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India-Kenya Joint Trade Committee meeting held in Nairobi
The 8th meeting of India-Kenya Joint Trade Committee was held in Nairobi, Kenya, from 22nd – 25th August, 2018.
The meeting was co-chaired by Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu and Mr. Peter Munya, Cabinet Secretary (Minister) for Industry, Trade and Cooperatives, Government of Kenya.
The discussions during the meetings covered India’s contribution in implementation of Kenya’s Big Four Agenda – food security, affordable housing, universal healthcare and manufacturing, expansion and diversification of bilateral trade, Kenya’s readiness to join the International Solar Alliance, implementation of Lines of Credit, of over US$ 220 million, extended by Government of India in power transmission, SMEs development, revival of the Rivatex factory and agricultural mechanization, implementation of decisions taken during the high level exchanges, cooperation in health, blue economy, agroprocessing sectors and WTO related issues; and training & capacity building programmes offered by India.
An Agreed Minutes of the Meeting was signed by both Ministers. A meeting of India-Kenya Joint Business Council was held on the side-lines of the Joint Trade Committee meeting. In his address to the Kenyan and Indian business leaders, Suresh Prabhu emphasized on research and design in products specific to Kenyan needs and urged Indian businesses to carry out a market study to identify priority areas for bilateral cooperation.
The Commerce Minister also interacted with the members of the Indian diaspora and apprised them about the various developmental initiatives and achievements of the Government of India.
During the visit, Suresh Prabhu called on the Kenyan President, Uhuru Kenyatta, and Deputy President, Mr. William Ruto. The Commerce Minister was accompanied by senior officials of the Ministry of Commerce & Industry and a business delegation.
India and Kenya are Indian Ocean neighbours and share longstanding trade and people-to-people contacts. At present, India is one of Kenya’s largest trade partners and the second largest foreign investor in Kenya. Indians are the third-largest group of tourists to Kenya. The last meeting of Joint Trade Committee was held in New Delhi in February 2015.
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Response to IIPA comments to USTR regarding South Africa’s Copyright Amendments Bill and AGOA eligibility
IIPA claims that South Africa’s copyright reform bill would make the country ineligible for AGOA benefits
The United States Trade Representative (USTR) is conducting its annual review of country eligibility for trade benefits under the African Growth and Opportunity Act (AGOA). This law allows beneficiary countries to export certain goods into the U.S. duty-free. The benefits are conditional upon a set of criteria, which includes the protection of intellectual property.
The International Intellectual Property Association (IIPA) has filed comments to USTR arguing that pdf South Africa’s copyright reform legislation (225 KB) , if it becomes law, “would place South Africa out of compliance with the AGOA eligibility criteria regarding intellectual property.” IIPA points to five specific provisions in the legislation, which it claims violate the TRIPS Agreement and the Berne Convention (a footnote points to the treaty articles laying out the three step test). The provisions are:
“An ill-considered importation of the U.S. “fair use” rubric appended to a proliferation of extremely broad and new exceptions and limitations to copyright protection, the effect of which would imperil the legitimate markets for educational texts, locally-distributed works, and online works, in general.
“New provisions regarding the “making available” right for record producers which have a far broader impact across the copyright industries, raising significant concerns.
“Licensing and regulatory mechanisms that are likely to undermine the digital marketplace by regulating the relationship between creative parties rather than by providing a robust legal framework for the protection of creative works within which private parties can freely negotiate the terms of their relationships.
“Unnecessary restrictions on rights holders to contract on the open market, a key factor for the healthy growth of the entire creative sector. For example, the 2017 Bill limits assignment of rights to 25 years.
“Inadequate criminal and civil remedies for infringement, including online piracy.”
The User Rights Network has previously submitted comments to the South African government supporting the legislation, with specific attention to the fair use provision. Indeed, the authors have written in IP Watch that South Africa’s bill “should be a model for the world.”
Sean Flynn and Peter Jaszi from the American University Washington College of Law’s Program on Information Justice and Intellectual Property have submitted the following response to the USTR.
Response to IIPA comments to USTR regarding South Africa’s Copyright Amendments Bill and AGOA eligibility
Submission to USTR for the Annual Review of Country Eligibility for Benefits under AGOA
The American University Washington College of Law’s Program on Information Justice and Intellectual Property (PIJIP) is an academic research program that promotes the public interest in intellectual property policy. We coordinate the Global Expert Network on Copyright User Rights, a group of leading copyright academics from around the world that publishes research and provides technical assistance to explain how adopting more open, flexible and general user rights can promote social and economic interests.
We write in reference to the August 1, 2018, filing of the IIPA, in respect of South Africa’s proposed copyright amendments. IIPA claims that adoption of the South Africa copyright amendment bill “would place South Africa out of compliance with the AGOA eligibility criteria regarding intellectual property.” We find this claim wholly unsupported.
AGOA is a general system of preferences (GSP) program. GSP programs are regulated under the World Trade Organization’s GSP “Enabling Clause.” The WTO permits GSP programs as exceptions to the most favored nation obligation only in so far as GSP criteria are “generalized, non-reciprocal and non discriminatory,” and that they “be designed and, if necessary, modified, to respond positively to the development, financial and trade needs of developing countries.”
The IIPA’s submission vaguely criticizes South Africa’s proposed copyright amendments as containing “extremely broad and new exceptions and limitations,” and an “ill-considered importation of the U.S. ‘fair use’ rubric” which it concludes without explanation would violate the so-called three-step test in TRIPS Article 13 and Berne Article 9. We take exception to this cursory analysis.
South Africa’s proposed copyright amendment bill contains an innovative, forward-thinking and South Africa-specific set of modernized limitations and exceptions that will contribute to its support of both innovation and access that will serve its public.
The bill’s proposed new article 12 (considering A and B together) is a hybrid general exception that combines a set of modern specific exceptions for various purposes (Section 12B) and an open general “fair use” exception that can be used to assess any use for a purpose not specifically covered elsewhere. In this sense, it is akin to US law, which also contains a host of specific exceptions and a general fair use general exception.
The IIPA criticizes the specific exceptions in 12B as being “broad.” The breadth of South Africa’s new specific exceptions is a virtue, not a flaw. Its current law applies exceptions narrowly to specific types of works, users and uses, to the effect that many modern lawful uses of works permitted under US fair use law are excluded from their scope. For example, the incidental use right in current South Africa law applies to artistic, but not audiovisual, works – with the result that documentary film makers lack a right to capture a radio or television broadcast in the background of a shot. The new law broadens most of its current exceptions to apply to all works (e.g., extending to audiovisual, etc.), uses (including, e.g., display, performance, etc.), and users (e.g., to both individuals and institutions). This breadth will make South Africa’s law function more similarly to US and other laws around the world that are more accommodating of modern technology.
The breadth of South Africa’s exceptions is a feature that contributes to its development, financial and trade needs. Recent empirical research has shown, for example, that providing exceptions that are open to purposes, uses, works and users is correlated with both information technology industry growth and to increased production of works of knowledge creation.
The fair use provision in Article 12A is similarly forward thinking. The main features of the clause draws from the US fair use right, and thus must be unassailable as a matter of US trade policy. The provision contains several innovations in its phrasing that will make the provision more clear in its application and consistent with modern trends in the interpretation of fair use and fair dealing rights.
First, we commend the drafters on the opening phrase – “In addition to uses specifically authorized.” This provision makes clear that the fair use clause intends to cover issues unaddressed in its specific exceptions, as is the case with US fair use. This is particularly important to obtain the benefit of fair use as enabling adaptation to technology and culture change. It also signals to the interpreter that there exist a full set of specific exceptions (in 12B et seq.), which we commend for adding to the predictability of the law.
We commend as well the unique and clear phrasing of the opening clause – “for purposes such as the following.” The inclusion of the illustrative purposes in an itemized list, preceded by the opening clause, makes it very clear that the listed purposes are illustrative, not exhaustive.
We commend the drafters on the list of illustrative purposes that are included. The list of illustrative purposes is innovative in including both traditional fair dealing purposes (e.g., criticism or review of that work or of another work), as well as more modern purposes that have been recognized by statutes and in case law in other countries (e.g., “comment, illustration, parody, satire, caricature, cartoon, tribute, homage or pastiche”).
The inclusion of the interests of “libraries, archives and museums” ensures that such institutions will be able to utilize fair use in addition to the specific rights they are provided later in the Act.
The provision will add to the predictability of its interpretation by reflecting the traditional approach that in interpreting whether a use is fair “all relevant factors shall be taken into account, including but not limited to” the listed four factors. This is also consistent with US law.
The proposal includes a well-considered four-factor test that reflects the global trend, but clarifies its application.
The four fair use factors in the Bill add to the predictability of the law. South Africa’s current fair dealing provision contains no standards for how to consider when a dealing is fair. The Bill proposes to ground the law in a growing international trend toward defining fairness, in both fair use and fair dealing statutes, through a variation of the US four factor test for defining fair use.
The four factors in the South African bill contain helpful clarifications that reflect global trends in interpretation.
In evaluating the purpose and character of the use, the provision helpfully instructs consideration of the core of the transformative use test – whether “such use serves a purpose different from that of the work affected.” The “transformative use” test has added greatly to the predictability of fair use in the US. Judge Leval’s opinion in Authors Guild v. Google, 804 F.3d 202 (2d Cir. 2015)(“Google Books”) makes the convergence of reasoning within US courts especially clear – he cites authorities from various circuits in reaching his conclusion. The Supreme Court denied certiorari review of the decision, leaving it to stand as the latest and most authoritative interpretation of the transformative use doctrine to date.
The fourth factor in the South African bill is clarified to focus on “the substitution effect of the act upon the potential market for the work in question.” The focus on “substitution effect” is important because copyright law is designed to protect consumer markets for protected works rather than licensing revenue in general. The concept is reflected in US interpretations of fair use. For example, the Second Circuit explained in Google Books, 804 F.3d at 214:
The more the appropriator is using the copied material for new, transformative purposes, the more it serves copyright’s goal of enriching public knowledge and the less likely it is that the appropriation will serve as a substitute for the original or its plausible derivatives.
Substitutionality is a common-sense concept, based on notions of intended audience. It does not open the floodgates for non-licensed use of derivative works. Art consumers substitute reproductions for originals – that’s why there’s a reproduction market, and why no one argues that merchandise based on reproductions of copyrighted art works is fair use. An example of a non-substitutional use would be the reproduction of some bars of music in a scholarly article, or a brief sample from one musical work incorporated into another.
IIPA makes vague but unsubstantiated claims that these provisions would violate TRIPS Article 13 and Berne Article 9. We find no basis for these claims. Many other nations have copyright laws with similar exceptions as proposed for South Africa, including the United States.
At bottom, the limitations and exceptions in South Africa’s proposed legislation are well crafted and completely within their rights under international law. They should not be considered as any basis for sanctioning the country under AGOA.
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Forum for China-Africa Cooperation: Africa still solidly in the crosshairs of China growth (Standard Bank)
When FOCAC was established in 2000, the rest of the world was perhaps bemused. Indeed, bilateral trade and investment between China and Africa then was minimal and African economic prospects not promising. China’s political embrace of Africa – as framed by FOCAC – has ushered in exponential growth in commercial ties. Now, just 18 years later, China is Africa’s largest trade partner, gaining large swaths of Africa’s market share. China is also a significant source of capital for Africa – loans to be sure, but also direct investment. Cities across Africa are virtually unrecognisable now from just a decade ago, largely due to partnership with China.
Chinese FDI in Africa remains small – at just $40bn. In reality, Chinese FDI into Africa is understated by as much as $10bn-$20bn. Most of Chinese firms in Africa are smaller privately owned firms, and are very poorly understood. When looking at data on greenfield investments announced, around 60% of the projects (measured by estimated capital to be deployed) is by private firms, and as much as USD19bn has been earmarked for manufacturing. As for RMB internationalization, the 13th Five Year Plan for a Modern Financial System – a key policy document overseeing the financial space through 2020 – has two goals: first, the development of direct finance; second, RMB internalization. We foresee one-third of China’s cross-border payments denominated in RMB by 2020. Extracts:
Chinese exporters have made strides in gaining market share in Africa – clearly at the expense of other trading partners. China’s exports to Africa reached $95bn for a second consecutive year in 2017. Overall, Africa has proved a resilient market for China, with exports rising by an average 14% y/y each year since 2010 — five percentage points faster than China’s sales elsewhere.
In fact, 10 of China’s 15 fastest-growing export markets since 2009 are in Africa; Djibouti, Kenya, Ethiopia and Tanzania in East Africa; Senegal, Ivory Coast, Guinea, Ghana and Cameroon in West Africa; and Mozambique in southern Africa. These 10 fast-growing countries now account for over one-fifth of China’s total sales to Africa, from one-tenth seven years ago, together consuming nearly $25bn of Chinese goods in 2017. This reinforces our view that Beijing and, more importantly, Chinese companies – both SOEs and private – are continuing their focused and nuanced approach to Africa.
Nigeria: Why is the share of non-oil export to GDP declining? (BusinessDay)
If you haven’t seen the recently released annual report of the Central Bank of Nigeria for the period ended December 31, 2017, especially with regard to the values of the nation’s non-oil export revenues on one hand, and the amount each of the top 100 exporters made as earnings during the same period, you might not understand the rationale behind this question. The CBN reported improvement in the nation’s non-oil export earnings as at the end of 2017 but the share of non-oil exports relative to GDP is declining. It is on record that in the last two years the CBN had devalued the naira with a view to addressing the pressures in the foreign exchange market. The policy was also meant to make Nigeria’s goods competitive at the international market. In the last quarter of 2017, trade with countries on the African continent accounted for 2.1% of Nigeria’s exported agricultural goods; 7.7% of raw materials exports; 34% of solid minerals exports; 98% of energy goods exports; 45% of manufactured exports, and 6.1% of other oil non oil exports. Extract from Chapter 7: External sector developments (pdf):
Non-oil imports, by country of origin: A disaggregation of non-oil import to Nigeria by country of origin showed that China remained dominant in 2017, accounting for 26.7% of the total. This was followed by the USA and India, with 9.8% and 7.1%, respectively. Non-oil import from Germany was 4.2%, while the United Kingdom had a share of 4.2% of the total. Import from Brazil represented 4.3%; The Netherlands, 3.4%; and Belgium, 2.6%.
Non-oil exports to ECOWAS sub-region: Non-oil export to the ECOWAS sub-region increased, significantly, by 31.8% to $370.24m, compared with $281.0m in 2016. Among member-countries, export to Ghana remained dominant at $114.99m, or 6.4% of the total. This was followed by Togo, $%85.53m (4.8%); Niger,$62.07m (3.5%); and Cote d’Ivoire with $56.55m (3.2%). At $0.39m, export to The Gambia was the least. The dominant export products to the sub-region remained: tobacco, plastics, rubber, plastic footwear, soap and detergents, and polybags.
What Uhuru must discuss with Trump during his visit to USA (Daily Nation)
As President Uhuru Kenyatta visits the White House this weekend, his agenda must be unassumingly firm because - let’s face it - with the Trump presidency, this won’t be an ordinary meeting and the traditional give-and-take diplomatic rule book may not apply. It’s telling enough that President Donald Trump has only hosted one African leader - President Muhammadu Buhari of Nigeria - with the agenda largely being security and terrorism in the African country’s restive north and Sahel region. It is, therefore, in many ways remarkable that he chose Kenya for his second one-on-one. Perhaps Trump’s primary agenda remains security and global terrorism, where Kenya is an undoubted regional ally. I am, however, interested in the opposite - in terms of what must be in President Kenyatta’s agenda, considering that this is a rare opportunity to cover some ground with Trump and speak for Africa. [The author: Erick Komolo]
Related perspectives: MFA CS meets African ambassadors in the US ahead of Kenyatta-Trump meeting. Foreign Affairs Cabinet Secretary Monica Juma is already in the United States ahead of a scheduled visit to the White House by President Uhuru Kenyatta on Monday. Upon her arrival at the Dulles International Airport on Wednesday, the CS held talks with 28 African resident ambassadors on trade cooperation with the US post-African Growth and Opportunity Act framework. She also engaged the ambassadors on the African Continental Free Trade Agreement. [Jaindi Kisero: Uhuru should not hold begging bowl but seek US tech assistance; The delicate Sh380bn road gamble US is pushing Kenyans to take]
Presidents of Vietnam, Ethiopia hold talks (Vietnam News)
At the end of the talks, the leaders witnessed the signing of co-operation documents, including a MoU on investment co-operation between the Vietnamese Ministry of Planning and Investment and the Ethiopian Investment Commission, an agreement on visa exemption for diplomatic and official passport holders and an MoU on co-operation between the two ministries of foreign affairs. President Quang also met with Ethiopian Prime Minister Abiy Ahmed, during which the two leaders pledged that Vietnam and Ethiopia will make better use of co-operation opportunities, promote trade exchanges and expand the list of high-quality goods with competitive prices while increasing information sharing and facilitating businesses’ investment promotion. Quang suggested Ethiopia enable Vietnamese firms, including the telecom group Viettel, to seek investment co-operation opportunities in Ethiopia in telecommunications, trade, agriculture, aviation and the construction of small and medium-sized hydropower plants. As regards agriculture, the host and guest said Vietnam’s experience in agricultural cultivation could be applied in Ethiopia to help the country ensure food security and agricultural development.
Ethiopia signs a host country agreement with Trade Mark East Africa (2Merkato)
Trade Mark East Africa, a non-profit organization, signed an agreement with Ethiopia to open a new office in Addis Ababa. Professor Afework Kassu, State Minister of Foreign Affairs, and Mr. Frank Matsaert, Executive Director of TMEA, signed a host country agreement today. The Minister said Ethiopia is undergoing socio-economic reforms which need regional economic integrity. The Minister appreciated the decision of the organization to open office in Ethiopia and said the government would assist in the process.
Tanzania: ATCL all set to go international from next week (IPPmedia)
Air Tanzania Company Limited is now set to extend its services to international skies with flights to Entebbe, Uganda and Bujumbura, Burundi starting next weekend. The company MD said flights to Mumbai, Bangkok, Johannesburg, and Guangzhou, via Dar es Salaam, will begin in the fourth quarter of the year. The government has this year spent billions of shillings in the purchase of new planes to kickstart an ATCL revival process being overseen by President John Magufuli himself. [SADC Aviation Safety Organisation Charter: GCIS update]
Francis Atwoli: Strengthening labour movement in Africa (The Standard)
Since inception in 2003, TUFEA’s pre-occupation has been to develop the region’s policy positions and strategies on political, economic and trade union integration process in the region in close consultations with our Pan-African organization, the Organisation of African Trade Union Unity, OATUU and our continent’s International Trade Union Confederation of Africa, ITUC-Africa. As TUFEA member countries, we continue to take a leading role in advocating for the importance of intra-African trade and trading blocks to challenge similar ones in both Europe and USA while advancing strong arguments in promoting South-South economic integration based on the theory that all counties will have a comparative advantage in manufacturing relative to the global economy. To this end, let us exploit our position in mobilising international solidarity campaigns whenever massive violations of trade union rights occur.
India: New industrial policy to focus on jobs, push tech use, cut red tape (Business Line)
The much-anticipated New Industrial Policy, which will replace the 27-year-old existing policy and pave the way for promotion of new technology and reduced regulations, has been placed before the Union Cabinet for approval. “The New Industrial Policy is now just a Cabinet nod away. Its implementation will lead to job creation and modernisation of units, and will encourage entrepreneurs to experiment with new technology to improve efficiency,” a government official told BusinessLine. This will be the third industrial policy drafted in independent India. The first was announced in 1956, and the second, in 1991. The draft industrial policy floated in August 2017 by the Department of Industrial Policy & Promotion aims to create jobs over the next two decades, promote foreign technology transfer and attract $100 billion FDI annually.
Economic Survey of Latin America and the Caribbean 2018: evolution of investment in Latin America and the Caribbean (ECLAC)
“Our region continues to grow, although at a slower pace than what was projected several months ago, despite international turbulence, said Alicia Bárcena, Executive Secretary of the UN Economic Commission for Latin America and the Caribbean during a press conference in Mexico City. While she noted that this steady growth is “positive,” she noted that “it demands that we redouble our efforts to prompt a reactivation, without resorting to excessive fiscal adjustments. “Regional integration can play an important role here, and we must aim in that direction,” she added. [Various downloads]
Friday’s Quick Links: Kenya: The Dangote angle in ARM Cement’s troubles Bitange Ndemo: How state intervention could boost the fortunes of Kenya’s pharmaceutical sector Nigeria: FG to submit 2019 budget in September Nduom: MTN deserves accolades for popularizing mobile money use in Ghana Owei Lakemfa: The African road to China Understanding Niamey’s flood risk through open source mapping, drones, and modeling India’s falling rupee is also dragging down businesses along with it ‘Finding global solutions for global problems’ is the focus of UN-civil society forum Mapping the landscape of transactions: the governance of business relations in Latin America ORF: Lessons from transboundary waste trade – why India should focus on the judicious use of its own waste |
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Launched today, in Busia: Cross Border Co-operation Coalition and Campaign. The coalition will consolidate efforts and voices of borderland CSOs to advocate for more enabling cross border cooperation policies, one of them being the AU Convention on Cross-Border Cooperation (the Niamey Convention).
South African trade policy updates:
(i) South Africa and AfCFTA ratification. “Cabinet approved the submission of the Agreement establishing the African Continental Free Trade Area to Parliament for ratification. This agreement will result in access to new and dynamic markets in the rest of Africa, in particular new markets in West Africa and North Africa. It will also provide export opportunities for South African products. This will also be in line with the integrated development approach in the continent. It will stimulate industrial development, investment and the creation of jobs in the continent.”
(ii) South Africa and TFTA ratification: pdf dti’s presentation to the portfolio committee of trade and industry (559 KB)
Slide: Potential benefit for South Africa. (i) When negotiations commence on the investment chapter, South Africa will advance that core provisions of South Africa’s Protection of Investment Act must be taken into account; (ii) Legal certainty and predictability of market in TFTA; (iii) Legal protections for South African exporters i.e. Agreement makes provision for dispute settlement mechanism that is delinked from national courts; (iv) Possibility for the TFTA having a “single-rule book” for trade, investment, IPR and Competition; (v) The TFTA will boost intra-regional trade.
Slide: Potential threats to South Africa. (i) Transshipment (third party imports gaining access through neighbouring countries) – this can be addressed through rules of origin and customs cooperation that is facilitated by the TFTA; (ii) Influx / dumping of substandard goods which can be addressed through effective border management – TFTA itself promotes intra-regional trade in compliance with SA standards; (iii) Non-implementation of commitments by regional partners with implications for preferential access for SA exports; (iv) Risk of implementation of barriers to trade with implications on movement of goods across the region - requires implementation of the industrial and infrastructure development pillars to broaden benefits of the TFTA.
(iii) Exports Councils are key drivers for South African economic transformation. The Deputy Director-General for Trade and Investment South Africa at the Department of Trade and Industry, Ms Lerato Mataboge, says export councils are key drivers for South Africa’s economic transformation and that they should be supported and prioritised. Mataboge said there is a need to find a way for export councils to coordinate better amongst themselves by looking at the clustering approach in order to make sure that they drive the economic strategy of the country. She said the clusters would enable the government and export councils to have an impact on the continent, in the BRICS economies, and the broader global market. “Export Councils, with the dti, need to find a niche in order to have a say in the Presidential R100bn investment drive, because investments and exports are intertwined. We also have to have a relook at the Integrated National Export Strategy in light of the 6% per annum export target that the National Development Plan has set for us. We need to reflect and see what contribution we are making to enable us to reach that target and also to make sure that we take a step back and look at the institutional arrangements that we have, and whether or not they are assisting in driving our export agenda.” Mataboge added that there was a need to discuss the recommendation of the Integrated National Export Strategy, and consider having a National Export Act that will pull together all the elements that speak to exports and the role of the export councils.
(iv) Government commits to increase Export Council funding. The Department of Trade and Industry has committed to increasing the funding of the export councils in order to drive the transformation agenda in different sectors. The commitment emanated from the export councils meeting hosted by the dti’s Director-General, Mr Lionel October in Pretoria. October said it was important to increase the funding in order to meet export targets and also to attach the conditionality of transformation to address the imbalances in different sectors. “Transformation of different industries is very important and that is going to be the pre-condition of funding for all export councils to commit to transformation and to grow the economy through exports. Export councils’ knowledge of industries and global markets is invaluable and it can never be replicated without decisive interventions, but what is important is to pass the knowledge on to the new players and have succession plans in order to transfer knowledge and skills.”
(v) Europeans unhappy about SA’s duties on chicken. The source of the European producers’ wrath is the provisional safeguard duties which the SA government imposed on European chicken imports last year. These duties lapsed but implementation of the final duties is expected soon. The Association of Poultry Processors and Poultry Trade in the EU (Avec), wrote to EC president Jean-Claude Juncker asking for reciprocal measures to be imposed on SA. “Since 2015, EU poultry meat producers have been confronted with a protectionist attitude from SA, who is using several measures to completely block access to the SA market to EU poultry meat producers,” Avec said in its letter. “Following antidumping measures ranging from 22% to 73% imposed in 2015, SA has used a wide range of sanitary and phyto-sanitary bans to block imports of poultry meat from eight of the 10 exporting EU member states. Most of these bans are still ongoing, although the avian influenza outbreaks which led to these bans have been resolved since mid-2017. The latest imposition of a safeguard duty of 35.3%, is another very hard blow to the [supposed] preferential nature of our trade relations with SA and Southern African Customs Union countries.”
(vi) New thinking needed for a collaborative manufacturing base. In the export market, SA’s competitiveness has been affected by a slowdown in investment in manufacturing as companies have been battling with low domestic demand and competition from cheaper imports. It is apparent that while SA has a coherent industrial policy, its implementation has been disappointing. There also appears to be a lack of policy co-ordination, particularly where the country has several other policy plans such as the National Development Plan and the New Growth Plan. SA needs a co-ordinated approach and a synchronisation of policies supporting economic growth and job creation. Policy consistency and collaboration across the manufacturing ecosystem can create synergies and linkages crucial to expanding the manufacturing base and improving competitiveness. [The author, Khumbulani Gumede, is chemicals, forestry, paper and pulp sector head at Absa Corporate & Investment Bank] [KwaZulu-Natal Manufacturing Indaba: speech by MEC Sihle Zikalala]
Namibia: Not a single piece of meat exported to China... despite lifting of moratorium (New Era)
Chinese Ambassador to Namibia, Zhang Yiming, confirmed yesterday that no meat has been exported to that country, despite the fact that a moratorium on beef export to that country was lifted in February. Zhang confirmed that the reason for this inactivity was that Namibia does not have enough beef to cater for the massive beef-eating Chinese market. He said this while briefing the media on the upcoming China-Africa Cooperation Beijing Summit slated for the first week of September. In 2016, Namibia and China signed a milestone agreement that would have seen A-grade Namibian beef enter the massive Asian market, making it the only country in Africa to export beef to that country. President Hage Geingob last month suggested the removal of the red line in the northern part of the country for the maximum Namibia’s beef benefits to be realised.
Ethiopia: Revenue & Customs Authority reboots customs system to ease hassle (Addis Fortune)
The new system, Electronic Customs Management System, replaces the Automated System for Customs Data (ASYCUDA), which has handled manifests, customs declarations, accounting procedures and transit procedures for the last 15 years. The new system, which has two integrated components, has been under development since 2016 by Webb Fontaine Group. It is expected to go live by the end of this year. A pilot program that automates and integrates operations on the main transit corridor of the country, connecting customs offices between Galafi, along the Djibouti border, and Qality in Addis Abeba, has been running since October 2017. Experts commend the technological advancement, yet question the characteristics, the legal framework and human resources quality of the Ethiopian Revenue & Customs Authority.
UAE will create business opportunities for Ghanaian enterprises says Ambassador (GhanaWeb)
Sheikh Khalifa Al-Zaabi, the UAE’s Ambassador to Ghana, said the embassy had set up an Economic and Trade Unit working with all Chamber of Commerce and Investment Authorities from UAE and Ghanaian business to increase the volume of trade and investment between the two countries and was planning an investment forum in Accra to introduce opportunities to Ghanaian businesses in the UAE. “As at 2017, trade volumes between UAE and Ghana were estimated $2.8bn and there are about 60 UAE Companies currently investing in Ghana”. A trade and investment delegation comprising 45 personalities, led by the Undersecretary of the Ministry of Economy for Foreign Trade is expected to arrive in Ghana on September 3 to explore business opportunities.
Nigeria’s oil export revenue rose to $26bn in seven months (New Stage)
Following the rally in global crude oil prices, Nigeria has recorded a significant increase in oil export revenue as the country earned an estimated $26bn in the first seven months of this year. The country saw its oil export revenue rise by 30% to $34bn in 2017, from $26bn in 2016, according to the new OPEC Revenues Fact Sheet released by the Energy Information Administration on Tuesday. Nigeria, Africa’s top oil producer, had the sixth biggest revenue in the 15-member Organisation of Petroleum Exporting Countries, and the lowest per capital oil revenue last year. Its rival, Angola, which earned an estimated $31bn in 2017, had a per capital oil revenue of $532. The southern African country earned $21bn in the first seven months of this year.
Improving road safety and urban mobility: Accra expert meeting (UNECA)
Every year, road crashes are estimated to claim over 300,000 lives in Africa. According to WHO, the African region has 2 per cent of the world’s registered vehicles but a disproportionate 16 per cent of the world’s road traffic deaths. Road traffic fatalities are estimated to be the fourth leading cause of death of persons aged 5 through 44 years. To share experience in improving road safety, over 100 participants representing nearly 20 African Government Ministries of Infrastructure/Transport, National Road Safety Authorities and Councils, African sub-regional and regional organizations, international organizations, NGOs, academic and research institutions, and the private sector are attending a 2-day workshop on Road Safety and Urban Mobility in Accra.
IMF technical assistance report on Malawi: Public Investment Management assessment
The strength of Malawi’s PIM institutions is generally comparable to SSA countries and other LIDCs (see figure 22). Malawi has stronger institutions than its comparators in the areas of coordination between entities, infrastructure financing, and budgeting for investment. Nevertheless, its PIM institutions are weaker in project appraisal, budget comprehensiveness, procurement, availability of funding, portfolio management and oversight, and project management. Despite the relative strength of Malawi’s PIM institutions, many of them are not being implemented efficiently and effectively (see figure 23). The gap between PIM institutional strength and its effectiveness is quite pronounced in all areas except project selection, suggesting the need to focus on the better implementation and enforcement of the existing framework of laws, regulations, and procedures that support PIM. Malawi has an opportunity to perform better than its comparators on key PIM institutions over the next five years.
IMF on Chad: Second review of the programme under the Extended Credit Facility
The current ECF arrangement (access of 160% of quota or SDR 224.32 million) was approved on June 30, 2017 in the context of a very difficult and deteriorating social, economic, and financial situation. The crisis was precipitated by the oil price and security shocks that began in 2014, and the heavy burden of external commercial debt. An agreement in principle to restructure the Glencore debt was reached in February 2018, which paved the way for the completion of the first review in April 2018. Chad’s stability is key for the regional security situation given its regional peace-keeping efforts.
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Exports councils are key drivers for South African economic transformation
The Deputy Director-General for Trade and Investment South Africa at the Department of Trade and Industry, Ms Lerato Mataboge, says export councils are key drivers for South Africa’s economic transformation and that they should be supported and prioritised.
Mataboge was addressing the two-day Export Council Quarterly Meeting that was held at the dti campus in Sunnyside, Pretoria on 20-21 August 2018.
“As government, we need to look at our efficiencies in so far as how we are structured, and the support that is provided to export councils and vice versa. We also need to determine if we are really working cohesively and supporting each other in accessing new markets, determining the strategy for which markets are a priority for the country, and determining which companies and exporters are in need of what kind of support.
“This is the role that we as government and export councils jointly play because that is where transformation is going to happen,” said Mataboge.
According to Mataboge, there is a need to find a way for export councils to coordinate better amongst themselves by looking at the clustering approach in order to make sure that they drive the economic strategy of the country. She said the clusters would enable the government and export councils to have an impact on the continent, in the BRICS economies, and the broader global market.
“Export Councils together with the dti need to find a niche in order to have a say in the Presidential R100 billion investment drive because investments and exports are intertwined. We also have to have a relook at the Integrated National Export Strategy in light of the 6% per annum export target that the National Development Plan has set for us.
“We need to reflect and see what contribution are we making to enable us to reach that target and also to make sure that we take a step back and look at the institutional arrangements that we have and whether or not they are assisting in driving our export agenda,” she said.
Mataboge added that there was a need to discuss the recommendation of the Integrated National Export Strategy, and consider having a National Export Act that will pull together all the elements that speak to exports and the role of the export councils.
Export councils are an integral part of government’s plan to grow exports, diversify product offerings, broaden markets and develop exporters through the mobilisation of black-, women- and youth-owned enterprises, as well as emerging exporters.
Government commits to increase export council funding
The Department of Trade and Industry (the dti) has committed to increasing the funding of the export councils in order to drive the transformation agenda in different sectors. The commitment emanated from the export councils meeting hosted by the dti’s Director-General, Mr Lionel October in Pretoria.
October said it was important to increase the funding in order to meet export targets and also to attach the conditionality of transformation to address the imbalances in different sectors.
“Transformation of different industries is very important and that is going to be the pre-condition of funding for all export councils to commit to transformation and to grow the economy through exports. export councils’ knowledge of industries and global markets is invaluable and it can never be replicated without decisive interventions, but what is important is to pass the knowledge on to the new players and have succession plans in order to transfer knowledge and skills,” said October.
October urged the councils to set targets for transformation and work towards them expeditiously. He said they could also set targets in their councils, in terms of staff complement, companies they procure goods from, and work towards having their own Black Economic Empowerment Export Councils’ Scorecard.
Speaking after the meeting, the representative of the South African Electro-Technical Export Council, Ms Chiboni Evans, said the key thing about this engagement with the dti was that it brought all export councils together not just to air any issues but to actually discuss constructively with the department on delivering on the country’s export agenda and targets.
She said the discussions will help the export councils to also understand from the government’s perspective what is it that was needed from them, and in turn communicate to the government what they need in terms of support in different sectors of the economy.
“The biggest commitment we received out of our engagement is the fact that our funding will be increased. Obviously the finalising of the quantum and how is it going to work needs to be finalised internally. But what was also important is that the Director-General insisted that we will not just get funding from government, but we also need to give something back from the private sector,” said Evans.
Evans added that as export councils, they all agree that issues around transformation are very important and commitments needs to be shown from both parties to make sure it happens in all sectors.
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Manufacturing sector evolving
KwaZulu-Natal Economic Development, Tourism and Environmental Affairs MEC Sihle Zikalala says the changes in trade, technology, organisation of production and product demand have all influenced the evolution of manufacturing activities.
“We are living through the Fourth Industrial Revolution, a wave of new technologies that are emerging and affecting our lives in many new ways, creating entirely new capabilities for people and machines. Global trends show an increase in disruptive markets that are changing traditional markets as we have known them,” Zikalala said.
Zikalala was speaking at the KZN Manufacturing Indaba, which was held on Wednesday, 22 August 2018 at Inkosi Albert Luthuli International Convention Centre.
Zikalala said the changes in the manufacturing sector has impacted heavily on the relationships between firms and the spaces they operate in.
“Probably the most significant change in this regard has been the globalisation of production networks whereby most manufacturing businesses are part of some type of globalised or globalising value chains. The growth of the manufacturing sector hinges on the availability of both skilled labour force and the ability of companies to acquire the latest technology to improve competitiveness,” he said.
Protect aggregate demand
The MEC said while they value the importance of technology in production, they also believe there is a need to protect the country’s aggregate demand, through attempting to balance the purchasing power of the labour force and productivity.
This will ensure that companies remain competitive and at the same time maintain the aggregate demand required to sustain increased production, he said.
Zikalala also stressed a need to constantly promote the growth of the middle income population in the economy, noting that in most emerging markets like India, China and Brazil, the growth in the middle income population has continued to anchor sustained economic growth.
Invest in infrastructure
In view of this, Zikalala said there is a need to invest in infrastructure that is investing for growth, rather than investing because of growth.
“There is a need to earmark substantial resources for research and development that are aimed at improving product quality. This might be achieved through tax incentives. KwaZulu-Natal remains committed to the national agenda of maximising the benefits of regional integration within SADC (Southern African Development Community) and BRICS (Brazil, Russia, India, China and South Africa) countries.
“The significance of exports in economic growth is evidenced by a large contribution of exports to GDP (Gross Domestic Product) in many successful countries. I can cite many examples here but it is critical to mention China and Germany. China’s export to GDP ratio is 39.9%, Germany’s ratio is about 50% compared to 25% of South Africa, and about 18% for KZN,” Zikalala said.
Zikalala maintained that the most successful economies of the world are those that are able to diversify their export basket.
Address by MEC Sihle Zikalala at the KwaZulu-Natal Manufacturing Indaba
I am honoured to be with you this morning as we collectively deliberate the developments in the manufacturing sector and profer solutions to stimulate growth.
The manufacturing Indaba offers us an opportunity to discuss the opportunities in the manufacturing sector and these can be exploited to by fight unemployment, povery and inequlity.
At present, the manufacturing sector is beset by a myriad of challenges. The challenges include lack of competitiveness and rising production costs.
It is in our hands as government, business, labour, and communitiese to find lasting solutions to improve the performance of the sector in order to create jobs, grow our economy and tackle poverty.
It is important for all spheres of government to know who their manufacturers are and must actively support the country’s localisation policies.
The manufacturing sector has such important linkages with other economic processes.
Manufacturing can also stimulate further deeper economic processes in towns and cities that are important not just in manufacturing, but also in a variety of services sectors.
Industrial development processes have thus been a necessary element of creating urban areas that can better meet the needs of citizens and a variety of economic systems.
This conference comes at a particularly momentous opportunity when the province is working tirelessly to implement various programmes to advance industrial development in the province such as the Special Economic Zones (SEZs), Industrial Economic hubs, maritime and Aerotropolis among other critical interventions.
Let me share a few reflections on some of the critical factors to develop the manufacturing sector in KwaZulu-Natal.
We remain guided by our growth and development vision that states that by “2030 KwaZulu-Natal will be a prosperous province with a healthy, secure and skilled population, acting as a gateway to Africa and the world.”
This vision is underpinned by the full knowledge that to succeed, we need a strong compact among all social partners to prioritise inclusive growth, create employment, reduce poverty.
KwaZulu-Natal manufacturing sector contributed about 21% to South Africa’s manufacturing Gross Value Added (GVA) in 2017.
The province’s manufacturing sector is the second largest in the country after Gauteng which contributes close to 41% of the total manufacturing GVA.
In KwaZulu-Natal, the manufacturing activities constitute about 72% of the secondary sector. The manufacturing sector in KwaZulu-Natal is heavily diversified, with highly integrated sectors such as industrial chemicals, timber, paper & pulp, and sugar.
In 2017, the real manufacturing GVA for KwaZulu-Natal was estimated at R80.8 billion and R154.7 billion for Gauteng, whereas the South African manufacturing sector GVA was estimated to be R384.04 billion.
The structure of KZN’s economy differs from the structure of the national economy in that it has a much larger manufacturing sector (16.6% of GGP compared to 12.6% of GDP for SA) and employs 12% of the province’s total employment.
The manufacturing sector employs about 14% of the province’s workforce. About a third of the country’s manufactured products originate in KwaZulu-Natal.
The lacklustre growth in the manufacturing sector remains the chief cause of slow growth in both the provincial and the national economy.
The province’s manufacturing sector contracted by 6.4% in the first quarter of 2018.
The causes of this sluggish growth in the sector relates predominantly to production bottlenecks centred on energy, labour unrests, infarstructure rigidities, diminishing competitiveness and exchange volatility.
As a country and as a province we are not an island. We are connected to a global network through various economic linkages and activities.
The current trade wars being experienced will affect us all and perhaps might even create a structural shift where manufacturing in the global sphere takes place.
This is both a challenge for many but also an opportunity.
We need to be flexible enough to counteract external threats and evolve and adjust to the changing environment.
We are living through the Fourth Industrial Revolution, a wave of new technologies that are emerging and affecting our lives in many new ways, creating entirely new capabilities for people and machines.
Global trends show an increase in disruptive markets that are changing traditional markets as we have known them.
For an example, we can talk about the automotive sector and how important this sector is to us but we know electric cars and autonomous vehicles are coming and how we prepare ourselves and transition the industry to this new wave of technology and going about re-skilling our workforce.
Changes in trade, technology, organisation of production and product demand have all influenced the evolution of manufacturing activities.
These changes have impacted heavily on the relationships between firms and the spaces they operate in. Probably the most significant change in this regard has been the globalisation of production networks whereby most manufacturing businesses are part of some type of globalised or globalising value chains.
The growth of the manufacturing sector hinges on the availability of both skilled labout force and the ability of companies to acquire the latest technology to improve competitiveness.
Whilst we value the importance technology in production, we also believe there is need to protect the country’s aggregate demand through attempting to balance the purchasing power of the labour force and productivity. This will ensure that our companies remain competitive and at the same time maintaining agregate demand required to sustain increased production.
We believe for our regional economy to grow, there is need to constantly promote the growth of the middle income population in the economy. In most emerging markets such as india, China and Brazil the growth in the middle income population has continued to anchor susstained economic growth.
In view of the above, there is need to invest in infrastructure, that is, investing for growth rather than investing because of growth.
There is need to earmark substantial resources for Research and Development that are aimed at improving product quality. This might be achieved through tax incentives. KwaZulu-Natal remains committed to the national agenda of maximising the benefits of regional integration within SADC and BRICS countries.
The significance of exports in economic growth is evidenced by a large contribution of exports to GDP in many successful countries. I can cite many examples here but it is critical to mention China and Germany.
China’s export to GDP ratio is 39.9%, Germany’s ratio is about 50% compared to 25% of South Africa and about 18% for KZN.
It is, therefore, a clear observation to state that the most successful economies of the world are those that are able to diversify their export basket. Our quest is to be able to grow the contribution of the export sector to GDP from the current levels to comparable levels with best economies of the world.
Export-led industrialisation has been highlighted in most economic circles as the vehicle through which developing countries and emerging markets can realize their economic fortunes and developmental aspirations.
In major emerging market economies export growth has been singled out as a necessary condition for rapid economic growth. The realisation of the importance of exports in economic growth is generally regarded as the force behind the success of the Asian “tiger economies”.
Ladies and Gentlemen, it is disheartening to note that although South Africa’s trade grew since 1994, the growth has been characterised predominantly by export of raw material commodities.
The success of our province and indeed our country hinges on our ability to grow the manufactured exports. The provincial government has placed the development of the export sector as an apex intervention that can grow the manufacturing sector and the economy at large.
There are three crucial lessons from the Asian Tigers.
Firstly, the success of the Asian tigers and China was their ability to promote labour-intensive manufactured exports. This was done through identifying potential sectors and identifying niche markets globally. The success of these economies was primarily hinged on innovation and beneficiation.
Secondly, the success of the Asian countries was also premised on their ability to promote exports through a combination of policies such free trade, convertible currencies, macroeconomic stability and through a set of innovative approaches such as export processing zones, duty exemption schemes, and incentive packages for foreign direct investment and special economic zones.
Ladies and gentlemen, we do not desire to replicate all of these schemes here, but it suffices to note that as a province we are ardently pursuing the development of SEZs and Industrial hubs in the province.
Lastly, the Asian tigers were also successful in consolidating regional integration as a critical component of export development.
Since 1994 South Africa has acceded to a number of investment and trade promotion agreements.
Our recent membership into BRIC countries is envisaged to bolster the country’s participation in international trade and as a premier investment destination.
South Africa is also a member to Southern African Development Community (SADC), South African Customs Union (SACU), African Growth and Opportunities Act (AGOA), Cotonoua Agreement (being replaced by Economic Partnership Agreements, EPAs), BRICS, World Trade Organisation (WTO) and a number of bilateral trade agreements (BTAs).
All of these point to the opportunities for the KwaZulu-Natal manufactures to aggressively look beyond the South African boarders.
New opportunities exist for us through the creation of a single continental market for goods and services within the African Union.
The African continent constitutes 29% of all exports from KZN and this bodes well as for the manufacturing sector and as a gateway for investors to the rest of the continent.
Our two Special Economic Zones in the KZN Province, one at Richards Bay Industrial Development Zone anchored by the Sea Port of Richards Bay and the Other at Dube Trade Port linked to King Shaka International Airport are gaining traction.
The cargo facilities at Dube Trade Port and connectivity at King Shaka International Airport are there to drive exports of high valued goods and help drive the development of the Durban Aerotropolis while Richards Bay focuses on bulk and heavy manufactured goods.
We are tirelessly working on a number of initiatives to re-industrialize the province and transform the economy through a number of mechanisms to radically transform the economy. The SEZ’s will be supported by Regional Industrial Economic Hubs through competitive advantages presented to us by various regions in the Province.
The province has identified the maritime sector as one of the strategic indutsries to develop exports and grow the provincial economy.
The areas we are focusing on include ship and boat building as well as repairs.
We are also exploring maritime tourism, oil and gas, fishing and aquaculture and the general freight and logistics sector. This is also in line with the national operation Phakisa programme that also identifies the maritime sector as critical for South African growth.
In the 21st century airports have become the springboads for the development of modern cities.
The provincial government recently formulated an integrated Aerotropolis strategy to guide the development of Durban Aerotropolis centrered around King Shaka International airport.
The Aerotropolis presents KwaZulu-Natal manufacturers and entrepreneurs to develop products that are geared for exports. It also presents opportunities in tourism resorts, hotel and accomodation, infrastructure and property development.
The province continues to attract international airlines to consider flying to King Shaka International airports.
From October, King Shaka International Airport welcomes British Airways to start a new route connecting KwaZulu-Natal and the United Kingdom.
We urge KZN companies to take advantage of this expanded network of King Shaka International airport to grow exports into the United Kingdom and Europe in general.
As we devise strategies to promote growth in the manufacturing sector and the economy in general, we cannot afford to do so at the detriment of the environment.
We need to work towards building a low-carbon footprint in KwaZulu-Natal. What this means is that when seeking for development models, we do not aspire to simply replicate the path to prosperity taken by the industrialised world.
We must pursue innovative waste management programmes, introduce carbon reduction incentive programmes and protect the biodiversity contained in many of our natural protected areas in the province.
Choosing a low carbon growth path for a cleaner future will be taking the road less travelled in development terms but the rewards definitely outweigh the risks.
Successful manufacturing has been heavily influenced by networks and relationships.
Therefore Ladies and Gentlemen I encourage you to compete through building effective clusters, involving specialised interactions between suppliers, producers, customers, related and supporting industries and government.
We are confident that your meaningful discussions will lead to an improved environment for our industrialist to prosper, to create jobs, and to train our youth to become the next generation of industrialists and grow the economy.
I thank you.
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Ethiopia: ERCA implements new customs management system
The Ethiopian Revenues and Customs Authority (ERCA) has introduced new electronic Customs Management System (CMS), which would help to comply with international customs standards.
Briefing journalists on 15 August 2018, CMS Project Manager Ababu Emiru said that the system is implemented through EU funded project to design, customize and deploy a customs management system on all ERCA's operational stations.
The new system, which replaces the existing Automated System for Customs and Data (ASYCUDA++), fully started its operation at coordinating office in Djbouti, Galaffi, Mile, Adama, Mojo, East Industry Park, Gelan, Addis Ababa-Kality and Bole-Lemi Industrial Park, he pointed out.
Moreover, CMS will also partially be implemented at Moyale and Metema Yohannes Customs Stations, the Project Manager added.
According to him, the newly introduced CMS expected to fill the gaps that have been identified at the existing ASYCUDA++ through applying an intelligent risk management system.
Besides, CMS will provide transparency in business transactions, promote predictable, fast economical and clearance operations, he said.
The system uses modern software developing system which makes the system easy to accommodate itself with variable operations changing with times and inculcate new and improved functionalities, he noted.
Ababu indicated that ERCA has a plan to complete the implementation of the system to regional branches on October, 2018.
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tralac’s Daily News Selection
German minister pushes for free trade deal ahead of Africa trip (DW)
Germany’s development minister Gerd Müller is promoting a “customs-free trade deal in Africa” ahead of his seven-nation Africa visit. Experts say the real issues are being ignored. When it comes to the economic relationship between Germany and Africa, the issue of customs exemption is no longer an important topic. At least that’s what renowned development economist Robert Kappel from the University of Leipzig thinks. Instead, agricultural subsidies and trade barriers should be the main topic of discussion. However, Kappel blames Europe for pursuing neocolonialism in its monetary policy. Yet, Müller avoided these issues before his trip to Africa this week. According to Kappel, he has failed to recognize that a trade imbalance has only increased in recent years – despite a customs exemption. “The minister is not well informed, therefore it’s right to criticize him,” Kappel told DW.
South African trade updates
South African poultry group targets US import quota (Reuters)
The South African Poultry Association has filed a lawsuit seeking to force the government to suspend a quota that excludes some US poultry imports from an anti-dumping tariff, a senior official with the association said on Tuesday. If successful, the move - a response to the Trump administration’s decision to impose tariffs on aluminum and steel imports - could put at risk duty-free access to the US market for nearly $2bn worth of South African exports. South African Trade and Industry Minister Rob Davies acknowledged that the government had received the court papers relating to the lawsuit from the poultry group but declined to comment further. South African meat importers argue that ditching the tariff-free quota would drive up prices for the country’s consumers and likely provoke retaliation by the US poultry industry. “I don’t think they’re going to take it sitting down,” said David Wolpert, CEO of South African meat importers association AMIE SA, referring to U.S. poultry producers. A Reuters update:
“We will certainly be encouraging our government to take appropriate action,” James Sumner, president of the USA Poultry and Egg Export Council, told Reuters late on Tuesday. “We hope that the US and South Africa will amicably resolve and differences they have over the (steel and aluminium) tariffs but it should not interfere with agreements already reached on poultry trade.”
SABIO relieved at Zambia honey import ban (Farmer’s Weekly)
South Africa’s recent ban on imports of non-irradiated honey from Zambia has been described as a “good thing” by the chairperson of the SA Bee Industry Organisation, Mike Miles. The ban was implemented following the discovery of a batch of imported of non-irradiated Zambian honey reportedly containing specimens of the American foulbrood Paenibacillus larvae that’s deadly to bees. Miles told Farmer’s Weekly SABIO had long been concerned about the safety of Zambia honey imports “because they are not irradiated due to trade agreements” between Zambia and SA. “Now we need to ascertain the original source of the bacterium. This can be done. It’s a concern if the American foulbrood found in Zambian honey is coming from outside of Zambia.”
South Africa’s retailers get to grips with Namibia Charter (Retailer News)
Angola and the IMF: statement by IMF Deputy Managing Director, Tao Zhang (IMF)
We have received a letter from the Angolan authorities for IMF staff to initiate discussions on an economic program that could be supported by the Extended Fund Facility. The request follows an IMF staff mission visit in Luanda (1-14 August) and an initial letter requesting a program to be supported by a Policy Coordination Instrument. The Government of President Lourenço has taken important steps toward improving governance and restoring macroeconomic stability. The IMF stands ready to help the authorities address Angola’s economic challenges by supporting their economic policies and reforms based on the Government’s Macroeconomic Stabilization Program and in the National Development Plan for 2018–22. We expect to initiate program discussions with the Angolan authorities as soon as feasible.
EALA, EABC set to deepen co-operation on integration matters
The East African Legislative Assembly and the East African Business Council have agreed to deepen co-operation in a bid to strengthen the integration process. EALA Speaker Ngoga Karoli Martin rallied for a clear avenue of engagement that institutionalizes the efforts of the regional legislators and the private sector. “This is something we need to bring to fruition so that we strategize together and regularly consult over key matters of integration”, he added. EABC Chairman, Mr Nesbitt reiterated the EABC was focused on the ultimate prize of full integration and said the apex body as part of its strategy would be aligning itself with key institutions to realise mutual beneficially relationships. Mr Nesbitt informed the Speaker that EABC would be holding a full Board meeting in Arusha in September 2018 and that a second meeting between both institutions was necessary to discuss the “nuts and bolts” of co-operation.
A New Times editorial: EAC and its organs should take safety seriously
Early at the beginning of the year, members of the East African Legislative Assembly conducted on-the-spot inspections of East African Community projects, organs and facilities along the two trade corridors; Northern and Central. The aim of the tour was to identify bottlenecks to the effective implementation of the EAC Customs Union Protocol. Among the facilities put in place was the East Africa Trade and Transport Facilitation Project set up to reduce transit cargo time by eliminating Non-Tariff Barriers and enhance safety.
When EALA members arrived at the Rusumo One-Stop Border Post along the Tanzania-Rwanda border, they pointed at the lack of adequate safety and emergency measures. Seeing the number of trucks hurdled together, with some carrying inflammable liquids and gases, it was as if they were waiting for disaster to strike … and it did this week. Though it claimed only one victim, the Rusumo tragedy should be a wakeup call to fully implement the EATTFP by clearing cargo trucks as soon as possible and installing safety features wherever they converge. Next time the toll could be higher. [Was Rusumo border fire avoidable?]
IGAD: Enhancing transboundary animal disease control and livestock trade
The IGAD Center for Pastoral Areas and Livestock Development organized a meeting between Ethiopian and Kenyan technical teams (14-15 August, in Adama) to finalize development of the implementation framework (IF) for operationalization of the MoU between the two countries that was signed in June, 2016 by Ministers responsible for livestock. Recommendations and way forward:
Innovation activity in South Africa: measuring the returns to R&D (World Bank)
The paper aims to deepen our understanding of the dynamics of innovation practice and technology absorption in South Africa at the firm-level by estimating the returns to R&D expenditure in the manufacturing sector. The paper is novel in that it is one of the first to measure the returns to R&D using firm-level data in a developing country. This is done by (i) estimating the intensity of R&D expenditure of South African manufacturing firms; (ii) estimating the elasticity of R&D expenditure with respect to output; (iii) putting these two estimates together to derive estimates of the return to R&D expenditure in the South African manufacturing sector from 2009 to 2014. This kind of analysis has been done many times for OECD countries, but far less frequently for developing countries, due in part to the lack of accessible firm level data. [The authors: Mark Schaffer, Andre Steenkamp, Wayde Flowerday, John Gabriel Goddard]
Building inclusive payment ecosystems in Tanzania and Ghana (World Bank)
Box 1. Why are the Tanzania and Ghana experiences unique? While this analysis could have highlighted the experiences of any number of countries that have succeeded in developing inclusive payment ecosystems, the Tanzanian and Ghanaian experiences hold unique and complementary lessons:
Wednesday’s Quick Links: Namibia hosts first Arts Summit of Southern Africa Beijing ups pressure on Taipei’s last African ally, eSwatini, to abandon it for Beijing Wang Yiwei: Why African countries need the Belt and Road Initiative Japan’s contrarian Daikin Industries makes Africa its next big bet Julius Probst explainer: why some current account imbalances are fine but others are catastrophic Nigeria Customs warns exporters against contrabands World Bank: Methodology for poverty measurement in Malawi UNDP Ghana: Northern Ghana Human Development Report (pdf) Influential foreign companies pushing ‘dirty seeds’ in Africa – Ghanaian CSOs warn Framing the social contract: a review of Algeria, Morocco and Tunisia |
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German minister pushes for free trade deal ahead of Africa trip
Germany’s development minister Gerd Müller is promoting a “customs-free trade deal in Africa” ahead of his seven-nation Africa visit. Experts say the real issues are being ignored.
When it comes to the economic relationship between Germany and Africa, the issue of customs exemption is no longer an important topic. At least that’s what renowned development economist Robert Kappel from the University of Leipzig thinks. Instead, agricultural subsidies and trade barriers should be the main topic of discussion. However, Kappel blames Europe for pursuing neocolonialism in its monetary policy.
Yet, Müller avoided these issues before his trip to Africa this week. According to Kappel, he has failed to recognize that a trade imbalance has only increased in recent years – despite a customs exemption. “The minister is not well informed, therefore it’s right to criticize him,” Kappel told DW.
Africa’s negative trade balance
The trade relationship between Europe and Africa is increasingly turning out to put Africa at a disadvantage. While the imports from Europe in most African countries are on the rise, the total number of African exports to most European countries is decreasing.
This mostly has to do with the trend of prices, says Kappel. Oil and gas are the main exports from Africa to Germany and Europe, followed by agricultural products. “The prices of agricultural products and that of oil and gas have dropped in the past years,” says Kappel. “This is why the trade balance of African countries with Europe has become negative.”
According to the economic promotion company Germany Trade and Invest (GTAI), Germany’s foreign trade with sub-Saharan Africa amounted to €26.1 billion euros ($30.1billion) last year. Imports have also risen compared to the previous year. However, sub-Saharan Africa accounted for only 1.1 percent of total foreign trade in 2017, just as in the previous year.
A new free trade agreement with Africa?
If the European Union (EU) and Germany’s federal government had their way, more European products would be found in the African market in the future. Europeans have already identified Africa as a huge outlet market. The European Commission’s statistical office, Eurostat, has calculated that by 2050 a quarter of the world’s population will be living in Africa. In Berlin and Brussels, Africa has been described as the “sleeping giant of the global economy.” And they are unwilling to leave this potential mass market to China and India. Asia’s trade with Africa has already spent years growing in importance.
For some time, the EU has been negotiating with African countries about possible new trade agreements, known as Economic Partnership Agreements (EPAs). They aim to allow the market to open up and offer an outlet for European products in Africa. Supporters are hoping for markets to open up on both sides and increase efficiency through competition and low prices for consumers.
But these discussions are causing displeasure in Africa. Critics of the EPAs fear that unrestricted trade with Europe will further weaken their economy. They are also concerned that high-quality European products might suppress the sale of African goods in their home countries. This would only serve to further increase the imbalance in trade between Europe and Africa.
Imbalanced food imports
The irregular trade balance also has to do with the massive export subsidies for European goods, says Kappel. But subsidy reduction is not an issue for the EU or the German government – despite it being the main point of criticism raised by most development economists.
Agricultural subsidies are not only an issue in Europe. According to the OECD, North America, Europe, Japan and China subsidize their agriculture with over 1 billion dollars (867 million euros) daily. But farmers and agricultural companies in Europe still pocket most state subsidies, says Kappel. “Their surpluses are made cheaper in African markets and compete with African producers, who end up destroyed.”
In the meantime, most African countries have become importers of food: 80 percent of food consumption in Africa is derived from food imports. Many experts agree that this issue needs to be urgently addressed. But Müller appears to be pretending that the problem does not exist.
“He proposed that African governments could subsidize their farmers as well, but no African country can compete with the EU’s subsidies,” says Kappel.
Hidden trade barriers
According to experts, another major obstacle African exporters face when it comes to accessing the European market is found in the health, safety and technical standards which are expected to be met by all African exporters.
Elmar Brok, a member of the European Parliament belonging to Germany’s Christian Democrats (CDU) party, considers these standards to be “non-tariff trade barriers,” and a form of hidden protectionist measures that cannot be achieved through taxes and subsidies alone. “We actually have very high health and consumer protection standards, but we are of course not prepared to lower our health standards,” she told Germany’s national broadcaster ARD shortly before Müller’s trip to Africa.
According to Brok, Müller still believes it is necessary to help Africans meet the necessary requirements. Kappel agrees: “German-African chambers of commerce should be set up – those that deal with the marketing of African products in the European market – so that African companies get a chance to enter the European market, not only with their raw materials and agricultural products but also with their manufactured goods.” However, such a plan is unlikely to materialize any time soon, as Müller has yet to voice any proposals addressing the matter.
Independent monetary policies remain a taboo issue
According to Kappel, the lack of independent monetary policies is another taboo topic, targeted at the needs of African economies. Falsely overvalued African currencies, tied to the US dollar or the euro, raised the price of African export products and prevented foreign investments in Africa.
As a result, the CFA franc regions in West and Central Africa – a relic of the French colonial era – became an attempt to maintain a sense of colonialism through currency.
“By overvaluing the CFA franc, we are hindering industrialization in other African countries,” says Kappel. “Companies there could never be competitive in the global market.”
The issue of migration remains relevant
Beginning on Thursday, Müller’s one-week trip will take him to Eritrea, Ethiopia, Mozambique, Botswana, Zimbabwe, Chad, and Ghana. During talks with the German Chancellor Angela Merkel and Ghana’s President Nana Akufo-Addo, they will examine the reform partnerships of both countries, as well as new investment opportunities. Young Ghanaians will hopefully be presented with future prospects and the issue of migration should be dealt with through new job opportunities.
See also: pdf Africa and Europe – A new partnership for development, peace and a better future | Cornerstones of a Marshall Plan with Africa (1.58 MB) – BMZ, January 2017
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SA retailers get to grips with Namibia Charter
SA retailers supplying products to Namibia have to abide by that country’s retail charter, which aims to control access to the local market to allow for the development of local suppliers.
The Spar Group is among those finding it challenging to operate in Namibia because local supplies are not always readily available.
The retail charter was introduced by the Namibian government in 2016 to promote increased procurement of locally grown and manufactured goods. It has become the Achilles heel for SA retailers, which would largely have home products in their stores.
According to the Namibian Trade Forum, one of the main objectives of the charter is to increase the retail shelf space devoted to local products.
The charter aims to raise local procurement from 6% of purchases of all retailers, ultimately ensuring that 20% of products are sourced locally.
“Should there be a short supply of product, this often results in stores not having sufficient stock for at least two weeks, if not longer,” said Mark Godfrey, group financial director at Spar.
Independent retailers connected with Spar are able to source up to 70% of their product requirements from local suppliers or manufacturers in Namibia. Spar’s sourcing is done by the group’s Namibian buying office in Windhoek.
“Suppliers see them on a regular basis and discuss retail product requirements for the stores in Namibia,” Godfrey said.
“Trading arrangements are negotiated on behalf of our retailers and, once in place, retailers are encouraged to support them by placing orders directly on these suppliers for direct delivery.”
“Spar manages the financial administration on behalf of the retailers, thereby also giving the suppliers further financial security of payment.”
Pick n Pay, which has 38 stores in Namibia, has franchise partners that actively seek out Namibian products.
“Our franchise MD in Namibia is the chairman of the Retail Charter Council and we work constructively with government and communities wherever we operate,” said David North, group executive for strategy and corporate affairs.
North said that in Namibia, Pick n Pay buys as much local product as it can obtain, particularly meat, fruit and vegetables.
A spokesperson for Shoprite, which has the largest store network of 152 stores in Namibia, said the group “is supportive of general transformation and opportunities for investment in local economies that aim to uplift the geographical areas and countries that we trade in and the people that we do business with”.
Godfrey said the Namibian government has been involved in the matter “and we appreciate this as well as our retailers’ commitment to support local suppliers where possible”.
EALA & EABC set to deepen co-operation on integration matters
The East African Legislative Assembly (EALA) and the East African Business Council (EABC) have agreed to deepen co-operation in a bid to strengthen the integration process.
On Monday afternoon, EALA Speaker, Rt Hon Ngoga Karoli Martin, received the EABC Chairman, Mr Nicholas Nesbitt, in the Speaker’s Chamber in Arusha, where both officials revealed the need to take the partnership a notch higher.
“Both institutions are to set to deepen areas of co-operation, the specifics of which shall be worked out later in September 2018, under an engagement framework,” it was agreed.
Speaker Ngoga rallied for a clear avenue of engagement that institutionalizes the efforts of the regional legislators and the private sector. “This is something we need to bring to fruition so that we strategize together and regularly consult over key matters of integration,” he added.
The Speaker remarked that EALA remained keen to enhance its legislative, representative and oversight role for the benefit of all stakeholders including the Business Community. He further lauded the regional private sector body for the tremendous work it continued to undertake in the region noting that it was a major driving force and engine for integration.
Rt Hon Ngoga said it was vital for stakeholders in the integration process to think ‘regional in their approach to issues’ saying the nationalistic tendencies should be discarded.
On his part, the EABC Chairman, Mr Nesbitt reiterated the EABC was focused on the ultimate prize of full integration and said the apex body as part of its strategy would be aligning itself with key institutions to realise mutual beneficially relationships.
Mr Nesbitt informed the Speaker that EABC would be holding a full Board meeting in Arusha in September 2018 and that a second meeting between both institutions (EABC and EALA) was necessary to discuss the “nuts and bolts” of co-operation.
The EABC Vice Chairman, Mwine Jim Kabeho said the Private Sector had continued to face a number of challenges which the Assembly was best placed to address while EABC’s Ambassador (and former EALA Chair of the Legal Rules and Privileges Committee), Hon Peter Mathuki said it was necessary for both institutions to interface and resolve many issues for a stronger integration and for posterity’s sake.
In attendance were senior EABC staff led by the CEO, Lilian Awinja, and the EALA Senior Public Relations Officer, Bobi Odiko.
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Energy implications of higher economic growth in Africa (US Energy Information Administration)
China, India, and Africa are three of the most populated parts of the world. Their economies collectively consume about one-third of all global energy, and their energy consumption is projected to grow faster than the rest of the world through 2040. As a result, changes in these economies have significant implications for global energy markets. The EIA has released three reports in its International Energy Outlook 2018 that discuss the energy implications of potential changes in these economies. China, India, and Africa collectively accounted for 32% of global energy consumption in 2015, and in the IEO2018 Reference case, these regions are projected to account for 36% of global energy consumption in 2040.
Higher economic growth in Africa leads to an expansion of the manufacturing sector and an increase in industrial energy use because of possible regional competitive advantages. Higher assumed economic growth over the projection period leads to African energy consumption per capita that is about 30% higher than in the IEO2018 Reference case in 2040. The IEO2018 Africa side case highlights the need to further explore the relationship between projected changes in GDP and the response of energy consumption, particularly in the industrial end-use sector.
Kigali agriculture conference: Unleashing the great potential of Africa’s youth to achieve sustainable development (FAO)
Country, regional trade updates
Ethiopia: Manufacturing export misses target (The Reporter)
The local manufacturing sector exported less than 50% of the plan set in the export target in the 2017-2018 fiscal year. According to the annual performance report of the Ministry of Industry, presented at the stakeholders’ consultative meeting held on Thursday at Ghion Hotel, the local manufacturing sector exported industrial good valued at $487.5m. The export target set by the Ministry of Industry was $997.9m. At the end of the second Growth and Transformation Plan (GTP-II) in 2020 the manufacturing sector export is expected to generate $3.5bn and employ 750,000. In the GTP plan the manufacturing sector forecast to grow by 2% each year. However, the sector grew by 11% in the year under review.
The local manufacturing sector is using 57% of its installed production capacity. According to the report, textile and garment achieved 46.3% of the export target, leather and leather products 47.7%, meat and milk 55.9%, food and beverage 62.4%, pharmaceuticals 36.6%, chemicals and construction 45.5%, electric and electronics 39% and metals and engineering 27.4%. While discussing the annual performance of the manufacturing sector, industrialists voiced their complaints. Most of the complaints came from leather producers. A representative of the Ethiopian Leather Producers Association said that following the ban on export of rawhide the price of hide in the local market has nosedived driving many traders out of business. “While rawhides are damped here due to minimal prices leather factories are allowed to import leather from abroad.” [Fifty mega projects earmarked for public-private investment]
Pointsettia assembly and selling emotion: high value agricultural exports in Ethiopia (AFD)
Our interviews with farm managers and owners, as well as airline managers and government officials, show that several agricultural enterprises are increasingly knowledge-intense, organizationally and technically sophisticated and by a reasonable definition ‘industrial’. Moreover, we find that horticulture exports embody another dimension of complex, cross-sectoral economic activity through their reliance on extremely sophisticated logistics and transport. The horticulture export sector has created far greater demands and pressures for the development of up-to-date transport and logistics in Ethiopia than, for example, the textile and leather sectors.
We then identify, within the context of the Upper Awash Valley in Ethiopia, some of the apparently technical but, above all, socio- political constraints limiting the potential for high value agriculture to contribute to growth and structural change. Our method and findings are very different from the literature on ‘complexity’ and ‘product space’ and they query pessimistic conclusions about ‘premature deindustrialization’. And our findings suggest the need to rethink how industrial strategies can promote structural change: much more support should be directed to high value agricultural production and less focus on assembling garments or trainers in subsidized industrial parks. [The authors: Christopher Cramer, Jonathan Di John, John Sender]
AfCFTA: One-stop border post will boost trading (UN Africa Renewal)
As the marketing executive of Dairibord Zimbabwe, a stock exchange-listed exporter of food and beverages in Southern Africa, Tracy Mutaviri is looking forward to a bigger market share for her goods when the African Continental Free Trade Area (AfCFTA) becomes operational. Cumbersome border documentation requirements and administrative and bureaucratic delays at ports of entry can mean delays of seven days or more. To expedite clearance, she suggests a one-stop border post to harmonise the export documentation process and expedite administrative processes.
Ghana: Stop cargo tracking note – GIFF to government (GhanaWeb)
The President of the Ghana Institute of Freight Forwarders, Kwabena Ofosu-Appiah, has issued a one-week ultimatum to government to stop the implementation of the Cargo Tracking Note. He said failure by the government to respond positively to their concerns, will result in a sit-down strike of GIFF’s 3,000 members. He was of the view that the CTN is not different from the Advanced Information System which was introduced in 2012. Meanwhile, the President of the Chamber of Freight and Trade, Dennis Anfoh-Sefah, at a counter-press conference disagreed.
Chinese manufacturing moves to Rwanda: a study of training at C&H Garments (pdf, SAIS-CARI)
The Rwandan government’s program for training its citizens across diverse industries has played a key role in the planning, implementation, and scaling of Chinese manufacturing in Rwanda. Yet to date, there have been few studies of Chinese manufacturing or technology transfer in Rwanda. In 2015, C&H Garments, a Chinese garment firm with previous operations in Kenya, opened a factory in Kigali, introducing new experiments in technology transfer and training. This study examines the employee training arrangement between C&H and the Rwandan government and aims to shed light on various approaches for other African countries seeking to bolster skills transfer with Chinese manufacturing firms. This study is significant given that the Rwandan government’s desire to boost local manufacturing capacity has been at the centre of recent trade tensions between Rwanda and the United States under AGOA. [The author: Janet Eom] [Download the policy brief version (pdf)]
How Kenya has let Uganda gain upper hand in regional trade (The Standard)
The Principal Secretary in the Ministry of East Africa Community Betty Maina said this trade pattern might be as a result of either trans-shipment or misdeclaration. “That might be a diversion of products under the guise that they are made in Uganda, which is an offence,” said Ms Maina in a telephone interview with Financial Standard. But Mr Musyoki insists that the problem of cargo diversion and dumping into the Kenyan market has been greatly reduced following the implementation of the Regional Electronic Cargo Tracking System.
PS Maina, on the other hand, said Kenya has been importing a lot of foodstuff such as maize, and milk products from Uganda for a long time but expressed surprise that an increasing number of imports from Kampala are manufactured products. “We import a lot of food products from Uganda but not manufactured goods,” she explained. In 2017, for example, Kenya imported food products valued at Sh24.6 billion. Much of the foodstuff included milk and milk products (Sh8.1 billion) and leguminous seeds (Sh7.1 billion). The PS said she was also perturbed that Kenya was importing more cars and car parts from Uganda. “They (Uganda) do not assemble cars,” she said, noting that KRA needed to do more to deal with the issue of misdeclaration. Imports of car parts from Uganda has since increased four times in 10 years to 2016 from Sh144 million to Sh659 million.
Nigeria wasted $1tn earned in oil booms, says report (ThisDay)
Brazilian cooperatives organise trade mission to Angola (Macauhub)
The Organisation of Brazilian Cooperatives announced in Brasilia that, together with the Ministry of Agriculture, it will carry out a mission to Angola (22-29 September) to expand the commercial relations of Brazilian cooperatives with the Angolan consumer market. “The Angolan economy is currently experiencing a moment of growth, which is reflected in foreign trade, with Brazil’s share of imports of food and beverages in Angola reaching 20%,” said a statement from the OCB. The aim of the mission is to explore business opportunities for the grain, dairy, meat, fruit, juice and soft drinks sectors.
Trade in global value chains: an assessment of labour market implications (World Bank)
In exploring the trade-labour market nexus, this paper seeks to disentangle the complex labour market outcomes that result, both within the export sectors and across the wider economy. The paper takes primarily a cross-country, econometric approach based on empirical models linking trade with aspects of the labour market. The exercises draw on the World Bank Labour Content of Exports (LACEX) and Export Value Added (EVA) databases, which both draw on underlying global input-output data from the Global Trade Analysis Project (GTAP). It explores three primary questions: [The authors: Thomas Farole, Claire Hollweg, Deborah Winkler; An earlier draft of this paper was presented at the Global Value Chain Development Report 2019 Background Paper Conference in Beijing]
Tuesday’s Quick Links: Jakkie Cilliers: Why Africa must industrialise China writes off $5.5m loan to reduce Seychelles’ debt load Huawei’s ICT intellectual programme targets Dar, Dodoma universities More Tanzanians off to China for oil and gas sector studies More taxes on petroleum will stall Kenya’s economy says KEPSA Angola: New customs tariff to facilitate new business Nigeria: Creating conducive environment for investors in Free Zones ORF: China is building a new Silk Road, and this one is digital OECD: Which strategies for NSOs in the digital era? Towards ‘smart data’ strategies (pdf) |
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One-stop border post will boost trading
Southern African trader is cautiously optimistic about a free trade area
As the marketing executive of Dairibord Zimbabwe, a stock exchange-listed exporter of food and beverages in Southern Africa, Tracy Mutaviri is looking forward to a bigger market share for her goods when the African Continental Free Trade Area (AfCFTA) becomes operational.
The economies of scale of serving a larger market will mean her company can trade its beverages and food products beyond its current markets: Botswana, Malawi, Mozambique, South Africa and Zambia. The company may even begin to look at countries in West and East Africa.
Ms. Mutaviri is excited about the opportunities that a big market presents, particularly the benefits of standardized procedures for export. She is currently concerned about tariff and nontariff challenges to her business.
“We have mostly been affected by nontariff barriers such as obtaining the necessary licences or permits for trading our goods. The process takes a long time, at times as long as three weeks, and this affects export competitiveness,” she told Africa Renewal.
Countries have their own individual standards, and exporters must meet each one, she says.
The African Union and the Economic Commission for Africa, two key players in the AfCFTA push, continue to assert that mechanisms will be in place to address these tariff and nontariff barriers.
Still, Ms. Mutaviri adds that cumbersome border documentation requirements and administrative and bureaucratic delays at ports of entry can mean delays of seven days or more. To expedite clearance, she suggests a one-stop border post to harmonise the export documentation process and expedite administrative procedures.
The World Trade Organisation (WTO) says that a one-stop border post would integrate different border agencies into one that would, among other benefits, reduce transit times for traders and transporters. It will lead to an effective use of available resources and assets at a lower cost, as well as improved competitiveness of goods due to reduced processing times – which, the WTO assumes, will translate into reduced costs.
Particularly cumbersome is the process of getting the necessary sanitary and phytosanitary documents. Sanitary and phytosanitary measures are plant- and pest-control requirements for exporting certain agro-based products such as tea.
Ms. Mutaviri says existing trade agreements, such as those of the Southern African Customs Union and the Economic Community of West African States, have not lowered trade barriers. In the absence of a trustworthy credit-rating agency and credit-insurance facilities, high credit risk across borders is a major hindrance to trade.
“Exporting from a United States dollar-based economy into markets with softer currencies has made our prices uncompetitive amidst high competition with players from the region and from outside the region,” she says.
While she embraces a free trade zone, Ms. Mutaviri fears that it may subject her company to increased competition from other African economies, given that Zimbabwe’s food processing sector’s regional competitiveness gap is currently estimated at just 38%.
“The AfCFTA, by its size, will also attract players from outside Africa and without a single currency. Countries will not compete on equal footing,” she insists.
Ms. Mutaviri notes that the industrialisation agenda being pursued by various African countries may make many governments reluctant to open their borders. She hopes that a free trade area will be implemented in a way that accommodates the different levels of industrialisation in different member states.
“The larger or stronger economies, if unchecked, will determine the way the reforms will be implemented, and lesser economies will be forced to adapt to the changes. Therefore, the AfCFTA governance structures must ensure fair representation from less developed economies,” she says.
Infrastructural barriers may also pose a big challenge, she adds. According to the African Development Bank Group, Africa’s infrastructure requires investments of about $93 billion per year over the next decade. Sourcing that amount will be a huge challenge, experts say, and without a solid infrastructure base, especially adequate transportation, it will be difficult to make free trade area a reality.
This article appears in the August-November 2018 issue of Africa Renewal, published by the United Nations.
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Unleashing the great potential of Africa’s youth to achieve sustainable development
FAO Director-General stresses the need to create more jobs for youth and build capacity in rural areas to use digital technologies
Africa’s young people are key to achieving the continent’s sustainable development, but realizing this great potential requires creating more jobs for them, including in the increasingly digitalized agriculture sectors, FAO Director-General José Graziano da Silva, said on Monday.
“We need to take action to make agriculture more attractive to young people. They must perceive agriculture as a remunerative and profitable sector and the dissemination of information and communication technologies (ICTs) in rural areas play an important role in this regard,” Graziano da Silva said.
His remarks came at the opening of the international conference, Youth Employment in Agriculture as a Solid Solution to ending Hunger and Poverty in Africa, in Kigali. The two-day event, which is co-organized by the Government of Rwanda, the African Union and FAO, has a special focus on youth employment, ICTs and entrepreneurship.
Other keynote speakers included Rwanda’s Minister of Agriculture and Animal Resources, Geraldine Mukeshimana, African Union Commissioner for Rural Economy and Agriculture, Josefa Leonel Correia Sacko, and the United Nations Industrial Development Organization’s Director-General, Li Yong.
As Africa’s population grows, so will the demand for food
Graziano da Silva noted that food demand in Africa is projected to grow by more than 50 percent in the coming years due to continued population growth, rapid urbanization, and dietary changes as household incomes rise. The World Bank expects African agribusinesses to create a market worth $1 trillion by 2030.
The agricultural sectors have thus “an invaluable and untapped potential to address the youth unemployment challenge, but it is well-known that young people seeking to gain a decent livelihood from agriculture face numerous constraints,” Graziano da Silva said.
He noted how young people are usually employed on a casual or seasonal basis, with limited access to relevant education and technical training; limited access to finance, information and markets; and low involvement in decision-making processes.
“These constraints become a bottleneck that also impede young people to start an agricultural business of their own. As a result, young rural people are migrating,” he said.
Preparing young people to enter the job market
“In the coming years, more and more of the agricultural activities and employment will require digital skills,” he said. Cooperatives or other forms of association represent “the best way to provide family farmers and young professionals with technical assistance, capacity building, and access to modern technologies”.
The FAO Director-General also said that there is a need to “think beyond farm jobs,” and to explore employment opportunities across the agri-food chain. The increasing demand for high-value products in urban areas also offer multiple employment opportunities in processing, distribution, marketing and retailing of food products.
Achieving this requires “a new kind of rural transformation,” which is means equipping rural areas with basic services such as education, health, electricity, internet access and so on. “These services are themselves another important source for employment, especially for women and young people,” Graziano da Silva said.
FAO’s role
The Director-General told conference participants that FAO will continue to strengthen its activities to support countries in realizing the potential of agriculture and food systems to create more job opportunities for youth.
In particular, the FAO can help countries to develop and implement legal and regulatory frameworks and services for youth’s inclusion as well as trainings to young people in financial literacy, business development and management, as well as in innovative digital finance solutions.
Concept note
Over sixty percent of Africa’s estimated 1.2 billion people are under the age of 25; yet with little job creation currently in the rural areas where the majority of the population resides, there is a growing uncertainty over the continent’s preparedness to tap this resource. Tens of millions of jobs will have to be created each year in rural areas for Africa to harness the dividends of this youthful population.
In the African context, the key to shared prosperity and poverty eradication is to be found through creation and expansion of decent jobs in rural and urban areas. Studies have shown that agricultural growth in Sub-Saharan Africa has a more positive impact on reducing poverty compared to growth in other sectors, implying that tapping into the reservoir of employment opportunities in agriculture is indispensable for poverty reduction. Despite the potential of agriculture to create employment, the growing youth population in Africa is turning away from agriculture and rural areas due to, among others, the drudgery and poor remuneration associated with low-productivity agriculture.
Furthermore, despite their significant contribution to the agricultural sector, young women in rural areas typically find themselves in disadvantaged positions compared with their male counterparts. They bear the burden of unpaid and household work and have unequal access to education and training and productive resources such as land, finance and technology.
Obviously, sustainable solutions for decent youth employment in agriculture in Africa must address the intertwined issues of minimizing drudgery while maximizing returns to effort, which could be achieved through harnessing opportunities in agribusiness entrepreneurships, and innovations to enhance productivity and competitiveness. According to estimates by the World Bank, the agribusiness and logistics sector in Africa are set to mobilize about a trillion dollar business by 2030. These are also playing key roles in agricultural transformation through agricultural value-chain development. It is crucial that the youth, and particularly young women, be empowered to take active part and benefit from such big and growing business opportunities.
Continental Frameworks exist that made commitments to creating enabling conditions for the transformation of the agricultural sector and for empowering the youth to actively participate and benefit from emerging opportunities. The Malabo Declaration, adopted by African Heads of State and Government in June 2014, on “Accelerated Agricultural Growth and Transformation for Shared Prosperity and Improved Livelihoods“ seeks to pursue an inclusive agricultural growth and transformation process; and to this end commits to create job opportunities for the youth in agricultural value chains, and to support and facilitate preferential entry and participation for the youth in gainful and attractive agri-business opportunities. It reaffirms the political leadership resolve towards ensuring, through deliberate and targeted public support, that all segments of the population, particularly women and the youth, must participate and directly benefit from the growth and transformation opportunities to improve their lives and livelihoods.
Considering agriculture as an essential driver of economic development and an area of great opportunities for young people in Africa, harnessing opportunities in agribusiness entrepreneurship and innovations, including in ICT innovations, along the value chains, contributes to improving the sector’s image, increases productivity and returns to investment and provides new employment opportunities, hence attracting more young people. Access to cheaper and more reliable ICT devices, particularly mobile phones, and increased connectivity in Africa is already an opportunity for adoption. It remains an open and clear avenue to support networking among youth, thus reducing their physical isolation in remote rural areas and facilitating access to information, employment and agribusiness services.
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Energy implications of higher economic growth in Africa
EIA’s International Energy Outlook 2018 focuses on uncertainty in economic projections for China, India, and Africa
China, India, and Africa are three of the most populated parts of the world. Their economies collectively consume about one-third of all global energy, and their energy consumption is projected to grow faster than the rest of the world through 2040. As a result, changes in these economies have significant implications for global energy markets.
Africa has a wealth of natural resources and a younger, faster-growing population than many other parts of the world. How Africa develops over the next 25 years may have a substantial impact on international energy markets. This analysis considers the uncertainty associated with future energy demand growth in Africa by examining an alternative case for the continent’s economic growth over the next several decades.
In this sensitivity analysis, African gross domestic product (GDP) grows at an average rate of 5.0% per year over the 2015 to 2040 projection period, which is higher than the 3.8% per year GDP growth assumed in the International Energy Outlook 2018 (IEO2018) Reference case.
Assuming African annual GDP growth rates that are 1.2 percentage points higher than in the IEO2018 Reference case over the projection leads to per capita energy consumption that is about 30% higher than in the IEO2018 Reference case in 2040. The largest changes in consumption occur in Africa’s industrial end-use sector.
Background
Over the past several decades, Africa has periodically been heralded by economic forecasters as ready for great expansion and development, but that potential has not been realized. Africa remains a relatively underdeveloped region and one that continues to face many challenges, particularly related to a lack of infrastructure development and investment in areas including electrification, transportation (roads, airports, ports), and commercial development.
More than half the people working in Africa contribute to the production of food – many on arable land spread throughout the continent. However, this dynamic is rapidly changing – Africa is urbanizing quickly, and the growth of African cities is among the fastest in the world. Only Asian cities are expanding faster. These urbanization trends are one important factor helping to shape energy consumption trends in Africa. Economic growth is another factor.
Every country and region in the IEO2018 Reference case projection except Africa experiences an increase in per capita energy consumption from 2015 to 2040. African energy consumption per capita declines between 2015 and 2040 in the IEO2018 Reference case, even while income per capita grows. This trend occurs because the level of the African population rises faster than energy consumption, underscoring the difficulties the continent will have in meeting its energy needs.
Africa’s low level of per capita energy consumption in 2015 is partly explained by the region’s sizeable reliance on traditional, non-marketed fuels. Although non-marketed fuels from plant and animal sources are important energy sources – especially in the developing nations of Africa – comprehensive data on the use of non-marketed fuels are not available and not considered in EIA’s international data and projections. Not accounting for non-marketed fuels can affect both historical and projected energy consumption; for example, the International Energy Agency estimates that nearly 80% of Africa’s building energy use in 2016 came from traditional biomass for which reliable data does not exist.
Key takeaways
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Higher economic growth in Africa leads to an expansion of the manufacturing sector and an increase in industrial energy use because of possible regional competitive advantages.
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Higher assumed economic growth over the projection period leads to African energy consumption per capita that is about 30% higher than in the IEO2018 Reference case in 2040.
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The IEO2018 Africa side case highlights the need to further explore the relationship between projected changes in GDP and the response of energy consumption, particularly in the industrial end-use sector.
Africa’s energy consumption per capita lags behind other regions in the IEO2018 Reference case as population growth outpaces energy use
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The growing gap in GDP per capita between Africa and other regions highlights the potential for faster African economic growth.
- Further infrastructure development, particularly transportation network development and electrification, could alter this projection.
In 2015, Africa’s manufacturing sector was relatively small, and its services sector was relatively large, which contributed to Africa's comparatively low energy use
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Africa’s manufacturing sector share of total output was one-half the share in India and only one-third of China’s share in 2015.
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Africa’s construction, services, and agriculture output shares were similar to those shares in rapidly growing India in 2015.
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Africa’s mining output share was larger than that of both China and India in 2015 because of abundant natural resources and the underdeveloped state of many African economies.
High economic growth in Africa leads to an increased role for the manufacturing sector compared with the IEO2018 Reference case and a reduced role for the services sector by 2040
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Higher economic growth in Africa results in an increase in the size of the manufacturing sector relative to the services sector.
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The manufacturing share of output increases the most because Africa’s economy more effectively employs its population, urbanization, and natural resources to broaden its industrial base.
Manufacturing output growth increases more than non-manufacturing by 2040 when compared with the IEO2018 Reference case energy-intensive and nonenergy-intensive manufacturing growth increases are both above 30%
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African economies account for a larger manufacturing share in 2040, with percentage increases in output for both energy-intensive and nonenergy-intensive manufacturing industries that exceed 30% compared to the IEO2018 Reference case.
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Non-manufacturing industrial output grows more slowly, rising by 23% compared to the IEO2018 Reference case in 2040.
African industrial output growth is associated with higher energy-intensive manufacturing in the Middle East and a reduction of energy-intensive manufacturing output in non-OECD Europe and Eurasia
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African countries have a competitive advantage in manufacturing because of low-cost labor and natural resource availability, which can displace output in other regions of the world.
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Higher African economic growth decreases manufacturing output in competing regions such as other non-OECD Europe and Eurasia.
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Industrial economic activity in the Middle East in 2040 increases relative to the IEO2018 Reference case as higher African growth increases demand for fossil fuels.
This report was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy.
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Featured tweet, from @ICA_Africa: The ICA Africa ‘Infrastructure Financing Trends in Africa’ report for 2017 is currently in development and should be ready by November 2018. It takes time to draw together full information, particularly from governments, but this ensures the report is accurate and comprehensive.
REC updates:
(i) 38th SADC Summit of Heads of State and Government: communiqué
Summit noted progress made in the implementation of SADC Industrialization Strategy and Roadmap 2015-2063, and urged member states to remain committed to the implementation of the SADC industrialization agenda, as the overarching priority for the region.
Summit reviewed the SADC regional economic performance, and urged member states to scale up efforts aimed at diversifying their economies, improve domestic revenue collection mechanisms, and manage public expenditures.
Summit noted the overall decline in food production in the Region, for the 2017/18 crop season, and urged member states to put in place measures to tackle food insecurity in the Region, while developing contingency plans to enhance drought preparedness, in view of the likelihood of adverse El Nino induced conditions during the 2018/19 cropping season.
Summit noted that, the Union of Comoros has deposited her Instrument of Accession, and commended the Union of Comoros for acceding to the SADC Treaty and becoming a full Member of SADC.
Summit urged member states that have not yet signed and/or ratified the TFTA Agreement to do so, and urged member states to expeditiously finalise the exchange of tariff offers, and pave the way for the implementation of the Tripartite Free Trade Area. [Download the communiqué: French, Portuguese]
(ii) COMESA Trade and Customs Committee meeting: update
In her speech at the opening of the 34th COMESA Trade and Customs Committee meeting in Nairobi, COMESA Secretary General Chileshe Kapwepwe observed that though member States had, upon signing the COMESA Treaty agreed to abolish all non-tariff barriers to trade among themselves, new ones kept cropping up thus affecting intra-regional trade. The SG appreciated the progress made in implementing regional programmes with substantial support from international cooperating partners. However, she noted that little progress has been achieved in domesticating trade facilitation instruments at national level as member states took their time to ratify and implement them. High on the agenda of the TCM was the implementation of the COMESA Digital Free Trade Area being rolled out in member states. Other key regional integration issues discussed were reports by member states that are not participating in the COMESA Free Trade Area, Non-Tariff Barriers in the COMESA region, the Kenya Sugar Safeguard and updates on the Tripartite FTA Negotiations and the AfCFTA.
(iii) ECOWAS moves to develop regional strategies for AGOA, TIFA: update
A technical working group, comprising focal points from Directorates of ECOWAS, last week recommended that regional and national strategies be developed to optimize the African Growth and Opportunity Act. A representative of the ECOWAS Commissions’ Directorate of Trade, Mr Kola Sofola, briefed the TWG on the status of the AGOA and the TIFA. He stated that following the 17th AGOA Ministerial Forum held in Washington in July 2018, ECOWAS resolved to strengthen its cooperation with private sector associations in the region and deepen the dialogue of the future of African trade. Regarding the TIFA, Mr Sofola explained that the US has five Trade and Investment Framework Agreements with African RECs and eight bi-lateral TIFA partners in sub-Sahara Africa, which include three ECOWAS member states - Ghana, Liberia and Nigeria.
(iv) Last week’s EAC Aflatoxin Prevention and Control Regional Forum: overview. Download the nine EAC policy briefs launched at the forum, here
Kenya’s Ruto roots for stronger intra-Africa trade: blasts protectionism (ChimpReports)
Increased trade among countries in Africa will leapfrog the continent to high levels of economic growth and multiply opportunities for millions of people, Kenya’s Vice President William Ruto has said. Ruto gave the example of Uganda which he said has in the last four months “overtaken Kenya on exports.” The Kenyan government official, who is in Kampala on a three-day state visit, said there are “now more exports to Kenya from Uganda which demonstrates that doing business together is beneficial to everyone.” Ruto also blasted what he described as a “new wave of protectionism,” saying, “we are better off sharing wealth obtained together than protecting poverty in our countries.” He said protectionism is “more reason we must look at blocs that will enable us negotiate for a better share of trade.”
South Africa: Export Councils, DTI explore trade facilitation strategies
The Department of Trade and Industry will host a two-day Export Council Quarterly meeting at the dti campus in Pretoria, starting today. “The meeting will also be used as a platform to cultivate a common vision and programme of action for the department to engage directly with industry on how common goals, objectives and targets can be efficiently and effectively achieved,” says dti’s Director General, Lionel October. Currently, 18 export councils are registered with the dti. They are funded by the dti through the Sector-Specific Assistance Scheme under the Export Marketing and Investment Assistance Scheme.
South Africa bans export of pure Zambian honey (Lusaka Times)
In a letter written to South African authorities, Zambia’s High Commissioner to South Africa, Emmanuel Mwamba stated that he had learnt with regret that South Africa has restricted market access for Zambia’s pure honey with immediate effect. He said that this is because a consignment allegedly from Zambia was found to be contaminated with a disease called American Foulbrood (Paenibacillus larvae). He said the procedure to impose the ban was breached and no official letter has been written to competent authorities in Zambia as required by trade protocols. He also stated that no official results of the analysis and copy of import airway bill were provided for Zambia to authenticate and verify the source of such a consignment.
Ghana: Finance minister stands firm on end to cocoa subsidies (Bloomberg)
As Ghanaian cocoa farmers prepare for the start of the next main harvest in less than two months, Finance Minister Ken Ofori-Atta said their compensation should be set according to international prices, even if it implies a pay cut. The world’s second-biggest cocoa producer subsidized farmers’ pay over the past season that began last October after London prices for the beans fell by almost a third in the preceding 12 months. While cocoa staged a recovery this year on forecasts of a smaller surplus, it remains at least 10% below the local-currency equivalent when producer prices were set at 7,600 cedis ($1,598) per metric ton in October 2016. “If we are getting high prices for our cocoa on the international market, our farmgate price should be high,” Ofori-Atta said in an emailed response to questions. “If we are getting less we should pay less. Government needs to be firm on this so as not to create a debt gap.” [Ghana steps in to help banks]
Afreximbank releases unaudited half-year results: shows $343m in gross revenue
The figure represents a $21m increase over the gross revenue for the same period in 2017. The results (pdf), released by the Bank in Cairo, attributed the higher gross revenue to a significant increase in fee income by 119% while interest and similar income recorded a 2% growth compared to prior year performance. The Bank’s attributable earnings over the six months also amounted to $110 million, beating the budget by 34%.
At WTO: EU, 11 others back US complaint against India’s export subsidies (Economic Times)
The European Union, Russia, China, Japan and eight other countries have backed the US complaint against India’s export promotion schemes at the WTO. They have joined the dispute as third parties. The US has challenged almost all of India’s export programmes at the WTO saying they will harm its workers, citing the Agreement on Subsidies and Countervailing Measures. It pegged the subsidies at $7 bn. ”The number of third parties in the issue is a matter of concern and has serious implications. They are backing the complainant,” said a person aware of the development. Negotiators had expected other countries to join the dispute when it began in March. Former commerce secretary Rita Teaotia has said there was a “real” possibility that India could lose the trade dispute. [Why India hasn’t cut back on coal imports despite rising prices]
Mozambique: Jobs Diagnostic (World Bank)
The existing growth strategy has limited capacity to support continued poverty reduction, because it is too focused on capital-intensive extractives and megaprojects. It doesn’t focus enough on supporting investments that can improve the jobs of the mass of low-income Mozambicans. The strategy is also vulnerable to global market fluctuations, as was seen when the fall in commodity prices in 2016 triggered a sharp economic slowdown. But as the gas revenues from the northeast come on stream over the next decade, Mozambique will have a unique opportunity to shift towards more inclusive growth pattern, focused on jobs transformations for the poor. In this blog, we outline four possible strategies that could help accelerate the shift into higher value-added activities and better livelihoods for the mass of low-paid workers in Mozambique. [Extract from a blog by the author: Ian Walker]
Extracts (pdf): To achieve inclusive growth, Mozambique needs better jobs for households in the bottom 40% of the income distribution. Mozambique’s gross national income is currently around $500 per person (Atlas method). This is below that of most neighboring countries and below the average for Sub‑Saharan Africa. The fact that over 50% of its citizens live below the international poverty line is not surprising. Nevertheless, Mozambique’s poverty rate is much higher than that of Uganda, which has a similar gross national income per capita. Uganda, Rwanda, and Bangladesh are examples of countries that have emerged from the ashes of conflict to deliver strong and relatively inclusive growth. This growth was achieved by investments in the sectors where poor households earn their living, especially in agriculture, and encouragement of private investment in labor-intensive firms, which creates new wage employment in urban areas. This growth pattern created productive employment, raised labor incomes, and allowed households to work their way out of poverty. The result was a virtuous cycle of investment, rising labor earnings, and poverty reduction. This is the growth pattern that Mozambique should aim to emulate.
Box 2 - The danger of Dutch Disease: Contrary to the common pattern among developing countries where this set of interactions occurs, Mozambique does not yet appear to be experiencing significant Dutch disease problems. Oftentimes these interactions stifle productivity growth in agriculture, where most of the poor work now, and dampen jobs growth in manufacturing. However, in Mozambique since 2008, exports have remained stable as a share of GDP. The main inflows of foreign currency have been in the form of foreign direct investment, and were used to finance equally large outflows to pay for import-intensive investments in extractive industries. However, as this investment phase comes to an end and net exports of gas and oil kick in toward the end of the decade, the risk of Dutch disease will increase. There are several possible policies which could mitigate the impact of Dutch disease. They include keeping public spending under control; setting up a sovereign wealth fund to relieve the pressure on the exchange rate by partly offsetting the current account surplus with a capital account deficit; and promoting greater competitiveness in the non-resource tradables industries through sector reforms.
Monday’s Quick Links: Call for papers: African Journal of Intellectual Property Ghana: Government to crack down on traders causing confusion over foreign retailers Mauritius to sign agreement amending the SADC Protocol on Politics Defence and Security Cooperation |
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Africa set for a massive free trade area
Experts say the African Continental Free Trade Agreement is a game changer
Following the unveiling of the African Continental Free Trade Agreement in Kigali, Rwanda, in March 2018, Africa is about to become the world’s largest free trade area: 55 countries merging into a single market of 1.2 billion people with a combined GDP of $2.5 trillion. In this edition of Africa Renewal, we examine the benefits and challenges of a free trade area for countries and individual traders.
The shelves of Choithrams Supermarket in Freetown, Sierra Leone, boast a plethora of imported products, including toothpicks from China, toilet paper and milk from Holland, sugar from France, chocolates from Switzerland and matchboxes from Sweden.
Yet many of these products are produced much closer – in Ghana, Morocco, Nigeria, South Africa, and other African countries with an industrial base.
So why do retailers source them halfway around the world? The answer: a patchwork of trade regulations and tariffs that make intra-African commerce costly, time wasting and cumbersome.
The African Continental Free Trade Agreement (AfCFTA), signed by 44 African countries in Kigali, Rwanda, in March 2018, is meant to create a tariff-free continent that can grow local businesses, boost intra-African trade, rev up industrialization and create jobs.
The agreement creates a single continental market for goods and services as well as a customs union with free movement of capital and business travellers. Countries joining AfCFTA must commit to removing tariffs on at least 90% of the goods they produce.
If all 55 African countries join a free trade area, it will be the world’s largest by number of countries, covering more than 1.2 billion people and a combined GDP of $2.5 trillion, according to the UN Economic Commission for Africa (ECA).
The ECA adds that intra-African trade is likely to increase by 52.3% by 2020 under the AfCFTA.
Economists believe that tariff-free access to a huge and unified market will encourage manufacturers and service providers to leverage economies of scale; an increase in demand will instigate an increase in production, which in turn will lower unit costs. Consumers will pay less for products and services as businesses expand operations and hire additional employees.
“We look to gain more industrial and value-added jobs in Africa because of intra-African trade,” said Mukhisa Kituyi, secretary-general of the UN Conference on Trade and Development, a body that deals with trade, investment and development, in an interview with Africa Renewal.
“The types of exports that would gain most are those that are labour intensive, like manufacturing and agro-processing, rather than the capital-intensive fuels and minerals, which Africa tends to export,” concurred Vera Songwe, executive secretary of the ECA, in an interview with Africa Renewal, emphasizing that the youth will mostly benefit from such job creation.
In addition, African women, who account for 70% of informal cross-border trading, will benefit from simplified trading regimes and reduced import duties, which will provide much-needed help to small-scale traders.
If the agreement is successfully implemented, a free trade area could inch Africa toward its age-long economic integration ambition, possibly leading to the establishment of pan-African institutions such as the African Economic Community, African Monetary Union, African Customs Union and so on.
A piece of good news
Many traders and service providers are cautiously optimistic about AfCFTA’s potential benefits. “I am dreaming of the day I can travel across borders, from Accra to Lomé [in Togo] or Abidjan [in Côte d’Ivoire] and buy locally manufactured goods and bring them into Accra without all the hassles at the borders,” Iso Paelay, who manages The Place Entertainment Complex in Community 18 in Accra, Ghana, told Africa Renewal.
“Right now, I find it easier to import the materials we use in our business – toiletries, cooking utensils, food items – from China or somewhere in Europe than from South Africa, Nigeria or Morocco,” Mr. Paelay added.
African leaders and other development experts received a piece of good news at the AU summit in Mauritania in June when South Africa, Africa’s most industrialised economy, along with four other countries, became the latest to sign the AfCFTA.
Nigeria, Africa’s most populous country and another huge economy, has been one of the holdouts, with the government saying it needs to have further consultations with indigenous manufacturers and trade unions. Nigerian unions have warned that free trade may open a floodgate for cheap imported goods that could atrophy Nigeria’s nascent industrial base.
The Nigeria Labour Congress, an umbrella workers’ union, described AfCFTA as a “radioactive neoliberal policy initiative” that could lead to “unbridled foreign interference never before witnessed in the history of the country.”
However, former Nigerian president Olusegun Obasanjo expressed the view that the agreement is “where our [economic] salvation lies.”
At a July symposium in Lagos organised in honour of the late Adebayo Adedeji, a onetime executive secretary of the ECA, Yakubu Gowon, another former Nigerian leader, also weighed in, saying, “I hope Nigeria joins.”
Speaking at the same event, Ms. Songwe urged Nigeria to get on board after consultations, and offered her organisation’s support.
Last April, Nigerian president Muhammadu Buhari signalled a protectionist stance on trade matters while defending his country’s refusal to sign the Economic Community of West African States-EU Economic Partnership Agreement. He said then, “Our industries cannot compete with the more efficient and highly technologically driven industries in Europe.”
In some countries, including Nigeria and South Africa, the government would like to have control over industrial policy, reports The Economist, a UK-based publication, adding, “They also worry about losing tariff revenues, because they find other taxes hard to collect.”
While experts believe that Africa’s big and industrialising economies will reap the most from a free trade area, the ECA counters that smaller countries also have a lot to gain because factories in the big countries will source inputs from smaller countries to add value to products.
The AfCFTA has also been designed to address many countries’ multiple and overlapping memberships in Regional Economic Communities (RECs), which complicate integration efforts. Kenya, for example, belongs to five RECs. The RECs will now help achieve the continental goal of a free trade area.
Many traders complain about RECs’ inability to execute infrastructure projects that would support trading across borders. Ibrahim Mayaki, head of the New Partnership for Africa’s Development (NEPAD), the project-implementing wing of the AU, says that many RECs do not have the capacity to implement big projects.
For Mr. Mayaki, infrastructure development is crucial to intra-African trade. NEPAD’s Programme for Infrastructure Development in Africa (PIDA) is an ambitious list of regional projects. Its 20 priority projects have been completed or are under construction, including the Algiers-Lagos trans-Saharan highway, the Lagos-Abidjan transport corridor, the Zambia-Tanzania-Kenya power transmission line and the Brazzaville-Kinshasa bridge.
The AfCFTA could change Africa’s economic fortunes, but concerns remain that implementation could be the agreement’s weakest link.
Meanwhile African leaders and development experts see a free trade area as an inevitable reality. “We need to summon the required political will for the African Continental Free Trade Area to finally become a reality,” said AU Commission chairperson Moussa Faki Mahamat, at the launch in Kigali.
This article appears in the August-November 2018 issue of Africa Renewal, published by the United Nations.
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SADC hosts the 38th Ordinary Summit of the Heads of State and Government in Windhoek, Namibia
The 38th Ordinary Summit of the Heads of State and Government of SADC was held at Safari Court Conference Centre, in Windhoek, the Republic of Namibia, on 17th and 18th August 2018. Below is the final Communiqué, available to download in English, French and Portuguese.
Communiqué of the 38th SADC Summit of Heads of State and Government
- The 38th Ordinary Summit of the Heads of State and Government of the Southern African Development Community (SADC) was held at Safari Court Conference Centre, in Windhoek, the Republic of Namibia, on 17th and 18th August 2018.
- Summit was attended by the following Heads of State and Government and/or their representatives:
Angola:
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H.E. President João Manuel Gonçalves Lourenço
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Botswana:
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H.E. President Mokgweetsi Masisi
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Comoros:
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Hon. Mohamed El Amine Souef, Minister of Foreign Affairs, International Corporation and the Francophone
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DRC:
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H.E. President Joseph Kabila Kabange
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Eswatini:
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Hon. Senator Paul Dlamini, Deputy Prime Minister
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Lesotho:
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Right Hon Prime Minister Dr. Motsoahae Thomas Thabane
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Madagascar:
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Hon. Dovo Eloi Maxime, Minister of Foreign Affairs
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Malawi:
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Hon. Dr. Emmanuel Fabiano, Minister of Foreign Affairs and International Relations
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Mauritius:
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Hon. Mahen Kurmar Seeruttun, Minister of Agro Forestry and Food Security
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Mozambique:
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H.E President Felipe Jacinto Nyusi
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Namibia:
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H.E. President Dr Hage G. Geingob
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Seychelles:
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H.E. President Danny Faure
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South Africa:
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H.E. President Cyril Ramaphosa
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United Republic of Tanzania:
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H.E. Vice President Samia Suluhu Hassan
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Zambia:
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H.E. President Edgar Chagwa Lungu
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Zimbabwe: |
H.E. President Emmerson Dambudzo Mnangagwa |
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Summit was also attended by H.E. Paul Kagame, the President of Rwanda, and the current Chairperson of the African Union.
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Summit was also attended by H.E. Dr. Stergomena Lawrence Tax, the SADC Executive Secretary, H.E. Moussa Faki, Chairperson of the African Union Commission (AUC), and H.E. Dr. Vera Songwe, Executive Secretary of the United Nations Economic Commission for Africa (UNECA).
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Summit elected H.E. Dr. Hage G. Geingob, President of the Republic of Namibia as Chairperson of SADC, and H.E. Dr. John Pombe Magufuli, President of the United Republic of Tanzania, as Incoming Chairperson of SADC.
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Summit also elected H.E. Edgar Chagwa Lungu, the President of Zambia as Chairperson of the Organ on Politics, Defense and Security Cooperation, and […] H.E. Emmerson Dambudzo Mnangagwa, President of the Republic of Zimbabwe, as Incoming Chairperson of the Organ on Politics, Defense and Cooperation.
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Summit commended the Outgoing Chairperson of SADC, H.E. Cyril Ramaphosa, the President of the Republic of South Africa for his exemplary leadership during his tenure.
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Summit endorsed the 38th SADC Summit theme of “Promoting Infrastructure Development and Youth Empowerment for Sustainable Development,” as the 2018/19 Theme, which takes forward the SADC industrialization agenda, while focusing on infrastructure development, youth empowerment and sustainable development.
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Summit approved the operationalisation of the SADC University of Transformation, in the form of a virtual university, to focus on entrepreneurship, innovation, commercialization, technology transfer, enterprise development, digital and knowledge economy, to support SADC Industrialization agenda.
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Summit noted the progress in the implementation of the Revised Regional Indicative Strategic Development Plan (RISDP) 2015-2020, and urged Member States to focus on implementing priority activities within the approved frameworks of the Revised RISDP, and their policy documents, including the Industrialization Strategy and Roadmap, Regional Infrastructure Development Master Plan, the Regional Agricultural Investment Plan, and the Strategic Indicative Plan of the Organ.
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Summit noted progress made in the implementation of SADC Industrialization Strategy and Roadmap 2015-2063, and urged Member States to remain committed to the implementation of the SADC industrialization agenda, as the overarching priority for the region.
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Summit reviewed the SADC regional economic performance, and urged Member States to scale up efforts aimed at diversifying their economies, improve domestic revenue collection mechanisms, and manage public expenditures.
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Summit noted the overall decline in food production in the Region, for the 2017/18 crop season, and urged Member States to put in place measures to tackle food insecurity in the Region, while developing contingency plans to enhance drought preparedness, in view of the likelihood of adverse El Nino induced conditions during the 2018/19 cropping season.
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Summit noted that, the Union of Comoros has deposited her Instrument of Accession, and commended the Union of Comoros for acceding to the SADC Treaty and becoming a full Member of SADC.
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Summit reaffirmed SADC Position that the current African, Caribbean and Pacific negotiations and decision-making governance structure be maintained.
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Summit urged Member States that have not yet signed and/or ratified the Tripartite Free Trade Area (TFTA) Agreement to do so, and urged Member States to expeditiously finalise the exchange of tariff offers, and pave the way for the implementation of the Tripartite Free Trade Area (TFTA).
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Summit endorsed the 23rd of March as the day for commemorating the Southern Africa Liberation Day.
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Summit noted that the SADC Solidarity Conference with the Saharawi Arab Democratic Republic (SADR)/Western Sahara will be held in October/November 2018, to be hosted by the Republic of South Africa.
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Summit noted progress in addressing SADC proposals on the ongoing Institutional Reform of the African Union, reiterated its commitment towards the reforms, and called for continued consultations with a view to addressing the outstanding issues. Summit mandated the Chairperson of SADC to fast track these consultations.
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Summit thanked His Excellency Paul Kagame, President of the Republic of Rwanda, and Chairperson of the African Union for accepting SADC’s invitation and for attending the 38th Summit of SADC Heads of State and Government, and for his continued commitment and leadership towards the implementation of the AU Institutional Reforms.
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Summit noted with concern that, despite a number of SADC initiatives in the Kingdom of Lesotho, progress on the implementation of the reforms roadmap, and national dialogue remains very slow.
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Summit urged the Kingdom of Lesotho and all stakeholders to ensure that the National Leaders Forum, scheduled for 23-24 August 2018 takes place as planned, and called upon all stakeholders, including those who reside outside to participate.
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Summit resolved not to entertain any further delays in the implementation of Reforms and National Dialogue, and called upon SADC Member States to take necessary measures against those with intentions to delay, or threaten to derail the Reforms and the National dialogue processes.
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Summit urged the Government of the Kingdom of Lesotho to put in place a program with clear milestones for the implementation of priority activities on the Reforms Roadmap and National Dialogue, while recognizing that the SAPMIL and Oversight Committee tenures end in November 2018, a report of which, is to be submitted to the Chairperson, of the Organ by 30th October 2018.
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Summit thanked H.E. Cyril Ramaphosa, President of the Republic of South Africa and Facilitator to the Kingdom of Lesotho, supported by the Facilitation Team, for his continued facilitation in the Kingdom of Lesotho.
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Summit commended H.E. President Joseph Kabila and the Government of the Democratic Republic of Congo for upholding the constitution of the Democratic Republic of Congo, and noted that the Government of the DRC will continue to provide the necessary funding and logistical requirements to enable the conduct of peaceful and credible elections.
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Summit commended the Government of Madagascar and political stakeholders for reaching an agreement that facilitated the appointment of the new Prime Minister H.E. Christian Ntsay, and the formation of a consensus Government, and urged all political stakeholders to ensure that the upcoming elections take place in a peaceful environment.
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Summit congratulated Member States that held elections since the last summit in August 2017, namely the Republic of Angola and the Republic of Zimbabwe, and congratulated His Excellency President João Manuel Gonçalves Lourenço and the Movement for the Popular Liberation of Angola (MPLA) party for winning the elections, and called upon all stakeholders in Zimbabwe to remain calm while the legal process regarding the outcome of the elections are being considered by the courts.
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Summit urged the international community to lift all sanctions against Zimbabwe, and support the Republic of Zimbabwe in her economic and social development efforts.
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Summit commended H.E. João Manuel Gonçalves Lourenço, the President of the Republic of Angola and Outgoing Chairperson of the Organ on Politics, Defence and Security for his outstanding leadership in steering issues of the Organ during his tenure.
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Summit approved the Declaration on Eliminating Malaria in the SADC Region to firmly place regional malaria elimination on the agenda of all Member States.
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Summit noted that the tenure of Ms. Emilie Mushobekwa, the current SADC Deputy Executive Secretary-Corporate Affairs, is ending in October 2018, and thanked her for the services rendered to the Secretariat and SADC.
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Summit approved the appointment of Ambassador Joseph Andre Nourrice, from Seychelles, for the position of SADC Deputy Executive Secretary – Cooperate Affairs.
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The Ordinary Summit was officially closed by SADC Chairperson, His Excellency President Dr. Hage G. Geingob, who thanked all the Heads of State and Government for attending the 38th Ordinary Summit of SADC Heads of State and Government.
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Summit expressed its appreciation to the Government and people of the Republic of Namibia for successfully hosting the 38th Ordinary Summit and for their hospitality during the Summit period.
Visit the SADC Resources page to download key legal and policy documents, including the Revised RISDP 2015-2020 summary and Action Plan for the SADC Industrialisation Strategy and Roadmap 2015-2063.
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Revised SADC gender protocol enters into force
A total of 12 countries in southern Africa have now signed the agreement amending a regional protocol that aims to advance gender equality and equity bringing the revised document into force.
Namibia and Seychelles became the latest members of the Southern African Development Community (SADC) to sign the pdf Agreement Amending the SADC Protocol on Gender and Development (92 KB) * during the just ended SADC Summit held in Windhoek, Namibia.
Other member states who have signed the agreement are Angola, Botswana, Democratic Republic of Congo, Kingdom of Eswatini, Lesotho, Madagascar, Mozambique, Tanzania, Zambia and Zimbabwe.
Malawi and South Africa are yet to sign the amendment.
The remaining two member states, the Union of Comoros and Mauritius, cannot sign the amendment as they are not parties to the protocol.
Comoros is a new member of SADC after having been formally admitted into SADC by the 38th SADC Summitth SADC Summit held on 17-18 August.
Mauritius is not party of the SADC Protocol on Gender and Development because it is not in line with the civil code of the country, which allows children to marry below the age 18 but above 16 with parental consent.
According to Article 22 (11) of the SADC Treaty and Article 38 (3) of the SADC Protocol on Gender and Development, an amendment to a protocol after it has entered into force shall be adopted by a decision of three quarters of member states who are party to the protocol.
The pdf SADC Protocol on Gender and Development (1002 KB) * in Article 8 says that “no person under the age of 18 shall marry.”
The Revised SADC Protocol on Gender and Development provides for the empowerment of women, elimination of discrimination and the promotion of gender equality and equity through gender-responsive legislation, policies, programmes and projects.
The protocol was revised in 2016 so that its objectives are aligned to various global targets and emerging issues.
Some of these global targets are contained in the post-2015 UN Sustainable Development Goals (SDGs), the African Union Agenda 2063, and the Beijing Declaration and Platform for Action.
SDG Goal 5, for example, deals with the Promotion of Gender Equality and Empowerment of all Women and Girls, and sets nine targets to be met by the global community by 2030.
These include ending all forms of discrimination against women and girls; elimination of all forms of violence against women and girls in the public and private spheres, including trafficking and sexual exploitation; elimination of all harmful practices, such as child, early and forced marriage, and female genital mutilation; and ensuring the full and effective participation of women and equal opportunities for leadership at all levels of decision-making in political, economic and public life.
Other SDG Goal 5 targets include universal access to sexual and reproductive health and reproductive rights in accordance with the Programme of Action of the International Conference on Population and Development and the Beijing Platform for Action.
In addition, the revised protocol captures emerging issues such as climate change and child marriages.
Child marriages are regarded as one of the factors contributing to the slow progress in the reduction of maternal mortality, but the definition of a child by age remains controversial.
The SADC Protocol on Gender and Development entered into force in 2013 following the ratification of the instrument by the requisite two-thirds of member states.
It was revised in 2016 and approved by the 36th SADC Summit held in Swaziland the same year.
The process of approval of a regional legal instrument requires, first, signing, and then ratification, a process that differs from country to country.
A protocol “enters into force” following ratification by two-thirds of SADC member states. This advances the regional law from being a stated intention to actual application. Those member states that join after a protocol has entered into force are said to “accede” to the protocol.
The 38th Summit of SADC Heads of State and Government was held under the theme “Promoting Infrastructure Development and Youth Empowerment for Sustainable Development.”
The theme builds on the focus of the past four SADC summits that sought to advance industrial development, and takes into account the need for adequate infrastructure to support industrialisation as well as the importance of engaging the youth, who are the bulk of the SADC population.
At the summit, Namibian President Hage Geingob took over the SADC chair from his South African counterpart Cyril Ramaphosa.
* Please note: You must be logged into the tralac website in order to download these files.
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President Kagame attends 38th SADC Summit
President Kagame attended the 38th Summit of the Southern African Development Community (SADC) on 17 August 2018 in Windhoek, Namibia where he delivered remarks in his capacity as the Chairperson of the African Union.
The Summit, which ran from 17-18 August, was held under the theme “Promoting Infrastructure Development and Youth Empowerment for Sustainable Development” and focused on sustainable growth through a conducive environment for industrialization processes.
In his address to SADC leaders, President Kagame highlighted that infrastructure development and free movement of persons are key to translating Africa’s aspirations into practical results.
“The long-term prosperity and security of Africa depend on creating the conditions and environment that enable our young people to achieve their full potential right here at home. We have the ability to do more for our countries individually, but even better, collectively.
“Today, more than ever, collaboration among African countries is not a choice. It is an imperative, in real terms. Our experience is that we are infinitely stronger when we face the world as a common front, united in our diversity, and yet respectful of the interests of each country, whether large or small,” President Kagame said.
At the Summit, President Hage Geingob of Namibia took over the SADC Chairmanship from President Cyril Ramaphosa of South Africa.
Leaders attending the Summit included Heads of State and Government from across the SADC region, the Chairperson of the African Union Commission, Moussa Faki Mahamat, as well as the Executive Secretary of the United Nations Economic Commission for Africa, Dr Vera Songwe.
Remarks by President Paul Kagame at the SADC Summit
Good morning.
I am very pleased to join you today, at this Summit. I thank you for inviting me to take part, on behalf of the African Union. I appreciate your bringing the AU and SADC closer, which indeed they should be.
Let me congratulate SADC for paying close attention to security and stability within the region and even beyond. As we all know, these are necessary conditions for the transformation we desire, and a critical part of the AU agenda.
Besides these socio-economic benefits, there are other security issues on our continent that go beyond national sovereignty, affect other nations, and call for collective action to resolve.
Wearing the hat of Chair of the AU, I wish to stress that we must meet such issues up front. It has happened before. Crises of security with cross-border implications have been settled by other countries or regional groupings. After all, we are all connected. And we all know too well that there are matters that we cannot just wish away but we have to face them directly and find the right remedies for them.
SADC has accomplished this task in the past in handling political and security issues in Lesotho and Madagascar, and recently in the Comoros.
You will be called upon to do the same again, where similar action is required, as indeed was the case in Zimbabwe in the recent past.
We can all be pleased that SADC and the AU accompanied the political process in Zimbabwe, and now matters are in the right direction and in the final stages in being resolved before the courts of law.
SADC has a similar role to play in DRC. We applaud the latest developments there, showing respect for the Constitution and the Agreement of December 2016. This is an important step, and others are hoped for as agreed by the people of this great country, You can count on the AU as a partner if you need support.
Excellencies, distinguished audience;
The theme of the Summit could not be more pertinent, to Africa’s transformation agenda.
Infrastructure development, as well as the free movement of persons, are key to translating our aspirations, into practical results for our citizens.
Equally, the long-term prospects or prosperity and security of Africa, depend on creating the conditions and environment that enable our young people, to achieve their full potential, right here at home.
We have the ability to do more for our countries individually, but even better, together.
Today, more than ever, collaboration among African countries is not a choice. It is an imperative, in real terms.
It is precisely because we recognise the necessity and advantage, of going beyond the borders of our respective countries, that we have joined forces through Regional Economic Communities, and the African Union.
Domestic priorities are, of course, important, and can never be disregarded. Those needs, are what brings us together, in the first place.
We must find a way of taking care of our home front, while also building our regional economic communities.
In the end we all gain. Our experience, is that we are infinitely stronger, when we face the world, as a common front, united in our diversity, and yet respectful of the interests of each country, whether large or small.
We have to keep that big picture in focus. We must also continually strive, to ensure that our actions, are always fully aligned with our ideals of African unity.
Just as important, while our stated commitments may be clear, we need to do more to match them with results.
Attitudes that weaken mutual trust, saying one thing and acting to the contrary, and antagonising neighbours, can only slow us down. Nobody gains, instead, we end up advancing the external interests, who benefit from a divided Africa.
Southern Africa has a long tradition of solidarity, born of the struggle for freedom, and sustained today, as a catalyst for progress.
This region has been a source of inspiration, for Africa as a whole. We must continue to build on that tradition, and expand it beyond SADC, across the continent.
Indeed, the Southern African Development Community’s industrialisation strategy clearly recognises that free trade facilitates export diversification, competitiveness, and inclusive growth.
We are also on the move, as a continent.
In the years ahead, the African Continental Free Trade Area, and the Protocol on the Free Movement of Persons, will significantly increase the level of trade among African nations, while strengthening our negotiating position, globally.
I would also like to take this opportunity, to thank the Heads of State and Government gathered here, for the growing support and engagement, given to the institutional and financial reform, of the African Union.
Issues raised by individual Member States, continue to be addressed in a flexible and consultative manner.
This irreversible process, is critically important, for our ability to deliver on the key pillars of Agenda 2063, the Africa we want and deserve.
Let me thank you, once again, for the kind invitation to participate in this Summit.
I wish you fruitful deliberations, and I thank you for your kind attention.