheel tractors, are available hiring services using digital technologies are proving popular around the continent, underscoring how the sharing of capital assets can be leveraged to achieve greater scale and access to modern tools.
What is to be done?
The framework notes that cross-border initiatives – for dealers, supply networks and tractor operators – can allow for viable scale and greater utilization.
Another key consideration is farm profitability. This can be fostered by giving access to markets, credit and land tenure a visible role in mechanization policies. The framework has been designed to contribute to the pledges made in the African Union’s Malabo Declaration and Agenda 2063, and to do so in a way that is private-sector driven, environmentally smart, affordable and friendly to smallholder farmers.
Its implementation will require significant contributions from other stakeholders, including public institutions and private actors such as the European Agricultural Machinery Industries Association (CEMA), which has just renewed its partnership with FAO to work on issues related to sustainable mechanization strategies in developing countries.
FAO and the AU’s strategy acknowledges that “there is great potential for innovation in African agriculture” – notably with the proliferation of mobile technologies and access to information and services – and that a significant effort in capacity development will have to be made to rise to related challenges.
To that end, FAO and the International Maize and Wheat Improvement Center (CIMMYT) have also published a training manual to help roll out more effective networks of access to small-scale mechanization services.
AUC launches the Sustainable Agricultural Mechanization Framework
Speaking at the launch of the Framework, AUC Commissioner for Rural Economy and Agriculture, H.E Amb Josefa Sacko reiterated the importance the Commission places on sustainable agricultural mechanization in African agriculture as a critical factor in realizing the commitments of the AU Malabo Declaration on agriculture transformation.
She further stressed that, “We will not be able to achieve the laudable objectives that we have set for ourselves, if agriculture continues to be saddled with the heavy drudgery of both farm and off-farm activities in the sector,” she said. “Efforts to attract youths to agriculture will also remain an illusion.”
Commissioner Sacko announced that she together with Angolan First Lady, H.E Ana Afonso Dias Lourenço would inaugurate the first Hand-Held Hoe Museum in Angola; building on the initiative by the former Chairperson of the AUC, H.E Dr. Nkosazana Dlamini-Zuma, who championed the campaign to relegate the hand-held hoe to the museum and replace it with tillers, a symbolic effort to emphasize the importance of removing the drudgery from agriculture, and thereby improving labour productivity, especially for women.
The Permanent Representatives to the Rome-based UN Agencies, from Ethiopia, Ghana and Cote d’Ivoire, shared their respective country experiences on agricultural mechanization and lauded the effort by the AUC and FAO to develop the framework.
In her closing remarks, the Deputy Director-General of FAO, Maria Helena Semedo said she was pleased that the joint effort between FAO and AUC had “given birth to a new baby” which had been outdoored. She expressed the hope that the same commitment would be provided to facilitate implementation of the strategy Framework, and help transform agriculture in Africa.
Agricultural Mechanization
The AUC and FAO view agricultural mechanization in Africa as an indispensable pillar for attaining the zero Hunger Vision by 2025, as stated in the Malabo Declaration of 2014, Aspiration 1 of the AU’s Agenda 2063, and Goal 2 of the Sustainable Development Goals.
Doubling agricultural productivity and eliminating hunger and malnutrition in Africa by 2025 can only be possible if mechanization is accorded the utmost importance. This includes enhancing access to mechanization services, improving access to quality and affordable inputs, such as seed and fertilizer, and delivering efficient water resources and management systems including irrigation.
Mechanization in the twenty first century must follow some core principles. It must be built along the entire agricultural value chain, private sector driven, environmentally competitive and climate smart, and economically viable and affordable, especially to small-scale farmers who constitute the bulk of African farmers. Mechanization must target youth, specifically to make agriculture more attractive for employment and entrepreneurship.
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Alan Wolff: “The importance of the rules-based multilateral trading system cannot be overestimated”
At a speech delivered to the University of the Western Cape in South Africa on 8 October, Deputy Director-General Alan Wolff highlighted the importance of trade as an engine of economic growth and the benefits of WTO membership to the African continent.
He also underlined the need for governments to create an enabling domestic environment in order for Africa to thrive in an increasingly open world economy. The full text of his remarks is available below.
Africa’s Stake in the Multilateral Trading System
I will start by thanking the University of Western Cape for inviting me to speak to you today on “Africa’s Stake in the Multilateral Trading System”. This University has had a long collaboration with the WTO through the joint UWC/UP Joint LL.M Programme in Trade and Investment Law. The WTO has provided resource persons to teach in the programme. It is a Pan-African programme which brings together the best students from the continent. Some of the past graduates are working for the WTO and others are working for their national governments in the field of trade policy and also regional economic organizations. There is no more important contribution to the world trading system than training the next generation of leaders. That is what you are accomplishing here, and you are to be congratulated for doing so.
The Importance of Trade
Most in this audience will think it unnecessary to make the case for trade. But in the world today, with the rise of populism in many countries, it is worth reiterating a basic truth. For this I will use not my words but those of Chiedu Osakwe, Nigerian Chief Trade Negotiator and Director-General Nigerian Office for Trade Negotiations:
“The classical case for trade stands on the basis of an abundance of empirical evidence. Trade plays a key role in supporting strong growth in the domestic and global economy. Trade openness and its underpinnings of competition and innovation drive growth. Countries that trade and are open have consistently demonstrated stronger, sustained growth and resilience in times of crises, in ways that are superior to closed and insular economies with high barriers and restrictions.”
Importance of the WTO
My purpose today is to set out in very broad strokes the benefits of the WTO and the challenges that exist, with particular reference to the interests of Africa in the multilateral trading system.
The importance of the rules-based multilateral trading system cannot be overestimated. It has made a positive contribution to the expansion of the global economy and in the process lifted several millions of people out of poverty Since its establishment on January 1, 1948, world trade has expanded by 20 times, and world GDP has grown by 15 times. Despite current negative headlines about the imposition of trade restrictions and increased tariffs, which bombard us almost daily, in fact most of world trade continues to take place in accordance with agreed multilateral rules. These rules have made a valuable contribution over seven decades, and recently proved their worth in the severe economic test of the Financial Crisis and Recession beginning in 2008.
Africa and the WTO
Today, 44 African countries are WTO Members, constituting more than a quarter of the entire membership.
Two African countries were original parties to the GATT in 1947, namely South Africa and present-day Zimbabwe. By the end of the GATT era, which extended from 1947 through 1994, 41 of the 54 African countries had become GATT contracting parties. Since the founding of the WTO in 1995, an additional three African countries have joined it (Cape Verde, Seychelles and Liberia).
Nine African countries (Comoros, Somalia, Sudan, South Sudan, Ethiopia, Equatorial Guinea, Libya, Sao Tomé and Principe, and Algeria) are in the accession process. This demonstrates a profound shared belief in the potential of the WTO and the rules-based multilateral trading system as a tool for poverty alleviation and economic development. The system underwrites the effort to attain and maintain peace, much as it did for the original GATT members following the devastation of the Second World War.
In providing reasons for the accession of Liberia to the WTO, Mr. Axel Addy, the then Trade Minister noted that:
“Liberia sees the WTO accession as a process that provides an acceding government with a powerful instrument for domestic reforms to accelerate growth [and] strengthen institutional capacity. [It]…provides a unique opportunity to show the power of trade for poverty reduction; to show that development is not sustainable without trade; to show that trade can trigger economic transformation that is inclusive and sustainable; and, with the right support, the right reforms, the right innovations, we can transform lives using companion policies that support trade.
… [A]s a post-conflict LDC, Liberia was in a fantastic position to use the accession, as one [with] the domestic reforms, to emerge from the trinity of conflict, health crisis and youth unemployment.”
Countries are willing to go through a process of rigorous domestic reform do so not just to gain better access to the world’s markets but to reduce poverty, foster domestic growth and attract foreign direct investment. For many, those that are now or were not long ago affected by conflicts, it is a chance to bolster stability and enjoy better prospects for attaining and maintaining peace.
Notwithstanding the engagement of African countries their share of world trade has fallen, not least because of commodity-dependency in many economies and unfavorable price movements. But it is also a failure to create a domestic environment that enables their societies to thrive in an increasingly open world economy.
Involvement in the WTO and adherence to its disciplines facilitates a badly needed transformation. Africa’s population is estimated to increase from 1.2 billion persons today to 2.5 billion by 2050 and 4 billion by 2100. While this presents considerable challenges, it also provides opportunities for Africa. The continent can benefit from a demographic dividend and with the right policies can harness its enormous resources. Economic growth and sustainable development on the African continent will be greatly assisted through increased intra-African trade as well as trade with the rest of the world. Intra-African trade is only around 10% of total trade, which is a very low figure compared to other regions.
The African Continental Free Trade Agreement (AfCFTA) is expected to create an integrated market with harmonised customs and trade rules, facilitating the cross-border flow of goods and services and making Africa more attractive to foreign investors. Trade costs in Africa are among the highest in the world. This has a negative impact on the competitiveness of African firms and also deters domestic and foreign investment.
The continent is also in need of greatly improved infrastructure to enhance connectedness. Investments in this area are beginning to make a difference, but there is a long way to go. Connectedness needs to exist not simply in a physical dimension. In an increasingly digitalized world, information technology will determine the extent of participation of countries in the global economy. There is already evidence of technological progress in this respect. Africa is a pioneer in the use of mobile phones to conduct financial transactions. This has benefitted farmers and small businesses who have to contend with information asymmetries.
How the WTO is Supporting African Countries?
The WTO is committed to assisting African countries to harness international trade as a tool for alleviating poverty and achieving robust economic growth and sustainable development. African countries, in their turn, must make an essential contribution to strengthen the trading system at a time when its ideals are being questioned amidst rising populism around the world. The power of trade has been central to lifting several millions of people out of poverty, particularly in China and India. Why should it not be Africa’s turn next?
The Participation of African Countries at the WTO
Thirty-three out of 54 countries in Africa are officially classified as least developed countries (LDCs) by the United Nations. The development challenges that this implies will not be met overnight, but steady progress in raising living standards, diversifying production structures and engaging in the global economy will be greatly facilitated by the progressive embrace of the disciplines enshrined in the WTO. Individual WTO members, based on need, can benefit from certain flexibilities in respect of disciplines and commitments. But that is not the heart of the matter. Adherence to the rules and disciplines should be the objective. For this capacity building is essential. But so is market-opening. A closed economy stunts the growth of the country that follows that policy, especially in this digital age. Development needs to be enabled through tailored arrangements not exemptions, and through appropriate domestic policies. They are intended to empower developing economies and render them more capable of reaping the benefits of specialization through trade. Preferential margins are eroding. African countries, and those of other regions need to concentrate on how to make the trading system better for all.
The future economic potential of WTO membership lies in living up to the best practices and the evolving enhanced requirements of the WTO. It also is to be found in actively considering making positive contributions to leading edge issues, such as E-Commerce and Investment Facilitation. The potential contribution of E-Commerce to African economies is very great. It offers African exporters the opportunity to gain access to new markets and increase the sales of their products without incurring significant costs. With respect to investment facilitation, it is beyond argument that African countries need a substantial inflow of foreign direct investment if they are to use international trade as a tool for economic growth and sustainable development. Issues of critical importance to African countries are being addressed by many WTO members. These efforts must be carefully and constructively considered by all WTO members, by no means excluding the nations of Africa.
WTO Technical Assistance and Capacity Building Programs
African countries are significant beneficiaries of WTO technical assistance programmers. These activities aim at building and strengthening the capacity of African countries to take advantage of current WTO Agreements and also to negotiate more actively to promote and defend their legitimate interests. They are also aimed at enabling African countries to use effectively WTO dispute settlement procedures to protect their interests. Furthermore, the WTO Secretariat has been providing targeted assistance to the nine African countries engaged in accession negotiations to join the WTO. The WTO is supported by and works closely with other development partners, both international agencies and governments.
Beyond regular technical assistance programs, there are a number of dedicated mechanisms such as the Standards and Trade Development Facility (the STDF) and an Aid for Trade initiative – the Enhanced Integrated Framework (EIF). These bring together partners and resources to support least developed countries in harnessing trade for poverty reduction, inclusive growth and sustainable development.
(i) The STDF
Standards can either open or close a market to African exports. While tariffs may slow trade, inability to meet standards can stop trade entirely. To help developing countries meet international standards, the Standards and Trade Development Facility was formed. It is a joint venture of the WTO, UNCTAD, the World Health Organization, the OIE and the WTO, and is administered by the WTO. I serve on the steering committee of the STDF.
The assistance begins with grants for the preparation of projects. Africa is the largest beneficiary region of these grants. Examples include: reducing aflatoxin contamination in maize (Burkina Faso), improving the safety and quality of pepper (Cameroon), improving capacity to meet market requirements for sesame (Sudan), improving sanitary capacity for livestock exports (Ethiopia), the possibility of creating a foot and mouth disease free zone (Tanzania), fresh meat production (Zimbabwe), strengthening plant health capacity (Zambia, Guinea), improving the safety of fruits and vegetables (Uganda), addressing fruit fly challenges (Mozambique, South Africa), digitalizing pest surveillance (Nigeria), prioritizing sanitary and phytosanitary investments (Madagascar), and developing a national SPS strategy (Togo).
(ii) EIF and Aid for Trade
The Aid for Trade program aims to help developing countries, overcome supply-side and trade-related infrastructural obstacles which constrain their ability to fully engage in international trade. In adopting the Aid for Trade initiative at the Hong Kong Ministerial Conference in 2005, the WTO membership recognized that investments from both the private and public sector are vitally important to complement access to international markets secured through the multilateral trading system.
A new Aid for Trade work program for 2018-2019 adopted in May 2018 seeks to further develop analyses of how Aid for Trade can contribute to economic diversification and empowerment, with a focus on eliminating extreme poverty, particularly through the effective participation of women and young people in the economy. It will include issues of relevance to African countries such as addressing supply-side capacity and trade-related infrastructure constraints for micro, small and medium-sized enterprises (MSMEs), particularly in rural areas. Industrialization and structural transformation, digital connectivity and skills development, as well as sustainable development and access to energy, are all components of these activities.
The WTO houses a programme specifically dedicated to Aid for Trade, owned and implemented in LDCs. This programme, the Enhanced Integrated Framework, or EIF, channels more than a quarter of a billion dollars into these countries, the majority of which are in Africa. The predominant focus of the program is supporting agribusiness, with over two-thirds of projects being implemented here. For instance, Zambia, one of Africa’s largest exporters of honey to the EU, has increased exports of honey by 700% in the last five years. A key ingredient in this success has been the implementation of a project dedicated to training and equipping around six thousand beekeepers and connecting them to processors and markets. In Malawi, effectively connecting agricultural producers to markets increased sales by more than $47 million last year. At the same time, investments in small-scale soya and groundnut producers has resulted in a doubling of farmers’ incomes.
Recent WTO Agreements and Negotiations of Importance to African Countries
The WTO has delivered significant outcomes of critical importance to African countries in recent years. With respect to agriculture, an agreement was reached in December 2015 in Nairobi to ban agricultural export subsidies and discipline export measures with equivalent effect, including international food aid. (This makes a substantial and early contribution to United Nations Sustainable Development Goal 2 – ending hunger, food insecurity and malnutrition).
The Trade Facilitation Agreement, which was signed in December 2013 and entered into force in February 2017, when fully implemented, could reduce trade costs by around 15% and boost global trade by up to $1 trillion per year. The biggest gains will accrue to developing countries, including those in Africa. Streamlining, simplifying and standardizing customs procedures and reducing red tape alleviate administrative burdens and the duplication of functions. This will, in turn, increase trade flows, ultimately creating jobs and making a positive contribution to growth.
Cotton. There have also been some notable achievements on the trade front for cotton at the WTO since the Cotton 4 (Benin, Burkina Faso, Chad and Mali) Sectoral Initiative on Cotton launched in 2003. Under the December 2015 Nairobi Ministerial Decision on Cotton, developed countries and developing countries in a position to do so have committed to grant duty-free and quota-free market access for exports of cotton and cotton-related products from least-developed countries (LDCs). They also agreed on an accelerated timetable for the elimination of export subsidies for cotton. While WTO Members continue to negotiate the critical issue of limiting trade-distorting support to cotton, Ministers have also agreed to enhance transparency on all policy developments affecting cotton through biannual dedicated discussions. Funds are being raised for cotton-producing African countries to develop the cotton sector by, inter alia, improving local processing capacity and expanding cotton-to-textile value chains at the regional level.
Fisheries subsidies. WTO Members have recommitted themselves to reach before the next ministerial meeting in 2020 an agreement to limit fishery subsidies. This has particular importance for the coastal countries of Africa, whose fishermen rely on the ocean for their livelihoods. With good management policies, Africa could be a leading exporter of fish. This effort also is related to the core benefit of the WTO, the creation of peace and stability, in that depriving fishermen in some parts of Africa of their livelihoods is seen as one motivation for some turning to piracy. Where there is a uniform African position it must fully take into account the need of these coastal states.
Recent developments in the International Trading System and their Impact on African Countries
Crises can be an engine for positive change. The history of trade over the last century is often portrayed as an unbroken and immutable march of progress. In reality, there are cycles, periods of great stress followed by outpourings of energy, that in the end have led to positive outcomes. The greatest improvements in international economic governance appear to be born in upheaval.
Modern trade history begins with the building of high tariff walls in the early 1930s. This was followed by a burst of negotiating dynamism to sharply reduce tariffs on a reciprocal basis. The Second World War was followed by creation of the international economic institutions that fostered economic recovery and laid the foundations for remarkable world growth.
A quarter century later, in 1971, there was another economic crisis. The international monetary system proved to be unsustainable. The crisis ultimately led to the creation of the current floating exchange rate system, and for trade, the Tokyo Round of Multilateral Trade Negotiations which yielded the first successful non-tariff barrier agreements in the GATT. In 1993, the then GATT Director General, Arthur Dunkel, concluded that the perceived need for strengthening the world trading system, which resulted in the creation of the WTO, should be attributed to the aggressive use of unilateral measures by the United States in the 1980s.
That brings us to the present. The world trading system is experiencing yet another upheaval. It can be attributed to reactions to a series of causes – rising income inequality, changes in trade patterns, the movement of peoples, and above all technological change – all forces giving rise to populism and nationalism. Whatever the causes, it is clear that this is a time of systemic flux. The results again are unforeseeable. The open question is whether this generation of leadership can find and exploit whatever opportunities may exist for positive ends.
There is reason for optimism that the present challenges to international trade can be overcome. However, a positive result cannot be achieved through drift and indecision. It will take an enormous conscious effort on the part of all WTO Members, including African countries, to assure a positive outcome.
The Need for Engagement
The current circumstances must be met by WTO Members and other stakeholders with agility, intelligence and adaptability. It is not quite the case that whoever does not help set the menu ends up being on the menu, but those WTO Members failing to make a positive contribution to the attempt to shape change will be unlikely to derive benefit to the extent they would have from any changes made in existing trading arrangements had they made a positive contribution to the effort. African countries should support a strengthened multilateral trading system to facilitate world economic growth and be responsive to their needs.
The post-1945 international order, characterized largely by market economies, the rule of law, and rules-based global trade, is of great and continuing value. There is growing recognition among WTO Members of the necessity to update the system in terms of 21st century realities. Even the strongest critics of the current system conclude that if the WTO did not exist it would have to be created. A recent article by two analysts – Robert Kagan and Ivo Daalder – sets out a conclusion that many, but perhaps not all Members, have reached. “The strategies to sustain the present international order are much the same as the strategies that created it. But they need to be adapted and updated to meet new challenges and take advantage of new opportunities”.
What are the present challenges (and opportunities):
- The rise of a major new economic power creates trade friction. In the last quarter of the last century, this was Japan. This time it is an even larger nation, China, that has rapidly become a major factor in world trade.
- The discontent with, and consequent threatened disruption, of the WTO dispute settlement system by a major trading country, the United States.
- The growing recognition of the need for an updating of the existing rules by the four largest trading entities – the EU, the US, Japan and China – and a number of mid-sized and smaller economies.
- The dissatisfaction of many developing countries, particularly African countries, with the progress that has been made to spur development through trade.
There will be intensive discussions among WTO Members in the coming months of appropriate responses to current challenges. The world will not wait for change that unfolds at what has become the norm in international negotiations, measured in decades rather than a few intense years. And even that may be too long.
The GATT was, at least from this vantage point, characterized by pragmatism, a willingness at key moments of participants to understand the needs of others, and by a good deal of creativity. Each member must decide for itself what course it will support. What is certain is that greater contributions will be needed from all countries for the good of the trading system, contributions that go beyond the swapping of product and services concessions on a reciprocal basis.
Nelson Mandela and Kofi Annan, in separate speeches delivered at WTO meetings, emphasized above all that trade is needed to assist economic development in Africa. In 1998, Nelson Mandela spoke at the WTO, a relatively new organization, then in its fourth year. In his speech President Mandela stressed the importance of countries working together to ensure benefits for all. The occasion was the WTO’s celebration of the 50th anniversary of the founding of the GATT. His clear-eyed narrative was sober. Trade was not a panacea. He said, “trade does not of itself and in itself bring a better world.” Trade enables it.
In his speech to the WTO Members at the WTO’s 2005 Hong Kong Ministerial Conference, Kofi Annan noted that “the development case for open, equitable trade is not yet won”.
If either of these two remarkable leaders were standing here today, talking to you about the international trading system, I suspect that each would acknowledge the importance of the system and still be dissatisfied. In fact, all WTO Members should to some extent be dissatisfied. Constructive discontent can be an agent of positive change.
The hallmark of great leadership is never to abandon one’s aspirations. Nelson Mandela is perhaps best known for the fact that he never gave up, never gave in. African countries have a lot to gain from the multilateral trading system and they should not give up their aspiration to use international trade to address their numerous development challenges.
Trade is not a zero-sum game. It can make a positive difference for the economic betterment of all peoples. It can create the conditions for peace. That should not only be an aspiration, it must be a work plan. African countries should have the opportunity to take advantage of the rules-based multilateral trading system to achieve robust economic growth and sustainable development. This would not only be equitable but would also greatly benefit the world at large. British Prime Minister, Theresa May, before embarking on a recent trip to Africa, said that “Africa stands right on the cusp of playing a transformative role in the global economy” and that “a more prosperous, growing and trading Africa is in all of our interests”. I agree.
The potential for Africa to become a leading participant in world trade has long been recognised. Now is the time to work hard to make this a reality. African countries need to deepen their reforms to improve transparency, reduce trade costs, enhance competitiveness and make the continent attractive to foreign investors, particularly in the non-extractive sectors. The international community will welcome a stable and prosperous Africa and the WTO stands ready to do its part to ensure the full integration of African countries into the rules-based multilateral trading system.
In the present, those of us who are engaged in working with the international trading system have to make it function as well as we can. It is then our job to hand over to the next generation, the generation being trained here, in at least as good a condition as how we received it. Then the future will be in your hands, whether in business, civil society or in public policy in government or in international organizations. You can carry the multilateral trading system to levels that we can only imagine.
I will close with the words of Nelson Mandela,
“In commemorating the 50th Anniversary of the GATT…, South Africa chooses to look forward rather than deal with the imperfections of the past.
The extent to which all countries benefit will depend on how we, the Member States act in concert to shape the processes....
We are firmly of the belief that the existence of the GATT, and now the World Trade Organization, as a rules-based system, provides the foundation on which our deliberations can build in order to improve”.
I cannot improve upon that sentiment.
Thank you.
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SADC industrialisation: Where regional agendas meet domestic interests (ECDPM)
This paper looks at the political economy dynamics around regional industrialisation policy in SADC. It examines what drives regional industrialisation strategies in African RECs; the key actors and factors shaping regional industrialisation in SADC; and the resulting opportunities, different modalities and potential risks for donors who want to support such strategies. Despite the apparent logic for regional industrialisation strategies, it is not clear what the actual role and added value of regional organisations and policies are, or should be, in this domain. While SADC member states profess support for a regional industrialisation agenda, their domestic industrial development and other political objectives often lead them to adopt policies that protect national industries, often at the expense of their neighbours. Extract (pdf):
‘Meaningful participation’ by the private sector is seen as key for successful implementation of the SADC Industrialisation Strategy. So far this has been dominated by the South African private sector, especially large South African firms. This is unsurprising, however, as the ‘organised SADC private sector’ is largely comprised of South African firms.
‘Opportunities’ and entry points for external support exist in complex environments but the findings on political and economic dynamics emphasise the need for support to be flexible, iterative and adaptive - for example, many of the emerging dynamics on which regional collaboration on industrialisation could build are found beyond the formal agendas of regional organisations.
Nonetheless, regional organisations provide political legitimacy for regional cooperation on industrial development, which could bring about a more enabling environment for such dynamics, while there are crosscutting issues that are crucial to industrialisation, which are regional in nature (standards, trade barriers, regional infrastructure, etc), and hence which are central to SADC’s mandate.
Efforts to support the SADC industrialisation agenda should seek to: exploit the interest created by South Africa’s past Chairmanship of SADC; encourage South African collaboration with Namibia (current SADC Chair); explore and build on political traction and private sector agency in cross-country functional cooperation and problem-solving (such as infrastructure and corridor development). Opportunities for supporting domestically-led and sector-specific cross-country dynamics need to be explored to diversify the regional support portfolio beyond institutional strengthening of SADC institutions and also cover functional cross-country cooperation.
Different areas of engagement require different forms of engagement. A portfolio approach seems best suited to supporting regional industrialisation-related efforts at different levels and in adaptive ways, depending on the nature of the issues and the likely coalitions to emerge.
East Africa: National interests delay Customs Union, even as technology kicks in (The East African)
Nicholas Nesbit, chairman the East African Business Council, says the increase in imports and policies whose net effect is keeping East Africans in poverty can be blamed on partner states ignoring the voices of manufacturers and innovators and choosing instead, to listen to importers whose business depends on failing locally produced goods and service. Mr Nesbit who is also the managing director of the Nairobi-based arm of tech firm IBM, blames the EAC partner states tendency to listen to traders and not manufacturers and innovators for the EAC’s failure on its mandate. “EABC has not been as strong as it should be,” he says. A strong EABC would force national business associations to bring trade disputes to their regional apex body. He says that national business associations take their trade issues to their ministers of trade and the EAC, which fuels protectionism, since discussions at that level are usually nationalistic and inward looking. But Alex Mugire, deputy commissioner at Rwanda Revenue Authority, says a fully functional EABC wouldn’t solve East Africa’s tendency to favour implementation of sections of the Customs Union that encourage imports.
West Africa: Benin buys cement from China, we’re just 35km away – Dangote (National Wire)
Chairman of Dangote Group, Aliko Dangote, has called for conscious efforts that will deepen African regional market by African investors and governments for rapid growth and development of the continent’s economy. Speaking in London on Monday during “One to One Conversation” at the on-going 5th annual Financial Times African Summit, Dangote said the key to Africa’s economic growth and strength is in the development of the regional market, saying “Regional markets in Africa must work.” Citing an instance of his own experience, the Africa’s richest man referred to the case of neighbouring Benin Republic where the country continues to import cement from China while his Nigerian factory is only 35 miles away from the border. “We need to trade with ourselves”, Dangote stated as he spoke glowingly about the prospect of African economy, the free trade agreement and the availability of huge raw materials to attract investors.
Prompted by the Editor of the Newspaper, Lionel Barber to speak about difficult markets like Tanzania and Ethiopia, Dangote dismissed the issue difficulty and re-affirmed “our aim is to always provide jobs and worth. As an African investor I don’t want any investor anywhere in Africa to have a bad experience.” Dangote repeated his central mantra for African growth urging the reduction of exports of raw materials to other continent but create greater wealth within African economies: “We need to continue to transform the structure of African economies”. He alluded to his company’s entry into the Ghana Sugar market, pointing that he is further expanding his sugar business to Ghana for the main reason of helping to revitalize its economy. “We are going to help Ghana grow its own sugar for the first time.” [Zambia: Moroccan firm in talks to revamp Nitrogen Chemicals]
Lessons from foregone mineral opportunities: The imperative for diversification in Ghana (Goxi)
In the case of Ghana, despite relatively strong performances, worrying trends abound. While Ghana ranks 8th in Africa as per the Ibrahim Index, its score has been slightly declining in recent years. Similar to Zambia, debt-to-GNI was brought down markedly but has begun to steadily rise from an average around 30% per year to over 50% by 2016. Ghana’s mineral rents have played an outsized role in some areas, accounting for 22% of government revenue and 45.5% of exports as of 2016. Yet it has not been similarly significant for income and job creation (see Figure 2), while manufacturing value added, in comparison, stagnates below 5%. In light of these developments, there are a number of takeaway messages of the crisis we see unfolding for other mineral producers, many of which are echoed in ongoing work of the African Minerals Development Centre as it assists countries in implementing the Africa Mining Vision. [The author: John Sloan]
ECOWAS to sanction members disobeying court judgments (ThisDay)
The Economic Community of West African States has disclosed that plans have been concluded to punish member states that are in the habit of disregarding and disobeying judgments of the ECOWAS Court of Justice. The President of the ECOWAS Court of Justice, Justice Edward Asante, made the disclosure Monday while declaring open a Regional Capacity Building Workshop for Law Enforcement Agencies.
Ghana: There will be massive infrastructural development next year – Bawumia (GhanaWeb)
The Vice President Dr Mahamudu Bawumia has announced plans by the government to embark on a massive infrastructural development across the country in 2019. “We are going to be tackling major roads, bridges, interchanges and so on across the country. There is a major infrastructure project on the way and the whole of Ghana, by the grace of God, will feel it when it starts in 2019”, he said, while addressing the closing session of a five-day capacity building conference for Metropolitan, Municipal and District Chief Executives in Accra. Dr Bawumia said the Sinohydro project would be implemented on a full scale next year, and indicated that the government would be spending almost $1.5bn out of the $2bn Sinohydro facility on the road sector. He mentioned the Eastern Corridor Road as one of the projects that would be benefiting from the road project. [China Affair: Our eyes are wide open – Akufo-Addo]
Trump reaches for checkbook diplomacy to counter China (Foreign Policy)
Trump came into office planning to shut down OPIC, which uses government funds to encourage private sector investment in developing countries, especially in Africa. Less than two years later, the administration is driving a massive expansion of the program, doubling its financing authority to $60 billion and freeing it to make more kinds of investments in more types of projects. The reason for the turnaround? China and its aggressive use of finance in the developing world. The US overhaul, said Ray Washburne, the current head of OPIC, “offers a financially-sound alternative to the state-directed initiatives pursued by China that have left many developing countries deep in debt.” Some of the changes to US development finance will likely take years to fully implement, including the ability to make sovereign loans, conduct financing in local currencies, and purchase equity stakes in new projects. [The author: Keith Johnson; Quartz Africa: The reason American presidents keep visiting the same few African countries]
Today’s Quick Link: IMF’s October 2018 World Economic Outlook: the report, press conference transcript, Maurice Obstfeld blog |
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National interests delay EAC Customs Union, even as technology kicks in
Fourteen years since East Africa’s Customs Union became operational, the East African Community (EAC) has thrice postponed the date of its full implementation.
The region was expected to achieve full implementation of the Customs Union in 2010, but has postponed the deadline indefinitely as issues such as the harmonisation of internal and joint collection of taxes are yet to be thrashed out.
Subash Patel, chairman of the Confederation of Tanzanian Industries, says that even though the Common External Tariff had been fully achieved, partner states are now choosing to go it alone because of slow implementation at the regional level.
He cites the case of Uganda and Kenya, which have gone ahead and implemented the 35 per cent external tariff on steel products to protect their industries.
Tanzania, on the other hand, has failed to do so, something that Mr Patel says is hampering the growth of its steel industry, as substandard and cheaper steel products from Asia flood the market.
In its current form, experts say, the EAC Customs Union is benefiting a handful of people in the region and a larger number in India and China. This is out of sync with the premise that EAC integration is pro-East Africans.
Currently, Customs Union implementation benefits politically connected traders importing goods into the EAC.
Nicholas Nesbit, chairman the East African Business Council, says the increase in imports and policies whose net effect is keeping East Africans in poverty can be blamed on partner states ignoring the voices of manufacturers and innovators and choosing instead, to listen to importers whose business depends on failing locally produced goods and service.
Mr Nesbit who is also the managing director of the Nairobi-based arm of tech firm IBM, blames the EAC partner states tendency to listen to traders and not manufacturers and innovators for the EAC’s failure on its mandate.
“EABC has not been as strong as it should be,” he says. A strong EABC would force national business associations to bring trade disputes to their regional apex body.
Trade disputes
He says that national business associations take their trade issues to their ministers of trade and the EAC, which fuels protectionism, since discussions at that level are usually nationalistic and inward looking.
But Alex Mugire, deputy commissioner at Rwanda Revenue Authority, says a fully functional EABC wouldn’t solve East Africa’s tendency to favour implementation of sections of the Customs Union that encourage imports.
Mr Mugire says that trade facilitation that cover common external tariff, the non-trade barriers and the ability of importers to pay their taxes and clear goods before reaching East Africa’s ports of entry Dar es Salaam and Mombasa is an easier process to implement.
The sections of the Single Customs Territory on the construction of one-stop-border posts, ability to track goods and the interlinking of Customs systems are easier to implement when dealing with imports.
As a result, Mr Mugire says about 70 per cent of the Single Customs Territory has been implemented since 2014 and this largely on account of imports.
The implementation of a SCT targeting exports in Uganda started for a few selected goods in August. In Rwanda, the Single Customs Territory for selected exports started in September.
EAC has also failed to come up with a deal on internal taxes like value added tax, excise duty and income taxes.
Mr Nesbit says failure to agree on internal taxes has fuelled the disputes over sensitive products like sugar, cooking oil and rice.
Different experts agree that the EAC has failed to harmonise internal taxes because these can be used to block products from the region at the slightest excuse.
“Each country is protecting its revenue. This makes trading in the region difficult,” said Businge Rwabwogo the general manager in charge of operations at the Mukwano Group of Companies.
Mukwano Group is one of the companies currently importing palm oil from India for refining, because of the war in South Sudan, a previous blockade by Rwanda and a current one by Tanzania has affected their ability to expand their sunflower cooking oil and fat manufacturing business.
By importing palm oil from India, Mr Rwabwogo says East Africans are losing out on jobs.
Arm-twisting
Currently, Mukwano spends about Ush80 billion ($21 million) in northern Uganda to provide advisory services, seeds, post handling advice and the purchase of sunflower and soya seeds for their cooking business.
He adds that the company would be happy to expand to places such as Shinyanga in Tanzania, if the quantity of sunflower produced and market size of resulting oil was right.
Instead of allowing local companies to expand, make enough capital to expand naturally into the region, EAC partner states prefer to arm-twist companies by imposing tariffs.
Ben Usaje the Tanzanian Commissioner for Customs calls this introduction of tariffs by some as being co-operative while at the same time remaining competitive.
“We are co-operating but we have never ceased to compete. It is survival for the fittest,” he says.
Mr Rwabwogo says Mukwano has been reduced to importing palm from India, because their competing for investors or protecting existing ones.
In the process, this fragments the EAC into small national markets instead of allowing companies to enjoy the economies of scale that would come with selling to the region’s 170 million population.
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African governments’ debt payments double in just two years
Debt problems on the African continent are increasing, with external government debt payments doubling in two years
In new analysis released ahead of the IMF and World Bank Annual Meetings in Bali, Indonesia, Jubilee Debt Campaign show that China accounts for one-fifth of external debt owed by African governments.
Recent news reports have claimed that China is responsible for causing new debt traps on the African continent. The new figures show that China’s role as a lender on the continent has indeed been growing, but its relative importance is less than often stated, especially in regard to countries currently in debt crisis.
The briefing, ‘Africa’s rising debt crisis: Who is the debt owed to?’ shows that debt problems are increasing rapidly for many African countries, with average government external debt payments doubling in two years, from an average of 5.9% of government revenue in 2015 to 11.8% in 2017.
The briefing also shows that of external debt owed by African governments, around 20% is owed to China, 35% is owed to multilateral lenders, 32% to private lenders and 13% to other governments. However, interest rates tend to be higher on private sector loans, which therefore account for 55% of interest payments, compared to China which accounts for 17% of interest payments.
The briefing also investigates who debt is owed to by the countries that currently have the greatest debt problems. Of the 16 African countries rated by the IMF as in debt distress or at high risk of being so, on average 15% of their debt is owed to China. China is therefore on average a less significant lender in debt crisis countries, than across the whole continent.
Tim Jones, Economist at the Jubilee Debt Campaign, said:
“Debt problems are worsening on the African continent, but many lenders bear responsibility, not just China. We need new rules to make all lenders publicly disclose loans to governments at the time they are given. Furthermore, the IMF needs to stop responding to debt crises by giving loans which bailout other lenders, from China to Western companies, incentivising them to continue lending recklessly. Instead, lenders need to be made to restructure and reduce debts.”
The data in the briefing comes from the IMF, World Bank and the China-Africa Research Initiative at John Hopkins University (CARI).
Loans to African governments
The most comprehensive data on loans to African governments from China comes from CARI. CARI says there have been $143 billion of loans from Chinese state institutions, and Chinese private banks, to African governments between 2000 and 2017.
Of the data CARI provides,[1] at least 80% of these loans are from organisations owned by the Chinese state, but up to 20% could be from private companies. These loans increased up to 2013, then fell back, before a spike in 2016.
The CARI data for the 48 countries is that $138 billion was lent between 2000 and 2017, $132 billion of which was between 2006 and 2017.
The Forum on China-Africa Cooperation in September 2018 announced a target of $60 billion of aid investment and loans to Africa, the same amount as at the 2015 summit. Future lending is therefore likely to continue at a similar rate as 2015-2017.
The World Bank does not give data on disbursements by, or debt owed, to China, but it does provide it on those from a broader group of creditors. The World Bank reports on lending by other governments (known as ‘bilateral’ loans), loans by multilateral institutions (and within this loans by the IMF and World Bank) and loans by the private sector from outside the country concerned.
For the 48 African countries on which it has data, the World Bank says $157 billion was lent by other governments to African governments from 2006 to 2017. This is only $25 billion (19%) more than lent by ‘China’ in total.
However, the Chinese figures above could be up to 20% loans from private banks, which would be included elsewhere in the World Bank figures. And signed loans may not all be disbursed at the time they are agreed, whereas the World Bank figure are based on actual disbursements. A final possibility is that not all Chinese government lending to African governments is included in the World Bank figures, because it has not been reported to the World Bank by either borrower or lender.
At most, Chinese government lending accounts for 80% of loans to African governments from other governments between 2006-2017 (and for 2016 reaches 97%). For the reasons stated above it is likely to be significantly less.
Disbursements from other lenders
In total, according to the World Bank, loans to African governments from external lenders amount to $460 billion between 2006 and 2017. This would mean that if China has lent $132 billion over this period, it would account for 29% of total lending. However, this percentage may be overstating Chinese lending for two reasons.
Firstly, the CARI data definition of loan contracts being signed may include loans which have not been disbursed, whereas the World Bank data includes only disbursements. Secondly, the World Bank data may not include all the Chinese loans recorded by CARI, which means total loans from all lenders have been more than $460 billion, so the $132 billion of loans by China according to CARI would be a lower percentage.
Debt payments
According to the World Bank, African governments made $12.8 billion of debt payments to other governments in 2016, in principal and interest, which is 38% of total external debt payments. $13.2 billion was paid to private creditors (40%), and $7.3 billion to multilateral institutions (22%), making total external debt payments of $33.3 billion. Multilateral payments are lower than their relative share of the debt, because interest payments on multilateral debt tends to be lower, and multilateral debt has longer maturities.
Debt interest
The higher cost of private sector loans is seen through debt interest payments. According to the World Bank, in 2016 total external debt interest paid to other governments by African governments was $3.1 billion, compared to $6 billion to private external creditors. $1.8 billion was paid to multilateral institutions, so total external interest paid was $10.9 billion. This means private creditors account for 55% of external interest payments, bilateral 28% and multilateral 17%.
[1] The CARI data is available for 54 African countries. However, the World Bank, a key source of data on wider creditor groupings, only has data for 48 countries. Therefore, the analysis in this briefing focuses on those 48 countries covered by both CARI and the World Bank.
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tralac’s Daily News Selection
The African Continental Free Trade Area and its implications for India-Africa trade (Observer Research Foundation)
The AfCFTA will provide a number of opportunities for the Indian firms and investors to tap into a larger, unified, simplified and more robust African market. It is critical for India to view Africa not just as a destination for short-term returns but as a partner for medium and long-term economic growth. An important component affecting the volumes of trade with Africa is the “third-country fabric” provision. Various Asian countries’ traders and investors, including those from India, are reaching out to the African markets as a market of “choice”. This is often perceived as a way to indirectly take advantage of the preferential trade programmes offered to the African countries by the third parties. A case in point is the African growth and Opportunities Act of the US, under which some African countries are eligible to source raw materials from third countries like India and China, to make clothes and then export to US duty-free. Such provisions help to shield African industries such as textiles and apparel, which have benefitted from huge amounts of Indian and Chinese investments in African export processing zones. Therefore, to establish a long-term partnership with Africa, India should not target African markets only for its unilateral preferences granted by the third parties.
To mitigate the expected trade losses for the African countries resulting from the establishment of MRTAs, especially the RCEP, India and Africa must build a solid partnership to boost their bilateral trade and investment flows. To this end, India’s active support towards Africa’s ongoing continental integration efforts can serve as basis for negotiations aimed at reciprocal market access and investment opportunities. It is important to note that positive outcomes for the India-Africa trade and investment partnership are hinged on Africa having sufficiently integrated markets, enhanced regional and continental connectivity, and improved infrastructure facilities. These will, in turn, help the African countries to address the supply-side constraints, remove bottlenecks, and move up the regional value chains. The African Trade Policy Centre of the ECA and CII must continue to work closely to identify the sectors that offer opportunities for development in Africa in the context of AfCFTA reform. [The author: Abhishek Mishra; Related ATPC, CII study: Deepening Africa-India trade and investment partnership]
SADC-EU Economic Partnership Agreement: the need for civil society engagement (Daily Maverick)
How should civil society and other interested stakeholders engage with this agreement, if at all? What should be the form and content of that engagement? Civil society should engage, first to demand a formal mechanism for citizens engagement and secondly to influence the implementation. While the EU has a mechanism for government-civil society engagement on the agreement, SADC countries do not, nor have they demonstrated a willingness to set up one. This is unfortunate, as it goes against the now widely accepted principles of civic participation in global governance. And this is in spite of the fact that both the SADC and AU have otherwise come a long way in providing for engagement with civil society in their processes. It is useful to point out that though the agreement has been finalised, mechanisms for its implementation are still being developed. This will entail alignment with domestic priorities, regional trade frameworks and processes. In this, CSOs have a role. There are therefore a number of areas to watch out for as the agreement enters into implementation phase. [The author: Showers Mawowa] [Related tralacBlog by Talkmore Chidede: Identifying the role of civil society in the SADC EPA]
AERC: Global agricultural trade liberalization and its implications for Sub-Saharan Africa
TICAD Ministerial Meeting:
Selected updates
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Opening ceremony: remarks by Mr Taro Kono (Minister for Foreign Affairs of Japan). Looking at some positive developments, Japan’s foreign direct investment in Africa has increased by more than five times since 2000 and Japanese companies have established more than 800 offices in Africa now. The first Japan-Africa Public-Private Economic Forum was also held in May in Johannesburg and a Public and Private Sector Joint Mission was sent to Rwanda and Zambia in July. On a related point, I would like to reiterate the importance of sound debt management in order to enable sustainable development for Africa with African ownership. International assistance should be provided in accordance with international standards such as transparency, openness, and economic efficiency, in view of life-cycle costs as well as debt sustainability of recipient countries. These principles are crucial components of Japan’s “Quality Infrastructure” initiative, based on which Japan is supporting enhanced connectivity throughout the entire African continent and beyond. In keeping with these ideas, Japan encourages African efforts toward economic transformation, as provided for in “Agenda 2063.” To realize Africa’s economic transformation, I would like to refer to the importance of free trade. There is increasing uncertainty surrounding the current international world order and widespread use of unilateral actions is eroding multilateralism. Japan, however, remains determined to maintain and develop free and fair multilateral and plurilateral trading systems.
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Remarks by Mr Kenji Yamada (Parliamentary Vice-Minister for Foreign Affairs): Plenary 2: Economic diversification and value addition; Plenary 3: Human security; Plenary 4: Connectivity
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Partnering for Africa’s future: Japan and UNDP
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Japan-Africa Business Dialogue: Looking ahead to TICAD 7. Official figures estimate that in 2017, 795 Japanese corporations were operating in the continent, up 7.7% from 738 in 2016.
Women’s economic empowerment and WTO trade negotiations: potential implications for LDC, SVEs and SSA countries (Commonwealth)
It is not clear whether gender issues are to be included in discussions at the WTO. What is apparent is that some LDCs, SVEs and SSA countries support the JDTWEE, which seeks to provide a framework for making trade and development policies more gender-responsive. In this regard, it is crucial that LDCs, SVEs and SSA countries acquire a better understanding of the impacts of reforming their policies, and the implications of possible negotiations on multilateral rules on gender and trade for their economies, and for women in particular, so they can more meaningfully participate in trade and gender activities at the WTO. In addition, it is critical that these countries address the barriers that constrain women from participating in trade for inclusive economic growth and development, if they are to move further with gender integration and maximise the benefits from trade. [The author: Collin Zhuawu]
Burkina Faso, Senegal and Togo look hard at e-commerce opportunities (UNCTAD)
Burkina Faso, Senegal and Togo (pdf) need far-reaching reforms of their infrastructure and legal systems to benefit from e-commerce, new studies of the West African countries by UNCTAD have revealed. The reports will be presented at a regional e-commerce workshop organized by UNCTAD and ECOWAS in Ouagadougou, 9–10 October. The workshop, the first step in the preparation of a regional plan, will be inaugurated by Ms. Durant in the presence of the ECOWAS agriculture, water resources and the environment commissioner Jonas Gbian and Daouda Ouedraogo, a representative of Burkina Faso’s commerce, industry and handicrafts ministry. While taking account of each country’s specific circumstances, the UNCTAD evaluations highlighted the common obstacles they face. UNCTAD Deputy Secretary-General Isabelle Durant said: “This is a win-win strategy, which must be pursued because e-commerce is now a key gateway to foreign markets.”
Digital Economy enabling environment guide: key areas of dialogue for business and policymakers (CIPE, NML)
Updates from Tanzania
Industry Minister says government doesn’t aim to put a ban on exports (The Citizen)
The Minister for Industry, Trade and Investment, Mr Charles Mwijage said on Thursday October 4 that, as a minister, he cannot put restrictions on exports by local manufacturers. “But I have to ensure that what’s produced locally, satisfies local needs,’’ he said during the Mwananchi Thought Leadership Forum in Dar es Salaam. The forum brought together stakeholders to discuss opportunities, challenges and solutions for Tanzania as the country seeks to graduate into a semi industrialized middle income economy by the year 2025. “The middle income economy that we want to build is one where every Tanzanian earns $3000 a day and not $1000. Let’s remain calm. We just have to have to maintain peace and good governance,” he said.
New TPSF chairman’s five priorities (The Citizen)
The new chairman for Tanzania Private Sector Foundation, Salum Shamte will prioritise five key issues as he seeks to play a key role in fostering dialogue between members of the business community and the government for the sake of improving the country’s business climate. His first task will be to make a close follow-up on implementation of the Blueprint which the government adopted in May this year to set the stage for a raft of amendments to laws and regulations governing the conduct of businesses in Tanzania. The blueprint – prepared after thorough consultations with various private sector associations and World Bank officials – will see the government initiating amendments of various laws including those governing Value Added Tax, Indicative prices for imports, Immigration and Labour, Social Security and environmental management among others. The second priority area, according to Mr Shamte, is to broaden and strengthen dialogue between the government and the private sector by bringing it down to village, ward and district levels.
Today’s Quick Links: Egyptian ‘Goldfinger’ targets African expansion After troubles in Myanmar, Facebook charges ahead in Africa Kenya’s $800m flower market is seeing a boost, thanks to China Wandile Sihlobo: Doubts about Zim’s maize production estimate presents opportunity for SA Zimbabwe: ‘Rand answer to export competitiveness’ South Africa: Concerns over levy on bone-in chicken cuts ECOWAS Commission urges for a more dynamic and flexible trade rules of origin Seychelles to host the African Shipping Line Investment Forum in March 2019 Challenges for central banking: perspectives from Latin America |
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TICAD Ministerial Meeting: Japan a strategic investor for SA
Japan remains a strategic and important long-term investor in different sectors of the economy both in South Africa and the rest of Africa, says Deputy Minister of Trade and Industry, Mr. Bulelani Magwanishe.
“Japan has over the years invested in the automotive sector, information and communication technology (ICT) and as South Africa, we will continuously cooperate and work with them for future investments.
“With that said, there are still vast opportunities for them to invest and collaborate with us in productive sectors like energy, agro-processing, ICT and skills development,” said Magwanishe on Monday.
The Deputy Minister was speaking during a breakfast engagement with Japanese investors hosted on the sidelines of the Tokyo International Conference on African Development (TICAD) Ministerial meeting in Tokyo.
Magwanishe also congratulated Sumitomo rubber industries on the recent launch of their R970 million truck and bus tyre plant in Ladysmith, KwaZulu-Natal. He also extended a congratulatory word on Tokyo Marine’s acquisition of a 22.2% stake in South Africa’s Hollard Insurance to the tune of R5 billion.
Furthermore, Magwanishe invited potential investors to attend the planned Presidential Investment Conference that will take place later this month.
TICAD
Magwanishe said TICAD remains important for the African Union, as it has the potential to support African countries to industrialise their economies; create sustainable, inclusive growth and with it, sustainable employment opportunities and a better future for their people.
The opening ceremony of TICAD got underway on Saturday. The Meeting focused primarily on the review of progress made by the TICAD process since the conclusion of the 6th TICAD Summit, hosted in Nairobi, Kenya in August 2016, and the TICAD Ministerial Review Meeting, concluded in Maputo, Mozambique in August 2017.
TICAD was launched in 1993 by the Japanese government to promote Africa’s development, peace and security, through the strengthening of relations in multilateral cooperation and partnership.
Last month, South Africa’s Department of Trade and Industry (dti) led a week-long investment mission to the island nation. The mission was part of government’s investment drive to attract $100 billion worth of investments in the next five years.
Magwanishe was accompanied by Deputy Minister Luwellyn Landers, on behalf of the Minister of International Relations and Cooperation, Ms Lindiwe Sisulu.
Remarks by H.E. Taro Kono, Minister for Foreign Affairs of Japan, at the Closing Session of the TICAD Ministerial Meeting
I would like to express my sincere appreciation for your active contribution over the last two days. We could say that we had very fruitful discussions that have paved the way forward toward TICAD 7.
The gist of the discussions is outlined in the Co-chairs Summary that has just been distributed to you, but let me briefly go through the highlights.
In Plenary 1, we reviewed positive macroeconomic trends and commended recent achievements such as the signing of the Agreement Establishing the African Continental Free Trade Area (AfCFTA), as well as national and regional efforts to improve societal resilience in areas including health, education, and disaster risk reduction. We also saw examples of improved governance such as peaceful power transitions and movements towards peace in some African countries. On the other hand, we recognized that challenges remain in every field, including the issue of debt sustainability. I also reconfirmed the high expectations from Africa for increased private investment to the continent, especially towards Japanese companies. Japan is committed to enhancing public and private partnership with Africa.
In Plenary 2, we reaffirmed that economic diversification and value addition are necessary for sustainable development. As potential drivers of economic and social transformation, we identified areas including: modernization of the agricultural sector; fostering of Micro, Small and Medium Enterprises (MSMEs); and promotion of Science, Technology and Innovation (STI). We also reiterated the importance of enhancing the blue economy in tandem with promoting maritime security and the rule of law. We also recognized the need to address some bottlenecks urgently, as unsustainable debts and insufficient business environments hinder public-private investment. From this perspective, I was encouraged by the efforts of African counterparts to promote a fair, open and transparent business environment.
In Plenary 3, we identified progress made in the area of human security. We affirmed that the promotion of universal health coverage (UHC) will remain key to enhancing the resilience and productivity of societies. We also emphasized the importance of disaster risk reduction (DRR) as African countries could be the most vulnerable to climate change impacts. Issues of rapid urbanization and demographic change were other important topics as well. Furthermore, we reaffirmed our determination to build a peaceful and stable region, placing importance on good governance, rule of law, and human rights. In these respects, it goes without saying that to find African solutions, African voices should be duly heard and reflected.
In Plenary 4, we took up the issue of “connectivity”. We developed our thoughts on how to enhance connectivity in terms of physical connectivity through quality infrastructure, connectivity through digital infrastructure and institutional harmonization, and people-to-people connectivity through exchange of people including in tourism, culture, sport and academia. We agreed that key infrastructure, including international ports, needs to be operated in a fair, open, and transparent manner.
In conclusion, I am confident that we are fully committed to working together towards the success of TICAD 7 and realization of Agenda 2063 and SDGs through the TICAD process.
Let me thank the co-organizers once again for their hard work and the tremendous amount of time they dedicated to making this meeting a success. I would also like to express my heartfelt appreciation to every single participant for your great contributions to the meeting. My special gratitude to Rwanda and Egypt, the incumbent and incoming AU chairs.
Our next destination is Yokohama. We will gather again next year at the end of August with increased momentum toward materializing our aspirations for development in Africa.
We look forward to seeing your Heads of States at the Summit next year.
I thank you.
Statement by H.E. Mr. Taro Kono at the Opening Ceremony
Having attended the United Nations General Assembly last month, I renewed my recognition that the world is facing greater uncertainty than ever before. As we believe Africa would be the most vulnerable region to such a climate, we are fully committed to working shoulder to shoulder with Africa.
It is my great pleasure to welcome my African colleagues to this meeting. I visited Maputo to chair the last TICAD Ministerial Meeting. It was one of my first trips as Minister for Foreign Affairs and the warm welcome I received in Maputo made it all the more memorable. Since then, there have been many significant events to enhance ties between Africa and Japan.
Take high-level exchanges to begin with. President Rajaonarimanpianina of Madagascar and President Sall of Senegal made official visits to Japan. Five former presidents, H.E. Mr. Chissano, H.E. Mr. Soglo, H.E. Mr. Mkapa, H.E. Chief Obasanjo and H.E. Mr. Mbeki, the ‘Founding fathers’ of Africa, also came to Tokyo in August to discuss how to realize peace and stability in Africa. And from Japan, Mr. Toshimitsu Motegi, Minister for Economic Revitalization, Mr. Hiroshige Seko, Minister for Economy, Trade and Industry, and myself visited Africa.
We have also been greatly encouraged by a number of touching messages from African friends in relation to the disasters caused by rains, typhoons and earthquakes that hit Japan over the past years. I would like to once again express my gratitude for those messages of solidarity. Thank you so much.
Our policies towards Africa have been shaped by our own experiences, which can be expressed in our belief that “the strength of a country lies in its people.”
This year marks the 150th anniversary of the Meiji Restoration of 1868, which was a turning point for Japan. In the years that followed, Japan established the basis of its democracy and realized significant development, while emphasizing education, human resource development, socio-economic reforms, and the rule of law.
We also made a miraculous revival after the World War II, thanks to generous international assistance and with self-help efforts based on the resilience we had built since the Meiji era.
Based on this success, as an emerging donor, Japan later applied its unique experience to Asia, which proved to be effective. I would like to reemphasize our firm resolve to further support Africa’s efforts, while respecting Africa’s ownership and focusing on empowerment of its people.
From this perspective, I would like to reiterate that Japan supports democracy in Africa, but at the same time, we highly value Africa’s own efforts to find “African solutions to African problems” in promoting peace and security. Japan appreciates the positive trend in eastern Africa, and stresses the importance of institution building as the foundation for peace and stability.
Japan is promoting proactively to realize a free and open Indo-Pacific, to connect Africa all the way to the coast of North and South America through Indian Ocean and-Pacific Ocean. We must maintain a free and open maritime order and freedom of navigation based on the rule of law. Any maritime disputes should be resolved in a fair and peaceful manner based on international law, but never by force. It is our wish to share such a world with Africa.
On the economic front, we have been promoting African economic transformation with an emphasis on human resource development and technology transfer, in close partnership with our private sector. Reflecting our belief in empowering people, Japanese companies investing in Africa such as TOYOTA and Chiyoda Corporation are training local people in the same manner as they have done in Japan.
Looking at some positive developments, Japan’s foreign direct investment in Africa has increased by more than five times since 2000 and Japanese companies have established more than 800 offices in Africa now. The first Japan-Africa Public-Private Economic Forum was also held in May in Johannesburg and a Public and Private Sector Joint Mission was sent to Rwanda and Zambia in July.
It is also encouraging to see the various business side events held yesterday afternoon and this morning, which some of you may have attended. Especially Keidanren, this morning the largest business federation and major Japanese corporations willing to further invest in Africa held a side event. I hope you have attended in the event and talked with Mr. Sakakibara, President of Keidanren about the more investment in your country.
On a related point, I would like to reiterate the importance of sound debt management in order to enable sustainable development for Africa with African ownership. International assistance should be provided in accordance with international standards such as transparency, openness, and economic efficiency, in view of life-cycle costs as well as debt sustainability of recipient countries. These principles are crucial components of Japan’s “Quality Infrastructure” initiative, based on which Japan is supporting enhanced connectivity throughout the entire African continent and beyond. In keeping with these ideas, Japan encourages African efforts toward economic transformation, as provided for in “Agenda 2063”.
To realize Africa’s economic transformation, I would like to refer to the importance of free trade. There is increasing uncertainty surrounding the current international world order and widespread use of unilateral actions is eroding multilateralism. Japan, however, remains determined to maintain and develop free and fair multilateral and plurilateral trading systems.
Now, let us remind ourselves that our TICAD process is created by all stakeholders, including co-organizers, participating countries, international organizations, civil society, and the private sector. Transparency and consistency are both key to this process. I would like to underline Japan’s determination to maintain and further develop this unique, transparent, and inclusive TICAD framework in close collaboration with the participating parties.
Last but not least, I would like to take this opportunity to express my sincere gratitude to you all for your cooperation on certain global issues to which Japan also attaches great importance, such as UN Security Council reform and a comprehensive resolution of outstanding issues of concern regarding North Korea, including the abductions, nuclear and missile development. We hope to work continuously with Africa on these challenges to realize a better future for all.
Before concluding my speech, I would like to announce that even if a group, which claims itself as a “State”, which Japan does not recognize, was sitting in this room, this fact does not mean that Japan in any way implicitly or explicitly recognizes it as state. And I would like to make clear that it is not allowed to put any name plate other than African Union, co-host organization and Japan. It is also not allowed to put any flag other than of African Union, co-host organization and Japan in the Plenary room including on the desk. Anybody who disrupts order may be asked to leave the Plenary room.
Thank you.
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Burkina Faso, Senegal and Togo look hard at e-commerce opportunities
Representatives of West African countries are gathering in Burkina Faso to consider their e-commerce future and what needs to be done to realise it.
Burkina Faso, Senegal and Togo need far-reaching reforms of their infrastructure and legal systems to benefit from e-commerce, new studies of the West African countries by UNCTAD have revealed.
The reports will be presented at a regional e-commerce workshop organized by UNCTAD and the Economic Community of West African States (ECOWAS) in Ouagadougou, Burkina Faso, on 9-10 October.
“Studies carried out by UNCTAD show that vast reform projects are needed for Burkina Faso, Senegal and Togo to seize fully the development opportunities offered by e-commerce, and that they will require ambitious actions on the part of governments. UNCTAD is here to help them,” UNCTAD Deputy Secretary-General Isabelle Durant said.
“This is a win-win strategy, which must be pursued because e-commerce is now a key gateway to foreign markets.”
The workshop, the first step in the preparation of a regional plan, will be inaugurated by Ms. Durant in the presence of the ECOWAS agriculture, water resources and the environment commissioner Jonas Gbian and Daouda Ouedraogo, a representative of Burkina Faso’s commerce, industry and handicrafts ministry.
While taking account of each country’s specific circumstances, the UNCTAD evaluations highlighted the common obstacles they face.
Although each is committed to building a digital ecosystem, none currently have a dedicated e-commerce strategy. And low-levels of internet accessibility and service quality, due to a lack of competition in the telecommunications sector, is a significant obstacle to the digital growth.
Weak and costly hard infrastructure, and logistics services that are not well integrated by operators, make deliveries of consumer good bought or sold online to “the last mile” often impossible.
Despite increased dynamism in the development of electronic payment systems, competition remains limited and online payments remain marginal. Cash payments on delivery are standard.
Although legal frameworks comply with ECOWAS regulations, their implementation remains insufficient and takes little account of the emerging aspects of the digital ecosystem.
Meanwhile, a significant gap remains between the needs of businesses and the knowledge of students, with schooling oriented towards traditional commerce.
Finally, Burkina Faso, Senegal and Togo share difficulties accessing finance to support e-commerce ventures.
Burkina Faso: starting start-ups
The assessment found that e-commerce expansion is taking place mainly in the informal economy, through private classifieds sites and social networks, while a small number of professional operators have developed platforms covering sectors such as agribusiness, clothing, IT and household appliances.
“Burkina Faso must capitalize on the strengths identified by the study: the process towards the digitalization of public services, a competitive telecommunications sector, the development of broadband internet infrastructure, a science park and dynamic start-ups. The proposed roadmap will enable us to accelerate the country’s digitization,” said Burkina Faso’s commerce, industry and handicrafts minister Harouna Kabore.
Under the aegis of Burkina Faso’s Plan National de Développement Économique et Social, the “Burkina Start-Ups” programme financially supports start-ups. But their growth and structuring as companies often remain uncertain.
Senegal: relatively dynamic
Dakar has become a laboratory of tech start-ups. Fintech players are already trying to penetrate the local market by forming strategic partnerships.
The e-commerce sector in Senegal is relatively dynamic, compared to many of its West African neighbours. Internationally renowned firms, such as Jumia, have established a strong presence by relying on the local market and the Senegalese diaspora abroad. Others, on a smaller scale, are trying to find a place in a market destined to grow.
However, apart from a small number of operators, e-commerce is developing mainly in the informal economy, through private classified sites, aggregator sites and social networks.
“The impact of the development of e-commerce in the structural transformation of the Senegalese economy is well established. This is why, thanks to UNCTAD’s assessment of Senegal’s readiness for e-trade, efforts will be more focused on mobilizing stakeholders, the state, the private sector and eTrade for all partners to remove obstacles, identify and implement its flagship recommendations,” Senegal’s investment, partnerships and teleservices minister Khoudia Mbaye said.
Several factors have contributed to the development of e-commerce: broadband internet (mainly in the big cities), a legal framework set up in 2008, electronic means of payment via mobile telephony, and people trained in information and communications technologies. However, there are several logistical and financial challenges to overcome before these favourable conditions can be exploited.
Togo: powerful potential
The potential for the development of e-commerce in Togo is limited: there is a weak internet infrastructure, few online payments, and it is difficult to make or receive deliveries outside of the capital Lomé. However, tech start-ups are bursting with innovative solutions that make it possible to work around existing problems.
“My ministry is strongly committed to making e-commerce a powerful engine for economic growth, inclusive trade and job creation in Togo. This new assessment has identified the development of e-commerce as one of the strategic sectors that should promote trade and remove barriers to trade,” said Togo’s commerce minister Essossimna Legzim-Balouki.
eTrade for all
The German government funded the Rapid eTrade Readiness Assessments as part of its support to UNCTAD’s eTrade for all initiative.
This initiative provides countries with capacity-building solutions for e-commerce and optimizing synergies between different partners.
It has 29 partners, seven of whom will participate in the Ouagadougou workshop: the World Bank Group, the African Development Bank, the United Nations Economic Commission for Africa, the International Trade Centre, the World Trade Organization, Universal Postal Union, and the Africa Civil Society for the Information Society.
UNCTAD has conducted e-commerce assessments for developing countries since 2016, recognizing that policymaking will need to move quickly if least developed countries are to capitalize on rapidly changing economics.
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tralac’s Daily News Selection
Next week, in Nairobi: Seventh Conference on Climate Change and Development in Africa (10-12 October)
The World Bank, IMF Annual Meetings take place next week in Indonesia:
(i) 32,000 people to attend IMF-WB meetings. Coordinating Maritime Affairs Minister Luhut Pandjaitan has said about 32,000 people have registered for the IMF-World Bank Annual Meetings in Bali. “There are 32,000 attendees, more than the initial estimate [of 19,000],” Luhut said as reported by Antara after chairing a coordination meeting to prepare for the event in Nusa Dua on Thursday. With the latest figure, Luhut said the meetings would welcome the largest number of participants since the annual meetings were first organized in 1946.
(ii) Annual Meetings Preamble: 10 years after crisis, World Bank and IMF fight for relevance amidst mounting global economic pressure. CSOs have also questioned the cost-effectiveness of the PPPs model. A forthcoming joint CSO report compiling negative outcomes from 10 PPP projects in different sectors, and across four continents, some of which have been supported by the WBG, will be launched at this year’s Annual Meetings’ Civil Society Policy Forum, adding to an ever-growing body of evidence, such as that provided earlier this year by the UK’s National Audit Office and the European Court of Auditors, which question the logic of PPPs. The Bali meetings will also see the launch of the Bank’s much-promoted Human Capital Index, which will rate countries on their investments in the human capital of their citizens when they depart school. While few would doubt the need to invest in education and other essential development needs of children and youth in developing regions, the HCI is likely to do little to overcome acute development challenges linked to structural inequality and may indeed distract attention from equally pressing policy debates.
Diarise: (i) Organisation of Women in International Trade Conference (24-25 October, Nairobi) on the theme Bridging the gap; empowering businesses to go global; (ii) 13th African Economic Conference (3-5 December, Kigali) on the theme, Regional and continental integration for Africa’s development
South Africa’s pdf Presidential Jobs Summit: Framework Agreement (946 KB)
Extract: Enforcement/illicit trade interventions: It was agreed that improved tactical interventions on sites where suspected illegal imported goods are kept or sold, are an important tool in dealing with customs fraud. It was acknowledged that there is room for improvement in this area. It was agreed that the partnership between SARS and other relevant government entities must be strengthened, including joint interventions, issuing of search warrants and conclusions of Memoranda of Understanding. The Social Partners agreed that specialist enforcement teams, with a focus on key commodities, e.g. clothing and textiles, tobacco, and fuel, should be reconstituted. Raids will focus on major distribution nexus of imported goods, including warehouses. It was agreed that the partnership between SARS and other relevant entities must be strengthened to address obstacles to successful prosecution. High-profile investigations would be prioritised with an aim to convict as this will boost confidence in the fight against customs fraud. Enforcement successes leading to conviction will be publicised in the media. [Address by President Cyril Ramaphosa]
EU-Nigeria trade volume hits N8.9trn (EU)
The total trade volume between Nigeria and European Union Member States stood at 25.3 billion Euros (about N8.9 trillion) in 2017. Deputy Head of Delegation, European Union to Nigeria and ECOWAS, Mr Richard Young, revealed this while briefing the press on the EU-Nigerian Business Forum yesterday in Lagos, saying that to further build on the relationship with EU companies in Nigeria, the EU Delegation, EU member States and European companies active in Nigeria have established a European Business Organisation which would represent the voice of European companies across various sectors of Nigeria economy. “The EBO Nigeria will also ensure a high-level policy dialogue with Nigerian authorities and organised private with the objective of improving the business and investment and fostering business and trade relations between the EU and Nigeria,” he said.
Country updates
At Nigerian borders, creeks, smuggling is business as usual (Leadership)
Also, last week, the CGC’s strike force intercepted about 6660 bags of rice which is equivalent to 11 trucks of rice in the south- west after it was successfully smuggled into the country through the land borders. The other seizures by the ad-hoc unit further range from vegetable oil, second hand clothes, cartons of frozen poultry products, unprocessed firewood, sugar to vehicles of different brands that were smuggled into the country through the land borders. Speaking on the sidelines of the arrest, the national coordinator of the Strike Force, Abdullahi Kirawa, disclosed that the seizures were made by the CGC Strike Force team from August 11 to September 18, 2018. He gave a breakdown of the seized items:
Ghana: Government to incur additional GHC1.5bn debt in subsidising cocoa price (GhanaWeb)
Government will incur an additional debt of GHc 1.5 billion in subsidising the price of cocoa, the Ministry of Agriculture has announced. Deputy Minister of Agriculture in charge of perennial crops, Mr Kennedy Osei Nyarko said at a press conference on Thursday, government had to incur GHc 2 billion in subsiding the price of cocoa in 2017. He was reacting to the allegations by the Minority in parliament that, government was fleecing cocoa farmers by refusing to increase the price of cocoa. He refuted the allegations and insisted that, government maintained the price despite the reduction of price on the world market.
Rwanda: The politics of second-hand clothes – a debate over ‘dignity’ (Al Jazeera)
The C&H factory in Kigali’s Special Economic Zone is bustling with activity. Hundreds of workers cut fabric, check labels, operate sewing machines, and carefully monitor the “Made in Rwanda” products for quality. Originally starting out as an export-oriented manufacturing plant, mostly for clients in the US and Europe, this Chinese-owned factory has moved into producing garments for the local market. Since the import tax on used clothing was implemented, orders from the US have decreased. But custom inside Rwanda has increased. C&H has opened a second plant to deal with the rising demand. “At the moment, we export 80% (to the US and Europe) and 20% is for the local market. We hope to act like a catalyst for the local manufacturing sector,” Malou Jontilano, marketing director of C&H, tells Al Jazeera.
Uganda: Banks urged to blacklist counterfeit manufacturers (Daily Monitor)
Speaking during a financial sector dialogue on counterfeits in Kampala, Mr Fred Muwema, the Anti Counterfeit Network director legal and corporate affairs, said banks must not lend to businesses involved in counterfeits, given their impact on the economy. “There is need to develop an anti-counterfeit policy in the financial sector through increased training and awareness,” he said, noting that a number of counterfeit businesses thrive on loans that they use to edge out legally conducted businesses. Counterfeits, according to a 2017 report from the Standard Bank, make government to lose in the excess of Shs15b taxes annually. Mr Muwema said the increased rate of counterfeiting and substandard goods, which Uganda National Bureau of Standard puts at 54%, needs to be fought head-on with government and institutions such as banks blacklisting involved companies.
Kenya: Chinese inspection company suspended by Kebs (The Star)
How should the government bring small firms into the formal system? Experimental evidence from Malawi (World Bank)
Developing country governments seek to reduce the pervasive informality of firms for multiple reasons: increasing the tax base, helping firms access formal markets and grow, increasing the rule of law, and as a means to obtain data that can be used for other government functions. However, there is debate as to the best approach for achieving these goals. This study conducted a randomized experiment in Malawi to test three alternatives: (a) assisting firms to obtain a business registration certificate that offers access to formal markets but imposes no tax obligations; (b) assisting firms to obtain business registration and tax registration; and (c) supplementing the assistance to obtain business registration with a bank information session intended to help firms utilize one of the key potential benefits of formalizing. Extract (pdf):
Our results highlight the importance of how governments attempt to bring firms into the formal system for their ability to achieve their different goals from doing so. Even without tax registration, we find the existing transaction costs of registering a business are enough to deter the average firm from registering their business. Yet when we offer our assistance, which brings the costs close to zero, a large majority (75%) of the firms register their businesses. This brings most firms into compliance with this law and provides the government with basic data on firms. However, on its own, this registration brings no discernable private benefits to the firms, nor does it increase trust in state institutions. Second, the disincentive to register for taxes outweighs any potential benefits plus the removal of transaction costs: the take-up of our offer of assistance for tax registration was around 4%, similar to the take-up rates in several other tax formalization experiments. Finally, it appears that transaction costs are not the only barriers that prevent formalization from contributing to firm growth.
Diamond trade must reform in face of threat from synthetic stones: US (Reuters)
The diamond trade must confront its tarnished image and revamp its certification scheme or risk seeing increasingly demanding consumers spurn natural stones in favor of cheaper synthetic diamonds, a senior US official said. “(Consumers) probably think they’re getting anything from a green standard to a human rights standard to a high labor standard, and in fact none of that is really conveyed by the Kimberley Process,” Pamela Fierst-Walsh told Reuters on Monday. Fierst-Walsh - senior advisor on conflict minerals for the United States, the world’s top consumer of diamonds - spoke as Kimberley Process members weigh reforms ahead of a meeting in Brussels in November.
Global value chain policy series: regulatory coherence (WEF)
A key challenge in the International regulatory cooperation (IRC) agenda at the regional level is that some regions, including Sub-Saharan Africa, the Middle East and North Africa and South Asia (pdf) are not forming part of these PTAs that include comprehensive disciplines on regulatory transparency and coherence. Similarly, the G20 discussions involve a limited number of emerging economies. Given that these are important future markets for investment and participants in GVCs, their engagement in IRC efforts would be desirable. Technical assistance and capacity development have an important role to play in this regard. On the other hand, the WTO’s Investment Facilitation for Development initiative does include a considerable number of developing and least-developed countries from all regions. Hence, the WTO initiative provides a good pathway to advance IRC in a manner that is inclusive and calibrated to the capacities and concerns of developing countries.
Today’s Quick Links: TZ customs official: Let us avoid nursery wars to boost trade Africa; the next big thing for Kenya’s tourism sector Daniel Moss, in Bloomberg: The new face of globalization is regional Taxing the digital economy in Malaysia: How do we balance growth with sustainability? |
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Jobs Summit ends on a high note: Historic agreement signed, sealed, delivered
Wrapping up the two-day Jobs Summit, President Cyril Ramaphosa has called on all stakeholders to roll-up their sleeves and create the much needed jobs in the country.
“This summit has achieved what it set out to do. The nation eagerly awaits our speedy and sustained implementation of this historic agreement which brings new hope to our country and to our partners in the global community,” said President Ramaphosa on Friday.
The President lauded the summit for achieving its target which is to carve a roadmap on how to drive job creation, job retention and boost the country’s economy.
“We have risen to the challenge of unemployment by working together as social partners representing all sectors of society and developing solutions in which we share ownership and pride,” said the President.
Through these interventions, the summit aims to create 275 000 direct jobs per year and tackle the triple challenge of unemployment, poverty and inequality.
The framework agreement signed on the first day of the summit was highlighted by the President as providing a clear and direct plan to address the staggering unemployment which sits at 27.2%.
National Economic Development and Labour Council (NEDLAC) constituencies signed the historic framework agreement, which includes practical actions such as:
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Investment of R100bn (over five years) in black enterprises and firms in the industrial sector;
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Bizniz in a Box Youth Empowerment Programme to equip young people with entrepreneurial skills and actual business opportunities;
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Commitments at the sectoral and company level to support local procurement of goods and services to boost employment and job retention;
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Finfind youth employment and SMME funding to provide training for unemployed youth;
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R1.5 billion for a new Smallholder Support Fund and R1.5 billion for the Township Enterprise Fund;
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Various interventions to create career pathways for the youth through programmes at TVET Colleges, the Installation Repair and Maintenance Initiative, and in the fields of health and, travel and tourism;
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Expansion of a Hub Model and incubators for SMME development;
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Harambee, working with all social partners, will strengthen its pathway management system to ensure that 1.5-million young people are part of an active network of work seekers and, that 500000 young work-seekers are able to enter first jobs or on pathways to generating an income to sustain themselves;
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Up-scaling the implementation of the 30% set aside of government spend for SMMEs and co-operatives;
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Strong focus on Early Childhood Development (ECD), including the KYB Enterprise Incubator, to support women-owned ECD centres;
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Building of 48 catalytic human settlement projects which will provide 635 0000 housing opportunities by 2019;
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Workplace equity and representation on company boards;
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The Framework Agreement sets up a mechanism to address regulatory constraints to investment;
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Reporting by business on executive pay ratios in annual reports;
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Measures to address customs fraud and illegal imports;
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Extension of the Employment Tax Incentive for a further 10 years;
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Establishment of nine Agri-parks to promote agriculture and agro-processing and value chain;
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Acceleration of productive land reform;
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Community-based and owned approaches to fast track rural water access;
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Increasing recycling tonnage to 2.7-million tonnes over five years;
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Establishing a Presidential Climate Change Co-ordinating Commission; and
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Commitment to support the anti-corruption strategy and implementing a zero-tolerance approach to corruption.
Support for small business
With small businesses noted as the key to unlocking jobs at the summit, President Ramaphosa said government is at work to create fertile ground for small business to prosper.
“Small business are meant to be the real engines of job creation and the real engines that are supposed to fuel economic growth. We are at this summit have decided that we are going to support small businesses to move ahead,” he said.
Buy local circle
Localisation was highlighted as the “real win” emerging from the summit. The framework agreement, called for business and the country at large to enter the “Buy local circle” where they procure and buy local products.
Proposals emerging from the summit
Providing feedback on the break-away sessions held ahead of the closing, community convener Nhlanhla Ndlovu proposed the implementation of a 24-hour service delivery model and the empowerment of informal traders.
Panels also proposed the establishment of more early childhood development centres in townships as they have potential to provide skills and employment in the townships.
President Ramaphosa proposed that the Jobs Summit be held bi-annually to allow constant monitoring of implementation.
Investment conference
In closing, President Ramaphosa said the summit gave an indication to potential investors on the country’s plan to deal with unemployment and a sluggish economy.
President Ramaphosa said the Investment Conference is seen as the next measure to creating jobs.
With just under three weeks to go until the Investment Conference which takes place on 26 October 2018, the President called on local and international investors to come forward and lend a hand.
“We have committed to raising R1.3 trillion in five years and we want to get a clear demonstration that there is a commitment by the investment community that they are ready to invest,” said the President.
Presidential Jobs Committee to ensure implementation
Key to ensuring that jobs are created, President Ramaphosa said the Presidential Jobs Committee, as a monitoring mechanism, will play a key role in ensuring that targets are met.
Constituencies will now implement the agreed actions in their respective sectors and report back to the President on an on-going basis.
All actions will be tracked through a monitoring framework and quarterly reports on progress will be provided to the President to ensure that they have real impact.
Address by President Cyril Ramaphosa at the opening of the Presidential Jobs Summit, Gallagher Estate, Johannesburg
We gather here today to answer the call of the people of South Africa for decent work.
We have gathered here, as social partners, having agreed on a broad range of measures to create and protect jobs.
Unemployment is the greatest challenge facing our country at this moment in its history.
Unemployment diminishes our ability to eradicate poverty, tackle inequality and improve the lives of the working class and poor.
It has a devastating effect on families and communities, eroding people’s dignity and contributing to social problems like poor health, poor education outcomes, substance abuse and crime.
The extreme unemployment in this country is the product of an economy that for several decades has been starved of any meaningful investment in its human capital, where most people have been denied the opportunity to own assets or develop skills.
The structure of the economy, which was built on the extraction of minerals, where ownership and control are highly concentrated, remains largely untransformed.
As a result, the decline of the mining industry and manufacturing has cost the country millions of jobs and much economic capacity.
Low levels of growth in recent years has undermined our efforts to overcome the economic legacy of apartheid.
Policy uncertainty and inconsistency, onerous regulations and declining business and consumer confidence have curtailed investment in the productive sectors of the economy.
Significant levels of public investment in infrastructure, which kept the economy afloat following the 2008 global financial crisis, has been tapering off as consumption spending and debt servicing has consumed a greater portion of our budget.
Our economic performance has also been undermined by state capture and corruption in both public institutions and private companies.
State capture and corruption has undermined investor confidence and public trust, eroded key institutions of the state and diverted resources intended to support development.
While progress has been made in lifting millions of people out of dire poverty, many of our people still face great hardship.
The apartheid spatial landscape makes economic opportunities scarce, increases the cost of living and diminishes quality of life.
Many people, especially young people, lack the skills and work experience needed to find a job and participate meaningfully in the economy.
As we speak, rising international oil prices combined with investor concerns about emerging economies are pushing up the price of petrol and other fuels, making life harder and more expensive for all South Africans, but particularly the poor.
The jobs that have been created over the past few years have not kept pace with the growth of the population or the expansion of the workforce.
We have therefore gathered here at this Jobs Summit to respond to these economic challenges, which manifest themselves through unemployment, poverty and inequality.
In the National Development Plan, we said that if we were to effectively and sustainably tackle this triple challenge, we should aim to reduce unemployment to at least 6% by 2030.
We need to acknowledge that we will not be able to reach that target unless we do something extraordinary.
Since the announcement of the Jobs Summit in the State of the Nation Address in February, all social partners have been engaged in intensive discussions to craft an agreement to begin to address this crisis.
I wish to commend all social partners for the hard work that has gone into making this Jobs Summit possible and to thank everyone who has contributed to organising this summit.
The social partners have agreed that this Presidential Jobs Summit will emerge with a framework agreement that is both ambitious and realisable.
It is the product of intensive engagement among the social partners over several months, in a spirit of cooperation, consensus building to address a problem that affects all of us.
Importantly, the framework provides the outline of an emerging social compact to grow an inclusive economy and fundamentally transform our society.
One of the great difficulties we have faced in recent years is that cooperation between communities, labour, business and government has weakened, making it difficult to advance the collective interest.
Countries that have succeeded in tackling economic challenges and social problems have had the benefit of getting all social partners to reach agreement on what needs to be done and to work together to ensure that it gets done.
Countries like Ireland, Spain and the Netherlands have been successful in forging social accords in response to economic difficulty.
Yet, in South Africa, with low levels of trust, weak confidence and heightened social tensions, we have neglected our greatest strength as a society – our ability to unite and work together.
It was by working together that we managed to overcome apartheid, that we brought an end to an intractable conflict that had raged for generations, and were able to write a democratic Constitution that guarantees the equal rights of all.
Now this framework agreement gives us the opportunity to once again develop trust and forge cooperation.
Through this framework agreement we are demonstrating that we are capable of developing a new social compact for jobs, growth and transformation.
This Presidential Jobs Summit is just the start of a process of engagement and collaboration that will intensify in the coming months.
This Jobs Summit is not a once-off event, but the first phase of an extensive process in which all social partners will work closely together to improve growth, protect existing jobs and create new jobs.
The framework agreement makes provision for monitoring mechanisms – including a Presidential Jobs Committee (what I have dubbed the Presidential Jobs Brains Trust) – to ensure effective implementation of the measures to which we have agreed.
It acknowledges that there are several areas that require further work and refinement, and social partners have agreed to devote more time for discussion to reach consensus on these.
I will now touch on the key issues that the social partners have agreed should emerge from this Jobs Summit.
As a critical starting point, social partners agreed that in the current economic environment the Jobs Summit must focus on both creating new jobs and retaining existing one.
All social partners have committed themselves to concrete steps to avoid retrenchments and support struggling companies.
To address this challenge, we have agreed that the training layoff scheme, which was introduced in response to the 2008 global financial crisis, should be immediately revived and improved.
Business and government have agreed to establish rapid response teams of experts to assist businesses in crisis.
There is agreement that all possible alternatives and opportunities need to be explored before retrenchment is considered, including executive salary sacrifices and the foregoing of dividends.
For the economy to grow and for jobs to be created, it is essential that there is a substantial increase in domestic demand.
This means that South African companies, government and consumers must buy local.
If we do not buy the food that comes out of South African soil, there will be no farms and no farmworkers.
If we do not buy the goods made by South African hands, there will be no factories and no workers.
The most direct way for South Africans and South African companies to create jobs is to buy only South African products.
This is a message that must reverberate across the country and that must find expression in concrete action.
The framework agreement goes into detail on measures to promote local procurement both within the public and private sectors – even to the point of outlining interventions in specific sectors and companies.
Government has undertaken to simplify and speed up the process for the designation of products for local procurement, and organised labour, in partnership with Proudly SA, will proactively identify opportunities for new designations.
As part of this agreement, a number of companies have made specific commitments to local procurement initiatives as part of their operational strategies.
These include companies such as Adcock Ingram, Anglogold Ashanti, Clientele, Coca Cola SA, Edcon, First Rand, Lixil, Mondi, Nandos, Nestle, AB InBev, Sappi, Sasol, Standard Bank and Tsogo Sun.
They will be the first to be invited to join a ‘Buy SA Circle’, which recognises companies that are leaders in buying local and have demonstrated in practice their commitment to supporting South African enterprise.
Companies that sign up to this commitment will, among other things, be celebrated at an annual dinner convened by the President.
While promoting local demand, social partners have also identified the need to more aggressively promote South African exports.
From this Jobs Summit, we will embark on an export drive that prioritises manufactured and processed goods, ensuring that we derive the full employment benefit of our mineral and agricultural resources.
We will seize the opportunities presented by regional integration and the establishment of an African Continental Free Trade Area to produce more goods for other African markets.
Social partners have agreed to unblock impediments to expanding exports – such as inefficiencies at ports and poor knowledge of potential markets – and to ensure greater support to companies seeking export opportunities.
Through this framework agreement, we will be mobilising finance on a far greater scale, ensuring that it is focused on building our manufacturing capacity.
The financial sector, as part of its transformation code, will invest R100 billion over five years in black-owned industrial enterprises.
Government will work with the financial sector to develop facilities for financing at preferential rates and extended repayment terms.
The social partners have agreed on strategic interventions in economic sectors that have great potential for growth and even more potential for employment creation.
The agriculture and agro-processing value chain, as set out in the NDP and the nine-point plan, is one area that has significant potential.
It is estimated that global demand for fresh produce could increase South Africa’s horticultural trade from R54 billion to R90 billion by 2030.
Through our programme of accelerated land reform, we will expand the area of land under cultivation, substantially increase the number of people productively working the land and provide rural dwellers with the ownership and tenure rights needed to unlock the economic potential of their land.
Specific interventions include the procurement of new hectares under black ownership and redirecting expenditure to black-owned and women-owned farmers, producers and processors.
Blended finance models for effective agricultural support are being finalised.
In addition to government initiatives amounting to approximately R600 million, Agbiz and the Banking Association of South Africa have developed a blended finance model designed specifically to make additional funds available to assist potential redistribution beneficiaries to access capital.
In the metals, mining and machinery sector, government has agreed to expeditiously finalise an export tax on scrap metal and ensure better access to incentives like the Downstream Steel Industry Competitiveness Fund.
Other value chains that are receiving focused attention include sub sectors of the manufacturing industry in clothing, textiles, leather and footwear, furniture and the automotive industry.
Organised labour, through one of its member unions, plans to open a union-owned clothing factory in the Eastern Cape within the next two years.
This innovative and welcome initiative will create around 100 jobs initially and aims to contribute to the re-industrialisation of a province which suffers from widespread poverty and unemployment.
If we are to succeed in creating the number of jobs we need, it is essential that small, medium and micro enterprises like these take their rightful place in the economic life of our nation.
Social partners have agreed to maximise the collaboration between public and private sector hubs and incubators.
Government will continue to advocate, educate, assist and monitor the implementation of the 30% set aside for SMMEs by all spheres of government and their agencies.
One of the country’s greatest potential strengths is our young population, whose capabilities and talents the social partners are committed to develop as a matter of priority.
A specific area of focus is the development of the technical skills that are required in the industrial economy.
Mechanisms are being put in place to enable companies to form partnerships with nearby TVET colleges, where the colleges offer the theoretical component of the programme and companies offer the practical and workplace components.
This is part of a series of initiatives supported through the framework agreement to ensure that graduates are absorbed into the economy.
Effective skills development on a large scale will not only help to expand the opportunities and capabilities of young people but will also assist in reducing the wage gap between the lowest and highest paid due to skills scarcities.
One of the greatest barriers to investment, growth and job creation is corruption within all spheres of government, state owned enterprises and companies.
We are determined as government to intensify the work we have already started to end state capture and root out corruption wherever it occurs and to bring those responsible to book.
The social partners have agreed to support the government’s anti-corruption strategy and to develop their own complementary strategies.
Business has committed to implementing a zero-tolerance approach to corruption and will develop several initiatives to develop training to combat corruption.
Social partners agreed on the need to introduce financial disclosure for all relevant government employees and the conduct of lifestyle audits.
Fellow South Africans,
Through this Jobs Summit, government, labour, business and the community sector have agreed on concrete interventions to boost employment.
We estimate that these interventions will create an additional 275,000 direct jobs a year.
This is over and above the jobs that would have been created without these interventions, which was on average about 300,000 a year over the past four years.
The Jobs Summit agreement complements other initiatives to create jobs.
In addition to what has been agreed between the social partners under the auspices of Nedlac, several companies are working – either individually or with others in their sector – on plans to expand and create new jobs.
They have taken the initiative themselves, understanding that sustainable employment creation is beneficial to their business, to the communities in which they are located and to broader society.
They understand that job creation is part of a virtuous cycle.
Greater employment increases demand for goods and services, enabling established companies to expand and new ones to emerge, thereby creating more job opportunities and greater demand.
Stimulus and recovery plan
The framework agreement that will emerge from this Summit provides significant additional impetus to the implementation of the economic stimulus and recovery plan we announced two weeks ago.
The plan includes a range of immediate measures to restore the economy to growth, improve investor confidence and establish a platform for greater job creation.
As part of the plan, government will:
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implement growth enhancing economic reforms,
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reprioritise public spending to support job creation,
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establish an Infrastructure Fund,
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address urgent needs in education and health,
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invest in municipal social infrastructure improvement.
Our experience is that infrastructure development can draw many unemployed people into economic activity relatively quickly.
The Infrastructure Fund we are establishing, which will be supported by a strong technical team in the Presidency, will ensure that infrastructure projects are implemented faster, with less wastage and have a greater impact on employment creation and localisation.
Government’s contribution to the Infrastructure Fund will be in excess of R400 billion over the next three years, which we will use to leverage additional resources from developmental finance institutions, multilateral development banks, and private lenders and investors.
Through specific economic reforms, government will unlock opportunities in sectors of the economy that have great potential for growth.
These include mining, oil and gas, tourism and telecommunications.
The Jobs Summit framework agreement will support this through reforms in other areas – such as streamlining of water license applications and registration of medicines.
The stimulus and recovery plan will see the reprioritisation of around R50 billion of public funding towards activities that will stimulate job creation in agriculture, township economies and rural areas.
By expanding the package of support to black commercial farmers, the plan will boost an underdeveloped part of the agricultural industry and provide jobs to those who most need it.
Government has also prioritised the revitalisation of industrial parks, primarily in townships, which will create job opportunities in areas where many of our people live.
This commitment, to take jobs to the people, also informs our plan to establish a township and rural entrepreneurship fund to support South Africans with businesses in townships and rural areas.
The plan will also have an impact on the filling of critical medical posts, including nurses and interns.
The stimulus and recovery plan recognises that growth alone is not enough – it needs to be accompanied by employment, specifically for young people and women.
We need to achieve growth that is inclusive and redistributive.
Everyone has a role to play in forging a social compact to create jobs.
Trade unions must continue to act as a check and balance.
They must articulate and advance the interests of workers and must push back against exploitative practices and unsafe environments in the work place.
Unions have taken up the challenge to work with employers to eradicate discrimination in the workplace, to promote labour stability, to reduce income inequality and to reach fair and sustainable wage agreements – understanding that these are necessary conditions for increased levels of investment and employment.
When it comes to business, firms have a specific responsibility to provide goods and services and introduce training and new technologies and production techniques which increase competitiveness and productivity and reduce the negative impact on the environment.
Business leaders have taken up the challenge to better recognise the value of regulatory interventions which seek to root out private sector corruption and which seek to stimulate more inclusive growth through limiting anti-competitive conduct and structures.
An effective social compact requires a capable, developmental state, that has the resources and administrative capacity to offer workers and working class communities credible and effective programmes of service delivery.
The developmental state must be capable of guiding and regulating market activity in such a way that the structure of opportunity is transformed and inclusive.
South Africa needs a new approach to growth and development – one informed by our collective interest and which harnesses the capabilities of all social partners who should see themselves as being irrevocably committed to creating a prosperous society where all our people live a better life in peace and harmony.
We are agreed that our country cannot achieve meaningful progress without faster growth and a great deal more jobs.
And we cannot achieve this if each of us works alone.
We need to trust each other as social partners, to understand how our shared and individual interests combine, to cooperate and to work together for a common vision – a growing economy in which the benefits are shared by everyone.
Through this Presidential Jobs Summit, we are each, as government, labour, business and community, confirming our determination to build a better South Africa for all.
I want to conclude by reminding us what we said in the preamble to the National Development Plan:
“We have created a home where everybody feels free yet bound to others: where everyone embraces their full potential.
We are proud to be a community that cares.
We have received the mixed legacy of inequalities in opportunity and in where we have lived, but we have agreed to change our narrative of conquest, oppression, resistance (and may I add unemployment, inequality, poverty).
We know:
What we do, and how we do it, is as important as what we want to achieve.
What we are, is because of who we have been and what we want to become.
We are people at work
We work to create plenty
Our work brings us ever closer to our dreams
Work grounds our dreams even the more fantastic they are
The reality of work connects us to our dreams.”
These are the dreams of millions of South Africans.
It is their dream to find work that this Job Summit must make a reality.
As we sign and implement the framework agreement, we do so for those millions of South Africans who yearn to work.
I thank you.
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EU launches ambitious External Investment Plan in Nigeria
The European Union has launched the External Investment Plan (EIP), an ambitious initiative to encourage investment in partner countries in Africa and in the EU Neighbourhood region.
The Plan, presented at the 7th EU-Nigeria Business Forum in Lagos on 4th October, 2018, will strengthen existing partnerships by promoting inclusive growth, job creation and sustainable development. It will also tackle some of the root causes of irregular migration. The theme for the Business Forum is “Building Partnerships for Growth and Job Creation”.
The EIP is a new approach to supporting sustainable development through investment. It will improve the way in which scarce public funds are used and how public authorities and private investors cooperate on investment projects. Through a new guarantee mechanism, the EIP will increase private investment in higher risk environments, facilitate private sector investments that otherwise would not be available, and mobilise investment for countries where investing is difficult.
The Plan targets five key sectors (investment windows):
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Sustainable Energy and Connectivity
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Micro, Small and Medium Sized Enterprises (MSMEs) Financing
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Sustainable Agriculture, Rural Entrepreneurs and Agribusiness
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Sustainable Cities
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Digital for Development.
The Plan will also assist in developing economically and financially viable projects to attract investment, and help to improve the business environment in partner countries by supporting reforms and economic governance.
The new European Fund for Sustainable Development lies at the core of the External Investment Plan and is expected to trigger additional public and private investment volumes, mobilising total investments of up to EUR 44 billion, based on EUR 4.1 billion contribution from the EU budget and the European Development Fund. The External Investment Plan is adapted to the specific needs of partner countries and builds on the very successful model used within the EU.
7th EU-Nigeria Business Forum: Building Partnerships for Growth and Job Creation
European and Nigerian business communities and policy makers explored business opportunities and address bottlenecks to investments to accelerate diversification of the Nigerian economy during the 7th European Union (EU)-Nigeria Business Forum in Lagos on 4th October, 2018. The Forum took place at the Grand Ball Room of Eko Hotel, Victoria Island, Lagos. Governor Akinwumi Ambode of Lagos State opened the event.
Since 2012, the EU-Nigerian Business Forum, jointly driven by the EU Delegation to Nigeria and the EU Member States, has served to address the obstacles affecting Nigeria’s business environment. The platform has enabled robust engagement among European and Nigerian businesses with Nigerian and EU policy makers on how to attract investment into the economy.
At this year’s event, specific sessions addressed issues surrounding business climate; certainty of Government policies; enforcement of contracts to attract the much needed FDI as well as leveraging Innovative Financial Instruments to attract investments to Nigeria. There was also a session to explore a strategy towards identifying the opportunities for Nigeria in the circular economy.
The 7th EU-Nigeria Business Forum was expected to raise awareness on the opportunities in Circular Economy; sensitize the private sector on Financial Instrument to support investments, including the opportunities in the External Investment Plan (EIP); improved business cooperation between EU and Nigeria businesses; and attract more investments in Nigeria.
To further build on the relationship with EU companies in Nigeria, the EU Delegation, the EU Member States and the European companies active in Nigeria have established a European Business Organisation (EBO). The EBO Nigeria will represent the voice of European companies across various sectors of the economy, and ensure a high-level policy dialogue with Nigerian authorities and organised private sector, with the objective of improving the business and investment climate and fostering business and trade relations between the EU and Nigeria. The EBO will be launched during the Forum.
The EU is Nigeria’s largest trading partner for oil and non-oil products with total trade at €25.3bn in 2017. EU Foreign Direct Investment (FDI) stock also stood at €39.6bn in 2016. The key to increased growth is hinged on ability of Nigeria to attract Foreign Direct Investment (FDI). However, statistics from UNCTAD show that Nigeria’s FDI flows have been on a steady decrease from an all-time high of $8.9bn in 2011 to $3.5bn in 2017.
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tralac’s Daily News Selection
Maritime trade and Africa (UNCTAD)
Maritime trade in Africa is shaped by the continent’s trade concentration and limited diversification. Accordingly, 40% of goods exported by sea in 2017 comprised of crude oil, while over two-thirds of imports were accounted for by dry cargoes (dry bulks and containerized goods) and close to 20% of imports were made up of petroleum products and gas. The EU remains Africa’s major trading partner although its share of trade has declined from about half in 1995 to one-third in 2017. In recent years, the share of trade with the US has fallen while trade with China has increased: China, and Asia in general, have incrementally cut into the EU and US share of African trade.
Africa’s ports account for 4% of global containerized trade volume, much of which comprises imports of manufactured goods. Africa’s shipping and ports do not always match global trends and standards. Apart from four container terminals in Morocco, Egypt and South Africa, no other African port was featured in the 2016 list of Top 100 global container ports. By diversifying their economies and enabling greater integration into regional and global value chains, Africa can improve its containerized trade and port traffic volumes and emerge as an exporter of containerized goods. For this to happen, however, trade policy and regional integration initiatives such as the AfCFTA will not be enough. Africa’s container ports and hinterland transport networks need to support these efforts by upgrading infrastructure and services, and improving performance, to match international standards. This entails, among other things, enhancing productivity levels: on average, crane productivity is around 20 moves per crane per hour in West Africa, 25 to 30 in South Africa, and 35 to 40 in Asia. [Additional downloads from UNCTAD’s Review of Maritime Transport 2018]
Related perspectives on African logistics:
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2018 African Ports and Rail Evolution Conference: African transport infrastructure insufficient for continental growth – Nzimande
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Africa Renewal: West African traders demand investments in roads, rails and telecom
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Northern Corridor: KRA’s tracking of regional imports triggers concerns across borders
Africa’s Pulse (World Bank)
Economic growth in Sub-Saharan Africa is estimated to have picked up to 2.7% in 2018 from 2.3% in 2017, barely above population growth. The region’s economic recovery continues but at a slower pace than expected (0.4 percentage points lower than the April forecast), due to downward growth revisions in the three largest economies in the region. The road ahead is bumpy. On the supply side, the moderate recovery reflected higher oil prices and better agricultural conditions following droughts. On the demand side, growth was supported by consumer spending amid eased inflation and public investment - especially among non-resource-rich countries. The external environment became less favorable for Sub-Saharan Africa. Global trade and industrial production lost momentum. Metals and agricultural prices fell due to concerns about trade tariffs and weakening demand prospects, while oil prices were on an upward trend. The tightness of oil supply suggests that oil prices are likely to remain elevated through the rest of the year and into 2019. Metals prices have been lower than previously forecasted and may remain subdued in 2019 and 2020 amid muted demand, particularly in China. Financial market pressures intensified in some key emerging markets and developing economies. Concern about dollar-denominated debt has risen among emerging markets amid a stronger US dollar.
IMF’s World Economic Outlook – Chapter 2: The global recovery 10 years after the 2008 financial meltdown
Against this backdrop, this chapter takes stock of the global economic recovery 10 years after the financial meltdown of 2008 and the policy lessons that can help prepare for the next downturn. Specifically, the chapter addresses the following questions:
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Compared with pre-crisis trends, how did output evolve across countries in the aftermath of the crisis?
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How did the associated components – capital, labor inputs, total factor productivity – advance after the crisis? What does this decomposition show about why it took a long time for output in many economies to return to its pre-crisis level?
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Even as the world economy experienced its worst slump in seven decades, post-crisis macroeconomic performance varied across countries. What accounts for this variation? Which policies and structural attributes helped limit the damage and facilitate recovery?
WTO Trade Forum: Less talk, more action needed on e-commerce (UNCTAD)
But while rules are needed, they must be business friendly and simple enough that everyone can navigate them, said Jack Ma, co-founder and executive chairman of the Chinese online commerce giant Alibaba Group. Online sales have mushroomed from $16 trillion in 2013 to around $26 trillion in 2016, offering new business opportunities to anyone with an internet connection. “[People] can buy everywhere, sell everywhere, deliver everywhere, and pay everywhere,” Mr Ma said during a discussion on “enabling an inclusive future for e-commerce”.
WTO head Roberto Azevêdo agreed that e-commerce allows entrepreneurs to overcome some of the traditional obstacles to trade, such as physical distance. “If you have a phone now you’re connected to a global marketplace,” Mr Azevêdo said, adding that online platforms allow consumers to access a broader selection of goods at better prices. But without the right approach, the big players could easily dominate this market at the expense of the smaller businesses, he said, reminding the audience that 4 billion people still don’t have an internet connection. “If we cross our arms and do nothing that is precisely what is going to happen. Poorer countries would be left behind.”
Miriam Altman: Taking China-Africa trade relations to new heights (China Daily)
Second, South Africa has lost its market share in Sub-Saharan Africa, the destination for 22% of its manufacturing exports, with China’s share growing to more than 25% of manufactured imports in most of these markets. South Africa’s loss of market share in Sub-Saharan Africa to China is particularly seen in non-electrical machinery, electrical machinery, iron and steel products, vehicles and parts, rubber, and iron and steel. The overlap between South African and Chinese exports has become more prominent in Sub-Saharan Africa. Only 17% of South African exports to Sub-Saharan Africa overlapped with Chinese exports in 1997, as against 74% by 2010, as China introduced new products. [The author is a member of South Africa’s National Planning Commission]
Lesotho’s economic recovery slowed by weaker South African growth (Fitch Solutions)
Tepid real GDP growth in South Africa will weigh on Lesotho’s economic recovery over the next two years, with lower remittances and subdued consumer demand expected to weigh on manufacturing and wholesale and retail trade sectors. At the same time, weaker growth in South Africa will also weigh on government consumption in the short-term, limiting fiscal stimulus. That said, we still see Lesotho exiting the period of recession registered in 2017, mainly on the back of stronger activity in mining and construction. We have revised down our forecasts for growth in 2018 and 2019 to 1.3% and 1.1% respectively, from 2.6% and 2.2% respectively to account for this poor economic performance. Moreover, Lesotho’s textile manufacturing sector, which made 13.1% of GDP growth in 2016, is expected to underperform due to structural issues and lower demand from South Africa. The textile sector has been one of the main engines of growth in Lesotho, but its prospects remain grim due to several factors.
IMF completes mission to Côte d’Ivoire: statement
The fiscal budget deficit is expected to be contained to 4%of GDP in 2018, in line with the program target, with a small revenue shortfall offset mostly by lower public investments. The IMF mission and authorities agreed on fiscal policy measures for the 2019 budget to secure key program objectives. These measures should enable the projected fiscal deficit to decrease to 3% of GDP in 2019 and thus comply with the WAEMU regional deficit norm. IMF staff and the authorities also agreed on policies to secure debt sustainability while making space to finance the National Development Program (2016-2020). The mission noted improvements in the restructuring and the oversight of public enterprises, and the monitoring of public-private partnership projects and their fiscal-related risks.
Cabo Verde: Investment policy review (UNCTAD)
Cabo Verde’s solid foreign direct investment attraction performance was instrumental in the country’s graduation to middle-income economy. However, FDI and economic activity remain concentrated in a few sectors and limited to a few locations. The IPR of Cabo Verde was initiated at the request of the Government. It analyses the legal and regulatory framework for investment, and contains a strategic analysis on how to better utilize FDI in the tourism sector as a leverage for sustainable development. The IPR is based on two fact-finding missions undertaken in July and December 2017 and information current at that time, as well as additional information made available to UNCTAD until May 2018. [Related UNCTAD analysis: Investment Policy Review Implementation Report – lessons learned (pdf)]
Tuberculosis must fall! A multisector partnership to address TB in Southern Africa’s mining sector (World Bank)
This book presents key activities, promising practices, and lessons learned to date from the World Bank’s Tuberculosis in the Mining Sector Initiative - an innovative multi sectoral, multi country, public-private regional initiative. It examines how a collaborative platform was established to cover 10 southern African countries, and details the processes through which multiple countries, ministries, sectors, and partners have been brought together to address the various dimensions of the epidemic. The primary focus of the case studies is how these cooperative regional processes - at both technical and political levels - have been designed, implemented, managed, and sustained through various partnerships to complement country-level efforts.
3rd PACA Partnership Platform: Calls for enhanced country-led approaches for sustainable aflatoxin mitigation in Africa (AU)
African Union Commission Chairperson, Moussa Faki Mahamat urged all AU Member States to tackle the impact of aflatoxins through a strong continental vision supported by robust political will, as well as the establishment of the necessary technical structures and the promotion of coordinated approaches. Speaking during the opening of the 3rd Partnership for Aflatoxin Control in Africa Partnership Platform Meeting themed ‘Scaling-out country-led approaches for sustainable aflatoxin mitigation in Africa,’ yesterday, Chairperson Faki emphasized the need for collective action to address the major health risks posed by Aflatoxins in Africa which also impact negatively on the agricultural and trade sectors of the continent.
AU STC-TTIET Sub-Committee on Tourism: Towards a Continental Tourism Framework. Access the speeches here.
Today’s Quick Links: Afreximbank trade programme designed to de-risk African banks Member states endorse ECA’s strategic plan for statistical development in Africa Deep concern over Tanzania’s statistics gagging law Kingdom of Lesotho: Technical Assistance Report-Government Finance Statistics Scramble for Eritrea likely to change Horn, Nile geopolitics British firm gets nod to build mega dam in Kenya |
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High-level panel highlights potential of e-commerce as driver for growth and inclusion
E-commerce is an increasingly growing force in global trade, with the potential to make the world economy more inclusive and provide opportunities for micro, small and medium-sized enterprises (MSMEs), women and young people.
However, many challenges must be addressed in a collective manner in order to pave the way towards a more inclusive e-commerce landscape in 2030. Keynote speakers addressed this issue at the WTO Public Forum in a debate involving governments, the private sector and civil society.
The WTO, the World Economic Forum (WEF) and the Electronic Trade Platform (eWTP) opened the debate on this issue with a high-level panel session titled “E-commerce 2030: enabling an inclusive future for e-commerce”, organized as part of the “Enabling E-commerce” initiative launched on the margins of the 11th WTO Ministerial Conference in Buenos Aires in December 2017. This initiative attempts to galvanize debate on e-commerce issues among a wide range of stakeholders, encouraging the sharing of ideas and best practice.
WTO Director-General Roberto Azevêdo called on the international community to ensure that the digital revolution now underway is fully inclusive and leaves nobody behind. He stressed that e-commerce provides a springboard to overcome some of the traditional obstacles to trade but warned that without the right approach, big players could easily dominate this market at the expense of smaller business.
“If we cross our arms and do nothing, that is precisely what is going to happen. Poorer countries could also be left behind. We know that around 4 billion people do not yet have internet access – and of course this is concentrated in developing and least-developed economies. But even when you are connected, there are still many other barriers. We need also the right policy infrastructure, such as regulatory and payment systems – as well as the appropriate skills and expertise. So if we want this digital revolution to be inclusive, we have to work on all of these areas,” he said. His full speech is available here.
DG Azevêdo led the debate, where speakers agreed on the need to urgently face the variety of challenges needed to ensure that the benefits of e-commerce are more widely shared around the world as well as to reduce and eliminate the existing digital divide which particularly affects least-developed countries (LDCs).
Borge Brende, President of the World Economic Forum (WEF), noted that e-commerce offers new opportunities that can contribute to the development of regional and global value chains for both goods and services, while playing a key role in reducing inequalities. Brende said that new thinking, regulatory coherence, policy space for governments, security for workers, flexibility for business and sustainable choices for consumers are the main ingredients to achieve results.
“We need to come together to shape responses and create the appropriate supporting global architecture. The Fourth Industrial Revolution can be a very good thing for humankind, but there are currently very few protocols and regulations to secure this. We definitely need traffic rules,” he said.
Speaking on behalf of the Electronic World Trade Platform, Jack Ma, Executive Chairman of Alibaba Group, said that less talk and more action is needed to face the new trade reality born as a result of the e-commerce boom. He called for an upgrade to existing trade rules, not the creation of new ones, and to open the debate on this matter beyond governments.
“Nobody can stop the technological revolution, so all the rules have to be forward-thinking. We have to be sure that rules and laws are flexible because businesses always develop much faster. Innovation always develops much faster and I think future laws should not be driven only by governments; they should be driven by private sectors and all stakeholders together,” he said.
UNCTAD Secretary-General Mukhisa Kituyi spoke of the main challenges faced by the international community when dealing with this new form of trade: measuring e-commerce, identifying where the gaps are, and raising awareness on the need to close the digital divide. He also noted that governments in LDCs have to be clear about what they intend to do in terms of e-commerce before seeking assistance – “broadband connectivity without the skills and capacities is a wasted opportunity” – and underlined the importance of visibility.
“Taking into account that 90 per cent of businesses will be online in the future, our main developmental challenge is how much we can make SMEs, women’s businesses in rural areas and young people have visibility in the digital market place,” he said.
Ambassador Robert Dufter Salama of Malawi said that LDCs are aware of the opportunity for job creation, business expansion and thriving economies the digital revolution offers. However, they face major challenges in jumping on the bandwagon of e-commerce – 62 per cent of the population without access to electricity, high illiteracy rates and high prices for IT products as well as few internet service providers and inadequate financial services.
“In Africa, there will be 1.1 billion people in 2030. We know that there is a need for us to create jobs, and we are aware that traditional businesses, that is manufacturing and exporting, will not be enough to meet the aspirations of the young people,” he said.
Ambassador Frances Lisson of Australia noted that digital trade in e-commerce is the future of international trade and is also an increasingly powerful economic enabler. To capture the opportunities offered by digital trade at all levels, she said, all stakeholders involved need to get the policy settings right. In this context, she stressed that “the growing call by consumers and businesses, including MSMEs, to move towards setting global standards for digital trade in the WTO have been heard.”
“At MC11, a group of 71 members representing 77 per cent of global trade and all the regions of the world, agreed to initiate exploratory talks towards future WTO negotiations. And as chair of this process, my priority has been to encourage and facilitate a substantive discussion on the trade-related e-commerce issues raised by members, and to ensure that the process is open, transparent and inclusive, and member-driven. All WTO members are encouraged to join these exploratory talks. It is clear that there is real appetite for substantive discussion and engagement in this initiative has exceeded expectations,” she said.
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Africa’s Pulse: Growth in sub-Saharan Africa is slower than expected
Investments in non-resource sectors, jobs, and efficient firms and workers are needed
Sub-Saharan African economies are still recovering from the slowdown in 2015-16, but growth is slower than expected, according to the October 2018 issue of Africa’s Pulse, the bi-annual analysis of the state of African economies by the World Bank. The average growth rate in the region is estimated at 2.7 percent in 2018, which represents a slight increase from 2.3 percent in 2017.
“The region’s economic recovery is in progress but at a slower pace than expected,” said Albert Zeufack, World Bank Chief Economist for Africa. “To accelerate and sustain an inclusive growth momentum, policy makers must continue to focus on investments that foster human capital, reduce resource misallocation and boost productivity. Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt.”
Slow growth is partially a reflection of a less favorable external environment for the region. Global trade and industrial activity lost momentum, as metals and agricultural prices fell due to concerns about trade tariffs and weakening demand prospects. While oil prices are likely to be on an upward trend into 2019, metals prices may remain subdued amid muted demand, particularly in China. Financial market pressures intensified in some emerging markets and concern about their dollar-denominated debt has risen amid a stronger US dollar.
The slower pace of the recovery in Sub-Saharan Africa (0.4 percentage points lower than the April forecast) is explained by the sluggish expansion in the region’s three largest economies, Nigeria, Angola, and South Africa. Lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture.
Growth in the region – excluding Angola, Nigeria and South Africa – was steady. Several oil exporters in Central Africa were helped by higher oil prices and an increase in oil production. Economic activity remained solid in the fast-growing non-resource-rich countries, such as Côte d’Ivoire, Kenya, and Rwanda, supported by agricultural production and services on the production side, and household consumption and public investment on the demand side.
Public debt remained high and continues to rise in some countries. Vulnerability to weaker currencies and rising interest rates associated with the changing composition of debt may put the region’s public debt sustainability further at risk. Other domestic risks include fiscal slippage, conflicts, and weather shocks. Consequently, policies and reforms are needed that can strengthen resilience to risks and raise medium-term potential growth.
Highlights
This issue of Africa’s Pulse suggests that the economic recovery of Sub-Saharan Africa continues but at a slower pace than expected. To accelerate and sustain an inclusive growth momentum, policy makers must continue to focus on investments that foster human capital, reduce resource misallocation and boost productivity. Finally, policies to manage the new risks arising from changes in the composition of capital flows and debt should be at the top of the macroeconomic policy agenda.
Here are the top five highlights from the October 2018 issue:
1. Growth in Sub-Saharan Africa has picked up in 2018 but at a slower pace.
Average growth in the region is estimated to have risen from 2.3 percent in 2017 to 2.7 percent in 2018, barely keeping up with population growth. Incoming data points to a bumpy ride on the road to recovery. The slower pace of the recovery in Sub-Saharan Africa is explained by the sluggish expansion in the region’s three largest economies. Lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture. Growth in the rest of the region was steady. Several oil exporters in Central Africa were helped by higher oil prices and an increase in oil production. Economic activity remained solid in the fast-growing non-resource-rich countries, supported by agricultural production and services on the production side, and household consumption and public investment on the demand side.
2. Public debt vulnerabilities remain high amid a stronger US dollar and tightening global financing conditions for EMDEs.
Public debt remained high and continued to rise in some countries, reflecting the recent surge in Eurobond issuances. The vulnerability to weaker currencies and rising interest rates associated with the increased reliance on foreign-currency debt may put the region’s public debt sustainability further at risk. As countries have gained access to international capital markets and nonresident participation in domestic debt markets has expanded, non-concessional debt has increased. The share of foreign currency-denominated public debt rose to 60 percent total debt in 2017, an increase of about two-fifths from 2010-13.
3. Economic recovery in the region is set to continue but at a more gradual pace
Growth in the region is projected to increase from 2.7 percent in 2018 to 3.3 percent in 2019, rising to 3.6 percent in 2020, slightly below April forecasts. The recovery is set to continue amid a more challenging external environment, including moderating economic growth among the region’s main trading partners, a stronger U.S. dollar, heightened trade policy uncertainty, and tightening global financial conditions. Against this backdrop, growth may be supported by a modest uptick in oil prices, the easing of drought conditions that had depressed agricultural output, and a rise in domestic demand as policy uncertainty of the past year recedes and investment rises.
4. Large global shocks have reshaped the composition of capital flows into Sub-Saharan Africa.
Although foreign direct investment and foreign aid remain the major components of capital inflows, portfolio investment (through international bond issuances) has experienced an uptick since 2013. The change in the composition of capital flows has a higher risk content, as captured by greater vulnerability to commodity prices, global interest rates, and currency movements. Policies and reforms that build resilience to these risks and use foreign capital to raise medium-term potential growth are needed.
5. The region’s low productivity is attributed to inefficiencies in the allocation of resources across farms and firms, and these inefficiencies are linked to human capital misallocation.
Labor productivity differences between Sub-Saharan Africa and more advanced economies have remained large. More recently, the story of misallocation (inefficiencies in the use of technologies) has become relatively more important than undercapitalization (low capital stock) in driving these productivity differences. These inefficiencies in resource allocation across agricultural farms and manufacturing firms in Sub-Saharan Africa are linked to human capital misallocation. Policies and institutions distort the allocation of talent by delivering inefficient occupational choices (which either leads to more informality of a slower structural transformation process) and affecting producers’ decisions to invest in new technologies or methods of production as well as their decisions to enter or exit the industry.
This report was prepared by the Office of the Chief Economist for the Africa Region. by a team led by Punam Chuhan-Pole.
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Maritime trade and Africa
Demographic growth and regional integration can nurture Africa’s maritime trade if shipping, ports and hinterland access are boosted
Africa’s minimal integration in world trade is reflected in the contours of its maritime sector yet this portends an enormous opportunity for the world’s youngest and second-most populous continent, according to UNCTAD’s Review of Maritime Transport 2018.
Seaborne trade
Africa relies heavily on ships and ports to service its intercontinental trade. While it accounts for approximately 2.7% of global trade by value, the continent contributes higher shares to global seaborne trade – 7% and 5% of maritime exports and imports by volume, respectively. While one-third of African countries are landlocked, maritime transport remains the main gateway to the global marketplace.
Maritime trade in Africa is shaped by the continent’s trade concentration and limited diversification. Accordingly, 40% of goods exported by sea in 2017 comprised of crude oil, while over two-thirds of imports were accounted for by dry cargoes (dry bulks and containerized goods) and close to 20% of imports were made up of petroleum products and gas.
The European Union remains Africa’s major trading partner although its share of trade has declined from about half in 1995 to one-third in 2017. In recent years, the share of trade with the United States of America has fallen while trade with China has increased: China, and Asia in general, have incrementally cut into the EU and US share of African trade. This is opening new opportunities for the continent both as a consumer market as well as a potential manufacturing region, for example, as shown by growing textile and garment manufacturing activity in Ethiopia.
Africa’s ports account for 4% of global containerized trade volume, much of which comprises imports of manufactured goods. Africa’s shipping and ports do not always match global trends and standards. Apart from four container terminals in Morocco, Egypt and South Africa, no other African port was featured in the 2016 list of Top 100 global container ports.
Demand and supply patterns
By diversifying their economies and enabling greater integration into regional and global value chains, Africa can improve its containerized trade and port traffic volumes and emerge as an exporter of containerized goods. For this to happen, however, trade policy and regional integration initiatives such as the African Continental Free Trade Agreement (AfCFTA) will not be enough.
Africa’s container ports and hinterland transport networks need to support these efforts by upgrading infrastructure and services, and improving performance, to match international standards. This entails, among other things, enhancing productivity levels: on average, crane productivity is around 20 moves per crane per hour in West Africa, 25 to 30 in South Africa, and 35 to 40 in Asia.
Shipping connectivity, which significantly influences transport cost levels, is below the global average in Africa. African countries shipping connectivity is strongly influenced by their geography. The best-connected countries are those at the continent’s corners, where international shipping routes connect to hub ports, notably in Morocco, Egypt and South Africa. They are followed by sub-regional load centres, notably Djibouti, Togo and Mauritius. Combinations of public and private investments, port reforms, and improved transit to connect to neighbouring landlocked countries have helped these countries to become leaders in African container shipping connectivity.
Being a significant user and importer of maritime transport services, Africa has for many years sought to increase its participation in the supply of shipping services. This has yet to be achieved, however, as the continent’s ownership of the world fleet is limited, with no African country among the Top 35 ship-owning nations in 2017. This is also evident when considering nationally flagged fleets. Only Liberia makes the list of top flag States, ranking third globally after Panama and Marshall Islands regarding nationally flagged tonnage.
Africa’s maritime transport demand and supply patterns underscore the potential of African countries both as users and providers of maritime transport services. They can do this by leveraging growth prospects and building on comparative advantages like abundant low-cost labour and long coasts to house maritime business industries.
The way ahead
While many challenges constrain the continent’s ability to fully take its place in the global economic arena, several factors on the upside suggest that Africa is a dormant giant. Factors supporting Africa in this journey include robust economic growth, a demographic dividend, resources, growing investment and financing commitments relating to transport infrastructure, including by China.
UNCTAD supports Africa in these endeavours with several flagship programmes. These include port management, trade facilitation and sustainable freight transport technical assistance programmes, as well as close collaboration with the African Union towards achieving the AfCFTA. UNCTAD also actively supports customs reforms with its ASYCUDA programme, which is implemented in most African countries.
A portfolio of measures involving targeted interventions by national, regional and international players that align with the Sustainable Development Goals and mainstream the three dimensions of sustainable development as applied to transport and trade facilitation are required to help Africa fulfil its potential. These include:
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Preparing African ports to accommodate larger vessels through dredging for water depth and ensuring adequate cargo handling equipment is in place.
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Improving access to the hinterland and landlocked countries by multimodal transport and transport corridor approaches and building inland transport infrastructure.
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Making use of relevant technologies and digital solutions to facilitate transport and trade, cutting inefficiencies, improving processes and enhancing transparency, and promoting security and resilience of transport systems.
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Enhancing transport connectivity either on the sea or land side to reduce transport costs and improve African countries’ position in the global shipping networks. This also must encompass enabling soft infrastructure in support of transit transport and trade facilitation by harmonizing transport regulation, including road and rail transport.
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Encouraging greater participation in maritime business by promoting maritime clusters where shipping and port activities can boost related services sectors, including in the context of the Blue Economy.
Trade war threatens outlook for global shipping
Seaborne trade expanded by a healthy 4% in 2017, the fastest growth in five years, while UNCTAD forecasts similar growth this year, according to its Review of Maritime Transport 2018. Volumes across all segments are set to grow in 2018, with containerized and dry bulk commodities expected to record the fastest growth at the expense of tanker volumes.
The 2018 edition of the UNCTAD Review of Maritime Transport, marking its 50th year of publication, was launched at the Global Maritime Forum’s Annual Summit taking place in Hong Kong on 3-4 October 2018.
“While the prospects for seaborne trade are positive, these are threatened by the outbreak of trade wars and increased inward-looking policies,” UNCTAD Secretary-General Mukhisa Kituyi said. “Escalating protectionism and tit-for-tat tariff battles will potentially disrupt the global trading system which underpins demand for maritime transport.”
The warning comes against a background of an improved balance between demand and supply that has lifted shipping rates to boost earnings and profits. Freight-rate levels improved significantly in 2017 (except in the tanker market), supported by stronger global demand, more manageable fleet capacity growth and overall healthier market conditions.
Supply-demand improvements, namely in the container and dry bulk shipping segments, are expected to continue in 2018. Freight rates may benefit accordingly, although supply-side capacity management and deployment remain key. UNCTAD projects an average annual growth rate in total volumes of 3.8% up to 2023.
On the supply side, after five years of decelerating growth, 2017 saw a small pick-up in world fleet expansion. During the year, a total of 42 million gross tons were added to global tonnage, equivalent to a modest 3.3% growth rate.
Looking at the shipping value chain, Germany remained the largest containership-owning country with a market share of 20% at the beginning of 2018, although it lost some ground in 2017. In contrast, owners from Greece, China and Canada expanded their containership-owning market shares.
Meanwhile, in 2018, the Marshall Islands emerged as the second largest registry, after Panama and ahead of Liberia. More than 90% of shipbuilding activity in 2017 occurred in China, the Republic of Korea, and Japan, while 79% of ship demolitions took place in South Asia, notably India, Bangladesh and Pakistan.
Key drivers of change
Liner shipping consolidation, technological advances, and climate change policy are key drivers of change in global shipping, the report says.
Consolidation activity in liner shipping continued unabated: the liner shipping industry witnessed further consolidation through mergers and acquisitions and global alliance restructuring.
As of January 2018, the Top 15 shipping lines accounted for 70.3% of all capacity. Their share has increased further with the completion of the operational integration of the new mergers in 2018, with the Top 10 shipping lines controlling almost 70% of fleet capacity as of June 2018.
Three global liner shipping alliances dominate capacity deployed on the three major East-West container routes, collectively accounting for 93% of deployed capacity. Alliance members continue to compete on price while operational efficiency and capacity utilization gains are helping to maintain low freight-rate levels. By joining forces and forming alliances, carriers have strengthened their bargaining power vis-à-vis the seaports when negotiating port calls and terminal operations.
Growing consolidation can reinforce market power, potentially leading to decreased supply and service quality, and higher prices. Some of these negative outcomes may already be in effect. For example, in 2017–2018, the number of operators decreased in several small island developing States and structurally weak developing countries.
“There is a need to assess the implications of mergers and alliances and of vertical integration within the industry, and to address any potential negative effects. This will require the commitment of all relevant parties, notably national competition authorities, container lines, shippers and ports,” Shamika N. Sirimanne, Director of UNCTAD’s Division on Technology and Logistics, said.
Port traffic volumes picked up speed: global port activity and cargo handling expanded rapidly in 2017, following two years of weak performance. UNCTAD estimates that 752 million twenty-foot equivalent units were moved at container ports worldwide in 2017. The outlook for global port handling activity remains positive supported by projected economic growth and port infrastructure development plans.
Port operations, performance and bargaining power continued to be defined by mega-ship deployment and alliance restructuring: Liner shipping alliances and vessel upsizing have made the relationship between container shipping lines and ports more complex and triggered new dynamics where shipping lines have a stronger bargaining power and influence.
Increases in the size of vessels and the rise of mega-alliances have heightened the requirements for ports to adapt. While liner shipping networks seem to have benefited from efficiency gains arising from consolidation and alliance restructuring, for ports, the benefits did not evolve at the same pace. This dynamic is further complicated by the shipping lines often being involved in port operations which in turn could redefine approaches to terminal concessions.
The report says that global ports and terminals need to track and measure performance as port performance metrics enable sound strategic port planning, investment and decision-making.
Technological advances in the shipping industry, such as blockchain applications, cargo and vessel tracking, autonomous ships, and the Internet of Things, hold opportunities for the global shipping industry. However, there is still uncertainty within the maritime transport industry regarding possible safety, security and cybersecurity incidents, as well as concern about negative effects on the jobs of seafarers, most of whom come from developing countries.
The climate change agenda remains a priority. The shipping industry must reduce greenhouse gas emissions, the report says, welcoming among international efforts the April 2018 adoption by the International Maritime Organization (IMO) of an initial strategy aimed at reducing by at least half the total annual emissions from ships by 2050 compared to 2008.
The IMO strategy identifies potential short-, mid- and long-term further measures with possible timelines, and their impacts on States, highlighting the need to pay attention to the needs of developing countries, especially small island developing States and least developed countries.
Depending on the outcome of negotiations and the specific design of any future instrument, it will be important to assess the related potential implications for carriers, shippers, operating and transport costs as well as the cost of trade. It will also be important to assess the benefits associated with these measures, including market-based instruments in shipping and how these could be directed to address the maritime transport and logistics challenges facing developing countries, the report says.
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tralac’s Daily News Selection
Nigeria: ‘Economy losing over N6.16tr from Apapa chaos monthly’ (Guardian)
The Nigerian economy is currently losing about N600 billion in customs revenue, an estimated $10 billion (N3.06 trillion at N306.35/$1) on non-oil exports, and about N2.5 trillion corporate earnings across the sectors on a yearly basis, latest data from joint research by the Lagos Chamber of Commerce and Industry, and other members of the Organised Private Sector, has shown. Specifically, the LCCI explained that the data showed a worrisome level of deliberate resistance by some ministries, departments and agencies (MDAs) to implement enabling regulations including the 2017 Presidential Executive Orders relating to the ports. The chamber added that fights for supremacy, conflict of interests among the MDAs and revenue ambitions that conflict with trade facilitation objectives among the MDAs are common issues.
Besides, the LCCI added that about 10% of cargoes are cleared within the set timeline of 48 hours while majority of the cargoes take between 5 to 14 days to clear, as a result of deliberate delays induced by MDAs’ officials. According to the study pdf Maritime Ports Reform in Nigeria: Feedback from the OPS (1.88 MB) undertaken by LCCI, in collaboration with the Nigerian Economic Summit Group and OPS, made up of MAN, NECA, NACCIMA, NASME, NASSI, and Centre for International Private Enterprise, the chamber noted that the port reforms undertaken by the Federal Government are being frustrated by businesses and government agencies thriving from the inefficiency of the ports. These developments, in the views of the chamber, have very huge adverse implication for job creation, tax revenue and real economic activities with estimated downside effect of about 3% on the country’s GDP. [LCCI holds special press conference on Nigerian maritime ports] [Nigeria: Shippers’ Council faults exclusion from review of ports concession agreement]
Mills Soko, Kobus van der Wath: China now – what SA boardrooms should be discussing (Fin24)
The opportunity is very real and, for many SA businesses, it is a strategic imperative to gain a foothold in the Chinese market. Healthy bilateral government relations between China and SA mean that there is political will to see both nations reach their respective goals, politically and economically. These ties should serve as a conduit and allow ease of access to their respective marketplaces. Above all, business leaders from SA and China must make the SA-China opportunity landscape a strategic priority in corporate boardrooms. This is true for large companies but also for small and medium-sized firms. Thus, [eight] key focus areas ought to be to: [Chinese delegation to study South Africa’s mineral codes]
Isabella Neuweg: China is investing in developing countries – what is it really up to? (LSE Business Review)
Although large opportunities still exist to align these infrastructure projects with the climate and energy goals of both China and the recipient countries, China is nevertheless filling a role that has been left empty by many of the multilateral development banks and bilateral aid agencies. The eight largest multilateral development banks together provided about $340bn of infrastructure financing between 2004 and 2013, i.e. roughly the same size as China’s investments. China provided more than $360bn for energy generation and supply, transport and storage in developing countries during the period 2001 to 2014. In light of the large infrastructure investments that are still needed in developing countries in the future, Western and Chinese donors can join forces. If China were to increase transparency and disclosure of their investments, the opportunities to learn from them could help improve international understanding of the impact infrastructure investments have in developing countries. With a more open sharing of data there could also be opportunities and willingness to explore collaboration between the West and China. [The author is a policy analyst at the Grantham Research Institute on Climate Change and the Environment]
COMESA region annual inflation rate stood at 22.5% in July 2018 (AfDB)
The year on year, inflation rate (annual percentage change) in the COMESA region as measured by the Harmonized Consumer Price Index, stood at 22.5% for the month of July 2018, down from 22.3% registered in June 2018. A year earlier, the rate was 27.5%. The month on month inflation rate in the COMESA region as measured by HCPI-COMESA stood at 2.9% for the month of July 2018, up from 2.8% registered in June 2018. It was 2.7% in July 2017. HCPI-COMESA comprises of twelve divisions of expenditure (pdf). These divisions registered the following average price changes during the month of July 2018 compared with July 2017:
SADC Harmonised Consumer Price Indices, July 2018 (AFDB)
The SADC Region registered annual inflation rate of 8.7% in July 2018 compared to July 2017 as measured by the HCPI. Month on month inflation rate registered an increase of 0.6% in July 2018 compared to June 2018. The reported annual inflation rates for July 2018 of SADC Member States indicate that three Member States have recorded highest double-digit inflation rates, as follows (pdf): Angola (19.4%), DRC (28.0%) and Malawi (10.2%) whilst Zambia registered lowest inflation rate of 2.0%. The annual inflation rates for the rest of the other member states were: Botswana (2.6%), Eswatini (4.5%), Lesotho (3.1%), Madagascar (8.5%), Mauritius (4.2%), Mozambique (4.7%), Namibia (5.2%), Seychelles (3.5%), South Africa (5.4%), Tanzania (3.3%) and Zimbabwe (4.0%), as reflected in table 2.
Francis Mangeni: African Continental Free Trade Area’s momentum needs refueling (EABW)
The African Continental Free Trade Area process seems to be stalling. There is concern that some critical timelines will not be met. Funds for the long meetings to undertake the ongoing negotiations are running out. Ratifications have dried up, though the number quickly grew to seven since the launch of the Agreement in March this year, mainly from countries that have championed the process or vying to host the new Secretariat for AFCTA. The ambivalence of Nigeria in not signing the Agreement has not helped. The product-specific approach being taken in negotiating the rules of origin, and uncertainty over trade liberalisation of the most critical sectors for intra-Africa trade, making up 10% of total products, is proving to be lengthy and tedious. These processes need to build on what already exists in the regional economic communities and the COMESA-EAC-SADC Tripartite.
IMF-Africa updates:
Guinea-Bissau: “A weak cashew harvest this year has dampened economic activity, with lower cashew production and prices weighing heavily on overall output, exports, and consumption. The mission projects real GDP growth of 3.8% in 2018, down from the roughly 6% pace maintained during 2015–17. Driven by lower cashew exports, the external current account deficit is projected to widen to 3.6% of GDP in 2018 from an estimated 1.9% in 2017. Government revenue has suffered from weaker economic growth along with slow progress on reform measures underpinning the 2018 budget. Tax collections for the first half of the year fell 9.7% below the program target. Cashew-related receipts have declined and there have also been delays in, among others, collection of tax arrears and stamp duty on air transportation. The underperformance of tax revenue was, however, partially offset by higher non-tax revenue, including receipts from sales of seized timber.”
Seychelles: “Macroeconomic performance continued to be strong in 2018. Real GDP growth is estimated to reach around 3.5%, reflecting strong output in the fishery industry and the information and communications sector. The external current account narrowed thanks to strong tourism earnings. The program is on track—with reserves and the primary surplus exceeding targets—and the mission reached a staff level agreement on policies for completion of the review.”
Rwanda: “The authorities have undertaken policies to improve Rwanda’s competitiveness, diversify production, promote exports, and contain imports. With export growth of 17.9% in the year to August 2018, and import growth of 7.4%, the trade balance has continued to improve. While export growth is expected to remain robust, the construction of Bugesera airport and a pickup in foreign-financed investment are expected to fuel imports, notably of capital goods, and is expected to lead to a rise in the trade deficit in 2018. Nonetheless, project disbursements and robust foreign direct investment are expected to maintain the balance of payments in surplus and support central bank reserve accumulation.”
Sierra Leone: “The economic environment remains challenging, with output growth still recovering from the recent loss in iron ore mining and reduced activity in the non-mining sectors. Output growth is likely to remain below 4% this year, and inflation remains elevated at 18%, reflecting a combination of factors including food and fuel price developments and pass-through from modest exchange rate depreciation. At the same time, the corrective actions the authorities have taken in recent months to shore up public finances in response to the cash shortfall have led to an increase in revenue and helped arrest the rise in public spending arrears. This is expected to result in some improvement in the 2018 budget performance this year.”
Today’s Quick Links: WTO 2018 Public Forum: news updates from the WTO Institute of Statistical, Social and Economic Research launches The 2017 State of the Ghanaian Economy Report Central Bank of Nigeria: Manufacturing Purchasing Manager’s Index for September (pdf) Central Bank of Egypt: Balance of payments performance, 2017-2018 SA Reserve Bank: speech by Daniel Mminele at Federal Reserve Bank of New York Kenya: Bolloré Logistics to let go hundreds of its Kenyan workers Monitoring EU agri-food trade: developments until July 2018 (pdf) |
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Lagos Chamber of Commerce and Industry holds special press conference on Nigerian maritime ports
Statement by Mr Babtunde Paul Ruwase, FCA President, LCCI
Press conference held at Commerce House, Victoria Island, Lagos on 2 October 2018
On behalf of the Lagos Chamber of Commerce (LCCI), Nigerian Economic Summit Group (NESG) and the Organised Private Sector (OPS) made up of MAN, NECA, NACCIMA, NASME, NASSI, our development partner, Centre for International Private Enterprise (CIPE), I wish to express our appreciation to you for honouring our invitation to this special press conference on Nigerian Maritime ports. This press conference has been called to present the key findings and recommendations of our just concluded feedback report on the Nigerian Maritime Ports.
As you may already know, there has been concerted efforts over the years by stakeholders (Federal Government in collaboration with private sector and development partners) to reposition the ports for efficiency and attainment of global best operational standard. For instance, the present administration over the last two years have focused on repositioning the ports through the National Action plans on cross border trading coordinated by Presidential Ease of Doing Business Council (PEBEC) and series of Presidential Executive Orders targeted at ports efficiency. The past and ongoing reform efforts notwithstanding, the Nigerian port continues to lag behind its peers in Africa and other parts of the world.
According to 2017 World Bank Ease of Doing Business ranking, Trading Across Borders which is a major indicator for measuring a country’s ports effectiveness ranked Nigeria very low at 183 out of 185 countries. This ranking did not reflect efforts of the present administration on repositioning the ports through series of interventions targeted at improving ports efficiency. Operators and users of the Nigerian ports are increasingly faced with bureaucratic red tape, limited access to the ports due to traffic congestion, constant delays, illegal charges, technical and security breakdown, leading to high costs of operations and competitiveness.
Consequently, LCCI in collaboration with other members of the OPS and our development partner, Centre for International Private Enterprise (CIPE) as part of our commitment to the Nigerian economy carried out a fact-based feedback study on maritime ports. The report is an update of our 2016 report titled pdf Nigeria: Reforming the Maritime Ports (1.32 MB) . The report highlights the present realities in our ports, outlined the costs of ongoing crises in our ports and highlighted gaps in the implementation of policy measures for attention and action of PEBEC and other relevant authorities.
The research finds that the economy is currently losing about N600 billion in customs revenue, estimated $10 billion on non-oil export and about N2.5 trillion corporate earnings across the sectors on an annual basis. Industrial capacity utilization currently stands at 38-40% and approximately 40% of businesses located around the Lagos ports’ communities have either relocated to other areas, scaled down operations or completely shut down. These developments have very huge adverse implication for job creation, tax revenue and real economic activities with estimated downside effect of about 3% on the country’s GDP.
This research noticed a worrisome level of deliberate resistance by some MDAs to implement / enforce enabling regulations including the 2017 Presidential Executive Orders relating to the ports. Fights for supremacy, conflict of interests among the MDAs and revenue ambitions that conflicts with trade facilitation objectives among the MDAs are common issues.
The study underscored the following concerns:
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About 10% of cargoes are cleared within the set timeline of 48 hours while majority of the cargoes take between 5 to 14 days to clear, some take as long as 20 days or more days to clear. Deliberate delays induced by MDAs official currently accounts for approximately 65% and 80% of import clearance and export processing time respectively.
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About 5,000 trucks currently seek access to the Lagos ports on daily basis. The port and its access roads were designed to take only about 1,500 trucks daily. Thus, trucks currently spend days and sometimes more than one week to access the port from Lagos main-land due to serious traffic hold-ups. Barring the traffic situation, the journey should have taken about one hour. This led to following consequences:
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Astronomical increase of trucks transport cost by 200 to 500% over the last two years;
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Longer cargo dwell time;
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Disruption of production schedules of manufacturers as raw materials are not delivered to factories in good time;
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Costs and risks of holding unreasonable level of inventory by companies in the bid to hedge against running out of raw materials arising from difficult access to the ports;
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Increased interest cost (borrowed fund) used for import transactions;
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High demurrage charges because of delays in cargo clearing process;
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High insurance premium of vessels coming to Nigeria and trucks conveying containers to and from the ports;
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Higher shipping and terminal charges; and
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Paralyzes of industrial and commercial activities in the Apapa axis and other parts of Lagos.
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About 60 tank farms are around Lagos ports, most of which were located without recourse to the original design of the ports, traffic consideration or the volatility of the products in the tanks. Lagos have witnessed rising spate of fuel trucks fire across the state with attendant loss of lives and properties. The most prominent recent case is the Otedola bridge fuel truck fire that clamed nine lives and 60 vehicles in June 2018.
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According to the Federal Road Safety Commission (FRSC), 1,000 people were killed in 308 container trucks related accidents in 2017 alone.
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Feedback from stakeholders confirm that bad port access roads accounts for 90% of accidents that cause damage to fragile imported items leading to significant losses. In addition, there are painful reports of loss/damage of perishable agricultural export due to extended time spent by the trucks before getting to the ports or the poor condition of warehouses at the ports. For instance, about 25% of cashew nuts being exported from Lagos to Vietnam in 2017 went bad or downgraded due to these factors.
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There are incessant pirate attacks and kidnappings on vessels in Nigeria’s territorial waters and the Gulf of Guinea. The high incidence of piracy leads to high shipping costs on Nigerian waters with the cost ultimately transferred to port users and final consumers.
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There is concern over the safety and cost implications of wrecked ships and abandoned vessels littering the Nigeria’s waters. According to NIMASA, about 200 derelict ships and wrecks currently litter our waters. Also, the Nigerian Channels and Habours remain largely shallow; making it difficult for big vessels to access the ports.
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Ports users are also worried about the rising cases of stealing and pilfering of loaded and sealed containers along the port road and within the ports.
Suggestions for reforms and policy actions
The report outlined ports reform measures that yielded positive outcome in some countries. It also suggested a number of short, medium and long-term measures for policies, processes and infrastructure enablers needed to reposition our maritime ports as follows:
1. Operational Reforms/Policy Measures
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Implement the use of Single Window Platform by all the relevant MDAs: We believe that enforcing the use of Single Window Platform is the most vital reform measure needed to reduce or eliminate process delays, human interface, bureaucracy and multiplicity of agencies. This will have an immediate, wide and positive impact in the port.
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Enforce Presidential Executive Order: Presidential Executive Order on Single examination should be enforced and any MDA that violates the Order should be sanctioned. There is also the need to digitize export processes, especially the processing and approval of NXP forms. In addition, Federal Operations Unit (FOU) of the Nigeria Customs Service should vacate all roads (whether on checkpoint duty or on patrol duty) in the country, including interstate roads. They should be limited to the Ecowas Treaty Approved Check Points near international border posts. This is global best practice to facilitate trade and doing business.
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Enforce the Reduction of the Number of MDAs and Security formations at The Ports: The number of government agencies/departments at the ports is now 12 and need to be reduced to 8 in line with Presidential Order and best international port practice. Also, the number of security formations which is currently between 6 and 10 involved in port operations with different levels of involvement in the cargo clearance processes need to be streamlined.
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Pass and Sign the Enabling Ports Reform Bills by the National Assembly and the Presidency: The National Transport Commission Bill was passed by the by the two chambers of National Assembly. The Bill when signed into law can set the transport sector on the path of positive development and will address many controversial issues in the maritime industry. We also expect the passage signing of Port & Harbours Bill (PHB), National Inland Waterways Authority (NIWA) bill, Coastal and Inland Shipping (Cabotage) Bill and Council for Regulation of Freight Forwarders Bill. This will provide the much-needed legal framework to move our maritime ports to the next level.
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Pay attention to other ports outside Lagos: There is need to extend reform action plans of PEBEC to Eastern ports, air and land ports. The concessioning of Onitsha seaport should be finalized. Government should improve the security situation along and within the Warri port in other to ward off militants and touts. Stakeholders request that government should approve and publicize a bouquet of incentives to importers and exporters that patronize ports outside Lagos State. These measures will make ports outside Lagos attractive for patronage by importers and exporters. This will ultimately reduce the current pressure on the Lagos Port and roads.
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Promote Business Ethics and Integrity among the Port Users: It was observed that many importers and their clearing agents are fraught with dishonest practices of under and false declarations, cutting corners and inducement of MDAs officials. There is need for increased partnership and collaboration between the government, trade association and Chamber of Commerce in the educating port users on the dangers of dishonest practices. More advocacy efforts from Business Management Organisations (BMOs), “name and shame” of culprits and their collaborators and sanctions are needed in this area.
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Integrated Advance Cargo and customs clearance system: While some level of container scanning is currently in place, the proportion of activities for which scanning (estimated at about 10%) is used is too small to have any meaningful effect. We call for the implementation of an Integrated Advance Cargo and customs clearance system, with scanning, sealing and tracking (SST) capabilities.
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Enforce the use of National Trade Data Centre: The National Trade Data Centre has been established but not accessible by most stakeholders in the port. The Centre should be readily accessible to all agencies, operators and stakeholders at all times and everywhere to eliminate valuation arbitrariness and inherent abuses.
2. Infrastructure and Facilities Intervention Measures
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Track Park and Call-up System: A trailer park that was under construction around Tin Can Port but has been abandoned for some time now should be revived. There is need to commence the use of Orile Truck Park for truck call-up system. The construction of more trailer parks desirable and the installation of truck callup system will help to address the lingering traffic congestion.
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Weigh Bridge (manual or electronic), warehouses, internet backbone, container scanning machines and other enabling facilities at the ports are either not in place or grossly inadequate. These are areas that Public Private Partnership can be further explored.
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Repair and Maintenance of Port Roads: The ongoing repair of port access roads through PPP is commendable but the pace of work has been very slow leading to traffic gridlock to and within the ports. The scope of the road repair should be extended to other port access and link roads with set timeline for completion and post repair maintenance.
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Rail: Our desire is for Nigeria to get to the point where it can move containers and other items to and from the ports using rail across the country. In the meantime, we call for the removal of all impediments and obstruction on the existing port rail line including the tank farms. The Nigerian Railway Corporation should be incentivized to build a 1000TEU capacity Terminal at its premises in Ebute Metta where containers can be transferred to and out of Apapa Port and Lilypond terminal by rail. Also, APMT should be directed to commence utilisation of Lilypond Container Terminal for both import and export, utilizing rail for container transfers.
The above concerns and recommendations are not exhaustive. Our advocacy activity in the maritime ports and other sectors is a continuous one. We have a collective responsibility working with various stakeholders to ensure a better investment environment for the progress of the Nigerian economy and the good of everyone.
Conclusion
It is widely acknowledged that coordinating port reforms can be challenging due to multi-level fragmentation of stakeholders, vested interests and the diversity of MDAs involved. To us in the private sector, one major way to drive economic diversification objective of the present administration is to fix the ease of doing business at the nation’s ports.
Overall, political will, active enforcement and monitoring framework that flow right from the Presidency down to the MDAs is the most essential enabler to succeed and sustain the present port reforms. We believe that the success of the ongoing reforms in the port is largely predicated on the buy-in of all stakeholders, political will of the Presidency and PEBEC through active and sustained enforcement, monitoring and sanctions where necessary.
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tralac’s Daily News Selection
The economic and social effects of the Economic Partnership Agreements on selected African countries (OFSE)
The report starts with an assessment of the main provisions of the three EPAs covered – the SADC-EPA, the ECOWAS-EPA and the EAC-EPA - thereby focusing on the market access offer and the provisions in the agreement which potentially limit the developmental policy space as well as offer a potential to strengthen sustainability aspects in African partner countries. Then the implications of the three specific EPAs with a focus on Mozambique, Ghana and Uganda, respectively, are scrutinized. Based on interviews with stakeholders during field research in the three countries, implementation challenges associated with the agreements are discussed.
Further, different sectoral case studies are analyzed to investigate the potential of the EPAs on the export side, highlighting the opportunities and challenges for export promotion policies in the context of global value chains and related lead firm strategies as well as local competitiveness conditions. The five sectoral case studies include the cotton, textile and apparel sectors in selected SADC countries with a focus on Mozambique, the cocoa and mango sectors in Ghana, and the coffee and fish sectors in Uganda.
The main findings and key policy recommendations of the study can be summarized as follows: (i) Estimated economic effects of trade liberalization for Africa are negative, but mostly small; (ii) Adjustment costs need EU policy responses; (iii) Promotion of export sectors needs strong industrial policies for structural transformation; (iv) EU Development Cooperation will need to support comprehensive capacity building in the public sector; (v) EPA monitoring process must be results-oriented, inclusive, transparent, and flexible. [The authors: Jan Grumiller, Werner Raza, Cornelia Staritz, Bernhard Tröster, Rudi von Arnim] [Download: pdf The economic and social effects of the Economic Partnership Agreements on selected African countries (2.33 MB) ]
Healthcare and economic growth in Africa: advance findings (Triple Pundit)
GBCHealth, the Aliko Dangote Foundation and the UNECA have released preliminary findings from their forthcoming Healthcare and economic growth in Africa (pdf) report, calling for greater African private sector involvement and investment in healthcare. The preliminary report finds that neither government nor existing public-private partnerships are effective enough, and that existing PPPs disproportionately focus on a small number of countries. The preliminary report recommends a new model, one in which PPPs prioritize around the most significant disease burden and broaden their scope to benefit the health of the whole continent, which is deemed critical to driving long-term economic growth in Africa. Profiled slides from the presentation (pdf): (i) How much do African countries spend on healthcare?; (ii) How much do Africans spend on healthcare?; (iii) PPPs often not aligned to disease burden or health priorities; (iv) …and are unequally distributed across the continent; (v) Why are the top 10 countries with the most health PPPs attractive to the private sector?
ECOWAS deliberates on West Africa trade facilitation programme
ECOWAS, WAEMU, and development partners, held their first steering committee meeting for the West Africa Trade Facilitation Programme which aims to improve trade facilitation measures and increase intra-regional trade in West Africa on 27 September in Abuja. The meeting approved the work plan for the first year of the programme, the establishment of its governance structure and its communication strategy. The ECOWAS Commission’s Commissioner for Trade, Customs and Free Movement, Tèi Konzi, said that the West Africa Trade Facilitation Programme, being a multi donor initiative, showcases the importance placed on economic integration by the international community. The Commissioner urged the donors - the EU, USAID, Netherlands, Germany and the World Bank - to take into account the political dynamics of the region and be flexible in the implementation of the programme in order to achieve its desired results.
Tanzania: Traders concerned about tracking cost (The Citizen)
The high cost of additional equipment for tracking and tracing goods has hampered smooth implementation of the Single Customs Territory, according to the business fraternity. Business leaders say the system has eased cross border movement of goods in the region and that by December last year, all goods were rolled onto the SCT. However, the business leaders in Tanzania are concerned that drivers carrying goods beyond the country’s borders have to buy other tracking devices. “This is due to the fact that the Tanzania Revenue Authority covers for transit goods only within Tanzania,” said Frank Dafa, a trade policy specialist with the Confederation of Tanzania Industries. He said the drivers taking goods to Kenya, for instance, have to buy new tracking devices from the Kenya Revenue Authority, which are said to cost up to $1,000 (about Sh2.3 million).
Updates from Ghana
Economy expands by 24.6% after rebasing (Ghanaian Times)
Ghana’s economy has expanded by 24.6% for last year, according to rebasing figures by the Ghana Statistics Service. This was after the GSS reviewed the based year from 2006 to 2013 and the way of calculating economic growth for the country. The recalculation means that gross domestic product last year grew by 8.1%, not 8.5% as previously estimated. “Ghana, a major commodity exporter, recalculated its GDP based on measurements from 2013 instead of 2006 to more accurately reflect recent activity in its petroleum, communication technology and construction sectors, acting government statistician Mr Baah Wadieh disclosed at a press conference in Accra on Friday. He said per capita rose to 8,863 cedis ($2,035) in 2017, compared to 4,679 cedis at the last rebasing in 2013. “The rebasing means that current GDP value including oil is estimated at 256.67 billion cedis ($58.9bn), up from 123.65 billion cedis,” Mr Wadieh added. [Note: Ghana Statistical Service GDP data can be accessed here]
2017 State Ownership Report (MOFEP)
Government has also commenced the development and implementation of a State Ownership Policy, which will, among others, outline the rationale for the State’s strategic ownership of interest in SOEs and JVCs and also clarify the relationship between the State as the owner and SOEs/JVCs. The Policy will help define, separate and strengthen government’s role as shareholder, policy maker and regulator of SOEs. The maiden edition of the State Ownership Report issued in 2016 focused on 18 entities on which we had financial and other relevant information. This year’s edition (pdf) covers 49 entities out of 86 entities in which government has equity investments. There are 37 more entities who are yet to submit the required information.
Related: Ghana’s State-owned enterprises recorded a net loss of GH¢1.29bn last year, the State Ownership Report has revealed. The report said the losses were a reduction over similar losses recorded in 2016. According to the report, the bane of SOEs was their chronic inability to contain costs, as their aggregate operating cost increased by 56.5%last year. “This is of concern, given that inflation and interest rates have been on a downward trajectory,” the Senior Minister, Yaw Osafo-Maafo, said when he launched the report at the 2nd annual State Owned Enterprise Policy and Governance Forum in Accra.
We’ve achieved 99% paperless system – GPHA (GhanaWeb)
Survey of the Kenyan private equity and venture capital landscape (World Bank)
This paper discusses the landscape for private equity and venture capital financing in Kenya. 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/taxation drivers and impediments that affect Kenya’s private equity and venture capital industry.
1st Africa Environment Partnership Platform (20-21 September, Nairobi): communiqué (NEPAD)
Decide to: Convene the African Environment Partnership Platform biennially with a focus on facilitating country experiences, lessons and best practice in the efforts to accelerate sustainable environmental practices; Request development partners and multilateral institutions to continue to support the African Environmental Partnership Platform as a vehicle to promote the sharing of innovative solutions for environmental challenges in Africa, to empower Member States and RECs, innovators, the private sector, micro, small and medium enterprises and civil society to invest in and use innovative approaches to address environmental challenges.
SADC urged to accelerate implementation of a single air transport market (SARDC)
However, a report from the SADC Safety Aviation Organisation shows that to date, only four SADC countries – Botswana, Mozambique, South Africa and Zimbabwe – have signed the solemn declaration on SAATM, a condition that has limited the expansion of the air transport industry in southern Africa and the continent as a whole. As such the SADC Ministers Responsible for ICT, Transport and Meteorology has urged the remaining Member States to assent to the SAATM and enable the region to improve its aviation industry.
India’s growth story (World Bank)
India has attained much economic success in the past three decades. Yet an economic deceleration in recent years has generated worried commentaries about the country’s growth outlook. This paper offers a long-term perspective on India’s growth experience. Analyzing the past five decades of data, the paper notes that growth has slowly but steadily accelerated, become less erratic, and been well diversified across sectors and states. A more granular assessment of the period since the early 1990s finds that there were three distinct phases of growth:
Tuesday’s Quick Links: PwC Kenya’s Victor Nyangau: Continental Free Trade Agreement has great potential World Bank holding Sh112bn for Tanzania over ‘restrictive’ Statistics Act Kenya: EACC survey reveals cost of bribery for services, tenders IGAD’s Land Governance Portal launched The AfDB has posted an EOI for its Mozambique Country Office Partnership Engagement Initiative Southern African Power Pool: Environmental and Social Management Framework OFSE Briefing Paper 19: Digitalization and Development Cooperation: an assessment of the debate and its implications for policy UNCTAD’s Mid-term review is presented at the Trade and Development Board UN Assembly wraps up annual general debate, its global multilateral role reaffirmed; now comes the task of reform World Bank: Everything you need to know to follow the 2018 Annual Meetings (8-14 October, Bali) |
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SADC urged to accelerate implementation of a single air transport market
The civil aviation industry in southern Africa and the rest of the continent is projected to grow exponentially once the Single African Air Transport Market (SAATM) is fully implemented.
A joint meeting of Southern African Development Community (SADC) Ministers responsible for Information Communication Technology (ICT), Transport and Meteorology, held in Windhoek, Namibia on 24-27 September noted that it is possible to attain double-digit growth rates in the aviation sector if the SAATM is operational.
Developing a single air transport market is an African Union (AU) initiative, whose goal is to accelerate the implementation of the 1999 Yamoussoukro Decision, a treaty signed by 44 African countries to provide an open skies policy among Member States.
The full implementation of the Yamoussoukro Decision and the SAATM is expected to reduce aviation costs and make air transport services accessible to a wider population of business and leisure-related travellers.
The anticipated growth in air passenger volumes will also have the knock-on effect of accelerating the growth of the civil aviation industry at the regional and continental level.
However, a report from the SADC Safety Aviation Organisation (SASO) shows that to date, only four SADC countries – Botswana, Mozambique, South Africa and Zimbabwe – have signed the solemn declaration on SAATM, a condition that has limited the expansion of the air transport industry in southern Africa and the continent as a whole.
As such the SADC Ministers Responsible for ICT, Transport and Meteorology has urged the remaining Member States to assent to the SAATM and enable the region to improve its aviation industry.
In order to create a guiding framework for the implementation of SAATM at the continental level, the NEPAD Agency, AU Commission and the African Development Bank convened the Aviation Stakeholders Laboratory, which was held in the Ivory Coast in March 2018.
During this meeting, stakeholders explored strategies to reduce fares and costs of travel by 50 percent so as to achieve double-digit growth in Africa’s air traffic by 2023.
In addition, the Aviation Stakeholders Laboratory came up with a draft SAATM Priority Action Plan covering the period 2018 to 2019, which SAATM signatory states have to consider for adoption and implementation.
The action plan comprises six pillars, the first of which involves implementing advocacy programmes to encourage the full adoption of SAATM across the African continent.
This would include executing a comprehensive communication strategy designed to raise awareness of the benefits of SAATM in advancing the continent’s air transport industry.
The second pillar of the action plan encompasses the setting up a robust regulatory framework for SAATM, which would include elaborate dispute resolution mechanisms, the operationalization of the African Civil Aviation Arbitration Tribunal as well as the harmonisation of airline authorization and market access regulations.
The third pillar seeks to bring SAATM into operation by strengthening the capacity of implementing entities, harmonizing policies on air traffic taxes including the establishment of a monitoring and evaluation framework for the implementation of SAATM.
An additional pillar of the action plan focuses on setting up adequate SAATM infrastructure that creates the necessary architecture of the single African sky, while also ensuring that the entire industry has the capacity to handle the anticipated growth of air traffic in the future.
The fifth pillar of the SAATM action plan places emphasis on enhancing aviation safety and security with all signatory states being required to meet the Abuja safety targets as well as the Windhoek targets for security and facilitation in Africa.
The Abuja targets are aviation safety requirements that were initially adopted in 2012 and subsequently reviewed in 2017 by the African Ministers responsible for civil aviation to ensure effectiveness and relevance.
The Windhoek targets were set up following a Ministerial Conference held in Namibia in April 2017 with the objective of reinforcing commitment by African states to enhanced aviation security on the continent.
Recognising that SAATM must operate within the context of a safe and secure aviation environment, SADC Ministers responsible for ICT, Transport and Meteorology also unanimously agreed that all SAATM countries must meet the Abuja safety and the Windhoek security and facilitation targets as required.
The last pillar of the SAATM action plan looks into establishing an appropriate financing framework for the aviation industry.
This includes mobilising resources to conduct a countrywide study on the benefits of aviation to Africa’s socio-economic landscape as well organizing a conference for resource mobilisation for the elaboration of regional and continental aviation infrastructure master plans.
In order to demonstrate the region’s commitment to SAATM, the September 2018 joint meeting of SADC Ministers responsible for ICT, Transport and Meteorology, also agreed to the principle that all countries joining SAATM must comply with the seven concrete measures required to fully comply with the solemn declaration.
These steps include a requirement by signatory states to abolish any provisions in their respective Bilateral Air Service Agreements (BASAs) for intra-African air services that are contrary to the Yamoussoukro Decision and to SAATM.